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Friday, December 2, 2016

Estate Planning | Using the Right Tools for Job at Hand


Summary: Classic children's tales can impart important lessons even to adults. The "Three Little Pigs" teaches its audience, regardless of age, about the importance of, not merely planning, but planning properly. Proper estate planning works on a similar principle. To make sure you have a plan that will survive whatever life throws at you, and still achieve your goals, it is important to work with estate planning professionals who can ensure that the tools and materials used in your plan are the ones best suited to address the challenges that may arise in your life.

A popular children's public television show, designed to encourage preschoolers to read, often engages in re-working classic children's tales to impart life lessons. In one episode, the "Three Little Pigs" solved their problem with the Big, Bad Wolf by befriending the wolf and persuading him to stop blowing down houses. While the importance of kindness is a good lesson to teach preschoolers, the actual lesson of the original "Three Little Pigs" teaches something more than that. In the original, the third pig saves the day, not because he convinced the wolf not to destroy his house, but because his house could withstand whatever the wolf tried to do to blow it down.

Proper estate planning works similar to the third pig's plan. Bad things can happen in life and, like the wolf in the original fairy tale, sometimes you cannot stop them from visiting you. But you can stop, or minimize, their destructive force by engaging in proper planning. A lot of times, proper planning involves following the adage that encourages us to "hope for the best, but plan for the worst." The third pig followed this method of planning when he built his house. Houses of sticks and straw were vulnerable to many potential calamities. The third pig's house survived because its material (brick) could withstand the worst onslaught the wolf could bring. It withstood the wolf because the third pig had the right tools (bricks) to accomplish the desired goal (creating a house that could last.)

With estate planning, the law also gives you materials and tools to help you hope for the best and plan for the worst, and create a lasting legacy. With the help of your estate planning attorney, you can create a plan that will withstand the foreseeable harms that may await you. If the "big bad wolf" you desire to plan for is the costs, delays and stresses of probate, the law gives you tools to plan for that. For many people, your proper materials to overcome this problem might include a revocable living trust or titling assets in pay-on-death/transfer-on-death ownership structures. If the wolf that concerns you is the possibility of mental incapacity, you have materials you can use, too. These can include powers of attorney and also living trusts. If you need to protect against the possibility of death taxes, your plan may involve different materials, such as irrevocable trusts. If you have a special needs child in your life, the materials in your plan will likely look different still, utilizing such devices as supplemental needs trusts.

In estate planning, each family's situation is unique; for each family, the "wolf" at your door looks a little different from someone else's. With a proper plan prepared with the assistance of a reliable estate planning attorney, you can be sure your plan will survive whatever "huffing and puffing" life throws at you. 


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Tuesday, November 29, 2016

Estate Planning | Being Vigilant in Maintaining Your Plan in Order to Keep Control and Achieve Your Goals


Summary: In a recent judicial ruling, a court gave a man's stepchildren the proceeds of two of his non-probate accounts even though the man had recently cut the stepchildren out of his will and had told a friend that that the friend would receive the entirety of the man's wealth. The man's plan did not achieve this goal of giving the friend "everything" because the man did not do the proper upkeep on the beneficiary designation forms tied to the non-probate accounts. This case serves as clear illustration of just how important proper estate plan maintenance is to the overall well-being of your plan.

The story of a Lexington, Kentucky man and the post-death transfer of his assets played out in the Kentucky courts recently. The distribution of this man's wealth potentially serves as yet another example of why estate planning maintenance is SO important. The facts of the case raised the distinct possibility that the man changed his estate planning goals but, because he did not do the proper maintenance work, he left behind a situation filled with uncertainty... which ended up requiring the involvement of the legal system and produced an outcome that may not have matched his true intentions.

In the case, the deceased man had no children of his own. He did, however, have two stepchildren. The man's wealth included both probate and non-probate assets. The man created a will that left everything to his wife if she survived him, otherwise everything went to his stepchildren. He also had an Individual Retirement Account and another non-IRA account with Vanguard Group. The beneficiary designations on both accounts mirrored the distribution plan of his will.

The wife died before he did. Initially, the man engaged in careful plan maintenance. He updated his will to name his stepchildren as the beneficiaries of his estate. Additionally, he contacted his IRA institution and obtained (and completed) the necessary paperwork to update the death beneficiary designations of those accounts, naming the two stepchildren as co-beneficiaries.

Sometime after engaging in this maintenance, the man decided that his estate planning goals had changed. He created and signed a new will. This will left his entire probate estate to an unrelated friend. The stepchildren received nothing. He spoke to his friend about this change in his plan. He indicated that the friend would receive "everything" from him. What he didn't do, however, was update his beneficiary designation forms with Vanguard. Once a year, Vanguard contacted him to inform him about the status of his beneficiaries. The provider told the man that, if the names were not correct, he needed to update the designations by going online or by calling the provider.

