Being single again is a shock for most widows and widowers; it changes everything, including your estate planning needs.  If your spouse has died, consult with a qualified estate planning attorney and implement these 3 tips for widows and widowers.

1. 1.       Update Your Estate Plan

Your goals, needs, and finances have likely changed since the death of your spouse.  This means that your estate plan needs to be updated.  In addition, because your spouse was likely your primary trusted helper, you need to name new trusted helpers.   Trusted helpers are executors, trustees, power of attorney agents, and guardians for minor children.

1. 2.       Determine How Your Assets are Owned

Determine how each of your assets are owned and how they should be owned with your estate planning attorney.  If you previously owned assets such as your home or financial accounts in joint names, re-title them in the name of your own revocable living trust.

If you’ve inherited assets from your spouse in trust, absolutely keep them in trust.  These assets have asset protection, meaning they can’t be taken from you in a lawsuit and will keep your children from being unintentionally disinherited.  Potential lawsuit creditors include a bankruptcy trustee, future divorcing spouse, unhappy client, or car accident injured person.

In addition, NEVER put your assets in joint names with a new spouse.  If you die first, your new spouse will inherit, no matter what your will or trust says, and your children will be DISINHERITED.

1. 3.       Don’t Lend Money to a New Friend or Spouse

When you fall in love again, do not lend money to a new friend or spouse.  Even though your intentions will be good, you need to keep the money in trust for your future and your children’s future.  If your friend or spouse’s business plan isn’t strong enough to get institutional lending, it’s not strong enough for you to invest in it.

Widows and widowers, consult with a qualified estate planning attorney.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.

If Grandma raised you, you help to support her, or you just want to honor her in your estate plan, you may be wondering whether you should name Grandma as your beneficiary.  Of course, you can name her as a beneficiary; however, there are some considerations.

• The Nursing Home

Will Grandma need governmental assistance to pay for a nursing home?  If so, then your gift will disqualify her, if given outright.  Instead, you can pass assets in a trust for her benefit.  The trust will pay for things that governmental assistance does not pay for.

• Asset Protection

Outright gifts can be taken by Grandma’s creditors and divorcing spouse.  Instead of handing Grandma a wheel barrel full of money, pass assets to her in a treasure chest (i.e. lifetime individual trust share.)

• Retirement Accounts

When you pass your retirement account to a beneficiary, that beneficiary can elect to stretch distributions out over his or her entire lifetime.  A tax deferred stretch out is very effective in building a significant sum.  Because Grandma’s life expectancy is likely much less than your other beneficiaries, consider passing retirement assets to younger beneficiaries and giving Grandma something else.

• Taxes

If you and Grandma have federally taxable estates or if your states of residence have an inheritance tax (Florida does not), your assets are likely to be taxed twice within a relatively short period of time.

• Personal Gifts

Consider giving Grandma a personal gift such as a letter describing your favorite shared memories, photos, or a video of the two of you together.  Use your funds now to spend time with your grandma and create new memories.

If you want to name Grandma as a beneficiary, consult with a qualified estate planning attorney to determine the best way to do it.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.

Life insurance trusts are used to get the cash value and proceeds of one or more life insurance policies out of an individual’s estate, thus avoiding the federal estate tax.  As the insured, you have few duties.  Your estate planning attorney, life insurance representative, and trustee do all the work.  You and your loved ones get all the benefit.

The Insured’s Duties

• Consult with a qualified estate planning attorney to design your estate plan.
• If a life insurance trust is appropriate, choose a trustee (and contingent trustees.)
• Sign the trust agreement.  Keep an original of the trust agreement in your file or fire safe.
• Gift cash to the trust (enough to pay for the insurance and to keep the account open.)
• Sign the consent for medical exam for the life insurance (this is NOT the application to purchase insurance.)
• If you’re transferring any existing life insurance policies into the trust, sign to do so. Change the address for premium notification to the trustee’s address.

Your Estate Planning Attorney’s Duties

• Determine whether an insurance trust is appropriate.
• Design, draft, and supervise execution of trust agreement.
• Retain original trust agreement.
• Obtain federal tax identification number.
• Answer questions and guide process for client, trustee, and insurance representative.

Your Trustee’s Duties

• Sign trust agreement.
• Apply for new life insurance policies.
• Open non-interest bearing checking account in the name of the trust.
• Send written notices (“Crummey Notices”) to beneficiaries when gift is made to the trust, if applicable.  (Repeat annually.)
• When Crummey Notice withdrawal period elapses, pay insurance premium.  (Repeat annually.)

If you have a federally taxable estate, there is no need to lose half the value of your life insurance to federal estate taxes.  Instead, consult a qualified estate planning attorney to determine whether a life insurance trust is right for you.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.

