Articles Posted in Estate Planning

If you’ve lost a parent, you’ve felt the devastating reality that everyone – including everyone’s parents – will one day pass away. Often, their children are the ones who have to handle financial responsibilities while handling their own grief. Planning in advance for the tasks that will need to be done can make that difficult time a little easier.

“We surely ought to have some idea of what we’re facing,” says Melanie Cullen, San Francisco Bay Area-based author of “Get It Together: Organize Your Records So Your Family Won’t Have To.” She continues, “On the other side of it, our parents need to know we’re interested, we care, we’re there to help.”

This week I’ll address why it’s important to have this conversation and how to bring up this topic with your parents:

Estate planning for most families typically involves more than simply naming beneficiaries. The goals of estate planning often include the transfer of assets in an orderly and tax-efficient manner as well as working to preserve wealth across generations.

The transition of wealth from one generation to the next is often most successful when there is a shared understanding of the use of the family wealth. Those family members who have created the wealth get to decide how their assets are to be distributed, but understanding and agreement from the rest of the family on how assets are to be used can help preserve wealth as it moves from one generation to another.

Reaching an agreement between family members when it comes to estate planning can be especially challenging as different people often bring different ideas and values to the table.

Last week I wrote about taking the opportunity with the changing of the seasons to begin or revisit your estate plan along with questions to guide this process. Another key component to be aware of while creating or changing your estate plan is significant changes in tax law. Here are a few to keep in mind:

Beginning in 2018, federal gift and estate tax exemptions were changed significantly. These exemptions are scheduled to be drastically reduced on January 1, 2026, but this change may occur even earlier.

Also, under the current law, income tax deferral opportunities in relation to inherited retirement accounts have been limited.

Spring has arrived, and many people feel a new sense of initiative and renewal during this season.

Although the resolutions you set with the New Year may no longer be in the forefront of your mind, the spring season is an excellent time to channel renewed focus and energy into improvements for yourself and your family. So many things are now on our minds but outside of our control, including current economic uncertainty, international conflict, political divides, and continued public health challenges. One thing we can do is focus our time on important matters that are within our control. Many people have taken this time to begin or update estate plans in order to best prepare for the inevitabilities of incapacity and death.

Here are several questions to consider while planning for or updating your legal estate planning documentation:

As part of an estate plan, sports fans who have season tickets might wish to pass these tickets on to family members or loved ones to enjoy. Unfortunately, passing on these tickets might be less simple than you would expect.

Acquiring season tickets to your favorite sport can be challenging to begin with. These tickets might be very expensive and may have a waitlist. It’s understandable to want family members or friends to be able to use these tickets after you have passed away, but most teams have limits for how you can transfer tickets while still alive or after death.

As a season ticket is a contract between the purchaser and the team, the team is able to put restrictions in this contract. Limits can be set on when and how the tickets can be transferred to another person. A team may state that the tickets cannot be transferred by will or trust, may only allow transfers to one’s spouse or close family members, or may require ticket holders to follow certain procedures to transfer the tickets.

One of the lessons the last few years have taught us is that we may miss out on the chance to do something if we put it off for too long. A number of people are making big life decisions such as switching jobs, moving into new homes, or making relationship changes.

Many people have also taken this time to begin estate planning. However, some people have been unable to stay focused and trail off instead of finalizing their estate plan. People may do this for a variety of reasons. They may feel too overwhelmed by the decisions they need to make, or they may not have someone in their life that they are comfortable naming to make important decisions for them. It’s also unnerving for most people to think about their own mortality. For all of us, it’s a matter of “when” and not “if” we will die, and it’s better to be prepared for it.

An estate planner helps to simplify this process and break down complex issues to make them much easier to understand. Although an estate planner can listen to clients’ concerns and offer guidance, it’s still up to the individual to decide to execute their own estate planning documents.

It’s often heartbreaking when an individual’s spouse dies and, on top of trying to arrange their spouse’s funeral while grieving, they also have to struggle through accessing the family’s financial records and accounts without knowing where to begin.

It’s difficult to have conversations about estate planning and death. However, having conversations to plan for each person’s death will make the life of the surviving spouse far easier when the time comes.

Since there is no way to know which spouse will die first, it’s important that both partners are involved in or are at least provided with information for the family’s finances.

You may choose to include a living trust as part of your estate plan for a number of reasons – such as avoiding probate, passing assets to beneficiaries in a more hassle-free way, etc. There are some common myths about living trusts that you may want to know so that you can be sure you aren’t trying to use a living trust to do something it cannot do. Here are a few of those misconceptions:

Misconception #1: A living trust will help you avoid estate taxes.

If you have a large enough estate to need to worry about estate taxes, there are a number of strategies you can use to reduce the size of your estate. However, a living trust is not one of them.

Not only can gifting assets to your grandchildren help them get a better start in life financially, but it can also help you by reducing the size of your estate and the tax due after you pass away.

An outright gift to each grandchild may be the simplest way to do this, and you can give them up to $16,000 a year (in 2022) before having to report your gifts. Also, if you are married, you and your spouse can both give gifts of up to this amount (bringing it up to $32,000 that could be given to each grandchild) without gift tax implications. These gifts also do not count as taxable income, although earnings will be taxed if these gifts are invested. However, keep in mind that gifts can have an effect on Medicaid eligibility.

You may be hesitant to give outright gifts to your grandchildren, especially if you wish for this money to be used in certain ways. If that’s the case, here are some options to consider: