Why Do I Need an Estate Planning Attorney?

Pennsylvania News Today’s recent article entitled “Top 7 Reasons You Need An Estate Lawyer says that when you think about hiring a real estate lawyer, it might seem a little unsettling. However, let’s look at these reasons and why you might require them.

Estate Planning. You might want to consider this, but everyone passes away. It’s important that your family is ready for this. An experienced estate planning attorney can help you through this process and make certain everything is prepared. You should have a will. This document says what should happen with your assets when you pass away.

Trusts. A trust helps manage assets before someone dies. If you only have one or two assets you want given to someone, a will is adequate. However, if you own extensive property, ask an experienced estate planning attorney about setting up a trust. This will help your family keep living in your home, even after you’re gone without worrying about it being sold out from under them.

Probate. The probate court oversees the distribution of a person’s estate according to the instructions in their will. Probate can be a lengthy and expensive process, depending on where you live and the complexity of your assets or family situation. An estate planning attorney can help you with strategies to avoid it. A probate attorney can help you, so your family doesn’t have to worry about dealing with that stress or spending a vast amount of money necessary to do this correctly.

Guardianship. Guardianships are used when parents pass away and leave minor children behind. You can designate a guardian for your minor children in your will.

Elder Law Services. Seniors frequently need help managing finances and health care decisions. An experienced estate planning attorney or elder law attorney can help your loved ones through these complicated matters.

Estate Investments. An experienced attorney can also advise you on how to make smart investments for your family and can make certain that the transaction goes smoothly, and that any moves work with your estate planning objectives.

Tax Issues. Taxes may be owed on estates worth more than five million dollars. This can make it hard for heirs who don’t have access to this much money upfront. An estate planning attorney can help you avoid taxes, so your family doesn’t have to deal with this problem.

Estate planning is a process that should be started as soon as possible. You’ll need an estate planning lawyer who is knowledgeable and experienced to help.

Reference: Pennsylvania News Today (Nov. 11, 2021) “Top 7 Reasons You Need An Estate Lawyer”

How Can I Clean Up My Estate Plan?

Chicago Business Journal’s recent article entitled “8 steps to tidy up your estate plan now” gives you some items to think about when working through your affairs.

Make certain that your plan is accurate and up to date. Your basic documents, which include your will, health care directive and power of attorney, should be in place and up-to-date. Review them to confirm that they’re consistent with your wishes and the current laws.

Review your named beneficiaries and fiduciaries. Confirm that the names of designated beneficiaries and fiduciaries are accurate. Most assets will pass under your will or through trusts, other accounts such as retirement, or life insurance may pass directly to a named (or contingent) beneficiary. If your planning circumstances have changed since creating these designations, update them.

Review your life and property insurance coverage. Be sure that these policies offer adequate coverage and meet their intended purpose. As your wealth increases, the planning purposes behind a term policy for risk mitigation purposes or a whole life policy to ensure ample liquidity upon death may become unnecessary. However, if your assets’ value has grown, you may need to re-examine if the current property coverage is sufficient to minimize your increased potential liability.

Ensure that your beneficiaries have enough liquidity. The estate administration process can be slow and tiresome. It’s possible that a person may not have immediate access to liquidity after a spouse’s death, depending on how assets are titled. A temporary (but major) burden can be avoided, by confirming at least some liquidity will be titled in or directly available to your spouse after you have passed.

Locate and compile important information and account identification. A difficult step in estate administration is locating a decedent’s assets. Make this process easier for loved ones, by creating a list of your accounts, property of significant value, liabilities and contacts at each financial institution. Make the list easily accessible to your family or executor, and update it whenever opening or closing an account.

Review digital assets and online accounts. These assets are frequently overlooked as to access and ownership after death. Instead of divulging passwords or allowing account access, you can add a “digital assets clause” to your planning documents. This lets named parties access specific items within the bounds of accepted legal standards.

Draft a letter of wishes. This document allows you to fully express your intentions and hopes, as well as any explanations or instructions you want to impart to your loved ones.

Plan to review. Repeat the review process regularly and calendar a reminder to give yourself an annual financial and planning checkup.

Reference: Chicago Business Journal (Dec. 2, 2021) “8 steps to tidy up your estate plan now”

How Do I Give My Children the Summer Home?

