Most matters the probate courts handle, like admitting wills and assigning executors, are standard operating procedures and go uncontested. However, legal contests arising from a person’s death or mental incapacity may lead to probate litigation over powers of attorney, will and trust contests, guardianships, conservatorships, and living wills.

Common Legal Concerns in Probate Court

Some common problems leading to probate litigations include:

• Will contests – The validity of a will can be challenged. Interested parties may dispute the will’s authenticity, allege undue influence or fraud, or argue that the person who made the will (testator) lacked the mental capacity to create a valid will.
• Estate administration disputes – Disagreements may arise among beneficiaries, executors, or administrators regarding the management and distribution of estate assets. These disagreements can include allegations of mismanagement or conflicts over the interpretation of the will or trust provisions.
• Claims against the estate – Creditors or individuals who believe they have a rightful claim to the deceased person’s assets may file claims against the estate. Claims can include outstanding debts, unresolved contracts, or disputed property ownership.
• Guardianship or conservatorship disputes – If there are disputes over the appointment of a guardian for a minor or an incapacitated adult or concerns about the actions of an appointed guardian or conservator, it can result in probate litigation.
• Breach of fiduciary duty – Executors, administrators, trustees, and other fiduciaries are legally obligated to act in the best interests of the estate and its beneficiaries. Allegations of misconduct, self-dealing, or failure to fulfill these obligations may lead to litigation.
• Document interpretation – Disputes may arise over the interpretation of a will, trust, or other estate planning documents. These conflicts can involve disagreements about the intended meaning of certain provisions, the scope of powers granted to trustees or executors, or the distribution of assets among beneficiaries.
• Family disputes – Family dynamics can often lead to probate litigation, especially with strained relationships, blended families, or unequal distributions of assets. Sibling rivalry, disputes with former spouses, or disinheritance can result in legal challenges.

Individuals marrying multiple times without a prenuptial agreement are also likely to incite probate litigation upon their death. Life insurance trusts can be a valuable way to separate the interests of the decedent’s spouses and children.

Probate, Estate, and Trust Litigation Attorneys

If you anticipate probate litigation, an experienced estate administration attorney can provide guidance and explain your rights and options to prevent future problems. If you are involved in a dispute, a probate litigation attorney can help you navigate the legal system and resolve it. There are also attorneys who specialize in conflicts with trust administration and litigation.

It’s essential to consider your legal situation and an attorney’s experience, reputation, and track record when handling similar matters. It’s also crucial to feel comfortable working with them.

Early Steps in Probate Litigation

In probate litigation, your attorney plays a key role in representing your interests while navigating the legal process. All things begin with an initial lawyer consultation to discuss your case’s details, goals, and concerns. Your attorney will evaluate the strength of your claims or defenses and explain the legal process, potential outcomes, and available strategies to achieve your objectives. Most states have strict statutes of limitations, so the earlier you contact a probate litigation lawyer, the better.

Your attorney will then thoroughly research your case’s relevant laws, precedents, and regulations. They will analyze the facts and circumstances to develop a legal strategy tailored to your situation. All relevant documents will be gathered and reviewed, including wills, financial records, trusts, and other evidence relating to the dispute. Your attorney will then prepare and draft legal documents like complaints, petitions, answers, motions, and discovery requests.

Probate Court Processes

Probate litigation hearings and trials are usually held in the county probate court where the decedent died. The probate litigation attorney you select should be familiar with the county probate court where the case is being tried.

Your attorney will engage in the discovery process by gathering evidence, documents, and depositions from other parties. They will also respond to discovery requests from the opposing party. Each side will advocate for their client’s interests, work to reach a favorable settlement if possible, and advise on the merits of accepting or rejecting settlement offers.

Trial preparation and representation will occur if the settlement phase fails. Your lawyer will prepare you for trial, make legal arguments, examine and cross-examine witnesses, and present your case to the court. Throughout the process, your attorney will help you make informed decisions regarding the direction of your case.

Probate court can illicit high emotions and tense interactions that greatly disrupt family relationships and leave the estate open to creditor lawsuits as well.

Our estate administration and probate litigation attorneys help prevent estate-related contests through proper estate planning and significantly reduce the likelihood of probate litigation in the first place. Should you find yourself in need of an experienced litigator, we can represent you. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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Assessing tax options can determine the best way to conduct business or personal transactions and inheritance to reduce or eliminate tax liability. Tax avoidance differs from tax evasion, which reduces tax liability through concealment or deceit. Tax evasion is a crime, but tax avoidance can lower your tax bill by structuring transactions to save the most money.

