Klitzman Law Group, PLLC

Planning for Family Businesses

It is more difficult for shareholders to get value out of privately-held family businesses than it is for public companies. It is important to understand that and to make plans around it.

If you leave your heirs shares in publicly traded companies, it is easy for them to turn those shares into cash anytime they wish. Shares in most public companies can be sold quickly and easily.

If you leave your family shares in a private or family business, it is much more difficult to turn those shares into cash. There are often restrictions on who can own the shares. There is not an easily and quickly accessible market to sell the shares.

 It means that money can more easily be lost, when you leave your heirs stock in a private company as the Wills, Trusts & Estates Prof Blog discusses in "The Family-Shareholder Wealth Roadmap."

One of the biggest mistakes that family businesses make, is not adequately considering the time value of money when it comes to making cash distributions to shareholders.

Companies often wait too long to make the distributions and thus the shareholders lose value. Another common mistake is using equity to finance operations, when debt financing would be better under the circumstances.

These problems can be overcome with the right assistance.

Family businesses should have financial advisers and accountants to help them. They should also seek estate planning attorneys to get help with how to pass the business on to heirs in a way that does not destroy the business.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 24, 2017) "The Family-Shareholder Wealth Roadmap."

Suggested Key Words: Estate Planning Attorney

 

Wealth Planners

Wealthy people have so many different advisors for different aspects of their lives, that it is often a good idea to hire someone who can coordinate all of them and keep them on the same page.

If you have a lot of money, it is likely that you pay a lot of people to manage various aspects of your wealth.

You have financial advisors. You have business consultants. You have accountants. You have estate planning attorneys. You have business attorneys. You have a lot more than that.

It can be difficult to keep all of your advisors coordinated and all working toward the same goals.

The advice you get from the different advisors can be contradictory.

While it is good to get a variety of opinions, it might be a good idea to hire someone to help you manage it all, as Forbes discusses in "Estate Planning For the Ultra Wealthy - The Role of A Family Wealth Advisor."

The idea is fairly simple.

Estate planning attorneys who have the expertise to plan how wealth can be transferred down within families for generations can also act as wealth planners. They coordinate the activities of all of the other advisors and make sure the wealthy client's ultimate estate planning goals are always kept in mind.

Estate planning attorneys can make sure that the other advisors are all working toward the one ultimate goal.

Not everyone needs a wealth planner.

Those that do would be well advised to talk to their estate planning attorneys about the benefits of having one.

Reference: Forbes (Aug. 29, 2017) "Estate Planning For the Ultra Wealthy - The Role of A Family Wealth Advisor."

Suggested Key Words: Estate Planning

Using a Trust for Educational Funding

Educational costs have risen so high, that accumulating the money to pay for a child or grandchild to attend college can take years. There are a few different ways to do it.

You might have heard the nightmare stories about people with college degrees who end up owing more than a hundred thousand dollars to the government in student loans. That is becoming such a common scenario, that the majority of Americans now support the idea that public colleges should be tuition free.

However, tuition free college is probably not a realistic scenario in the near future.

Families who do not want their younger generations to have to pay back gigantic student loan debts are making plans to have parents and grandparents pay for school.

There are a couple of different options as the Wills, Trusts & Estates Prof Blog discussed in "Funding Education? Consider A Trust Instead of a 529 Plan."

A 529 plan is a great way for families to save for education.

It allows for tax-free investments for educational expenses. However, the investment opportunities can be somewhat limited and people can only sign up for plans that are made available from state governments.

People with more money would be better off using trusts for educational expenses.

With trusts there are more investment options and if the money is not needed for educational expenses, then it can more easily be used for other things.

If you would like to make paying for the education of future generations of your family part of your estate, then talk to an estate planning attorney about the best way to do that.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 16, 2017) "Funding Education? Consider A Trust Instead of a 529 Plan."

Suggested Key Words: Estate Planning

 

Duke's Will to Be Unsealed

The Duke of Windsor's will has been sealed since his death in 1972. The will of the man once known as King Edward VIII has been ordered unsealed, so copyrights can be determined for a television show.

It is considered one of the biggest acts of romantic love in modern history. King Edward VIII of England abdicated the throne in 1936, so he could marry a divorced American woman named Wallis Simpson.

His title changed from the king to the Duke of Windsor. He passed away in 1972.

