The United Nations estimates that the amount of money laundered globally is as high as $2 trillion a year. Governments around the world are taking steps to protect the financial system from crimes like money laundering. Among the new measures in the U.S. is the Corporate Transparency Act (CTA).
Congress enacted the CTA in 2021. The CTA requires many businesses that operate in the U.S. to report information about their beneficial owners. The reporting platform opened on January 1, 2024.
Many businesses are scrambling to figure out what they need to report. Learn more about filing beneficial ownership information reports and how a business lawyer can help.
The Corporate Transparency Act and Beneficial Ownership Information
Beneficial ownership information (BOI) reports are a requirement of the Corporate Transparency Act. The goal of the law was to fight illegal activities, like
- Tax fraud
- Money laundering
- Terrorism financing
The CTA is designed to prevent bad actors from hiding or benefiting from their ownership of a U.S.-based entity.
Companies that meet the criteria under the law must report information about their beneficial owners to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN will keep the information in the beneficial ownership registry secure and confidential.
What Are Beneficial Ownership Information Reports?
Beneficial ownership information reports tell the federal government who owns or controls companies doing business in the U.S. Reporting companies typically need to provide four pieces of information about each beneficial owner:
- Birth date
- Passport, driver’s license, state or local ID card, or Indian tribal ID number
A foreign passport can be used for BOI reporting if the beneficial owner doesn’t have any valid form of American ID. Any form of ID used for BOI reporting must not be expired.
Information about the company is also a requirement. Reporting companies formed before January 1, 2024, must submit:
- Business name
- Business address
Reporting companies formed on or after January 1, 2024, also need to submit information about the people who created the company.
How to Determine Beneficial Ownership
A beneficial owner is someone who:
- Exercises substantial control over the reporting company, or
- Owns or controls 25% or more of the reporting company’s ownership interests
Beneficial owners may exert direct or indirect control.
Exercising Substantial Control
A beneficial owner can exercise substantial control in several ways, such as:
- Serving as a senior officer, like president or chief executive officer
- Having authority to appoint or remove officers or directors of the company
- Serving as an important decision maker
Someone who exercises a form of substantial control not listed is still a beneficial owner. The FinCen Small Entity Compliance Guide provides more detail on determining substantial control.
Holding an Ownership Interest
Ownership interests can include stocks, equity, voting rights, capital interest, convertible instruments, or options. Reporting companies may have more than one kind of ownership interest. Someone who holds at least 25% of any type of ownership interest is a beneficial owner.
Exemptions to Beneficial Ownership
A person may be exempt from qualifying as a beneficial owner. The exemptions include:
- Minor children
- Inheritors who will inherit interest in the reporting company in the future
- Employees of the company, except senior officers
- Agents or custodians
Tax professionals and lawyers usually qualify for an exemption as agents or custodians. They act on behalf of an actual beneficiary owner.
Which Businesses Need to Submit Beneficial Ownership Information Reports?
Most privately-held companies registered to conduct business in the U.S. need to follow BOI reporting requirements. The law applies to domestic or foreign companies.
Publicly-traded companies don’t fall under the same reporting requirements. This is because publicly-traded entities have their own reporting requirements.
Several other exemptions exist, such as:
- Companies with more than 20 full-time employees and $5 million in gross sales or receipts
- Banks, credit unions, and some other financial institutions
- Insurance companies
- Public utilities
Some statutory trusts, business trusts, and foundations may be reporting companies. You may want to consult a lawyer to determine if your organization needs to file a BOI report.
How and When to Submit a Beneficial Ownership Report
You can submit your beneficial ownership information online through the BOI e-filing website. Select the option to “File BOIR” to access the reporting form. Filing is free.
The Corporate Transparency Act requires reporting companies to submit information directly to FinCEN. State or local governments, financial institutions, or other federal agencies may have their own reporting requirements. Filing with these other organizations isn’t a substitute for submitting information to the FinCEN beneficial ownership registry.