Minimizing Your Heirs’ Tax Burden

Inherited assets often come with tax burdens, and planning ahead can simplify some of the processes and lower taxes for your heirs. Depending on the state of the deceased’s estate, inheritance taxes will differ. As laws and regulations change regarding inheritable assets, your estate planning attorney can conduct a routine review of your plan to ensure transferring wealth is tax-efficient.

Gifting Your Money And Assets

The most direct way to minimize inheritance tax is to start gifting your heirs money each year while you’re still alive. Taking advantage of the gift tax exclusion of $17,000 per year per person is a quick way to transfer non-taxable cash or assets to heirs. A married couple can gift $34,000 yearly to each child or other inheritor without tax consequences to the gifter or the recipient.

Life Insurance

A solid insurance plan can also set up future inheritors without tax consequences. Choosing between whole life and term life insurance will determine how long the policy will last. A term or whole life insurance policy generally provides the beneficiary a death benefit not subject to income taxes unless they receive payouts in installments.

Irrevocable Life Insurance Trusts

An irrevocable life insurance trust (ILIT) can control whole or term life insurance policies while the owner is alive. Transferring your policy to the trust or using the trust for purchase means you own your insurance policy as the trust grantor. You can determine who administers assets, designate beneficiaries, and the terms of receiving benefits. Your estate planning attorney helps you set up the trust and properly fund it.

An ILIT removes the life insurance policy from your gross estate, which minimizes or eliminates estate tax liabilities on assets not qualified as marital or charitable deductions. The policy provides immediate liquidity to the decedent’s estate and beneficiaries upon the insured’s death.

Death Benefit Annuities

An annuity with a death benefit pays a lump sum to a beneficiary. There are also joint-and-survivor annuities that provide a guaranteed income stream to the beneficiary for life. While annuities are subject to tax, they can be structured to minimize the tax burden to the beneficiary.

Retirement Accounts Converted to Roth Accounts

Heirs will pay tax on any inherited retirement benefits if they are in a 401(k) or Individual Retirement Account (IRA). However, taxes on a Roth 401(k) or Roth IRA are already settled upon conversion, so there is no additional tax on distributions. While this is great for inheritors, when the owner converts a standard 401(k) or IRA to Roth, there will be regular income tax consequences for the conversion to occur.

Real Estate

Real estate is one of the most significant non-liquid assets to pass on to heirs. Capital gains tax will apply to real estate, and the recent IRS Revenue Ruling 2023-02 removes the step up in basis even if the real estate is in an irrevocable grantor trust.

However, this new ruling doesn’t apply if the irrevocable trust is in the grantor’s gross estate. The rules and applications are complex and will require the review of an estate planning attorney to decipher.

If the property is not in an irrevocable trust, there are three other options to pursue:

1. Sell it – If you plan on downsizing or putting your home’s equity to use elsewhere, selling the home to an heir might be a good option. It removes the property from your taxable estate, establishing a new cost basis. The property’s future sale has a cost basis tied to the home’s value on the date of transfer, lowering capital gains tax. Do not, however, sell the property below fair market value, or the difference may be subject to gift tax.
2. Gift it – While a generous gift, providing a home to an heir during your lifetime might have negative tax consequences. This gift will count toward your lifetime gift tax exemption which may not be a problem now, but in 2026, the exemption will be cut in half as adjusted for inflation. Depending on your estate’s size, it may result in up to 40 percent federal estate tax. State-level gift, estate, and inheritance taxes may also be a factor depending on where you live.
3. Pass it Down – Depending on how many heirs you have and their ability to maintain a property, you can leave your home in your will, a living trust, or in some states, a transfer-on-death deed. Again, these methods may no longer receive a step-up in cost basis and should be discussed at length with your estate planning attorney before making a decision.

Stock Investment Accounts

Unlike other gifted securities, inherited stocks don’t maintain their original cost basis. Upon inheriting a stock, the inheritor receives a step-up in cost basis determined by the stock’s value at the date of death. If you have held dividend-producing stocks for a significant time, the cost basis may make selling financially unproductive. However, an inheritor with a step-up in cost basis can immediately sell the stock to create cash flow without tax consequences.

Capital gain tax methods are a highly-contentious topic in the ongoing debate of inheritance and taxes. Often regulations may change without Congress enacting a law, as in the case of IRS Revenue Ruling 2023-02. To ensure your strategy is in tax compliance and advantageous to inheritors, review your estate plan routinely to account for any legal changes.

Estate Planning Attorneys and Tax Planning

Your estate planning attorney can help you legally minimize tax liabilities to your heirs by gifting assets during your lifetime, establishing trusts, and leveraging exemptions. Tax-advantaged accounts, capital gains tax planning, and other tax-efficient investments like life insurance can minimize taxes to your heirs.

Further, you can use family and charitable trusts or philanthropic foundations to receive tax benefits. There are many creative ways that your estate planning attorney can legally help to minimize taxes to your heirs. Estate planning guidance is key in creating wealth transfer management and tax strategies. Your attorney can provide personalized advice based on current tax laws and regulations and work with your tax advisor to create the best outcome for your heirs.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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High Net Worth Individuals (HNWI) and Ultra High Net Worth Individuals (UHNWI) can make adjustments to maximize giving before the federal estate tax threshold rollback on January 1, 2026. Unless Congress intervenes, this historically high estate exemption limit of almost $13 million per individual will be reduced by approximately half. Clients with applicable net worth need to consider using exemptions as soon as possible. Changes to current tax laws seem unlikely in the near term.

The Secure Act and Secure Act 2.0

The SECURE Act (Setting Every Community Up for Retirement Enhancement Act) and SECURE Act 2.0 introduce several retirement planning changes that have implications for estate planning, including:

• Changes to Required Minimum Distributions (RMDs) – The age when individuals must begin to take RMDs from retirement accounts will increase from 70 ½ to 72. This change may impact current retirement account distribution planning in estate plans.
• Elimination of the “Stretch IRA” – Most non-spouse beneficiaries will no longer be able to “stretch” distributions from inherited retirement accounts over their lifetimes. Instead, these beneficiaries must typically withdraw the balance within ten years of the account owner’s death. This change may affect estate plans leaving retirement accounts to non-spouse beneficiaries.
• Exceptions to the “Stretch IRA” Rule – Some eligible designated beneficiaries can still stretch distributions from inherited retirement accounts over their lifetimes. They include surviving spouses, minor children, individuals with disabilities, and individuals not more than ten years younger than the account owner. Estate plans can be modified or designed to take advantage of these exceptions and minimize the tax impact on beneficiaries.

Reviewing and updating beneficiary designations on retirement accounts is crucial to align with your estate planning goals and the new rules. These actions will ensure the desired individuals or entities receive the assets as intended and tax-efficiently.

Ongoing Market Fluctuations and Interest Rates

The current market environment is tricky regarding tax management issues in short-term investing and estate planning. Reducing losses by optimizing investment tax write-offs is a silver lining for many. Still, the monthly movement in the applicable federal rate (AFR) can affect estate planning strategies, particularly regarding the Section 7520 rate used to calculate the value of a certain annuity. Market movements and rising interest rates shift estate planning strategies to some long-overlooked strategies.

Incorporating Asset Protection Strategies

Asset protection is becoming an increasingly important aspect of estate planning. Individuals are exploring strategies incorporating new laws and regulations regarding trusts, limited liability companies (LLCs), and family limited partnerships (FLPs) to safeguard their assets from potential risks and creditors.

Some states have extended or eliminated the rule against perpetuities regarding trusts. States with these changes may allow a trust to last 100 years or some to last indefinitely. Some states allow “directed trusts,” which appoint a trustee for the legal title and property custody, while at the same time, an investment adviser is granted decision-making authority, and a distribution adviser makes decisions regarding distributions to beneficiaries.

States are competing for trust business and creating greater flexibility and additional options regarding the administration of trusts. For example, a New York resident may want to create a trust in perpetuity for their descendants. However, there is a law against NY trusts in perpetuity. Instead, they can create a trust using a Delaware trust company as trustee because, under current law, forming a trust in Delaware permits the trust to last forever.

International Estate Planning

As globalization, cross-border relationships, and increased mobility become more common, international estate planning is gaining importance. The unique challenges of planning for assets in different jurisdictions, its tax implications, and coordinating with legal systems in multiple jurisdictions and countries are key considerations in international estate planning.

Integrating Digital Estate Planning

As digital assets play a significant role in people’s lives, estate planning increasingly incorporates provisions for managing and distributing these assets. Cryptocurrencies, social media accounts, and online businesses place greater estate planning emphasis on addressing these assets. The plan may include creating digital inventories, designating digital asset trustees, and providing instructions for accessing and transferring digital assets.

Family Business Succession

Succession planning for family-owned businesses will remain an important aspect of estate planning. Ensuring a smooth transition of ownership and management to the next generation or other designated individuals can help preserve the family’s legacy and protect the value of the business.

Sustainable and Charitable Planning

The trend toward incorporating sustainable and philanthropic goals in estate plans will continue. Many individuals may include charitable bequests, establish family foundations, or incorporate environmentally-friendly strategies such as impact investing or funding renewable energy projects in their estate plans. Some trusts can support charities and provide assets to beneficiaries using a charitable lead or charitable remainder trust.

Long-term Care Planning

With the aging population and rising health care costs, there is a growing emphasis on long-term care planning in estate plans. Provisions include funding long-term care, selecting appropriate health care proxies or agents, and establishing trusts or insurance policies to cover potential expenses.

