Category: Life Insurance

Best Uses of Life Insurance Benefits

Best Uses of Life Insurance Benefits

The loss of a spouse is an extremely stressful event. It comes with many emotions that can be overwhelming for the bereaved. Hopefully, life insurance is one thing that was put in place to allow those remaining to process their loss without fretting over their finances. But what are the best uses of life insurance benefits, says Kiplinger’s recent article entitled “What Is the Best Way for a Widow to Use Life Insurance Proceeds?”

Life insurance death benefits can be paid within 30 days after you submit a claim. To do this, you need a certified death certificate, which is generally issued in less than a week by the funeral home. You should also order plenty of copies (about 15) for closing accounts.

The best use of the money is different for each widow and her unique situation.

Funeral Costs. Use life insurance money to cover these costs to decrease your financial strain.

Ongoing Expenses. When your spouse dies, living expenses do not stop. Your income is frequently reduced. In fact, after the death of a spouse, household income generally declines by about 40% due to changes in Social Security benefits, spouse’s retirement income and earnings. The death benefit from a life insurance policy can help provide the funds you need to help cover your mortgage, car payment, utilities, food, clothing and health care premiums.

Debts. You are generally not personally responsible for paying off the debts of your husband, provided they are in his name alone. When an estate does not have enough funds to pay all the debts, any gifts that were supposed to be paid out to beneficiaries will most likely be reduced. Note that you may be responsible for certain types of debt, such as debt that is jointly owned or a loan that you have co-signed. Talk to an experienced elder law attorney to understand the laws of your state, so that you know where you stand concerning all debts.

Create an Emergency Fund. Life insurance can help build a liquid emergency fund, which should cover three to six months of expenses.

Supplement Your Retirement. When a woman loses her spouse, she becomes much more vulnerable to poverty. To retire, a person typically needs 80% of their preretirement income to live comfortably.

Education. If you are a young widow, the life insurance proceeds can be used to pay for going back to school to augment your earning abilities. These funds could also cover the cost of college for your children. However, you should only save for college educational costs after your retirement savings is secure.

It is up to beneficiary to decide the best uses of life insurance benefits going forward. It is a good idea to consult an estate planning and probate attorney to make sure you have a full grasp of the benefits provided. If you would like to learn more about life insurance and estate planning, please visit our previous posts. 

Reference: Kiplinger (Dec. 17, 2021) “What Is the Best Way for a Widow to Use Life Insurance Proceeds?”

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Several Ways to Avoid Probate

Several Ways to Avoid Probate

Probate can tie up the estate for months and be an added expense. It can be a financial and emotional nightmare if you have not planned ahead. Some states have a streamlined process for less valuable estates, but probate still has delays, extra expense and work for the estate administrator. A probated estate is also a public record anyone can review. There are, however, several ways to avoid probate.

Forbes’ recent article entitled “7 Ways To Avoid Probate Without A Living Trust” says that avoiding probate often is a big estate planning goal. You can structure the estate so that all or most of it passes to your loved ones without this process.

A living trust is the most well-known way to avoid probate. However, retirement accounts, such as IRAs and 401(k)s, avoid probate. The beneficiary designation on file with the account administrator or trustee determines who inherits them. Likewise, life insurance benefits and annuities are distributed to the beneficiaries named in the contract.

Joint accounts and joint title are ways to avoid probate. Married couples can own real estate or financial accounts through joint tenancy with right of survivorship. The surviving spouse automatically takes full title after the other spouse passes away. Non-spouses also can establish joint title, like when a senior creates a joint account with an adult child at a financial institution. The child will automatically inherit the account when the parent passes away without probate. If the parent cannot manage his or her affairs at some point, the child can manage the finances without the need for a power of attorney.

Note that all joint owners have equal rights to the property. A joint owner can take withdrawals without the consent of the other. Once joint title is established you cannot sell, give or dispose of the property without the consent of the other joint owner.

A transfer on death provision (TOD) is another vehicle to avoid probate. You might come across the traditional term Totten trust, which is another name for a TOD or POD account (but there is no trust involved). After the original owner passes away, the TOD account is transferred to the beneficiary or changed to his or her name, once the financial institution gets the death certificate.

You can name multiple beneficiaries and specify the percentage of the account each will inherit. However, beneficiaries under a TOD have no rights in or access to the account while the owner is alive. An estate planning attorney will be able to identify several ways for you to avoid a costly probate. If you would like to read more about probate, please visit our previous posts.

