Some Key Documents Should Be Considered Before Sending Your Child Off to College

In the United States, as soon as a minor turns 18, they’re typically considered a legal adult.

As a result, parents no longer have any authority to make decisions for their child, including financial and health care decisions.

Yahoo’s recent article entitled “Don’t Let Your Child Leave for College Without Signing Three Critical Documents” asks what if your adult child becomes sick or is in an accident and ends up hospitalized?

Because of privacy laws, known as Health Insurance Portability and Accountability Act (HIPAA), you wouldn’t have any rights to get any information from the hospital regarding your child’s condition. Yes, we know you’re her mother. However, that’s the law!

You also wouldn’t have the ability to access his or her medical records or intercede on your child’s behalf regarding medical treatment and care.

If your child’s unable to communicate with doctors, you’d also have to ask a judge to appoint you as your child’s guardian before being able to be told of his or her condition and to make any healthcare decisions for them.

While this is hard when your child is still living at home, it’s a huge headache if your child is attending college away from home.

However, there’s a relatively easy fix to address this issue:

Ask an experienced estate planning attorney about drafting three legal documents for your child to sign:

A Durable Power of Attorney (DPOA) for Health Care. This document designates the parent as your child’s patient advocate.
A HIPAA Authorization gives you access to your child’s medical records and lets you to discuss his or her health condition with doctors.
A DPOA for Financial Matters, designates the parent as your child’s agent, so that you can manage your child’s financial affairs, including things like banking and bill paying, in case your child becomes sick or injured, or is unable to act for any reason.

Reference: Yahoo (Aug. 2, 2022) “Don’t Let Your Child Leave for College Without Signing Three Critical Documents”

Who Inherited from the Estate of ‘the Man in Black’?

Johnny Cash spent a few years in the Air Force, where he and his friends created their first band. He then met his first wife, Vivian, and they married in 1954. Their first daughter, Rosanne, was born in 1955, followed by Kathleen, Cindy, and Tara. Johnny and Vivian divorced in 1966.

MSN’s recent article entitled “Here’s Who Inherited Johnny Cash’s Wealth After He Died” reports that June Carter Cash helped Johnny Cash turn his life around, after he became addicted to drugs and alcohol. They married in 1968 and welcomed their son John Carter Cash a few years later. June also had two kids, Rosie and Carlene, from her first marriage.

After a long and prolific music career, Cash left behind plenty of cash for his son, but little for his daughters according to his will. He’d amassed a $60 million to $100 million fortune. The Nashville Ledger reported that just before his death, he finalized his estate details. Since then, the money continued to grow, reaching as much as $300 million.

The family fight has to do with one song in particular, Ring of Fire. June Carter Cash, Johnny Cash and Merle Kilgore wrote the song together which was released in 1963, five years before June and Johnny got married. Decades later, it’s caused a heated debate among the Cash children. Since June and Johnny only had one biological child together, John Carter Cash, it meant that all their other children were excluded from getting royalties from the song. The four kids that Cash had with his first wife — Rosanne, Cindy, Tara, and Kathleen — didn’t get any of the royalties from the song.

Johnny gave each of his four daughters $1 million in his will. However, that’s nothing compared to the steady stream of royalties generated by the hit country song. Moreover, after Cash died, fans began playing the song again, raking in millions more in royalties.

There are conflicting stories about the origins of Ring of Fire. According to the Irish Examiner, Johnny told Vivian that he gave June “half credit” on the tune—but only because he felt bad that June was low on funds. The New York Daily News reported that Cash and Merle Kilgore wrote the song while on a fishing trip. However, since Johnny was going through his divorce with Vivian at the time, he added June as a writer so the tune wouldn’t be tied entirely to him. Regardless of the actual origins of the song, Johnny, Merle Kilgore and June are the officially credited writers of the song.

However, Johnny’s daughters eventually sued their brother, John Carter Cash. They also wanted to earn royalties from the song. However, they lost their case in 2007. As a consequence, John Carter Cash is the publishing rights owner for at least some of his dad’s extensive musical legacy.

Reference: MSN (July 19, 2022) “Here’s Who Inherited Johnny Cash’s Wealth After He Died”

Pay Attention to Income Tax when Creating Estate Plans

While estate taxes may only be of concern for mega-rich Americans now, in a relatively short time, the federal exemption rate is scheduled to drop precipitously. Estate planning underway now should include consideration of income tax issues, especially basis, according to a recent article titled “Be Mindful of Income Tax in Estate Planning, Particularly Basis” from National Law Journal.