Special needs planning is a subset of long-term care for individuals with disabilities. Establishing a plan that can evolve to address the needs of these individuals using trusts, ABLE accounts, and other planning techniques can assure additional support while preserving eligibility for government benefits.

Privacy and Confidentiality

Privacy and confidentiality concerns lead individuals to explore strategies to protect their personal and financial information in their estate plans. The goals are to limit public disclosure of assets, utilize trusts and other entities for privacy, and incorporate digital security measures.

These trends reflect individuals evolving needs and priorities in estate planning relating to changes in federal and state inheritance and tax laws. It’s important to meet with an estate planning attorney to create or review an existing estate plan. Our attorneys explain how these trends may apply to your specific situation and jurisdiction and ensure compliance with current laws and regulations while looking to the future.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post Legal Trends in Estate Planning: Planning for the Future appeared first on Seif & McNamee.

• Procrastination – This is a fundamental error. The drawbacks that procrastination presents are often severe and sometimes unrecoverable. Heirs can incur unnecessary taxes and lose significant percentages of wealth. A business owner may unknowingly create discord with existing partners and vendor relationships. A simple Will may not be enough to address a more complex estate. If you haven’t already, it is time to take the first step and meet with an estate planning attorney to create your unique plan. During this process, you will identify which additional professional services can best benefit your planning.
• Traditional gender roles – While gender roles continue to evolve, more women, particularly the younger generations, are taking the reins of financial discussion and decision-making. However, many in the baby boomer generation (and older) occupy a space of traditional male-female roles. On average, women will outlive men. This statistic implies that inheritable assets between spouses will pass from a man to a woman most of the time. Therefore, the female’s estate plan more often than not controls the ultimate disposition of family wealth, and it is imperative to plan according to this likelihood. The involvement of both spouses is crucial for smooth transitions — a spouse of whichever gender may need more information to understand estate planning. Both spouses need to know their estate planning attorney, CPA, and other relevant planners.
• Older estate planning documents requiring review – Just because you already created your estate plan does not mean that changes in your life and your family do not affect what is in writing. A periodic review of your estate plan with your attorney and accountant can catch minor errors that may otherwise lead to catastrophic problems. Wills, trusts, divorce settlements, pension, insurance, and stock statements can be missing a critical step that may render the document invalid or not in full force. A missing signature, or an incomplete document can implode your estate plan. An unfinished divorce decree can derail your plans to pass wealth to your children, especially in the complex situations where remarriages occur and there are other competing interests in your property.

Change is a constant in life. A key player such as a named executor may be in failing health and no longer a viable solution in your estate plan. You may need to remove this person or add a contingent executor. If you have made significant structural changes to your finances, it will affect your estate plan. Some named inheritors may predecease you. It is essential to dial into the details with your attorney and accountant regularly with your documents and ensure they represent your most current situation and desires.

• A Will or Trust assumes that “fair” and “equal” are the same thing. Even if you have a simple estate plan, documents that divide your assets equally among heirs can have devastating consequences within a family system. If, for example, there are two adult children and one is involved in a family business, a parent may still want to divide the business asset fifty-fifty. On the face of it, this distribution seems equal however the child without involvement in the business will typically be pursuing their own professional goals leaving the family business interests protected solely by the family business involved inheritor.

Your estate planning attorney may suggest a buy-sell agreement allowing one child to take control of the business. The other child may receive a life insurance policy payout as compensation, creating an equal distribution of assets moving forward. This life insurance asset is generally tax-free to the beneficiary; therefore, the more independent child receives an asset without burdening the business’s financial and tax obligations. This decision may create a new imbalance; another life insurance policy can again equalize the asset value inherited by the child remaining in the family business. As the complexity of remaining equal increases, the services of a corporate attorney and an insurance specialist may become a requirement.

Other assets with changing value conditions like raw land, fine art, jewelry, and stocks, are factors to consider as the IRS will establish a value for your estate at the time of your death. Professional reappraisals of these assets, like estate document review, can help you keep your asset distribution as equal as possible under changing conditions.

Estate planning can be complex, and there is a constant potential for mistakes because of life changes, lack of coordination, and even oversights. Assembling the right group of professionals will get you to the estate plan you need for your legacy aspirations.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post To Avoid Estate Planning Mistakes, Use a Blend of Professionals appeared first on Seif & McNamee.

What is a CRAT?

A charitable remainder annuity trust (CRAT) is a legal arrangement in which an individual transfers assets, typically appreciated securities or real estate, into an irrevocable trust. The donor receives a fixed annuity payment each year, predetermined when the trust is established. This fixed annuity provides the donor with a stable income stream throughout their lifetime or for a specified number of years. Since a CRAT is an irrevocable trust, it can’t be changed once it’s created, and no additional contributions can be made.