Reference: Forbes (March 28, 2022) “7 Ways To Avoid Probate Without A Living Trust”

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Alternatives to replace Stretch IRA

Alternatives to replace Stretch IRA

The idea of leaving a large inheritance to loved ones is a dream for some parents. However, without careful planning, heirs may end up with a large tax bill. When Congress passed the SECURE Act in December 2019, one of the changes was the end of the stretch IRA, as reported by Kiplinger in a recent article titled “Getting Around the Stretch IRA Block.” There are alternatives to replace a stretch IRA.

Before the SECURE Act, people who inherited traditional IRAs needed to only take a minimum distribution annually, based on their own life expectancy. The money could grow tax-deferred for the rest of their lives. The tax impact was mild, because withdrawals could be spread out over many years, giving the new owner control over their taxable income. The rules were the same for an inherited Roth IRA. Distributions were based on the heirs’ life expectancy. Roth IRA heirs had the added benefit of not having to pay taxes on withdrawals, since Roth IRAs are funded with post-tax dollars.

After the SECURE Act, inherited traditional and Roth IRAs need to be emptied within ten years. Heirs can wait until the 10th year and empty the account all at once—and end up with a whopping tax bill—or take it out incrementally. However, it has to be emptied within ten years.

There are some exceptions: spouses, disabled or chronically ill individuals, or those who are not more than ten years younger than the original owner can stretch out the distribution of the IRA funds. If an underage minor inherits a traditional IRA, they can stretch it until they reach legal age. At that point, they have to withdraw all the funds in ten years—from age 18 to 28. This may not be the best time for a young person to have access to a large inheritance.

These changes have left many IRA owners looking for alternative ways to leave inheritances and find a work-around for their IRAs to protect their heirs from losing their inheritance to taxes or getting their inheritance at a young age.

For many, the solution is converting their traditional IRA to a Roth, where the IRA owner pays the taxes for their heirs. The strategy is generous and may be more tax efficient if the conversion is done during a time in retirement when the IRA owner’s income is lower, and they may be in a lower tax bracket. The average person receiving an IRA inheritance is around 50, typically peak earning years and the worst time to inherit a taxable asset.

Another alternative to replace the stretch IRA is life insurance. Distributions from the IRA can be used to pay premiums on a life insurance policy, with beneficiaries receiving death benefits. The proceeds from the policy are tax-free, although the proceeds are considered part of the policy owner’s estate. With the current federal exemption at $12.06 million for individuals, the state estate tax is the only thing most people will need to worry about.

A Charitable Remainder Trust can also be used to mimic a stretch IRA. A CRT is an irrevocable split-interest trust, providing income to the grantor and designated beneficiaries for up to twenty years or the lifetime of the beneficiaries. Any remaining assets are donated to charity, which must receive at least 10% of the trust’s initial value. If the CRT is named as the IRA beneficiary, the IRA funds are distributed to the CRT upon the owner’s death and the estate gets a charitable estate tax deduction (and not an income tax deduction) for the portion expected to go to the charity. Assets grow within the charitable trust, which pays out a set percentage to beneficiaries each year. The distributions are taxable income for the beneficiaries. There are two types of CRTs: Charitable Remainder Unitrust and a Charitable Remainder Annuity Trust. An estate planning attorney will know which one is best suited for your family. If you would like to read more about managing retirement accounts, please visit our previous posts. 

Reference: Kiplinger (March 3, 2022) “Getting Around the Stretch IRA Block”

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Your Estate Plan can include Grandchildren

Your Estate Plan can include Grandchildren

Wanting to take care of the youngest and most vulnerable members of our families is a loving gesture from grandparents. However, minor children are not legally allowed to own property.  Your estate plan can include grandchildren, with the right strategies and tools, says a recent article titled “Elder Care: How to provide for your youngest heirs” from the Longview News-Journal.

If a beneficiary designation on a will, insurance policy or other account lists the name of a minor child, your estate will take longer to settle. A person will need to be named as a guardian of the estate of the minor child, which takes time. The guardian may not be the child’s parent.

The parent of a minor child may not invest and grow any funds, which in some states are required to be deposited in a federally insured account. Periodic reports must be submitted to the court, and audits will need to be done annually. Guardianship requires extensive reporting and any monies spent must be accounted for.

When the child becomes of legal age, usually 18, the entire amount is then distributed to the child. Few children are mature enough at age 18, even though they think they are, to manage large sums of money. Neither the guardian nor the parent nor the court has any say in what happens to the funds after they are transferred to the child.

