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.

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.

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.

Key Differences Between Revocable and Irrevocable Trusts

The key differences between these two trust types include:

·       Control

A revocable trust allows the grantor to maintain control of the assets during their lifetime and make changes to the trust as needed as long as the grantor is mentally competent. In contrast, an irrevocable trust typically transfers control of the assets to the trust itself or a trustee. This prevents the grantor from making any changes to the trust once it is written and funded, with few exceptions.

·       Tax Implications

A revocable trust is generally treated as part of the grantor’s estate for income tax purposes but does not reduce estate taxes. However, an irrevocable trust can be structured to reduce estate taxes by removing assets from the grantor’s estate.

·       Creditor Protection

Assets in a revocable trust are generally not protected from the grantor’s creditors. In contrast, assets in an irrevocable trust can receive protection from creditors depending on the trust’s terms.

·       Probate

A revocable trust can help avoid probate, the legal process after someone dies to transfer assets to their heirs. Assets held in a revocable trust are generally not subject to probate. An irrevocable trust can also help avoid probate; however, because the grantor gives up control of the trust’s assets, it may be more difficult to change the trust to accommodate changing circumstances.

·       Privacy

A revocable trust can provide more privacy than a will since the terms of the trust don’t become part of the public record. An irrevocable trust can also provide privacy, but because it may involve transferring control of the assets to a trustee, it may be more difficult to keep the terms of the trust private.

Each trust type offers benefits and some drawbacks, and the choice between them will depend on the grantor’s specific estate planning circumstances and goals. An estate planning attorney can help determine which trust type is the most appropriate for a particular individual or family.

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When to use a Revocable Trust

In some situations, a revocable trust may be the best option. There are eight circumstances when a revocable trust may be a good choice.

1.    Avoiding Probate

One of the primary benefits of a revocable trust is that it can help you avoid probate. Assets in the trust can pass directly to your beneficiaries without the need to involve the court.

2.    Incapacity Planning

If you become incapacitated and unable to manage your affairs, the trustee of your revocable trust can step in and manage the assets on your behalf. The trustee can properly manage your financial affairs and carry out your wishes.

3.    Privacy

A revocable trust can provide more privacy than a will since the terms of the trust don’t become part of the public record. If you have concerns about your financial affairs becoming public knowledge, create a revocable trust.

4.    Flexibility

Modifications or even fully revoking this trust type may occur during your lifetime. If circumstances change, you can make changes to your trust.

5.    Blended Families

If you have a blended family, a revocable trust can be a good way to provide for your spouse and children from previous marriages. You can specify how you want your assets distributed and ensure you fulfill your wishes.

6.    Special Needs Planning

If you have a child or other beneficiary with special needs, using a revocable trust can provide for their ongoing care and support you after death.

7.    Real Estate Ownership in Multiple States

You can avoid ancillary probate in a state other than where you live.

8.    Estate Value

This trust is a great choice if your estate is less than that federal estate tax exemption.

When to Use an Irrevocable Trust

In some situations, irrevocable trusts are the better option. There are seven specific circumstances when an irrevocable trust may be a good choice.

1.    Estate Tax Planning

You can remove assets from your estate using an irrevocable trust, helping reduce or eliminate estate taxes. Once the assets transfer to the trust, they are no longer legally part of your estate for tax purposes.

2.    Creditor Protection

Assets in an irrevocable trust receive protection from your creditors. This can be particularly important if you are in a profession or business that exposes you to liability.

3.    Medicaid Planning

If you are concerned about the cost of long-term care and its impact on your estate, an irrevocable trust can transfer assets out of your name and into the trust. Doing so can help you qualify for Medicaid benefits if you need them.

4.    Charitable Giving

An irrevocable trust can be a vehicle for charitable giving, allowing you to leave a legacy and support causes that are important to you.

5.    Business Succession Planning

If you own a business, an irrevocable trust can transfer ownership to your heirs or to a trustee who can manage the business on behalf of your beneficiaries.

6.    Comfort with Permanence

You must be comfortable giving up control of your asset after establishing the trust.

7.    Estate Value

This trust is a great choice if your estate value is higher than the federal estate tax exemption, and you want to avoid estate taxes.

