12 Critical Estate Planning Mistakes

12 Critical Estate Planning Mistakes

If you want to ensure that your estate plan properly protects and provides for your heirs, it is essential that you thoroughly plan ahead.

To make sure it’s “smooth sailing”, here are some important estate planning mistakes to avoid.

  • Failure to plan. Without a thorough estate plan, you’re risking the financial future of your estate and your loved ones.
  • Not reviewing your documents. It is essential to make sure they’re exactly as you want them and also not out of date.
  • Not discussing your plans with family. Sometimes even a brief conversation can shed some light on which of your wishes are likely to be controversial, giving you a chance to rethink certain plans.
  • Don’t name just one beneficiary. Just in case your only heir dies before you, you’ll want to have a contingent beneficiary. According to Ohio State Law, here is the designation or qualification of a beneficiary.
  • Don’t forget that your retirement plan accounts or life insurance can’t be included in Wills or Trusts. You’ll need a beneficiary designation form to name a revocable trust as the beneficiary.
  • Don’t forget about a power of attorney or health care representatives. These professionals step in to make decisions if you become incapacitated. Typically, the roles dissolve on your death.
  • Lack of a funeral plan. Lack of communication for your funeral plans places an extra burden on your already grieving family. Be sure to give some indication of what you’d like to happen at your funeral or with your burial arrangements. Let them know what they can do to honor you.
  • Failure to include your digital assets. Include a digital estate plan that specifies how you want all your digital assets (i.e. social media accounts, online banking, email, etc.) handled upon your death, and name a digital executor to get it done.
  • Not planning for all contingencies. A will often leave an estate to the testator’s “surviving children”, but that raises questions if one of the testator’s children dies. Does the money go to that child’s heirs or is it split among the survivors? Unthinkable as it may seem, your Will should plan for those possibilities.
  • Failure to fund your trust. Simply put, a trust is useless unless it’s funded with your assets.
  • Don’t forget about taxes. Understand the limits of potential state estate taxes or inheritance taxes before you write your Will or trust.
  • Failure to properly store your estate plan. Even a perfect estate plan is absolutely useless if no one knows where to find it. Safes and safety deposit boxes are popular options, but it is vital to tell someone that it’s there and how to access it.

Get a qualified Estate Planning Attorney.

 

Help your family save money in unnecessary taxes and probate fees by sidestepping errors. By including an estate planning attorney such as Charles Bendig, you’ll have help in drafting your plan and making any changes you want to essentially carry out your wishes as you see fit.

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How To Value Items at Death

How To Value Items at Death

If you’re named an executor of an estate, part of your job is to oversee the valuation of assets. So, what does that entail? Finding out how much the estate is worth and how that value is distributed will determine not only your approach to probate, but also the allocation of the assets among the heirs, and how much the estate will pay in taxes. In the case of larger estates, valuation can be a huge responsibility. It may even require you to bring in experts to value antiques and other collectibles.

One thing to note is to expect to be challenged whenever you value assets, by the IRS, by heirs, by creditors or by the court. Be sure you’re valuing everything reasonably.

Certain types of assets are easy to value, such as the contents of a bank account or shares of stock in a publicly-traded company. To value stocks or precious metals, average the highest and lowest selling price for similar items on the date of the owner’s death. For mutual funds, use the closing valuation.

Other assets, such as a used car or collectible, don’t have such a definitive value. You estimate their value by using public references like collectible websites such as Worthpoint.com. When valuing real estate, you can check out the tax assessor’s valuation and talk to a real estate agent about comparable properties in the area.

Go with the pros

Some assets are really difficult to value, like artwork or a private business. For assets like these, you should hire a professional appraiser. Keep in mind that appraisers typically charge between $125 and $400 an hour, and often with an extra charge for visiting the site. It’s a good rule to avoid appraisers who charge based on a percentage of the asset’s value. This goes against the ethics of the Uniform Standards of Professional Appraisal Practice.

You should ask whether the appraiser has any certifications or memberships in professional organizations, and also ask them for a written estimate of the appraisal fee in advance. Among the items that can be listed as household contents are books, tools, and appliances, and you can ask for one overall valuation estimate for them. You may want to get an individual appraisal for any individual items that were specifically bequeathed in the will. The value of household items should be done based on what a buyer would pay for the items as-is.

Should the heirs decide to sell everything in an estate sale, use a reputable estate sale company. Since there are variations in quality and condition as well as changes in economic conditions and local demand, descriptions and values should be seen as general guidelines.

Lastly, a few keynotes as you proceed with the valuation,

  1. Be aware of the pitfalls. Heirs could be upset if a particular asset doesn’t meet the value they expected.
  2. Document your work in case there are questions later, and work closely with legal and financial professionals as you move forward.

