King & Wood, P.A.

How Estate Plan Protects Your Family

“Though generally not as trendy as hitting the gym or planning summer vacations, such estate planning assurances bring peace of mind and create legacies of thoughtfulness for our loved ones.”

Estate planning is one of many ways to make a difference to your family’s future. Whether starting from scratch or revising a will created many years ago, your estate plan gives you control over your assets and secures your loved ones. The title of a recent article from Florida Today says it all: “Your family’s future is important to you. These estate-planning tips can help secure it.”

If you don’t have a will, get started on this part right away. A will outlines how you want assets to be distributed upon your death. Without one, the probate court in your jurisdiction will determine who receives your property, and while you may not be around to see the results, your family will. If you have a will but haven’t reviewed it in a while, you’ll want to know if it still makes sense for you. Life is all about changes, good and bad, and your will should reflect your current life.

Living trusts keep assets in the family and pass from one person to the next without court involvement. Property owned by a trust goes directly to the beneficiaries without going through the probate process. Even better, trusts are used to appoint a trustee who will manage the assets if you become incapacitated. A trust works while you are living and after you have died. Families with significant assets, blended families and anyone looking for a smooth way to pass assets to loved ones rely on trusts.

People underestimate the importance of a Power of Attorney. A durable power of attorney gives a person of your choosing the legal authority to act on your behalf in financial matters. If you are too sick to pay bills or manage investments, an agent (the person named in the POA) can act on your behalf. Without this document, your family must petition the court to appoint someone to manage your life. The court has no obligation to name a family member or even someone you know to oversee your life. It’s far better to simply have an estate planning attorney create a POA suited to your needs.

You’ll also want an advance healthcare directive, sometimes called a living will, to express your wishes for healthcare in case you can’t. This document includes your wishes regarding life-sustaining treatments, organ donation and end-of-life care. The healthcare directive serves two critical purposes: it allows you to state your wishes and spares your family from not knowing what you want during a healthcare crisis. An emergency is no time for your children to guess what Mom wants.

Beneficiary designations are used in many financial accounts to allow the asset to go directly from the original owner to the beneficiary without going through probate. Beneficiary designations override your will. If you want your nephew to inherit your IRA but your IRA’s beneficiary designation is your spouse, your nephew gets nothing. People who have been divorced need to be extra careful about making sure their beneficiary designations are updated.

Parents of minor children must designate a legal guardian in their estate plan. Establishing a trust to own an inheritance for healthcare, education and living expenses ensures that their guardian will have funds to care for the children. Minors may not inherit property, so making a trust is the best way to protect and control their inheritance.

An estate plan, including a will, power of attorney, healthcare directive and trusts, is central to protecting your family and their future. An experienced estate planning attorney will help identify your concerns and know how to address them in a legally enforceable manner.

Reference: Florida Today (Feb. 8, 2025) “Your family’s future is important to you. These estate-planning tips can help secure it.”

 

Can You Make a Will in a Video?

“Why the written word is still the final word in estate planning.”

Jesse Beck had no will at age 45. However, he did make a video in which he stated he wanted his brother Jason to inherit everything if he died. Four days after making the video, Jesse was struck and killed by a car. Not surprisingly, estate litigation ensued after his death. The Montana Supreme Court ruled that video doesn’t count as a will, according to The Wall Street Journal article, “Yes to Text Messages, No to Video: What Counts as a Will.”

Despite the article’s title, you definitely don’t want to create a testamentary document using a text. A lack of understanding about what is acceptable as a will often leaves heirs with legal disputes and huge headaches. Beck’s brother won’t inherit his estate. It will go to his daughter. He would have done far better to have a will and an estate plan.

The gold standard is a paper will prepared by an estate planning attorney who knows the state’s laws and is signed with ink—known as a “wet signature.” While some states recognize holographic wills written and signed by hand on paper, doing so puts your wishes at risk.

Nearly half of all Americans don’t have a will. Some states recognize electronic wills, and legislation is pending in a few other states. However, the electronic will must be text and not audio or video. There are growing concerns about using artificial intelligence and deepfakes to create fraudulent electronic wills or alter electronic wills without the testator or heirs being able to identify the changes.

