On December 29, 2022, President Biden signed the Setting Every Community Up for Retirement Enhancement 2.0 Act (SECURE 2.0 Act). The previous SECURE Act in 2020 made several changes to retirement planning:

• It increased the required beginning date (RBD) for required minimum distributions (RMDs) from your individual retirement accounts from 70 ½ to 72 years of age.
• It eliminated the age restriction for contributions to qualified retirement accounts.
• It requires that most designated beneficiaries withdraw the entire balance of an inherited retirement account within 10 years of the account owner’s death.

Eligible Designated Beneficiaries Exempt from the 10-Year Rule
The SECURE Act provided a few exceptions to the mandatory 10-year withdrawal rule with a list of eligible designated beneficiaries:

• Spouses

• Beneficiaries who are not more than 10 years younger than the account owner
• The account owner’s children who have not reached the age of majority
• Disabled individuals and chronically ill individuals

New Provisions in the SECURE 2.0 Act
The SECURE 2.0 Act made quite a few enhancements to clarify the original legislation. Several of the key enhancements are summarized below: 

• It raises the RBD age for RMDs to 73 in 2023 and 75 by 2033.
• It decreases penalties for not taking RMDs to 25 percent of the RMD amount and 10 percent of IRAs if corrected timely.
• Employees will be automatically enrolled in 401(k) and 403(b) plans but may opt out within 90 days.
• Higher catch-up contributions are allowed for participants over 50 ($7,500 in 2023).
• There is more flexibility in annuity payments paid from qualified retirement plans.
• Early distributions are permitted for long-term care contracts without penalty.
• Qualified charities can be named as remainder beneficiaries after the death of a disabled or chronically ill beneficiary without disqualifying the trust as a see-through trust.
• Plan sponsors may match contributions made on student loan repayments on the same vesting schedule as elective deferrals, effective 2024.
• 529 plans maintained for at least 15 years may be rolled over into a Roth IRA with a $35,000 lifetime limit, effective 2024.

Exceptions to the Early Distribution Rule
The SECURE 2.0 Act allows exceptions to the 10 percent early distribution excise tax, including the following:

• Qualified births and adoption expenses
• Terminally ill individuals
• Federally declared disasters
• Emergency personal expenses
• Domestic abuse victims

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The new provisions and exceptions in the SECURE 2.0 Act may change the decisions you have made for your intended beneficiaries and alter the path to achieving your long-term goals.
 
Under the old law, beneficiaries of inherited retirement accounts could take distributions over their individual life expectancy. Under the SECURE Act and SECURE 2.0 Act, the shorter 10-year time frame for taking distributions will accelerate income tax due, possibly bumping your beneficiaries into a higher income tax bracket and causing them to receive less of the funds in the retirement account than you may have originally anticipated. Eligible designated beneficiaries exempt from the 10-year rule may still have the opportunity to benefit from future retirement plan growth.
 
Your estate planning goals likely include more than just tax considerations. You may also be concerned with protecting a beneficiary’s inheritance from their creditors, future lawsuits, and a divorcing spouse. In order to protect your hard-earned retirement account and the ones you love, it is critical to act now.

Review Your Revocable Living Trust or Standalone Retirement Trust
We may have addressed the distribution of your retirement accounts in your living trust, or we may have created a retirement trust that would handle your retirement accounts at your death. Your trust may have included a conduit provision, which requires that retirement distributions be immediately distributed to or for the benefit of the beneficiaries (rather than being held in trust). With the SECURE Act’s passage, a conduit trust structure may not be the best choice any longer because the trustee will be required to distribute the entire retirement account balance to most types of beneficiary within 10 years of your death (which, as discussed above, can create an income tax headache for the beneficiary).
 
Under the current rules, if a person dies prior to their required beginning date for RMDs, then designated beneficiaries will not be required to take out RMDs during the 10-year payout period (but would need to take full distribution by the end of the 10-year payout period). However, if the person died after their required beginning date, the beneficiary must continue to take out RMDs on an annual basis (with full distribution at the end of the 10-year payout period).[1] We should discuss the benefits of an accumulation trust, an alternative trust structure through which the trustee can take any required distributions and continue to hold them in a protected trust for your beneficiaries.

Consider Additional Trusts
​For most Americans, a retirement account is the largest asset they will own when they pass away. If we have not done so already, it may be beneficial to create a trust to handle your retirement accounts. While many accounts offer simple beneficiary designation forms that allow you to name an individual or charity to receive funds when you pass away, this form alone does not take into consideration your estate planning goals and the unique circumstances of your beneficiary. A trust is a great tool to address the mandatory 10-year withdrawal rule under the SECURE Act, providing continued protection of a beneficiary’s inheritance.

If you have beneficiaries with a disability or chronic illness, you may want to consider a special needs or supplemental needs trust. Beneficiaries are exempt from the mandatory 10-year payout rule, giving them more time for the retirement account to grow tax-deferred.

Review Intended Beneficiaries
With the changes to the laws pertaining to retirement accounts, now is a great time to review and confirm your retirement account information. Whichever estate planning strategy is appropriate for you, it is important that your beneficiary designation is filled out correctly. If your intention is for the retirement account to go into a trust for a beneficiary, the trust must be properly named as the primary beneficiary. If you want the primary beneficiary to be an individual, they must be named on a beneficiary designation form. You should ensure that you have listed contingent beneficiaries as well.
 
If you have recently divorced or married, you will need to ensure that the appropriate changes are made to your current beneficiary designations. At your death, in many cases, the plan administrator will distribute the account funds to the beneficiary listed, regardless of your relationship with the beneficiary or what your ultimate wishes might have been.

