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Reevaluating Your Retirement Investments: 5 Compelling Reasons

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To ensure a comfortable retirement, it’s essential to reconsider your financial retirement portfolio. While you might have accumulated a substantial nest egg in a 401(k) plan, withdrawing money from it comes with significant tax planning considerations. In the early stages of a 401(k), employers match your contribution to the plan. Contributions come out of your paycheck before calculating taxes and compound every year. When you retire, however, the tax impact of a 401(k), 403(b), or traditional IRA can become significant.

Retiring at a Higher Tax Bracket

You have probably been told you’ll be in a lower tax bracket at retirement. However, many people experience the opposite. Your tax rate is expected to increase if you maintain the same standard of living, requiring the same amount of income and tax rate. With your children grown and the house paid off, substantial tax deductions are gone, which may push you into a higher tax bracket. You will pay taxes on withdrawals from your contribution plan(s) annually, whether the money comes from dividends, capital gains, or your contributions. That money will be taxed at your income tax rate at the time of withdrawal. Currently, the top marginal income tax rate is 37 percent, and considering the US deficit, that tax rate could increase in time.

Double Taxation

Unless you have a Roth IRA, distributions from your retirement plans count against you when calculating what percentage of your Social Security is subject to tax. The result is paying more taxes on your retirement plan distributions and Social Security income. You also pay more taxes from capital gains, dividends, and interest from your investments.

Required Minimum Distributions (RMDs)

It can be frustrating and expensive if you neglect to make your minimum required distributions. You must withdraw funds from your retirement fund accounts when the IRS deems it necessary. Even if you want to leave the money in the account, as of 2023, the IRS will schedule your withdrawals when you reach age 73. There are stiff penalties for not taking out the required minimum distribution. You may pay an additional 25 percent tax. If you correct the shortfall during a two-year window, it could reduce to 10 percent.

Leaving a 401(k) or IRA to a Spouse

If you’re married, a 401(k) or IRA is the worst account to leave to your surviving spouse. No one wants to die without leaving their spouse financially secure, but these two financial vehicles are fully taxable accounts. Upon your passing, your spouse changes their tax filing status from married filing jointly to single. That takes their tax obligation from the lowest to the highest bracket — probably not exactly what you had in mind.

Both your 401(k) and IRA plans are subject to tax law changes. Every time Congress convenes a session, there is the possibility that increases in taxes on your retirement plans can occur. It’s highly unlikely that your taxes won’t increase. The US debt continues to grow at an alarming rate, and tax increases are used to gain some level of financial control.

Get together with a tax planner to identify ways to move your retirement funds into better financial retirement vehicles. Sometimes conversion can cost a bit of money upfront, but in the long run, you’ll be far better off with regard to your retirement tax obligations.

Contact an Estate Planning or Elder Law Attorney

Connect your tax planner with your estate planning attorney. Retirement and tax planning are heavily tied to money and property being managed, preserved, and eventually distributed to your heirs. Our estate planning and elder law attorneys look at changing tax laws and retirement goals to maximize your family legacy. We also discuss preparing for potential long-term care expenses and how they could affect your retirement income. Costs for health care services continue to rise, and you don’t want to lose significant income to medical emergencies.

Contact our Ruston, LA office by calling us at (318) 255-1760 today and schedule an appointment to discuss how we can help you with your planning.

The Importance of Trusts as Estate Planning Tools

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Estate planning is a crucial process that entails the distribution of assets and property after the passing of a loved one. Though many people are familiar with wills as a means of distributing assets, trusts can be even more effective.

A trust is a legal arrangement where a person, known as the grantor, settlor, or trustmaker, transfers their assets to a trustee who manages and distributes those assets to the beneficiaries according to the terms specified in the trust agreement. Some people shy away from trusts due to the extra cost, but they can save time and money in the long run. Trusts offer several significant benefits that make them essential components of any comprehensive estate plan.

Probate Avoidance

One of the primary advantages of trusts is their ability to avoid probate. Probate is the legal process through which a deceased person’s will is validated before distributing assets. It can be a lengthy and costly process, subject to court supervision and public scrutiny.

By using a trust, your estate can bypass probate entirely, ensuring a faster, more efficient transfer of assets to your intended beneficiaries. This not only saves time and money but also maintains privacy, as trust documents are not public records like probated wills.

Flexibility

Another important aspect of trusts is their flexibility and customization options. Trusts can be tailored to meet the specific needs and goals of the grantor. For example, if the grantor has minor children or beneficiaries who are not yet responsible enough to handle their inheritances, a trust can be created to provide for their financial wellbeing until they reach a certain age or milestone. This allows the grantor to exercise control over how and when the assets are distributed, ensuring their loved ones are taken care of in the best possible way.