When someone dies without a will, known as intestacy, their state’s laws determine who inherits their estate. If Jesse wanted his brother to inherit his estate, he should have had a will created with an experienced estate attorney. While his own estate may have been modest, there is a wrongful death case pending against the vehicle involved in Jesse’s fatal accident. Alexia’s inheritance may be in the millions.

Different state courts have ruled differently regarding non-paper wills. An appellate court in Michigan accepted a digital will created with a note in an Evernote app on the decedent’s mobile phone.

Montana doesn’t have an electronic or e-will statute. However, writing may be treated as valid if there is clear and convincing proof the decedent wished it to be a valid will. In a case different from the Beck matter, a Montana court rejected using a text message as a will.

The bottom line: unless you intend to subject your family to a lot of legal wrangling and spend a lot of time in court, it’s best to meet with an experienced estate planning attorney and have a will prepared. You’ll also want to speak with the attorney about related documents, including Power of Attorney, Healthcare Proxy, Living Will and, if applicable, Trusts.

Reference: The Wall Street Journal (Dec. 14, 2024) “Yes to Text Messages, No to Video: What Counts as a Will”

How to Include Digital Life in Your Estate Plan

“The shift to a digital world has made life easier in many ways, allowing people to eschew physical photo albums, file cabinets, taking checks to the bank and waiting for the mail carrier.”

The same conveniences of digital life, from making bank deposits on the phone, posting photos instantly and accessing investment accounts wherever you are in the world, create headaches for executors and heirs if no plans are made for a “digital afterlife.” A recent article from The Minnesota Star Tribune, “When death planning, don’t forget to account for your digital life,” explains how to plan ahead.

In the past, when someone died, their executor and family members would work together to go through paper financial statements, bills and property ownership documents. There would usually be a shoebox or a cabinet somewhere in the house with relevant documents. The search is far more complex today, with information locked inside a computer or cell phone.

The right kind of authorizations are needed for each platform. You can create directives for Google, Yahoo!, Apple and Facebook to request a copy of the account contents. This way, the executor doesn’t have to deal with passwords, encryptions, or data privacy laws.

• Google has an Inactive Account Manager, which notifies someone else if you stop using Google products for a designated period of time. You choose which data you want to share, and the contact receives a link for a download.
• Apple has Legacy Contacts, allowing you to add a contact for your Apple ID who will have access to your Apple account.
• Facebook also has a legacy contact who can manage your main profile if it is memorialized after your death. Friends and family members can leave memories and comments on your page. Another option is to allow the legacy contact to delete your account.

Most states today have laws concerning digital assets. Your estate planning attorney will be able to help you plan for what you want to happen to your digital assets and how to make this task easier for your digital executor.

A federal data privacy law known as the Stored Communication Act protects the disclosure of a person’s digital communications without their consent. You’ll want to have a consent form created by an experienced estate planning attorney to allow online platforms to disclose your digital assets. Think of it as a HIPAA form for digital assets.

Create a complete inventory of all digital property and online accounts and how to access them. Use an electronic list, an encrypted secure list, or a notebook, whatever method works best for you. Make sure to tell your digital executor how your information is stored.

Some platforms will not release data unless family members pursue the matter in court if no legacy contact was named and no consent form has been completed. Don’t count on calling the company out on social media or contacting the press to take up the fight on your behalf as a solution.

If you have data stored only in the cloud, consider backing up your data (content) on a local computer, external hard drive, or a memory stick. Accessing this will be easier than taking Microsoft to court.

While preparing for your digital afterlife, ensure that your will, power of attorney, trust documents and authorizations are current. Have an estate planning attorney create authorization paperwork; if you don’t already have a digital consent form, create one.

Reference: The Minnesota Star Tribune (Nov. 11, 2024) “When death planning, don’t forget to account for your digital life”

How Does a Trust Work in an Inheritance?

Trusts should be in your estate plan if privacy is important to you. Most people don’t know their wills become public documents as part of probate.

It’s not easy to create an estate plan without the guidance of an experienced estate planning attorney. They can help work through the many moving parts and address concerns about how family members will respond to your plan to pass on assets. A recent article from msn, “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family,” says. At the same time, you may think keeping things simple with a last will and testament may be sufficient, but there are also good reasons to use a living trust.