Other Strategies
Although these new laws may be changing the way we think about retirement accounts, we are here and are prepared to help you properly plan for your family and protect your hard-earned retirement accounts. If you are charitably inclined, now may be the perfect time to review your planning and possibly use your retirement account to fulfill your charitable desires.
 
A charitable remainder trust can use annuity and unitrust payments to mimic the “stretch” provided by using life expectancy. Assets are funded into the trust and then liquidated or sold by the trust. The money from the sale is then invested to produce a stream of income. The sale avoids capital gains tax at the trust level because the trust is liquidating the account and is tax-exempt. However, the noncharitable recipient of the income stream will still be responsible for income tax on the distributions. In contrast, you may distribute your entire retirement asset directly to a charity, and they will not have to pay tax on the income from the plan. Additionally, If you have a significant estate, there may be an estate tax charitable deduction.
 
Following the recent changes to the SECURE Act, you may be concerned about the amount of money that will be available to your beneficiaries following your death and the impact that the potential accelerated income tax may have on that ultimate amount. We can explore different strategies with your financial and tax advisors to infuse your estate with additional cash upon your death.

Give us a call today to schedule an appointment to discuss how your estate plan and retirement accounts might be impacted by the SECURE Act and SECURE 2.0 Act.
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[1] Different distribution rules may apply to different types of beneficiaries, and eligible designated beneficiaries may be subject to different rules. 

You have a minor child who depends on you for their survival, so you need to make sure that they will be cared for if you are ever unable to care for them. By creating an estate plan, you can address your minor child’s care and custody and provide instructions about how your money and property should be used for their care should something happen to you.

​Creating an estate plan allows you to name someone to care for your minor child if you are unable. A child under the age of majority (eighteen or twenty-one depending on your state law) cannot legally care for themselves (unless they have been emancipated). A guardian must be appointed to take care of the minor child if both parents have passed away or are unable to care for the child. It is important to note that if the other legal parent is still alive, that parent may receive custody of the child. However, you need to have a plan in case there is no other legal parent or the other legal parent cannot care for the child. If you do not choose a guardian, the judge will look to state law to determine the appropriate guardian, who may not be the person that you would have chosen.

There are a few different ways to nominate a guardian to care for your child after your death. First, it can be done in a last will and testament (also known as a will). In this document, you can name someone to be your child’s guardian after your death, a person to wind up your affairs (executor or personal representative), and people to receive your money and property, along
with any instructions. Similarly, you may use a pour-over will to name a guardian for your child upon your death. A pour-over will also allows you to name your trust as the beneficiary of any money and property that goes through the probate process. Lastly, some states have a separate document that allows you to nominate a guardian for your minor child. Some people
prefer the separate document because they can change guardians without having to update their entire will or pour-over will.

While an estate plan usually focuses on planning for your death, it is also important to plan for the situation in which you are alive but unable to act or make decisions (called being incapacitated), including naming someone to temporarily care for your child. In addition to delegating your parental authority when you are unable to act, this document can be used if you
are traveling and need someone to make decisions for your child. It is important to note that this document is only effective for a short period (six months in some states), and your chosen person cannot agree to certain actions, such as the child’s adoption or marriage.

Who will be in charge?
A minor child cannot handle their own financial affairs (unless they are emancipated); they need an adult. If you pass away without an estate plan, the other legal parent may be in charge of managing the money and property you have left to your child. If the other legal parent is unable to manage your child’s inheritance, then the court will have to appoint someone. An estate plan allows you to name the person you want to control the money and property. Without an estate plan, the judge can only use state law and the people who appear in court to determine who will manage the inheritance.

When and how will your child receive their inheritance?
If you do not have an estate plan, your child’s inheritance will be managed for their benefit until they reach the age of majority, and then it will be given to them outright. Although they will be a legal adult, they may not be prepared for a large influx of money and property. Also, you may have certain things that you want the money to be used for. With a trust, you can draft instructions for exactly how you want the inheritance to be used. You can create a revocable trust or include these instructions in your will (known as a testamentary trust). The important distinction between these two options is that a will has to be filed with the probate court, and the proceedings will be public and overseen by a judge. A properly drafted and funded revocable trust, on the other hand, can be managed without probate, and no documents need to be made public.

There are many options available to you when crafting instructions for how your child’s inheritance should be managed and distributed. Your minor child can receive a percentage upon reaching a specific age (e.g., 50 percent at thirty years old and the remainder at fifty years old). You can also structure your child’s trust as an incentive trust to allow the trustee to give your child money only after they meet certain goals (e.g., successfully completing postsecondary education, being sober for one year). Alternatively, you can leave the decision of how and when to give out the funds exclusively up to the trustee’s discretion. This is sometimes referred to as a discretionary trust. Because your child will not be guaranteed a specific amount
of money or piece of property, the funds will be better protected from any future creditors or divorcing spouses that your child may have. However, when deciding to use a discretionary trust, it is important to choose your trustee wisely and provide clear guidelines for the trustee to consider.
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Choosing a Trustee
When considering who to select as the trustee of your minor child’s trust, you can choose a family member who knows your child and understands your wishes. If you do not have family that you would like to fill this role, you can look to your close friends. These people may already be a large part of your child’s life and may understand your wishes. Lastly, if you do not have someone who you would want to serve as a trustee, you can hire a professional trustee, though be aware that professional trustees charge for their services. While all trustees are entitled to compensation, a professional trustee may be more expensive and have set fees.

