Simpson Law, PASilver Spring Estate Planning Attorney | Simpson Law, PA2024-02-29T18:46:15Zhttps://www.simpsonlaw.biz/feed/atom/WordPress/wp-content/uploads/sites/1301194/2020/07/favicon-75x75.pngOn Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475652023-08-18T12:41:05Z2022-11-19T19:14:16ZJoint ownership: Under joint tenancy, ownership is shared equally with a right of survivorship. That means when one owner dies, the other automatically takes over the deceased person’s share. Establishing joint ownership is usually as easy as putting both names on a document, such as a vehicle title or the deed to a house.
Beneficiary designations: Certain assets can be transferred via beneficiary designations, outside of your Will. You can leave bank accounts, insurance, retirement accounts, and certain government securities to someone by naming that person as the “payable-on-death” beneficiary. These forms are available directly from the bank/account administrator and can be updated at any time.
Living will and power of attorney: If you want your partner to handle financial and medical decisions if you become incapacitated, a health care power of attorney and a living will can make sure that happens. Likewise, a financial power of attorney gives your partner control over your assets.
Revocable trust: A living trust places your assets in trust for your benefit during your lifetime and designates where these assets will go when you die. A revocable trust is one you can change at any time. They can be set up to benefit unmarried partners, in the same way they can be set up for children or other heirs.
By placing assets in a trust, you can avoid the probate process, eliminating delays and fees. Your property can pass immediately and directly to the named beneficiaries. Some people also choose trusts to protect their privacy. While wills are public documents, a living trust is private and typically more difficult to challenge.
These are big questions, and you may not have all the answers right away. But don’t let that be a reason to put off creating or updating your estate plans. Talk with your estate planning attorney to talk through your options and wishes.]]>On Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475642023-08-18T12:41:11Z2022-11-10T19:10:17ZDepartment of Justice’s website on guardianship and conservatorship. Please be sure to check their website for in-depth information, resources, and other helpful tools.
Guardians are also known as fiduciaries, who “are people or organizations that act on behalf of someone else and have high duties of trust, care, honesty and confidentiality.” Guardians are responsible to the person for whom they provide care as well as to the court, and often must report to both.
Four Types
There are four types of guardianships. The first two are guardian of the person and guardian of the property. The first type allows the guardian to make decisions regarding health care choices, living situation, and other personal matters. The guardian of the property is responsible for managing the finances and financial assets, and generally manages the flow of income, investments, expenses, real estate purchases or sales, donations, and more. Although the second type of guardian is called “guardian of the property,” they don’t necessarily control or manage tangible property unless it needs to be bought or sold. Tangible property, like household items the beneficiary owns, are more likely to be managed by the guardian of the person.
A full guardianship is one which gives virtually all control of the individual, and their assets, to the guardian. This may occur when the person is deemed incapable of making any decisions on their own, such as in advanced dementia or severe substance abuse that impairs decision-making.
A limited guardianship is one with specific duties outlined in a court order. The guardian is limited to only those duties as specified by the court, and the beneficiary generally retains control of the rest.
Guardianships or conservatorships are typically a last resort because they remove rights from an individual – sometimes permanently. Estate planning is so crucial because it can help the elderly (and others) avoid guardianships by establishing care through powers of attorney.
If you have questions about guardianships, take a look at the Department of Justice website or talk to a qualified professional.]]>On Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475632023-08-18T12:41:15Z2022-10-22T18:07:32ZOn Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475622024-02-29T18:46:15Z2022-10-09T18:05:50ZGun Control Act of 1968, several categories of people are federally prohibited from owning guns. These include felons and people with mental illnesses and those with dishonorable discharges, domestic violence convictions, and domestic restraining orders.
Unless you are fully aware of and involved with your beneficiary’s life, it’s possible that you may unwittingly leave your fire arm to an uneligible person. Your beneficiary may, unknown to you, fall into one of the prohibited categories.
Likewise, your executor may not know whether the recipient falls into one of these prohibited categories. In that case, both the transferor, and recipient could be deemed to have exercised criminal behavior.
Other complications arise when you leave instructions to pass your firearms on to a particular younger relative, but they are still a minor at the time of inheritance. An individual must be 18 years old to take possession of a rifle and 21 to own a pistol.
Here are some other factors:
The nature of the firearm
The National Firearm Act puts additional restrictions on certain types of guns, including short-barreled rifles and shotguns, suppressors, machine guns, and large caliber weapons.