Because of these upcoming changes, plans and trusts put into effect under current law may no longer efficiently work for income tax and tax basis issues.

Planning to avoid taxes has become less critical in recent years, when the federal estate tax exemption is $10 million per taxpayer indexed to inflation. However, the new tax laws have changed the focus from estate tax planning to coming tax planning and more specifically, to “basis” planning. Ignore this at your peril—or your heirs may inherit a tax disaster.

“Basis” is an oft-misunderstood concept used to determine the amount of taxable income resulting when an asset is sold. The amount of taxable income realized is equal to the difference between the value you received at the sale of the asset minus your basis in the asset.

There are three key rules for how basis is determined:

Purchased assets: the buyer’s basis is the investment in the asset—the amount paid at the time of purchase. Here’s where the term “cost basis” comes from

Gifts: The recipient’s basis in the gift property is generally equal to the donor’s basis in the property. The giver’s basis is viewed as carrying over to the recipient. This is where the term “carry over basis” comes from, when referring to the basis of an asset received by gift.

Inherited Assets: The basis in inherited property is usually set to the fair market value of the asset on the date of the decedent’s death. Any gains or losses after this date are not realized. The heir could conceivably sell the asset immediately and not pay income taxes on the sale.

The adjustment to basis for inherited assets is usually called “stepped up basis.”

Basis planning requires you to review each asset on its own, to consider the expected future appreciation of the asset and anticipated timeline for disposing the asset. Tax rates imposed on income realized when an asset is sold vary based on the type of asset. There is an easy one-size-fits-all rule when it comes to basis planning.

Estate planning requires adjustments over time, especially in light of tax law changes. Speak with your estate planning attorney, if your estate plan was created more than five years ago. Many of those strategies and tools may or may not work in light of the current and near-future tax environment.

Reference: National Law Review (July 22, 2022) “Be Mindful of Income Tax in Estate Planning, Particularly Basis”

Did COVID Spark More Estate Planning?

Those who have had a serious bout with the coronavirus (COVID-19) are 66% more likely to have created a will than those who did not get as sick, according to Caring.com’s 2022 Wills and Estate Planning Study.

COVID has accounted for more than one million deaths in the United States thus far.

MSN’s recent article entitled “More Young Adults Are Making This Surprising and Smart Money Move” says that it may be even more surprising that the number of adults in the 18-to-34 age range who now have estate planning documents has jumped 50% in the pandemic era.

Nonetheless, many people of all ages continue to put off the process of creating this key estate planning document.

Two-thirds of Americans still don’t have a will.

Caring.com found that among those who don’t have a will, a third say they think they don’t have enough wealth to warrant one.

However, even if you don’t have an expensive home, a large IRA and other valuable assets to pass on, you can still benefit from creating a will.

There’s no minimum level of wealth needed to have an estate plan, and every adult should have a basic plan in place to care for their own needs and the needs of their family.

The Caring.com survey of more than 2,600 adults found that—you guessed it—good old-fashioned procrastination is the primary reason people don’t create a will. About 40% admit to this factor.

Not surprisingly, the survey also found that those with higher incomes are more likely to put off getting a will due to procrastination.

Those people with lower incomes don’t prioritize a will because they don’t feel they have the assets to justify this important legal document.

Reference: MSN (July 24, 2022) “More Young Adults Are Making This Surprising and Smart Money Move”

When Should I Hire an Estate Planning Attorney?

Kiplinger’s recent article entitled “Should I Hire an Estate Planning Attorney Now That I Am a Widow?” describes some situations where an experienced estate planning attorney is really required:

Estates with many types of complicated assets. Hiring an experienced estate planning attorney is a must for more complicated estates. These are estates with multiple investments, numerous assets, cryptocurrency, hedge funds, private equity, or a business. Some estates also include significant real estate, including vacation homes, commercial properties and timeshares. Managing, appraising and selling a business, real estate and complex investments are all jobs that require some expertise and experience. In addition, valuing private equity investments and certain hedge funds is also not straightforward and can require the services of an expert.

