Living Will document and court gavel

End of life estate planning can be a difficult thing to confront. But that doesn’t mean it’s not important.

Most Americans understand how helpful having a living trust is. In fact, 76% of Americans think it’s important to have one. Unfortunately, only 40% of those people actually do have a living trust.

And even fewer will spend time updating a living trust.

Your living trust is similar to a car.

It needs to be maintained regularly so that it can stay in good working order. Our lives, circumstances, and relationships change over time. And our wills should reflect these changes.

However, unlike getting your tires rotated or your oil changed, you can update your living trust in just a few minutes. And from the comfort of your own home.

Interested in learning more? Continue reading and we’ll walk you through everything you need to know about updating a living trust.

Reasons for Updating a Living Trust

You might think that if you’ve already got a living trust, you don’t have to worry about it ever again. On the contrary, having an outdated living trust might not end up being very effective when the time comes to put it to use.

Let’s go over some of the most important reasons why you should update your living trust.

Changes in Your Family or Relationships

Have the relationships that you have with the people who are named in your living trust changed over the years? Have you become divorced or estranged with former loved ones?

You might want to think twice before leaving your precious valuables to people who you don’t even like anymore.

And, more importantly, you might’ve changed over the years too. You might want to donate your valuables to a charity or other group after your death.

On a brighter note, there might be many new and wonderful people in your life that you’d like to give to. Perhaps you got married, had a child, or have become closer to grandchildren, nieces, nephews, or made new friends.

No matter who’s been added to your life, you’d want to update your living trust if you’d like those people to get a piece of the action.

Also, if you’ve had a child in the intervening years between now and the writing of your living trust, it’s highly recommended that you review your living trust. You’ll want to name a guardian for your child should something happen to you or your spouse.

And if your kids have reached the age of majority in your state, you might want to consider giving them responsibility as your executors.

Comb through your list of representatives, trustees, heirs, executors, and guardians. Think about if the circumstances of your life and relationships have changed in anyways.

For example, are these people that you listed still able to fill the roles that you’ve assigned for them? Are they even still alive?

It’s reasons like these that you need to be updating your living trust once a year.

Changes in Assets

Another major reason for why you should update your living trust is if you’ve experienced a major decrease or increase in value in your estate.

Maybe you sold or bought a large asset or started or closed a business. Also, you might have new pension plans or insurance policies that affect the naming of beneficiaries in your living trust.

Changes in Location

If you’ve moved to a state that is different than where you originally wrote your living trust, you should speak with a lawyer in your new area. Determine with the attorney if the will is still valid.

The laws regarding living trusts vary by state. Because of this, you should never assume that an old will can meet the requirements that are demanded by your new state.

Changes in Tax Laws

Federal, as well as state tax laws, are changing constantly. You are going to want to stay informed of any changes in your state that might have an effect on your living trust and estate plan. By staying informed and consulting with a lawyer who specializes in estate planning and living trust, you can stay on top of all the different law changes.

What to Look for When Updating a Living Trust

There are several important aspects of your living trust that you are going to want to make sure are always up to date. These factors include:

• Divorce and Marriage
• Children have reached the age of majority
• You’d like to give to an organization like a charity
• You started a new business
• You’re approaching or reached the age where you’re required to start taking distributions from your 401(k), IRA, or other plans
• It’s been at least three years since you last reviewed your living trust
• Birth of a child or grandchild
• Death of a person who’s listed in your living trust
• A change in relationship with people in your living trust
• A change in the circumstances of your trustees, guardians, executor, etc.
• A large decrease or increase in your estate’s value
• A change in your tax laws
• If you’ve moved to a new state

Although you should look over everything in your living trust, these are some of the most important points to consider.

The Importance of Updating Your Living Trust Every Year

Updating your living trust once a year is a simple task that is nonetheless extremely helpful. Although it can sometimes be seen as uncomfortable or morbid, having and maintaining your living trust may save your family from a lot of confusion and arguments in the long run.

Need help with your estate planning? Contact us today to get started!

Taking care of loved one’s assets and debts while also grieving their passing is not an easy task. When it is time for you to choose an executor for your estate, there are a few things that would be beneficial to take into consideration. This article by the Washington Post discusses factors that should be contemplated before naming your executor.

First, success is not everything. You may think that your child who works as a successful accountant may be the obvious choice to take care of your estate. However, oftentimes people who are successful with their line of work struggle to tie that discipline over into their personal lives. Taking care of a parent’s estate requires patience above all, as it could take years to handle.