There are many ways to pass property on to children, such as gifting a home to them while you are still alive, bequeathing it to the children at your death, or selling the home to your heirs. Each has legal and tax implications, so consider the possibilities and consult with an experienced estate planning attorney.

According to USA Today’s recent article entitled “How estate planning can help you pass down a house to your kids and give them a financial leg up,” as you put a plan in place, here are three options to review.

Gifting the property to children. One idea for a landlord with rental properties is to set up a revocable trust, where a trustee is responsible for liquidating houses as they became vacant, as long as the tenants were in good standing. This type of plan is built around the idea of maximizing the value to our children as beneficiaries and minimizing the impact on the trustee, while compensating them for their troubles. In addition, there may be tax implications. When you give a house or any other capital asset to your children while you’re alive, there’s significant capital gains tax issues because of the carryover cost basis. The use of a revocable trust avoids probate. It gives the children a step-up in basis and allows them to avoid capital gains tax.

Bequeathing a house to heirs. You can gift the family home to the children while you’re still alive, bequeath it to them at your death, or sell the residence to your heirs. A will is the standard way to bequeath property to children. Parents have the ownership and benefit of the property during their lifetime and when the last parent dies, the children get the home with the stepped-up basis (the increased value of the property when it passes to the inheritors). A revocable trust is another option to bequeath property. Placing a house into a trust avoids probate court and saves on estate taxes. You can say who gets the property and set guidelines on how they get the property. If one child wants the property, for example, you can state they have to buy out the other siblings. Note that adding the children to the deed of the house means they will each own the house. Therefore, if one child wants to live in the home, the others won’t be able to sell because that child won’t be in agreement. A revocable trust can prevent this from happening.

Selling the home to the children. Selling a home to an adult child may be wise, if the parents can no longer afford to maintain the property. However, there can also be pitfalls if the agreement isn’t well thought out. Parents should think about ways to save money when selling to their children, such as deeding the property to the kids and having them refinance the property and cash the parents out. If parents sell the home below fair market value to their children, they’re restricting their ability to have a retirement. This leaves little to help with retirement, since many people don’t have pensions and are only living on Social Security. There are also taxable gains consequences, if parents sell the home for more than they paid. The sale may result in higher property taxes to the purchaser in some situations.

Reference: USA Today (Dec. 7, 2021) “How estate planning can help you pass down a house to your kids and give them a financial leg up”

Why Should I Update My Estate Plan?

The majority of Americans don’t have an updated estate plan in place. This can create a major headache for their families, in the event that anything happens to them.

Fox 43’s recent article entitled “Majority of Americans have outdated estate plans” explains that estate planning is making some decisions now for what you want to happen in the future, if you’re unable to make decisions then.

It’s important that every adult has an estate plan in place. Moreover, as you get older and you have a family, an estate plan becomes even more important.

These decisions can impact your family. It involves deciding who will care for your children. If you’re a parent with children under the age of 18, your estate plan can name the guardians of those children.

This is accomplished by having a clause in your will that states which person(s) will have the responsibility of caring for your minor children, in the event that you and your spouse pass away unexpectantly.

In your will, you’ll also name an executor who will carry out your wishes after your death.

You may ask an experienced estate planning attorney about whether you should have a trust to protect some of your assets.

You also should have your attorney draft a power of attorney, healthcare directive, living will and HIPAA waiver.

Many people don’t know where to get started. However, the good thing is ultimately it’s your decisions about what you want to happen, if you are unable to care for your loved ones.

Talk to an experienced estate planning attorney and do this sooner rather than later.

Reference: Fox 43 (Oct. 27, 2021) “Majority of Americans have outdated estate plans”

Why Do Families Fail when Transferring Wealth?

A legacy plan is a vital part of the financial planning process, ensuring the assets you have spent your entire life accumulating will transfer to the people and organizations you want, and that family members are prepared to inherit and execute your wishes.

Kiplinger’s recent article entitled “4 Reasons Families Fail When Transferring Wealth” gives us four common errors that can cause individuals and families to veer off track.

Failure to create a plan. It’s hard for people to think about their own death. This can make us delay our estate planning. If you die before a comprehensive estate plan is in place, your goals and wishes can’t be carried out. You should establish a legacy plan as soon as possible. A legacy plan can evolve over time, but a plan should be grounded in what your or your family envisions today, but with the flexibility to be amended for changes in the future.