Asset Protection

Trusts are also valuable tools for protecting assets from creditors and lawsuits. By transferring assets to an irrevocable trust, the grantor effectively removes them from their personal ownership, making them less susceptible to potential legal claims or judgments. This can be particularly advantageous for people in high-risk professions or with substantial wealth. Additionally, trusts can safeguard assets in situations where the grantor becomes incapacitated, ensuring that a designated trustee manages their affairs and finances according to their wishes.

Philanthropic Legacy

Charitable giving is another area where trusts are especially helpful. If philanthropy is an essential aspect of your estate planning, you can establish a charitable trust to support your chosen causes. Through a charitable trust, you can donate assets while retaining income from those assets during your lifetime. This allows you to support charitable organizations and potentially receive certain tax benefits, all while ensuring that your philanthropic legacy endures.

Estate Taxes

Trusts can also be instrumental in minimizing estate taxes. Through various types of trusts, such as irrevocable life insurance trusts or generation-skipping trusts, you can reduce your overall estate tax liability. By leveraging the tax advantages provided by trusts, it becomes possible to preserve more wealth for future generations and secure a more meaningful legacy.

Adding a Trust to Your Estate Plan

By incorporating a trust, or trusts, into your estate plan, you can expedite the distribution of assets, maintain privacy, and provide greater control and flexibility over how your assets are managed. A trust can also offer asset protection, facilitate charitable giving, and help minimize estate taxes.

An experienced estate planning attorney or elder law attorney can help you navigate the intricacies of trusts and ensure that your estate plan aligns with your goals and aspirations. Contact our estate planning and elder law firm today to learn how we can help you establish a trust to meet your estate planning needs.

Contact our Ruston, LA office by calling us at (318) 255-1760 today and schedule an appointment to discuss how we can help you with your planning.

Tax-Efficient Wealth Transfer to Heirs

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Employing tax avoidance principles in wealth transfer is a smart approach to safeguarding your legacy and beneficiaries from burdensome taxation. Still, it requires careful planning and oversight to ensure techniques don’t cross the line to tax evasion.

Assessing tax options can determine the best way to conduct business or personal transactions and inheritance to reduce or eliminate tax liability. Tax avoidance differs from tax evasion, which reduces tax liability through concealment or deceit. Tax evasion is a crime, but tax avoidance can lower your tax bill by structuring transactions to save the most money.

Minimizing Your Heirs’ Tax Burden

Inherited assets often come with tax burdens, and planning ahead can simplify some of the processes and lower taxes for your heirs. Depending on the state of the deceased’s estate, inheritance taxes will differ. As laws and regulations change regarding inheritable assets, your estate planning attorney can conduct a routine review of your plan to ensure transferring wealth is tax-efficient.

Gifting Your Money And Assets

The most direct way to minimize inheritance tax is to start gifting your heirs money each year while you’re still alive. Taking advantage of the gift tax exclusion of $17,000 per year per person is a quick way to transfer non-taxable cash or assets to heirs. A married couple can gift $34,000 yearly to each child or other inheritor without tax consequences to the gifter or the recipient.

Life Insurance

A solid insurance plan can also set up future inheritors without tax consequences. Choosing between whole life and term life insurance will determine how long the policy will last. A term or whole life insurance policy generally provides the beneficiary a death benefit not subject to income taxes unless they receive payouts in installments.

Irrevocable Life Insurance Trusts

An irrevocable life insurance trust (ILIT) can control whole or term life insurance policies while the owner is alive. Transferring your policy to the trust or using the trust for purchase means you own your insurance policy as the trust grantor. You can determine who administers assets, designate beneficiaries, and the terms of receiving benefits. Your estate planning attorney helps you set up the trust and properly fund it.

An ILIT removes the life insurance policy from your gross estate, which minimizes or eliminates estate tax liabilities on assets not qualified as marital or charitable deductions. The policy provides immediate liquidity to the decedent’s estate and beneficiaries upon the insured’s death.

Death Benefit Annuities

An annuity with a death benefit pays a lump sum to a beneficiary. There are also joint-and-survivor annuities that provide a guaranteed income stream to the beneficiary for life. While annuities are subject to tax, they can be structured to minimize the tax burden to the beneficiary.

Retirement Accounts Converted to Roth Accounts

Heirs will pay tax on any inherited retirement benefits if they are in a 401(k) or Individual Retirement Account (IRA). However, taxes on a Roth 401(k) or Roth IRA are already settled upon conversion, so there is no additional tax on distributions. While this is great for inheritors, when the owner converts a standard 401(k) or IRA to Roth, there will be regular income tax consequences for the conversion to occur.

