Klitzman Law Group, PLLC

Estate Planning With no Estate Tax

The federal estate tax might soon be a thing of the past. That does not mean that you will no longer need a will.

On January 20, 2017, the Republican Party will control the Presidency, the Senate and the House of Representatives. Many people are hopeful that the party will quickly act on its long-stated goal of eliminating the federal estate tax.

If it does so, do not be tempted to think that you no longer need an estate plan. There are reasons to get one that have nothing to do with avoiding the estate tax.

At the very least, you still want to have a will as Forbes discusses in "Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!"

The reasons include:

• In a will, you appoint an executor who is in charge of administering your affairs. The executor can make sure that all of your debts are paid and that your assets are handled appropriately.
• If you have minor children, a will is used to designate who you want to have guardianship of those children in case something happens to you.
• In a will, you can give specific bequests to people. That means if you want one of your children to have a specific piece of personal property for sentimental reasons, a will is the place that you do that.
• While getting a will you can also get advanced medical directives that will determine how you should be cared for, if you are incapacitated and not able to communicate with doctors at the time.
• A will is more efficient than allowing the courts to handle your affairs without your directions. It also protects your estate by making sure that your property does not go to people you do not want to have it.

Reference: Forbes (Dec. 8, 2016) "Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!"

Suggested Key Words: Estate Planning, Will, Estate Tax

What Estate Planning Is

Do not be confused about what estate planning is and whether or not you need to do it.

Most Americans do not have estate plans. One of the reasons that they don’t is confusion about what getting an estate plan means and who should have them. The term "estate" often conjures up images of the palatial estates of the ultra-wealthy. However, the term applies to the property of anyone who passes away.

We will all have estates someday. For that reason, it is important to know what estate planning actually does.

Recently, the Vail Daily discussed some basics in "Estate Planning."

If an estate is the property you have when you pass away, then estate planning is deciding what should happen to that property. It is you deciding beforehand who you want to have your property and the legal means by which they will receive it.

The two most common methods to have your property distributed are wills and trusts.

A will is a legal document that is submitted to a court. The will sets out who should receive what. If the will is valid, the court will oversee the process of making sure that the property goes where you want it to.

A trust creates a new legal entity to hold and distribute property. It is not normally submitted to a court, unless it is a “testamentary” trust created under a will to manage the estate distribution.  Another person known as a trustee, is charged with making sure that your directions are followed.

There are other aspects of estate planning you should address, including planning for your own end-of-life care. Visit an estate planning attorney if you have questions about wills, trusts, or any other aspects of estate planning.

Reference: Vail Daily (Dec. 8, 2016) "Estate Planning."

Suggested Key Words: Estate Planning, Wills, Trusts

When to Change Beneficiary Designations

Who you name as the beneficiaries of your retirement accounts and your life insurance policies, is an important part of modern estate planning. Knowing when to change them is vital.

Estate planning today is not just about going to an estate attorney to have a will or a trust drawn up. It also includes making plans for your own end-of-life care and deciding who should get your retirement accounts and life insurance policies, if something happens to you.

The beneficiaries of your accounts will get the assets by operation of law. If you have done everything correctly, then you have factored those accounts into your overall estate plan with the assistance of your estate planning attorney. Sometimes you need to review and change those designations.

Recently, the Aiken Standard listed some appropriate times to do that in "On the Money: Don't disinherit your loved ones," including:

• If you get divorced or remarried, then review your accounts to make sure you are not leaving things to an ex-spouse or that your new spouse is included.
• If you get a new employer and roll over your old account, then make sure that the new account accurately reflects your wishes.
• If the primary beneficiary on your accounts passes away, then you obviously need to make changes.
• If the financial institutions you have the accounts with change ownership, review your beneficiary designations to make sure the new company has everything recorded properly.
• If you have a new child or grandchild, consult your estate attorney about including them and whether they should be named as beneficiaries.
• If a beneficiary becomes disabled, you should talk to an attorney about creating a special needs trust. Keeping them as a beneficiary could make them ineligible for some needed government benefits.

Reference: Aiken Standard (Dec. 10, 2016) "On the Money: Don't disinherit your loved ones."

Suggested Key Words: Estate Planning, Beneficiary Designations

 

Estate Planning Is Not as Hard as You Think

Many people put off estate planning because they mistakenly believe that it will be too difficult and time-consuming.

Younger people delay getting estate plans for all sorts of reasons. Some think that they are too young for it. Some think that they do not have enough assets to bother with it.  Others think that it will be too difficult or take too long.