Who Can File a Beneficial Ownership Report
An employee or owner of your company can file the beneficial ownership information report. You can use a third-party service provider if you choose. You may consult with a lawyer or an accountant.
Many businesses will be able to follow the reporting requirements without external help. If you have questions or a more complicated business situation, a lawyer may be useful.
Submission Deadlines for BOI Reporting
The deadline for submitting beneficial ownership information reports depends on when your company was established. If you created your company before January 1, 2024, you must fulfill your BOI reporting requirements by January 1, 2025. Businesses created in 2024 have 90 calendar days from their effective registration date to file BOI information. Companies registered in 2025 will need to submit beneficial ownership information reports within 30 calendar days.
You don’t need to submit a beneficial ownership report every year. After you file the initial BOI report, you only need to re-file if you’re updating or correcting it.
Find Help with Your BOI Reporting
Beneficial ownership information reports are a new requirement for many companies. They help FinCEN prevent and prosecute financial crimes. Accurately determining who the beneficial owners are for your company and reporting that information correctly is essential.
Rhodes Law Firm, PC has been serving business clients in the Augusta/Aiken area for over 40 years. Our expertise in business law means you can count on us to be a reliable partner. We can help you navigate BOI reporting to ensure that your report is accurate and filed on time.
Schedule a consultation with Rhodes Law Firm today to discuss the best way to fulfill your BOI reporting requirements.
If you’re in the process of buying a home, the costs can add up quickly. If you’ve ever thought about avoiding title insurance, this article from The Ascent explains why that may not be in your best interest.
Title insurance can help protect you against any competing claims or liens on the property, and help prevent you from inheriting any unforeseen issues with the ownership of the property. The author of the Ascent article noted she was lucky to have title insurance on her pending home purchase as the home had been foreclosed upon and the previous owner had filed a lawsuit to get it back.
Without title insurance, she could have been out a lot of money or been stuck fighting in court to keep the home. A home is a very expensive investment. You never know what might happen, and it’s not worth taking the risk when it comes to your ownership rights.
Make sure you add title insurance into your home-buying budget and be confident in your investment. Contact Rhodes Law Firm today with any questions you may have about the process.
Those with children from prior relationships must consider the impact of 2nd marriages on their children’s ability to inherit. About 50% of adults remarry within five years of a divorce, with 18% of blended families having at least one stepchild. Measures also reduce impact if you fall into the 60% category of failed second marriages.
Regardless of the positive attitude of your new spouse toward children from a prior relationship, planning for/protecting your children is a priority. Once a parent dies, if the entire estate goes to their new spouse, that person has total power over the assets. This may result in children being disinherited.
We will share tips on protecting your children and their inheritance, whether they are six or 60 when you remarry.
Numerous financial accounts require designating a beneficiary to receive the assets upon death. The primary beneficiary gets all funds in the account. If there is more than one primary, all primaries receive equal amounts.
Contingent beneficiaries receive funds only if the primary beneficiaries predecease them. You may designate your children as primary beneficiaries and your second spouse as a contingent beneficiary or vice versa.
After a divorce or becoming widowed, check all accounts to determine who you have as a beneficiary of the account. If you remarry, having the proceeds of all or most of these accounts go to your children is one way to secure an inheritance.
- Life Insurance
- 401(k), IRA or other retirement accounts
- Existing wills and trusts
Verify who you have as your durable power of attorney, the person on your health care proxy, and your safety deposit box. You don’t want your ex-wife in charge of live-or-die healthcare decisions while your second wife has no legal say in the matter.
Any legal or financial document that designates a person’s decision-making power or specifies beneficiaries must be adhered to, even if you have divorced that person.
Prenuptial and Postnuptial Agreements
These contracts determine the division of assets following a divorce or death. They specify the holdings of each person and the distribution of assets when the marriage ends.
Marital contracts ensure an equitable inheritance for both parties and children of prior relationships. You should discuss the advantages and disadvantages of having a marital contract as part of your estate planning packet with your estate planning attorney.