It’s important to note that an irrevocable trust isn’t as flexible as a revocable one since you can’t make changes after establishing and funding except in very limited circumstances. However, they can be a powerful tool for achieving specific estate planning goals.

How an Estate Planning Attorney can Help

An estate planning attorney can guide and assist you with revocable and irrevocable trusts to determine which will meet your goals, assets, and other factors. They may provide tax planning advice since trusts have complex tax implications and assets must be transferred efficiently.

Your estate planning attorney can draft the trust documents and ensure proper execution. If you already have a trust, they can review the documents, ensuring they still meet your needs and comply with changes in the law.

Contact our office at (740) 947-7277 for ongoing support and advice, ensuring your trust meets your needs throughout your lifetime. We look forward to the opportunity to work with you.

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According to a 2021 Gallup poll, only 46% of US adults have a will. This is a slight increase from 2016 when 44% had a will. Still, less than half of US adults have taken the time to create this important document. The poll also showed that older adults are more likely to have a will than younger adults. Of those polled who were over the age of 65, 76% said they have a will.

Dying Without a Will

If you were to die without creating a will, a state probate court would choose an administrator to manage the probate process for your estate and choose a guardian for any minor children you have, provided the children’s other biological parent is deceased or unable to care for them. The downside to this process is that the decisions the probate court and the administrator would make may not align with what you would want.

Dying without a will is known as dying intestate, and it can create problems beyond state laws dictating what happens to your assets and children. When your intentions aren’t known before you die, you set the stage for potential conflict among your family members and heirs. Without the will to use as a guide, the administrator has to guess what you would want and have the probate court approve it. This places an undue burden on the administrator, who is often a family member.

The administrator’s duties include the following:

• Locating all your living heirs and notifying them of your death
• Publishing a notice of your death so that any creditors you may have can submit their claims
• Compiling a list of your assets
• Paying off any debts and taxes that are owed
• Collecting any money owed to your estate
• Distributing any remaining assets to beneficiaries deemed valid by the probate judge

To avoid creating conflict that could cause rifts in your family, draft and execute a valid will spelling out how you want your estate distributed, who should become the guardian for any minor children, address funeral arrangements, and what should be done with your remains.

Dying With a Will

When you have a valid will, it makes life for your survivors much easier. In a will, you can appoint a person you trust to manage your estate after your death. The person you appoint is known as the executor or personal representative for your estate. A will acts as their guide.

Even if you have a will, your estate still has to go through the probate process. The first step in the process is for the named executor to file your will with the probate court. The court then determines the authenticity of your will. Upon confirming that your will is valid, the probate court officially appoints the executor, most likely the person named in your will, to carry out the administrator duties.

Avoiding Probate

Regardless of whether a person dies with a will or not, the probate process exists to help ensure the decedent’s bills and taxes are paid and that their assets are distributed fairly. Though this sounds good in principle, the probate process can be a long and expensive process. And since the process takes place in the court system, it’s open to the public and the will can be contested. For these reasons, some people create trusts for their assets before they die. Their estates can settle outside of probate court and there is less of a chance that family members can successfully contest the will.

Consult with an estate planning attorney about your options. You may be able to keep your estate out of probate and leave a better legacy for your heirs.

This article offers a summary of aspects of estate planning law. It is not legal advice, and it 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 Comparing Having a Will Versus Not Having One appeared first on Seif & McNamee.

The Benefits of Hybrid Long-Term Care Policies

“Hybrid” policies essentially combine life insurance or an annuity with LTC coverage. The unique benefits are also known as:

·       Accelerated death benefits

·       Living benefits

·       Life/long-term care

·       Linked benefits

·       Combo policy

Flexible Coverage

This type of policy will pay if you need nursing care, but if you never need that, then the policy functions like standard whole-life coverage. It’s a win-win. Say, for example, you buy a hybrid policy with a $100,000 death benefit. You eventually need $50,000 of that coverage to pay for LTC. Then, when you pass, your beneficiary would receive a $50,000 payout from what’s left of the original $100,000 coverage.

Tax-Free Benefits, Return of Premium, and Locked in Rates

Some plans offer tax-free death benefits to your heirs if your LTC benefits are not fully used or needed. They may return your premiums if you change your mind down the road. Premiums can be locked in from the initial purchase date, with a guarantee that they will never increase. Those who already hold a legacy policy with a large cash value may be able to roll that value over, tax-free, into a new hybrid policy.