If you have many beneficiaries, a living trust allows you to control assets while living and after you’ve passed. If you have a large family and want to include grandchildren, nieces and nephews in your estate plan, the living trust is easier than a will. Beneficiaries can be easily added or removed, as events like marriage, birth and divorce occur within the family.

The living trust allows you to get very specific about exactly how much of which asset you want to pass to each beneficiary. If your heirs include minors, a living trust consists of a trustee who can manage their assets until they reach a certain age. You can also determine at what age you want beneficiaries to receive your wealth. You might, for instance, decide to give a grandchild their inheritance not when they reach the age of majority (legal age) but when they turn 30.

Do you own real estate property? This asset can be tricky to bequeath in a will, especially if you own property in multiple states. Your estate would have to go through probate in each state, which all have their own rules and laws. This becomes expensive and time-consuming. Retitling real estate property into a living trust means the properties don’t need to go through probate. Your estate planning attorney will help make this an efficient process.

Trusts should be in your estate plan if privacy is important to you. Most people don’t know their wills become public documents as part of probate. This means anyone who is interested can read your will. This could be an estranged family member who feels they were wrongfully left out of the will, an ex-spouse, creditors, salespeople and thieves.

The public nature of probate is another reason why wills should not contain any specific account information, like account names, numbers, or the amount of money in the accounts. For the same reason, the names of digital assets, including user names and passwords, should never be included in a will.

Trusts are one of many means of passing assets to heirs without anyone except the grantor (the person creating the trust), the trustee (the person in charge of managing the trust), and the beneficiaries knowing about the trust’s existence and what it contains. This is especially important if your situation includes someone you wish to keep in the dark about your assets or your intentions.

Meet with an experienced estate planning attorney to discuss the different ways to pass wealth to loved ones, including a will and trusts. Learning what options are available will allow you to make an informed choice.

Reference: msn (Nov. 2, 2024) “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family”

Planning to Protect Your Children’s Inheritance: Asset Protection

“You've worked hard for your wealth. Don't let it fall into the wrong hands. Consider prenups, trusts and other protections to safeguard your family legacy.”

No one likes to think about the possibility of losing a lifetime of earnings through unfortunate events like divorce, spendthrift heirs, or litigation. However, ignoring these risks won’t prevent them. A recent article from Kiplinger, “Want Your Kids to Inherit? You Need an Asset Protection Plan, ” explains several asset protection strategies used to protect wealth from disappearing in nefarious ways.

Prenuptial agreements aren’t the most welcoming topic when your adult child announces their engagement. Still, this should be discussed and encouraged no matter how much you love your prospective new family member. A prenuptial agreement or prenup is a contract between two adults agreeing on how they will distribute assets in case of divorce. This legally binding document addresses assets, debts, spousal support, alimony, gifts and inheritances. It’s also helpful as a supporting document if one of the spouses should die unexpectedly. However, the couple should have a will, power of attorney and other estate planning documents created as soon as they are married.

Depending on the state, there may be laws concerning when the prenup is signed for it to be valid. Signing a prenup under duress could make it invalid, so this needs to be addressed in a timely manner.

Another option is to create a postnuptial agreement (postnup). Spouses may contractually agree to terms outlining the distribution of assets in the event of a divorce after the wedding.

Asset protection includes determining and formalizing how assets will be passed on to heirs. Parents should consider creating trusts as part of their estate plan. Trusts allow grantors (the person creating the trust) a much higher degree of control over who receives the assets in the trust and takes them out of the probate estate.

For example, the trust may call for a beneficiary to receive a portion of their inheritance at ages 30 and 40 and the balance at age 50. An heir with a drug dependency might be required to complete a rehabilitation program or maintain employment over a steady period of time before the trustee can distribute some or all of the assets in the trust.

If assets are left through a will, a number of vulnerabilities are created. First, they are part of the probate estate and subject to federal and state taxes. Second, the will becomes a public document when it goes through probate, so creditors can learn if someone is receiving an inheritance. Creditors may include ex-spouses, credit card companies and financial institutions.