Poor communication and a lack of trust. Failing to communicate a plan early can create issues between generations, especially if it is different than adult children might expect or incorporates other people and organizations that come as a surprise to heirs. Bring adult children into the conversation to establish the communication early on. You can focus on the overall, high-level strategy. This includes reviewing timing, familial values and planning objectives. Open communication can mitigate negative feelings, such as distrust or confusion among family members, and make for a more successful transfer.

Poor preparation. The ability to get individual family members on board with defined roles can be difficult, but it can alleviate a lot of potential headaches and obstacles in the future.

Overlooked essentials. Consider hiring a team of specialists, such as a financial adviser, tax professional and estate planning attorney, who can work in together to ensure the plan will meet its intended objectives.

Whether creating a legacy plan today, or as part of the millions of households in the Great Wealth Transfer that will establish plans soon if they haven’t already, preparation and flexibility are uber important to wealth transfer success.

Create an accommodative plan early on, have open communication with your family and review philosophies and values to make certain that everyone’s on the same page. As a result, your loved ones will have the ability to understand, respect and meaningfully execute the legacy plan’s objectives.

Reference: Kiplinger (Aug. 29, 2021) “4 Reasons Families Fail When Transferring Wealth”

If I Have a Will, Do I Have an Estate Plan?

Estate planning and writing a will are entirely different terms.

An estate plan is a broader plan of action for your assets that may apply during your life, as well as after your death.

However, a will states the way in which your assets will go after you die.

Yahoo Finance’s recent article entitled “Estate Planning vs. Will: What’s the Difference?” explains that a will is a legal document that states the way in which you’d like your assets to be distributed after you die.

A will can also detail your wishes about how your minor children will be cared after your death, and it names an executor who’s in charge of carrying out the actions in your will. Without a will, the state’s probate laws determine how your property is divided.

Estate planning is a lot broader and more complex than writing a will. A will is a single tool. An estate plan involves multiple tools, such as powers of attorney, advance directives and trusts.

Again, a will is a legal document, and an estate plan is a collection of legal documents. An estate plan can also handle other estate planning matters that can’t be addressed in a will.

A will is a good place to start, but you’ll want to create an estate plan to ensure that your family is fully covered in the event of your death.

While having a will is important, it’s only the first step when it comes to creating an estate plan.

To leave your heirs and loved ones in the best position after your death, you should talk to an experienced estate planning attorney about creating a comprehensive estate plan, so your assets can end up where you want them.

Reference: Yahoo Finance (Aug. 10, 2021) “Estate Planning vs. Will: What’s the Difference?”

Where Do You Score on Estate Planning Checklist?

Make sure that you review your estate plan at least once every few years to be certain that all the information is accurate and updated. It’s even more necessary if you experienced a significant change, such as marriage, divorce, children, a move, or a new child or grandchild. If laws have changed, or if your wishes have changed and you need to make substantial changes to the documents, you should visit an experienced estate planning attorney.

Kiplinger’s recent article “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?” gives us a few things to keep in mind when updating your estate plan:

Moving to Another State. Note that if you’ve recently moved to a new state, the estate laws vary in different states. Therefore, it’s wise to review your estate plan to make sure it complies with local laws and regulations.

Changes in Probate or Tax Laws. Review your estate plan with an experienced estate planning attorney to see if it’s been impacted by changes to any state or federal laws.

Powers of Attorney. A power of attorney is a document in which you authorize an agent to act on your behalf to make business, personal, legal, or financial decisions, if you become incapacitated. It must be accurate and up to date. You should also review and update your health care power of attorney. Make your wishes clear about do-not-resuscitate (DNR) provisions and tell your health care providers about your decisions. It is also important to affirm any clearly expressed wishes as to your end-of-life treatment options.

A Will. Review the details of your will, including your executor, the allocation of your estate and the potential estate tax burden. If you have minor children, you should also designate guardians for them.

Trusts. If you have a revocable living trust, look at the trustee and successor appointments. You should also check your estate and inheritance tax burden with an estate planning attorney. If you have an irrevocable trust, confirm that the trustee properly carries out the trustee duties like administration, management and annual tax returns.

Gifting Opportunities. The laws concerning gifts can change over time, so you should review any gifts and update them accordingly. You may also want to change specific gifts or recipients.

