Losing a loved one is always painful, but it’s something for which we all must prepare. One thing everyone could do to make their own passing a little less difficult on their family is to have a properly planned estate.
When the beloved Queen of Soul Aretha Franklin passed away last week, she did not have a last will or a trust set up to assist her loved ones. Now, her finances and assets will become public in Oakland County Probate Court, according to this article by CNN.
Her attorney Don Wilson says he was after her for a number of years to do a trust but she never got around to it, leaving her family to pick up the pieces.
“It would have expedited things and kept them out of probate and kept things private,” he told CNN.
Wilson’s biggest concern is that things will become heated within the family, as this typically becomes the case when there is no estate plan.
“I just hope (Franklin’s estate) doesn’t end up getting so hotly contested,” Wilson said. “Any time they don’t leave a trust or a will, there always ends up being a fight.”
By creating an estate plan, you can help shield your family from unnecessary difficulties during an already difficult time. If you’re ready to make a plan for your estate, give us a call today. We can guide you through the entire process and give you and your family peace of mind.
More people are looking for ways to donate, and are seeing great benefits when they do.
Charitable planning is a way to support charities and non-profits that are near and dear to you while receiving tax. You can contribute annually, or periodically over a lifetime.
Take a few minutes to learn how to develop your charitable planning strategies.
Choose a charity
You may donate to a public charity–501c (3)–or a private foundation. If you have an organization in mind already, you should find out about its tax-exempt status.
If it’s a non-profit organization, it will likely be tax-exempt. If it’s a private foundation it might be subject to charitable trust taxation.
There are a few charity types you can donate to and your deductions may differ by the type of organization. Human rights, animals, education, and the environment are just a few types of charities out there.
If you’re unsure of what charity you’d like to give to, there are a few websites available to help you find and research a reputable and deserving organization.
What You Can Donate
You can donate time and things you don’t use anymore.
You might want to consider charitable planning within your estate planning. What items that are usually subject to estate tax could receive further deductions.
When you donate appreciated stock, receive a tax incentive and avoid capital gains tax. You’d pay capital gains tax on the stock if you sold it and donated the proceeds.
You can donate shares or the entire stock holding.
Mutual fund shares
If you’ve held the mutual fund for less than a year, you would be able to deduct your original investment amount. Any appreciated value can’t be deducted.
For mutual funds held for longer than a year, you might be able to deduct the full market value from your income taxes.
Short-term mutual finds have a cap of 50% deduction on your adjusted gross income, while long-term mutual funds have a cap of 30%.
However, you can carry any amount that you couldn’t for the current year to the next year for up to five years.
If you’d like to donate your life insurance to charity, you do it in one of two ways. You can make the receiving organization the beneficiary. It will receive the insurance payout after your death.
You wouldn’t receive a tax deduction for the donation, however, since the contribution wouldn’t happen until after you die.
The second way to donate is to make the charity the policyholder when you’re alive. You could receive up to 50% of your adjusted gross income on the value of your donation and any cash donations to give the charity can be deducted to pay the policy premiums.
Making the charity the policyholder is irrevocable, so you should be sure you won’t want to change your mind later.
Donating real estate can lend benefits to all parties involved. A needy family might get a home or the charity might get a new location. You can donate land (developed and undeveloped) and structures.
When you gift real estate, you avoid capital gains tax and receive immediate tax incentives up to 50% of your adjusted gross income. You can also carry any remaining deductions for five years.
When donating artwork, there are a few things to consider.
You should consider the type of organization, the type of property the artwork is (capital gain property or ordinary income property), will the artwork be used in the manner in which it’s gifted, and has it been properly appraised.
Donor-advised funds allow you to donate to a public charity and get an immediate tax deduction. These types of funds can be used like a charitable savings account, where you open a donor-advised fund account and deposit money then recommend grants to charities.
Highly appreciated stocks, bonds, and mutual funds. The full market value of the appreciated stock or mutual fund shares is deducted but you avoid tax on the appreciated gain.