An experienced estate planning attorney is familiar with the tools used to protect assets and ensure that they pass to the next generation according to your wishes. Protecting a lifetime of hard work is a worthy endeavor, creating a legacy and providing security for those you love.

Reference: Kiplinger (Nov. 9, 2024) “Want Your Kids to Inherit? You Need an Asset Protection Plan”

Is Charitable Giving Part of Your Estate Plan?

“When it comes to charitable giving, most donors think of cash—its liquidity and immediate benefits make it a go-to option.”

Legacy gifts and complex assets can be used in charitable giving to create a lasting impact for donors, heirs and the nonprofits they benefit, according to a recent article from Wealth Management, “Unlocking the Power of Complex Assets and Legacy Gifts in Philanthropy.”

Legacy donations, sometimes referred to as planned giving, involve gifting assets to a charity through trusts, wills, or beneficiary designations. These donations can be made during the donor’s lifetime, upon the donor’s passing, gifted all at once, or in a steady stream. Several trusts specifically allow for making donations, with Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) among the most widely used.

An estate plan incorporating charitable giving should include educating family members about their own role in philanthropy. Creating a tradition of giving and service teaches the importance of compassion and social responsibility as part of the family’s legacy.

Legacy donations are often made through Donor-Advised Funds (DAFs). The estate planning attorney should discuss how donations are made to ensure that they align with the estate plan. Donations can be made annually, based on a percentage of the fund’s year-end balance, or structured according to the donor’s wishes.

Donating illiquid assets may yield greater benefits for a nonprofit than cash gifts. Nevertheless, some charities are reluctant to accept non-cash assets, since they may need to manage the assets and/or liquidate them. The DAF may provide a means of converting assets into cash for charitable giving.

A common gift to nonprofits is real estate property. The nonprofit may not have the money to maintain the property until it is sold, then sell the property. Instead of selling it and paying capital gains taxes (which will reduce the amount of money the charity receives), the donor can gift it to a DAF. The DAF facilitates the transfer, alleviating the nonprofit from the transactional work involved in real estate transactions.

Tax policy has recognized the social benefit of charitable giving for many years, acknowledging that donated assets aren’t income and shouldn’t be taxed. Legacy and complex asset gifts are not taxed as long as they are donated to charities recognized as 501(c)(3) organizations.

There have been some recent attempts to change the tax treatment of gifts, so an estate planning attorney should be consulted to ensure that all charitable giving falls within the current regulations and yields benefits for both donors and charity.

Reference: Wealth Management (Nov. 6, 2024) “Unlocking the Power of Complex Assets and Legacy Gifts in Philanthropy”

What Is the Great Wealth Transfer?

“Whether you are set to inherit or are thinking about passing down your assets, being prepared is not just about managing money but also navigating taxes, avoiding fees, sidestepping family drama and ensuring that this transition works for your benefit.”

You’ve undoubtedly heard the expression “The Great Wealth Transfer” in recent months. However, what does it mean for you and your family? A recent article from The Street, “The Great Wealth Transfer: Strategies for Beneficiaries,” explains how the anticipated transfer of more than $84 trillion will impact families.

Between 2020 and 2045, a massive amount of wealth is expected to transfer from baby boomers to Generation X, millennials and Generation Z. As more people live longer and wealth from increases in home equity and investments, the assets will eventually be passed across generations. How wealth has been transferred to heirs has changed, drawing the attention of estate planning attorneys and financial advisors.

In the past, wealth was typically created through owning a family business or inheritances from multiple generations. Today’s wealth takes many different shapes, including investment growth, home equity, cryptocurrency and retirement accounts. Inheritances are more likely to come from a complex financial portfolio than from inheriting a farm or family business.

Attitudes about inheritances and money are also shifting. Millennials and Gen Z members have grown up in times of economic instability and may be less focused on stewarding wealth for the next generation. These generational differences may create family stresses, which can be avoided through estate planning and family discussions. Open conversations about these differences can prevent surprises or assumptions.

Minimizing or avoiding taxes and unnecessary expenses is always part of estate planning. Trusts are used to minimize both estate taxes and probate costs. Using a revocable living trust allows the trust creator to control assets during their lifetime and avoid having assets go through probate after death. Using an irrevocable trust also removes assets from the estate and can be used in planning for other needs, like a Medicare Asset Protection Trust.