When you’re ready to begin the probate process, call Charles Bendig. With over 40 years of experience practicing law before all Ohio state and federal courts, you can rest easy knowing you’re in good hands. I’ll walk you through every step of the process together.

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Leaving Your Estate to Your Grandchildren

Leaving Your Estate to Your Grandchildren

If you’re a grandparent with assets that you plan to leave to your grandchildren, it’s important to continue reading. How you plan the transfer of those assets depends on whether they’re adults or minors. In addition, grandchildren with special needs may need complete or supplementary financial support throughout their lives. You may think of contributing to that.

Would you like to pay for education as your grandchildren transition into adulthood? Some vehicles that are available to help with that are;
– 529 Plans pay for college, and you’re able to maintain control until the money is withdrawn
– A Uniform Gifts to Minors Act (UGMA) account.
– A Uniform Transfers to Minors Act (UTMA) account

Here you’ll find the difference between 529 plans, UGMA accounts and UTMA accounts.

Consider contributing to these during your lifetime as a strategic way to reduce the value of your taxable estate while still working toward education savings goals.

Successor Designations

To begin, update successor designations to stipulate who will take over managing your accounts should you pass away. Ensure your beneficiaries are up to date on assets that have provisions for naming them, such as investment and bank accounts with transfer-on-death designations.

The Importance of Trusts

If your grandchildren are still minors, you might want to ensure they’re provided for financially. Trusts will allow more control of your assets, even after your death.

  • You can state how you’ll leave money to your grandchildren, the circumstances used to distribute funds, and when the funds should be withheld.
  • You can determine whether they will gain control of the money at a certain age and whether they are co-trustees or full owners.
  • A trust gives you the ability to transfer assets while reducing estate taxes and allowing your influence on the assets.

What kinds of trusts are available?

  • Generation-skipping trusts: these allow the assets to be distributed to non-spouse beneficiaries who are two or more generations younger without incurring the generation-skipping tax.
  • Credit shelter trusts: these make full use of you and your spouse’s federal estate tax exclusion, bypassing your surviving spouse’s estate.
  • Irrevocable life insurance trusts: these purchase life insurance policies to provide immediate benefits on death that don’t usually pass through probate.

Can I leave my IRAs to my grandchildren?

Yes. You can leave any IRAs to your grandchildren, however, they will generally need to take required minimum distributions (RMDs) soon after your death, and depending on their ages may have to pay associated income taxes. So, it is important that you note any beneficiaries on retirement account forms.

Finally, keep in mind that for many grandchildren, it’s being remembered that matters more than the inheritance itself, especially if it’s paired with something sentimental for your estate. Consider this an opportunity to tell your grandchildren that they are loved, and when you’re ready to create your estate plan, call Chuck Bendig.

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What exactly does an Executor do? (Checklist)

What exactly does an Executor do? (Checklist)

If named the executor in a Will, you’ll be the final administrator of a deceased person’s estate and have many details to manage. Below is an estate executor checklist that can help you navigate the process while making sure none of your duties slip through the cracks:

Obtain copies of the death certificate. You’ll need them for a number of tasks:

  • Filing life insurance claims
  • Filing tax returns
  • Accessing financial accounts
  • Notifying organizations like the Social Security Administration

Ensure that the funeral arrangements are carried out according to the deceased wishes.

File a copy of the Will in probate court. Here’s how to go about it:

  • Ask the court to confirm you as a personal representative. Probate court clerks will commonly answer basic questions about court procedures but won’t provide legal advice particular to your case.
  • In some courts, staff lawyers will look over probate documents, pointing out errors in your papers and advising you on how to fix them.
  • Send notice of the probate proceeding to the beneficiaries named in the will and to close relatives as a surviving spouse and children who would have been entitled to property had there been no valid will.

Locate and secure all assets and manage them during the probate process. This commonly takes about a year and could involve deciding whether to sell property or securities owned by the deceased, depending on the contents of the will as well as the financial condition of the estate.

Close out day-to-day finances:

Establish an estate bank account to hold any money owed, such as paychecks and stock dividends.

Pay any debts that are legally required to pay.

  • Notify creditors of the probate proceeding
  • Creditors then have a certain amount of time to file a claim for payment of any bills or other obligations you haven’t voluntarily paid
  • As executor, it’s your job to decide whether a claim is valid

Supervise the distribution of property to those named in the Will. This includes any cash, personal belongings, and real estate.

An executor will then ask the probate court to formally close the estate when debts and taxes have been paid and all property distributed to beneficiaries. It is advised that you have support from an estate attorney, accountant, investment adviser, insurance agent, and others to file the necessary paperwork.

Some items to note:

  • Continue to pay mortgage payments, utility bills, homeowners insurance premiums, and income taxes for the year the person died.
  • You may even need to file an income tax return for the full year.