A prenuptial agreement must pass a three-part test pursuant to Scherer v Scherer, 249 Ga.635 (1982) to be enforceable:
- Proof that creation is not the result of duress, fraud, misrepresentation, mistake, or nondisclosure of material facts
- The prenup is not unconscionable
- That enforcement is not unfair or unreasonable
Anyone seeking to enforce the terms of a prenuptial agreement must prove the above. Failure to disclose assets or yearly income may fall under nondisclosure of material facts.
A postnuptial agreement is for people already married when they realize the need to protect assets. They may be necessary in a second or subsequent marriage to secure an inheritance for their children.
Postnuptial agreements must meet the same criteria as prenuptial agreements when seeking enforcement in Georgia. A full disclosure of assets is crucial to ensuring validity.
Wills/Trusts in 2nd Marriages
The individual assets each person brings into the marriage determine the best estate plan.
A will provides instructions for distributing assets after you die. This includes real property, personal property, and guardians for minor children.
Stepchildren do not have any legal inheritance rights to your estate, but your spouse does. Georgia law states that a surviving spouse may receive at least one-third of an estate; the remaining assets go to your children.
If the probate court accepts your will, your spouse receives what you designate in the will. You may leave your spouse out of your will, but they can request the court award them up to twelve months of support.
The Georgia intestate succession rules apply if you don’t have a will. This may leave your children less inheritance than you intend.
The standard probate process in Georgia is governed by Title 53, Chapter 5. A will becomes a public record, meaning anyone can visit the courthouse where the will is on file, pay a fee, and obtain a copy. The way to avoid having your assets become public records is to place them in a trust.
A trust avoids probate and keeps your assets private. The type of trust you need depends on individual circumstances.
A marital trust transfers all assets to your surviving spouse as the sole beneficiary of your estate. This secures your spouse’s future but may leave your children with zero inheritance.
A family trust allows you to designate the distribution of your assets among your surviving spouse, children, and any other beneficiaries you choose. You may also specify percentage allotments and the ages your children need to be before receiving their inheritance.
When appointing a trustee, many select their new spouse. If they do not have a strong, positive relationship with your children, this can create problems.
Select someone you can trust to act in the best interests of your children. If you are unsure of your selection, ask your attorney for suggestions or if they are willing to serve in this capacity.
The laws governing the validity of a trust are in §53-12-4 of the Georgia Code. While there are do-it-yourself wills and trusts available online, ensuring that your estate plan is valid is essential.
Estate Planning Is Tricky
Second marriages increase the importance of careful estate planning and the benefits of hiring an estate planning attorney. They will review your and your spouse’s financial holdings, offering options that protect both parties and their children.
Factors include children from prior relationships, your current spouse, children born of the second marriage, and any prenuptial agreements. You may have established businesses, significant retirement investments, real estate, significant debt, family heirlooms, or other items of value.
Hire an Estate Planning Attorney
Hiring an estate planning attorney ensures you have a legally binding estate plan. Rhodes Law Firm, PC has 35 years of experience, providing guidance in setting up your estate to reduce conflict risks and emotional distress of surviving family members.
Review these examples of why estate planning is crucial in 2nd marriages, then call (706) 724-0405 to schedule an estate planning consultation.
Small business owners should ensure they maximize the value of their business, not only for themselves but for their heirs. This article lists a few helpful things to consider to help you make the most of a significant portion of your estate.
Planning your exit strategy is crucial for business owners, as it can help maximize the value realized from the business and add value to your overall estate. Whether you plan to sell your business to an outside party or set up a succession plan, an effective strategy will realize the full value of your business.
Business owners should also have necessary estate planning documents in place. These may include a will, a power of attorney, and a medical power of attorney. A will can help lay out any wishes involving your assets, including your business. A power of attorney can help keep your business running smoothly if you are incapacitated for any reason.
There are also a number of trusts that business owners can use to their advantage. These can also help keep the business running if the owner becomes incapacitated or dies. Some benefits include avoiding probate, keeping the business safe from creditors, and minimizing taxes during the transfer in a succession plan.