Tax-free from your IRA. When you donate to a non-profit from your IRA, the donation is untaxed.
You can establish a public charitable trust to donate. Charitable trust tax deductions may be spread over five years. The initial donation amount can’t be deducted dollar for dollar.
The federal government offers tax incentives to encourage giving to charity. Not only does it benefit the charitable organizations but it benefits the donors as well.
Make the most of your taxable income with charitable planning. You may designate an allotted amount of your taxable income to go to the charity or foundation of your choice.
This can reduce the amount of income tax you will pay during tax season.
Items you donate to non-profit organizations aren’t considered taxable and are excluded from estate tax.
You can donate as much or a little as you want to charity, so if you wanted to donate your entire estate, you’d pay no estate tax.
Through a charitable remainder trust or a charitable remainder unitrust, you can earn a residual income via charitable planning.
With charitable remainder annuity trusts, you’d receive a fixed annuity amount every year. You can’t make additional contributions to these types of trusts.
Charitable remainder unitrusts pay the donor a fixed percentage based on the balance of the trust assets which are revalued every year. You can make additional contributions to this type of trust.
At the end of the designated lifetime or term, any trust assets that are left go to a charitable remainder beneficiary.
It Feels Good to Give
Studies show that people who are generous are happier and live longer. Not to mention the satisfaction of knowing you’re doing good for someone or something else.
The studies also show that it doesn’t matter the amount you’ve given, the intention and the act produce the same result.
Get Help With Charitable Planning
Planning future donations can be tricky, especially when you’re new to charitable giving.
Visit our blog to learn more about estate planning and charitable planning.
If you’re making dinner or helping your kids do math homework, the last thing you want to think about is mortality.
Unfortunately, you’re not alone – 64% of Americans don’t have a will, and 27% said there was no urgent need for them to get one.
But will and estate planning are vital to ensuring that your assets and estate are handled properly after your death. To help you make sense of it, here are nine estate planning mistakes to avoid.
1. Not Having a Plan
On the top of the list? Not having any estate plan at all.
As you can guess, this is a pretty common problem. Most people don’t think they have enough assets to make a will or estate planning worth the trouble.
This is a huge mistake. If you don’t have a will or any form of estate planning, the courts will decide how to transfer your assets to a living beneficiary, a process called probate.
This can be a long process, especially if there are any complications in your estate (hint: there usually are). It’s also an expensive process, with court fees, personal representative fees, attorney fees, accounting fees, appraisal and valuation fees, bond fees, and more.
2. A DIY Estate Plan or Will
But before you get ahead of yourself, a DIY estate plan or will isn’t any better than having no will at all.
Sure, there are plenty of websites that will give you DIY forms, and some of those forms may be correct. But unless you know how to fill them out and file them correctly, or even what forms you need, they won’t be sufficient as a will, power of attorney, or other vital documents.
Which means your assets wind up back in probate, and you’re in just as much of a mess as you would have been with no plan at all.
3. Not Understanding How Assets Pass On
Pop quiz: all of your assets pass through your will, right?
Because most people hold most of their wealth in life insurance policies or retirement funds, most assets cannot pass through a will.
Real estate, on the other hand, can pass through wills, which is good news because the house is the most valuable thing most people own outside of a retirement fund.
If you don’t know anything about how your assets pass on, guess what? Your assets will land back in probate court after your death.
4. Not Handling or Reviewing Paperwork
On a related note, failure to properly handle or review the relevant estate planning paperwork is another huge issue that most people encounter.
Let’s say you named your sister as the beneficiary of your life insurance and retirement while you were single. That’s all fine and good.
Now let’s say that you got married. You changed your will and assumed everything would be fine.
Here’s the problem: if you didn’t change beneficiary designations on your life insurance and retirement, your sister will receive most of your estate, not your spouse.
5. Not Planning for Disability
In much the same way that people don’t like to think about their mortality, they also don’t like to think about the possibility of future disability.
That’s a big problem for estate planning.
If you don’t have anything like a living trust set up in the event that you are unable to make decisions for yourself, major decisions like managing your finances, raising your children, or healthcare decisions on your behalf are left out of your control.