A columnist for The Gleaner put it off because she and her husband could not agree about who would care for their children. She wrote about their experience in "HARDY: No reason to delay estate planning."

The article is instructive and enlightening. The writer details how once she and her husband did come to an agreement about their children, the process of getting an estate plan was not as difficult as they thought.

This might be because they took the critical step of going to an estate planning attorney instead of trying to do things for themselves.

The attorney provided the couple with a questionnaire that allowed them to think about things that they had not even considered and make their own decisions about those things. If the couple had tried to create their own estate plans, they likely would have been incomplete because of the things they did not know.

The important lesson to learn from the column is that there really is no reason to delay getting an estate plan. If you go to an estate attorney, the process will be simple and you will get a complete plan.

Reference: The Gleaner (Dec. 10, 2016) "HARDY: No reason to delay estate planning."

Suggested Key Words: Estate Planning

 

Elder Man Dies after Humiliation by Store

An odd case out of Florida has emerged where a woman claims that a Walgreens store employee forced her husband to clean its bathroom which subsequently led to his death from emotional distress.

According to a lawsuit filed by Florida widow Maria Elizarraras, her elderly husband died under suspicious circumstances. She alleges that her husband used the bathroom in an Orlando Walgreens store that he often frequented. On his way out of the store, he was allegedly stopped by store employees and ordered to clean the bathroom because he had left a mess.

The widow claims that her 69-year-old husband was forcibly detained, forced to clean and mop the bathroom for 20 minutes and was made fun of by store employees. The lawsuit alleges that the humiliation led to emotional distress that caused the man's death.

WFTV9 reported this story in "Man dies of emotional distress after being forced to clean Walgreens bathroom widow says."

There are several problems with this lawsuit.

Specifically it is not clear how exactly the incident caused the man's death.  In addition, the suit does not state how long after the incident the man passed away. Setting aside those legal hurdles, if the incident is true, it is a shocking case of elder abuse.

To force an elderly man to clean a store's bathroom while mocking him is abuse. It is difficult to imagine he could have left a mess that required 20 minutes to clean, but even if it was a large mess, a pharmacy should be more aware about problems the elderly might face and be more understanding.

This specific incident might provoke snickers in some people, but it is a good reminder of how the elderly can be abused and that the abuse can lead to problems.

Reference: WFTV9 (Dec. 8, 2016) "Man dies of emotional distress after being forced to clean Walgreens bathroom widow says."

Suggested Key Words: Elder Law, Elder Abuse

 

The Future of Charitable Giving

What policies President-elect Trump chooses to pursue and whether they prove to be successful or not, could have a dramatic impact on charitable giving.

Whether it is to set up a lasting charitable legacy or to avoid paying the estate tax, creating plans for charitable giving has always been an important part of estate planning. After the unexpected results of the Presidential election, it is not clear exactly how estate planners will deal with their clients' charitable wishes. It is actually not clear which policies President-elect Trump will pursue after his inauguration that will have an impact on charitable giving.

Bloomberg looked at some of the possibilities in "Where Charitable Giving May Head With Trump."

Trump has stated that he will increase GDP growth by 4% per year, which would likely lead to more charitable giving. However, many economists doubt he will be able to fulfill that promise due to economic and demographic circumstances which are beyond his control.

The President-elect campaigned on cutting taxes, especially on the wealthy.  This would also likely increase giving to charity. However, his nominee for Treasury Secretary has cast some doubt on those tax cuts, by recently stating that any cuts on the wealthy will be offset by reducing deductions.

It is also thought that Trump would like to eliminate the estate tax.  This could reduce some charitable giving, at least when the impetus for the giving is to shrink the value of the estate.

Some of this uncertainty should be cleared up soon, when the President-elect begins submitting budget proposals to lawmakers. They should give an indication of what policies he will pursue.

Reference: Bloomberg (Nov. 27, 2016) "Where Charitable Giving May Head With Trump."

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Why Homemade Wills Do Not Work

Drafting your own will or using a form that you purchased online to create a will, might seem like a good idea that will save you money. However, those wills often fail to do much more than create large legal bills in probate.

Wills often sound like simple legal documents. In a sense, they are. They are just a legal way to write down who gets your possessions after you pass away.

When it comes to estate planning generally, wills are among the simplest ways to express your parting wishes. However, the truth is that wills are only simple from an estate planning attorney's perspective. They are not so simple that anyone can just write their own wills or purchase a form online to fill in and use as a will.

Those homemade wills do not always work very well for a variety of reasons, as the Huntsville Item explains in "A humorous look at the danger of homemade wills."

Some homemade wills do not work for very simple reasons of formalities. In most states, executing a will requires that a specific number of people be present to witness the will being signed.

