Don’t Be Like Abraham Lincoln. Create a Will

WillWhat do Abe Lincoln, Bob Marley and Prince have in common?
You guessed it…they all died without a will.
But why?
Kiplinger’s article, “4 Strategies to Avoid an Estate-Planning Mishap,” says that their reasoning was the same as it is for most people: just “too busy.” They were busy with life’s daily demands on their time. Also, many people don't want to think about it or take the time to sit down and get it done.
People don’t realize how much can be accomplished in a very short time with an experienced estate planning attorney. Similarly, they also don’t understand the issues that can pop up if they don't have a plan in place.
While you may hear about income and investments at every turn these days, you may not hear about important topics like taxes, health care, asset protection and leaving a legacy for your family, friends, and charities.
Be certain that you’ve made every effort to express how you want your assets distributed when you die. Take a look at these four basic strategies and discuss them with an experienced estate planning attorney to help you avoid an estate planning mishap.
1. Get that will in place. A will directs your executor about your wishes and spells out how you want your assets distributed when you pass away.
2. Consider a living trust. This can protect your assets and can help your estate avoid probate. While you may believe you don't need a living trust, it can help make certain your assets are managed according to your wishes even in the event that you’re no longer able to manage them on your own. In addition, you can sign a health care directive and power of attorney so those you trust can make decisions about your physical and financial well-being. Finally, trusts are not public court records so your affairs remain private.
3. Title your accounts appropriately. Get that trust in place or set up a "transfer on death" designation. This lets assets pass directly to the beneficiaries named by the owner. Also, make sure you’ve properly named the beneficiaries and contingent beneficiaries on IRAs and other tax-qualified accounts.
4. Think about life insurance. A policy is used to provide a death benefit for your family and can augment the legacy you pass down. It can help cover final expenses—like funeral, burial and medical bills.
Do it now. Your picture on the five-dollar bill might be a nice lasting tribute, but your family will like a comprehensive estate plan much more.
Reference: Kiplinger’s (August 2016) “4 Strategies to Avoid an Estate-Planning Mishap”


The Importance and the True Cost of Estate Planning

Wills-trusts-and-estates-coveredIt seems as though Prince is now almost as famous for not having a will as he is for hit records. He left behind a multi-million-dollar estate, but who’s supposed to get it? The courts in Minnesota will answer that question because Prince didn’t have a will.
According to KHON’s recent article, “What happens when you don’t prepare a will, and how much will it cost?”, you’d think Prince would’ve had some smart advisors to encourage him to create an estate plan. Maybe he thought he would live forever. We may never discover the reasons why he elected not to draft a will.
Some folks believe they’re kind of jinxed by creating a will—maybe something bad is going to happen to them. OK, that’s a theory—but not an especially great one. If you don’t create a will, in addition to having no say in who receives your property, you’re potentially making a big mess for your heirs. When a person dies without a will or “intestate,” his or her property and assets are distributed by a probate judge in accordance with state law.
If you are married, the estate will all go to your spouse. If you have a spouse and children, it will be divided among your closest relatives. That may work for you, but others may have other individuals and charities they want to remember.
Even if you’re not wealthy, you may still own some assets you want to designate to certain people—and you need a way for those specific wishes to be carried out.
There’s a cost to creating a will or a trust, but that will be very small compared to how much your estate would have to pay if it went to probate court. As the Prince situation shows, not having a will can bring turbulence and turmoil instead of a peace.
Reference: KHON (June 9, 2016) “What happens when you don’t prepare a will, and how much will it cost?”


Supreme Court Changes Estate Planning for Married Same-Sex Couples

Female gay couple"The Supreme Court ruled that the Constitution guarantees a right to same-sex marriage."

The recent Court decision has changed financial and estate planning significantly for same-sex couples, including taxes and retirement planning.

In The Kansas City Star's article, "Your financial planner: A guide for same-sex couples," married same-sex couples are advised to be aware of these changes in order to take advantage of the benefits.

When figuring out your income taxes, married same-sex couples are now able to file a joint state tax return, along with the federal joint return, which should make things easier. In addition, Social Security for married same-sex couples has changed, granting both partners access to their spouse's work record and benefits—which could be higher than their own individually.

Now a spouse can leave property to the surviving spouse without paying estate taxes when the first spouse dies, and a married survivor in a same-sex couple also now is under the state's intestacy statute. If a married person dies without a will, the state will typically give more property to the surviving spouse than other family members.

From an estate planning perspective, the process remains the same. When reviewing your assets, it's important to check how accounts are titled and make sure the primary and contingent beneficiaries are correct. If the couple has created a revocable trust, assets must be titled in the trust's name where appropriate and used on the beneficiary lines, according to their estate planning attorney's instructions.

When an IRA passes to a beneficiary, spouses get special tax treatment because of a spousal rollover provision. A surviving spouse of a same-sex married couple can now delay taking distributions until age 70½ and delay IRA distributions over their own lifetime.

Finally, gift taxes previously applied to transfers of assets exceeding $14,000 between same-sex couples, but now the law allows gifts of any amount between them under the unlimited marital deduction.

The case Obergefell v. Hodges changed the landscape for same-sex married couples in 2015. If you're a partner in a same-sex marriage, you'll want to speak with your estate planning attorney and take advantage of these new benefits.

Reference: The Kansas City Star (February 17, 2016) "Your financial planner: A guide for same-sex couples"

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