Real Estate

Real estate is one of the most significant non-liquid assets to pass on to heirs. Capital gains tax will apply to real estate, and the recent IRS Revenue Ruling 2023-02 removes the step up in basis even if the real estate is in an irrevocable grantor trust.

However, this new ruling doesn’t apply if the irrevocable trust is in the grantor’s gross estate. The rules and applications are complex and will require the review of an estate planning attorney to decipher.

If the property is not in an irrevocable trust, there are three other options to pursue:

  1. Sell it – If you plan on downsizing or putting your home’s equity to use elsewhere, selling the home to an heir might be a good option. It removes the property from your taxable estate, establishing a new cost basis. The property’s future sale has a cost basis tied to the home’s value on the date of transfer, lowering capital gains tax. Do not, however, sell the property below fair market value, or the difference may be subject to gift tax.
  2. Gift it – While a generous gift, providing a home to an heir during your lifetime might have negative tax consequences. This gift will count toward your lifetime gift tax exemption which may not be a problem now, but in 2026, the exemption will be cut in half as adjusted for inflation. Depending on your estate’s size, it may result in up to 40 percent federal estate tax. State-level gift, estate, and inheritance taxes may also be a factor depending on where you live.
  3. Pass it Down – Depending on how many heirs you have and their ability to maintain a property, you can leave your home in your will, a living trust, or in some states, a transfer-on-death deed. Again, these methods may no longer receive a step-up in cost basis and should be discussed at length with your estate planning attorney before making a decision.

Stock Investment Accounts

Unlike other gifted securities, inherited stocks don’t maintain their original cost basis. Upon inheriting a stock, the inheritor receives a step-up in cost basis determined by the stock’s value at the date of death. If you have held dividend-producing stocks for a significant time, the cost basis may make selling financially unproductive. However, an inheritor with a step-up in cost basis can immediately sell the stock to create cash flow without tax consequences.

Capital gain tax methods are a highly-contentious topic in the ongoing debate of inheritance and taxes. Often regulations may change without Congress enacting a law, as in the case of IRS Revenue Ruling 2023-02. To ensure your strategy is in tax compliance and advantageous to inheritors, review your estate plan routinely to account for any legal changes.

Estate Planning Attorneys and Tax Planning

Your estate planning attorney can help you legally minimize tax liabilities to your heirs by gifting assets during your lifetime, establishing trusts, and leveraging exemptions. Tax-advantaged accounts, capital gains tax planning, and other tax-efficient investments like life insurance can minimize taxes to your heirs.

Further, you can use family and charitable trusts or philanthropic foundations to receive tax benefits. There are many creative ways that your estate planning attorney can legally help to minimize taxes to your heirs. Estate planning guidance is key in creating wealth transfer management and tax strategies. Your attorney can provide personalized advice based on current tax laws and regulations and work with your tax advisor to create the best outcome for your heirs.

Contact our Ruston, LA office by calling us at (318) 255-1760 today and schedule an appointment to discuss how we can help you with your planning.

Providing Financial Guidance to Graduates

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Whether your child is graduating high school or college, you should help them prepare for the future financially. You want to set a strong foundation for long-term financial stability by broadening their scope of financial literacy. Sharing the following tips can help prepare them.

Budgeting Expectations and Boundaries

Nearly one-third of young adults don’t have a budget because they believe they are too poor to budget or don’t make enough money to need one. Without a budget, they create a huge stumbling block for financial success. A budget can helps control where money goes instead of wondering where it went.

Before creating a budget, talk through short- and long-term goals like home ownership or starting a business or a family, writing down the three or four most significant accomplishments to achieve in the next five to ten years.

Next, narrow the focus to two things to accomplish regarding finances within the next year such as:

  • Pay off debt to improve your credit score
  • Start a new career
  • Secure a credit card in your name
  • Build an emergency fund

Then further narrow the focus on what to accomplish next month. It might be saving a certain amount of cash or not using credit cards for thirty days.

Set Up a Budget

Setting up a budget requires gathering paperwork like bank statements, pay stubs, and investment accounts. From this data, calculate expected monthly income and typical monthly expenses. The hope is that monthly income exceeds monthly expenditures, including rent, utilities, food, and entertainment. If not, it’s time to cut costs. Some expenses are variable. Find a way to normalize increases in monthly expenditures with extra savings throughout the year.

Track the Budget

This step is where many people attempting to budget tend to fail because they don’t follow the budget they created. Track your daily transactions and subtract them from the proper budget category. Monitor expenditures using apps, spreadsheets, or pen and paper. Discuss what will work best to stay disciplined, as living within a budget is the first step to building financial security.

