OEpic-Blog-Image-3-300x133ne of the biggest problems that senior citizens ages 65 and older face is that they are frustrated by the fact that they have worked hard and sacrificed to save a nest egg for their later years only to face the possibility that they could lose everything to a long term care medical need, while others who spend and don’t worry about their finances can rely on government assistance to pay for all of their skilled nursing home costs

Sometimes older parents and grandparents even wake up in the middle of the night worrying about how much their children will struggle to have to provide care for their aging parents while the children watch the family finances go down the drain.

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Let’s face it. many people HATE paying tax. And many people hate paying income tax when distributions are made from their IRA.8942c891917593748f2b7930878e34f5-300x300

We recently were working with a gentleman from our area on his estate plan. He owned property in Dane County. He had never been married and he never had children.

He wanted to leave some things and some money to a family member of his, but he liked the idea of setting up some scholarship funds. So, after quite a bit of discussion, he decided to name his college as the beneficiary of part of his IRA when he died. But he did not want the funds from his IRA to go into the general funds of the college. So, we are restricting the IRA so that it can only be used in a certain curriculum of the university. Now, he knows that students in his prior field will benefit from scholarships that he establishes.

The internet has turned the paper trail of one’s life into virtual confetti of online accounts. Sure, it’s not hard to find someone’s Facebook, LinkedIn and Twitter accounts. You might even be able to guess a password or two. But you won’t guess them all, and even if you could you might be breaking the law; in many places, accounts can’t be legally accessed by anyone other than the holder.

All that gray area creates the potential for Twitter, Facebook, email and other accounts to sit stranded online in a state of suspended animation. At best, they’ll be creepy reminders every time they prompt friends and family to wish a happy birthday to the departed. At worst, they’ll keep important assets, like bank balances, locked away.

There are currently federal and state laws that may make it a criminal offense for anyone other than the account owner to access an account. This is true even if the owner gives another person permission to do so.  By the end of 2017, it is expected that almost every state will have enacted some form of the Revised Uniform Fiduciary Access to Digital Assets Act. RUFADAA will allow for users to request a digital assetsservice provider to give a fiduciary access either by opting in on an online tool furnished by the service provider or through one’s estate planning documents.

The biggest challenge facing your estate may be finding digital assets after a death. If your family or named fiduciary isn’t aware that you have a Dropbox account, no one may ever look for it.

We recently partnered with Directive Communication Systems which provides personal representatives with a powerful solution for managing personal accounts. When the time comes, DCS works with accounts to implement an estate’s final wishes which may include deletion, transference, memorialization or other instruction. Even a financial institution can be contacted to initiate next steps for the attorney. With DCS, you can be assured that accounts will be managed securely and estate administration will be handled smoothly saving both time and anxiety.  Continue reading

Not all of a deceased person’s property has to go through probate. If the property had a properly designated beneficiary, such as an insurance policy, an IRA or a 401(k), those do not go through probate.
Additionally, because of Wisconsin’s marital property law, everything owned jointly by a married couple easily transfers over to the surviving spouse. However, if real estate is only in the deceased spouse’s name there may need to be a probate. Continue reading

We recently had some discussions with a Madison family that was trying to make the most of their father’s IRA and had questions about naming the beneficiary of an IRA. The family wanted to make sure that after the father died, the IRA would benefit one of the children, and then after that child died, the family wanted the IRA to be shared among the other children.

retirement trustThe family kept asking: “Should we name the child as the beneficiary, or should we name a trust (for the benefit of the child) as the beneficiary.

One of the children was married to an accountant. His suggestion (whether it has merit or not is debatable) was, “Don’t name a trust as the beneficiary of an IRA because I hate trusts.”

One of the children stated, “Dad wants it left to a trust for the benefit of a child so that Dad has the assurance that when the child dies, the remaining IRA would go to the child’s siblings.”

What should they do?

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An affidavit of transfer is an alternative option to probate only when people have less than $50,000 in probateable assets, in other words, anything that would pass through the probate court. Typically that would include any real estate, bank accounts or other personal property which was held in the deceased person’s name. However, again the total of all assets would have to be under $50,000.

Another option for estates over $50,000 to avoid probate requires planning before the person passes away.

Another option to avoid probate is by creating a revocable trust and then transferring all of the assets into that trust. Upon doing so, if a person then dies, there would be no need for a court case. This is the best way for most people to plan their estates.

What Types Of Trusts Are Useful In Protecting Retirement Plans?

There are a number of schools of thought here. In our practice, we feel a revocable living trust is not a good vehicle to handle retirement plans. Often these are not drafted with the appropriate language to comply with the IRS service regulations to be what’s called a “see-through trust”. A Retirement Plan Trust is specifically drafted to comply with the service regulations and meet all the criteria so that if this trust is designated as the beneficiary, you will be able to preserve the tax deferral for those named beneficiaries to get the stretch advantages.

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No, it does not. It transfers by beneficiary designation. Much like life insurance that goes to the individual named in the policy, the retirement plan goes to the individual named on the beneficiary designation in the plan document. If you don’t have a beneficiary designated or the individual that you designated is deceased, the account value can wind up in your probate estate; and if this happens, the only choice is that all the taxes are due right away, and there is significant inflexibility. But in general, it will avoid probate.
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The attorneys at Krause Donovan Estate Law Partners, LLC know the timelines of the probate process. They are able to work on matters so that as soon as one timeline is met, they start working on the next timeline. That allows them to get a probate done in the minimum amount of time because of their familiarity with the process. Additionally, in order to probatemake the probate process go as smoothly and quickly as possible, the attorneys at Krause Donovan Estate Law Partners, LLC always encourage the Personal Representative to be open and honest and with all beneficiaries so there is not anyone who is out there suspicious and worried. By just simply opening up the books and being very communicative, delays can sometimes be avoided that could be caused by people contacting the court and asking for information or creating a will contest because of a distrust. Additionally, the lawyers at Krause Donovan Estate Law Partners, LLC act as a buffer sometimes between factions of the family that don’t get along. If people who don’t really trust the Personal Representative can contact their firm instead sometimes that can make things go faster than if they are trying to get in touch with the Personal Representative who may be personally not a friend. Experienced attorneys can also help resolve disputes when they arise. Being able to calmly deal with family members as a person without a bias or history is often useful. Therefore, there are a lot of ways that an experienced attorney can speed up the probate process and make it less painful for those involved.

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monopoly-capital-gains-tax-300x225Let’s face it, most families simply won’t have to worry a lick about the federal estate tax. That’s because about 99% of unmarried people don’t have an estate that exceeds $5.49 million. And more than 99% of married couples don’t have a combined estate of $10.98 million. So, for most families, have no worries about trying to avoid the 40% federal estate tax but fail to spot this unintended tax issue of the Capital Gains Tax.

But almost every family who engages in estate planning has assets that have appreciated in value. That means there is the potential for capital gains tax at the federal level when those appreciated assets are sold.

Example: Let’s say Dad bought stock in ABC Co. for $5 per share over the years. Now, that Dad is 76 years old, ABC Co. stock sells for $60 per share. That means that there is $55 of gain in each share of stock that Dad owns. If Dad sells the stock during his lifetime, he’ll get hit hard with a capital gains tax.

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