Writing Your Tulsa Estate Planning Blog

Relatively recent changes to federal estate tax law have made bypass trusts less popular than they used to be. However, they are still good in many circumstances.

It used to be a complicated process for a married couple to get the most out of the estate tax exemption. When one spouse passed away his or her estate tax exemption could be useless if all of the assets went to the other spouse directly. When the second spouse passed away all of the couple’s assets would be considered part of his or her estate and the individual estate tax exemption would be applied.

To get around this couples had to get a “bypass” trust of which there were many types. Essentially, the surviving spouse was bypassed in the estate plan.
The relatively new federal law of spousal “portability” changed this and made bypass trusts less necessary. Now, if the paperwork is properly filled out, a surviving spouse can elect to carry over the deceased spouse’s estate tax exemption and use it along with his or her own later.

This move essentially doubles the estate tax exemption.

However, there are some situations where a bypass trust is still a good idea as discussed by the Poughkeepsie Journal in “Bypass trust works better for many families.”

Many states have estate taxes of their own and they do not all allow spousal portability. Thus, in some states a bypass trust is still necessary to take full advantage of estate tax exemptions. A bypass trust can also be used to protect against a surviving spouse getting remarried and having all of the couple’s property eventually ending up in the new spouse’s family. They can also be used as a great way to include other family members in the estate plan, especially grandchildren.
If all this sounds a bit confusing, do not worry. That is why there are estate planning attorneys.

Tell the attorney what you want done with your possessions after you pass away and let the attorney worry about the best way to accomplish that while minimizing the estate tax burden on your estate.

Reference: Poughkeepsie Journal (Nov. 4, 2016) “Bypass trust works better for many families.”

One of the first things that people have to decide when they start thinking about estate plans is whether they want to use a will or a trust. Both have their advantages.

If you start asking your friends and family or look on the Internet for estate planning advice, then you are likely to receive a lot of conflicting advice. Should you get a will or a trust? Nearly everyone seems to have an opinion one way or another.

Normally, the opinion of non-attorneys is rooted in which of the two options was best for the person giving the advice. It may or may not be the best advice for you.

To help decide the better option to use as the primary legal instrument in your estate plan it is helpful to know the basic differences between the two.
This was the subject of a Motley Fool article titled “Wills vs. Trusts: Which Are Better?”

A will determines who gets your possessions after you pass away. It has no legal effect until then. It is a roadmap for what you want to happen later. The rules for wills vary from state to state, but they need to go through probate court and the details are made public. For people with small estates they can be cost-effective.

Trusts, on the other hand, have legal effect as soon as they are executed. Property is placed in the trust while you are still alive. While trusts can be more costly to obtain and maintain, they do not ordinarily have to go through probate after you pass away and the details are not made available to the public. Trusts are normally preferred to wills for larger estates.

If you are uncertain whether a will or trust is a better option for you, that is okay. You probably should not decide between the two before talking to an estate planning attorney who can help you make the decision. To learn more about trusts versus wills, sign up for one of our upcoming workshops.

Reference: Motley Fool (Nov. 8, 2016) “Wills vs. Trusts: Which Are Better?”

Estate planning can sometimes seem like it requires a long, complicated list of different documents. It can be helpful to break those documents down into two basic categories.

Once you start planning for your estate you can quickly get bogged down trying to figure out what all of the different estate planning documents are. There are all sorts of different legal documents that are not familiar to most non-attorneys. This often confuses people enough that they give up and delay getting an estate plan.

However, it does not have to be that complicated.

A good way to think about the different documents is to put them into two basic categories, as the Motley Fool discusses in “The Estate-Planning Documents Everyone Needs.”

The first type of estate planning document determines what happens to your belongings after you pass away. This category includes wills, most trusts and even things like a retirement account that has a beneficiary designation.

The second type of estate planning document determines who takes care of your affairs if you are not able to do so. This category includes powers of attorney and advanced health care directives.

Who do you want to have your possessions after you pass away and who would you like to take care of your affairs if you cannot? Answer these questions, and then go to an experienced estate planning attorney. Tell the attorney your answers, and let the attorney figure out the documents you need to give your answers legal effect.

Reference: Motley Fool (Nov. 7, 2016) “The Estate-Planning Documents Everyone Needs.”