There are many other ways to transfer assets to a minor child to provide more control over how the money is managed and how and when it is distributed.

One option is to leave it to the child’s parent. This takes out the issue of court involvement but may has a few drawbacks: the parent has full control of the asset, with no obligation for it to be set aside for the child’s needs. If the parents divorce or have debt, the money is not protected.

Many states have Uniform Transfers to Minors Accounts. In Pennsylvania, it is PUTMA, in New York, UTMA and in California, CUTMA. Gifts placed in these accounts are held in custodianship until the child reaches 18 (or 21, depending on state law) and the custodian has a duty to manage the property prudently. Some states have limits on the amount in the accounts, and if the designated custodian passes away before the child reaches legal age, court proceedings may be necessary to name a new custodian. A creditor could file a petition with the court if there is a debt.

For most people, a trust is the best option for placing funds aside for a minor child. The trust can be established during the grandparent’s lifetime or through a testamentary trust after probate of their will is complete. The trust contains directions as to how the money is to be spent: higher education, summer camp, etc. A trustee is named to manage the trust, which may or may not be a parent. If a parent is named trustee, it is important to ensure that they follow the directions of the trust and do not use the property as if it were their own.

A trust allows the assets to be restricted until a child reaches an age of maturity, setting up distributions for a portion of the account at staggered ages, or maintaining the trust with limited distributions throughout their lives. A trust is better to protect the assets from creditors, more so than any other method.

A trust for a grandchild can be designed to anticipate the possibility of the child becoming disabled, in which case government benefits would be at risk in the event of a lump sum payment.

There are many options for leaving money to a minor, depending upon the family’s circumstances. Your estate can include grandchildren if you do it right. In all cases, a conversation with an experienced estate planning attorney will help to ensure any type of gift is protected and works with the rest of the estate plan. If you would like to learn more about planning for future generations, please visit our previous posts. 

Reference: Longview News-Journal (Feb. 25, 2022) “Elder Care: How to provide for your youngest heirs”

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Why You should review Estate Planning

Why You should review Estate Planning

There is a line from John Lennon that states, “Life is what happens to you while you’re busy making other plans.” This is especially true when reviewing your estate planning. Maybe your estate plan was created when you were single, and there have been some significant changes in your life. Perhaps you got married or divorced. You also may now be on better terms with children with whom you were once estranged. This is why you should periodically review your estate planning to ensure they are accurate and up-to-date.

Tax and estate laws can also change over time, requiring further updates to your planning documents.

WMUR’s recent article entitled “The ‘final’ estate-planning step” reminds us that change is a constant thing. With that in mind, here are some key indicators that a review is in order.

  • The value of your estate has changed dramatically
  • You or your spouse changed jobs
  • Changes to your income level or income needs
  • You are retiring and no longer working
  • There is a divorce or marriage in your family
  • There is a new child or grandchild
  • There is a death in the family
  • You (or a close family member) have become ill or incapacitated
  • Your parents have become dependent on you
  • You have formed, purchased, or sold a business;
  • You make significant financial transactions, such as substantial gifts, borrowing or lending money, or purchasing, leasing, or selling assets or investments
  • You have moved
  • You have purchased a vacation home or other property in another state
  • A designated trustee, executor, or guardian dies or changes his or her mind about serving; and
  • You are making changes in your insurance coverage.

Your should review your estate planning after every major change of life. Sit down with your estate planning attorney and take the time to review your planning. If you would like to read more about making changes to your estate planning, please visit our previous posts.

Reference: WMUR (Feb. 3, 2022) “The ‘final’ estate-planning step”

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Carefully consider which assets to place in Trust

Carefully consider which Assets to place in Trust

Whether you have a will or not, assets may go through the probate process when you die. People use trusts to take assets out of their probate estate, but they don’t always understand the relationship between wills and trusts. Carefully consider which assets to place in a trust. This is explored in a recent article “What Assets Should be Included in Your Trust?” from Kiplinger.

Probate can be a long and expensive process for heirs, taking from a few months to a few years, depending on the size and complexity of the estate. Many people ask their estate planning attorney about using trusts to protect and preserve assets, while minimizing the amount of assets going through probate.

Revocable trusts are used to pass assets directly to beneficiaries, under the directions you determine as the “grantor,” or person making the trust. You can set certain parameters for assets to be distributed, like achieving goals or milestones. A trust provides privacy: the trust documents do not become part of the public record, as wills do, so the information about assets in the trust is known only to the trustees. If you become incapacitated, the trust is already in place, protecting assets and fulfilling your wishes.