6. Not Funding Your Trust
And speaking of trusts, not funding your trust is another estate planning sin that many people are guilty of.
It’s a good first step to have a trust. But a trust is like a suitcase. If you don’t put anything in it, you’re passing an empty suitcase to your beneficiaries and leaving the rest up to chance.
In other words, trusts are only as good as what you do with them. If you do nothing, well, they aren’t going to do you very much good.
7. Planning Your Estate Around Specific Assets
There’s been a lot of talk about assets going on here, which means you may be tempted to try estate planning based on certain specific assets.
Unless there is an unusually compelling reason for a specific asset to go to a specific person, resist the temptation.
For example, let’s say you have three children, and you want them to share your assets equally. One receives half your home, another is added as the beneficiary of your life insurance, and the third is added as a signer on your bank account.
That’s all fine assuming that nothing changes between now and when you die. But if you, say, sold the house or let the life insurance lapse, whatever child was supposed to receive those assets will get nothing.
8. Beneficiary Designations and Joint Accounts
On that note, let’s talk about beneficiary designations and joint accounts.
Beneficiary designations are useful, especially when it comes to life insurance and retirement funds.
The problem is that some beneficiary designations can override your will. Remember, your will doesn’t control retirement accounts or jointly owned accounts, which means that you may be leaving a sticky situation behind for your beneficiaries to sort out.
9. Keeping Secrets from Your Estate Planner
Finally, the greatest mistake in estate planning: even if you do everything else right, keeping secrets from your estate planner can throw off your best-laid plans.
Keeping secrets from your estate planner, or only providing them with vague or incomplete details regarding your finances and family, is like lying to your lawyer. You can do it for the sake of your dignity, but you’re the one who will be hurt in the long run.
The whole point of an estate planner is to provide you with an appropriate strategy to protect your family after your death. It’s difficult for them to do that if they don’t have an accurate picture of your situation.
Making Sense of Will and Estate Planning
With all of this in mind, one of the best things you can do in terms of your will and estate planning is to have a professional on your side.
Rhodes Law Firm PC offers estate planning in Augusta and Aiken, whatever your needs may be.
Our very own attorney, Daniel Rhodes, made a special guest appearance on the program LawCall recently to help answer questions about protecting your assets, trusts, and more. If you didn’t get a chance to tune in to this episode, you can see some clips of the episode here.
LawCall is a weekly program that features local attorneys offering advice and answering questions from callers. The show airs live every Sunday night at 11:30.
Have you recently acquired a substantial amount of wealth? Are you considering donating some of the money to different charities?
Whether you’re looking to donate a large amount of money or simply make a small donation, planning your charitable contributions is important.
If you don’t plan properly, you could end up donating money to an illegitimate charity or another scam, or make a donation that doesn’t end up being tax deductible when the end of the year rolls around.
These two mistakes are all-too-common, which makes planning your charitable gifts even more important.
Below are 10 helpful tips for donating money to charity, so you don’t make any mistakes with your money.
1. Pick a Charity That’s Important to You
Before you can donate your money to a charitable organization, you have to find one.
Think about what’s important to you. What causes really fire you up? If you could change anything in the world, what would it be?
Whether you’re passionate about ending domestic violence, sex trafficking, or world hunger, there’s a charity that will happily accept your monetary donations. After you have made a decision on where you want to focus your donation, it’s time to decide if you’re going to keep your donation local, regional, national, or international.
The great thing here is that it’s completely your call. It is your money, after all. No one can tell you where you have to donate.
2. Verify the Legitimacy of the Charity or Charities You’ve Chosen
When you’re donating money to charity, this is a crucial step.
If you don’t verify that the charity is, in fact, legitimate before you donate, you could end up donating money to an organization that uses more of your money to line their pockets than it does to feed the children. Or worse, you could donate it to a corrupt organization or person whose sole reason for collecting donations is to profit off of them.
Neither of those situations would be your preferred outcome.