These items cannot be transported or handled by another individual unless the registered owner is present, which presents a complicated challenge when the owner has passed away.
When the beneficiary lives in another state
State laws may require additional background checks, permits, and notifications to transport a firearm across state lines.
Risk of incompetence
If you are deemed incompetent before your death, your firearms may be subject to immediate confiscation.
All of the above complications can be addressed using a gun trust.
A trust allows you to add additional protections to the gift, such as requiring that your children reach a certain age, complete a safety course, or meet other requirements as you deem appropriate.
Trusts also provide a way to avoid probate, allowing you to keep your gun collection private and out of the public record. In addition, trusts can offer a system for sharing the firearm among multiple beneficiaries, such as two children using the gun in alternating years.
Likewise, trusts can relieve pressure on your executor. You can name a trustee who knows federal and state gun law and is comfortable managing these assets. (Alternately, your representative can hire the services of a Federal Firearm Licensee, such as a licensed gun dealer, to hold the items and manage the required forms and background checks.)
A gun trust provides a mechanism by which your trustee can legally possess NFA-restricted items before they are distributed to your heirs.
Trusts can provide a mechanism for keeping the items in the family for future generations, and they can protect your collection from confiscation if you’re found incompetent.
Finally, in the case of NFA-restricted firearms, a trust can simplify the transfer, registration, and approval process.
Make sure you ask questions of a qualified professional before the need to pass on these items becomes necessary, or before you become incapacitated to make these decisions yourself.]]>On Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475582023-08-18T12:41:26Z2022-06-26T21:49:19ZWills and Estate Planning Survey. There are multiple interesting data points in this survey, so let’s take a look at some of the highlights.
2 out of 3 American Adults Do Not Have a Will
Even after the years of pandemic and the growing knowledge of the importance of estate planning, 2 in 3 American adults still do not have a will, or any kind of estate planning.
Of those adults without a will, more than 60% haven’t even started the process, while the remainder have taken some kind of action such as consulting a lawyer, wrote down basic plans or ideas, or filed paperwork.
More Young Adults Have Wills Since the Pandemic
American adults over the age of 55 are still the most likely age group to have a will or any other kind of estate planning document. This is likely because they have children or grandchildren to provide for, or have had a medical emergency which necessitated estate planning.
But since the pandemic’s start, the number of young adults aged 18-34 to have a will has grown by 50% compared to before the pandemic. This stark increase may be due to the effects of the pandemic, but it is difficult to place that as the instigating reason without more information obtained from those surveyed.
Laziness Still the Top Factor
40% of adults surveyed said they did not yet have estate planning completed because they hadn’t gotten around to it. It’s not a top priority and so they keep getting put off.
The second most common reason for not having estate plans? 1 in 3, or 33%, said it’s because they believe they don’t have enough assets to bother with estate planning. This is a detrimental misconception because they may unintentionally be disinheriting their spouse from receiving all of what they in fact have.
A Serious Case of COVID More Likely to Result in Estate Plans
Of those surveyed, almost half (48%) of those who had a severe case of COVID-19 had estate planning documents.
Those with first-hand experience of COVID were 17% more likely to have any kind of estate planning documents than those who had second-hand experience (such as a loved one getting sick) and 39% more likely than those who had no personal experience with COVID.]]>On Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475562023-08-18T12:41:30Z2022-06-08T21:46:34ZBarron’s reported in June that “the bill that passed the House pushes back the age at which seniors must begin taking RMDs to 73, so long as they turn 72 after Dec. 31, 2022. The Secure Act 2.0 further increases the age for initial RMDs to 74 starting in 2030 and to 75 starting in 2033.”
The bill also creates a mandatory enrollment requirement. SECURE ACT 2.0 would require employers to automatically enroll new employees as they become eligible, if the employer establishes defined contribution plans after 2021. It also specifies (currently) that the employer must enroll the employee in a plan at a pretax contribution level that is at least 3% of the employee’s pay. Employees have the option to choose a higher contribution, but it seems there is a minimum selection of 3%. The goal from this mandatory enrollment is to increase the number of Americans who are actively saving for retirement.
Another significant change is the SECURE Act 2.0 would expand eligibility for long-term, part-time workers to participate in an employer’s retirement plan. Currently, the only options for these workers are to have a Roth retirement account or to have no contributions at all. Traditionally, 401(k) and some other types of retirement accounts have only been offered to full-time employees. The new bill would expand access and allow those who do not work full-time access to these retirement saving options.