If you need more information or help creating an estate plan as a small business owner, contact Rhodes Law Firm today.
While planning your estate, it is important to know the two types of beneficiaries and their differences. This helpful article helps illustrate their major differences as well as their pros and cons. Revocable beneficiaries can be changed without the beneficiary’s knowledge or consent at any time. The owner of the account has full control over the assets and has the flexibility to change the beneficiary as circumstances evolve.
Irrevocable beneficiaries cannot be changed without the beneficiary’s written consent and gives certain legal rights to the beneficiary. This is a much more permanent designation than a revocable beneficiary.
Which type is right for you? It can vary depending on a number of factors. While there are numerous advantages of revocable beneficiaries, they don’t come without some limitations. For example, if you don’t remember to update your designations if circumstances change, such as divorce, you may face negative consequences.
A seasoned family planning attorney can help you navigate which is right for you and help you make the best decision for your family. Contact Rhodes Law Firm today to learn more!
Who will carry on your legacy? It’s a question that resonates deeply for those with assets and loved ones to protect. In the world of estate tax planning strategies, knowledge is more than just power; it’s a legacy safeguard.
Whether you’re navigating the intricacies of wills and trusts or considering the impact of a second marriage on your estate, the stakes are high and the rules, complex. Here, we unravel the often-overlooked estate tax planning strategies that could be the difference between a well-preserved legacy and an opportunity lost. Read on to discover how you can protect not just your assets, but the future of those you cherish most.
Utilizing Revocable Living Trusts
Revocable Living Trusts are becoming increasingly popular in estate planning due to their flexibility and control advantages. Unlike irrevocable trusts, they can be modified during your lifetime to allow you to own and manage assets within the trust.
A key benefit is avoiding the time and expense of probating assets upon death. Especially important if you own real estate in multiple states. These trusts also:
- Provide more efficient estate administration
- Minimize emotional stress for your family
- Ensure privacy by avoiding public court processes
Revocable Living Trusts are particularly effective in preventing court interference after death or incapacity. They ensure equitable asset distribution and provide prenuptial protection.
Importantly, they can protect assets from beneficiaries’ creditors and from being impacted by divorce proceedings. Unlike a will, a living trust is more difficult to contest. They ensure minor children are not directly handed their inheritance and can include tax planning to reduce or eliminate estate taxes.
While initially more expensive than a will, a living trust covers both living and post-death issues, potentially saving costs in the long run.
Gift Tax Strategies
Gift tax strategies are crucial for estate tax planning. One effective method is to utilize the annual gift tax exclusion. This allows you to give a certain amount per recipient each year without incurring gift tax.
This strategy can significantly reduce the size of your taxable estate over time. It’s important to note that the rules for what constitutes a gift can be complex, and improper gifting can unintentionally trigger tax consequences.
For example, paying for someone’s tuition or medical expenses directly to the institution can be exempt from gift tax. Additionally, larger gifts can be planned to coincide with significant life events, like marriages or the birth of a child.
Understanding the nuances of these rules and strategically planning gifts can play a pivotal role in minimizing estate taxes and maximizing the inheritance for your beneficiaries.
Charitable Contributions and Trusts
Charitable estate planning allows you to leave a legacy that goes beyond financial wealth. It’s an opportunity to impact causes you care about, like education or healthcare.
It’s not just about donating money. Appreciated assets, life insurance policies, or even endowments can be used. This kind of planning ensures that your values and beliefs continue to make a difference even after you’re gone.
One of the major benefits of including charitable giving in your estate plan is the potential tax benefits. Not only can these contributions reduce your estate’s tax liability during your lifetime, but they can also offer estate tax advantages.
For instance, giving appreciated stock to a charity can help you avoid capital gains tax, and making a bequest in your will or trust can also bring tax benefits. These tax advantages can optimize your financial position and fulfill your charitable intentions simultaneously.