Lump Sum Premiums

For those who can afford to pay premiums in a lump sum in advance, LTC coverage could amount to as much as twice the face value of the policy. Compare that with simply setting money aside for LTC expenses at a rate of five percent interest. It could take as long as thirty years to save for the payout the policy offers.

A Variety of Options

There is a wide range of coverage, depending on the policies. They may cover different services, delivered at home, in a facility, or both. The monthly or daily benefits can vary. Some policies require an elimination period (a delay between the time a doctor qualifies you for coverage and actual payment); some do not. Some provide inflation protection. Some provide adjustable rates, weighing how much the insured might need LTC  against the death benefit.

When choosing an insurance carrier, always remember that the company must have long-term financial stability to pay claims and remain in business for decades to come. You can check the company’s financial strength at four major agencies:

• M. Best Company
• Demotech
• Moody’s Investor Service
• Standard and Poor’s Corporation

To sort through all these intricacies, the National Association of Insurance Commissioners has issued a free and comprehensive Shopper’s Guide to LTC Insurance.

Estate planning and elder law attorneys can create a long-term care plan that incorporates a hybrid LTC plan in an irrevocable trust that will protect all of your bank accounts and real property (like your home) in the event you need long-term care services. If you are interested in protecting your savings and home, please contact our office at (740) 947-7277 and schedule a free consultation. We look forward to the opportunity to work with you.

The post Hybrid Long-Term Care Insurance 2.0: Benefits appeared first on Seif & McNamee.

Aside from not having an estate plan, failing to review an estate plan every few years for life changes can unintentionally derail the effort and time put into it. Most people don’t understand the variety of situations that could impact their will, trust, tax situation, and more, causing big problems in the future.

Reasons for Reviewing your Estate Plan

Review your will, trusts, and beneficiary designations at a minimum every five years or when there is a shift in family dynamics such as birth, death, marriage, divorce, and infirmity. Your assets may have grown, sold, lost, or been spent. Minor children will require guardianship if something happens to you, and you can name a guardian in your will. A child with special needs may require a trust to provide extra financial help without affecting eligibility for government benefits. Many life experiences and outdated forms can render your estate plan ineffective because it does not represent your current situation.

Planning for Disability

Many older American workers believe their risk of disability before retirement is very low. However, according to the Society of Actuaries (SOA), one in seven workers will experience a disability lasting five years or more before they reach retirement age. Without planning, an unexpected disability will negatively impact your estate plan. Creating a trust document with your estate planning attorney can lessen the financial stress of health care costs due to a disability. Establishing a durable power of attorney to legally make decisions on your behalf also helps you control aspects of your daily life and permit long-range decision-making if necessary.

Including Nursing Home Care

Not pre-planning for nursing home care can devastate your estate, and if you have a spouse, it can ruin their long-term financial security. Because of the expense of long-term care, many people rely on Medicare funding. However, Medicare does not fund these expenses. Medicaid can, in some instances, provide this long-term care when a person’s financial resources are depleted; however, this creates a financial hardship for the remaining spouse in the household. An estate planning lawyer can present appropriate options for pre-planning for potential nursing home care.

Putting a Child on Your Home’s Deed

Often, an adult child will move in with their aging parents to alleviate the stresses of daily living. Unfortunately, this gives them title to your home, and in the worst cases, they might sell the house, kick you out, keep the profits and not share with other beneficiaries. Even in the best scenario where the child does not take advantage, you still give them a taxable gift. An estate planning attorney can advise how to protect and transfer real estate and minimize tax consequences.

Choosing an Estate Executor

Choosing an executor or personal representative is an important decision. Selecting the wrong person to administer your estate can have dire consequences. A surviving spouse who’s grieving may be too overwhelmed to manage the probate process. They may have a limited understanding of investments, finances, or tax laws to manage a larger estate or trust. Some adult children may disagree with your estate decision-making, and you may have concerns they will not fulfill the terms of your will. Still, other children may not act responsibly as trustees or guardians because of spendthrift habits. Identifying a responsible and capable executor is crucial to proper estate administration.