Benefits of CRATs

One of the key benefits of a CRAT is the immediate charitable income tax deduction the donor receives at the time of the transfer. This deduction is based on the present value of the remainder interest that will ultimately pass to one or more chosen charitable organizations. By establishing a CRAT, individuals can reduce their current tax liability while supporting the causes they care about.

What is a CRUT?

A charitable remainder unitrust (CRUT) operates similarly to a CRAT but with a crucial distinction. Instead of receiving a fixed annuity payment, the donor receives a variable payment based on a fixed percentage of the trust’s assets. The value of the CRUT is reassessed annually, allowing the income stream to fluctuate with the performance of the trust’s investments.

Benefits of CRUTs

The flexibility of a CRUT can be particularly appealing to donors who anticipate the need for adjustments in their income stream over time. If the trust’s investments experience growth, the income payments will increase proportionally, ensuring the donor benefits from their philanthropic investment. Moreover, donors can make additional contributions to the CRUT during their lifetime, allowing them to further benefit from tax deductions and increase the ultimate charitable contribution.

Making a CRAT or CRUT Part of Your Estate Plan

Both CRATs and CRUTs allow you to support charitable causes while enjoying tax benefits and a stable income stream. Whether you choose a fixed annuity payment through a CRAT or a variable income stream through a CRUT, the ability to leave a meaningful legacy while achieving personal financial goals makes these charitable trusts attractive options.

Setting up and administering CRATs and CRUTs requires careful planning and the assistance of legal and financial professionals. Donors must comply with specific rules and regulations established by the Internal Revenue Service (IRS) to ensure the eligibility of the trust for tax benefits. Consulting with your estate planning attorney and financial advisor is essential to navigating the complexities associated with these agreements.

Contact our office at (740) 947-7277 today to learn more about your estate planning and wealth management options. We will help you achieve your estate planning goals and establish a meaningful legacy.

This article offers a summary of aspects of estate planning. It is not legal advice. It does not create an attorney-client relationship. For legal advice, you should contact an attorney.

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About half of US adults have gone without or delayed medical care in the last year due to a lack of affordability. Even with insurance benefits, many are still unable to afford the high cost. Approximately one-third of insured US adults are worried about being able to afford their monthly premiums. Additionally, 44% worry that they can’t afford their deductible. Health care costs are rising globally, but the US accounts for more than 40% of total global spending.

The Cost of Avoiding Treatment

Delaying or avoiding annual checkups or treatment for a seemingly minor illness may seem like an easy way to cut expenses. However, it may result in significant physical and financial costs later. For example, minor problems can become chronic illnesses as we age and eventually lead to the need for long-term care. This financial burden can carry over to other family members or result in losing a home or a lifetime of savings.

Complications from minor illnesses can easily be avoided with basic treatment. Otherwise, infections can worsen, potentially leading to hospitalization or other serious conditions.

Annual checkups and preventative care are the first line of defense against disease and provide early detection for better health-related outcomes. Routine cardiovascular exams and various cancer screenings save thousands of lives every year.

Preparing for Health Care Costs with Employee Savings Plans

It’s hard to predict the cost of doctor’s visits if you’re uninsured or have a high-deductible health insurance plan without copays. Health care bills are usually higher than anticipated, which creates financial strain and debt. Many people turn to family and friends to borrow money or deplete retirement accounts or home equity to pay medical bills. Unexpected accidents or illnesses can cause lasting financial damage.

One way to prevent medical debt is by contributing to a health savings account (HAS) or flexible spending account (FSA). A payroll deduction puts tax-free funds directly into your account to use for out-of-pocket medical expenses, including vision and dental needs. HSAs have annual contribution limits and are usually only available to those with high-deductible health insurance plans. FSAs may have a slightly lower annual contribution limit and a requirement to use the funds within that calendar year.

Creating Your Own Savings Plan

You can create your own savings account to use for medical and financial emergencies. Research different financial institutions to find the best interest rate. Then stretch your savings by comparing treatment prices on your insurance provider’s website or checking with customer service. You can also look at third-party sites like Clear Health Costs, FAIR Health, and Healthcare Bluebook for average costs.

Also, let your doctor know if you are having trouble affording your medications. They won’t offer low-cost options unless you tell them it’s a concern.

Many Americans avoid treatment regardless of income level and access to health insurance. Our elder law and estate planning attorneys help families plan ahead to avoid the financial devastation that can result from high health care costs in medical emergencies and the need for long-term care as they age. We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post The Cost of a Doctor’s Visit Is Out of Reach for Many Americans appeared first on Seif & McNamee.