Although state law will provide your child with a guardian, someone to manage their inheritance, and a distribution plan for their inheritance, this is the least desirable result. You have the power to design an estate plan that is unique to your child’s circumstances and allows you to choose the most trusted individuals to guide them if you are no longer able to. We would love the opportunity to help you create the best plan for you and your child or to update your existing plan. Call us to schedule an appointment

As the name suggests, ABC’s TV show Modern Family depicts the relationships and experiences between a fictional extended family. Throughout the course of the series, the show addresses many issues that families deal with each day. For a close-knit family such as this fictional one, estate planning is crucial to ensure that everyone is protected when one of them dies or becomes disabled or incapacitated. We hope that examining some of the issues this family would need to address as they prepare for such circumstances will encourage you to consider how these issues impact your own family.
 
The Family’s Entrepreneurial Endeavors
Over the course of the series, there are a variety of businesses owned by members of the family. Whether it is a hobby, investment, or their nine-to-five job, these businesses require special consideration when planning for their future.

• How are these businesses owned? Depending on the ownership structure (sole proprietorship, partnership, corporation, limited liability company), what happens to the business at the owner’s death may already be dictated by the business’s official documents. If not, there needs to be legally enforceable documentation in place to facilitate the transition.
• Who should ultimately end up with the business? For business owners, it is very easy to get caught up in the day-to-day operations. However, it is important that you look to the future and proactively determine who should be in charge of your business. Just like Jay, if you want your child to continue your business, it is important that you have that discussion with them and pave the way for them to take over.
• Should the business interest go directly to the next generation or be held for them? Depending on the age of the beneficiary, you may need to appoint someone to run the business until your child is sufficiently mature. Instead of relying on the state’s determination of when a child becomes an adult, you can provide specific instructions for when and how your child becomes involved in the business.

Multiple Generations of Blended Families
When determining who will receive their money and property, members of blended families must evaluate the bonds within their family. For instance, on several occasions, Jay refers to Manny as his son, and Manny spent many of his formative years living with his mother and Jay. On the other hand, although Dylan and Haley have two children together, Dylan also has children from his first marriage. Haley may not be that close to Dylan’s other children and may not want them to receive anything she owns individually (or what she may inherit from her parents). Because a stepchild has no legal right to their stepparent’s money and property, a legally enforceable last will and testament or trust needs to be put in place in order for a stepparent to leave anything to their stepchild at death.
 
Guides for the Next Generation
Within this extended family, there are a few minors who need guardians in the event both parents pass away. First, although Manny states that he wants to be Joe’s guardian in the event Gloria and Jay pass away, they need to name the person they want to be Joe’s guardian in their wills. However, the naming of an individual in a last will and testament or separate document is merely a nomination. This may not stop others from contesting the nomination. It may be wise for Jay and Gloria to have frank conversations with both of their families to avoid the possibility of a fight for guardianship and to prevent Joe from potentially being taken to a foreign country.
 
Lily and Rex are also minors who would need a guardian if their parents were to pass away. Without an appropriate estate plan, a fight between Cameron’s and Mitchell’s families is likely to occur. Although Lily spent much of her life around Mitchell’s family, by the end of the show, Lily and Rex are moving with their parents to Missouri and will be living closer to Cameron’s family. Rex will arguably grow up with a greater bond with Cameron’s family, which could lead to conflict between the Pritchett and Tucker families if a guardian for these two children is needed.
 
Lastly, Poppy and George would need guardians if their parents died. Haley and Dylan may not have a lot of money and property to plan for, but their precious children deserve at least basic planning, including naming a guardian and alternates. At the end of the show, although Haley and Dylan are no longer living with Phil and Claire, they are still living close by. However, Dylan’s mother Farah started appearing once Haley became pregnant. She may have a desire to raise the children should something happen to Haley and Dylan.
 
If you have minor children, it is important that you think about who you want to raise them if you cannot. Although no one will ever care for them as you would, it is important that you nominate someone in a last will and testament or separate writing (if your state allows for one). Although the court will still have to make the ultimate decision as to who will be the guardian, you can rest easier knowing that you have made your wishes clear. Also, by having conversations with your family members ahead of time, you may be able to reduce the possibility of fighting after your death if everyone understands your wishes.
 
Protecting the Surviving Spouse
All married couples face the question of what will happen at the first spouse’s death. Some couples, like Phil and Claire, have earned and accumulated most of what they have while they were married. It would be understandable for them to consider everything they own “theirs.” Both of them would likely want everything to go to the surviving spouse. However, when everything is given to a spouse outright, the hard-earned money and property is susceptible to creditors and predators. A naive and well-meaning person like Phil might become the victim of a scam artist and give large sums of money away based on a sad story. Alternatively, a successful woman like Claire could end up remarrying, and without proper planning, could accidentally disinherit Haley, Alex, and Luke by leaving everything to her new spouse. To protect what you leave to your surviving spouse, no matter if it is your first or third marriage, a qualified terminable interest trust can help. This type of trust can allow your surviving spouse to receive the income the trust generates at least annually, to withdraw principal for specific purposes such as health, education, maintenance, and support, while allowing you to determine what happens to any remaining money at your spouse’s death.
 
Determining How Much Everyone Gets
Within this blended family, there are many different options for who will receive an inheritance from each person. When preparing his estate plan, Jay will need to consider how he wants to divide everything he owns. In his immediate family, he has a spouse, two adult children from a previous marriage, a minor son, and an adult stepson. He also has five grandchildren and two great-grandchildren. He will need to decide who gets what, how much, and when. He will need to ask himself if it is better to give everything to Gloria (possibly in a trust) for her needs during her life with the remainder to go to Claire, Mitchell, and Joe at her death—or if Claire and Mitchell should receive their portion of the inheritance while Gloria is still alive. Should he provide for Joe or leave that up to Gloria if she survives him?
 