The contents of his will were quickly sealed by the court and have never been made public, despite great public and historical interest in them. People are curious whether the will might shed any light on the man's decision to abdicate.

A court in the U.K. has now ruled that the will is to be unsealed as the Daily Mail reports in "Duke of Windsor's will to be unsealed at last… but only so The Crown's writers can get their facts straight."

The Duke's will is only to be unsealed for a limited purpose.

The writers of the Netflix show The Crown would like to use the duke's letters in their show. However, they first need to know who owns the copyrights to those letters, so they can get the necessary permissions to use them.

It is not likely the will's other details will be made public.

For a former king's will to be sealed, is probably a simple matter.

For other people, it is much more difficult since wills are generally a matter of public knowledge.

People who would like to keep their estates private, should see an estate planning attorney for more information about how to do that.

Reference: Daily Mail (Nov. 15, 2017) "Duke of Windsor's will to be unsealed at last… but only so The Crown's writers can get their facts straight."

Suggested Key Words: Estate Planning, Will

Do Not Neglect Estate Planning

If you do not have a will, it might be assumed that your assets will go to your spouse or children. But you might very well be wrong.

For centuries the only people who bothered to make detailed estate plans were the wealthy. Most people had very few assets and did not have a great need to make detailed plans. Some people chose to draft a simple will, but most did not do even that.

Even today people still tend to think of estate planning as something really only necessary for wealthy people. Other people with lesser means tend to assume that if they do not do any estate planning they do not need to worry. They think their spouse or children will inherit their assets and they do not need to bother actually drafting a will.

That is a mistake as the Wills, Trusts & Estates Prof Blog explained in "Estate Planning Is Not Just for the Ultra-Rich Anymore."

If you do not have an estate plan, then any assets you have at the time of your death will be distributed according to the laws of intestate succession in your state.

In some states, that means your assets will pass to your spouse and your children. However, other states have different laws and they sometimes give assets to people who might not have been included in an estate plan, such as siblings and parents.

It is not difficult to get a will from an estate planning attorney.

There is no reason you should leave things up to state law.

Get an estate plan and make sure that your assets are distributed as you choose.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 16, 2017) "Estate Planning Is Not Just for the Ultra-Rich Anymore."

Suggested Key Words: Estate Plan, Wills

Endowments of Closed Schools

Every year wealthy people give money to the endowment funds of colleges and universities. What happens to the money, when a school closes its doors for good is complicated.

Some big name schools have gigantic endowment funds. Schools like Harvard and Yale have many wealthy alums who are happy to give to their alma maters.

However, wealthy people do not just give to their own former schools.

They often contribute to much smaller colleges and universities, with the hope that those schools can use the funds to educate younger Americans.

Some schools do not make it. In fact, this has increasingly been the case since the financial collapse in 2008.

Every year, hundreds of schools close their doors permanently but still have money in their endowment funds.

The Wills, Trusts & Estates Prof Blog recently discussed what happens to that money in "Orphan Endowments of Dead Schools Bedevil U.S. States."

The big problem?

When a school closes there are many people who would like to have the money that is left over in the endowment funds.

The descendants of wealthy donors would like to have the money, as would the bondholders and other creditors of the schools.

The Attorney General of the state has to figure out who gets the money and state laws are not always clear on the subject. That creates big headaches for people over what are often relatively small sums.

If you or an ancestor of yours has given money to a small school that has closed, you should know that you can try and get that money back.

Nevertheless, you should know that you are unlikely to be successful.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 17, 2017) "Orphan Endowments of Dead Schools Bedevil U.S. States."

Suggested Key Words: Estate Planning, Endowments

Getting the Most out of Social Security

Every year Americans make big mistakes with Social Security. They choose to leave benefits on the table and do not receive as much as they should.

Social Security benefits are of critical importance to most retired Americans. The benefits often account for 50% of the income retired people have, if not more.

It means that getting the most out of those benefits is extremely important.

Everyone knows that the amount of benefits they will receive depends on when they start taking the benefits. Many people choose to figure out for themselves how to maximize their benefits.

Many do so to their own detriment, according to CNBC in "Bungling this retirement decision could cost you $300,000."

It has been estimated that every year, Americans receive $10 billion less in Social Security benefits than if they maximized their benefits. Some people leave as much as $300,000 in lifetime benefits on the table, without even knowing it.

