Category Archives for "Estate Planning"

Protect IRA Taxes

Protect Your IRA For Your Young Beneficiaries

Because the income tax on an IRA is deferred, a beneficiary who inherits an IRA is required to either:

  • withdraw all the funds within 5 years of inheriting and pay the income tax due on the entire account; or
  • take annual required minimum distributions (“RMD”) and pay income tax only on the annual distributions (“stretching” an IRA).

The reality is that most young people who inherit IRAs aren’t thinking of their future, so they withdraw all the funds and pay income tax on the entire account, plus the 10% penalty for those under age 59 ½. All the benefits of income tax deferral are lost.

If your beneficiary is under 18, you’ve added more costs and complications to the mix. A minor child can’t legally manage assets, so a Conservator would have to be appointed by the Probate Court. Unless there are other funds available to pay the attorneys fees, court costs and the premium for the required surety bond, at least some of the IRA would have to be liquidated, resulting in additional income tax plus the 10% penalty. At age 18, the child becomes a legal adult, takes control, and probably chooses to liquidate the balance of the IRA. That means the entire IRA is subjected to income tax and the 10% penalty, on top of the court costs, legal fees and bond premium that were already paid for the Conservatorship.

Even if a beneficiary over age 18 is tax smart, and chooses to stretch the IRA and take only the RMD, the IRA is still at risk. In 2014, the US Supreme Court ruled that an inherited IRA does not have creditor protection. That means the entire IRA would still be at risk to the beneficiary’s creditors or an ex spouse in a divorce.

There is a way you can protect the tax deferral, avoid the costs of a Conservatorship, and provide creditor protection for your young beneficiaries. A trust with the right provisions allows the RMD stretch, avoids a Conservatorship, and protects the account from creditors and divorce.

Not sure exactly what you need for you and your family?  Does a trust even make sense for your situation?  Reach out to schedule an appointment with our expert Estate Planning Attorneys.  Call us at (770) 817-4999 or click here to send us a message.

Pros and Cons of Joint Bank Accounts with Mom Or Dad

Pros and Cons of a Joint Account with Mom or Dad

Adding a child to a bank account might seem like the perfect solution to safeguarding an elderly parent’s finances. Once added to the account as joint owner, the child can help with bill paying, and can monitor the account balance to control double payments or excessive gifts.  When the parent dies, the account passes to the surviving joint owner without requiring probate.

But there are down sides to adding a joint owner to a bank account that should be considered, and too often aren’t.  If the child added to the account has financial problems, the child’s creditors can access the funds in mom’s or dad’s account to satisfy the child’s debt.  In that circumstance, the decision to add a child to the account to make it easier to protect the parent’s money can result in the loss of the entire account.

Another down side to adding a joint owner that is often not considered is what happens when mom or dad dies if there are other children.  Under Georgia law, the child on the account as joint owner receives one hundred percent of the account. Even if the parent has left a Will leaving everything equally to all the children, the other children will not receive a share of the joint account.  Of course, the child who receives the account is free to split the funds with the other children, but there is no legal requirement to do so. If the joint owner chooses to keep all the funds, the decision to add that child to the account caused the other children to be disinherited and undid the parent’s intended estate plan.

If the risks to adding a child to the account as joint owner outweigh the benefits, there is another solution.  The parent can execute a Power of Attorney. Georgia’s 2017 statutory power of attorney form includes provisions authorizing an agent to pay bills and manage bank accounts.
A properly executed Georgia Power of Attorney can accomplish the goal of safeguarding mom’s or dad’s account, without the possible legal risks.

If your parent has not created their Power of Attorney, or you are not sure if it is correctly created, then you want to make it a priority to take the time now to get a proper one set up.  Don’t put it off and wait, because you never know when that emergency situation could arise.

We are able to provide the expertise for you to help make sure that Mom or Dad has their wishes carried out along with making sure you as the child has proper control over their finances. Call (770) 817-4999 or contact us here today.