Financial Literacy

Parents can help their young adult children by teaching them to set goals, create a budget, and manage their finances. It’s tempting but essential not to routinely bail them out financially if they aren’t following their budget. If you must provide financial assistance, make it temporary. Learning to save and live within or beneath their means in these early adult years is crucial to success and teaches financial responsibility.

Encourage children not to take the summer off after college. In a competitive world, losing time in the business world equates to lost opportunities. There’s no such thing as a perfect job to wait for, and the sooner they begin building a resume, the better the chances of finding that dream position.

Estate Planning Attorneys

An estate planning attorney can play a valuable role in assisting parents of graduates in planning for their financial future. They can help your adult child understand long-term financial goals like starting a business, saving for retirement, or buying property. They can help set attainable goals and develop a plan to achieve them.

Start Investing Early

Long-term financial growth typically begins with a modest initial investment when young. Time is on your graduate’s side to allow compound interest and savvy investing to accumulate wealth. Encourage them to take advantage of employer-sponsored retirement plans, such as 401(k) or 403(b), especially if the employer offers matching contributions. Additionally, explore individual retirement accounts (IRAs) or other investment vehicles suited to their goals and risk tolerance.

Consider Insurance Coverage

Evaluate insurance needs, such as health insurance, renters or homeowners insurance, and vehicle insurance. Even though they’re young, look into disability and life insurance to protect themselves and their loved ones from unexpected life events. Typically, the healthier and younger you are, the lower the premium cost. Many policies are flexible to regain premium payments in the future if you no longer require the policy.

Create an Estate Plan Early

Your child may think estate planning is unnecessary. However, if they start a family, creating a will is critical to distribute assets and personal property to loved ones and can appoint guardians for minor children.

A living will is critical since accidents and incapacitation can happen at any age. It outlines your preferences for medical treatment if you can’t communicate your wishes and how long you want to persist in a vegetative state.

They can modify or completely rewrite their wills as they age and circumstances change.

Parental Input

For your child to receive financial messages without sounding like another money lecture, stick to the basics, such as:

  • Basic budget and goal-setting
  • Now versus later thinking
  • Delayed gratification and tradeoff requirements necessary to attain goals
  • Establishing and maintaining good credit
  • Saving versus investing and the importance of starting early
  • Big picture planning in financial life management

Once they understand the importance of legal and financial planning, they’re ready for the next steps in financial responsibility and setting realistic expectations around money.

Fostering Financial Independence

Some adult children will be more willing than others to heed parental advice on financial planning. You may want to provide some modest capital for early investment purposes. If you worry they might squander the money rather than watch it grow, your estate planning attorney can put guardrails on the gift via a trust or other legal mechanisms that limit their ability to withdraw funds.

All parents want to see their children do well in life, and a large part of their success is contingent upon achieving financial independence. Educating them early about building wealth can give them the clarity, control, and confidence they need to create a strong financial foundation that will serve them throughout their lives.

Contact our Ruston, LA office by calling us at (318) 255-1760 today and schedule an appointment to discuss how we can help you with your planning.

How Do Estate Planning and Elder Law Differ?

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Although elder law and estate planning are both concerned with aging issues, elder law focuses mainly on issues that seniors face as they grow older.

How Estate Planning and Elder Law are Similar

No matter what stage of life we’re in, we face challenges. Hope for the best, but plan for the worst. We can get into accidents, especially when we’re young and under the impression that we’ll live forever. If you were incapacitated, who would you want to speak for you? Who would you trust to pay the bills or make medical decisions?

Both estate planning and elder law attorneys help you choose the right people to stand in your shoes when you can’t speak for yourself.

As adults, we start families, buy property, and accumulate valuable and sentimental items. If we’re thinking realistically, we want to ensure our families are taken care of and receive our property should something happen to us.

Both estate planning and elder law attorneys help you answer tough questions. Both attorneys also know how to protect your estate from tax burdens and avoid the expense and delay of court proceedings, such as probate and guardianship.

Elder Law Becomes Crucial in Later Stages of Life

Elder law expertise becomes crucial when we get older. We’re living longer, healthier lives – but nobody knows when we, or those we love, will get too sick to make decisions or live independently.

You may want to postpone thinking about these things, but delay or denial about incapacitation or declining health can mean that your entire savings gets wiped out paying for nursing home care. Misconceptions about government benefits, like Medicaid, can prevent you from seeking benefits, cause disqualification, or delays that leave you paying thousands of dollars a month for care out of pocket.