Second, you don’t have to automatically choose your firstborn. Just because this child is the eldest does not mean he or she can inherently handle all that comes with being the executor of your estate. Also, while one child may be great at dealing with finances, it may be best to choose one that will prioritize keeping the peace between family members during this delicate time. A child who is a mediator is often the wisest choice.

Carefully planning your estate is the best way to minimize any emotional and/or financial chaos in the wake of your death and leave your loved ones in a much better position to handle these matters.

Rhodes Law Firm can help walk you through the entire estate planning process, including choosing executors. We know this is a tough topic for most, but we are here to help you make the best decisions for your family and loved ones. Let us help you today! Give us a call or stop by our office to speak with our experienced team.

Among people 35 and over, the majority of people who get divorced go on to remarry.

The numbers are also growing: 57% of people aged 35 to 44 whose first marriages end go on to enter a second marriage, and 63% of those 45 to 54 do the same. Even half of all people 65 and older tie the knot again. The trend is more prevalent among those 55 and older, but singles under 35 are likely to couple up again, just perhaps without signing the dotted line.

When you remarry, you need to update any estate plans you had with your first spouse. If you don’t and something happens, your survivors could wind up seeing real – and expensive – complications in probate court.

What changes when you enter your second marriage? Keep reading for an introduction.

1. Consult Your Divorce Agreement

In most states, including South Carolina and Georgia, spousal support ends with the remarriage of the supported spouse or death of either of the former spouses. So spousal support generally isn’t a concern for your estate.

However, there may be other financial or contractual obligations lodged in there, especially if you own property together that you maintained without splitting.

Start any second marriage estate planning by including any necessary provisions from the first marriage. These either need to be resolved in advance or written into your estate to avoid complications during probate.

2. Talk With Your Children

If you have children from both marriages (biological, step-children, or adopted), you need to update your estate plan to reflect all children.

The estate should include both guardianship issues (if your children are under 18) and long-term financial goals for providing for your children.

As with the divorce agreement obligations, these need to be hashed out with both your current spouse and your ex-spouse when possible so they can plan accordingly too.

3. Decide Whether to Combine Your Estates

Your estate has changed dramatically since your divorce. It no longer includes your ex’s property, and it could now feature your current spouse’s assets.

It’s at this juncture that you need to decide whether to keep the assets you both brought into the marriage separate or to join them. South Carolina, like most states, is a marital property state. As a result, your spouse has a right to all the real and personal property you accumulate during your marriage, but not before it.

Deciding whether to combine your estates is difficult compared to the decision during your first marriage.

You might be significantly older than you were when you entered your first marriage, which means one of you might bring substantially more into the union after several years of a successful career.

The issue of combining assets impacts childless couples, but it tends to affect couples with children from a previous marriage most. You may find you prefer to keep assets aside to save for your biological children. It’s not uncommon to want to set aside the assets you brought into the union for your children outside it.

It’s Okay to Leave Pre-Marriage Assets out of Your Married Property

Why? Because bringing them into the estate risks losing those assets for your children.

A good example is when a newly married couple moves into the home purchased by one of the spouses before the second marriage.

If you’re the owner and decide to bring it into the estate, then your new spouse gets the house if you pass away first. If they have the right to the home, they can do as they please with it, even if it goes against what your will says.

For example, they can leave it to their children. They have a legal right to do, so even if you wanted to pass it on to yours.

This makes second marriage estate planning more complicated: the plan you might’ve chosen with your first spouse – with whom you share children – won’t work because you don’t legally share the children.

Similar issues arise with retirement plans and life insurance. If you name your new spouse as the new beneficiary, they can then pass it on as they see fit in their estate.

These are difficult discussions to have, but you must make them early. The conversations become even harder if you’re not there to broker them and express your wishes.

However, it’s also important to remember that the reverse can also be true. If you don’t update your estate, you could leave your spouse and any children from your second marriage out in the cold, even if that wasn’t your intent. It’s very difficult and expensive for them to fight these things in probate court.

4. Consider Remarriage Protection

Just as getting married once doesn’t automatically guarantee a second marriage, neither does your second wedding mean you’ll get married a third time. But things don’t always go as we plan. If your second marriage ends pre-maturely – either through divorce or death – then the estate becomes even more complicated, particularly if the surviving or ex-spouse remarries.

Think about all the intricacies of restructuring your estate above. Now, consider your first marriage twice removed from your estate.

Remarriage protection doesn’t just apply to second marriages; all couples benefit from it.