While possibly a bit overwhelming at times, you’ll find that being an executor is a labor of love and is about honoring the deceased and serving the heirs.

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Will Contest: Undue Influence and What You Need to Know

Will Contest: Undue Influence and What You Need to Know

I’ve seen it time and time again, someone dies and divides up their assets among family and beneficiaries in a way they believe is fair, only to ultimately have one of the beneficiaries contest their inheritance. Some of these reasons include fraud, suspected forgery, lack of capacity, or even undue influence.

What is Undue Influence?

Undue influence is defined as “excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.”

More simply put, it’s when someone uses manipulative actions or tactics to convince the victim to change financial documents in their favor. Unfortunately, the mentally disabled and elderly are at risk for this type of manipulation.

Oftentimes, this occurs when a family member, caregiver, or close friend unduly influences an elderly person during a time of mental or physical distress to change their estate plans. This is usually not discovered until after their passing and beneficiaries are surprised to find they have inherited less than anticipated or written out of the will completely.

Who can Claim Undue Influence?

Only an “interested party” may bring a claim of undue influence. An interested party is someone who suffers some kind of financial damage from this exertion of undue influence.

For example, there could be a case where a child influences their elderly mother to leave a piece of property to them. Whereas previously it would have been split between all of her children. In this example, only the children left out of this specific inheritance would be considered “interested parties.”

While other family members may be aware of the undue influence and be angered by it, only the damaged parties may file a claim.

How to prove undue influence

The burden of proof in an undue influence case lies with the challenger. It is their responsibility to prove that the will or trust is invalid by supplying proper evidence.

There may not be one single piece of evidence that proves manipulation or influence, but several small pieces that align together.

This evidence may include

  • Witness or expert testimonies from family members, caregivers, or healthcare providers.
  • Physical evidence such as documents, written or recorded conversations, and previous statements of intent.
Representation for Undue Influence

While knowing the signs of undue influence is the first step to identifying if you have a case, it’s important that you seek the help of a qualified attorney as soon as possible. There is a statute of limitations for when claims can be made and gathering proper evidence before it’s lost or destroyed is essential.

I have years of experience in defending and representing claimants in will contest undue influence cases. Schedule a consultation today to begin discussing your case.

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What happens to your digital assets after you die?

What happens to your digital assets after you die?

In this time of technology, privacy is more important than ever before, and protecting important digital documents and assets is imperative.

Digital assets include:

  • All digital communications (emails, social media, LinkedIn, etc)
  • Online Rewards Programs (Capital One shopping, Rakuten, Airlines, etc)
  • Financial Accounts (banks, investment advisors, lenders, insurance, etc)
  • Digital Assets (cloud-based documents, passwords, music files, photographs and videos, etc.)
  • Business Accounts (your personal info stored in external client databases)
  • Digital Copyrights or Trademarks (intellectual ownership of content that you created)
  • Cryptocurrencies

To make things more confusing, the rights to access these assets are scattered in a seemingly endless web of user agreements and federal and state laws that protect both a fiduciary’s right to access and the decedent’s privacy.

If you’ve ever created a digital asset, you’re probably familiar with a lengthy legal document called the “terms of service”. There’s usually a checkbox to acknowledge that you have read and understood it. Let’s be honest, most people scroll to the bottom of these agreements without as much as a glance at the text.

However, usually somewhere within that text, there is a clause that prohibits third-party access to digital assets after we die or are incapacitated. This could create a problem when your heirs try to account for all your belongings.

These laws were drafted to protect privacy and to combat hacking. Even if your trustee has your username and password, they may not have the legal authority to access your account.

Here are some steps you can take to dispose of your digital assets.

  1. Create an inventory of your digital assets including what accounts you currently hold and how you want them to be managed. It’s important to be as specific as possible when outlining how you want your digital assets to be handled. Remember to provide legal protection for your loved ones, since state and federal laws make accessing private data without permission a crime.
  2. Decide what you want your estate’s executor or loved ones to do with your digital assets after you pass away, like what will happen to any credit card rewards you’ve accumulated or whether an online business you own will continue to operate.
  3. State law may specify what can or can’t be included in your digital estate plan, the format your digital estate plan must take and how a digital estate plan must be witnessed or recorded, so it’s important to determine the law pertaining to your digital assets in your particular state. This is where your estate planning lawyer can help.
  4. Find out what planning options, including instructions within a will, trust or power of attorney that allow a trustee to access or destroy certain digital assets. Be sure to name a digital executor, and spell out what they may or may not manage as part of your online estate plan.

This is a complex topic and the information above is merely scratching the surface, which is why it’s crucial to consult an estate planning attorney about your particular situation.

Attorney Charles Bendig has over 40 years of experience and can guide you in the right direction to ensure your digital assets are fully protected. Get a free video consult today.

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