Blog

Common Estate Planning Myths

Estate planning can be a very difficult process. While it’s not brain surgery, making the decision to move forward with the planning requires us to face the fact that we will not live forever. This thought can stop many people right in their tracks. Others talk themselves out of seeing a qualified attorney to put together an estate plan based on some of the following common myths:

Read More

Estate Planning Awareness Week: The Importance to You and Your Family of Having an Estate Plan

In 2008, Congress recognized the need for the public to understand the importance and benefits of estate planning by passing House Resolution 1499, which designated the third week of October as National Estate Planning Awareness Week. Nevertheless, according to a 2019 survey carried out by Caring.com, 57% of adults in the United States have not prepared any estate planning documents such as a will or trust despite the fact that 76% viewed them as important. Many of the respondents said this was due to procrastination, but many others mistakenly believed that it was not necessary because they did not have many assets.

Why should you have an estate plan?

An estate plan can provide significant peace of mind by ensuring your assets are protected, plans are in place in the event you become ill, and your property is passed down according to your wishes.

What key topics should you consider?

●        Do you have a last will and testament and/or a trust? If you do not have these important documents, state law will determine who will inherit your property—and thus it may not occur in the way you would have chosen. In addition, someone appointed by the court, instead of a trusted person of your choosing, will be in charge of caring for any children or pets. Spelling out your wishes in a will or trust will also prevent unnecessary confusion, anxiety, and expense for other family members when you are gone.

●        Have the proper powers of attorney been prepared? A financial power of attorney will allow you to designate an individual to make financial and property decisions for you should you become  unable to handle your own affairs. A medical power of attorney enables you to designate a person you trust to make medical decisions for you when you are otherwise unable to speak for yourself.

●        Make sure that you have an advanced directive, also called a living will, which memorializes your wishes concerning your end of life care, such as whether you would like to receive life support if you are in a vegative state or terminal condition.

●        Do you have insurance? If you become incapacitated or die, it is important for your family or loved ones to have information about your insurance (such as life, health, disability, longterm care, etc.) so that claims can be filed.

●        Compile a list of all of your accounts and other important information, including bank and investment accounts, titles to vehicles and homes, credit card accounts or loans, digital accounts (such as Facebook, LinkedIn, and Twitter) and passwords, Social Security cards, passports and birth certificates, which may be needed to manage your property when you are incapacitated or settle your estate once you are gone. This information should be kept in a safe place and shared only with trusted family members or loved ones.

●        A list of legal, financial, and medical professionals who have performed services for you is also important. The list should include their contact information so your family can easily reach them in the event their help is needed if you become disabled or die. If desired, you should also ensure HIPAA authorizations are in place with medical professionals to ensure your family members are able to obtain needed information.

How should you encourage your family members to create an estate plan?

Estate Planning Awareness Week is a great opportunity not only to take steps to make sure your own estate plan is in place, but also to talk to your family members, especially elderly parents, about creating an estate plan. Estate planning is often a difficult topic to broach, as it brings the unpleasant topics of aging and death to the forefront of our minds. Here are a few tips to help you start the conversation.

●        Be sensitive to your family members’ feelings. Put yourself in their shoes, and keep in mind that few people are eager to dwell on the subject of their own death. One way to begin the conversation is to talk first about the need to plan for an illness and to provide instructions in the event they become too ill to communicate with doctors or handle financial matters for themselves. The conversation can then naturally progress to the importance of having an estate plan that will enable their assets to be transferred in the way that they wish, provide for the care of any dependents or pets, and minimize any taxes, court costs, and legal fees. Communicate that you are not trying to control their decisions, but only want to ensure that their own wishes regarding their medical care and their property are known—and that all their instructions are in writing to guarantee they are carried out.

●        Involve other family members in the conversation. If you are planning to speak to your parents about the need for an estate plan, it is important to try to include any siblings in the discussion to avoid giving the impression that you are trying to influence or control your parents’ choices. You and your siblings should emphasize to your parents that none of you are asking about what you will inherit, but just want to make sure that their wishes are carried out if they become ill or pass away.

Consult an estate planning attorney. An experienced estate planning attorney can help you and your family members create an estate plan tailored to meet each of your unique needs and carry out your wishes—or help you update a pre-existing estate plan. We can provide each family member with guidance and information about the options available to them. We can help each of you put a plan in place that will prevent unnecessary stress, legal expenses and taxes, uneven inheritances, disputes between family members, and delays in passing life savings on to loved ones. In addition, it will provide you and your family members with the peace of mind that comes with knowing there are plans in place for your care if any of you become ill and that your wishes will be honored once you pass away. Call us today to set up a meeting.

I have a Last Will and Testament from forty (40) years ago. Should I update it?

An individual’s original estate planning purposes may be different today than many years ago. For instance, many estate planning attorneys in years past drafted estate plans in order for their clients to maximize estate tax savings. Due to legislation, estate tax planning is not usually a primary focus of estate planners.

Read More

If something happened to me, someone will need to take care of my children. How do I name a guardian for my children?

This question is the main reason why young married couples enter the office of an estate planning attorney. The greatest concern for these clients is often not related to the efficient distribution of their wealth to the next generation. Rather, the greatest concern for young married couples is often the question of whom will care for their children if something traumatic should prevent both parents from caring for them. In fact, when a married couple has their first child, such is the opportune time to their first will.

It is critical that parents of minor children name an individual to serve as Guardian of their children in their last will and testaments. When both parents have deceased or are unable to care for their children, a probate court will look to the parents’ last will and testament in deciding whom shall serve as Guardian. Without the parents’ input through their last will and testament, the probate court may only have the opinion of self-interested family and friends to consider the question. Obviously, the most important opinion is that of the parents. Clients with young children do not want to leave the question up to anybody else than themselves.