When considering what to leave to a surviving spouse, it is important to remember that in some jurisdictions, there is a minimum amount that must be given to a surviving spouse known as the elective share. Also, if you reside in a community property state, your spouse may be entitled to some of your money and property if it was acquired during your marriage. While someone might think that their surviving spouse will be able to support themselves without an inheritance, it is important to have this conversation ahead of time: without the proper documentation, a surviving spouse can unwind a plan if they have not been provided for in their deceased spouse’s estate plan and have not waived the right to their entitled minimum amount.
 
Phil and Claire will need to take a look at their own family situation and determine how their money and property are to be divided up among their children and grandchildren. They have three children who are very different and most likely would have very different needs. Haley, the mother of two, may benefit from receiving a larger share since she has two children to support. Alternatively, Phil and Claire could choose to set aside a sum of money specifically for their grandchildren. Alex may not need an inheritance given her education and employment opportunities. Luke, on the other hand, may need more financial assistance. A sum of money could be held in a trust for him, with restrictions to ensure that he is properly provided for, gets an education, and is able to invest in good business ideas while protecting him and his inheritance from bad business decisions.
 
For many families across the country, not just the fictitious ones on television, an estate plan is a great way to make sure that you, your loved ones, and your hard-earned money are protected. We are committed to working with families of all shapes and sizes to craft a plan that is as unique and modern as you and your family are.

Life is full of contingencies. While some outcomes are relatively certain, other events are more difficult to predict. This uncertainty can create estate planning challenges. Because life changes quickly and sometimes unexpectedly, your estate plan needs to be flexible.

You can make changes to your estate plan when you are still alive, but when you pass away, your plan is effectively—but not entirely—set in stone. Incorporating milestones into your estate plan is one way to hedge against the unpredictable future. By creating incentives for particular events, you can continue to exercise your values and provide for your loved ones beyond your lifetime.

Clarifying Your Wishes with If-Then Statements
If-then statements allow outcomes to be determined with conditions. They are found in deductive logic, computer programming, and legal documents, including estate planning documents.

The premise of an if-then statement is simple: if a given criteria is met, then a certain action follows. For example, you might write in your will that, “If my spouse predeceases me, then I leave my house to my oldest son,” or, “If both my spouse and I pass away, then [Person X] will be nominated as guardian of our children.”

Such clauses can help you retain some power over outcomes that would otherwise be out of your control. They can also help you to plan for future contingencies in a way that is not possible with simple declarative statements (e.g., “I leave my house to my spouse.”).

If-then clauses can be combined to account for numerous future possibilities. So, in addition to “If my spouse predeceases me, then I leave my house to my oldest son,” you could specify that “If my son is not employed, then I put my home in a trust to be managed by [Trustee Y].”

Common Beneficiary Milestones Used in Estate Plans
Conditional provisions that offer enhanced flexibility to your estate plan can take many forms. These provisions do not always have to be if-then statements. They can also include gifts or distributions that are triggered at specific times or milestones.
The following are some events that you might consider incorporating into your estate plan:

• A child turning eighteen or twenty-one. A child celebrating a milestone birthday could trigger an action in your estate plan, such as the child receiving distributions from a trust to which they are a beneficiary.
• Completing a degree or certificate. A gift in your will might be conditioned upon the beneficiary graduating from college or earning a professional certificate.
• Purchasing a first home. You could give some or all of a bequest to a beneficiary when they purchase their first home.
• Financing a first wedding. Parents typically pay for most wedding expenses.[1] A clause in an estate plan can direct wedding money to a child the first time they tie the knot.
• Employment. You might hesitate to leave money to a beneficiary who is bad with money or has a poor employment record. As a compromise, you can base their inheritance on being fully employed for at least a year.
• Sobriety. Like an employment clause in your estate plan, there can be a clause that releases an inheritance only if the beneficiary has stayed sober for a certain length of time such as a year or has successfully completed a rehab program. 
• Having children. Having a child is expensive. To help with the expenses of childbirth and childrearing, include an estate planning provision that kicks in extra money to a family member when they give birth, adopt, or require assistance with reproductive technology, such as in vitro fertilization.
• Retiring. Approximately two-thirds of Americans are not financially prepared for retirement.[2] If you want to ensure that a beneficiary continues to work but can retire comfortably at an appropriate age, reward them with a lump sum inheritance to be used once they reach retirement age.

Keep in mind that these estate planning milestones can be combined and modified as you wish. For example, you might give wedding money to a child, but keep the rest of their inheritance in a trust so that if your child gets divorced, the money and property you pass on will not end up in the hands of their ex-spouse.

Another option is to set up your estate plan to direct more money to someone if the value of a certain account or property rises. Or, if the account overperforms, the increase in value could be donated to a charity of your choice. You could also use an if-then statement to provide that a beneficiary receives an extra gift only if they meet a certain milestone. The options are nearly endless.

Now Is the Time to Plan for the Future
Populating your estate documents with numerous if-then clauses and milestones can make things more complicated. But it might give you greater peace of mind knowing that numerous potentialities have been anticipated.

It is crucial to make sure that everything is in writing. Your estate planning attorney can create a diagram or flowchart that helps you keep track of all the moving pieces. Having a chart—rather than a jargon-filled legal document—can make it easier to review and update your estate plan if there is a major life event, such as a death, birth, marriage, or illness).
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Whatever you decide to do, do not put it off. Act now to create a plan that provides for your loved ones while honoring your wishes. Schedule an appointment with our estate planning attorneys to get started.


[1] Kim Forrest, Who Pays for the Wedding? Here’s the Official Answer, WeddingWire (May 21, 2021), https://www.weddingwire.com/wedding-ideas/who-pays-for-what-in-a-wedding.