If you want to avoid donating to a scam, you can use the following two websites to verify the credentials of your chosen charity:
Both of these organizations vet nonprofits so you don’t have to.
This is a simple step, but when it comes to charitable planning, it’s not one to take lightly. Don’t skip it, or you may end up throwing your money away.
3. Keep an Eye on Their Administrative Expenses
Before donating your money, it’s a good idea to confirm that it’s going to be spent wisely.
Of course, charitable organizations will have administrative expenses just like any other organization, but it’s important to ensure that the money used for these expenses does not outnumber the amount of money that they are using to fund programs. If you pull their reporting and find that their contributions to expenses are far beyond those to their programs, there’s a problem.
Save your money and find a different charity to donate it to. Preferably one that values their programs more.
4. Make Your Money Work
If you donate to the same several charities, your money will go farther than if you donate smaller amounts to many different charities. Why? Many charities have fees they will deduct from your donation, meaning less of your money is going directly to the cause you’re looking to support.
5. Donate Directly to the Charity Itself
In other words, don’t donate money over the phone to a solicitor you don’t know. There’s always a risk that they might not be legitimate and could be taking the money they receive and profiting off of it.
6. Itemize Your Donations
To claim a deduction on your taxes, you need to itemize it. When it comes time to file them, you can use Schedule A on the form 1040 to itemize each of your deductions. Be sure to include your donation on lines 16-19.
7. Donate to Qualified Organizations
If you’re hoping to deduct your donations from your taxes, you’ll need to donate your money to qualified organizations which are determined by the IRS.
If you want to confirm the status of a charity, call the IRS.
8. If You Want to Deduct Your Donations, Donate to Organizations, Not Individuals
No matter how much the individual needs or deserves your contribution, you won’t be able to deduct donations to individuals on your taxes. Keep this in mind if you want to be able to deduct your donations, and donate only to the qualified organizations mentioned in the previous tip.
9. Get a Receipt
Are you looking to make a charitable donation in cash? If you are, and you want to claim it as a deduction on your taxes, you’re going to need to have a receipt to back it up.
Be sure that it includes the date, the amount of the donation, and the name of the charitable organization that received the money. To claim a deduction, you’ll need to donate $250 minimum and then have the qualified organization provide you with a form of acknowledgment.
No matter what amount you donate, don’t forget to ask for a receipt!
10. Deduct Expenses Related to Volunteering
If you’re considering donating to charity, you may also be considering volunteering.
While your time is not tax-deductible, any expenses you incur as a result of volunteering are. See tip #9 and always get a receipt.
Some Closing Words on Donating Money to Charity
Donating money to charity is a great way to relieve yourself of extra funds while also doing something that will benefit a good cause.
To donate the smart way and ensure that your charitable gifts are, in fact, tax-deductible, just take these tips into account before making your next donation.
If you’d like some assistance with your charitable planning efforts, don’t hesitate to contact Rhodes Law Firm today.
Our team will work with you to ensure that we answer each of your questions and can provide you with the help you need.
Cryptocurrency values are rising and so is the wealth of its investors. Adding cryptocurrencies to an estate plan is important to keeping a fortune in order, especially in the event of an unexpected death. However, accessing a deceased relative’s cryptocurrency is a daunting task and is not as simple as gaining access to your relative’s safety deposit box filled with their financial information. Keeping family in the loop of your assets and an updated list of all account information, is essential in protecting assets during an unexpected emergency.
With the popularity of cryptocurrency, safer ways to back up and secure financial assets should be available soon. In the meantime, make sure you are taking proper steps to protect your financial investments, and to ensure your heirs are left with the wealth you have created.
If you own a business, you’re probably very concerned about protecting your assets. Most businesses fail in the first five years. Asset protection is key to ensure that your company lives on for future generations.
To keep your business assets and the business itself intact, you have to do three key things.
1. Recognize the Dangers
“Asset protection” is pretty vague, so let’s get more concrete. When you think about your business, think about the ways in which your assets are vulnerable.