Getting a formal estate plan from an attorney is not the final step to prepare for your estate. Estate planning is a lifelong process.

If you have taken the important steps of going to an estate planning attorney, discussing your wishes for your estate, having the attorney craft your plans and executing those plans, congratulations. You have done what far too few Americans do and have planned for how your estate will be handled. You have taken the necessary steps to make sure that if anything happens to you, your loved ones will be taken care of according to your requests.

However, do not think you are done with everything forever.

It is extremely important that you update your estate plan when necessary as the Verde News discusses in “Updating Your Estate Plan: When You Should Review It.”
It is impossible to list all of the possible times your estate plan should be updated.

Plans need to be changed whenever there are significant changes in circumstances. That can include changes in your financial situation, death of an important person in your estate plan, changes in estate law and much more.

Estate planning attorneys suggest that you review and change your plans anytime you experience a substantial change in life circumstances. It is also suggested that you review your estate plan every few years and talk to your estate planning attorney to make sure no laws effecting your plan have changed.

If it has been awhile since you have updated your estate plan, then call your attorney and schedule an appointment to have your plan reviewed.

Reference: Verde News (Oct. 29, 2016) “Updating Your Estate Plan: When You Should Review It.”

Getting an estate plan often seems more difficult than it is. If you follow a few basic rules and steps, then you can get a good estate plan with little hassle.

Many people have the mistaken idea that getting an estate plan is an overly complicated process. They let this idea stop them from doing their own planning and they just keep putting things off.

However, estate planning does not have to be complicated.

Recently Personal Liberty offered some tips to simplify things in “Nuts and Bolts of Estate Planning,” including:

•Organize all of your financial and asset documents so you know what you have and what you need to plan for.
•Make the important decisions about who you want to have your assets and how much everyone should get.
•Think about how your heirs might disagree and how any conflicts can be avoided.
•Your plan does not need to be perfect. You will not be able to create a plan that pleases everyone completely.
•Whenever possible keep your plans flexible so they are easy to change when circumstances change.
•Make sure you are choosing responsible people to act as your executor and trustees.
•Do not surprise your heirs with too much. If you are planning something unusual, it is a good idea to let them know.

An experienced estate planning attorney can help you avoid missteps.

Reference: Personal Liberty (Oct. 28, 2016) “Nuts and Bolts of Estate Planning.”

If you have never had to deal with a close family member passing away, then you might not know that there are important things that you need to do to make sure everything goes smoothly.

Dealing with the death of a close family member can be a trying experience, especially if it is the first time you are the responsible adult in charge of making sure everything is done properly. You not only have to deal with your own grief, but you also must make sure the deceased’s affairs are in order.

This is tough for even the most meticulous people as the Cape May County Herald discusses in “What to Do When a Family Member or Loved One Dies.”

Some things you need to do are just common sense. For example, you must make sure everything is safe and secure at the home, that any pets are taken care of and that any perishable food items are cleaned out of the refrigerator and pantry.

You should also take some financial steps.

It is important that you log any expenses you have while dealing with the clean up so you can be reimbursed from the estate. You should also be certain to locate any credit cards or check books to make sure they are secure. It is illegal for you or anyone else to use the cards or checks, so destroy them.

The most important thing you need to do when a loved one passes away is to call an attorney. If you know the family member used a specific estate planning attorney, then call him or her to ask about important documents. Otherwise, call an estate attorney to learn about your legal obligations.

Reference: Cape May County Herald (Oct. 31, 2016) “What to Do When a Family Member or Loved One Dies.”

Many children with aging parents know that their parents should do estate planning, but convincing their parents of that can be difficult.

Many elderly people in the U.S. believe estate planning is something only the very wealthy need. If they only have a few major assets and modest back accounts, then they believe estate planning is unnecessary for them.

Many of their adult children know better, however.

The children know estate planning is an important responsibility for everyone regardless of wealth. While those children would like to talk their parents into estate planning they may find it difficult.

This topic was addressed by NJ 101.5 in “Talking to your parents about a will.”

If you find yourself having this problem with your aging parents, there are some steps you can take.

First, explain to your parents that without an estate plan their estates will have to go through probate and everything will be distributed according to state law and not your parents’ wishes. That means if they would like to leave something directly to their grandchildren, they will not be able to do so in most cases.

