A Guide to Lawsuit-proofing your Estate Plan

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Tuesday January 17th, 2023.

Many people plan their estate for their heirs beforehand so that their assets are distributed equally. However, planning beforehand does not ensure that your estate plan will stay protected from lawsuits. With the help of a proper estate planning attorney, you must ensure that your estate plan is devised correctly and cannot be questioned based on any injustice or illegal activity.

How to Lawsuit-Proof Your Estate Plan

Some of the ways to lawsuit-proof your estate plan are listed below.

Treat Siblings Equally

You have to treat all the heirs equally when formulating your estate plan. You attract legal constraints when you cut off an heir or your sibling from the estate plan. Even if you have kids from second or third marriages, you must research and abide by all the laws regarding the distribution of your estate.

Keep Track of Loans and Advances

Loans and debts can lead to many complications if not appropriately stated. If you loan money to one of your heirs, you have to decide beforehand if you want it to be repaid or discharged at your death. Make sure to put your decision in writing or in contract form.

Transfer Business with a Contract

When deciding what to transfer to your siblings or children, you often decide that the businesses are distributed to different children accordingly. When handing over a business to someone, make sure it is in contract form. Carry out the process with written signatures and proof of the transfer.

Check Ownership of What you Leave

When you are leaving your children a part of your estate in your estate plan, make sure you have complete ownership of those assets. At times, due to jointly owned property, there can be confusion regarding the ownership and how the property or assets will be inherited.

Spell Out Disinheritance

If you are excluding any child of ours from the estate plan willingly, make sure you write it clearly in the estate plan. If you do not mention the disinheritance, you can face legal concerns regarding why the legal heir was not included in the will.

How to Recognize Fraud in Estate Planning?

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Friday December 9th, 2022.

Frauds and scams are becoming common these days. Many fraud cases in estate planning are being reported, and unlike other scams, estate planning scams can cost you everything you have. Older adults are the most vulnerable group of people prone to these types of fraud.

It becomes very challenging to leave a will under such circumstances. Hence one should have backup plans and appropriate measures to track fraud and scams from agencies, family, or friends.

Measures to Track Down Fraud

There are a few measures one can take to track down any kind of fraud. Whether it is a changed will, misinterpretation, or unequal distribution, you must know the basics to identify fraud in these situations.

Removal from Will Without any Reason

The most apparent indicator of fraud in estate planning is if someone is unexpectedly removed from the will without any genuine or particular reason. It is best to keep checking on the lawyer if this happens.

Contrary Will

The best way to avoid fraud in estate planning is by discussing your will and future plans with family members or a trusting friend. Most people prefer to keep their will and inheritance plan between them and their estate planning lawyer. 

But, discussion with family members can serve as a good way to track fraud in the future. Family members being aware of the inheritance plans prevents any kind of fraud from happening in the first place.

Unequal Distribution

Another way to track fraud is if you notice that one heir is getting more from the will as compared to others. This most likely means that the heir is involved in fraud by coordinating with the estate planning lawyer because it is not usual for a person to favor one heir and discriminate against the others. 

Secretly Signed Will

We all know the importance of witnesses in law. Make sure that you sign your will in the presence of a trusting person. If the lawyer presents an unknown will that no one knows about, it is likely that the will was generated on false claims and is part of a scam.

How to Choose an Estate Administrator?

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Monday November 14, 2022.

When your loved one dies, you probably need assistance in settling his/her estate, loans, property, and other affairs. Whether you leave a will or not, some rules and regulations directed by the court need to be followed. Hence, it is essential to find the right person as an administrator that will handle your estate and property issues.

What is an Administrator?

An administrator is a person appointed for a deceased person in case he/she did not already have an executor to follow through with his will. The administrator is usually appointed by the court, or the family can select the person to deal with the will.

What to look for in an Administrator?

It can be very challenging for the family to select the right person that will be dealing with their family matters and the division of property. The following characteristics are considered important to be an administrator.

Objectivity

The person dealing with your family affairs and politics needs to be dynamic and logical. The person should be committed to putting your will into action and should be able to resist persuasion from certain family members.

Location

Many people would not consider this a priority, but your estate administrator being close to you highly affects how the will is put into action. The administrator should be close to you in order to know the local laws and be there in case of any emergencies.

Availability

The administrator should have a flexible schedule and ample time to tend to your affairs. Do not go for an administrator that has a lot of cases on his hands and cannot give your case the time it needs.

Willingness

Before choosing an administrator, make sure you ask them whether they are up for this duty or not. Make sure that they have time and will take full responsibility for your work. Ensuring this helps avoid any misunderstanding in the future.

Punctuality and Other Organizational Skills

The administrator should be there on time for your court meetings and other activities. They should also have promising emotional, communication, and interpersonal skills to deal with family members and the court.

What is Spousal Lifetime Assess Trust

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Tuesday October 18, 2022.

The Spousal Lifetime Assess Trust (SLAT) is a common strategy for tax savings that is used by married couples. The spousal lifetime access trust is an irreversible trust that is created by one spouse to benefit another spouse. The donor spouse makes a gift to the SLAT by using their gift tax exemption and then the spouse who will benefit is named as the beneficiary.