For example, if you own a physical storefront, you’ll need to protect it from burglars and vandals. If you’ve invented an innovative product, you may risk losing the rights to it from copycats and patent trolls. You can also have employee disputes, familial ownership disputes, and a host of other things that can damage or leach away the value of your business assets.
Once you’ve identified all the risks to your assets, you can move forward.
2. Get Insured
For any business, no matter what line of work you’re in, business insurance is a must. Business insurance will cover your losses that result from a wide variety of things, such as property damage, legal liability, theft, and employee-related dangers.
In many places, having liability insurance, at the bare minimum, is a requirement for business owners. Check your local laws to ensure compliance.
Signing up for worker’s compensation insurance would also be a sound decision. The last thing you want is to have all your profits and assets taken from you because you’re wrapped up in an arduous and expensive legal battle.
3. Hire a Lawyer To Protect Your Business Assets
Like insurance, a good lawyer can guard you against a lot of different hazards. A lawyer can represent you in legal disputes with customers or employees. He or she can also oversee the trademarking and patenting of various aspects of your operations.
When you wish to pass on your business assets to members of your family or someone else, a lawyer can ensure your assets transfer successfully through estate planning.
A good estate planner can draw up an iron-clad will so that your assets go to the people you want them to go to once you die. There won’t have to be any legal quibbling between your trustees or heirs
A lawyer may seem like a costly expense, but in the long run, having a lawyer will save you a lot of time and money.
Need a Lawyer?
Hopefully, this article has given you a few ideas on how to protect your business assets. If you haven’t yet begun to think about the ways that your assets might be vulnerable, don’t worry. You’ve got time.
However, if you’re someone looking to protect their assets once they’ve passed, contact us to oversee your estate planning. We have the expertise to make sure your assets fall into the right hands.
Keeping your finances in order is essential to managing your possessions in the event of an unplanned emergency. Make sure you protect your assets and your family during a time of crisis with a properly executed estate plan. Here are a few common ways to avoid an estate planning disaster.
1. Plan Ahead for Disability or Incapacitation. Appointing a person to manage health care and business affairs during a temporary or permanent situation is essential. Without proper documentation, state and local laws will make important decisions for you.
2. Get a Professional to Write Important Documents. Writing your estate planning on your own can often lead to an invalid will. Leave this important step to a professional attorney.
3. Re-examine Your Estate Plan. Changes in laws and family structure can invalidate prior planning. Review your estate plan after a major life event or every five to seven years to avoid an outdated will.
4. Be Honest with Your Estate Planner. A professional estate planner is able to make suggestions to minimize taxes, increase the value of your estate, and to avoid family conflict. These propositions are not possible without disclosing complete information.
So you’ve worked all your life to create a legacy. Did you know that all your hard work can disappear?
This can happen if you’re sued or upon death, even when you’ve created a trust to shield your assets. Yes, that’s right. Even when you plan ahead your assets could be seized.
Trusts can be great tools for creditor protection, but only if you do it the right way. If you are here it means that you want to protect your assets, but want to make sure you’re doing it right.
Now the question is, are trusts protected from creditors?
Creditor Protection: Where to Start?
Before we get into if trusts are protected from creditors, we’ve to start with the basics. What is a trust? How do they work?
A trust is an arrangement where the settlor or trust maker transfers the ownership of their assets, to be managed by a trustee, for the benefit of a person or group of people, also known as beneficiaries. The 2 most common types of trusts are revocable living trust and irrevocable trust.
A revocable living trust is a trust that’s created while you’re alive. The purpose of this legal document is to provide the instructions on how your assets will be handled when you pass away. It’s different to a will because it can prevent the court from controlling your assets, and avoid probate upon death.
Also in a revocable trust, the settlor keeps the control of the assets. While an irrevocable trust, the trust maker loses the ownership of the assets. Another thing that makes it different is that it can’t be amended or revoked.
How Do Trusts Work?
Many people get wills to establish how their assets will be handled when they pass away. But, a lawyer might recommend a trust instead. They might suggest a revocable trust or an irrevocable trust.
