Articles Posted in Estate Planning

While the coronavirus pandemic has left many people uncertain about what the future holds, now might be an excellent time to take advantage of a historically low tax environment.  Although it is unclear how long rates created by the Tax Cuts and Jobs Act of 2017 will remain low, remember that many provisions of this Act will automatically expire in 2026 provided Congress does not act to prolong them. With the matter of how these regulations will be handled uncertain, whoever wins the US election in several weeks will likely play a role in influencing the outcome of these regulations.

Due to uncertainty about how long the Tax Cuts and Jobs Act will remain in place, many people are taking advantage of both the high lifetime gift as well as estate tax exemptions to pass on assets to loved ones. Although there are many ways that high exemptions can be utilized, one of the best ways to make the most of these exemptions is through the use of a Spousal Lifetime Access Trust.

The Role of Spousal Lifetime Access Trusts

Special needs trusts perform the valuable role of keeping a person eligible for government benefits like Medicaid and Supplemental Security Income (SSI) while also paying for services in addition to what the government can offer. If you make the decision to establish a special needs trust for a loved one, many assets will likely be placed in the trust only after you pass away. To transfer these assets, there are several commonly used methods including living trusts, will, and other types of beneficiary designations. This article reviews several of the estate planning tools most commonly used to transfer property to a special needs trust.

# 1 – Beneficiary 

Many different types of financial accounts including retirement plans like 401(ks) and IRAs, life insurance, and securities allow a person to assign a beneficiary of the assets. This beneficiary then receives the funds following the owner’s death. By assigning a special needs trust as a beneficiary, it is possible to pass on an asset without subjecting it to probate. Remember, you must list the special needs trust rather than your special needs loved one as the beneficiary. If you list your loved one as a beneficiary, this could end up jeopardizing their receipt of Medicaid or SSI.

In the most comprehensive study of its kind, scientists at Harvard and the University of Wisconsin determined that within the three month periods after a spouse dies, the odds that the other will pass away during this period is between 30 to 90 percent. 

As a result, each year, many couples find themselves in a similar situation. While the spouses recognize the advantage of creating an estate plan, they fail to do so. Other times, spouses create an estate plan but fail to adequately update it as time passes. To better prepare spouses for how to handle an estate plan in such a situation, this article reviews some critical issues on how to approach estate planning as a surviving spouse.

# 1 – Recognize Common Challenges

While it would be nice if it were, estate planning is not a once and done process. Instead, it is important to routinely review the terms of your estate plan to make sure that it is capable of achieving your goals. Reviewing estate planning documents is particularly important nowadays, during a time of low-interest rates and high exemptions which are likely to change in the not-so-distant future. 

Fortunately, it is possible to create estate planning strategies that allow assets to be transferred in a way that makes the most of these terms. If you are interested in making the most of your estate plan and positioning your loved ones in the best possible manner after you pass away, you should continue reading because this article reviews some important strategies that will likely have a significant influence on your estate.

# 1 – Exemptions Are At An All-Time High

Estate planning is vital if you want to leave a lasting legacy to your loved ones. Despite its importance, a survey by Caring.com, however, revealed that the number of adults in the United States than ever before are engaging in estate planning. The study found a 25% decrease in the number of individuals that have wills or similar documents since 2017. Remember, estate plans are not made for the creator, but instead are created for the benefit of your loved ones and among other advantages can avoid placing your family members and friends in the difficult position of making healthcare decisions for you in case you end up incapacitated. In the hopes of getting you started on writing an estate plan today, this article reviews 5 fast facts to remember about estate planning.

# 1 – Estate Planning Is for Everyone

Estate planning exists to protect both the creator as well as loved ones in case of incapacity or death. Despite what some people think, estate planning is not only for the wealthy. If you own any type of assets or are interested in having a say in the type of healthcare that you receive if you become incapacitated, estate planning is worth utilizing. While estate planning can be utilized to make decisions about the healthcare you receive and who will receive your assets, many people overlook estate planning because it can be difficult to face your mortality, particularly during a global pandemic.

While some people are still debating the outcome of the 2020 election, it is extremely likely that Joseph R Biden Jr. 

will be the next President of the United States. As President, Biden and his administration will likely attempt to pass new regulations that remove some estate planning opportunities to raise revenue to pay for costs associated with things like increasing assistance during the pandemic. While it is only possible to speculate at the moment, this article discusses some of the most likely changes during the administration that individuals should consider while estate planning.

# 1 – Exemption Amounts Will Be Reduced

In December 2019, the United States Treasury recently released guidelines in Subchapter Z of the Internal Revenue Code. the regulations play the vital role of clarifying earlier 2018 and 2019 regulations about financial opportunity zones. This article briefly reviews some of the most important lessons to be learned from this announcement. 

The Role of Opportunity Zone Investment

The Tax Cuts and Jobs Act of 2017 created many estate planning changes including the introduction of opportunity zone provisions. These provisions allow people to defer capital gains tax by reinvesting the amount in a qualified opportunity fund (QOF). A QOF is a low-income tract  A WOF is an entity created to invest in opportunity zone property and must hold at least 90% of its assets in qualified opportunity zone property (QOZ). QOZ property must satisfy four elements:

At first glance, inheriting real estate might seem like an entirely good thing. In reality, when taxation and other estate planning issues are considered, this inheritance also presents several burdens. 

While New York does not have an inheritance tax, other states do and it is critical to consider this as well as other issues when deciding what to do with the other property. In short, your options include moving, selling, or renting a property. What works best for you, however, depends on your situation. As a result, this article reviews some factors you should consider when deciding how to respond. 

Factor # 1 – Mortgage

Children and Estate Plans: Equality Is Not Required

If you do not have an estate, at least one person you know has probably recommended that you create one as soon as possible. Among the various questions that the creation of an estate plan presents is how exactly to divide assets. While you likely want to help your loved ones have an easier time in case something happens to you, it can be challenging to determine how to achieve these goals.

 While you might have considered passing assets to the children that need it most, you might have quickly dismissed this thought because passing on your assets in an unequal amount might seem unfair. In reality, passing on your assets to your children in equal amounts is not necessary. This article reviews some of the most common situations where unequal distributions might be the best choice to make.