There are two qualifications that must be met to fund a Roth IRA.  The first qualification is that either you or your spouse must have earned income at least in the amount you wish to contribute to the individual retirement plan; and, second, you must meet certain income limitations.

Earned Income

Either you or your spouse must have earned (not investment) income at least in the amount that you contribute to the Roth IRA.  For example, if you wish to contribute $5,000 to a Roth IRA for the year 2011, either you or your spouse must have earned at least $5,000 in 2011.

Even if you did not have earned income, you can contribute to a Roth in your own name so long as your spouse had earned income.

Roth Income Limitations

Full Roth IRA participation is available if you are single and have income less than $107,000 or married and have income less than $167,000.

A phase out of eligibility begins for single filers at $107,000 per year and ends at $122,000 (the maximum annual income allowable for single filers.)  If you’re married, the phase out starts at $169,000 and ends at $179,000 (the maximum annual income allowable for married filers.)

This means that if you have income over $122,000 and you’re single or you have income of $179,000 and you’re married, you cannot contribute to a Roth IRA.

Maximum Roth IRA Contributions

You can contribute $5,000 to a Roth IRA each tax year; if you’re 50 years of age or older, you can contribute an additional $1,000 per, for a total of $6,000 per tax year.

Roth IRA Benefits

• Your contributions (and their growth) grow tax deferred.
• If you opened your Roth IRA more than five years from the date of any distribution, all distributions are tax free.
• Your Roth IRA assets can grow throughout your entire lifetime, without forced distributions.  There are no required minimum distributions required during your lifetime.
• There is no maximum age limit for contributing to a Roth IRA.
• If you are disabled, you can withdraw Roth IRA assets without penalty.

If you’re wondering whether a Roth IRA is right for you, consult with a qualified estate planning attorney.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.

Understanding where you are in relationship to the existing estate tax parameters is one of the first things you are going to want to ascertain when you are planning your estate. At the present time, the estate tax exclusion stands at $5 million and the maximum rate of the tax is 35%.

So if your estate is worth less than $5 million the entirety of it could be passed on to your loved ones free of taxation. Anything that exceeds $5 million would be taxed at 35%.

The above parameters came about due to provisions contained within the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. At the end of 2012 this tax relief measure is going to sunset. Under current laws the estate tax exclusion will then be reduced to $1 million and the top rate of the tax will go up to 55%.

There are some 8,000,000+ households in the United States who have assets that exceed $1 million, so these pending changes will impact a lot of Americans.

A tax that will consume 55% of the taxable portion of your estate is certainly a force to be reckoned with. This is where intelligent estate planning comes in.

There are a number of different strategies that can be implemented to reduce or eliminate your estate tax liability. The optimal plan is going to vary on a case-by-case basis depending on the nature of your assets and exactly what it is that you would like to achieve with your legacy. If you are interested in devising a plan that provides you with estate tax efficiency, don’t hesitate to pick up the phone and get in touch with an experienced Orange Park FL estate planning lawyer.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.

Without question, you have financial matters to consider when you are devising a plan for the future. When the subject of estate planning comes up many people immediately think about transferring assets to their loved ones. But in addition to this it is a good idea to consider all of the eventualities of aging.

Individuals don’t generally pass away on a given day after being in good health for the period of time that preceded their passing. For this reason it is a good idea to include advance health care directives when you are creating your estate plan.

The two advance health care directives that are widely recommended are the living will and the durable power of attorney for health care. A living will is used to state your wishes concerning medical procedures such as being kept alive via the use of artificial life support systems.

This is a very sensitive subject and different people have different feelings about it. This is a personal decision and it is important to let your wishes be known so that there are no disagreements among family members regarding the appropriate course of action should you become unable to communicate your own decisions.

A durable power of attorney for health care is used to name a representative who would make medical decisions in your behalf should you become unable to make them for yourself.

Advanced directives are a key component to the modern holistic plan for aging. If you have not yet executed these important documents, you may want to take action right now to arrange for a consultation with an experienced Jacksonville estate planning attorney.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.

If you are like most people Social Security will provide a significant percentage of your retirement income. As a result, your retirement date may well coincide with your date of Social Security eligibility. With this in mind we would like to provide a brief explanation of the current eligibility requirements.

There is no one age at which everyone becomes eligible for Social Security. People who were born prior to 1955 reach the age of full Social Security eligibility they celebrate their 66th birthdays. Full eligibility age then graduates by two months per year through 1960.

So if you were born in 1955 your full retirement age is 66 years and two months; if you were born in 1956 your retirement age is 66 years and four months, and so on. Full retirement age in a Social Security eligibility context for individuals who were born in 1960 and after is 67.

It should be noted that the above information applies to eligibility to receive your full retirement benefit. If you want to, you can retire early and accept a reduced benefit. The youngest age at which you can apply for Social Security is 62.