How Do You Probate Out of State Real Estate

How Do You Probate Out of State Real Estate?

Many Georgia residents own real estate that is located in another state. The property might be a vacation home, rental real estate, a home that has been in the family for generations, or a future retirement home. Whatever the purpose might be for maintaining ownership of out of state real estate, families are often faced with unforeseen complications when the owner of the out of state property dies.

Unless the real estate is owned in a way that passes title outside of probate to a surviving owner, it will be necessary to file for probate in the other state. This “ancillary” probate will be in addition to the probate filed in Georgia. While Georgia probate is relatively straightforward, there are many “gotchas” for Georgia residents filing for an ancillary probate in other states.

For example, states differ on whether a nonresident can even be appointed as Executor. Florida and Kentucky allow a nonresident to serve as Executor only if that person is legally related to the deceased.

Some states, such as Virginia, require a nonresident Executor to post bond, even if the deceased’s Will waives the bond requirement. In Tennessee, a nonresident can serve as Executor only if there is also an in state Co-Executor and the nonresident appoints the secretary of state as agent to accept legal papers. The Tennessee probate court may also require the nonresident executor to post bond even if the Will waives that requirement.

Given the potential drawbacks of having to probate for real estate owned by a Georgia resident outside of Georgia, it is important to understand what the laws are of the state where the real estate is located. It may be that an ancillary probate in that state would not impose any great difficulty. But if there is a chance that problems might occur, it would make sense to either title the non Georgia real estate so that it passes outside of probate, or to create a trust and title the non Georgia real estate in the trust.

It can be complicated to try and navigate these issues alone, and that’s why it’s important to have an Estate Plan in place before an unexpected death occurs.  If you want support in creating the right plan for your needs, then please click here to schedule with our staff of trusted attorneys.

Help Your Executor Out

Help Your Executor Out

When putting together your estate plan, you need to choose an Executor, the person responsible for administering your estate. Once you’ve decided on who that should be, there are things you can do to help your Executor out.

Prepare a list of assets, including real estate, bank and investment accounts, insurance and retirement accounts. Include account numbers and contact information. Years ago, if an executor couldn’t find account statements, it might take a month or two of waiting for the statements to show up in the mail. Hard copy statements sent by regular mail are becoming more and more rare. If your asset and account information is stored online, how will your Executor find it?

You may not want to share information with your Executor now, but you can still assemble it, and let your executor know where to find it. Whether you use a password manager, or have your own system for storing and updating passwords, your executor is going to need your user names and passwords. While it is important to keep such information secure, it is also important not to keep it so secure that the person you’ve chosen to carry out your estate plan can’t get access to the information needed to do the job.

Another list to prepare is people to contact. This includes your accountant, your attorney, and your insurance agent. It also includes your next of kin. To probate a Will in Georgia, the Executor has to provide the Probate Court with the names and addresses of your next of kin. If you don’t have a spouse, children or grandchildren, that list could include living parents, siblings, or nieces and nephews if a sibling is deceased. Even if you haven’t had contact with someone on that list for years, the Executor will still have to track that person down.

Serving as an Executor is a job that requires time and effort. You can help your Executor out by making sure the information needed to do that job is easy to find.

If it’s time for you to make an update to your estate plan, or you are not even sure where to begin, click here to schedule a time to come and meet with our experts who can support you through the entire process.

How Do You Plan Your Estate When You Don't Have Children

How Do You Plan Your Estate When You Don’t Have Children?

For people with children, estate planning is usually pretty straightforward – leave everything to the children in equal shares. Sometimes there are issues with a child who is estranged, a child who has already received too much, or a child with a problem with substance abuse. But those issues can be addressed in keeping with an overall goal to pass assets down to the children and grandchildren.

For people without children, estate planning is not that straightforward. Sometimes there are nieces and nephews who are part of your life, and are the logical ones to name as beneficiaries. But if you are an only child, you don’t even have a niece or nephew.

