Financial Planning for blended families

Financial Planning for blended families

When it comes to blended families, inheritance can get dicey. Tensions run high. With proper planning, you may be able to avoid conflicts. Let’s go over some basic tips:

1. What are your estate planning goals?

With blended families that include stepchildren, things can quickly get complicated. Especially if your spouse isn’t the parent of your children. You’ll probably want to leave any assets to your children and your spouse, but your children may not be old enough to inherit yet.

If you’re incapacitated and unable to make these decisions, your spouse and any adult children may fight over the right to make decisions for you. However, with an estate plan in place, you can not only choose a party to give power of attorney to but also determine whether their biological parent or your current spouse takes custody of them.

2. Review, review, then review again.

Changes happen throughout life. Some of these changes can seriously change your initial goal. For example, when you married, maybe your only concern was your biological children’s safety, but now you have stepchildren who you care for as your own. In that case, it’s time to go back and change your estate plan.

3. Communication is key.

Make sure your children and stepchildren are informed and that the process of inheriting is transparent. Also, discuss it with your spouse and try to be open to their input, but don’t just bend to whatever your partner wants. This is YOUR estate plan.

4. Be Cautious.

Estate planning for blended families has its own unique problems. For example, if the wealthier partner has children of their own, there could be conflicts over an inheritance. If that sounds like your situation, you need to be cautious in your second-family estate planning.

If you’re not remarried yet, get a prenuptial agreement. Discuss inheritance with your partner and get a guarantee from your spouse that he or she won’t contest your plan. If you and your partner are not married nor do you plan to be married, there is also such a thing as a domestic partnership agreement that serves the same purpose.

If you have any gift for your children or beneficiaries, give it to them while you’re still alive. This allows you to have direct control over your funds, not leaving anything to the whim of your executor or trustee. If they’re large gifts, take into consideration that you’ll probably run into the federal gift tax. Also, keep in mind, if you give $15,000 or less to any one person in a year, you don’t have to report it to the federal government.
You should also be thinking about any heirlooms or personal property. You may love and care for your stepchildren as your own, but want family items that have been passed through the generations to go to a blood relative.

You want to be fair to everyone while still being true to what you really want. Give assets according to your values and what you feel is best. Listen to any advice your family may give, but not if it goes against what you sincerely believe is right. These will not be easy decisions, and it’s crucial that you consult with everyone involved, including your attorney and tax adviser.

Contact Estate Planning Attorney Chuck Bendig today.

 

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Wills vs. Trusts: Which is the right choice?

Wills vs. Trusts: Which is the right choice?

Most people don’t like to discuss their own demise. Frankly, it’s not the most enjoyable thing to think about. However, drawing up a will or trust allows you to designate exactly where and how you want your assets to be distributed if you pass away. It’s a common misconception that using a trust can save you on estate taxes. In reality, there are other major differences between wills and trusts that could save you time, money, and headaches in other ways. Let’s discuss the advantages and disadvantages of each.

Wills

Advantages: Wills are usually cheaper and easier to create. If you have a smaller estate, the costs of creating a trust could exceed the savings of avoiding probate. Plus, you don’t have to worry about some of the formalities that come with holding your assets in a trust, like retitling any of your assets. Lastly, using a will requires court supervision of your estate, which is helpful if you’re skeptical that your assets would be distributed according to your wishes.

Disadvantages: Wills must be probated. That means a court must supervise the distribution of the assets, making the process more costly as well as time-consuming. In addition, the court documents are public records, so anyone can go to the courthouse to see how your estate was distributed. Also, your will doesn’t take effect until you’re deceased, meaning you can’t use a will to name someone to take care of you if you’re incapacitated. Other documents are needed to do that.

Trusts

Advantages: A living trust allows you to pass your property to your heirs without going through probate, which usually allows for faster distribution than wills. If you have multiple properties in multiple states, a trust can pass the assets without the need for additional proceedings. With a will, you might need to go through subsidiary probate proceedings in the other states as well. Lastly, trust documents are effective immediately, allowing you to include things like end-of-life directives or assign a guardian in the event that you’re incapacitated.