Estate planning attorneys know there’s no way to completely avoid probate. Some assets cannot go into trusts. However, removing as many assets as possible (i.e., permitted by law) can minimize probate.

Once trust documents are signed and the trusts are created, the work of moving assets begins. If this is overlooked, the assets remain in the probate estate and the trust is useless. Assets are transferred to the trust by retitling or renaming the trust as the owner.

Assets placed in a trust include real estate, investment accounts, life insurance, annuity certificates, business interests, shareholders stock from privately owned businesses, money market accounts and safe deposit boxes.

Funding the trust with accounts held by financial institutions is a time-consuming process. However, it is necessary for the estate plan to achieve its goals. It often requires new account paperwork and signed authorizations to retitle or transfer the assets. Bond and stock certificates require a change of ownership, done through a stock transfer agent or bond issuer.

Annuities already have preferential tax treatment, so placing them in a trust may not be necessary. Read the fine print, since it’s possible that placing an annuity in a trust may void tax benefits.

Certificates of Deposit (CDs) are usually transferred to a trust by opening a new CD but be mindful of any early termination penalties.

Life insurance is protected if it is placed in a trust. However, there are risks to naming the living trust as a beneficiary of the insurance policy. If you are the trustee of your revocable trust, all assets in the trust are considered to be your property. Life insurance proceeds are included in the estate’s worth and could create a taxable situation, if you reach the IRS threshold. Speak with your estate planning attorney to determine the best strategy for your trust and your insurance policy.

Should you put a business into a trust? Transferring a small business during probate presents many challenges, including having your executor run the business under court supervision. For a sole proprietor, transfers to a trust behave the same as transferring any other personal asset. With partnerships, shares may be transferred to a living trust. However, if you hold an ownership certificate, it will need to be modified to show the trust as the shareowner instead of yourself.  Some partnership agreements also prohibit transferring assets to living trusts.

Retirement accounts may not be placed in a trust. Doing so would require a withdrawal, which would trigger income taxes and possibly, extreme penalties. It is better to name the trust as a primary or secondary beneficiary of the account. Funds will transfer upon your death. Health or medical savings accounts cannot be transferred to a living trust, but they can be named as a primary or secondary beneficiary.

Carefully consider which assets to place in a trust and which should remain as part of your probate estate. Your estate planning attorney will know what is permitted in your state and what best suits your situation. If you would like to learn more about funding a trust, please visit our previous posts. 

Reference: Kiplinger (Jan. 16, 2022) “What Assets Should be Included in Your Trust?”

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A trust can protect your pet

A Trust can Protect your Pet

One of the goals of estate planning is to care for loved ones, particularly those who depend on us for care after we have passed on. Wills, trusts, life insurance and beneficiary designations are all used to provide support to people—but what about pets? There is something you can do to protect your furry companions. A trust can protect your pet says a recent article from The Sentinel, “Elder Care: Estate planning for your furry friends.”

We love our pets, to the tune of $103.6 billion in expenditures in 2020, including everything from pet food, toys, bedding, veterinary care, grooming, training and even Renaissance style portraits of pets. Scientific studies have proven the emotional and physical advantages pet ownership confers, not to mention the unconditional love pets bring to the household. So why not protect your pets, as well as other family members?

Many people rely on informal agreements with good friends or family members to take care of Fluffy or Spice, if the owner dies or becomes sick to take care of their pet. Here’s the problem: these informal agreements are not binding. Even if you’ve left a certain sum of money to a person in your will and ask it to be used solely for the care and well-being of your pet, it’s not enforceable.

We know all things change. What if your chosen pet caretaker has a child or a new romance with someone with a deathly allergy to pet dander? Or if their pet, who always used to play well during your visits, won’t tolerate your beloved pet as a housemate?

The informal agreement won’t hold the person accountable, and the funds may be spent elsewhere.

A better option is to use a trust to protect your pet. These have been recognized in all fifty states as a lawful way to provide for your animal companion’s needs. A pet trust can be created to provide for your pet during your lifetime, as well as after you have passed, allowing for continuity of care if you become incapacitated and need someone else to have the resources and guidance to care for your pet.

A pet trust is a legal document, prepared by an estate planning attorney and usually includes financial accounts in the name of the trust. Note the pet does not own the trust (animals may not own property), nor do you as the creator of the trust (the grantor). The trust is a legal entity, managed by the trustee.

A few of the things you’ll need to consider before having a pet trust created:

Who is to be the pet’s guardian? Have more than one person in mind, in case the primary pet guardian cannot serve or changes their mind.