People who create their own wills often fail to either have the right number of people present or they do not leave any indication of how a court can contact the witnesses, if necessary.

Other homemade wills do not work for less technical reasons. The directions in these wills are often contradictory or impossible to carry out.

Getting a will does not have to be a complicated process but it should begin with hiring an estate planning attorney.

Reference: Huntsville Item (Nov. 27, 2016) "A humorous look at the danger of homemade wills."

Suggested Key Words: Estate Planning, Wills

It Is Time to Review Your Estate Plan

You should review your estate plan anytime something significant changes that could have an impact on your plans. That means that you should be reviewing it now.

Some things do get better with age. However, unlike fine wine and good cheese, estate plans do not improve after aging.

An estate plan can be viewed as a snapshot of a person's financial and life situation at the moment the plan is made. When something changes in a person's financial or life situation the snapshot is no longer an accurate representation. If the change was significant enough, then the estate plan itself could be ineffective.

For this reason, estate planning attorneys suggest that their clients review their estate plans every few years to make sure the plans are still good. Another reason to review estate plans is when there have been legal changes that could affect the plans.

Recent Treasury Department regulatory changes make it likely that your plan needs review as Wealth Management points out in "Remind Clients Importance of Updating Estate Plans."

Take some time to review your estate plan.

Make sure that it still does everything that you want it to do. Ask yourself if there have been any changes to your life and finances that are not reflected in your plan. Then, call your estate planning attorney and ask about any legal changes that have been enacted since you made your estate plan.

Once you are done with that and have an idea what needs to be changed in your estate plan, go to and have the changes made by your attorney.

Reference: Wealth Management (Nov. 21, 2016) "Remind Clients Importance of Updating Estate Plans."

Suggested Key Words: Estate Planning

 

Elder Abuse Costs Rising

A new study suggests that the total costs from elder abuse in the U.S. continue to rise at an alarming rate.

Elder abuse is a serious problem in the U.S. This has been known for a long time. As more people live longer while suffering from some form of cognitive impairment due to age or disease, fraudsters have more and more incentive to target the elderly.

What is not often known by the general public is how frequent financial abuse of the elderly is and how costly it can be.

Recently, the Wills, Trusts & Estates Prof Blog discussed the results of a recent survey that helps to answer those questions in "Elder Financial Abuse Is Costing Americans."

The numbers are alarming: 37% of elderly caregivers report that the person under their care has been the victim of financial abuse. The average cost of the abuse to the elderly victim is $36,000. That is up 20% from two years ago when the average cost per victim was reported at $30,000.

Given the large number of elderly people in the U.S., these numbers show that a significant amount of wealth is being taken from the elderly in abuse incidents.

If you suspect that an elderly person you know is the victim of elder abuse, it is vital that you contact an elder law attorney and alert authorities. While it is often difficult to recover the lost funds, it can be done if the proper people are informed in time.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 16, 2016) "Elder Financial Abuse Is Costing Americans."

Suggested Key Words: Elder Law, Elder Abuse

 

Prince Record Label Sues Jay Z

As expected the dispute between Prince's estate and Jay Z has resulted in a lawsuit.

How Prince's estate will manage to pay its hefty estate tax bill has been a source of much speculation. It was assumed that one way to do so would be to sell the rights to Prince's unreleased recordings. Rapper Jay Z had offered a reported $40 million for those rights. However, the estate turned that offer down and it has come up with a possibly different answer.

It can raise money by suing Jay Z, as it hinted it might do in a statement made after rejecting Jay Z's offer.

Through Prince's record label a lawsuit has been filed against Jay Z's company Roc Nation, according to TMZ in "Prince to Jay Z No Free Rides in My Little Red Corvette ... Record Label Sues."

The lawsuit alleges that prior to his death, Prince had negotiated a deal with Jay Z to allow Jay Z to stream Prince's last album on the Tidal service, which Jay Z owns through Roc Nation. However, instead of just streaming that album, Jay Z assumed that he had permission to stream all of Prince's music and in June of this year began streaming all of Prince's best-known songs.

The lawsuit does not state the amount of damages that the record label is seeking, but it is likely to be extremely high given the popularity of Prince's music.

This is a case that both copyright attorneys and estate planning attorneys will keep a close eye on. The latter will be interested to learn if it sheds some light on how Prince's estate plans to pay estate taxes.

Reference: TMZ (Nov. 15, 2016) "Prince to Jay Z No Free Rides in My Little Red Corvette ... Record Label Sues."

Suggested Key Words: Estate Litigation, Estate Tax