Articles Posted in Estate Planning

Estate planning can be overwhelming for many people, and it can be even more complex for today’s global families with international loved ones or with assets outside of the United States. For instance, someone whose spouse is not a U.S. citizen must keep unique legal considerations in mind while creating their estate plan. An increasing number of families also have international beneficiaries or own properties and assets in more than one country, and the laws and tax regulations of each jurisdiction need to be taken into account.

Planning for Non-U.S. Citizen Spouses

When it comes to estate planning for a spouse who is not a U.S. citizen, the following remain the same:

For those born between 1981 and 1995, estate planning may be associated with older generations and with being very wealthy. However, many millennials are at the age where they may be starting their own families or caring for aging parents. As millennials take on more responsibility in caring for loved ones, there is a greater need to plan for the possibility of becoming seriously ill or incapacitated as well as for how their family will be cared for after their death.

Where Can I Start?

Starting with the basics can help younger clients prepare for the future and protect their loved ones:

In the last post, I wrote about some of the complexities of art in estate planning as well as some strategies to consider if art assets are a part of your estate plan. Here are some things to consider when it comes to tax implications and valuation in relation to art assets.

Tax Implications And Planning

When it comes to art estate planning, tax considerations are extremely important. The different types of relationships a seller has to the art will present specific challenges as well as opportunities to that seller depending upon if they are an artist, investor, collector, or dealer. Tools such as charitable remainder trusts, qualified opportunity zone funds, and deferred sale trusts can lessen tax burdens while still protecting the collection’s legacy.

When it comes to the world of art, its value goes beyond simple aesthetics or price. Art realizes a legacy for artists, collectors, investors, and dealers as well as for their loved ones. Stories of individuals such as James Gandolfini, James Brown, and Doris Duke serve as cautionary tales of what can happen when there is inadequate estate planning for art.

The care and responsibility for art includes physical, financial, and legal aspects. There are rational and emotional considerations when it comes to art, calling for attention to detail when it comes to estate planning.

Navigating The Complexities Of Art In Estate Planning

If you are prioritizing charitable giving in your estate plan, you may want to consider using something called a donor-advised fund (DAF) which has become more popular in recent years.

The value of DAF grants made to qualified charitable organizations increased 9% to $52.16 billion in 2022, and the number of accounts increased 2.9% to nearly 2 million according to the 2023 Donor-Advised Fund Report. Here are some of the basics to know about DAFs:

ABCs of DAFs

One way that a party may challenge a will during a will contest is to assert that undue influence was exerted over the decedent by the party who benefits from the disputed will. This raises the question: What is undue influence, and what proof is needed to demonstrate its presence?

Appellate courts have explained that in order for influence over a decedent to rise to the level of being considered undue influence, it has to be demonstrated that this influence destroyed the free agency and will of the decedent. This could involve mental, moral, and/or physical coercion. The influence must rise to a level of the testator accepting the domination and influence of another instead of following the dictates of his or her own mind and will. Weakness of mind as well as the desire of the testator being distorted by the imposition of a stronger dominating influence typically need to be shown to establish the existence of undue influence. That a party gave care and assistance to the testator is not in itself enough to be considered evidence of undue influence to destroy that individual’s free will. It needs to be demonstrated that the influence destroyed the free agency and will of the testator and that the will reflected the desires of the party which exerted the influence.

Undue influence is typically demonstrated through witness testimony (and potentially through relevant documents) which evidence that another party exercised mental, moral, or physical exertion, or all three, over the decedent. Any drastic changes in the decedent’s estate documents which directly benefit this party may also be proof of undue influence having been exercised over the decedent. The presentation of this testimony can be complex, and it is important that it be carefully planned before presenting this evidence to the court.

The beginning of a new year is an excellent time to take a new look at your current estate plan or to create one for the very first time. Here are some specific opportunities to consider in 2024:

Increased Estate, Gift, and Generation-Skipping Transfer Tax Exemptions

The estate, gift, and generation-skipping transfer tax exemptions increased to $13,610,000 per person in 2024, which is an additional $690,000 of tax exemption per person. For those who have previously made significant gifts, this provides even more gifting opportunities. These opportunities include things such as gifting portions of your family business to the next generation, transferring growth stock, or helping your child with a down payment on a house. Unless Congress takes action to maintain the exemption at its current level, the exemptions are currently expected to decrease to approximately $7 million per person as of January 1, 2026.

In the last post, I shared about how incapacity is defined and what may cause it. Here are ways incapacity relates to specific estate planning documents:

Power of Attorney

A power of attorney is a legal document that is used to appoint someone you trust to make decisions for you.

You’ll likely come across the term “incapacitated” while planning with an attorney for your future and addressing challenges that may come along with aging. In this post, I’ll write about how incapacity is defined as well as what can cause it, and next week I’ll write about what this concept means in relation to elder law and estate planning.

Incapacitated Definition

When someone is incapacitated, they are unable to make personal decisions or understand legal documents. A person who is incapacitated requires someone to make decisions on their behalf. Individuals such as an agent under a health care power of attorney or a guardian might be the ones to make decisions for a person who is incapacitated.

Using a trust as part of your estate plan can be beneficial in a number of ways, including maximizing tax code provisions to shield assets from gift and estate taxes, protecting assets from creditors or ex-spouses, or helping heirs be more responsible with their inheritance.

Revocable living trusts can be a vital part of your estate plan, but in order to help you, they can’t just be drafted and forgotten. A trust needs to be properly funded, including additions that are warranted. If you don’t move certain assets (such as cash, securities, real estate, artwork, and other types of property) into the trust before you pass away, the trust will not serve the purpose you intended in your estate plan.

If you are making a trust part of your estate plan and have already made the necessary arrangements, be sure to retitle assets in the name of the trust. This may be easier said than done, and depending on the type of asset, specific requirements will need to be met. Simply transferring assets to a trust is not enough. A transfer of ownership of real estate, for example, typically requires you to jump through extra hoops.