Regularly updating your estate plan can help you to avoid simple estate planning mistakes. You can also ensure that your estate plan is entirely up to date and in compliance with any state and federal laws.

Reference: Kiplinger (July 28, 2021) “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?”

What Should I Know about Cryptocurrency and Estate Planning?

Cryptocurrency is a digital currency that can be used to buy online goods and services, explains Forbes’ recent article entitled “Cryptocurrency And Estate Planning: What Digital Investors Should Know.” Part of cryptocurrency’s appeal is the technology that backs it. Blockchain is a decentralized system that records and manages transactions across many computers and is very secure.

As of June 24, the total value of all cryptocurrencies was $1.35 trillion, according to CoinMarketCap. There are many available cryptocurrencies. However, the most popular ones include Bitcoin, Ethereum, Binance Coin and Dogecoin. Many believe cryptocurrency will be a main currency in the future, and they’re opting to buy it now. They also like the fact that central banks are not involved in the process, so they can’t interfere with its value.

In addition, NFTs or non-fungible tokens, are also gaining in popularity. Each token is one of a kind and they’re also supported by blockchain technology. They can be anything digital, such as artwork or music files. NFTs are currently being used primarily as a way to buy and sell digital art. An artist could sell their original digital artwork to a buyer. The buyer is the owner of the exclusive original, but the artist might retain proprietary rights to feature the artwork or make copies of it. The popularity of NFTs is centered around the social value of fine art collecting in the digital space.

Here are three reasons to have an estate plan, if you buy bitcoin:

No probate. Even if your loved ones knew you had cryptocurrency, and even if they knew where you stored your password, that wouldn’t be enough for them to get access to it. Without a proper estate plan, your digital assets may be put through a lengthy and expensive probate process.
Blockchain technology. You must have a private key to access each of your assets. It’s usually a long passcode. A comprehensive estate plan that includes this can help you have peace of mind knowing that your investments can be passed on to loved ones’ if anything were to happen to you unexpectedly.
Again, central banks don’t play any part in the process, and it’s secure because its processing and recording are spread across many different computers. However, there’s no governing body overseeing the affairs of cryptocurrency.

Reference: Forbes (July 21, 2021) “Cryptocurrency And Estate Planning: What Digital Investors Should Know”

Who Inherited from the Painter Bob Ross?

Like many painters before him, Bob Ross’s image only took hold after his untimely death. He’s now a pop culture icon, and is featured as bobbleheads, Chia pets and has his own cereal.

However, there’s a reason why we see so much more of the gentle painter than ever before. That’s because of a legal battle for ownership of Ross’s name. That was the only item of value in his estate, which is rare for celebrities of his caliber.

Wealth Advisor’s recent article entitled “Here’s Who Inherited Bob Ross’ Estate, And Where They Are Now” reports about what happened to his estate, who controls it and where they are today.

The Daily Beast wrote that Ross is “a smash hit on social media, where he feels more like a Gen-Z influencer than a once semi-obscure PBS celebrity who rose to fame in the 1980s on the back of his bouffant hairdo, hypnotic singsong baritone and a timeless message about the beauty of the world around us.”

However, he wouldn’t have become a household name, if not for Bob Ross Inc. The battle began when the artist met Bill Alexander, a celebrity painter who had a show on PBS, in 1978. Alexander gave him a job as a traveling art instructor. Ross met Annette and Walt Kowalski at a class, who recently lost their son, and who wanted to learn how to paint.

The Kowalskis convinced him to come to Washington, D.C. to teach. They eventually made a deal: they’d give him a stipend and room and board, if he’d teach more classes that they’d arrange in the area. PBS then asked Ross to do a show like Alexander’s, and Dennis Kapp, the owner and CEO of the art-supply company Martin F. Weber, wanted to develop a line of supplies with him too. Soon, The Joy of Painting was born. However, to look after the supply company with Kapp, Ross and his wife Jane, and Annette and Walt signed documents to create Bob Ross Inc., with all four of them being equal partners.

At the end of the 1980s, all four partners were making $85,000, and in the early ’90s, Ross made around $120,000. However, he wanted to branch out, and when he did, the happy days were at an end. When Ross’s health started to decline, Walt “declared war” and sent Ross documents saying the Kowalskis owned everything, but they’d agreed that Ross and his heirs would get 1% of the revenues for the next decade. Ross never signed anything, and in fact, he quickly changed his last will to make it harder for the Kowalskis to steal his name and likeness.