Additionally, the bill would allow people with student loans to make payments on those loans in lieu of contributions to their workplace retirement plans and still receive their employer match. That helps people to pay down debt and save for retirement at the same time.
A few sites have additional information:
If you have any questions, ask your estate planning professional or financial planning professional for advice. They will be more than happy to help]]>On Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475522023-08-18T12:41:35Z2022-05-29T21:42:59ZWills and Estate Planning Study, inflation is listed as one of the main fears of American adults in how they view their personal finances. When inflation goes up, people tend to perceive their savings and other financial assets as being less valuable. In turn, this can cause them to postpone or abandon estate planning. With 9 out of 10 American adults fearful of inflation this year, according to a recent New York Times study, that means a lot of adults could suddenly decide to hold off on creating necessary estate plans.
This is not an unknown or unfounded phenomenon, either. Caring.com interviewed Patrick Hicks, General Counsel and Head of Legal at Trust & Will, in the same 2022 study. Hicks explained that “Inflation can have significant impacts on one’s ability to save for their own future. The current and potential financial strains amid the COVID-19 pandemic and ongoing economic uncertainties have compelled many people to think they don’t have enough valuable assets to leave behind. A natural reaction during times of economic uncertainty is to look for ways to reduce costs by cutting unnecessary expenses.”
But inflation doesn’t have to derail your estate planning—in fact, it shouldn’t. In the short term, it may feel frightening and it may feel unnecessary. But your estate plans are more than your financial health. Wills and trusts also help you make decisions regarding your health care; who will act on your behalf if you’re incapacitated; who will care for your pets or your children in your absence; and who has a legal right to which property. Also, failing to set forth in a legal document who will inherit your assets could have the unintended consequence of disinheriting your spouse from a significant portion of what you do have and leaving your children open to financial abuse.
It's easy to think that estate planning is just about what you’re leaving behind, specifically what monetary property you’re leaving behind. That is the aspect most people focus on because it can be frightening or unpleasant to think about our own death. It’s not something most of us like to dwell on.
But estate plans are about your life as well as your death—who will care for you in a medical emergency? What decisions are they empowered to make? Who has guardianship of your children if you cannot take care of them anymore? All these questions and more are handled in estate planning.
Even now, after the impact of the pandemic and years of uncertainty, 2 out of 3 American adults still do not have a will. Are you one of them?
Talk to an estate planning professional today to begin the process, even if you just want to ask some questions.]]>On Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475542023-08-18T12:41:39Z2022-05-15T21:45:02ZKnow the tax rules. You can give each grandchild up to $16,000 a year (in 2022) without creating a taxable event. Two grandparents together can give up to $32,000 per grandchild (or any recipient) per year with no reporting requirements.
For example, a married couple with six grandchildren may give away up to $192,000 per year without gift tax implications. If you have a large estate and expect to exceed the federal estate tax exemption ($12.06 million in 2022, $24.12 million per couple), maxing out your annual exclusion gifts can be one strategy to optimize your wealth transfer.
If you’re thinking about gifts as a way to get money out of your estate, start planning now. The $12 million estate tax exemption is set to revert to $6 million in 2026.
Of course, you need to keep enough for your own needs. Grandparents who could potentially deplete their estates with long-term care needs should know that any gifts can interfere with their Medicaid eligibility for up to five years. If that’s your situation, planning for after-death gifts may be a better option.
Talk to the grandchild’s parents first. Communicate with your kids before making a large gift to your grandchildren. Your children may have strong feelings about how much financial support their children should have, and when. Likewise, they may have insight into a grandchild’s problem spending issues or even legal challenges that they’ve kept private from you.
Paying for college. If your goal is to put money away for a grandchild’s education, 529 plans are a tax-advantaged way to do that. Be aware, you can also make unlimited payments for tuition and medical expenses for anyone you like, with no estate tax consequences. Just be sure you pay the school or healthcare provider directly.
UTMA or UGMA accounts. UTMA and UGMA accounts are taxable investment accounts set up to benefit a minor, but controlled by an adult custodian until the child reaches a certain age, between 18 to 21, depending on what state they live in. Money in these accounts can be used in any way for the child.
IRAs. As a grandparent, you can open an IRA for your grandchild and help them get a start on retirement savings. To be eligible, your grandchild must have earned money during the year. You can contribute as much as they earn, annually, up to $6,000.
Trusts. Giving to grandchildren through a trust can offer you more flexibility and control over how those funds are distributed. One of the advantages of a trust is that you can work with an attorney to draft guidelines on when the income and principal will be available to the grandchild and/or how the money can be used.