You might be asking yourself, how do these work? A revocable trust can be established tying it up with your will. Many lawyers advise their clients to do this because it saves their family members court proceedings.
This process is known as probate. If there’s a will, it will have to go through the court probate process to confirm the distribution of the assets. This process can take from 6 months to a year and can cost your survivors from 3 to 5 percent of the assets.
Also, this type of trust helps in case you’re incapacitated, because if this happens your trustee will handle your assets in accordance with your trust provisions. This means that the court won’t assign an administrator, and your wishes will be followed.
In a revocable trust, you keep the ownership, and control over your assets. This is different in an irrevocable trust because the court won’t consider you the owner of the assets. It’s like this because you will lose all control and ownership of the property included in the trust.
Are Trusts Protected from Creditors?
You might be asking yourself, will a trust protect my assets? The answer is yes, but not all trusts are created equal. Not all types of trusts can protect your assets from creditors.
The only type of trust that can protect your property is an irrevocable trust. Once you put your assets in this trust, you aren’t the owner or control these assets anymore. Therefore, you can’t modify how they’re distributed.
Since you aren’t the owner of the assets, when there’s a judgment from a creditor against you, they won’t be able to seize the property that’s included in the trust.
Why Should You Establish a Trust?
There are many reasons why you should create a trust, but the most important is to protect your assets. If you want to do this is because you want to be prepared for when or if the worse happens.
In the event that lawsuits against you or even death occur, a trust can protect your assets from creditors and people who want to take advantage of the situation.
If your assets are in a trust, the courts and creditors can’t seize those assets. Yet, they could go against the assets that aren’t in the trust. This only applies to irrevocable trusts.
It only applies to this type of trust, because it creates a separate legal entity with control and ownership over those assets. The court and creditors could still seize your property, but only the assets that aren’t in the trust.
Many people think that having a will guarantees that their wishes will be followed when distributing their assets. Yet, even if there’s a will there are complications that can happen.
Besides the fact that a trust will help avoid the long probate process. These can prevent debts not being paid off, certain heirs receiving more than you intended them to receive, money designated for charities of being distributed elsewhere, among other possible issues.
Cost-Effective Creditor Protection
Another option you may consider to be prepared in the event of death is a testamentary trust. This trust is programmed to be created upon death and will include your life insurance policy proceeds, or all the assets of your estate.
Some people prefer this type of trust because it will protect your assets after death, without all the costs involved in the maintenance of a trust. But, it will also allow the distribution of your assets without them going through the probate process, or causing any financial hardship on your loved ones.
Wrapping It Up
You shouldn’t have to continuously worry about your assets being seized, or end up in the wrong hands. If you’re in the process of writing your will or are looking for ways to protect your assets now you know that trusts are protected from creditors.
Remember that you’ll get creditor protection only if you leave your property in an irrevocable trust, or a testamentary trust if your purpose is protection upon death. Make sure to consider these types of trusts when you decide to secure your family’s financial future.
Are you planning on getting a trust to protect your assets? We can help!
Contact us for more information about our services.
Estate planning is not just for older people or people who have already retired. Once someone owns a business, it is crucial to start creating an estate plan. The reason for this is to make sure that in the event of incapacity or death, your loved ones and your business are safe and secure.
As soon as you have something to give away, it’s time to do an estate plan. You could be twenty, thirty or forty years old. The estate plan will map what the business owner wants to happen with the business and all assets when he or she dies.
Before scheduling an estate plan meeting, there are a few important things to ask yourself according to this article. Who do you want to handle the business affairs? Who will take over the business? Will it be your family? Your children? A key employee? You may also choose to leave the business to one child and leave other assets to your other children. Having an idea about who you want to leave things to and what those things may be will help make the estate planning process simpler.
The business could easily be put into jeopardy if a business owner does not have estate documents in place. Some businesses do not survive to the next generation because of a lack of planning. It is very important for business owners, no matter how old, to have estate plans in place. Estate planning helps a business survive.
To learn more about estate planning, contact us today!