The estate might owe federal or state estate tax. In some estates, there are time-sensitive decisions that require somewhat immediate attention. Even if all assets were held jointly and court involvement is unnecessary, hiring a knowledgeable trust and estate lawyer may have real tax benefits. There are many planning strategies from which testators and their heirs can benefit. For example, the will or an estate tax return may need to be filed to transfer the deceased spouse’s unused Federal Estate Unified Tax Credit to the surviving spouse. The decision whether to transfer to an unused unified tax credit to the surviving spouse is not obvious and requires guidance from an experienced estate planning attorney.

Many states also impose their own estate taxes, and many of these states impose taxes on an estate valued at $1 million or more. Therefore, when you add the value of a home, investments and life insurance proceeds, many Americans will find themselves on the wrong side of the state exemption and owe estate taxes.

The family is fighting. Family disputes often emerge after the death of a parent. It’s stressful, and emotions run high. No one is really operating at their best. If unhappy family members want to contest the will or are threatening a lawsuit, you’ll also need guidance from an experienced estate planning attorney. These fights can result in time-intensive and costly lawsuits. The sooner you get legal advice from a probate attorney, the better chance you have of avoiding this.

Complicated beneficiary plans. Some wills have tricky beneficiary designations that leave assets to one child but nothing to another. Others could include charitable bequests or leave assets to many beneficiaries.

Talk to an experienced attorney, whose primary focus is estate and trust law.

Reference: Kiplinger (July 5, 2022) “Should I Hire an Estate Planning Attorney Now That I Am a Widow?”

Did Former NFL Tackle and Fox Sports Commentator Tony Siragusa have an Estate Plan?

In June 2022, former NFL tackle and Fox Sports commentator Tony “The Goose” Siragusa died at the age of 55. The death of the popular athlete was confirmed to TMZ Sports by Siragusa’s former teammate Jamal Lewis. Lewis also played on the Baltimore Ravens Super Bowl winning team in 2001.

MSN’s recent article entitled “What Was NFL Legend Tony Siragusa’s Net Worth When He Died?” says that no cause of death was included with the announcement of Siragusa’s passing.

Siragusa was first drafted by Indianapolis and played a dozen years in the NFL before working more than 10 years on the sidelines for Fox Sports.

In a 2012 interview with Howard Stern, he revealed that his father died young from a heart attack at the age of 48, and that heart disease runs in the Siragusa family.

As a success both before and after his playing career, Tony left behind a sizable net worth when he died.

At the time that Siragusa died in 2022 his net worth was $6 million, according to Celebrity Net Worth. He also earned a $500,000 annual salary for his on-camera work with “Fox on Sunday.”

In addition to the money Siragusa made through football both in the game and on the sidelines, he was also an actor. Siragusa had a role in the hit HBO TV series “The Sopranos,” as well as other parts. Siragusa also hosted “Man Caves” on the DIY Network, as well as other TV appearances.

As news of Siragusa’s death spread, Indianapolis Colts owner Jim Irsay tweeted that Siragusa was the strongest player he’d ever seen in Irsay’s’ half-century in football. Siragusa was drafted by Indianapolis in 1990.

“I’m heartbroken as is all of Colts Nation,” Irsay also tweeted.

Siragusa is survived by his wife, Kathy Siragusa, and their three children.

Referring to the death of his former teammate, Jamal Lewis said, “It’s a sad day to be a Raven.”

Reference: MSN (June 22, 2022) “What Was NFL Legend Tony Siragusa’s Net Worth When He Died?”

Addressing Vacation Home in Another State in Estate Planning

Many families have an out-of-state cabin or vacation home that’s passed down by putting the property in a will. While that’s an option, this strategy might not make it as easy as you think for your family to inherit this home in the future.

Florida Today’s recent article entitled “Avoiding probate: What is the best option for my out-of-state vacation home?” explains the reason to look into a more comprehensive plan. While you could just leave an out-of-state vacation home in your will, you might consider protecting your loved ones from the often expensive, overwhelming and complicated process of dealing both an in-state probate and an out-of-state probate.