What are the different forms of a Power of Attorney?

A “power of attorney” and “limited power of attorney” may manage your affairs until you are legally considered incapacitated or incompetent. The word “limited” narrows a power of attorney’s authority to transact business only to a specific property or with an agent’s limited access to funds. A “durable power of attorney” remains in effect until the principal revokes the document or upon their death. A “springing” durable power of attorney will not go into effect until a doctor certifies the principal incapacitated, allowing you to keep control over your affairs until you are unable. A “medical power of attorney” is always durable and permits healthcare decisions on behalf of the principal. The document includes sections similar to a living will, guiding the agent and doctors’ medical decisions to the principal’s wishes.

Like your will, durable power of attorney documents requires drafting according to the state laws you live in and some forethought of your selection of agents. Every state has laws governing the creation and use of valid power of attorney documents. Does your state abide by The Uniform Power of Attorney Act of 2006? This Act intends to standardize the approach, provide safeguards for the principal, and eliminate differences between state laws. As of 2019, twenty-six US states abide by The Uniform Power of Attorney Act. Residents of multiple states and snowbirds who routinely travel and transact business in other states may benefit from creating a valid durable power of attorney documents in both states.

Take note that if your spouse is your power of attorney, this designation does not automatically end when you finalize a divorce between you unless you live in these twelve states: Alabama, California, Colorado, Illinois, Indiana, Kansas, Minnesota, Missouri, Ohio, Pennsylvania, Texas, Washington, or Wisconsin.

What to Consider When Appointing a Power of Attorney

When appointing a power of attorney, the agent you select is a personal decision. There are things to consider, such as if your adult children are trustworthy and mature in handling finances and medical decisions on your behalf. Some adult children move away or lose touch and are not necessarily suitable candidates simply because they are your children. You may select a contemporary friend who becomes disabled themselves or pre-deceases you, so you must have a backup agent in the documentation. Always make the decisions regarding your power of attorney selection while you are in good mental and physical health.

What Role Does Your Financial Power of Attorney Play?

A financial power of attorney can have the authority to perform some or all of these tasks:

• Pay everyday expenses for you and your family with your assets
• Maintain, pay taxes on, sell, buy, and mortgage real estate and other property
• Collect government benefits including Medicare, Social Security, Disability, and more
• Invest your money in mutual funds, stocks, and bonds
• Transact with banks and other financial institutions
• Buy and sell annuities and insurance policies on your behalf
• File and pay your taxes
• Operate your small business
• Claim inheritance or other property to which you are entitled
• Transfer property to a trust you created
• Hire someone to represent you in court
• Manage your retirement accounts

There may be other actions necessary to perform; however, the above list constitutes significant duties. Your agent must act in your best interest, keeping accurate records and avoiding conflicts of interest.

What Role Does Your Medical Power of Attorney Play?

Your medical power of attorney is one type of healthcare directive that outlines your healthcare preferences if you are too ill or injured to do so. The agent you select must be trustworthy and mature in overseeing your medical care and healthcare decision-making. Your healthcare agent will coordinate with doctors and other healthcare providers, ensuring you receive the medical care you prefer. To make these preferences clear, you may choose to use the second type of healthcare directive known as a “living will” or “healthcare declaration.” In this document, you can make clear your healthcare preferences. In some states, medical power of attorney and healthcare declaration combine into one form known as an “advance health care directive.” With this information, your agent is legally bound to comply with your treatment preferences to ensure they are made aware in the documentation.

Choosing your agent well, appointing backup agents, and tailoring your documents to your needs and specifications can take away a lot of worry about your future care and well-being. Having valid power of attorney documents avoids guardianship issues, which are time-consuming, expensive, and limit freedoms. An elder law attorney can address any questions or concerns you may have about establishing power of attorney documents for your particular needs.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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Even though many young parents acknowledge the possibility of a life-altering event by maintaining insurance policies, a much smaller number of young parents have estate plans addressing what should happen if these situations occur. An estate plan ensures your wishes will be carried out, including who will care for your minor children and how your assets will be distributed.

Planning for Disability

In the unlikely event you can’t make or communicate financial and health care decisions, you’ll need to have people you trust to make them for you. Most people name their spouse as the person they want to make decisions for them. It’s a good idea to name at least one backup person in case your spouse is also incapacitated.

Appointing people as your agent to make decisions on your behalf requires creating and executing two powers of attorney, one for financial decisions and one for health care decisions. Depending on where you live, these documents have slightly different names, but they are used for the same purpose across the country.

In your health care power of attorney, you can also specify which medical treatments you want or don’t want if you are terminally ill. In your financial power of attorney, you can give your agent the ability to manage all your financial matters or just certain issues.

