Articles Posted in Estate Planning

We’ve talked to many Wisconsin families about things that they had done in an effort to protect their money from all being sucked up by the nursing home costs which can exceed $100,000 annually. Lots of mistakes are being made by people who don’t truly understand the intricacies of the Wisconsin Long Term Care Medicaid law and regulations. While you won’t get all the answers in this post, you’ll learn what some of the common mistakes are. So… here are options that just don’t work. Continue reading

Retirement plans, including IRAs, 401Ks, 403Bs, and 457As, are not controlled by common estate planning documents such as wills and revocable living trusts. They transfer to heirs by a beneficiary designation. So whoever is named as the beneficiary when you initially signed that plans document, is the person that will receive the value in the account when you pass away.
This lack of control sometimes can be problematic, especially when an individual retirement saver has designated a beneficiary and has forgotten to keep those designations up to date. The plan documents will control where the money goes and your last will and testament will have no effect because beneficiary designations avoid probate. Your retirement plans will also not be controlled by a revocable living trust because the plans are not trust property; they are individual property.

Is The Title of A Retirement Plan Going To Be Transferred To A Trust Upon Someone’s Death?retirement

No, what happens is that beneficiary is contacted by the custodian. For example, you have an IRA in a brokerage account. You pass away, and hopefully, you have designated beneficiary’s, for example, your spouse as the primary beneficiary. The broker or your financial advisor calls up your spouse and says, “You are the designated beneficiary of this retirement account there is $100,000 in it and you have a few options for distribution. What would you like to do? Would you like to pay the income tax obligation now, cash it out and do whatever you wish with the money, or do you wish to inherit this IRA and stretch out the tax obligation over your lifetime keep it as your own retirement fund?” Now there are different rules as to whether spouses inherit or if children inherit, but that’s effectively what happens when a custodian handles the transfer to the designated beneficiary.

Continue reading

A lot of people do not understand the landscape of how retirement plans pass to beneficiaries. They do not necessarily understand the particularities and technicalities of how one inherits and their choices presented by fund custodians. IRAs have only been around since the mid-1970’s and we are only beginning to see multiple generations inheriting them. The lifetime distribution option (stretch IRA) is an even more recent addition to the mix so the idea of not just simply cashing it out is relatively new. Whenever you have these options and choices, people just aren’t savvy enough. Continue reading

Epic Blog Title Image #1

The Most Important Thing You Can Do For Your Aging Parents

How to Ensure Your Parents Don’t Lose Their Home, Bank Accounts, & Assets To Long Term Care Costs

A friend relayed a story that is one I hear all too often when it comes for caring for aging parents.

According to multiple money experts, America is facing a retirement crisis. Many do not have enough savings and Social Security benefits will not be able to cover the cost of living of most Americans in retirement. Unfortunately, many people prefer not to talk about death so they refuse to think about estate planning for the welfare of those they leave behind.

Yet, death is inevitable and whatever you own should be protected to ensure that the people you love are taken care of according to your wishes. According to Greg Stevens of Cabot Wealth, “everyone needs a will.” He adds that the will should be updated regularly. This is one way to transfer wealth and assets, health care, and other proxies smoothly to the next generation. Continue reading

Many people don’t like to talk about death but they will if it has anything to do with protecting their assets – including digital assets. Digital assets are your online accounts, digital currencies, online accounts, passwords, digital files, user names, and any Terms of Service Agreements (TOSA) that you signed. With the growth of digital technology and Estate Planning in the Digital Ageuse, these assets are expected to be worth over US$5 billion by year 2020. You will need and should have a will drawn up to protect these assets either after death or in case of incapacity to ensure that your loved ones gain legal access to these assets.

The First Step: Assigning Assets

Before anything else, you will have to list down all your digital and traditional assets since your will or estate documents will incorporate all assets. You will need a fiduciary, an executor for your traditional assets, a personal agent with power of attorney in case of incapacity to make decisions, and a trustee. These are the individuals chosen by you to manage all your assets according to your wishes so it is important to select them wisely.

