albany estate planning

Perhaps your prodigal child wants to start a law firm or a medical practice and needs start up funding. You have some money set aside for your children’s and grandchildren’s inheritance but agree to loan them the money out of this fund. It’s not uncommon for these monies to be secured by a promissory note, even though many parents would not strictly enforce its terms. If the promissory note is not paid off by the time the parents pass away, it becomes an asset of the estate that must be accounted for. If it is a significant amount of money, the IRS or state tax authority will impute interest. If the parent decides to forgive the loan, that is usually considered taxable income to the child.

LOAN DOCUMENTS AND ESTATE DOCUMENTS CONTROL

The parent controls these issues and to the extent that it can be controlled during his or her life, they should be. Loans should be in writing, with the repayment schedule outlined. Most loans obtained on the open market have extensive outlines of the remedies that the creditor reserves. These are not necessary unless the parent actually intends to exercise these remedies. If no remedies are outlined in the document, the parent always has the right to document his or her intentions on how the estate should treat these loans.

Ensuring that your family knows what happens to your property and assets after your death is always a challenge. A Will can help make the decision less challenging and provide solid guidance to your family at a difficult time. A Will is a legal document, which decides who receives your real and personal property at your death. A Will can also be used to select an estate executor. The executor is the person, or people, you choose to oversee and manage the distribution of assets from your estate. Many people choose to have a will so that they are able to adequately provide for their children and spouse after their death.

If you do not have a Will, your estate will be distributed according to the intestacy laws of your state. Intestacy laws reflect lawmaker’s attempt to figure out how you would like to distribute property and assets among your children and surviving spouse. These laws are complex in most states and become even more complex for non-traditional and blended families – the law can make a wrong decision for your family.

Blended Family

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CAN AN HEIR BORROW AGAINST INHERITANCE?

Back to the Basics – Wills and the Blended Family