Choosing a Guardian for Minor Children

If you were to die or become seriously ill, your spouse would continue to care for your children. However, if your spouse were also unable to care for your children, then someone else would need to care for them. This person is referred to as a guardian. If you and your spouse don’t name a guardian in your wills, then a judge decides who will have custody of your children. Most people would rather choose who has custody of their children than rely on the court.

Give careful thought to who will raise your children. Think about whether they will still be able to attend the same schools and participate in their usual activities. You may want to make sure your children’s guardian will raise them with values the same or similar to your own.

Choosing a Conservator for Minor Children

A conservator manages another person’s finances when it would be unwise for them to have the responsibility, such as a minor child or someone with dementia. Some parents choose their children’s guardian to also act as their conservator, while others choose a different person.

Same as with a guardian, if a conservator is not selected, a judge will decide. You can name a conservator in your will. However, if you want to lay out more definite instructions as to how and when your children inherit your assets, you should consider creating a trust for their benefit.

Wills and Trusts

Having a valid will ensures your wishes concerning the distribution of your assets and guardianship of your children are followed after you are gone. In your will, you name the person you want to distribute your estate to your creditors and beneficiaries. You can also name a guardian and conservator for your minor children.

Trusts are usually more involved than wills. They allow your estate to bypass the probate process, making the distribution of your assets faster and private. If a person dies with only a will or no will, then their estate must pass through the public court system. Creating a trust also makes it easier to dictate how your assets will be distributed. When developing a thorough estate plan, a trust is an important tool in addition to a will.

Starting the Estate Planning Process

Having an estate plan is important for everyone, especially parents with minor children. Think carefully about who will make decisions for you if you are unable to, who will be the guardian for your minor children, and how you want your assets distributed. Viewing estate planning as an ongoing process rather than a one-time event is helpful. You should revisit your estate plan every few years to make sure it’s still in line with your wishes. An experienced estate planning attorney can guide you through the estate planning process so that you can rest easy knowing that you have a solid plan. Contact us today to start your estate planning process.

This article offers a summary of aspects of estate planning. It is not legal advice and does not create an attorney-client relationship. For legal advice, you should contact an attorney.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post The Importance of Estate Planning for Growing Families appeared first on Seif & McNamee.

What is a Digital Footprint?

A digital footprint is the record or trail of data from a person’s online activity. This online activity can include any information shared, created, or collected online. The following are some examples:

• Email Addresses – Including work and personal email addresses
• Social Media – Posts, likes, comments, shares, and messages on social media platforms like Facebook, Twitter, Instagram, LinkedIn, Pinterest, Snapchat, and others
• Communication Apps – WhatsApp, Skype, Slack, WeChat, and more
• Websites and Blogs – Business or personal websites and licensed domain names
• Financial Services – Banking, retirement accounts, trading, cryptocurrency, PayPal, Venmo, etc
• Online Shopping – Amazon, Etsy, eBay, Craigslist
• Online Searches – Data generated via online searches, including search terms used, websites visited, and time spent on each site
• Online Profiles – Listservs and dating profiles as examples
• Health and Medical Accounts – Online medical and health insurance records
• Entertainment – Netflix, YouTube, Hulu, Cable TV, Sling and more
• Music, Photos, Books – iTunes, Spotify, Shutterfly, Kindle
• Travel – Airline and car rental apps, Expedia, Airbnb, Uber
• Geolocation – Location data generated by mobile devices, such as GPS data, WiFi signals, and cell tower data

Absent an Estate Plan, Where Do You Start?

Handling a loved one’s digital footprint after they die can be a difficult and emotional task. Specific steps are needed to assess the accounts.

The first step is to find out what online accounts your loved one had and gather any usernames, passwords, and other information to access them. You may need to check their computer files, emails, or other documents to locate this information.

Once you have a scope of all online activity, contact the service providers for any online accounts your loved one had and notify them of their death. They may require a death certificate or other documentation to close or transfer the accounts.

Deciding What to Do With The Accounts

Depending on the terms of service for the online accounts, you may be able to close or delete them, or you may be able to transfer them to a family member or beneficiary. Some accounts may also have options for memorializing the account, allowing others to view the content without making changes.

If your loved one had digital assets such as photos, videos, or documents, you might want to back up the content and store them securely. This action can help prevent them from being lost or deleted, allowing family members to access and preserve them.

Estate Planning Attorneys Specializing in Digital Assets Can Help

The process of securing or closing the digital footprint of a loved one can be overwhelming. Estate planning attorneys can provide legal guidance on issues relating to digital assets, such as privacy laws, intellectual property laws, and cybersecurity laws. They can also help you navigate any disputes relating to these digital assets.