[2] Sean Dennison, 64% of Americans Aren’t Prepared for Retirement—and 48% Don’t Care, Yahoo (Sept. 23, 2019), https://www.yahoo.com/now/survey-finds-42-americans-retire-100701878.html.

​Getting ready to embark on your next great adventure? Before you zip up the last suitcase, here are five issues you need to address to protect yourself and your loved ones.
 
Do you have a foundational estate plan? Has it been reviewed?
An estate plan is a set of instructions memorialized in legal documents that explains to your trusted decision makers and loved ones your wishes about your care, the care of any dependents, and how your money and property should be handled.
 
Last will and testament
Depending on your unique situation and needs, you may have a last will and testament (also known as a will) as the foundation of your estate plan. This document allows you to name someone to wind up your affairs (i.e., gather your belongings for safekeeping, create a list of everything you own, pay your outstanding bills and taxes, and give the remainder to the individuals and charities you have chosen). You can also name a guardian for your minor children if you have any. Because a will takes effect only at your death, using a will to outline your wishes will likely still require your loved ones to go through the probate process (a court process that can be expensive, time-consuming, and public) to carry them out.
 
Revocable living trust
On the other hand, you might have a revocable living trust as the basis of your estate plan. A revocable living trust is an entity that owns your accounts and property. In order for your trust to own your accounts and property, they will either be retitled in the name of your trust (instead of in your sole name) or the trust will be named as the beneficiary that will receive money and property at your death. Your trust instrument provides your chosen decision maker (trustee) with instructions for how to operate the trust. In the beginning, you can serve as the trustee of your own trust, which means that you are still able to control what happens to the accounts and property owned by the trust. Additionally, you can continue to benefit from the accounts and property because you are also a trust beneficiary. In the event you are unable to manage the trust (i.e., are incapacitated) or you die, someone you have chosen ahead of time can step in as trustee and continue managing the trust for your benefit (if you are still living) or for your chosen beneficiaries (at your death), without court involvement. Because the trust will be the owner or beneficiary of almost everything, for probate purposes, you will die owning nothing. If you own nothing in your sole name, there is nothing that has to be transferred through the probate process. A trust becomes effective as soon as you sign the trust agreement.
 
Review your documents
Because life circumstances often change, it is important that you periodically review your existing estate planning documents. Do they still reflect your wishes? Have there been any major changes in your life that might necessitate another look at your documents? Also, if you have a revocable living trust as part of your estate plan, it is crucial that any accounts or property that are supposed to be owned by the trust have been properly retitled and, if there are any accounts or property that should name the trust as a beneficiary, the appropriate paperwork has been completed.
 
Can someone manage your financial affairs when you cannot?
If you are out of the country, it will likely be more difficult to handle your personal financial matters (e.g., writing a check for rent, following up on an insurance claim, etc.). However, just because you are unable to do these things does not mean that no one else can do them for you.
 
A durable financial power of attorney enables you to name a trusted decision maker to handle your financial matters. When crafting a financial power of attorney, your estate planning attorney will discuss when you want the document to be effective. In some states, you can choose to give your trusted decision maker the authority to act on your behalf immediately or only upon the occurrence of an event (which is usually a determination that you are no longer able to manage your own affairs). In the case of international travel, you may want to consider giving the power immediately so that your chosen decision maker can respond as soon as there is an issue, regardless of whether you are capable of making a decision for yourself. In addition, you can tailor how much authority you give your chosen decision maker in the financial power of attorney. You may want to limit the person’s authority to actions related to a specific transaction, such as a real estate closing, or you may want to allow that person to carry out almost anything you could do for yourself. This is a personal decision based on your unique circumstances.
 
How will you manage your health while you are away?
Even the healthiest person can develop a health issue while traveling. This is why it is important for you to choose a trusted decision maker to make medical decisions for you. A standard estate plan typically includes a medical power of attorney that appoints a person to make medical decisions, a living will or advance directive document that gives instructions for your end-of-life wishes, and a HIPAA authorization form that grants named individuals the right to obtain your private healthcare information. These forms can be state-specific and may not be accepted in another country, so if you are traveling internationally and will be staying in a particular country for a long period of time, it may be beneficial to look into how to name a medical decision maker under your vacationing country’s laws.
 
Another thing to consider is whether your health insurance will be accepted overseas. In some cases, your health insurance may be valid only in the United States. It is important that you research this and, if necessary, look for a short-term policy that will cover you while traveling.
 
Speaking of insurance, do you have adequate insurance?
In addition to health insurance, there are two other types of insurance that may be important for protecting yourself while you are traveling. First is travel insurance. International travel can be more complicated than domestic travel, and having additional insurance can help you navigate the curve balls life can sometimes throw at you. Depending on the cost of your trip and the items you are taking, getting travel insurance may save you money in an emergency.
 
Life insurance is also important to have and review. It is essential to fill out your beneficiary designations correctly so your loved ones will receive what you want in the way you want. It is also important to review the policy terms to see whether any of the activities you want to engage in while on vacation will void your coverage. Sometimes insurance companies will not pay out if the insured has engaged in extreme activities like bungee jumping, skydiving, and scuba diving. This means that if you are in an unfortunate accident while engaged in one of these activities, your loved ones may receive nothing.
 
What arrangements have you made for your minor children?
If you have minor children, taking care of them does not stop when you go on vacation. If your minor children will be traveling with you, they will likely require a passport. It is important to remember that a passport for a child needs to be renewed more frequently than a passport for an adult. Also, some countries may require proof that you are the children’s parent or legal guardian. With the threat of international kidnappings and human trafficking, customs officers want to ensure that children remain safe when traveling internationally.
 