Senior business owners who are retiring need a succession plan for a smooth and profitable transition from their business. Older adults and their families have a quality of life to protect. Many want to stay in their homes as long as possible but must prepare for a time when skilled nursing facility care becomes necessary. Elder law attorneys help seniors allocate financial resources to protect against as many potential problems as possible. That includes preserving your home and savings for a spouse or future generations.

Reasons to Find an Elder Law Attorney

Elder law attorneys create custom estate plans with senior issues in mind. They can help you answer difficult questions and find the right solutions for your family by keeping their best interests at heart. Preparing for the future reduces stress and anxiety in an emergency. Your family will know your wishes and can make decisions for you when you need their help. Part of your plan to pay for long-term care includes how to use Medicaid, Medicare, Social Security, or retirement benefits.

Evaluating financial resources and determining eligibility for government benefits is complex and requires knowledge and experience to navigate the process successfully. Elder law attorneys use legal strategies to maximize your resources and will work with your financial advisor to align estate planning strategies with overall financial goals.

Our elder law attorneys want you to enjoy your life and independence for as long possible. And when life becomes harder with age, you’ll have something left over for your legacy. We are dedicated to keeping you informed of issues that affect seniors who may be experiencing declining health. We help you and your loved ones prepare for potential long-term medical expenses and the need to transition to in-home, assisted living, or nursing home care.

This article offers a summary of aspects of estate planning and elder law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

The Different Types of Trusts

The Different Types of Trusts

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It may seem that trusts only belong to wealthy people, but they are common and useful tools for estate planning of all sizes. They are used to manage and protect assets, control the distribution to beneficiaries, and continue family legacies. There are different types of trusts.

Types of Trusts

There are many types of trusts, but they all establish a financial arrangement between three parties: the settlor(s), the trustee(s), and the beneficiary(ies). The person creating the trust is known as the settlor. (In other states, the creator of the trust can be referred to as the trustor, grantor, or trustmaker.) Trusts can be created by more than one person or entity. The trustee manages the trust and disperses income or principal from the trust according to specific terms. The trust is for the benefit of one or more beneficiaries, which can be people or entities, such as charities.

Benefits of Trusts

Trusts provide many benefits. One of the key benefits is transferring assets from the owner to the trust fund, so assets do not have to go through a probate court before reaching the beneficiary. This allows the beneficiary to receive the assets faster and generally privately. Probate proceedings can last for months, unnecessarily delaying the dispersal of assets. Since court records can be viewed by the public, in many circumstances assets become public knowledge.

A person can establish a trust that they benefit from during their lifetime. Trusts can also be used to hold and disperse assets to beneficiaries who are minors, disabled, or otherwise unable to manage the assets. Some trusts are used to remove countable assets from a person who is planning to apply for Medicaid benefits. Assets intended for heirs may prevent them from qualifying for Medicaid coverage. Trusts created for this purpose are usually established at least five years before the settlor plans to apply for Medicaid.

Since estate taxes and gift taxes can eat into the number of assets a beneficiary receives, trusts provide a way to avoid or lessen these taxes. Trusts can protect assets from creditors, legal claims, and family disputes regarding how your assets should be dispersed. You may have additional reasons to create a trust for your assets.

Types of Trusts

There are two types of trusts:  living and testamentary. Trusts may be revocable or irrevocable. They can be funded during or after the settlor’s life, depending on the purpose of the trust. These common trusts are described as follows:

Living Trust

A living trust  or inter vivos trust  is set up while the settlor is still alive. The assets that are held in the living trust are typically available to the settlor during his or her lifetime. This type of trust is helpful if the settlor wants to have access to the assets but wants to give clear direction on how they will be distributed after death.

Testamentary Trust

A testamentary trust is a trust that is contained within an individual’s last will and testament. It is generally set up to benefit the settlor’ descendants. It goes into effect when the will is probated by a probate court judge.

Revocable Trust

A revocable trust is created while the settlor is still alive and wishes to continue to benefit from the assets that the trust will hold. Often the settlor, trustee, and beneficiary are the same person while that person is still alive. After the settlor dies, a successor trustee assumes management of the trust for the benefit of the beneficiaries designated in the trust. The settlor can change or terminate a revocable trust while her or she is still alive.

Irrevocable Trust

An irrevocable trust cannot be changed or terminated during the settlor’s lifetime. Because the assets held in an irrevocable trust are off limits to the settlor, this type of trust helps protect assets from creditors and taxes. It is often used when planning for Medicaid or government benefits. It may also be used to limit access to minors and adults with special needs to distribute funds at specific times or over their lifespan.

Trusts help individuals and businesses protect and direct their assets to beneficiaries while keeping those assets out of probate court. An experienced estate planning attorney can help you create the trust, or trusts, that will best suit your family’s needs and financial goals.