There is no requirement to name a family member as your beneficiary. No one is entitled to receive an inheritance simply because of a blood relationship. If you don’t want to name nieces, nephews, siblings, or cousins as your beneficiaries, then don’t.

You might name good friends, charities, your alma mater, or a combination of these, as beneficiaries. If that’s how you decide to structure your plan, be sure to have a current address, phone number and email for each friend you’ve named, as well as the exact name and the address for each charity or educational institution. If you name a national charity, be clear whether you want the bequest to go to the national organization, or be used locally.

Your Will, Trust, or beneficiary designation for a retirement plan or life insurance should have a contingent beneficiary if a friend you’ve named does not survive you. The contingent beneficiary could be the friend’s children, or that bequest could simply be voided if the friend is deceased.

You should not delay creating an estate plan because you don’t have children. If you die without a plan, state law could require that your assets be distributed to distant family members who weren’t even a part of your life. Wouldn’t you prefer to benefit close friends, or charities you care about? If you’ve worked your whole life to build up an estate, it’s your right to decide who benefits after your gone.

Are you still wondering what is exactly right for you and your needs?  Attend one of our Free Workshops to educate yourself on how you can protect your stuff in 3 easy steps.  We invite you to register today and take the first step in knowing the right documents you need to protect you and your loved ones.

Dementia Related Sleep Issues Eldercare

5 Ways You Can Improve Dementia Related Sleep Issues

It can be very challenging to watch a loved one suffer from dementia.  A caretaker can feel very powerless over the changes that happen to a dementia patient.  A big challenge can be that the patient suffering is unable to communicate what problems they are having physically, because they have lost the ability to express their needs.  

According to the sleep experts at Tuck Advanced Sleeping, “Accurately diagnosing sleep disorders in dementia patients can be quite tricky, due to an abundance of underlying causes, mitigating factors and common causal symptoms”.  When looking at patients with dementia, there are usually four categories that the disturbances fall within:

  • Trouble falling or staying asleep (insomnia)
  • Excessive daytime sleepiness (hypersomnia)
  • Difficulty breathing during sleep (apnea) or excessive nighttime physical activity (such as – restless leg syndrome)
  • Nocturnal hallucinations and/or behavioral problems

In addition to medications and treatment, there are steps that dementia patients can take on their own to effectively mitigate the symptoms of different sleep disorders. Tuck Advanced Sleeping shared their top 5 ways you can help improve dementia related sleep issues. These include:

  1. A consistent sleep schedule: In order to maintain regular circadian patterns, dementia patients should strive to fall asleep and wake up at the same time every day. Adapting to a sleeping and waking schedule may be difficult at first, so they are encouraged to set alarms and force themselves out of bed at predetermined times in order to get on a healthy track.    
  2. Outdoor and photo light therapy: Exposure to natural sunlight will help elderly people realign their circadian rhythm and reduce the effects of sleep disorders like insomnia and CRSDs. Studies have also found that light therapy can improve sleep patterns for people with Alzheimer’s disease. If patients are unable to spend time outside, then they can utilize specialized lamps outfitted with bright lights.
  3. A customized diet: While a nutritious, balanced diet is essential for any healthy person, elderly people with sleep disorders can supplement their meals with foods that help them sleep. For instance, calcium (found in milk, cheese and other dairy products) is known to trigger melatonin and induce sleepiness. Oatmeal and other grains achieve the same end by raising blood sugar, which can lead to sleepiness. Alternatively, people with dementia-related sleep disorders should avoid excessive amounts of foods, drinks and substances that hinder sleepiness; these include alcohol, tobacco and caffeine.
  4. Physical activity: While many elderly people are unable to exercise as rigorously as their younger counterparts, even light physical activity can lead to higher levels of sleep. Patients with dementia-related sleep problems are encouraged to walk in moderate amounts during the day. Nighttime stretching can also be helpful.
  5. A healthy sleep space: Creating, and maintaining, a healthy sleep environment is crucial for mitigating the symptoms of dementia-related sleep issues. Beds should be reserved for sleep and sex, and patients should avoid other activities in bed, such as eating or watching television. Additionally, bedrooms should remain dark and relatively quiet during normal sleep times; keep the blinds drawn, and adjust the temperature to ensure comfort throughout the night.   