If all of your guardians end up unable or unwilling to serve, name a no-kill animal shelter or rescue organization to take your pet. They may require you to plan in advance to cover the cost of caring for your pet. Larger organizations may have a process for a charitable remainder trust (CRT) as part of this type of arrangement.

Give details about pet preferences. If they are AKC registered, use their formal name as well as their regular name. People often fail to use the correct name in legal documents, even for humans, which can lead to legal challenges.

Do you want the same person to serve as trustee, managing funds for the pet, as the guardian? This is a similar decision for naming a guardian for minor children. Sometimes the person who is wonderful with care, is not so skilled at handling finances.

Finally, include instructions about what should happen to the money left after the pet passes. It may be used as a thank you to the person who cared for your beloved companion, or a gift to an animal organization. If you would like to read more about pet trusts, please visit our previous posts. 

Reference: The Sentinel (Jan. 7, 2022) “Elder Care: Estate planning for your furry friends.”

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What Assets are in an Estate?

What Assets are in an Estate?

Estate planning attorneys are often asked what assets are included in an estate, from life insurance and real estate to employment contracts and Health Savings Accounts. The answer is explored in the aptly-titled article, “Will It (My Home, My Life Insurance, Etc.) Be in My Estate?” from Kiplinger.

When you die, your estate is defined in different ways for different planning purposes. You have a gross estate for federal estate taxes. However, there’s also the probate estate. You may also be thinking of whether an asset is part of your estate to be passed onto heirs. It depends on which part of your estate you’re focusing on.

Let’s start with life insurance. You’ve purchased a policy for $500,000, with your son as the designated beneficiary. If you own the policy, the entire $500,000 death benefit will be included in your gross estate for federal estate tax purposes. If your estate is big enough ($12.06 million in 2022), the entire death benefit above the exemption is subject to a 40% federal estate tax.

However, if you want to know if the policy will be included in your probate estate, the answer is no. Proceeds from life insurance policies are not subject to probate, since the death benefit passes by contract directly to the beneficiaries.

Next, is the policy an estate asset available for heirs, creditors, taxing authorities, etc.? The answer is a little less clear. Since your son was named the designated beneficiary, your estate can’t use the proceeds to fulfill bequests made to others through your will. Even if you disowned your son since naming him on the policy and changed your will to pass your estate to other children, the life insurance policy is a contract. Therefore, the money is going to your son, unless you change this while you are still living.

However, there’s a little wrinkle here. Can the proceeds of the life insurance policy be diverted to pay creditors, taxes, or other estate obligations? Here the answer is, it depends. An example is if your son receives the money from the insurance company but your will directs that his share of the probate estate be reduced to reflect his share of costs associated with probate. If the estate doesn’t have enough assets to cover the cost of probate, he may need to tap the proceeds to pay his share.

Another aspect of figuring out what’s included in your estate depends upon where you live. In community property states—Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin—assets are treated differently for estate tax purposes than in states with what’s known as “common law” for married couples. Also, in most states, real estate owned on a fee simple basis is simply transferred on death through the probate estate, while in other states, an alternative exists where a Transfer on Death (TOD) deed is used.

This legal jargon may be confusing, but it’s important to know, because if property is in your probate estate, expenses may vary from 2% to 6%, versus assets outside of probate, which have no expenses.

Speak with an experienced estate planning attorney in your state of residence to know what assets are included in your federal estate, what are part of your probate estate and what taxes will be levied on your estate from the state or federal governments and don’t forget, some states have inheritance taxes your heirs will need to pay. If you would like to read more about placing assets in an estate plan, please visit our previous posts.

Reference: Kiplinger (Dec. 13, 2021) “Will It (My Home, My Life Insurance, Etc.) Be in My Estate?”

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Naming beneficiaries is vital to your planning

Naming Beneficiaries is Vital to Your Planning

Naming beneficiaries is vital to your planning. For the loved ones of people who neglect to update the beneficiaries on their estate plan and assets with the option of naming beneficiaries, the cost in time, money and emotional stress is quite high, says the recent article “Five Mistakes To Avoid When Naming Beneficiaries” from The Chattanoogan.

The biggest mistake is failing to name a beneficiary on all of your accounts, including retirement, investment and bank accounts as well as insurance policies. What happens if you fail to name a beneficiary? Assets in the accounts and proceeds from life insurance policies will automatically become part of your estate.