This article offers a summary of aspects of estate planning law. It is not legal advice, and it does not create an attorney-client relationship. For legal advice, Contact our Ruston, LA office by calling us at (318) 255-1760.

The Estate Planning Process

The Estate Planning Process

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An estate planning process is a multifaceted process that involves several documents spelling out a person’s wishes. During the process, you can name people to make financial decisions on your behalf when you are unable. You can designate beneficiaries for your assets. You can also express your wishes for what type of medical care you want if you are severely ill or injured and unable to communicate.

Since each person’s situation is unique, every estate plan is different. Here are the basic steps in the estate planning process to get you started. Working with an estate planning attorney will help you create and implement a plan that works for your specific needs.

Inventory Your Assets

We often don’t realize how many tangible and intangible assets we have until we start counting them. Before meeting with an estate planning attorney, create an inventory of everything you own that has significant monetary or family value.

Your tangible assets may include:

  • Real estate, both residential and commercial (unless owned by your company)
  • Vehicles, such as cars, motorcycles, or boats
  • Collectible items, such as artwork, antiques, coins, stamps, or trading cards
  • Jewelry and other valuable items

Your intangible assets may include:

  • Checking and savings accounts
  • Investments, such as mutual funds, stocks, bonds, or certificates of deposit
  • Retirement plans, such as a 401(k) or an IRA
  • Life insurance policies or health savings accounts
  • Ownership shares in a business

After you have created an inventory of your assets, determine each asset’s value. If you are unable to attach a dollar amount to an asset, you can determine its worth by how much your heirs will value it or have it appraised. By giving each asset a value, you will be able to evenly divide your assets among your heirs.

Determine Your Family’s Needs

One important aspect of estate planning is making sure your dependents’ needs will be met after you’re gone. Life insurance can be a good way to ensure the necessary funds to support your loved ones. Work with a financial advisor to be certain you have enough life insurance to cover your dependents’ needs.

If you have minor children, name a guardian and a backup guardian who can take care of your children if you and your spouse are both unable to care for them. In addition to naming guardians for your children, it is a good idea to express what’s most important to you. For example, you can share your values related to education, religion, and general child rearing.

Put It All in Writing

For your estate plan to be official, you need to put your desires into legal documents and sign them in the presence of a notary public and one or two witnesses. The requirements for a valid will vary from state to state. Here are some estate planning documents that may be part of your estate plan.

  • Will: A will is an estate planning document that everyone should have. You can use your will to name the person you want to manage your estate after you have passed away. You can also designate which beneficiaries should get which assets, appoint guardians for your minor children, and explain funeral and burial arrangements.
  • Trust: During the estate planning process, you may determine that you need a trust to manage some of your assets. Trusts are useful estate planning tools that can offer various asset protection benefits. An estate planning attorney can let you know if a trust can help you achieve your estate planning goals.
  • Durable Financial Power of Attorney: This document allows you to appoint a person you trust to manage your financial affairs if you are unable to manage them.
  • Advance Health Care Directive: With this document, you can express your wishes for end-of-life care and name a person you trust to make health care decisions on your behalf if you are unable to do so.
  • HIPAA form: This form is usually only about three pages long and includes a list of people whom health care providers may share your medical information with.

Review and Update Your Estate Plan

Too many people think that once they have signed their estate plans, they are through with the process. However, since changes in our lives are inevitable, changes to our estate plans are often necessary. You should review your estate plan every few years and consult with your estate planning attorney when you need to make changes.

 

This article offers a summary of aspects of estate planning law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

 

A Comparison of Elder Law and Estate Planning

A Comparison of Elder Law and Estate Planning

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You might wonder what estate planning and elder law are and how they differ as you plan for the future. Both financially and in terms of health care. Estate planning and elder law also have some similarities. A comparison of elder law and estate planning will be addressed below.

Even though these two types of law are for different stages in life, they are often handled at the same time. This is because many people wait till later in life to start their estate planning process. When an older person creates an estate plan, they may also need some elder law counseling. To better understand the two areas of the legal field, we will look at the solutions they provide. As well as the questions they answer, and how they can work together.

Estate Planning

The main goal of estate planning is to choose legal documents that will determine what will happen to you and your assets once you have passed away or become incapacitated. An estate planning attorney will help you make important decisions, such as:

  • Who makes medical and financial decisions if you are unable
  • Who is allowed access to your medical records
  • How assets are distributed after you are gone
  • Who cares for minor children if you become incapacitated or die
  • Who manages money for your minor children if you are no longer able
  • How to handle your funeral arrangements and burial

Durable Powers of Attorney

By using a general durable power of attorney document, you can name a person, or persons, to make financial decisions on your behalf either immediately or  if you are no longer able to do so. Expressing your end-of-life wishes requires designating a person to make healthcare decisions for you by completing a health care directive. By completing a Health Insurance Portability and Accountability Act (HIPAA) form, you will give your health care providers permission to share your medical records with the people listed on your HIPAA form.