You can also talk to your parents about how costly and time-consuming probate can be and how it could be a burden on the family.

If all else fails and you can afford it, you might offer to pay for your parents to visit an estate planning attorney. They do not have to commit to anything before seeing the attorney, but the attorney can discuss the benefits of estate planning with your parents and give them some options.

Reference: NJ 101.5 (Nov. 1, 2016) “Talking to your parents about a will.”

The federal estate tax might soon be a thing of the past. That does not mean that you will no longer need a will.

Today, January 20, 2017, the Republican Party will control the Presidency, the Senate and the House of Representatives. Many people are hopeful that the party will quickly act on its long-stated goal of eliminating the federal estate tax.

If it does so, do not be tempted to think that you no longer need an estate plan. There are reasons to get one that have nothing to do with avoiding the estate tax.

At the very least, you still want to have a will as Forbes discusses in “Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!”
The reasons include:

•In a will, you appoint an executor who is in charge of administering your affairs. The executor can make sure that all of your debts are paid and that your assets are handled appropriately.
•If you have minor children, a will is used to designate who you want to have guardianship of those children in case something happens to you.
•In a will, you can give specific bequests to people. That means if you want one of your children to have a specific piece of personal property for sentimental reasons, a will is the place that you do that.
•While getting a will you can also get advanced medical directives that will determine how you should be cared for, if you are incapacitated and not able to communicate with doctors at the time.
•A will is more efficient than allowing the courts to handle your affairs without your directions. It also protects your estate by making sure that your property does not go to people you do not want to have it.

Reference: Forbes (Dec. 8, 2016) “Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!

Do not be confused about what estate planning is and whether or not you need to do it.

Most Americans do not have estate plans. One of the reasons that they don’t is confusion about what getting an estate plan means and who should have them. The term “estate” often conjures up images of the palatial estates of the ultra-wealthy. However, the term applies to the property of anyone who passes away.

We will all have estates someday. For that reason, it is important to know what estate planning actually does.

Recently, the Vail Daily discussed some basics in “Estate Planning.”

If an estate is the property you have when you pass away, then estate planning is deciding what should happen to that property. It is you deciding beforehand who you want to have your property and the legal means by which they will receive it.

The two most common methods to have your property distributed are wills and trusts.

A will is a legal document that is submitted to a court. The will sets out who should receive what. If the will is valid, the court will oversee the process of making sure that the property goes where you want it to.

A trust creates a new legal entity to hold and distribute property. It is not normally submitted to a court, unless it is a “testamentary” trust created under a will to manage the estate distribution. Another person known as a trustee, is charged with making sure that your directions are followed.

There are other aspects of estate planning you should address, including planning for your own end-of-life care. Visit an estate planning attorney if you have questions about wills, trusts, or any other aspects of estate planning.

Reference: Vail Daily (Dec. 8, 2016) “Estate Planning.”

Who you name as the beneficiaries of your retirement accounts and your life insurance policies, is an important part of modern estate planning. Knowing when to change them is vital.

Estate planning today is not just about going to an estate attorney to have a will or a trust drawn up. It also includes making plans for your own end-of-life care and deciding who should get your retirement accounts and life insurance policies, if something happens to you.

The beneficiaries of your accounts will get the assets by operation of law. If you have done everything correctly, then you have factored those accounts into your overall estate plan with the assistance of your estate planning attorney. Sometimes you need to review and change those designations.

Recently, the Aiken Standard listed some appropriate times to do that in “On the Money: Don’t disinherit your loved ones,” including:

•If you get divorced or remarried, then review your accounts to make sure you are not leaving things to an ex-spouse or that your new spouse is included.
•If you get a new employer and roll over your old account, then make sure that the new account accurately reflects your wishes.
•If the primary beneficiary on your accounts passes away, then you obviously need to make changes.
•If the financial institutions you have the accounts with change ownership, review your beneficiary designations to make sure the new company has everything recorded properly.
•If you have a new child or grandchild, consult your estate attorney about including them and whether they should be named as beneficiaries.
•If a beneficiary becomes disabled, you should talk to an attorney about creating a special needs trust. Keeping them as a beneficiary could make them ineligible for some needed government benefits.

Reference: Aiken Standard (Dec. 10, 2016) “On the Money: Don’t disinherit your loved ones.”