The SLAT offers married couples a way to take advantage of the federal lifetime gift and estate tax exclusion whilst keeping restricted access. It is possible for either one spouse to fund the SLAT for another spouse or each spouse may opt to fund the SLAT.

SLAT 101

It is vital to remember that the trust is irrevocable and this means that when contributing spouse transfers assets to the SLAT, they are forever parting with the use of those assets and any income from it.

However, the contributing spouse can only gain benefits from the funds and property given to the trust if the benefactor of the trust is still legally wedded to the donor. This is subject to the terms of the SLAT, the spouse who is to benefit from the SLAT could receive distributions of income from the SLAT, which allows the benefactor spouse together with the donor spouse indirectly, to access the assets if they needed to.

Advantages and disadvantages of SLAT

An advantage of SLAT is that it enables the contributing spouse to donate up to their available exemption amount without gift tax. If the contributing spouse dies, the value of the assets in SLAT will not be subjected to federal estate tax since it is excluded from the contributing spouse’s gross estate because the SLAT is funded with a gift made during the contributing spouse’s lifetime.

The downside to a SLAT is that if the benefactor of the trust dies, then that would mean that the donor of the trust will no longer have indirect access to the SLAT. The donor of the trust will have no choice but to terminate the trust. They can either choose to distribute it or continue it for the donor’s children or perhaps other family members.

Tax Strategies for Charitable Giving

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Tuesday September 13, 2022.

It takes much thought and planning to decide where to contribute your hard-earned money. A wise charitable giving plan takes into account your giving style, timing, and content. 

Your giving strategy and the timing of your donations can optimize their impact on your favorite charity while lowering your tax burden. The following two strategies can help reduce your tax burden. 

It’s Not Just Cash

Direct charitable giving may be more advantageous than selling non-cash assets like a mutual fund or stock shares and donating the after-tax proceeds. If you’ve had the assets for more than a year, you’ll receive two important advantages. In most cases, you’ll be able to deduct the full fair market value from your taxes — neither you nor the charity will owe any taxes on the gain. As a result, you will be able to donate up to 20% more to the charity than you would have given if you had sold the asset and donated the after-tax revenues.

You can also acquire more of the same stock after donating any that has dramatically increased in value, thereby “resetting” the cost basis to a more significant sum.

While stock awards can generate a sizable income, they can also have unanticipated tax repercussions after they are exercised or vested. As a clever strategy to lower your tax exposure, think about using vested shares from prior years or other long-term appreciated assets for charitable giving.

Consider a QCD

A qualified charitable distribution, or QCD, is another tactic that can lower your taxable income. These are contributions paid to your preferred charity straight from your IRA. The gift amount isn’t considered as a charitable deduction, but it doesn’t count as taxable income either. It essentially reduces your taxable income by the amount donated to charity, even if you weren’t otherwise itemizing deductions.

If your required minimum distribution (RMD) for the year has not yet been satisfied, QCDs can count toward it. Reducing your taxable income can also be beneficial when figuring out how much Medicare premiums will cost you. Make sure to speak with your accountant first because there are a few rigorous criteria you must follow in order to take advantage of this method.

What Can and Cannot Be Included in a Living Will

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Wednesday August 10th, 2022.

Living wills and other advance directives are legally binding documents that outline your preferences for medical treatment if you become incapacitated. 

Advanced directives are not only for those in their advanced years. All people should create these documents since unexpected end-of-life circumstances might occur at any age.

By making arrangements in advance, you can receive the medical treatment you desire and prevent needless suffering. The document also frees up caregivers from the pressure of making decisions during trying or grievous times. 

What Can Go In a Living Will

Be specific about your wishes for medical procedures while drafting your living will. Take into account your options for each of the following:

Cardiopulmonary Resuscitation (CPR): using a defibrillator or someone performing chest compressions to restart your heart.

Life Support: maintaining your life through artificial nutrition, hydration, medicine administration, and ventilator support.

Mechanical Ventilation: a device that takes over breathing by supplying the lungs with air.

Artificial Nutritional Feeding: a tube that extends into the stomach and delivers nutrients.

Dialysis: a process where blood is cleansed by passing through a machine.

Intravenous: injections of medication, antibiotics, or antivirals using a tube or needle into the veins.

End-of-Life/Palliative Care: Healthcare professionals can manage your pain to make you comfortable while respecting your preferences for medical treatment, such as avoiding intrusive procedures.

Organ Donation: You must be briefly put on life support if you choose to donate your organs. You will need to obtain an exemption for the organ transplant operation if you decide not to be put on life support.

What You Can’t Include in Your Living Will

You need a few things in conjunction with your living will, but they are not included as part of it. 

Do Not Resuscitate (DNR): Although you might have said in your living will whether you wish to be revived, a DNR is a particular directive that a doctor must write and sign. 

Orders for Life-Sustaining Treatment (OLST):  An OLST is primarily used for those who have been told they have a severe or fatal illness, are elderly, or both.

Health Care Proxy: A Health Care Proxy or other Medical Power of Attorney document must be used to designate the person you want to act as your Health Care Proxy (also known as a Power of Attorney for Health Care and a Health Care Representative) to make decisions on your behalf if you become incapacitated. 