Family Limited Partnerships (FLPs)
FLPs are strategic tools for estate tax planning, especially in the context of preserving family wealth and reducing estate taxes. They involve transferring business interests or assets to family members, often at a reduced tax cost.
FLPs allow the transfer of business interests or assets to family members in a tax-efficient manner. By doing so, you can reduce the overall value of your estate, which in turn can lower potential estate taxes.
This strategy is particularly effective for those who wish to keep their family business within the family while also managing their estate tax exposure.
FLPs offer a way to maintain some control over the assets or business while transferring them to the next generation. This control is balanced with the tax benefits that come from reducing the value of your taxable estate. It’s a way of ensuring that your family retains the wealth you’ve accumulated, without the heavy burden of estate taxes.
Life Insurance Trusts
Irrevocable Life Insurance Trusts (ILITs) offer benefits like estate tax reduction and asset protection. When you establish an ILIT, you transfer the ownership of a life insurance policy into the trust. This strategic move separates the policy’s value from your taxable estate, which can lead to substantial estate tax savings.
One of the pivotal advantages of an ILIT is its ability to protect the policy proceeds from creditors, lawsuits, and even complications arising from 2nd marriages. This feature ensures that the benefits of the life insurance policy are reserved exclusively for the beneficiaries you designate, thus effectively planning for your children and protecting your children’s future financial security.
An ILIT also allows you to maintain control over how the policy proceeds will be distributed among your beneficiaries. This aspect is particularly beneficial in complex family dynamics, where specific terms might need to be set for different family members.
In addition to this, ILITs offer the convenience of bypassing the probate process. They enable a quicker and more cost-effective transfer of assets to your beneficiaries.
However, it’s important to consider that once an ILIT is established, it becomes irrevocable. This means you cannot amend or cancel the trust, which requires careful consideration before setting it up. Additionally, the management of the trust may involve certain costs.
Tailored Estate Tax Planning Strategies for Lifelong Peace of Mind
Estate planning is a journey that requires foresight and expert navigation. At Rhodes Law Firm, PC, we specialize in crafting estate tax planning strategies that resonate with your unique life story and goals. We understand that your legacy is not just about assets; it’s about the future and well-being of your loved ones.
To ensure your estate plan mirrors your intentions and secures your legacy, schedule an appointment with us. Let’s collaborate to protect what matters most to you.
Did you know that 67% of Americans don’t have trusts or estate plans? This means your assets and loved ones are left unprotected after you pass away. To help make sure this doesn’t happen to you or your family, we’ve rounded up everything you need to know about estate planning, durable power of attorney, and more.
In this article, we will discuss the most common types of trusts and how they help in planning for/protecting your children. We’ll also explain why it’s important to talk with an estate planning attorney. Let’s jump in and see which type of trust makes sense for you and your family.
What is a Trust?
Trusts are tools designed to help you manage your assets and protect them for your beneficiaries. There are different types of trusts that can be used with different goals in mind. A trust is a contract between the person who creates it, the one who controls it, and the beneficiaries.
The Grantor is the person who creates the trust. The Trustee is the one who controls it, and the beneficiaries are the ones who are entitled to the benefits of the trust. This is often a spouse, children, or grandchildren.
Trusts are also used to handle plans for a business after the owner passes. Businesses, assets, property, and more all come with a plan for your partners and family members.
Benefits of a Trust
The benefits of a trust are almost endless. Without one, this leaves your assets unprotected after your death. Your assets, children, or grandchildren are left confused, unprotected, and without a plan.
A trust gives you asset protection, planning for a child with special needs, and asset management in the case of young children or those who aren’t equipped to handle money. In a 2nd marriage, you can also protect assets after your death.
A trust will also give you privacy. Without a trust, your affairs are open to the public in probate. This allows for no court intervention, and your trust is handled by your trustee. You get to lay out all your wishes after your passing or a disability.
Revocable Trust or a Living Trust
A revocable trust is a legal entity that you create and control. You can change the terms of your trust at any time, making it ideal for people who want to keep their finances private. A revocable trust is also known as a living trust.
