What happens to him if something happens to you?

What happens to him if something happens to you?

Thinking about all the “what-ifs” becomes the norm once you become a parent. What if they fall down and hurt themselves? What if I’m not giving them what they need? What if something happens to me?

Having an estate plan is crucial, especially for parents. Not only will having one ease your mind but if the unthinkable happens, you can ensure your children are cared for in the way that you intend.

First and foremost, in today’s “I’ll just download one” mindset, know that estate planning law is complex and your situation is unique to you. If you misstep, misjudge, or simply don’t completely understand it, your mistakes can not only be expensive but also burden those that you care for the most. So, it’s extremely important to speak with an estate planning attorney.

Having these three basics is a must: A Will, a Power of Attorney, and a Medical Directive.

These documents will allow the distribution of your assets, authorize someone of your choosing to make decisions on your behalf, designate who cares for your children and provide guidance for medical professionals regarding your treatment and care.

Along with those basics, you should review your beneficiary designations on assets such as bank accounts, digital access, individual retirement accounts, life insurance, and annuities. Major life events (divorce, marriage, death, children, or step-children) can change the way you want to distribute your assets and decision making authority.

If you have a minor child, you will also want a medical power of attorney so you can entrust a family member or an associate with the authority to take your minor child to a doctor and to make health-care decisions on their behalf.

If you are young, you may be more concerned about the economic impact of COVID-19 rather than any impact on your mortality. The economic downturn may have affected your net worth and inspired you to adjust your estate plan.

If substantial gifts are part of your plan, let’s develop a strategy that will accomplish the transfer of your assets while also minimizing the tax burden.

In an estate-planning guide there are a number of basic things to consider:

  • Irrevocable living trusts – These spell out exactly how assets in a trust will be held and distributed before and after your death.
  • Durable powers of attorney – These allow you to designate a person of your choosing to make financial decisions on your behalf when you are unable to do so.
  • Health-care surrogates – These can designate a surrogate to make health decisions on your behalf and receive health-care information from your doctors in the event you become incapacitated.
  • Living wills – These permit you to designate whether you want life-prolonging treatment should you be in a terminal state.

What should your Will include?

Here are a few basics:

Beneficiaries are people you choose to receive real property or personal property in the form of cash or assets. It’s common to name your spouse, children, friends, charities, or other family members.

Executor is the individual who will carry out what’s written in your Will. You can choose whomever you like, but most people choose a responsible friend or family member. If you don’t name an executor, often this job falls into the hands of an administrator who has to pay for a bond.

Parental guardian: If you are caring for young children, it’s important to name the person(s) you want to raise your children should you pass away. Since this is a major life endeavor for the person or people you name, list a few individuals in case one or two of them are not in a position to take on this role at the time of your death.

If the pandemic is making you fear for your health, or your finances, contact Estate Planning Attorney Chuck Bendig today. The consultation is free and online consults are available.

“Invincible” estate planning trusts have weaknesses. Read this.

“Invincible” estate planning trusts have weaknesses. Read this.

Trusts can be used to protect your hard earned assets, to help your beneficiaries avoid the cost and expense of probate, as well as transfer legal ownership of assets to a trustee. A property is deeded in the name of the trust and the trustee is responsible for administering it as the grantor specifies. However, there could be more strings attached to an asset in a trust than if it were left to someone in a will.

While a trust is fairly straightforward, simple mistakes can invalidate your transfer of property.

Below we’ll discuss the common mistakes people can make when creating a trust.

  1. You fail to show intent to create a trust. This is vital. American courts are extremely protective of individual property rights. The intent standard for a trust conveyance is similar to the property being gifted: The individual granting the property must show that making such a grant was intentional. Without this, no trust can be considered valid.

2. You fail to sufficiently fund the trust. A trust cannot be created unless the property changes hands. Any failure to deliver the property to an adequate item or sum in trust will result in a trust failure. Funding problems could be due to the granting party failing to make delivery or due to placing in trust some future property interest that can’t be tied to any property in a way that proves its viability.

3. You fail to instruct beyond precatory language. Precatory language expresses your desire but doesn’t create a legal obligation. Your trust document must indicate that you are creating a legally binding obligation.