The Dangers of DIY Estate Plans

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Tuesday July 12th, 2022.

DIY projects are popular, but is DIY estate planning a good idea? 

Do-it-yourself estate planning has become increasingly popular in recent years — especially since a global pandemic has people worrying about the future in new ways. DIY planning seems like an excellent way to save money. People often think grabbing forms from the internet will be sufficient. However, there are some reasons why this is one area where doing it yourself may not be the best option. 

Does It Meet Your State’s Requirements?

Each state’s estate planning laws are unique, and the rules that apply from year to year can change significantly. Unfortunately, there is no real way to verify if a DIY estate plan you download from the internet complies with your state’s laws, even if it promises to do so. 

Most websites that provide do-it-yourself estate planning disclaim any liability for any paperwork that doesn’t function appropriately after settling your estate. On the other hand, an estate planning law company assumes full responsibility for the documents they design and will be on hand to help if any problems occur. They are available to testify in support of your objectives should it be required. They can review the notes they took during your discussions with your beneficiaries after your death.

It’s More Than Just a Will

Most people mistakenly believe that having a will is all that is necessary to establish an estate plan. Even if you create a DIY will that is legal and complies with state regulations, it’s unlikely that it will be sufficient to meet your estate planning needs. Wills are only one component of a comprehensive estate plan.

Besides, wills are usually not a one-and-done situation.

Wills require updating. You must update your will to reflect any changes resulting from having children, getting married or divorced, or acquiring a sizable sum of money. It will be much simpler for you to make these modifications if a professional is accessible to assist you.

Get the Help You Need

In the end, assurance that your legacy is safeguarded motivates most people to make an estate plan with an expert instead of relying on internet research and DIY forms.

Mistakes Parents Make When Naming Guardians

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Thursday June 9th 2022.

When putting together your will, one thing that must decide if you are a parent is what happens to your children should the worst happen to you and your partner. Your estate is one thing, but the well-being of your children is quite another! Should you become incapacitated, pass away, or otherwise unable to provide for your minor children, your will should include the names of suitable legal guardians you have chosen to care for them.

While it is a difficult thing to consider for any parent, the importance of the task makes it one of the more significant life decisions. Before naming a guardian, consider these mistakes many parents make.

Naming a Couple 

Some parents name a couple to raise their children if a guardian becomes necessary. However, what if you don’t want both members of the couple to raise your children? It is important to specify your wishes for your children’s guardianship should the couple be broken up or one of them passed away. 

Failing to Prepare for Short Term Needs

It is good to appoint short-term guardians to look after your child until your long-term guardian can take custody. An interim guardian, such as a nanny or trusted neighbor, can temporarily assume guardianship of your child and offer immediate care in the event of an emergency. If the police are contacted, and you don’t have temporary guardians, your child may be taken from your house and placed in protective custody.

Documenting Too Few Details

Everyone has different views on how children should be raised. Do you have a school in mind for your children? What about a particular diet? Religious beliefs? Your appointed guardian should respect your wishes as a parent, but they can’t respect them if they don’t know what they are.

Not Appointing a Financial Guardian

Often, parents forget to designate someone to manage the money they are leaving behind for the children. If you’re leaving money behind — which you should be, even if all you have is a life insurance policy — you should put it in trust for your children and appoint a trusted person to handle your children’s finances until they come of age.

What Happens to a Mortgage After the Owner Dies?

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Monday May 8th, 2022.

Though you’re probably preoccupied with a million other things after a loved one has died, you’ll have to address one crucial topic: “What happens to the house?”

A will or probate is often used to determine who gets a home when a homeowner passes away. But what about a house with a loan on it? Are your relatives liable for your mortgage debts if you pass away? What happens to the surviving family members who are still living in the house?

The word mortgage is derived from a French term that means “death pledge” — meaning a mortgage does not simply vanish when the lien holder passes away. The lender still needs to be paid, or they will likely foreclose on the home. If the property has outstanding home equity loans or lines of credit, the same rules apply. A mortgage is a lien that lasts until the loan is paid off, even if the borrower passes away.

Who Assumes The Payment?

If a mortgage has a co-borrower or co-signer, the solution is straightforward: the other party can keep making payments on the loan.

If the deceased has a surviving spouse, federal law permits them to take over the mortgage instead of paying the full total back to the lender. They will need to show financial ability and creditworthiness, however.

If the deceased leaves the title to someone else, this person only acquires the title to the property, not the mortgage. The inheritor has no personal obligation to make loan payments until the assuming process is completed because the person’s credit isn’t tied to the loan installments. They aren’t legally obligated to repay the loan.

If none of these scenarios apply and no one takes over the mortgage, the mortgage servicer will begin the foreclosure process.

Have the Conversation

Numerous things go into end-of-life preparations. It’s crucial to think about how your choices today will impact your loved ones once you’re gone.

Consider any other debts you may leave for your family after you die, in addition to your mortgage. Although discussing your mortality isn’t often the most uplifting issue, doing so now may provide you and your loved ones with some peace of mind in the future.