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Leaving an Inheritance? Tips from the Pros

Few people get excited about doing estate planning, even though they might recognize the importance of leaving a legacy for their children and grandchildren. If you want to be smart about making gifts to your loved ones, though, there are some things you should consider before just writing a check.

When leaving a legacy to your heirs, you want to do it the right way. It’s always best to consult with the pros on important estate planning matters.

A recent article from The Motley Fool, titled “Thinking of Gifting an Inheritance to Your Grandchildren? Keep These 3 Things in Mind,” asks some of their experts for estate planning tips. Here are some of their answers:

Set up a Trust. Who wants to see the grandkids squandering their inheritance on something foolish? Many of the younger ones don’t have the appropriate financial skills to properly manage money. This makes the thought of handing over a large sum of cash or stock a queasy idea. A 2012 study showed that 23% of millennials spend more than they earn, so you have a reason to not feel well about your heirs and your money.

The article suggests that you instead set up a trust, a wise move if you're planning to pass along a substantial amount of money and want to avoid any chance of probate. You can control how and when a certain amount of money can be distributed to your grandchildren. That way they won’t be overwhelmed. This also gives your kin time to mature and develop their financial know-how. That way they can handle the inheritance when they receive the money later on.

Know about Estate Taxes. If you’re planning to leave an inheritance to your grandkids, the article says that you should remember the estate tax. This tax will be applicable if your total estate is valued at more than $5.43 million (for 2015). If this applies to you, you could start giving the grandkids money while you're still alive. The IRS allows a $14,000 tax-free gift each year per person, and that works for both you and your spouse ($28,000). Speak with an estate planning attorney to review your estate planning and estate tax situation. Some planning will go a long way toward helping you know that you money will be given to your heirs when they are ready and will anticipate any tax issues.

Need more information on this matter? Contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney.

Reference: The Motley Fool (April 22, 2015)“Thinking of Gifting an Inheritance to Your Grandchildren? Keep These 3 Things in Mind”

Americans Are Living Longer. Planning for Future Medical Care Is Essential!

We understand people are living longer and many live into their 90s. More than 25 per cent of seniors living at home receive help with day-to-day living activities. Ten per cent of seniors older than age of 80 live in a long-term care facility. Have you made prudent plans for longer living?

Medical issues associated with aging are most apt to be the reason life gets expensive during your later years. It’s very useful to look forward and understand the types of medical issues that could happen down the road. That’s the advice from a recent article in the Oakville (ONT) Beaver titled“Living in your later years can be expensive – plan ahead.”Americans, just like our friends to the north, need to better understand how to plan for the future. This article gave some interesting perspectives on the aging process. Here are some facts:

• People are living longer and many live into their 90s.
• More than 25% of seniors living at home receive help with day-to-day living activities.
• More than 10% of seniors older than age of 80 live in a long-term care facility.
• One of the leading causes of injury to seniors is a result of a fall.

Also, the article points out that as we live longer, dementia can become a real medical reality. Research shows that dementia issues are low at age 65 but increase steadily until age 90 where they affect half of seniors. With adult children living far from their parents with both husband and wife working, there is less time available to be devoted to caring for an elderly family member.

Initially, care can be received from the healthier spouse, but that takes a toll. Also, some seniors are single, so this isn’t an option. Thus, aging seniors will be increasingly dependent on others.

An experienced estate planning and elder law attorney can help devise your financial strategy to ensure there are enough financial resources in the event you have increased medical and living expenses in your later years.

Aging is expensive. Talk to Robert A. Gordon of Redkey Gordon Law Corp, an estate planning and elder law attorney and plan accordingly.

Reference: Oakville (ONT) Beaver (April 23, 2015) “Living in your later years can be expensive – plan ahead”

Selecting Guardians for Your Children

Without a formal direction, your wishes must be interpreted and your estate must be settled by a probate court judge. The process is expensive and encourages disputes. But divvying up wealth is whole lot easier than handing your children off to the state to determine where they go and how their care will be paid for. Just imagine the two grandmothers fighting over custody of your children?

For many young parents death seems like a long ways away. Regardless of how one feels, parents of all ages should have their affairs in order—including guardianship. New Hampshire Magazine’s May 2015 issue addresses this issue and offers sound advice through an article titled “Don't put off writing down your last words.”

If you just can’t decide on a guardian, you should still move ahead with your estate planning. It is better to have this issue undecided than to die without a will. That said, the article suggests that it’s a good idea to nominate two people. That way you have one to be the guardian of the children and a second to be a trustee of the funds dedicated to their care. 

Some parents feel that they must choose family members, but in many instances a close friend will work better than family. Think about close friends with children at about the same age as yours. Here are a few other things to ponder about selecting a guardian:

Does your guardian have a similar parenting philosophy, religious, and personal values?

Do they live close to you?

Do they have children, and how will your child(ren) fit in that situation?

Is the household stable?