An estate planning lawyer can help by:

• Identifying and inventorying digital assets – An attorney can help inventory your loved one’s digital assets.
• Determining ownership and access – A lawyer can help determine ownership of the digital assets and whether access is allowed under applicable laws and terms of service agreements. They can also guide you on accessing digital assets that are password protected or encrypted.
• Creating a plan for the digital assets – Your attorney may designate beneficiaries or create a trust for digital assets. They can also help identify which digital assets can be deleted or closed and which may be valuable and should be preserved.
• Working with service providers – A lawyer can work with service providers to transfer ownership or close accounts. They can assist with obtaining copies of digital content, like photos or videos that may be valuable or sentimental.

An estate planning attorney can also help prepare families with a digital estate plan that will spare their loved ones the challenge of identifying, memorializing, or closing many online accounts. Additionally, having a digital estate plan can prevent post-mortem identity theft.

Providing instructions to Loved Ones Regarding Digital Assets

Making decisions about a loved one’s digital assets and accounts can be very difficult if they have not left instructions to follow. For some people, it’s useful to have reminders of their departed loved one. Others may prefer to close all accounts for various reasons. For those who lack online literacy, closing digital accounts can be beyond their capabilities.

Seeking the services of an estate planning attorney specializing in digital assets can reduce the complexities of identifying and preserving a deceased loved one’s online accounts and the likelihood of overlooking valuable assets in the online world. Contact an estate planning attorney today to help you sort through your or your loved one’s digital assets.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

The post The Digital Footprint of a Loved One After Death appeared first on Seif & McNamee.

Tax Form 1041

A disability attorney or special needs planning attorney may often collaborate with a CPA, tax attorney, or other financial professionals to help their client understand how special needs trust taxation works. Typically, beneficiaries of a trust pay taxes on income distributions they receive from the trust’s principal. When a trust makes a distribution, there is a deduction of the income distributed from the trust’s tax return. Tax Form 1041 is the form used to document taxable income distributed to a beneficiary.

Schedule K-1

The beneficiary then receives a Schedule K-1, indicating how much of the distribution received is interest income versus principal. The distinction between the trust’s interest income and the principal determines the taxable income to claim on the beneficiary’s tax return.

• Distribution from the principal balance of the trust has no tax consequences. The IRS assumes these funds were taxed before being placed into the trust.
• Income earned distributed from the principal funding carries a tax liability.

Overall, tax rules on special needs trusts can be pretty straightforward. However, the income tax rules become more complex depending on the type of special needs trust.

First and Third-party Trusts

A first-party or grantor trust’s funding comes from the beneficiary, typically from an inheritance, the proceeds of a personal injury settlement, retirement plan, divorce settlement, or life insurance policy. It is usually required to have a payback provision for repayment to the state upon the beneficiary’s death. The repayment covers Medicaid benefits the beneficiary receives during their lifetime. This trust is mainly funded by a donor-beneficiary under 65 years of age.

Because transferring assets into a first-party special needs trust permits an individual to qualify for government benefits such as Medicaid and SSI, most states don’t protect the trust’s assets from creditor claims to the beneficiary. Because all trust assets can satisfy the beneficiary’s debts and provide benefits, the IRS treats taxation as if there were no trust. So if the trust receives investment income, the taxes are assessed as income directly received by the beneficiary, even if the income is not yet distributed and remains in the trust.

A third-party trust receives funding from someone other than the trust’s beneficiary. This funding can be via life insurance policies, personal wealth, or other financial resources. However, third-party trust funding often occurs upon a family member’s death and is known as a testamentary trust. Assets transferring to a third-party trust during the funder’s lifetime, rather than death, may include trust language permitting the trust income to be taxable to the donor rather than the beneficiary or the trust. Sometimes referred to as an “intentionally defective grantor trust,” it can create advantageous situations, such as lowering the beneficiary’s tax bracket.

Complicated Interest, Dividends and Capital Gains

A typical third-party special needs testamentary trust is responsible for paying the income tax directly from the trust. Income tax brackets for trusts are subject to generally high rates, but the trust may deduct what it pays out to its beneficiary. However, the income to the beneficiary is taxable through issuing a K-1 showing taxable income to the IRS. The situation becomes more complex when treating interest and dividends as taxable income. Yet, capital gains distributions via mutual funds may not be treated as income, remaining trapped in the trust and taxable.

Before finalizing plans for a loved one’s special needs trust, it is critical to assess how the trust and its beneficiary will be taxed in the future. Understanding the tax laws regarding special needs trusts requires disability planning and tax law expertise. Collaboration with special needs and disability lawyers, including tax specialists, can help you craft a special needs trust and estate plan that will provide the best advantage for the future of your disabled loved one.

We hope you found this article helpful. Contact our office at (740) 947-7277 and schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.

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