The man died without ever making this change on his accounts. Ultimately, the friend and the stepchildren ended up in court, battling over who was the rightful recipient of the death benefit payouts on the two Vanguard accounts. Both the trial judge and the appeals court sided with the stepchildren. The mere fact that the man informed his friend of his intention to alter his plan was not enough. The law required something called "substantial compliance," which in this case, meant updating the beneficiary forms. Not only was this true in the case of these accounts, the outcome would have been the same if the asset in dispute had been an annuity or a life insurance policy.

It is not 100% clear what the man's true goals were. If, however, he DID intend for his friend to get everything, including the proceeds of his non-probate accounts, and for the stepchildren to get nothing, then his plan did not achieve this goal and it failed to do so solely because he did not do the required maintenance on all of the parts of his plan. 


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Friday, November 25, 2016

Revocable Living Trusts | More Than Just a 'Will Substitute'


Summary: Living trusts are sometimes called "will substitutes" because they can accomplish many of the same objectives as a will when it comes to distrbuting your assets when die. A living trust, however, can do much more than that alone. A properly created and funded living trust can also help you plan, not just for asset distribution upon death, but also for the possibility of mental incapacity during your lifetime. Your living trust can help you make sure you have a seamless system in place for the management of your assets should your health dictate that you are no longer able to make those decisions yourself.  

You have many options when it comes to creating your estate plan. Each options has certain benefits, and each has its limits. As you contemplate how to go about constructing your plan, it is important to understand what each estate planning tool can, and cannot, do for you.

One example of this is the revocable living trust. Many people may be familiar with the benefits and uses of this legal document when it comes to avoiding probate. The reality of that benefit is true. A properly crafted and funded living trust may help you distribute your wealth to those you wish to receive it while avoiding the costs, delays and stresses that can be associated with the probate administration process. Because your trust can accomplish this goal of wealth distribution upon the occasion of your death, similar to how a will distributes your assets when you die, that's why living trusts are sometimes referred to as "will substitutes."

However, calling a living trust a "will substitute" misstates, in some ways, exactly what a trust's benefits and limits are. If you engage in the proper sort of estate planning, your trust's benefits may not be limited simply to accomplishing the objectives otherwise available using a will. Potentially, your trust can do much more. An area where this clearly true is protection during your lifetime. Your will does not take legal effect until you die; it can do nothing for you while you're still alive. A living trust, though, has the possibility to be vitally important to you during your lifetime if you should lose your mental capacity (a/k/a your mental ability to make decisions for yourself.) 

If this should happen to you, your properly funded trust can direct what will happen with regard to the management of your assets. When you establish a living trust, you will name someone (often yourself) to serve as the trustee of the trust initially. You will also name the person (or people,) called a "successor trustee" or "successor trustees," whom you want to take over the management of these assets when you either die or are otherwise unable to make those decisions for yourself. So, if you become mentally incapacitated, and you have funded your assets into your trust, then the process of dealing with them transitions seamlessly from you to the person or people you named in your trust document.

Without this type of planning in place, it may be necessary for your loved ones to go to court and ask a judge to appoint what's known as a "conservator" to manage your assets. This process, which is sometimes known as "living probate," has the potential, just like any legal proceeding, to be time-consuming, expensive and stressful for you and your family. By planning to avoid the negative impacts of living probate, your living trust can be a lot more than just a will substitute.


This article written and published by:
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
@assuranceplan
#legacyassuranceplan






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Tuesday, November 22, 2016

Estate Planning | Don't Delay, Plan Today... To Keep Your Estate in Order


Summary: Whether it is your marriage, your health, your car, your home, your boat or your estate plan, all of these have some things in common. One of them is that all of the hard work you put into acquiring and building these things up end up being lost if you allow them to fall into disrepair due to neglect. With regard to your estate plan, one of the best ways to avoid this state of disrepair is through regular maintenance. By resisting the urge to put off periodic estate plan reviews, you be certain that you have a plan best suited to carry out your wishes and your goals, and reflect both the state of personal affairs in your life and the state of the laws where you live. 

When it comes to estate planning, it can be easy to procrastinate. There are dozens of different reasons people put off getting an estate plan in place. For those that clear this hurdle and get a complete plan put together and executed, this is not the end of the process. Many people know that they need to be pro-active in ensuring that their plan remains up-to-date. However, just like making an initial estate plan, maintaining an estate plan can be easy to put off. And just as with initial estate planning, it is imperative not to fall into this procrastination trap. 