There are options to help avoid probate on an out-of-state vacation home that can save your family headaches in the future. Let’s take a look:

Revocable trust: This type of trust can be altered while you’re still living, especially as your assets or beneficiaries change. You can place all your assets into this trust, but at the very least, put the vacation home in the trust to avoid the property going through probate. Another benefit of a revocable trust is you could set aside money in the trust specifically for the management and upkeep of the property, and you can leave instructions on how the vacation home should be managed upon your death.
Irrevocable trust: similar to the revocable trust, assets can be put into an irrevocable trust, including your vacation home. You can leave instructions and money for the management of the vacation home. However, once an irrevocable trust is established, you can’t amend or terminate it.
Limited liability company (LLC): You can also create an LLC and list your home as an asset of the company to eliminate probate and save you or your family from the risk of losing any other assets outside of the vacation home, if sued. You can protect yourself if renting out a vacation home and the renter decides to sue. The most you could then lose is that property, rather than possibly losing any other assets. Having beneficiaries rent the home will help keep out-of-pocket expenses low for future beneficiaries. With the creation of an LLC, you’re also able to create a plan to help with the future management of the vacation home.
Transfer via a deed: When you have multiple children, issues may arise when making decisions surrounding the home. This is usually because your wishes for the management of the house are not explicitly detailed in writing.
Joint ownership: You can hold the title to the property with another that’s given the right of survivorship. However, like with the deed, this can lead to miscommunication as to how the house should be cared for and used.

Plan for the future to help make certain that the property continues to be a place where cherished memories can be made for years to come. Talk to a qualified estate planning attorney for expert legal advice for your specific situation.

Reference: Florida Today (July 2, 2022) “Avoiding probate: What is the best option for my out-of-state vacation home?”

What Happens to Investment Accounts when Someone Dies?

Taking responsibility for a decedent’s probate or trust estate often involves managing significant amounts of wealth, whether they are brokerage accounts or cash assets. Today’s volatile markets add another level of complexity to this responsibility. The article “Estate Planning: Investments during administration of decedent’s estate” from Lake County News explains what estate administrators, executors and trustees need to know as they take on these tasks.

Investment account values are in a constant state of change and may include assets now considered too risky because they are owned by the estate and not the individual. The administrator will need to evaluate the accounts in light of debts owed by the decedent, the costs in administering the estate and any gifts to be made before the estate will be closed.

At the same time, too much cash on hand could mean unproductive assets earning less than they could, losing value to inflation. If there is a long time between the death of the owner and the date of distribution, depending on markets and interest rates, having too much cash could be detrimental to the beneficiaries.

The personal representative or trustee, as relevant, may determine that the cash should be invested, shift how existing investments are managed, or decide to sell investments to generate cash needed for debts, expenses and distributions to beneficiaries.

A personal representative is not expected or required to be a stock market expert. Their duties are to manage estate assets as a person making prudent decisions for the betterment of the estate and heirs. They must put the interest of the estate above their own and not make any speculative investments. With the exception of checking accounts, the expectation is for estate accounts to earn something, even if it is only interest.

If the personal representative has the authority to do so, they may invest in very low-risk debt assets. If the will includes investment powers and if certain conditions safeguarding payment of the decedent’s debts and expenses are satisfied, the personal representatives may invest using those powers. In some instances, a court order may be needed. An estate planning attorney will be able to advise based on the laws of the state in which the decedent resided.

For a trust, the trustee has a fiduciary duty to invest and manage trust assets for beneficiaries. Assets should be made productive, unless the trust includes specific directions for the use of assets prior to distribution. The longer the trust administration takes and the larger the value of the trust, the more important this becomes.

In all scenarios, investment decisions, including balancing risk and reward, must be made in the context of an overall investment strategy for the benefit of heirs. Investments may be delegated to a professional investment advisor, but the selection of the advisor must be made cautiously. The advisor must be selected prudently and the scope and terms of the selection of the advisor must be consistent with the purposes and terms of the trust. The trustee or executor must personally monitor the advisor’s performance and compliance with the overall strategy.

Reference: Lake County News (June 11, 2022) “Estate Planning: Investments during administration of decedent’s estate”

Do I Need an Estate Plan If I’m 25?

Florida Today’s recent article entitled “No matter your age, income or crushing debt, you should have an estate plan” explains that the purpose of a good estate plan is that it allows you to maintain control over how your assets are distributed if you die.

It names someone to make decisions for you, if you can no longer act for yourself. Let’s look at the different documents that are necessary.

Power of attorney: If you become incapacitated, someone still needs to pay your bills and handle your finances. A POA names the person you’d want to have that responsibility.

Health care surrogate: This document is used if you become incapacitated and appoints the individual whom you want to make health care decisions on your behalf.

Last will and testament: This document designates both who oversees your estate, who gets your assets and how they should be transferred.

Beneficiary designations: Part of your planning is to name who should receive money from life insurance policies, annuities, retirement accounts and other financial accounts.