If your minor children will be staying with someone while you are traveling, it is important that you have the proper documentation in place so the chosen adult can fully care for your children. Many states have a document that will allow you to designate someone to make medical and other decisions on your minor children’s behalf on a temporary basis. The document’s name and effective duration can vary by state, but having this document can ensure that whomever you leave your child with will be able to fully care for your children in your absence.
 
Additionally, whether you are traveling or not, it is important that you have a last will and testament that designates someone to care for your minor children in the event you and their other legal parent die or are unable to care for them. Some states allow you to name someone to care for your minor children in the event you die or are otherwise unable to care for them in a document other than a last will and testament, such as a durable power of attorney or nomination of guardian. Although these documents will not avoid court involvement, they will help ensure that your wishes are honored.
 
We know that preparing for international travel has a lot of moving parts. We want to offer our assistance to ensure that you are properly protecting yourself and those you love during your amazing journey. Give us a call to schedule an appointment before you go.

​In estate planning circles, the word “probate” often carries a negative connotation. Indeed, for many people—especially those with valuable accounts and property—financial planners recommend trying to keep accounts and property out of probate whenever possible. That being said, the probate system was ultimately established to protect the deceased’s accounts and property as well as their family, and in some cases, it may even work to an advantage. Let us look briefly at the pros and cons of going through probate.
 
The Pros
For some situations, especially those in which the deceased person left no will, the system works to make sure all accounts and property are distributed according to state law. Here are some potential advantages of having the probate court involved in wrapping up a deceased person’s affairs:
 
●It provides a trustworthy procedure for redistributing the deceased person’s property if the deceased person did not have a will.
●It validates and enforces the intentions of the deceased person if a will exists.
●It ensures that taxes and valid debts are paid so there is finality to the deceased person’s affairs rather than an uncertain, lingering feeling for the beneficiaries.
●If the deceased person had debt or outstanding bills, probate provides a method for limiting the time in which creditors may file claims, which may result in discharge, reduction, or other beneficial settlement of debts.
●Probate can be advantageous for distributing smaller estates in which estate planning was unaffordable.
●It allows for third-party oversight by a respected authority figure (judge or clerk), potentially limiting conflicts among loved ones and helping to ensure that everyone is on their best behavior.
 
The Cons
While probate is intended to work fairly to facilitate the transfer of accounts and property after someone dies, consider bypassing the process for these reasons:
 
●Probate is generally a matter of public record, which means that some documents, including personal family and financial information, become public knowledge.
●There may be considerable costs, including court fees, attorney’s fees, and executor fees, all of which get deducted from the value of what you were intending to leave behind to your loved ones.
●Probate can be time-consuming, holding up distribution of your beneficiaries’ inheritance for months and sometimes years.
●Probate can be complicated and stressful for your executor and your beneficiaries.
 
Bottom line: While probate is a default mechanism that ultimately works to enforce fair distribution of even small amounts of money and property, it can create undue cost and delays. For that reason, many people prefer to use strategies to keep their property out of probate when they die.
 
An experienced estate planning attorney can develop a strategy to help you avoid probate and make life easier for the next generation. For more information about your options, contact us today to schedule a consultation. 

Ideally, when someone passes away, the paperwork and material concerns associated with the deceased’s passing are so seamlessly handled (thanks to excellent preparation) that they fade into the background, allowing the family and other loved ones to grieve and remember the deceased in peace.
 
In fact, the whole business of estate planning—or at least a significant piece of it—is concerned with ease. How can money, property, and legacies be transferred to the next generation in a harmonious, stress-free, fair process? To that end, many people strive to avoid burdening their loved ones with the complications and costs involved with probate.
 
There are numerous tools of the trade that a qualified attorney can use to keep your money and property out of probate, for example, establishing joint ownership on bank accounts and real estate titles, designating beneficiaries for life insurance policies and certain accounts, and so on. However, setting up a revocable living trust is quite often the best, most comprehensive option for avoiding probate. Let’s discuss why this is true.

Often touted as an alternative to a will, a trust is a legal structure that owns your accounts and property or is named as the beneficiary of certain accounts and property (like a retirement account) and is managed by a trusted decision maker, also known as a trustee, on your and your beneficiaries’ behalf. A living trust is established while you are still alive, as opposed to being created upon your death. You can be the trustee for your own living trust until you are no longer able to manage your financial affairs or you pass away, at which point your chosen backup trustee, also known as a successor trustee, steps up and assumes the responsibility for managing the trust on your or your beneficiaries’ behalf.

​The purpose of probate is to transfer property ownership for all accounts and property that are owned in your sole name and that do not have a beneficiary, pay-on-death, or transfer-on-death designation when you pass away. A trust can bypass this process completely because your accounts and property are either transferred to the trust while you are alive, or the trust is named as the beneficiary at your death. Therefore, when you die, there is nothing that needs to be transferred by the probate court (everything is already in your trust or was transferred to the trust automatically at your death). Furthermore, a trust can cover virtually any type of account or property, from real estate to heirlooms to stock to bank accounts. When a trust is structured correctly with the help of an experienced estate planning attorney, your affairs can stay out of probate court entirely. This process not only limits court costs but also maintains the privacy of your financial records while enabling your beneficiaries to enjoy the benefits of the trust without disruption or delay.

One would assume that celebrities with extreme wealth would take steps to protect their estates. But think again: some of the world’s richest and most famous people enter the pearly gates with no estate plan, while others have made estate planning mistakes that tied up their fortunes and heirs in court for years. Let us look at three high-profile celebrity probate disasters and discover what lessons we can learn from them.
 
1. Prince
 
The court battle over musician Prince’s estate was a probate disaster.
 