To view the full Dementia and Sleep Disorders Guide, click to the Tuck Advancing Better Sleep Guide

Has the senior in your life created their estate plan yet?  It is important to have a plan in place to make sure their assets are protected in order to maintain living a full life.  We have the expertise in creating the right plans for all our clients. If you want to learn more, reach out to us today. Click to contact us

Who owns the home when your significant other dies

Are You Sure You Own Your House If Your Significant Other Dies?

For many of us, our home is the most valuable asset we own.  Yet many Georgia residents who own their home jointly with a spouse or other family member do not understand what would happen to the ownership of that home if one of the owners died.

In Georgia, for ownership of real estate to pass to the surviving owner at the first death, the Deed must have language such as “as joint tenants with right of survivorship”.  If the Deed simply has two names as the owners, but has no reference to right of survivorship, that means each person owns fifty percent.  When one owner dies, that fifty percent must go through probate.

Home owners tend to assume that if there are two names on the Deed, ownership will pass automatically to the surviving owner.  That assumption often leads to a delay in selling the home, because the estate of the first owner to die has to be probated to pass title to that fifty percent.

If the deceased owner has a Will which leaves that fifty percent to the surviving owner, the Executor of the deceased owner’s estate can sign an Executor’s Deed of Assent, conveying that fifty percent to the survivor.  But if the deceased owner did not have a Will, things could become very complicated.

For example, if there is no Will, and the deceased owner was survived by a spouse and two children, Georgia law says that the children and surviving spouse each get a one third share of the deceased’s estate.  That means the two children would each own one third of the deceased owner’s fifty percent.  If it is a second marriage, where the deceased’s two children don’t get along with their stepparent, that’s not a pleasant result for the surviving spouse.

If a Deed is not with right of survivorship, there is an easy solution.  The owners can sign a new Deed making it with right of survivorship.  The first step, though is carefully reading your Deed to determine which kind of joint ownership it is.

Are you wondering how you can make sure all your assets are protected should you or a loved one pass?  Attend one of our Free Workshops to educate yourself on how you can protect your stuff in 3 easy steps.  We invite you to register today and take the first step in knowing the right documents you need to protect you and your loved ones.

 

Should the Inheritance be Equal?

Should the Inheritance be Equal?

For some parents the decision of how to leave their estate to their children is easy. The kids are all doing fine, they get along well, so the inheritance is left in equal shares.

For other parents, the decision isn’t that easy. One child may have a disability, and will never be self supporting. One child may have been the caregiver, while the other lives far away and rarely visits. One child may have already received an advance on the inheritance in the form of loans that were supposed to have been paid back, but weren’t.

No one is entitled to an inheritance and it’s the parents’ choice on how to leave their estate. Unfortunately, there are many children who don’t understand that concept. They won’t be happy getting a lesser share, and might take steps to fight the plan.

If there are reasons to disinherit a child, or to leave more to one child, that’s what the parents should do. But the plan must be carefully designed to minimize the risk of trouble from the child who is left out or left less.

Because probate of a Will in Georgia requires that all the heirs be given the opportunity to contest the Will, making unequal distributions in a Will is not good planning. Probate avoidance techniques like payable on death account designations or living trusts should be utilized. A “no contest” clause can be included in a trust to incentivize the child who is left a lesser amount to accept that amount and not contest it, because the clause states that anyone who contests will get nothing.