Those changes to his last will included “a clause specifically addressing his name, likeness and the rest of his intellectual property. All of those rights were to go to Steve and one of Bob’s half-brothers.” His third wife replaced Annette as the administrator of his estate. In July 1995, the painter lost his battle to cancer.

When Ross died, Bob Ross Inc. was totally owned by the Kowalskis. However, they wanted it all, including his name and likeness. Then what one of Ross’s good friends calls “Grand Theft Bob” began.

Steve did not know about the final amendment until 20 years later when his uncle Jimmie, the estate’s executor, informed him. When Ross died, he was worth $1.3 million. Half of that was his third part of Bob Ross Inc., and there was also cash, stocks and property to divide.

The Kowalskis went after Ross’s art supplies and artwork and made “claims against the estate for business and personal reimbursements,” charging Ross’s widow with hefty lawsuits and suing PBS and the children’s show Ross guest-starred on. In 1997, Jimmie, Ross’s brother, settled the lawsuit, practically handing over everything to the Kowalskis. In 2012, their daughter Joan took over, opening up the realm of merchandising for the company.

However, there was still a “grey zone” in how Bob Ross Inc. could truly own Ross’s name and likeness. After learning about that amendment in Ross’s will, Steve went after Bob Ross Inc. but didn’t win his case against Bob Ross Inc.

Joan did strike a deal with him: if he surrendered his rights to Ross’s name and likeness, he could print his name on anything he wanted.

The good news was that Steve was able to return as an art instructor, and thanks to Bob Ross Inc., Ross was bigger than ever. That helped class sizes, and students came in masses to learn the iconic style. Steve gets to run his father’s estate, and fans welcomed him back to the painting world. Despite the fact that the Kowalskis got everything, they were the only ones who could have kept Ross’s name from disappearing.

As for all of Ross’s paintings the Kowalskis seized, they ended up in an unprotected warehouse until the Smithsonian took a collection of them.

Reference: Wealth Advisor (June 28, 2021) “Here’s Who Inherited Bob Ross’ Estate, And Where They Are Now”

What are the Most Popular Estate Planning Scams?

The Wealth Advisor’s recent article entitled “Beware of These Common Estate Planning Scams” advises you to avoid these common estate planning scams.

Cold Calls Offering to Prepare Estate Plans. Scammers call and email purporting to be long lost relatives who’ve had their wallets stolen and are stranded in a foreign country. Seniors fall prey to this and will pay for estate planning documents. Any cold call from someone asking that money be wired to a bank account, in exchange for estate planning documents should be approached with great skepticism.
Paying for Estate Planning Templates. For a one-time fee, some scammers will offer estate planning documents that may be downloaded and modified by an individual. While this may look like a great deal, avoid using these pro forma templates to draft individual estate plans. Such templates are rarely tailored to meet state-specific requirements and often fail to incorporate contingencies that are necessary for a comprehensive and complete estate plan. Instead, work with an experienced estate planning attorney.
Not Requiring an Estate Plan. Although less of a scheme, somepeople think they do not need an estate plan. However, proper estate planning entails deciding who can make health care and financial decisions during life, in the event of incapacity. These documents help to minimize the need for family members to petition the Probate Court in certain situations.
Paying High Legal Fees. Like many things in life, with an estate plan, you may get what you pay for. Paying money upfront to have your intentions memorialized in writing can minimize the expense. Heirs should be on guard if an attorney hired to administer an estate is charging exorbitant fees for what looks to be a well-prepared estate plan. Don’t be afraid to get a second opinion in these situations.
Signing Estate Planning Documents You Don’t Understand. Estate planning documents are designed to prepare for potential incapacity and for death. It is critical that your estate planning documents represent your intentions. However, if you don’t read them or don’t understand what you’ve read, you will have no idea if your goals are accomplished. Make certain that you understand what you’re signing. An experienced estate planning attorney will be able to explain these documents to you clearly and will make sure that you understand each of them before you sign.

You can avoid these common scams, by establishing a relationship with an experienced attorney you trust.

Reference: The Wealth Advisor (June 7, 2021) “Beware of These Common Estate Planning Scams”

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