Gifting with warm hands, or giving during your lifetime, is a way to reduce the size of a taxable estate and enjoy seeing the impact of a gift on a family member or beloved friend. In 2024, individuals may gift as much as $18,000 per recipient yearly without incurring gift tax. This reduces the taxable estate considerably, as there is no limit on the number of recipients a person can give a gift to.

A step up in basis lets the value of inherited assets be “re-set.” Someone inheriting a stock portfolio worth $100,000 at its inception but now worth $1,000,000 has a new cost basis. When you sell the asset, you will save substantial capital gains taxes upon the sale of the asset. The new cost basis is the $1 million valuation, not the $100,000 purchase price. Talk with your estate planning attorney about how to best manage this kind of transfer if it is in your future to obtain the best possible results.

Working with the right professionals can make an enormous difference when managing wealth is new. An estate planning attorney with knowledge of wealth transfer laws and tax planning can prevent heirs from being blindsided by unexpected taxes.

Reference: The Street (Oct. 28, 2024) “The Great Wealth Transfer: Strategies for Beneficiaries”

It’s Not Too Soon for Generation X to Start Estate Planning

“Gen X is stuck in the middle of children and aging parents. However, retirement's not far off.”

Adults born between 1965 and 1980 are often called the “sandwich generation” as they sometimes support older children who are still figuring out who they want to be when they grow up and caring for aging parents. While retirement may feel far away, says a recent article from Kiplinger, “Come as You Are: Wealth Management for Gen X,” it’s on the horizon, and planning for the future should start now.

Some of the tools used for retirement planning include 401(k) plans, which are tax-deferred plans from an employer. If your employer offers matching funds, try to contribute enough to take advantage of the match. You can also use a personal IRA to make tax-free annual contributions.

With changes from the SECURE 2.0 Act, you can open and contribute to a 529 College Savings Account and then roll a portion of unused funds into a Roth IRA once the account has been opened for 15 years and the funds have been in the account for at least five years. There are rollover limits, but this might be a good fit for retirement savings. Commonly, 529 funds are used for various educational purposes, so even if your children are past college, your grandchildren might use them for private school, not just college.

The one constant in life is change, and estate planning documents created when your children were little need to be reviewed and possibly updated. If the last time you thought about your will was when your adult children were born, you should schedule a review with your estate planning attorney. Changes like marriage, divorce, death, financial ups and downs and changes in the tax law all call for updates to wills.

If you don’t have long-term care insurance, now is the time, while you’re still relatively young and healthy enough to be able to buy it. Insurance companies now offer hybrid policies combining life insurance with a long-term care insurance policy rider.

Digital assets are a relatively new asset class requiring estate planning. Speak with your estate planning attorney to be sure your estate plan documents reflect your digital life. If you are active on social media, investing in cryptocurrency, or own an online business, you have digital assets and need to protect them.

Be proactive about estate planning to protect yourself now and your loved ones after you’ve passed. Just as retirement is on the horizon, so are the inevitable events of aging. Make an appointment to see an estate planning attorney to learn your needs, now and in the future.

Reference: Kiplinger (Oct. 7, 2024) “Come as You Are: Wealth Management for Gen X”

Wealth Protection Through Estate Planning

“Estate planning is crucial and beneficial in many ways since it documents all your assets—from real estate, bank accounts, investments and business interests to personal items, like family heirlooms and even your monthly subscriptions.”

Without a well-prepared estate plan, wealth can be lost to taxes, administrative costs, or disputes among heirs, both in and out of court. With an up-to-date estate plan, changes to tax laws are proactively addressed and wealth can be protected and passed across generations. A recent article appearing in Medical Economics, “Estate planning is your first line of defense against wealth loss—Here’s what you should know,” explains how an estate plan creates a framework to minimize taxes, avoid the costs and complications of probate and ensures that your wishes for your estate are followed.

Documenting assets is one task that is done when creating an estate plan. When records are not clear, transferring assets can become complicated. A comprehensive record-keeping system can store documents like deeds, life insurance policies, asset inventories, family videos and photographs online.