This is the result of people not choosing to retire at the right time and also not thinking about things like spousal benefits that might be a good option for them.

It is not a good idea to make Social Security decisions on your own or to rely on government employees to tell you how to get your maximum benefit.

You need to talk to experts when making these decisions.

An elder law attorney in your area can help you decide how to get the most out of Social Security. Visit with one before you make any decisions that you cannot change later.

Reference: CNBC (Nov. 14, 2017) "Bungling this retirement decision could cost you $300,000."

Suggested Key Words: Elder Law, Elder Issues, Social Security

Lesser Known Estate Planning Mistakes

Some common estate planning mistakes are mentioned all the time. There are other common mistakes that receive less attention.

There are many articles written about mistakes in estate planning. They often mention the same few things over and over again.

That is good.

The more often mistakes are mentioned, the less likely it is that people will make them.

However, it also means other estate planning mistakes do not get mentioned very much, despite the fact that people often make them.

The Ithaca Times recently discussed some of those lesser mentioned estate planning mistakes in "Key estate planning mistakes to avoid," including:

• Forgetting to update an estate plan when a spouse or child passes away. It might not be the best time for you to change your estate plan, especially given everything you are going through. Not doing so, can result in problems later.
• Not reviewing and updating retirement plan and insurance policy beneficiaries for years.
• Many people have the mistaken belief that if they have a will, then their estates will not go through probate. That is almost never the case. If your objective is for your estate not to go through probate, see an estate planning attorney to learn how to accomplish that.
• People too often assume that once their children reach the age of 18, they will be able to responsibly handle any inherited assets. That may not be the case. You should plan for any minor children to have assistance with assets for longer than that.

Reference: Ithaca Times (Nov. 8, 2017) "Key estate planning mistakes to avoid."

Suggested Key Words: Estate Planning, Wills, Probate

 

Estate Planning for Pets

Estate planning used to focus almost exclusively on making sure that loved ones received inheritances. Today, it is increasingly including planning for pets.

One hundred years ago, it would have been considered extremely odd if someone left detailed estate plans for their pets. A will might have mentioned who should be given a beloved animal.  However, it was not common to leave aside money for the pets or to leave detailed instructions for their care.

Many people today are often very concerned about what will happen to their pets, after they pass away.

As a result, they are planning for those pets more carefully than ever before.

 The Wall Street Journal  recently offered some tips about how to go about that planning in "Estate Plans Don't Have to Be Just For People," including:

• Think about who should be the caregiver for your pets and make sure your choice is willing to serve in that role.
• Figure out how much money your pets might need to maintain their lifestyle and set aside that money for them.
• Think about everything that needs to be done to properly care for your pets and make sure you have it all written down, so the caregiver will know what to do.
• Be sure to visit an estate planning attorney so you can formalize your plans. The attorney will help you decide the best legal instrument to make sure your plans will be carried out. In addition, the attorney will draft those documents so a court will accept them as valid.

Reference: Wall Street Journal (Nov. 5, 2017) "Estate Plans Don't Have to Be Just For People."

Suggested Key Words: Estate Planning

 

Tax Inflation Changes for 2018

The IRS recently announced what the annual inflation changes will be for some important taxes for estates and those who are planning their estates.

Every year the Internal Revenue Service adjusts tax exemptions and deduction limits to keep them in alignment with inflation. The changes that are made can have a big impact on estate plans, even if the actual adjustments are relatively small.

 The IRS recently announced some of those important changes. They could make a difference for people planning their estates, according to the Wills, Trusts & Estates Prof Blog in "Estate Planning Inflation Adjustments for Tax Year 2018 & 2017-2018 Priority Guidance Plan."

Changes include:

• Lifetime gift tax exemption increased to $5.6 million.
• Annual gift tax limit increased to $15,000.
• Annual gift tax limit to a foreign spouse increased to $152,000.
• Estate tax exemption increased to $5.6 million.
• Failure to file a return within 60 days of due date, to result in a penalty of $215 or 100% of amount due, whichever is lower.

If you have questions about how these changes could impact your estate plan, visit an estate planning attorney.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 8, 2017) "Estate Planning Inflation Adjustments for Tax Year 2018 & 2017-2018 Priority Guidance Plan."

Suggested Key Words: Estate Planning, Estate Tax, Gift Tax