I have been married more than once. How should I plan the inheritance for my spouse, children and stepchildren?

Sometimes clients desire that stepchildren be treated no differently van the clients biological children. Other clients sometimes want only their children to receive their property. Thus, to answer this question it is necessary for the estate planning attorney to understand the family dynamics. Further, it is important for the client to understand the legal presumptions regarding stepchildren. While this blog post cannot address particular family dynamics, it can address the treatment of second marriages and stepchildren according to Indiana law.

Read More

I will soon be married. Should my future spouse and I enter into a prenuptial agreement?

I.               What is a prenuptial agreement?

A prenuptial agreement (sometimes called an antenuptial agreement) is an agreement made between a future married couple. Barron’s Law Dictionary (6th Edition) defines a prenuptial agreement as follows:

“An agreement entered into by two people who intend to marry each other which sets forth the rights of each person in the property of the other in the event of divorce or death. Generally, the entering into marriage constitutes sufficient consideration to make a prenuptial agreement enforceable.”

A prenuptial agreement can address several issues related to property. For instance, a prenuptial agreement can determine whether the surviving spouse will invoke his/right to the spousal share of the deceased spouse’s estate. In addition, couples may agree whether they will waive spousal rights in a qualified retirement plan. The contents of the prenuptial agreement will be different for every couple.

II.             What are some instances in which individuals should enter into a prenuptial agreement?

1.     Second Marriage: If the upcoming marriage will be a second marriage, then it may be a wise idea to consider a prenuptial agreement. The first marriage might have created property and family issues that need to be addressed by the couple prior to marriage. For example, the future husband may have children by his first marriage. By marrying his second wife, the husband may be concerned that his first wife’s children receive particular property when the husband passes away, rather than the second wife, notwithstanding his love and affection for the second wife.

2.     Inheritance: If a future spouse believes that he/she will receive an inheritance during the course of the marriage (whether it is a first marriage or a second marriage), the couple should consider a prenuptial agreement. The default rule in Indiana is that all property acquired during the marriage is marital property. In the event of divorce, the presumption is that a 50/50 split of the marital property is a just and fair division. That would include inheritance. To overcome this presumption, it may be prudent to enter into a prenuptial agreement.

3.     Business: If a future business owner will soon be married, a prenuptial agreement should be considered for the same reasons as listed in paragraph 2, above. That is, any ownership of a business that commences after marriage would become marital property, and therefore, it would be subject to division in a divorce. The founder of Amazon, Jeff Bezos, and his wife, MacKenzie Bezos, dealt with this issue in their divorce in 2019. MacKenzie Bezos received $36 billion in the divorce settlement. Food for thought: if you are planning to become the richest person in the world as is Jeff Bezos, and you want to get married, it’s probably sound advice to get a prenuptial agreement.

Is a Trust Better Than a Will?

A commonly asked question at Vick Law is whether a trust is better than a will. As with many questions asked of attorneys, the answer is: “It depends”. A trust can be better than a Last Will and Testament depending upon various factors, including the client’s interest in control, purpose and efficiency.

CONTROL: Sometimes clients want to make sure that their beneficiaries will use the inheritance in a proper manner. Perhaps the client wants a beneficiary to use the inheritance specifically to start a business or to fund a college education. A trust ensures that the beneficiaries will use the inheritance as the client, rather than beneficiaries, desires. You might call this “ruling from the grave”. Unfortunately, in this age of the opiate crisis, a client might find wisdom in maintaining control through a trust.

PURPOSE: A client's purposes in protecting financial resources can be a factor in whether a trust is better for the client. In Indiana, Medicaid for the Aged and Disabled requires certain levels of income and resources prior to granting eligibility. A trust, whether at the time of a long term care event or in preparation for it, may assist clients in becoming Medicaid eligible. If protecting assets from long term care expenses is important to the client, a trust might be the right estate planning option.

EFFICIENT: A trust might be better for a particular client so that the estate is settled in an optimally efficient manner. Suppose an individual has real estate in Indiana and another state. With only a Last Will and Testament, his/her estate will likely have to go through two (2) probate administrations, here in Indiana and in the other state. That might result in a very costly and time-consuming process. Contrariwise, a trust will likely prevent any probate administration. Instead, the real estate and other property will pass directly from the trustee to the beneficiaries in accordance with the terms of the trust agreement.

There are many, many more factors that go into whether a trust is the best option for a client. Take advantage of the free consultation at Vick Law to find out whether a trust fits your estate planning needs.

CLICK HERE TO SCHEDULE YOUR APPOINTMENT TODAY!

Don't Make Them Pay Taxes Too Quickly On Your Retirement Plan

Perhaps the best kept secret about qualified retirement plans, such as IRAs and 401(k)s, is the flexibility of their beneficiary designations.

Once an individual reaches age 70 1/2, he must begin withdrawing Required Minimum Distributions from his retirement plan. If he has not withdrawn all of the money from the retirement plan by the date of his death, the beneficiary designation form will determine not only who will receive the money. The beneficiary designation form will also determine how quickly the recipient will have to withdraw the money and thus how quickly the tax will be paid on the funds.

Depending on the circumstances, it may be possible to extend the period of time in which the beneficiary must withdraw Required Minimum Distributions by naming a much younger individual beneficiary. The effect of this decision is that the Required Minimum Distributions will be withdrawn at a much slower rate. Thus, taxes will become payable at a much slower rate. The net effect will likely be that the beneficiary receives a greater amount of money over the course of the distribution than had the beneficiary received the money in one lump sum upon the death of the owner of the retirement plan.

Every situation is unique. Excruciating attention to detail is required to arrive at the proper outcome. But with proper estate planning, an individual can help his beneficiaries take full advantage of his retirement plan.