Procrastinating the completion of your estate plan maintenance essentially creates a minefield of possible harms that can blow up all the careful planning you've done. One of these mines is a change in your personal situation. Life events that can cause this include divorce, marriage, a birth or a death, among others. A man in Virginia ended up leaving his ex-wife (instead of his current wife) a $124,558 death benefit payout from his life insurance because he did not do proper estate plan maintenance and, specifically, did not update the death beneficiary form on his life insurance after he divorced the previous wife and later married the subsequent one.

Another potential problem possibly awaiting your estate plan is a change in your state's laws. If, for example, you have a former spouse whom (unlike the man in Virginia mentioned above) you do wish to include in your legacy, and you have not updated your plan since before your divorce, your goals could be thwarted. Some (but not all) states have statutes saying that a divorce automatically invalidates any estate plan provision created to benefit the now ex-spouse. If your state didn't have such a law but then decided to create a new statute and adopt such a provision, then this person to whom you made a conscious and intentional decision to leave a distribution could end up getting nothing as a result of your plan not being updated to address this legal change.

Your estate plan "check-up" can serve other goals, too. It can allow you and your team of estate planning professionals to contemplate many questions, like whether a change in your amount of wealth might warrant additional planning steps, such as the additional of additional trust(s)... or whether you still have sufficient resources to pay for your final expenses and the other costs of carrying out your final wishes. 

Whether taking inventory of your assets, taking inventory of the changes in personal life or taking inventory of the changes in the law, your estate plan review can give you the confidence that you have a plan in place that is optimized to deal with circumstances as they exist now, not as they existed when you signed your original set of plan documents. 



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Friday, November 18, 2016

Creating an Estate Plan | Don't Delay, Get Your Estate in Order

Summary: Most everyone considers themselves very busy with their day-to-day lives. Whether it is work or family or something else, chances are you have something (or some things) in your life that keep you daily schedules filled up. In the crush of addressing daily responsibilities, it can be easy to lose sight of things that may not seem like immediate priorities. Estate planning can be one of those things, making it easy to put off. Don't fall into this procrastination trap. Failing to take the steps necessary to get a plan in place is a serious risk and this gamble can proven extremely costly to you and your loved ones.

If you don't have a valid will and/or living trust, both your loved ones and the legal system may not know how you'd want your assets divided after your death. When this happens, the courts will classify your estate as "intestate" and will distribute your wealth according to certain laws passed by your state's legislature. Leaving your plan up to the laws of your state, instead of taking control of it yourself, can risk leaving nothing to cherished loved ones and also possibly leaving significant portions of your wealth to people that you did not want to receive it.

Should you want to avail yourself to the potentially time, money and stress-saving benefits of avoiding probate, you need to create a plan. There are many options available for avoiding probate, including living trusts, transfer-on-death deeds, pay-on-death accounts and other tools. Without a plan, your wealth must, as mentioned above, be distributed using the rules of intestate estates, which means going through the probate court process.   

If you want to make sure that you are best positioned to avoid (or at least minimize) death taxes, you need to have an estate plan. While the current exemptions values under federal estate tax laws are very high, the numbers when it comes to death taxes under the laws of certain states are less forgiving. Regardless of the state in which you reside, incurring both state and federal death tax obligations can be easier than you think, especially if you are a small business owner or a farmer. Your estate plan allows you utilize all the tools available, including gifting strategies, trusts and insurance products, to put your family in the best position possible.

Additionally, if you have minor children or children with special needs at home, you have extra incentive to plan. With a properly drafted and executed will, you can name the person or people you want to serve as the guardian(s) of your child. If your child has special needs, your plan can include special trust planning elements that will allow you to leave part or all of your wealth to your child with special needs without risking your child's eligibility to continue receiving essential government benefits.

Your planning process can make sure that you have a genuinely complete plan in place. This can include powers of attorney and trust planning that may protect you in the event of incapacity, as well as advance directives to protect your desires in terms of end-of-life planning. 

In addition, this process can be your opportunity to address other planning issues that you may not have even thought about. For instance, do you have a plan to cover your final expenses and the other costs of carrying out your estate planning wishes? If not, you may want to consider the options available to you in terms of life insurance and other insurance products, which can offer important assistance in achieving this goal.



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Tuesday, November 15, 2016

Estate Planning For Smaller Estates | Why You Don't Need To Be a Millionaire To Need An Estate Plan


Summary: A lot of people think that estate planning is something that is only necessary if you have large amounts of wealth. This thought is wrong in almost all cases and, for some people, clinging to this thought can be a damaging mistake. Sometimes, people with extremely modest estates have circumstances in their lives that cause them to have a great need for extensive estate planning. 

A popular cable TV home channel broadcasts several shows dedicated to finding inexpensive properties on the beach or a lakefront. The shows’ openings proclaim, “…and it’s only for the rich… or so you thought!” For some, estate planning can like that. Too many people live under the mistaken thought that estate planning is only for the rich. Nothing could be further from the truth. 