Disadvantages: Generally, trusts have higher preparation costs than wills and they require you to retitle your assets in the name of the trust, taking up time and money. If you don’t retitle your assets, they won’t pass through the trust and instead will go through probate. Also, trusts don’t offer any kind of special asset protection, meaning your creditors can still get assets in your revocable trust.

Estate planning can be murky waters to navigate without the help of an Attorney. When making decisions this important, you need a trusted estate planning attorney to ensure your documents are correct and cover every possible area of your plan. Call Chuck Bendig.

 

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Inheritance: Is challenging a Will worth it?

Inheritance: Is challenging a Will worth it?

After the loss of a loved one, emotions can run high, sometimes bringing resentments to the surface. It’s common to have heirs challenge the deceased final wishes if there was an expectation of inheritance that didn’t exactly pan out. However, they need to do so on the basis of one of four legal grounds:

Undue influence: Although difficult to prove, if the deceased was pressured by someone to change their will, the would-be heirs could have a case.

Fraud: If the will’s author was somehow tricked into signing, the will is invalid. For example, maybe they were told that it was a deed or other legal document but they were unable to read it themselves.

Improper execution: Wills are complex. That is why so many people choose to have a lawyer help them with the specifics. However, if the will was not prepared properly under the state laws, it could be deemed invalid.

Lack of capacity: If the deceased was not mentally capable of thinking out the many issues that are involved in preparing a will, for example, if they had dementia, the will could be thrown out at court.

Is it worth it?

If you’re wondering if it will be worth the effort to contest, look at the amount of money that is involved. If your interests are more about proving wrongdoing and not increasing your bank account, you may decide it’s not worth the pursuit. It costs tens of thousands of dollars to challenge a will in court. Ask yourself if the payoff is worth it to you. If there is a suspicion of elder abuse, however, contesters might be able to pursue criminal charges against any alleged offenders. That may make more sense than bringing a costly case to court.

Also, consider the potential cost to personal relationships. If you’re feeling slighted in some way by a late relative or missing out on a potentially large inheritance, it can be painful. Contesting the will may very likely affect any relationship you have with the adversary, and you should be warned that successful will contests are few. Most end up being settled out of court.

Can I contest a trust?

Has a trust omitted you in favor of a sibling? Similar to wills, these can be deemed invalid for similar reasons as a will, and this result can be difficult to achieve as well. Courts consider accounts of convenience, as well. For example, let’s say you know that the deceased didn’t intend to keep a joint owner on a bank account. Maybe they only added that person as a matter of convenience in order to assist them with bill paying. Courts can order the asset to be turned over to the estate, depending on the intent of the person who added the name at the time it was created.

If you feel there’s a reason to challenge a will or trust, consult Estate Attorney Charles Bendig. The consultation is without obligations and completely confidential.

 

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Financial Planning for blended families

Financial Planning for blended families

When it comes to blended families, inheritance can get dicey. Tensions run high. With proper planning, you may be able to avoid conflicts. Let’s go over some basic tips: 1. What are your estate planning goals? With blended families that include stepchildren, things...

Wills vs. Trusts: Which is the right choice?

Wills vs. Trusts: Which is the right choice?

Most people don’t like to discuss their own demise. Frankly, it's not the most enjoyable thing to think about. However, drawing up a will or trust allows you to designate exactly where and how you want your assets to be distributed if you pass away. It's a common...

Inheritance: Is challenging a Will worth it?

Inheritance: Is challenging a Will worth it?

After the loss of a loved one, emotions can run high, sometimes bringing resentments to the surface. It’s common to have heirs challenge the deceased final wishes if there was an expectation of inheritance that didn’t exactly pan out. However, they need to do so on...

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.

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.