Is age of the guardian an issue?

The article also advises not to exclude someone because they aren’t well off. You can create a trust that is funded through assets or life insurance to ensure the day-to-day care, health care needs, and the college expenses of your children. Talk to Robert A. Gordon of Redkey Gordon Law Corp, a qualified estate planning attorney about setting up this type of trust and reviewing your estate plan.

Finally, when you have decided on a guardian, review your plans and expectations with them (including the trust created by the attorney) and give them some time to think about assuming this role.

Reference: New Hampshire Magazine (May 2015)“Don't put off writing down your last words”

Who’s on Your Estate Planning Team?

If a Loved One or you have an estate plan, or even part of one, then some team members already are on board via the planning process and likely are actively serving or are nominated in the documents. They can have roles in the testamentary will, trusts, business purchase agreement, powers of attorney, medical directives or any of the other estate-planning instruments created during life.

Some team members are fee-based professionals, while others can be volunteers. In many instances, not all of the specialties will be required. Your estate planning team should consist of the combination of members that best suits your situation.

The Myrtle Beach (FL) Sun News recently published an article titled “Assembling your team for estate management”which reminds us that one person or a firm can serve in more than one fiduciary or team-member role.

The article suggests these possible team members:

• Personal representative(s) are nominated in the will and appointed by the probate court when the will is probated. This is the team leader who has the ultimate decision-making power and responsibility for administration of the probate estate.
• Trustee(s) are in charge of the trust, responsible to carry out its terms, and have ultimate decision-making authority and responsibility for its administration.
• Guardian(s) are court-appointed persons to provide day-to-day care for a child or a legally incapacitated person, managing and being responsible for his/her personal business.
• Attorney(s)-in-fact and/or health-care agent(s) have responsibility and authority during a person’s end-of-life.
• Professional life and property insurance agents who are professionally qualified to handle claims in their fields.
• Business associates, partners, key employees, even competitors.
• Funeral director.
• Late-life caregivers.
• Spiritual advisers.
• Financial planner.
• Tax adviser, if other than the CPA, financial or legal professional.
• Advisory staff of the client’s long-term-care residential facility.
• Personal bankers.

A key player on this team is the estate’s attorney. He or she is hired to handle the estate’s legal matters. Estate attorneys are specialized attorneys who practice solely or primarily in estate planning matters. An estate planning attorney can be extremely beneficial in cases where highly sophisticated, specialized expertise is needed. This may often include issues of taxation, evaluation, litigation, international commerce, securities, and commercial real estate transactions. This is also true with trusts and the business interests. Contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney, to assist you with such matters.

Although we live in the information age, there is sometimes too much information. This can be dangerous. The article gives some wise words of advice for everyone:

Well-meaning publications, websites, helpers and family members can lead you wrong with outdated, jurisdictionally invalid, technically inapplicable information, and inapplicable, superficial generalizations. The guidance of the right professionals in matters that count so seriously in the profoundly serious business of estate planning, preparation and administration always should be the governing resource of choice.

Reference: The Myrtle Beach (FL) Sun News (April 25, 2015) “Assembling your team for estate management”

Estate Tax Burden – Which Is the Worst State to Die In?

Sixteen states and the District of Columbia levy an estate tax with some taking a bigger piece of your estate than others. For this reason, it is critical to understand which states are going to take more out of your beneficiaries pocket when you die. So which states are the most costly?

Does your state have a death tax? While the federal applicable exclusion is $5.43 million in 2015 or $10.86 million for a married couple, many states have much lower thresholds. This casts a much wider net—meaning there’s a better chance that your estate will be subject to state tax.

An article in The Times of Trentontitled, “N.J. ranks among worst states to die from an estate tax perspective,” points out that some states don’t index their exemption amount for inflation, which gradually increases the number of taxpayers affected.

Sixteen states and DC have an estate tax with some taking a bigger chunk of your estate than others. That’s why it’s important to understand which states are going to take more out of your beneficiaries’ inheritance when you pass away.

Which state is Number One?
New Jersey! Of all of the states, New Jersey has the distinction of having the lowest exemption level for estate taxes ($675,000). Estate tax rates range from 4.8% to 16% of the total estate.

But wait! There’s more: not only does the Garden State levy an estate tax, it’s also one of only two states to assess an inheritance tax where applicable. The state also has a three-year look-back on gifts considered to be in contemplation of death—this could trigger more inheritance taxes!

Remember that spouses are exempted from paying estate or inheritance tax, and in some states, this exemption applies to civil unions.

So it is really at the death of the surviving spouse when assets are passed to other beneficiaries that estate taxes come to the forefront. Too many people wait until it is too late to establish a plan that addresses these taxes.

Develop an estate plan to help to reduce future estate taxes. Speak to Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney to determine the most appropriate approach for you.

Reference: The Times of Trenton (April 25, 2015) “N.J. ranks among worst states to die from an estate tax perspective”