Wills and Trusts

In your will, you can name the beneficiaries of your estate as well as a guardian to care for any minor children you may have at the time of your death. You can also name a person to manage the money you leave for their benefit. Some people create a trust, or trusts, to hold their assets during their lifetime and after death. They then sign a pour-over will that moves assets into their trust(s) upon death.

Elder Law

Whereas estate planning focuses mostly on what happens after a person dies, the area of elder law focuses on a person’s last years or months. This can include planning for long-term care and applying for government assistance, such as Medicaid, Medicare, and veterans’ benefits, if applicable. Using elder law tools and strategies, an elder law attorney can help you find ways to preserve your assets while preparing to apply for benefits.

Like estate planning, it is best to start the elder law planning process well in advance. To qualify for benefits, such as Medicaid, you may have to sell or transfer ownership of some assets years before applying for benefits. Gifting or transferring assets out of your name must be done according to government requirements, so applying for benefits can be a complicated process. Hiring a skilled attorney can make the difference between receiving benefits quickly or not at all.

Since seniors are at a greater risk for discrimination, neglect, and abuse, elder law attorneys can help seniors and their family members recognize when a senior’s rights are being violated and take legal action to counter and remedy the situation.

Tying Estate Planning and Elder Law Together

It is best to start your estate planning process as soon as possible. The decisions involved could come at any time due to an accident or an illness. Planning for end-of-life care and the benefits associated with it may come later in life, but preparing well in advance lets you legally reduce assets for an extended period to qualify for benefits, like Medicaid.

Even younger families just starting their estate planning process may look at elder law planning at the same time for senior family members’ needs. Some estate planning tools, such as trusts, are often used when helping a parent plan for Medicaid. Even other government benefits for long-term care expenses. An attorney experienced in both estate planning and elder law can advise you in these areas. They will help you navigate complicated processes.

This article offers a summary of aspects of estate planning law. It is not legal advice and does not create an attorney-client relationship. However, it is of upmost importance to know the comparison of elder law and estate planning. For legal advice, contact our Ruston, LA office at (318) 255-1760 to speak to one of our experienced estate attorneys.

The Role of the Executor

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The Role of the Executor

An executor is someone chosen to handle an estate’s assets and affairs after the death of the deceased because they believed you would be trustworthy to do so. Even though the decedent nominated you to be their executor, you will still need to be appointed to that role by their local probate court. The role of executor is an honorable role that comes with many responsibilities. Below is an overview of what the role entails.

Get a Death Certificate

The first thing you will want to do is get original copies of death certificates. You will need a death certificate to open and close financial accounts, file the decedent’s final tax return, and more. The number of originals you will need varies depending on the complexity of the estate. Some places will accept copies, and others will require the originals. The funeral home should be able to provide the death certificates.

Find the Will

You will need to find the decedent’s original will as well as any other estate planning documents. Read the documents so that you understand what you have to do. If you need help interpreting the documents, you must consult an attorney who is experienced in estate administration and probate. You will need to file the will with the local probate court and petition the court to appoint you as the executor of the estate.

Gather and Inventory Assets

After you have been appointed as the executor by the court, you will use the documents the court gives you to create an Employer Identification Number (EIN) for the estate. You will use this number to open a bank account, so the estate can receive funds and pay bills. Other actions you may need to take include:

  • Take possession of a safe deposit box and its contents
  • Locate and inventory any real estate deeds, mortgages, and leases
  • Appraise any real estate owned by the estate
  • End any recurring expenses, such as subscriptions, memberships, or services
  • Find and list all the decedent’s financial assets, including life insurance policies, retirement accounts, pensions, or social security benefits
  • Determine if the decedent was the beneficiary of any other deceased person’s estate
  • Collect debts owed to the estate
  • Evaluate the estate’s assets and liabilities and report this information to the beneficiaries and family members

This is just a partial list of what the role of executor entails. Each estate is different; therefore, each probate process is unique.

Pay Debts and File Taxes

As the executor, you will need to pay all the debts the estate owes. You may have to reject false claims against the estate and defend the estate in court, if necessary. You will also need to file a final tax return for the decedent and pay any taxes that are owed by the decedent and the estate.

Distribute Assets

After the estate’s debts and taxes have been paid, you can distribute the remaining assets according to the instructions in the decedent’s will or trust. The decedent have made specific bequests in their will or trust expressing that certain assets to be given to certain family members, friends, or charities.