HIPAA Waiver: This is a legal document that allows an individual’s health information to be used or disclosed to a third party. Without this, loved ones may not be able to be a part of decisions and treatment.

Trust. A trust can facilitate passing property to your heirs and potentially provide tax benefits for both you and your beneficiaries.

As you can see, there are a number of reasons to have an estate plan.

Estate planning isn’t only for the rich, and it doesn’t have to be overly complicated.

An experienced estate planning lawyer, also called a trusts and estates attorney, can work with you to create an estate plan customized to your needs, financial affairs and family situation.

Putting your wishes in writing will make certain that your affairs are in order for now and in the future and help your family.

Reference: Florida Today (May 28, 2022) “No matter your age, income or crushing debt, you should have an estate plan”

Your Cryptocurrency and NFTs Need to Be Included in Your Estate Plan

As more people continue to purchase cryptocurrencies and non-fungible tokens (NFTs), digital assets are becoming a bigger part of the investment world and of people’s estate plans. If you want to pass these assets to loved ones upon death, you’ll need to plan for it, says the article “Got Cryptocurrency or NFTs? They Need to Be in Your Estate Plan” from Kiplinger. Otherwise, securing, transferring and gifting crypto and NFTs can create unsolvable problems and lost assets.

There are many different kinds of crypto and NFTs, with Bitcoin, Ethereum, Binance Coin, Thether among them. An NFT is a unique, collectable, and tradable digital asset, like digital art or a photo. NFTs are purchased through a bidding process in this universe and in the metaverse, an online world where people are buying homes, real estate and more in the shape of NFTs. Sales of NFTs are estimated to have reached more than $17 billion in 2021. For better or worse, the future is here.

Cryptocurrency is accessed through a private key. This is a series of alphanumeric characters known only to the owner and stored in cold storage or a digital wallet. Whoever has possession of the key can buy, sell and spend the digital currency. If you have crypto, your family or fiduciary needs to know what you have, where to find the assets and what to do with them.

One option is to share the private key or place crypto assets and NFTs in custody, using a software application or a hardware wallet. There are a number of companies now offering these services. An old-school option for this new world asset is to create a secure spreadsheet of your digital assets and list the login protocols for each account.

For now, it is difficult to open crypto accounts and NFTs in the name of a revocable or irrevocable trust. However, digital wallets allowing you to open an account in the name of a trust do exist, if the company handling the digital asset permits. This is a very new, rapidly evolving asset class. Beneficiaries may not yet be named for crypto accounts. However, this may change in the future.

With no trust account and no named beneficiary, what happens to your crypto and NFTs when you die? For now, they must pass through your probate estate under the will. Your estate planning attorney will make sure your estate plan includes the correct way to give digital asset powers for the fiduciary handling your estate and include digital asset powers in your will, trust, and durable power of attorney.

If your state has adopted the Uniform Fiduciary Access to Digital Assets Act (UFADAA) or the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)—46 states have—then it will be easier for loved ones to manage digital assets in case of incapacity or when you pass, as long as your estate plan addresses them.

Reference: Kiplinger (May 23, 2022) “Got Cryptocurrency or NFTs? They Need to Be in Your Estate Plan”

Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas

Some Key Documents Should Be Considered Before Sending Your Child Off to College

Who Inherited from the Estate of ‘the Man in Black’?

Pay Attention to Income Tax when Creating Estate Plans

Did COVID Spark More Estate Planning?

When Should I Hire an Estate Planning Attorney?

Did Former NFL Tackle and Fox Sports Commentator Tony Siragusa have an Estate Plan?

Addressing Vacation Home in Another State in Estate Planning

What Happens to Investment Accounts when Someone Dies?

Do I Need an Estate Plan If I’m 25?

Your Cryptocurrency and NFTs Need to Be Included in Your Estate Plan

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Some Key Documents Should Be Considered Before Sending Your Child Off to College

Who Inherited from the Estate of ‘the Man in Black’?

Pay Attention to Income Tax when Creating Estate Plans

Did COVID Spark More Estate Planning?

When Should I Hire an Estate Planning Attorney?

Did Former NFL Tackle and Fox Sports Commentator Tony Siragusa have an Estate Plan?

Addressing Vacation Home in Another State in Estate Planning

What Happens to Investment Accounts when Someone Dies?

Do I Need an Estate Plan If I’m 25?

Your Cryptocurrency and NFTs Need to Be Included in Your Estate Plan

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