● When the ‘80s pop icon died in early 2016, he left no estate plan (reportedly due to some previous legal battles that left him with a distrust of legal professionals).
● The probate court had the task of determining Prince’s heirs among all of the people who stepped forward claiming an interest in Prince’s money and property. In 2017, the court ruled that his five half-siblings and his sister were to inherit from Prince.
● The court battle among Prince’s potential heirs cost millions of dollars, and all matters involving Prince’s money and property took about six years to resolve.
 
Lesson learned: Accurate legal documentation protects your legacy. Do not let a general distrust or a bad experience propagate through generations, leaving your loved ones to fight or lose their inheritance.
 
2. Whitney Houston
 
Whitney Houston’s failure to update her estate plan ended up leaving her daughter with more than she probably intended.
 
● Whitney Houston executed a will in 1993 and died in 2015 without making any updates to the distribution instructions in her will.
● Her will left everything to her nineteen-year-old daughter, Bobbi Kristina Brown.
● According to the will, one-tenth was to be given to Bobbi at age twenty-one (about $2 million), another one-sixth at age twenty-five, and the remainder at age thirty.
● Unfortunately, Bobbi died in 2015 at the age of twenty-two, of drowning.
● Many people have speculated that Bobbi was not mature enough to have received $2 million when she turned twenty-one.
 
Lesson learned: Naming your child in your estate plan is not enough. You must periodically review the documents and assess whether your original plan to leave your money and property is still in the best interest of your child.
 
3. Michael Crichton
 
● Michael Crichton, author of Jurassic Park, had a will prepared and died leaving behind a daughter from a previous marriage and his surviving wife. His surviving wife had signed a prenuptial agreement and was not considered an heir when he died. She was, however, pregnant with his son.
● He did not update his will to provide for his soon-to-be-born son.
● A court battle was fought between his daughter and his wife, on behalf of her son, to determine what share he was to receive. Was he to split the inheritance fifty-fifty with his half-sister, or a smaller amount as a pretermitted (omitted) heir?
●His son ultimately inherited from his father, but the cost of the litigation reduced the inheritance, the process took a considerable amount of time, and the conflict most likely damaged familial relationships.
 
Lesson learned: There are four major events that should trigger a review of your estate plan: a birth, death, divorce, or move. These milestones could have a lasting impact on your estate plan. When they occur, review your plan and contact an experienced estate planning attorney to make the necessary changes.
 
These celebrity probate disasters serve as stark reminders that no one’s wealth is exempt from the legal trouble that can occur without proper estate planning. As always, we are here to help you protect your loved ones and legacy. Give us a call today to discuss protecting your hard- earned money and property and your loved ones. 

​When you pass away, your family may need to sign certain documents as part of a probate process in order to claim their inheritance. This can happen if you own property (like a house, car, bank account, investment account, or other asset) in your name only and you have not  completed a beneficiary, pay-on-death, or transfer-on-death designation. Although having a will is a good basic form of planning, a will does not avoid probate. Instead, a will simply lets you inform the probate court of your wishes—your loved ones still have to go through the probate process to make those wishes legal.
 
Now that you have an idea of why probate might be necessary, here are three key reasons why you may want to avoid probate, if at all possible.

​Almost everything that goes through the courts, including probate, becomes a matter of public record. This means that in order to properly wind up your affairs (i.e., pay your bills, file any remaining tax returns, and distribute your money and property to your chosen recipients), documents—including associated family and financial information—could become accessible through the probate court to anyone who wants to see them. This does not necessarily mean that account numbers and Social Security numbers will be made public, as the courts have at least taken some steps to reduce the risk of identity theft. But what it does mean is that the value of your accounts and property, creditor claims, the identities of your beneficiaries, contact information for your loved ones, and even any family disagreements that affect the distribution of your money and property may be publicly available. Most people prefer to keep this type of information private, and the best way to ensure discretion is to keep your affairs out of probate.

Thanks to court costs, attorney’s fees, executor fees, and other related expenses, the price tag for probate can easily reach into the thousands of dollars, even for small or simple matters. These costs can easily skyrocket into the tens of thousands or more if family disputes or creditor claims arise during the process. Your money and property should be going to your loved ones, but if it goes through probate, a significant portion could go to the courts and legal fees instead.
 
Of course, setting up an estate plan that avoids probate does have its own costs. Benjamin Franklin wrote, “An ounce of prevention is worth a pound of cure.” Like the “ounce of prevention,” costs you incur now to put a plan in place are more easily controlled than uncertain costs in the future, especially when you consider that your loved ones may be making decisions while grieving. With proper planning, you can minimize the risk of costly conflict and also reduce or eliminate some costs; if there is no probate case, there will not be any probate filings fees or court costs.

​While the time frame for probating an estate can vary widely by state and by the value, amount, and complexity of the deceased person’s accounts and property, probate is not generally a quick process. It is not unusual for probates, even seemingly simple ones, to take six months to a year or more, during which time your beneficiaries may not have easy access to the money and property you intended to leave them. This delay can be especially difficult for loved ones experiencing hardship who might benefit from a faster, simpler process, such as the living trust administration process. Bypassing probate can significantly expedite the disbursement of money and property so that beneficiaries can benefit from their inheritance sooner.
 
If you have property located in multiple states, a version of the probate process must be repeated in each state in which you hold property. This repetition can cost your loved ones even more time and money. The good news is that with proper trust-centered estate planning, you can avoid probate in all of the states, simplify the transfer of your financial legacy, and provide lifelong tax savings and asset protection to your family. To learn more, call us to schedule an appointment. One of our experienced attorneys will be happy to strategize with you.