Close the Probate Case

Throughout the probate process, you should document everything you do in your role as executor. After you have fulfilled your obligations as executor, you will petition the probate court to close out the probate process.

The probate process can be long and tedious, but resources are available, such as The American Bar Association’s Guide to Wills and Estates, that you can use to help guide you. However, you may want to hire an attorney experienced in estate administration and probate to help you with the process or handle everything for you.

With that being said, this article gave a summary of aspects of estate planning law. It is not legal advice and does not create an attorney-client relationship. For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.

Estate Planning: Six Mistakes to Avoid

Estate Planning: Six Mistakes to Avoid

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Estate planning: six mistakes to avoid. It can protect your assets, interests, and the people you love if you plan ahead. Sadly, many individuals make costly mistakes without proper advice and guidance from a qualified estate planning attorney. Beyond undermining your intent and diminishing your financial legacy, poor planning can create additional stress to your heirs in their time of grief.

Six common errors frequently happen during the estate planning process. These mistakes often occur because the complete financial picture was not fully considered. It is easiest to avoid estate planning mishaps by knowing what they are before you begin or looking for these errors when reviewing and updating your plan.

Financial Procrastination

Financial procrastination causes problems. While examining your mortality and making end-of-life preparations is not a particularly fun activity, try viewing it as helping and enhancing your loved ones’ future lives while creating a sense of peace during your own.

The need to protect your finances using wills, trusts, and power of attorney (POA) documents is not solely the domain of the elderly. Putting off the drafting of legal documents necessary to protect yourself and your inheritors can lead to disastrous outcomes.

By far, failing to create an estate plan is the most common mistake. Even if you do not have a lot of money, you need a will to protect any minor children you have by naming their guardians. Your will also ensures your asset distribution to heirs is carried out according to your intentions when you die and names a representative to handle debt obligations, final taxes, and other estate administrative duties. Dying without a will or “intestate” can lead to dire consequences.

Outdated wills, forms, and POAs create problems. If you made a will twenty years ago and have not reviewed and updated its contents, chances are many of the details no longer reflect current assets or beneficiaries. Estate planning is not a “set it and forget it” proposition. Reviewing estate planning documents and beneficiary forms every two years is generally adequate, barring a major life change such as divorce, birth, death, remarriage, or relocation to another state.

Beneficiaries without coordination can create expensive oversight. Beneficiary forms for retirement accounts like 401(k)s and IRAs, annuities, and life insurance policies may constitute a significant portion of your estate’s assets. These beneficiary forms are legally binding and will supersede the contents of your will. Failure to update beneficiary forms can lead to an ex-spouse receiving assets that preferably would go to your heirs. Routine checks of all beneficiary designations are best practices for estate planning.

Failing to title trust assets properly can lead to probate. While not everyone requires a trust, those who do must carefully retitle their assets into the name of the trust. Forgetting to add more recently purchased property or opening a new account requires you to title them into the trust to receive trust benefits. Whether real estate, cash, mutual funds, or stocks, if you fail to move the asset into the trust, they become subject to the probate court, possible tax consequences (depending on the trust type), and a public record of these assets.

Life insurance can trigger estate tax. Life insurance can provide heirs with liquidity without the sale of assets and tax consequences when handled correctly. However, if a wealthy individual dies while maintaining ownership of their life insurance policy, they may inadvertently create a tax event for their heirs. Although life insurance death benefits are not subject to state or federal income taxes, any “incident” of ownership by the decedent can create an inheritance tax.

An estate planning attorney can help shelter life insurance proceeds from high-value estates by gifting the policy to an Irrevocable Life Insurance Trust (ILIT) or draft a new trust to purchase a new policy where the trust is the owner and beneficiary. A policy owned by the trust does not create a taxable situation to death benefits. Your attorney’s careful structuring of this trust type is complex but can provide proper protection.

Joint ownership of assets with your children can lead to disastrous consequences. Naming your children as co-owners of assets, even digital, permits their creditors to access your money. The better way to address the situation is to give your adult child power of attorney and assign them as a beneficiary to a payable on death bank or brokerage account. This tactic permits them to access your funds if required during your lifetime. However, it keeps your assets from your child’s estate and away from their potential creditors.

Ultimately the biggest error you can make is not finding the right estate planning attorney to guide you. This specialized attorney receives training on avoiding probate, tax implications, and asset protection if you require long-term care. Proper planning with the right guidance will help you avoid costly estate planning mistakes and protect your family’s future financial well-being. If you have questions or would like to discuss your personal situation, please contact our Ruston, LA office by calling us at (318) 255-1760.