A revocable trust allows you to name someone else as trustee. The trustee is the person who manages the assets. You can also have a co-trustee alongside another person.
A revocable trust is also used in some cases as a will substitute. This keeps you in total control over your assets while you’re living. After your death, you would have given instructions for your assets and beneficiaries.
What is an Irrevocable Trust?
An irrevocable trust is one that cannot be changed once it’s been set up. This means that you can’t remove assets from the trust or change any of its terms, such as who will receive distributions and how much they’ll receive. Speak with your attorney to determine which trust works best for you.
You might use an irrevocable trust if you want to provide lifelong support for your children or grandchildren. This is a great option if you don’t want them to have access to their inheritance until they reach a certain age.
You could also use an irrevocable trust if there’s a possibility that someone might try to take advantage of your generosity by asking for money early on in life. This happens during a divorce, job loss, or if another child faces an emergency.
The Difference Between a Trust and a Last Will and Testament
Without a will, your assets get distributed according to state regulations. In this case, your loved ones won’t always receive your assets. If you have certain assets that are in your name alone, those assets may pass to your loved ones after your death when you leave a will.
You always want to use an attorney to make sure your will is written correctly. Protect the ones you love by creating a trust within your will. This protects them from tax liabilities and creditors. A written will gives you and your family protection and makes your wishes known.
Unlike with a trust, your will goes through probate. This process uses the court to divide your assets and property. This saves your family a lot of time and money wasted in court.
Why Do You Need a Trust?
One of the biggest benefits of using a trust is to avoid probate. When you pass away, your estate will be subject to probate court before it gets distributed to your heirs. Probate is a long and costly process that involves court hearings, attorney fees, and other expenses.
Without a trust, there’s no guarantee that all of your assets have protection during this probate time period. By contrast, when you leave an asset in trust for beneficiaries, the trust avoids probate because it’s considered private property.
A trust also keeps your assets protected from creditors or lawsuits against you. The trust also protects the beneficiary’s ability to manage their inheritance. You can pass assets without tax implications on death, which is a huge money saver for your loved ones.
Hire a Trusts Expert Today and Protect Your Family and Assets
Deciding what to do with your assets after your passing is a big decision. If you want to learn more about the different types of trusts, contact us today. We are here to answer any questions you may have and help you make the right decision for your situation.
You don’t have to go through this process alone. Let our experts help with trusts, wills, power of attorney, and more. Make a plan for when the unimaginable happens.
Fill out the contact form here to get in touch with a local trust attorney at Rhodes Law Firm, PC. Don’t put off this important life milestone any longer.
Divorce can be tough for children to cope with. They’re suddenly having to shuttle back and forth between both parents, splitting their time and energy in new ways. What happens when a stepparent is introduced into the equation?
An estimated 50% of US children aged 13 or younger live with one biological parent and that parent’s new partner. The emotional impact of a parent’s second marriage will vary based on a variety of factors, as will the long-term financial impact.
If you’re getting remarried, it’s time to start thinking about protecting your children. This may include efforts like improved communication and family counseling. It should also include financial planning.
Read on to learn how to protect your children with estate planning when you’re getting remarried with these seven tips.
1. Consider a Prenuptial Agreement
No one wants to think about their impending marriage coming to an end, but the divorce rate in second marriages is statistically higher than it is in first marriages. When you’re entering a second marriage with significant premarital assets, you may want to consider creating a prenuptial agreement with your new spouse.
If a divorce leaves your former partner at a financial disadvantage, you may be expected to pay alimony. A prenup will ensure that you remain in possession of your premarital assets so that you may then use them to support your children as you see fit, even in the face of alimony.
2. Review Guardianship Designations
If you began the process of estate planning during your first marriage, you may want to review any guardianship designations you made for your children. Who did you previously name as the guardian of your children in the event of your death and the death of their other parent? Does that designation still stand?
Guardianship designations for children of divorce can become tricky when both biological parents are in disagreement. For example, you may want your new spouse to become the legal guardian of your children in the event of your passing and your former spouse may not approve of this plan. An attorney can review your will and provide legal guidance to protect your best interests.