On the other end of the spectrum you can put off applying for Social Security until you are as old as 70. By doing so you earn delayed retirement credits that will increase your benefit by 8% for every year that you delayed your retirement.

This information is valid as of this writing, but it is important to understand the fact that it is always going to be subject to change.

If you would like to devise a comprehensive plan for the future that takes the limitations of Social Security into account, simply take a moment to arrange for a consultation with an Orange Park retirement planning attorney.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.

Having an estate plan is important, no matter what your age or where you live. Those Americans that live abroad should have an estate plan and also be aware of the estate and inheritance laws of the country where they are residing, even if the living arrangements are temporary. 

When you are making arrangements to live abroad for a period of time, likely one of the last things on your mind will be death, but it is important to understand that this is an inevitable for everyone, and there is no telling when we will be faced with it. Once someone realizes that death is a reality, they begin to see just how necessary an estate plan is. 

Even though you are an American citizen, if you are living in another country you will likely be subject to their laws, and each country does have different laws governing estates and inheritances. Some countries have very specific laws that dictate how an estate will be divided among heirs after someone dies. This is why it is very important that you become familiar with the laws of the country where you will be living, as it is these laws that will be governing your life while you are in that country. 

One way around this problem is to leave most of your assets in the United States when you move. If you only have the assets that you absolutely need in the country where you are residing, it is only those assets that that nation’s laws will govern. The rest of your assets will be in the United States and subject to U.S law. 

In addition to leaving the majority of your assets in the United States you will also want to ensure that you have plan that will cover more than just your estate. If you have minor children, you will want to ensure that you have a will that names someone as the guardian of your children. Make sure that you have a copy of this will, as well as the person you have named as guardian of your children. It is also a good idea to contact the U.S Embassy in the country where you reside to inform them that you are living in there for a time, and that you have small children with you. If something was to happen to you while living in a different country, the U.S Embassy could work with that country to ensure that your chosen guardian can take the children back to the United States. 

Obviously having an estate plan is important no matter what your circumstances, but it is very important if you are a U.S citizen that plans to live abroad.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.

On a fundamental level estate planning involves preparing your material assets for distribution to your loved ones after your death. But when you are taking the time to evaluate what you have accumulated throughout your lifetime and how you intend to pass it on a bigger picture sometimes emerges. Giving the money that you have left over when you pass away to your family members is simple enough, but the totality of your legacy is something that will inevitably cross your mind as you are making these financial plans.

Over the summer Bill Gates and Warren Buffett issued a challenge to the richest people in America asking that they pledge to give away most of their wealth to charity over a period of time. Buffett has given billions to the Bill and Melinda Gates Foundation over the last several years so you have to give him credit for setting a good example and not asking others to do what he himself is unwilling to do.

Though you may not have the resources to start a family foundation, your legacy can still include charitable contributions. One of the ways that people of more modest means can make a difference is through the use of donor advised funds. With these funds you can give to multiple charities through a single contribution, making them extremely efficient. You can also name an adviser to succeed you after your death in an effort to foment a family legacy of philanthropy.

Another creative way that you can make a difference with your estate plan is through the use of incentive trusts. With an incentive trust you name a beneficiary and a trustee as you would with other trusts, but you add stipulations that are intended to act as incentives. If you were to create an incentive trust that required some type of community service as a stipulation you would provide some tangible loving wisdom to accent the financial bequest while facilitating a positive difference in the world you have left behind.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.

A new year is upon us, which means it is time to start to think about taking care of the things that we tend to annually. Estate planning attorneys would like to think that our clients prioritize an estate plan review each year, and many are diligent in this regard. But estate planning lawyers are used to seeing a lot of procrastination when it comes to setting up an initial plan and the subsequent updating of plans that already exist. It is human nature to put off things that don’t seem relevant in the immediate future, and for many people an estate plan update would fit this category.

Of course nobody expects to total their car, and we all have motor vehicle insurance and we update our coverage when we purchase a new car or truck. And traffic accidents are not inevitable, but death is something that we all will face. So the motivation for keeping your estate plan current has nothing to do with the expectation of impending demise; the reason for revisiting your estate plan regularly is to protect your family “just in case.” And there is no one among us who has not known or heard about someone who passed away suddenly in a totally unexpected manner.

This having been emphasized, 2011 is an especially important year for estate plan reviews and adjustments. We passed along information about the new estate tax legislation right as it was happening, but to review, the estate tax exclusion had been scheduled to be just $1 million in 2011 with a top rate of 55%. On December 17th the president signed a measure into law that upped the exclusion to $5 million and reduced the maximum rate to 35%. Procrastination may be understandable at times, but in a year when the tax laws have changed this significantly there is really no way you can justify postponing an estate plan review.

The Edwards Law Firm is a member of the American Academy of Estate Planning Attorneys.