4. You fail to name beneficiaries. A person or group of people must be named as beneficiaries. Viable trusts name beneficiaries and set out any terms for the trust as well as the duties the trustee owes to the beneficiaries.

5. You fail to put the trust in writing. When a trust involves a grant of real estate or a trust is created through the execution of a will, it must appear in writing to be considered valid. A “verbal arrangement” made with a family member or close friend will never see the inside of a courtroom.

Of course, there are expenses to set-up the trust, but these expenses should be compared to the costs of probate as well as any fees paid to the estate executor that often equal a large portion of the probate estate. The expenses may include:

  • The cost to establish the trust and to create a pour-over Will that deposits all remaining assets into the trust at the time of death.
  • When administering the trust, the trustee might have to retitle documents or add new filings in order to transfer ownership to the trust.

Another potential problem involves interpersonal issues that could arise between the beneficiaries and the trustee if the beneficiaries resent the trustee’s role or believe that they are not acting in their best interests.

However, it’s key to remember that you can overcome any of these problems by setting up a trust with forethought and professional assistance. Call Chuck Bendig for your free consultation.

Filing Taxes for the Deceased

Filing Taxes for the Deceased

Chances are you’ve heard the saying “In this world nothing is certain, but death and taxes”, and as it turns out, taxes are certain even if preceded by death. In fact, a decedent’s executor must file one last tax return for the deceased, with a few conditions which we’ll discuss here.

The decedent’s marital and parental status are key factors since there are special rules for families:

The deceased’s spouse may file a joint tax return for the year of the spouse’s death. However, if the spouse remarries during that same year, a “married filing separately” return should be filed.

If the surviving spouse has a dependent child, they might receive a tax break for up to two tax years following the death. The surviving spouse referred to as the ‘qualifying widower’, can pay the tax rate that applies to married couples, which could mean a smaller tax bill.
To be eligible;

  1. you must have been entitled to file a joint return with your deceased spouse for the year of their death,
  2. you must not be remarried before the end of the current tax year,
  3. you must have had a dependent child,
  4. you must have provided more than half the cost of maintaining your home (considered head of household)

What forms should I use to file taxes for the deceased?

You’re probably familiar with Form 1040 for a federal income tax return, start there. If you’re the executor, you will sign the form in the capacity of estate representative, and if you are the surviving spouse and are filing a joint return, you will sign it yourself. Be sure to add the words “filing as the surviving spouse” after your signature. An executor who is appointed before the return is due will need to sign as well.

In the case where there is no surviving spouse and an executor has not been appointed, whoever has taken charge of the deceased’s property should sign the return as a ‘personal representative’.

Any income that was earned by an estate or trust should be reported on IRS Form 1041.

As with any other income tax return, the returns are due on April 15 of the year after death. If the deceased person didn’t file a tax return for the prior year, you’ll need to file that tax return as well. Although there is no extra paperwork needed to claim a refund for a surviving spouse on a joint return, there are additional forms in other situations.

If you’re not sure if your loved one’s estate or trust will be subject to taxes or if you’re not sure whether what you have inherited will be subject to taxes, call estate planning attorney Charles (Chuck) Bendig, as settling an estate can be complicated.

Are you single? Estate Planning is Vital.

Are you single? Estate Planning is Vital.

You may not think much about estate planning if you’re single, but you should. If you don’t have a spouse or close relatives, who will you leave your estate to? A close friend? A charity?

Additionally, you should specify who will make healthcare and financial decisions for you if you can’t make them for yourself. These documents are called Financial & Healthcare Power of Attorneys.

True story (names changed): a young woman graduates from a renowned Veterinary School fulfilling a lifelong passion for animals. At 32 years old, she enters a hospital for a suspicious heart condition. She dies. She is an only child. Her grieving parents grow apart and divorce. Her mother, now single, establishes a trust that, upon the mother’s death, will fund a scholarship program for underprivileged veterinary students in her daughters name at the Veterinary School.