Coordinating Beneficiaries

It can be an expensive oversight if you forget to update the beneficiaries of your retirement accounts (401(k)s, IRAs), annuities, and life insurance policies. These retirement accounts are often the more significant assets in an estate. For instance, an ex-spouse might receive these assets if you forget to change the beneficiary designation. A secondary beneficiary should also be named to these account types if possible, as you may outlive the first selection. Know that beneficiary designations will take priority over a will.

Life Insurance and Estate Tax

Individuals with wealth may also have very large life insurance policies, which may inadvertently create estate taxes for their heirs. While life insurance payouts are not subject to state or federal income taxes, if the benefit is large enough, it may still be subject to estate tax if the insured had “incidents of ownership” when they died. Your estate planning attorney can circumvent the estate tax consequences of a large life insurance policy by creating an irrevocable life insurance trust for the intended heir.

Titling Specific Assets to a Trust

By creating a trust account, you may protect assets from creditors, ensure your heirs can easily acquire their inheritance, and keep details of your financial affairs private. However, if you fail to move assets into the trust, its creation is worthless. It is necessary to retitle the assets you want in the trust into the name of that trust. Forgetting to retitle assets into a trust means they will still go through probate.

Making Gifts to Reduce Estate Tax

For larger estates, it is possible to gift loved ones a certain dollar amount each year without incurring any gift tax. This annual gift tax exclusion will be $17,000 per individual in 2023. Many people fail to take advantage of yearly gifting, which can reduce the impact of estate taxes when you die and provide a significant benefit to your loved ones. As the estate tax laws permitting increased inheritance before federal estate tax is applied expires in 2026, gifting to reduce your overall estate assets over time may benefit your estate’s tax situation.

The complexity and ever-changing laws that govern inheritance on a state and federal level make it easy to take the wrong actions, even with the best intentions. Working with an estate planning attorney can create a plan to protect your estate, keep your documents current, and provide the most advantageous inheritance situation for your family members when you are gone.

Contact our estate planning attorneys at (740) 947-7277 to create or update your estate plan. We look forward to the opportunity to work with you.

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Asset Division

Dividing assets during any divorce is challenging, but it is especially difficult when a couple has accumulated a lot of assets together as well as separately. Older couples are likely to have family heirlooms from each of their families that have become commingled property. This can make it hard to separate it legally.

It is important to consider how a divorce affects a couple’s financial assets, such as retirement accounts, pensions, and life insurance policies. The natural inclination would be to drop a former spouse as a beneficiary of these accounts; however, doing so could have negative financial and tax implications. It is a good idea to consult a knowledgeable financial or legal professional before removing beneficiaries from accounts and policies.

Additionally, divorces are often expensive and can deplete financial resources. This can be especially tough for older couples whose future earning capacity is limited.

Tax Implications

After a couple divorces, they will each have to file their taxes individually instead of jointly. This could affect their tax planning options, especially if they have a large estate.

Usually, a couple’s home is their most valuable shared asset. In the case of older couples, they may have owned their home for decades. The value of their home may have increased significantly over the years. Transferring ownership of the home from the couple to one spouse could negatively affect that spouse’s capital gains tax when the property is sold. This is because the individual personal residence exclusion is less than what it would be for a couple.

Long-term Care Planning

Older couples who are thinking about getting a divorce should consider how the divorce will affect their long-term care planning. They may be in the process of transferring assets out of their names and into trusts. How assets are divided could affect each person’s eligibility for Medicaid benefits.

Estate Planning

In some states, when a divorce is final, all provisions and bequests to the former spouse in the other spouse’s last will and testament are revoked. If either had their former spouse named as an agent in a power of attorney document or an advance health care directive, then that is also revoked. During the divorce process, the divorcing spouses will want to redo any estate planning documents that name the other as an agent.

In some cases, however, divorcing couples may want the other to still act as an agent for them. If this is the case, they may need to redo their affected estate planning documents if the state has nullified them.

If you are considering getting a divorce, especially if you have accrued assets together over many years and did your estate planning together, you should seek the help of an experienced estate planning attorney to navigate the process. Contact our office to get answers to your estate planning questions.

This article offers a summary of aspects of estate planning law. 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.

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