Crucial Coordination

Sometimes we are most vulnerable in life when we do not know what we do not know. You may need to shore up your estate plan to provide smooth sailing ahead for you, loved ones and assets.

Estate Plan Essentials
While a distribution plan for assets after death is an important aspect of estate planning, the process begins with life planning. Our bodies and minds may not keep up with our rise in birthdays. Falls, strokes or Alzheimer’s could leave us legally incapacitated.

What then?

You need legally appointed trusted family members or friends making your personal, health care and financial decisions, including carrying through your wishes of appointed guardians for any minor children in the home. Take steps to allocate inheritance based on what you know about each unique circumstance – special needs, problems with addiction, divorce, bankruptcy…

Without a plan, a judge will decide, costing your family money, time, emotions and privacy.

Retirement Plan Requirements
If you want to protect retirement fund distributions – usually a large part of estates — from the potential creditors of adult children, then special alternative arrangements need to be made now. As in the case of Clark v. Rameker, “retirement funds” were not entitled to any special asset protection treatment, subject to the creditors of direct beneficiaries who are individuals.

Long-Term Care Logistics
Expect sticker shock like $7,000/mo. for long-term care. Cash and savings pay initial expenses, then liquidated investments. Finally, retirement dollars are withdrawn and subject to ordinary rates of income taxation. Created with pre-tax dollars, the funds have grown tax-deferred until withdrawal.

Elder law attorneys can help you qualify for Medicaid or acquire long-term care insurance that allows you access to the cash value of the policy, pays for your long-term care, if needed, or a life insurance death benefit to your loved ones, if not.

Work with experienced legal counsel who can coordinate a seaworthy strategy with your financial advisor and insurance professional.

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No Federal Estate Tax, No Problem?

The 2015 federal estate tax exemption will rise to $5.43 million per individual (from $5.34 million in 2014) due to an inflation adjustment. This means only about 3,700 estates, or 0.12% of the total, are expected to owe federal estate tax this year.
But don’t be fooled. Regardless of federal estate taxes, issues of personal dignity, family conflict and your life’s legacy are fundamental to proper estate planning.

Your Personal Dignity

Important decisions affecting you must be made, despite your lack of legal capacity, including the payment of bills or taxes. At 18, an adult must appoint agents through proper Durable Powers Of Attorney to make personal, health care and financial decisions in the event of incapacity. You can legally prepare to ensure that your wishes are honored should the worst happen.

Avoiding Family Conflict

20 percent of Americans age 50 and over in an AARP/Scudder Investment Program study cited problems among surviving family members due to their inheritance. Fortunately, the laws of most states provide solutions for the specific distribution of cash and tangible personal property. Communicating these solutions is key and making updates to documentation to match changes in situations or goals.

Protecting Your Legacy

Proper planning can ensure your family is provided with a thoughtfully prepared, efficiently implemented and effectively administered estate plan that protects your legacy at death and for generations to come.

About Those Taxes …

As of January 1, 2015, 19 states and the District of Columbia will collect a state death tax. State death taxes, which kick in for estates valued at only $1 million or less in several states, could take a big bite out of your legacy. Also, be aware that many states impose a nonresident estate tax on real and tangible personal property situated within the state. So even if you reside in a state without a death tax but own property in another state, death taxes could still be an issue.

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