Any planning you’ve done with your estate planning attorney to avoid probate will be undercut by having all of these assets go through probate. Beneficiaries may not see their inheritance for months, versus receiving access to the assets much sooner. It’s even worse for retirement accounts like IRAs. Any ability your heir might have had to withdraw assets over time will be lost.

Next is forgetting to name a contingency beneficiary. Most people name their spouse, an adult child, or a sibling as their primary beneficiary. However, if the primary beneficiary should predecease you and there is no contingency beneficiary, it is as if you didn’t have a beneficiary at all.

Having a contingency beneficiary has another benefit: the primary beneficiary has the option to execute a qualified disclaimer, so some assets may be passed along to the next-in-line heir. Let’s say your spouse doesn’t need the money or doesn’t want to take it because of tax implications. Someone else in the family can more easily receive the assets.

Naming beneficiaries without taking care to use their proper legal name or identify the person with specificity has led to more surprises than you can imagine. If there are three generations of Geoffrey Paddingtons in the family and the only name on the document is Geoffrey Paddington, who will receive the inheritance? Use the person’s full name, their relationship to you (“child,” “cousin,” etc.) and if the document requires a Social Security number for identification, use it.

When was the last time you reviewed beneficiary documents? The only time many people look at these documents is when they open the account, start a new job, or buy an insurance policy. Every few years, around the same time you review your estate plan, you should gather all of your financial and insurance documents and make sure the same people named two decades ago are still the ones you want to receive your assets on death.

Finally, talk with loved ones about your legacy and your wishes. Let them know that an estate plan exists and you’ve given time and thought to what you want to happen when you die. There’s no need to give exact amounts. However, a bird’s eye view of your plan will help establish expectations.

Naming beneficiaries in your estate planning is vital to a sound plan. If naming beneficiaries is challenging because of a complex situation, your estate planning attorney will be able to help as a sounding board or with estate planning strategies to accomplish your goals. If you would like to learn more about beneficiary designations, please visit our previous posts. 

Reference: The Chattanoogan (Dec. 6, 2021) “Five Mistakes To Avoid When Naming Beneficiaries”

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holidays are a good time to have a family meeting

Holidays are a good time for a Family Meeting

Kiplinger’s recent article entitled “Someone Needs to Know Where Your Money Is” recommends that families talk about money with an elderly parent. The holidays are a good time for a family meeting. If it’s really too late, you should know where to find the following:

Get the most recent tax return. This will have the name and contact information of the accountant who prepared the tax return. The tax return will also document income. If you find the income, you can find the assets. The reason is that earned interest, dividends, pension income and withdrawals from retirement accounts will be reported on the tax return. You should also call his or her employer’s human resources department to see if there’s a company life insurance benefit or 401(k) balance.

When a senior is admitted to the hospital, their health can sometimes deteriorate quickly. It’s one example of how everyone needs to have their estate plan updated and make sure their financial affairs are in order at all times. Someone must know all of the financial details and how to access the money, life insurance and other important documents. Here are some actions to consider taking now to ensure this situation doesn’t occur with you or a family member.

Collect key financial documents. During the family meeting, ask your parents to collect copies of the following documents:

  • Their wills;
  • Any trusts;
  • Their financial power of attorney;
  • All bank and brokerage account information;
  • Social Security statements;
  • Their website log-ins for any financial assets and insurance policies;
  • A list of beneficiaries for IRAs, annuities and life insurance policies;
  • A list of any other assets and debts; and
  • Their most recent tax returns.

As you begin gathering these documents, the most crucial one to help uncover current assets is the tax return. It can help describe the parent’s assets and the income they have from pensions, annuities, real estate investments, business interests and Social Security. A Schedule B is filed to report the interest and dividends received each tax year. If you’re unable to locate any paper statements or log-in information to financial websites to track down an asset, ask the tax preparer for a copy of the 1099 form for each asset, so you will know which company to contact.

Make certain key documents are signed. These are a will, financial power of attorney, health care power of attorney and any trust documents. Put these in a safe place, along with a copy of the Social Security card, birth and marriage certificates. You should also provide copies and access to files to people who serve as professional advisers, such as attorneys, accountants, financial planners and insurance agents. In addition, share contents of this collection with your parent’s executor, financial and health care agent and/or another relative who lives nearby. With everyone gathered together, the holidays are a good time to have a family meeting and make sure everyone is on the same page. If you would like to learn more about planning for elderly loved ones, please visit our previous posts. 

Reference: Kiplinger (Nov. 1, 2021) “Someone Needs to Know Where Your Money Is”

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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