​The news that you will be receiving an inheritance is often bittersweet because it means that somebody close to you has passed away. But you might also have mixed emotions about your inheritance for reasons that have to do with the actual accounts or property you are inheriting.

On the one hand, you might not want to reject your inheritance out of respect for the person who put you in their will or trust or named you as the beneficiary of an account or policy. On the other hand, depending on what you have been gifted, an inheritance might pose unintended logistical or financial difficulties that you are unable—or unwilling—to take on.
​
An inheritance, like the loss of a loved one, can be life-changing. While there is no law that requires you to accept an inheritance, there are sometimes good reasons for doing so. And if you choose to turn down a gift, that does not mean it will end up in the hands of the state. Prior to accepting or rejecting an inheritance, you might want to seek legal and tax advice about the implications of either decision. 

An estate plan contains instructions for distributing a person’s money and property when they pass away. Some families discuss who will receive certain accounts or property. For example, maybe all of the kids are asked if they would like to inherit an item from mom’s collection of family heirlooms.

In an effort to be fair, most testators (i.e., persons who have made a will or created an estate plan) or trustmakers divide their money and property equally among heirs. There are cases where one child or heir may be given a larger inheritance based on a larger caregiving role or contribution of their time to the family in some other way. But typically, there are family talks about such matters to ensure that everyone is in agreement and the unequal inheritance does not spur intrafamily resentment and conflict.

However, unexpected inheritances are not out of the question. Testators or trustmakers are under no legal obligation to be fair. Generally, they are entitled to divide up their assets however they see fit. Furthermore, family dynamics can shift and force changes in an estate plan.

For instance, maybe there are three siblings, and two of them have rocky marriages. The testator may have a provision in their will that gives the executor discretion to address this situation and keep their assets out of the hands of a sibling’s soon-to-be ex-spouse, such as by disinheriting a sibling or reducing their inheritance if their marriage is on the verge of failing at the time of probate. Or, a testator could simply decide to write an heir out of the will altogether and assign their share of an estate to somebody else.
​
Similarly, the death of an heir could result in estate assets being reassigned. Indeed, there are many situations that could result in a surprise inheritance. Maybe you have a childless uncle or friend who wanted to surprise you with a windfall. Up until the moment a person passes away, a person is free to amend their will. Heirs usually have some idea of what they will be inheriting from whom, but estate planning does not always go according to plan. 

Accepting an inheritance is a free and voluntary act that is also affected by personal circumstances. If you were informed that you have an inheritance coming your way, you will have to decide whether to receive or reject it. Here are some factors that may impact your decision:

• Outstanding debt. Your inheritance could include a big ticket item, such as a house, car, or RV, that carries outstanding debt. As the inheritor, you may be responsible for servicing the loan or mortgage and will have to figure out if you can afford to pay it off or refinance and continue making the payments.[1] You could always sell the item, but if more than one heir inherits a home, that would have to be a group decision. Also, keep in mind that real estate and other valuable property will need to be insured, at added cost to you.
• Oversized items. You could inherit a car, truck, RV, or other large item or collection that comes with no debt obligations but poses a storage problem. This is particularly true if you do not have your own home or if you live in an apartment or condo with limited space. Paying for additional storage is an option, but if you do not really want the item in the first place, storing it may not be worth the cost.
• Logistics. Taking possession of an item might sound good in theory but turn out to be a logistical nightmare. You might have to travel a long distance and pay for a trailer to haul it. Shipping may be an option, but who will pay for the transport? The money could come out of the estate or out of your own pocket.
• Tax consequences. Six states impose an inheritance tax on beneficiaries: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.[2] In addition to a potential inheritance tax, which ranges from 1-20 percent of the value of the assets you inherit[3], income-producing assets such as real estate, securities, and retirement accounts can increase your taxable income and could even place you in a higher tax bracket. Be clear on the tax implications of your inheritance and how inherited assets may affect your overall financial situation.
• Personal considerations. Perhaps you just do not want to take possession of an item that somebody left to you in their will. You may also realize that somebody else in the family really does want it and would feel hurt if you got it instead. Inheritances can produce hurt feelings and irritate existing tensions. To squelch conflicts before they get out of hand and lead to legal disputes, consider taking the high road.

Whichever path you choose—acceptance or refusal—be prepared to file documents stating your intentions. Another thing to keep in mind is that if you refuse an inheritance, you will have no say in who receives it. If the will does not name a backup (contingent) beneficiary, it will pass back to the estate and on to the next beneficiary according to state law. To make sure that a specific person receives what you are rejecting, you have the option to accept it and then gift it to them. However, as the giver, giving a gift comes with possible tax implications.

Managing Your Inheritance and Planning for the Future
An inheritance could be a pleasant surprise, but most people expect to receive an inheritance at some point in their life. Whenever that day comes, you will want to make the most of your inheritance. Working with a trusted advisory team can help you assess your finances, preserve your wealth, plan for the future, and establish an estate plan of your own. For wealth and estate planning advice, reach out to our office to schedule an appointment.
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[1] Victoria Araj, Inheriting a House with a Mortgage, Quicken Loans (Sept. 17, 2021), https://www.quickenloans.com/learn/inheriting-a-mortgage.
[2] Anna Hecht, Millennials Will Inherit $68 Trillion by 2030—Here’s What to Know If You Receive a Windfall, CNBC: Make It (Jan. 16, 2020), https://www.cnbc.com/2020/01/16/receiving-an-inheritance-four-things-experts-say-you-should-know.html.
[3] What Are Inheritance Taxes?, Intuit TurboTax (Oct. 16, 2021), https://turbotax.intuit.com/tax-tips/estates/what-are-inheritance-taxes/L93IUc3sC.