To determine the best way to provide for your grandchildren, consult an estate planning attorney.]]>On Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475612023-08-18T12:41:44Z2021-12-26T19:00:22Z(This is part 2 of 2 posts talking about digital assets. This post discusses what inheritors can do with assets they receive from parents, grandparents, or other family members, while part 1 covers what you can do with your own assets.)
What do you do with the photos and videos of a loved one after their passing?
Maybe your aunt or father was the shutterbug of the family and they have an archive with thousands of images. Or your grandparent left boxes of physical photos, slides, or negatives that need to be digitized and organized. How do you manage these digital (or soon-to-be digital) assets?
Create Backups
For the physical items, your first priority might be to create digital backups, especially for photos or documents that may have been damaged by being kept in damp storage areas or exposed to the elements. You may want to consult with a family historian or other photo professional on the best way to handle these precious items, and how to store physical items correctly that you want to keep.
Distribution
Your siblings or cousins might be interested in sharing items from the collection, or in having photos or videos that have significance to them.
If no specific provisions have been made in the estate documents, then it is generally up to the personal representative what happens to physical and digital assets like these. Some items might be distributed to the most appropriate person, like collections of photos of your sibling’s childhood might be given to them, while you keep your own. Or the most appropriate person might be that relative who acts as the family historian and is willing and able to take the collection and distribute as appropriate. It’s not uncommon for one person to be the recipient of a relative’s entire collection because it’s disorganized or no one knows what is in it, and so it has to be sorted with more care and time than is possible right away.
You could also create a virtual distribution system, such as a private Dropbox folder that is then shared with all of the family members who want to be able to see and download family photos. This is easier and quicker than creating multiple copies of photo prints and mailing them, and has the benefit of being cloud storage as well (see the Storage section from the Part 1 of this series).
However you decide to handle your family’s digital assets, remember that it’s always wise to create backups in case of natural disaster or accidental loss. Once a physical photo is destroyed, it’s often gone for good unless a digital copy has been created and saved.]]>On Behalf of Simpson Law, PAhttps://www.simpsonlaw.biz/?p=475602023-08-18T12:41:48Z2021-12-12T18:56:14Z(This is part 1 of 2 posts talking about digital assets. This post covers what you can do with your own assets, while part 2 discusses what inheritors can do with assets they receive.)
In this digital age, we accumulate a lot of digital assets now. Photos, documents, videos, graphics and art, archive backups of accounts and social media, email – the list could go for quite a while.
These assets are valuable as an archive of your life and that of your family, and your children, grandchildren, or personal representative will need to know what to do with them after you’re gone. So what can you do with these items?
Storage
First, how are you storing your files? Hard drives can fail, files can be accidentally deleted, and subscriptions can end without a backup being made.
A good rule of thumb for storing your digital files is the 3-2-1 rule: Three versions of backup, with two different methods, one of which is a cloud storage or off-site storage option.
Here’s how that breaks down:
Three: Create three copies of your data. One version is your primary copy and the one that you change and update most frequently. Then you have two additional copies as backups. Set a schedule to update your data so that you never lose more than a week or two of data if something were to fail.
Two: Of your local copies, keep them on two different versions of media. For most people, this usually means two copies on two separate external hard drives.
One: One of those copies needs to be kept off-site. This could be a physical off-site backup, like storing a hard drive in a family member’s home or in a deposit box at a bank, or it could be cloud storage. The cloud storage option is great if you can choose a service with auto-backup, like Dropbox or Drive. This way you can be assured that your data is being automatically uploaded to your secure service, you can access it from anywhere, and you can download your archive at need.
Family History
Family historians and genealogists can help you create wonderful archives and records of your family’s stories while you’re alive. They can also advise you on the best way to store, display, and digitize any of your physical photos and documents that need to be addressed.
Some historians will work with individuals and families to tell the narrative of their stories and incorporate photos into a coffee-table book that can be shared with loved ones. Others focus more on the genealogy side of family history and advise you on how to research and share that information.
If you have a lot of family photos in your physical or digital assets, a family historian can be a great way to create a lasting, shareable legacy for your children or other relatives.
Family History
One helpful thing you can do is to decide how you want your digital accounts to be managed after your death, particularly your social media. Do you want your Facebook account to be removed or memorialized, for instance?
Some of these services have an option you can select that will mark what you’d like done with your account as well as who will have access and rights to delete or memorialize an account. Take a look at the settings or FAQs section of the website you want to know more about.]]>