Many financial records are already online through client portals by major financial companies. The key to incorporating these records into an estate plan is remembering where all the information is stored and being willing to share access information with a trusted family member or friend. The person you name as an executor of your will or a trustee for a trust is the most likely candidate to be provided with this information.

There are many steps to having a solid estate plan. However, there are also many missteps. Here are some of the most common pitfalls to avoid:

Failing to update an estate plan. All the documents in your estate plan, including a Will, Power of Attorney, Healthcare Proxy, HIPAA Release Form, Trusts, Advanced Directives and more, must be updated to comply with changing laws and changes in your life.

Making a careless decision about the executor or trustee can be disastrous. The eldest child does not have to be the one to be in charge of your estate. Neither does the person you love if their life is a trainwreck. The person to be named executor and/or trustee needs to be someone you know to be extremely responsible, reliable, good with money management and a solid moral compass.

Digital assets are often ignored when it comes to estate planning. However, this new asset class needs to be included. If you have email, you have a digital asset. You have digital assets if you have email, cryptocurrency, websites, social media content, online subscriptions and photos stored in the cloud. Suppose no plan is made to create an inventory of accounts and name a digital executor. In that case, your estate becomes vulnerable to identity theft, valuable cryptocurrency could be lost forever and there may be nothing your loved ones can do.

Most family fights have to do with unequal asset distribution after the death of a parent. A clear estate plan is one way to preclude confusion about what you want to happen after death. Talking about your estate plan while you’re still able to have these uncomfortable discussions is one way to help establish your wishes. You may want to create a Letter of Intent or make a video to express your reasons for making certain decisions. This may not be legally enforceable. However, it will serve to document your wishes.

Estate planning is not just about distributing assets after death. By establishing an estate plan, the family is better prepared to deal with the loss of a loved one and can focus on healing together instead of battling over their inheritance.

Reference: Medical Economics (Oct. 17, 2024) “Estate planning is your first line of defense against wealth loss—Here’s what you should know”

How Can a Will Be Changed?

“While a codicil provides flexibility, frequent amendments can complicate estate planning and create room for misunderstandings.”

A last will and testament is a legal document that distributes assets, including investments, real estate and personal property after death. Once a will has been signed and executed, it becomes the foundation for an estate plan. However, what happens if you want to make changes? This is the topic addressed in a recent article from smartasset.com, “What is a Codicil to a Will?”

A codicil is a legal document that changes an already completed and valid will. Some prefer to use a codicil rather than revise their entire will, usually for reasons of economy. The codicil allows the will’s creator to update specific provisions. A codicil can be used to change beneficiaries, assign a different person to be the estate executor, or even change the size of gifts made to heirs.

Codicils are like wills: they need to be signed and witnessed according to the laws of the state to be valid. People like the ability to make changes to their wills quickly and easily. However, sometimes, a codicil is not the right way to change a will.

The codicil performs best when changes being made to the will are minor in nature. They should be used to make small changes when the testator’s wish is to maintain the overall intent of the will. For instance, the birth of a new child and the addition of an heir could be reflected through a codicil.

An experienced estate planning attorney must create the codicil. Making a note on an original will with initials and a date is not a codicil. It’s a separate document, requiring a formal signature and the presence and signatures of witnesses. Most states don’t require a codicil to be notarized. However, you should check with your estate planning attorney to find out if this applies to your state.

Making a lot of changes to a will with multiple codicils may result in estate problems in the future. There are numerous instances where multiple changes, especially repetitive ones, like taking the same person off and then adding them back, are perceived as changing the intent of the testator (the person who made the will). This leaves the entire estate vulnerable to challenges.

Some typical reasons for using a codicil:

• Changing beneficiaries
• Replacing an executor
• Revising asset distribution
• Divorce, marriage, birth, death.
• Making new bequests
• Correcting prior errors or omissions

Before having your estate planning attorney create a codicil, there are a few steps to take. First, discuss the reason for the change and whether the entire will should be revised. A new will may be better if the change is not simple and straightforward. If the codicil is being done to disinherit a beneficiary, your estate planning attorney may have other suggestions. If you have created trusts, the changes to the will don’t carry over to your trusts. They may need to be modified as well.

Reference: smartasset.com (Oct. 23, 2024) “What is a Codicil to a Will?”