3. Update Account Beneficiaries
It is common for married individuals to name their spouses as their beneficiaries on retirement accounts and other assets. When children are involved, the expectation is often that the spouse will use those assets to provide for the children. However, this may not be the reality when your spouse is not the biological parent of your children.
With the help of an attorney, review all documents that name your beneficiaries. Determine which assets, if any, you wish to go to your new spouse and which assets you want to go directly to your children. It is best not to operate on the assumption that either your new or former partner will use assets left to them to support your children.
4. Create an Airtight Will
As estate planning attorneys, one of the biggest issues we see in clients who are getting remarried is a simple will that leaves room for error. While it may seem straightforward enough to use language like, “I leave everything to my children,” vague and overarching statements are often considered open to interpretation. What about property and assets owned jointly with your second spouse?
An airtight will specifies who will receive each of your assets that do not have a named beneficiary (e.g., cars, liquid funds, and high-value belongings) and under what circumstances they will receive them. Not only should you revisit your will before a second marriage to modify any statements regarding your former spouse, but you should also create an airtight outline of everything your children and new spouse will separately inherit.
5. Create a Trust for Your Kids
Depending on the age of your children, you may need to set up a trust in order for them to receive their inheritance. While minors can receive an inheritance, they cannot manage that inheritance until they are at least 18. That means that someone will have to manage it for them and by creating a trust, you can determine who that person is, whether it’s your spouse, a relative, or a professional financial advisor.
When creating a trust, you can also determine when that trust no longer requires third-party management. The earliest that this can occur is when your child turns 18, but you can also set a later date if you’re concerned about your child’s ability to manage their inheritance at such a young age.
6. Close Joint Accounts from Previous Marriage
When parents think about protecting their children when getting remarried, they typically think about their new spouse’s involvement. However, you should also take into consideration your former spouse’s involvement with your current assets.
Whether or not your first divorce was amicable, it’s recommended that you close all joint accounts from your previous marriage. This will eliminate the possibility of becoming responsible for any debt your previous partner may accrue after your divorce.
7. Prevent Probate
Your ultimate goal is to provide enough legal protection over the assets you’re leaving to your children to avoid probate. Probate will occur if there is good reason to contest your will, which can happen if:
- You were deemed incompetent at the time of writing your will
- It can be argued that you were coerced to write your will a certain way
- Your will was not notarized and there were no witnesses to your drafting and signing of the will
If you die intestate, meaning that you left no will, probate is a guarantee. When your estate goes into probate, your children may have to fight other parties for their right to an inheritance.
Prioritize Protecting Your Children in a Second Marriage
When you’re getting married for a second time, you’re creating a blended family. While the impact of a second marriage on children varies from one family to another, one thing remains consistent. Protecting your children requires financial management.
Rhodes Law Firm is here to review your will and estate planning to ensure legality and airtightness. Contact us today to schedule a consultation to learn more.
Having your last wishes in place is an important part of the wealth-building journey. The motivation for many is to have a legacy that they can pass down to future generations. With this in mind, many people are simply unprepared.
Approximately 64% of people today have not drafted a will. If you’re among those who either have not created a will or other legal arrangements, it’s important that you get started. Knowing the most important legal terms will help you tremendously.
This article will teach you all about estates, wills, and trusts so that you have a better idea of what to expect when getting your final affairs in order.
What Is a Trust?
Having to put your affairs in place is a sobering reality, but one that you must face with diligence and discretion. Understanding what a legal trust is will help you as you navigate this journey.
A legal trust is a type of arrangement that is put into writing to list how assets should be passed on once a person dies. Make sure that you learn which variables make the biggest difference when creating trusts:
The Types of Trusts
Before anything, get to know the types of trusts that people generally enter into. The two main types you should know are revocable and irrevocable trusts.
A revocable trust is a type that lets the person who created the trust control the assets. They can make changes to it in their lifetime as long as they are of sound mind to do so.