If you die without a will, the State will locate your closest relative so that he or she can receive all of the proceeds of your estate. That may not be what you want. Here is the beneficiary seniority should you die without declarations (Will or Trust):

  1. Spouse
  2. Children
  3. Grandchildren
  4. Parents
  5. Siblings
  6. Nieces/Nephews
  7. Grandparents
  8. Aunts/Uncles
  9. Children of a deceased spouse
  10. Any relatives of a deceased spouse
  11. Your state of legal residence

You may have other intentions; a close friend, a charity or organization, scholarship or educational institution, a step-child, a trust to care for a minor or a pet, or maybe a business partner.

Do I really need a Will if I’m single?

If you have a positive net worth, the answer is yes. It’s normal to choose people who mean something to you and who can benefit from your estate after you pass away.

If you prefer, there are various trusts you can set up, some of which are especially good at transferring money to charities.

Incapacity Planning for Singles

You may not have named a health care representative or indicated your wishes in a medical power of attorney or a health care directive. Without these, you’ll have no control over who will represent you if you become temporarily or permanently incapacitated.

Someone will be making these decisions regarding your physical health. So, if the state can’t find a family member to represent you, everyone will be looking for an heir to act on your behalf. Thus, someone who may not know you will be making decisions about whether you will receive artificial sustenance or will become an organ donor.

A close friend, a professional representative, a lawyer or even a family doctor can be chosen to represent you. You need someone who you would feel comfortable with making decisions on your behalf. If you have strong feelings about resuscitation or other procedures, you need to make these known so your wishes are followed.

Inheritance of Your Business

If you’re a business owner, you’ll want to consider who will inherit your business and determine what restrictions (if any) you would like to put on your beneficiaries. If you’re an entrepreneur with no spouse or children, if you’re widowed or divorced, estate planning can be a little more difficult. Ask yourself, do you want your shares to be left to a business partner or another loved one, or held in trust for a minor?

You are protecting yourself and your preferences with your estate plan, using it as a tool to help you protect your loved ones and the things that are important to you.

Contact Estate Planning Attorney Chuck Bendig today.

The Top Estate Planning Errors and How To Avoid Them

The Top Estate Planning Errors and How To Avoid Them

There are many myths and misconceptions about estate planning. In this article, we’ll discuss the top common mistakes and how to avoid them, which will help your family save thousands of dollars in unnecessary taxes and probate fees:

Beneficiary omissions
Not naming beneficiaries or failing to review your beneficiaries often enough could subject your estate to probate, creditors and delays.

Forgetting to change an ex-spouse on an IRA
Many people aren’t aware that when you remarry, your new spouse becomes your beneficiary on the day you get married, but not in an IRA. This can have disastrous consequences for your new spouse and family.

Leaving assets directly to a minor without addressing guardianship issues
Who will handle a child’s inheritance? The phrase “for their benefit” welcomes a whole host of potentially abusive interpretations. Make sure to address this in your estate plans to avoid any misinterpretations.

Ownership mistakes and imbalances
If too many assets are in one spouse’s name, it could wreak havoc when it comes to tax planning. One spouse could have a much larger IRA and own a vacation house in his or her name only. By shifting the house or investment to the other spouse, the estate becomes more equalized, possibly reducing taxes.

Not having a residuary clause
A residuary clause covers items not named in a will or included in a trust, typically including items you don’t yet own but will before your death. Sometimes there are things you might not even know you own.

Not planning for the unexpected
There are a multitude of things that can happen, such as a sudden decline in your spouse’s health or a change in your assets. You can address this by having assets go to a trust. You can control how, to whom and when money gets distributed.

Not dealing with your own mortality
Don’t leave your family ruined because you don’t want to admit to yourself that you are going to die someday. Don’t make matters worse by failing to plan.

Not updating your will
Many changes take place within a family or business structure. Ensure the assets you leave behind are given to the people you intended to have them. Revisit your will every few years.

Not planning for disability
An unexpected long-term disability can affect your personal and financial affairs in many different ways. Decisions like who will handle your finances, who will raise your children or make health care decisions on your behalf are essential. It may be necessary to appoint a power of attorney or create a living trust to work on your behalf if you’re unable to do it for yourself.

Chances are, you already know you can benefit from having an estate plan. Not only can it help maximize the actual value of the estate you pass on to your heirs and beneficiaries, but you’ll also have an opportunity to make informed decisions concerning how your assets should be handled while you are still alive.

We can help you put together a clean and concise estate plan. Contact Chuck Bendig today.