The main issue facing digital assets is the fact that they are not tangible assets and exist primarily on the Internet. The individual tasked to manage your digital assets will have to deal with extenuating circumstances far different because these digital assets may or may not have monetary value. In fact, they are valuable to you because they represent something sentimental to you like a memory or a milestone.

The Second Step: Understanding the Laws on Digital Assets
Continue reading

Over half of American adults and approximately 92 percent of adults under the age of 35 have not written a will. Most assume they do not need a will because any assets left behind will automatically be inherited by family members. Although assets may be distributed according to state intestacy laws, the process can be lengthy. With proper estate planning, however, you Designating a Guardian for Your Childrenmay be able to avoid placing any additional emotional or financial burden on your family after your death.

It is a good idea to create a will once you begin acquiring assets or start a family. In addition to designating how your assets will be distributed upon your death, your will designates an executor who will manage them until they are distributed. If you are a parent, you should also select a guardian who is likely to survive until your minor children reach the age of majority in the event both parents pass away.

Other useful estate planning documents include a durable power of attorney and a healthcare proxy. A durable power of attorney will allow your designee to make financial and legal decisions on your behalf if you become unable to do so. Similarly, a healthcare proxy allows a designee to make medical decisions for you if you become incapacitated and cannot do so yourself. By designating a power of attorney or healthcare proxy, you may save your family from being required to take the matter to court in the midst of an unexpected healthcare crisis.

Continue reading

When talking about families and inheritance, studies show that while financial assets are important, family values and family history take the driver’s seat. Most people treasure family stories and life lessons regardless of their age, financial situation, or race. A simple case would be comparing the reactions of siblings on two topics: a family legend or a new car. Chances are, the stories of the new car will stop after one month while the family stories will continue to be told and enjoyed for decades. This is because family stories, family values, and life lessons learned by members of the family are integral to its legacy.

safeDepositBoxA very recent study though shows that millennials think of inheritance as a “bonus” but expect to get that bonus – and are expecting large sums of up to $100,000. However, they are willing to lower that figure because many parents are already helping their adult children financially with student loans and other expenses.

An article published on www.Marketwatch.com reported that one in three Americans will “blow their inheritance” because they are not prepared to handle it. In fact, those who inherit money tend to spend it quickly and one-third end up with negative savings two years later.

Parents have a responsibility to teach their children money management so any windfall they get will be spent wisely. Inheritance, while a “bonus,” should not be just “fun money.” In today’s economy, a $1,000,000 inheritance does not even guarantee a comfortable retirement for a couple beyond their fifties. Continue reading

The young often think of themselves as invincible in the sense that in their protected world, nothing bad can happen to them, especially with their parents around. Studies show that over 90% of adults under 35 do not have a will, providing reasons like:young-family

  • It’s not necessary.
  • It’s too complicated for me to deal with right now.
  • It’s too expensive.
  • My parents will take care of all that.
  • I won’t need it for a long time anyway.
  • It takes too much time

According to surveys done by USA Life Expectancy, adults aged 15 to 34 rarely die from medical causes but the figures are high for accidents, poisoning, suicide, homicide, and injuries. This suggests that for young adults, death often comes unexpectedly. Continue reading

Asset protection planning, no matter what anyone tells you, was never meant to be a tax avoidance tactic. Asset protection planning is a legal option for planning your wealth in advance of a claim or the threat of a claim.retirement trust

Asset protection planning is used to improve your bargaining position, make options available for settling claims, and avoid litigation – not to escape paying your taxes or debts or hiding your wealth from certain people.

And while there are some who insist asset protection planning is a form of cheating, this is only a perception because the truth is: There are some who try to use this option to cheat and lie, but it does not make it right and eventually they get caught.

Continue reading