With an irrevocable trust, the creator hands over rights that they otherwise would have had. The trust is pretty much set in stone once it is created, and it will be handled based on the terms, without modifications.
Consider the Types of Assets to Include
Perhaps the biggest piece of the puzzle to consider is what types of assets you wish to include in your trusts. There are a variety of asset classes that people include in these arrangements, such as stocks, liquid funds stored in bank accounts, exchange-traded funds (ETFs), mutual funds, precious metals, and other sorts of assets.
Make sure that you consider the types of assets that you want to include at the creation of the account so you can designate how it is handed out to your beneficiaries.
Know the Benefits of a Living Trust
So, what makes a living trust such a great idea?
For starters, having a solid trust helps you avoid probate so that your affairs are carried out exactly to your liking. You’ll be better able to skip the legal process so that you don’t run into lawsuits and other issues that might compromise your plans.
This process is also helpful because you can avoid estate taxes that you would otherwise pay. Many people like the autonomy that trusts bring and that they find them more financially advantageous.
Determine Your Trustees and Beneficiaries
Once you are ready to create a trust, the most important part is to decide who you would like to be your beneficiaries. These are the people that you will pass your assets down to and can include any number of relatives, including your children, grandchildren, survived spouse, and other people.
Consider the needs that they will still have after your passing and how the assets that you pass on can help them out. From there, you can also determine the amounts and when they will be able to receive their proceeds.
What Is an Estate?
An estate is one of the most important legal terms that you need to understand. In simple terms, this is the wealth that you leave behind upon your passing.
It is calculated so that decisions can be made on how it will be divided, and which beneficiaries will receive which parts of the estate.
Understand What Comprises an Estate
Your estate will consist of any wealth that you accumulate prior to your passing. It is your net worth, which consists of a combination of liquid funds, stock equity, real estate, personal property, and a host of other assets.
It can also include future earnings, such as royalty payments that you are entitled to.
Decide on the Legal Structures
Estate planning comes down to deciding on which legal structures you prefer. This can include a combination of wills/trusts of different kinds that help in planning for your passing and protecting your children.
A legal professional can provide you with legal help so you can decide which combination makes the most sense for you.
Consistently Manage Your Estate
Make sure that you are staying on top of your estate so that you know how to handle it. For starters, figure out the key legal terms you need to know so that you can remain abreast of your legal standing.
Appoint an estate manager to help execute decisions upon your passing. This can include a family member along with an estate lawyer to oversee it. You can also appoint a durable power of attorney that can assist you in the event you are medically unable to make decisions.
Make changes to your living will and trust whenever necessary. You might do this when you accumulate new forms of wealth or enter higher tax brackets. Do everything in your power to stay current and set your estate up in a way that helps everyone involved.
Perhaps most important, learn the estate laws where you live. This will help you to arrange your estate in a way that skips the probate process and lets your wishes be carried out how you choose.
Learn About Trusts and Estates
This article lets you know the ins and outs of trusts so that you can make the right decision for your final wishes. Now all you need to do is get in touch with professionals that can assist you through the process.
For help with any kind of estate planning, get in touch with us online or call (706)724-0405 for our Augusta branch or (803)649-6060 in Aiken.
Medical and legal experts recommend patients with declining mental or physical health examine their end-of-life arrangements to ensure it is up to date and your wishes will be carried out. This National Institute of Aging article shines light on the different documents you may need, as well as the next steps to consider while getting your affairs in order.
There are several documents a lawyer may recommend, such as ones that help communicate the wishes of the person who can no longer make health care decisions as well as financial and estate management documents.
Advanced Directives should be prepared while the person is still able to legally execute them. They may include a durable power of attorney, a living will, as well as a DNR order (do not resuscitate). Having these documents in order can help ensure your wishes are properly respected.
Above all, it is important to begin these discussions early. The rate of decline is different in each case, so act while you still can. If you or a loved one needs legal and financial planning assistance, Rhodes Law Firm is here to help.