A case that went through the Michigan courts recently provides a clear example. Emil Awad, a man from Bay County, Michigan, had what could be described as an incomplete estate plan. He had no will or other estate documents, but he had structured several assets to pass outside probate through the use of transfer-on-death designations. When he died in 2009, he had a probate estate that, all totaled, consisted of only about $50,000 cash and the contents of his home. He left behind no surviving spouse but he had three daughters that survived him. As his intestate estate worked through the probate court process, Awad’s creditors began making claims and, eventually, his debts were $18,000 more than his probate assets.

The daughters fought bitterly with each other over the distribution of the estate. The case went back and forth between the trial court and appellate court. In fact, the Michigan Court of Appeals ruled on matters related to this modestly insolvent intestate estate three times! The last decision, made this past winter, related to the personal representative’s efforts to pull certain non-probate assets into the estate in order to cover the estate’s unpaid debts. In the end, it is possible the personal representative and the daughters spent more in attorneys’ fees than the entire value of the estate.

All of this could possibly have been avoided through implementing a careful and complete estate plan. With an estate of only $50,000, Awad may not have needed a plan that included a trust. (Some families, however, might have a need for a trust, even if their assets are as small as Awad’s, if they have special circumstances, such as a child with special needs at home.) Regardless, Awad, like almost everyone, probably could have benefited from a plan that included a will, which would have given him the ability to clearly direct how he wanted his cash, his furniture and his other personal belongings divided up between the daughters and others. 

A complete plan could also have included powers of attorney and an advance directive, which can provide you with the ability to decide who makes decisions on your behalf when you cannot make them for yourself. These parts of a complete plan can benefit you significantly, regardless of how small or large your “bottom line” is. Just because you don’t have tens of millions of dollars to your name, don’t make the mistake of thinking that you don’t need a plan.



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8039 Cooper Creek Blvd
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Friday, November 11, 2016

Estate Planning For Farmers | The Importance For Both Farm and Family

Summary: Family farmers, like other small business people, have some of the greatest needs for careful and complete estate planning. A proper plan can help you provide for your family and for the seamless transition and continued operation of the farm. This way, you can have the peace of mind knowing that you’ve provided for both the loved ones and the land that you’ve dedicated your life to.  

Family farmers represent the backbone of the American agricultural economy. They are hardworking and family-oriented. They may also, however, come from humble backgrounds and may not realize that the success of their family farming business gives them a great need for detailed estate planning, even though it definitely does.

Estate planning for a farm family can achieve many benefits. One of the chief benefits is to ensure the continued and uninterrupted operation of the farming business. To accomplish this goal, it is important to identify who you want to take over the farm after you die, and also make sure that the person you’ve identified is interested in taking on that responsibility. That’s why, with farm families, as with so many families, detailed and honest communications between you and your loved ones is a necessary precursor to estate planning. With proper communication, you can make sure that everyone is on the same page when it comes to handing down control of the farm’s operations.

Once you’ve decided on the “who” part of your plan, you and your estate planning attorney can get to work on the “how” part. Working with a knowledgeable attorney is important, because there are lots of varieties of estate plans that can be dangerous for farming families. For example, let’s assume that, as one of your goals, you want to save your loved ones the time, stress and expense of probate. One strategy that can avoid probate, which some people use, is to deed over the farm to the person who will to take over, while retaining a life estate for yourself. This probably will succeed in avoiding probate but, if your farming business has been successful enough that avoiding death taxes is another necessary goal, this plan may come up short. Using this plan will place the full value of your farm in your gross estate for Federal Estate Tax purposes and, depending on your circumstances, may leave your loved ones with a huge tax bill. 

You may be thinking, “The Federal Estate Tax exemption is so high, surely I don’t need to worry about that.” This can be a mistake, especially if you own a large farm. Depending on your acreage and the quality of your soil, your farm, if it is large, could by itself realistically have a value that clears the current exemption levels. What’s more, if your neighbors succeed in selling their farmland for high amounts, that may raise the “fair market value” of your land and make the FMV of your farm jump by millions of dollars very abruptly. In other words, it is important to create a plan that takes the potential risk of death taxes into consideration and, once you’ve put that plan together, to review and update it regularly to factor in any changes in death tax laws.

Another plan that some farmers might use to avoid probate is to “add” to the farm’s property deed the name of the child whom they want to take over upon their death. Again, this can avoid probate but potentially opens up many other risks. That child is now a full and current co-owner, which means that, if he becomes liable for a court judgment (such as an auto accident or a divorce,) the farm could be taken away from the family in order to satisfy this legal judgment. A proper plan can give you benefits of probate avoidance while also ensuring that you do not open yourself up to other pitfalls.  

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com

This article written and published by:
8039 Cooper Creek Blvd
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@assuranceplan
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