Sometimes the parents want to explain the plan to the children and attempt to soothe any ruffled feathers. Sometimes the children don’t find out what the plan is until after both parents have died. Every family is different, and there is no right or wrong way to handle disclosure of an unequal plan.

The key factor in leaving an unequal inheritance is to make sure the plan is designed to minimize the risk it might be prevented from being carried out.

If you need help in figuring out how to choose to leave your inheritance, then we invite you to contact our office and schedule an appointment today. We can help develop the right estate plan for you and your needs to make sure you are able to take care of all your loved ones.

 

Georgia’s New Power of Attorney Law

A Power of Attorney is a legal document that names another person as agent to handle financial and business affairs for the person who signed the Power of Attorney.  On July 1, 2017, Georgia implemented a new law on Powers of Attorney that should make it easier for families to use a Power of Attorney when needed.

Under the old law, banks and financial institutions often refused to accept a Power of Attorney because  they said it was too old.  That caused hardship for many families.  It was a common occurrence for a parent to sign a Power of Attorney naming a child as agent, but when the child tried to use it several years later because the parent had dementia, the bank refused to honor the document. That meant going above local bank managers to higher ups or even hiring an attorney to argue with the bank.  Sometimes the family ended up having to go to court to file for Guardianship and Conservatorship, which was what having the Power of Attorney was supposed to prevent.

The new Power of Attorney law says that a Power of Attorney can’t be rejected simply because time has passed since it was signed.  There are methods to establish that it is still a valid document.  If a bank still refuses to accept a Power of Attorney after the steps outlined in the new law to prove its validity are followed, a court can order them to accept it and to pay for the costs of  having to file that court action, as well as damages.

This is great news for families, because they can now have confidence that a Power of Attorney using the new form, signed after July 1, 2017, will work when it is needed.  Because the new law only applies to Powers of Attorney that are signed after July 1, 2017, and the old law will still apply to Powers of Attorney signed before that date, people with old Powers of Attorney should be sure to update them using the new form.

If you want to make sure that you are secured with the right Power of Attorney with the new law change, then make sure and contact us today.  We will help you update your Power of Attorney so it will be effective!

Is a power attorney of attorney enough?

Is A Power Of Attorney Enough?

A Power of Attorney is a legal document giving someone, known as the “agent”, the authority to handle financial and legal matters for the person who creates the Power of Attorney, called the “principal”.  A Power of Attorney can be limited: an elderly mother gives her son Limited Power of Attorney to handle the sale of her house.  A Power of Attorney can be general, giving the agent broad authority to handle all financial and legal matters.

A Power of Attorney is an important part of an estate plan, but unfortunately, families are being frustrated trying to use them.  Banks and financial institutions will often refuse to honor a Power of Attorney.  They may reject it because it’s too old. There’s no way of knowing how old is too old. A financial institution recently rejected a Power of Attorney that was thirteen months old. Very commonly, they insist that their customer sign a new Power of Attorney using the institution’s own Power of Attorney form.

Families usually don’t try to use a Power of Attorney until the principal is no longer able to manage, and at that point, may be incompetent to sign legal forms.  What happens if the bank says the Power of Attorney is too old, or they simply won’t accept one that isn’t on their own form, but the principal isn’t legally competent to sign a new one?

Sometimes it requires going above local managers to higher-ups, and sometimes it requires the intervention of an attorney.

It is wise these days to be proactive, and make sure that the bank or brokerage firm will honor the Power of Attorney while the principal still has capacity.  That can be daunting if the principal has accounts at multiple institutions.

If the principal is elderly, or if there are signs of dementia, another approach is to include a Trust in the estate plan, rather than relying on a Power of Attorney.  A valid Trust will be accepted no matter how old it is, and the financial institution isn’t going to have its own form for a Trust.

Are you wondering what is exactly right for you and your needs?  Attend one of our Free Workshops to educate yourself on how you can protect your stuff in 3 easy steps.  We invite you to register today and take the first step in knowing the right documents you need to protect you and your loved ones.