In most cases, remarriage protection involves a trust, which provides protected assets for each spouse’s children. However, it can also include other options. An estate attorney can help you work through the possible options to prevent the complexity that comes with commingled assets.

A Second Marriage Always Requires Estate Updates

Whatever your circumstances and whatever your assets, a second marriage always requires at least some estate paperwork, if only to switch your life insurance beneficiary.

Although the conversations aren’t easy, it’s essential to work them out early and to communicate with all parties involved. You also shouldn’t feel bad about wanting to protect the assets you want to give to your children from a previous marriage. It’s both reasonable and smart to take steps that ensure your estate is executed according to your wishes.

Do you have questions about updating your estate? Share your questions with us and start your second marriage off on the right financial footing.

There are many different issues to take into account while making your estate plan, specifically when it comes to beneficiary designations. This article by Forbes highlights seven of the most common issues that can really impact your plan if your beneficiaries were not carefully chosen. While it may seem like a simple task, but there are many factors that ultimately can undermine your intended plan. It is very important to go over your choices and your overall plan with a qualified estate planning attorney. Here are just a few of the possible issues you should look out for when making your estate plan.

1. All about the cash – Make sure that you have enough money in your estate if you plan to give monetary gifts to people or various charities.
2. Make sure to have your estate tax liability covered – if assets pass outside of your estate to a beneficiary, there should be enough money in your estate and trust to pay estate liability tax.
3. Keep your tax savings protected – it is a good idea to make sure enough assets go into your trusts to maximize estate tax savings. If there aren’t enough assets in your trust, your beneficiaries may end up paying more in taxes.
4. Double Check Everything – Make sure all information on the change of beneficiary form is correct and up to date.
5. Choose wisely about naming your spouse as a beneficiary – This may defeat your estate planning.
6. Think twice about making any last-minute changes – It could be wise to trust the choices that have already been made with much thought and consideration.
7. Be Wary of Qualified Accounts – Always consult your attorney before naming a trust as a beneficiary of a qualified account such as an IRA.

If you want to revisit your estate plan and beneficiaries, contact us today. We can work with you to help make the best decisions for your specific plan.

Talking about you or your loved ones’ inevitable passing can be uncomfortable, but it is necessary in planning your estate. It is very important to discuss your assets and estate plan so that when you do pass, the people who are closest to you won’t have added difficulty on top of their grief. This article explains the importance of having all of your assets are updated and your estate plan is current.

According to the article, roughly 50 percent of people do not have an estate plan in place. If you are one of these people, the state will designate your assets. This will, more often than not, result in ways you would not have intended and is usually very complicated and time consuming.

There are a few dos and don’ts for estate planning that you should know. If you have a blended family, there is a statutory formula that depends on how many children there are and can affect who gets what. It’s important to sort these things out now, as it can get very complicated. Do make a plan and keep it updated as your family grows.

Also, while difficult to discuss, it’s important to consider who you want in charge of your healthcare decisions should you become unable to do so yourself. Who would you trust to make the tough choices if you were hit by a bus tomorrow?

Don’t assume that a will can control all of your assets. A lot of people don’t realize that a will does not control things like joint bank accounts, life insurance policies, or retirement accounts. It’s very important to designate a beneficiary on these accounts.

If you are ready to make an estate plan or update an existing plan, Rhodes Law Firm is here to help. Call or come by our office today!

Donation word written on wood block. Donation text on table, concept.

You know what they say — giving is better than receiving. That might be why donor advised funds, or DAFs, rocketed past $100 billion for the first time in recent years.

Want to give but don’t know if a donor advised fund is right for you? Have questions about charitable planning?

There are many things to know before pledging donations to a charity. Our guide to sponsored donations will answer any questions you have about guidelines and regulations related to charitable giving.

What is a Donor Advised Fund?

The IRS defines a donor advised fund, or DAF, as a separate account run by a 501(c)(3) organization. Multiple donors contribute to the one account, called a sponsoring organization.

Once funds are placed in the sponsoring organization’s control, they are the ones in charge of the money. The donor at this point can’t make a guarantee or specific pledge with the assets.

What Assets Can Go Into a DAF?

While money is always an easy option, it’s not the only thing to put into your DAF. Anything valuable that the charity can use is welcomed.

Some options are stocks or even real estate. Valuable holdings, like artwork, can even be put into your sponsoring organization’s account.

This flexibility is one of the reasons a DAF is appealing to so many people. Let’s examine some other reasons you might want to set one up for yourself.

Benefits of Having a DAF

DAFs are a popular way for individuals to give back to their favorite charities. There are tons of benefits to managing your donations through them.

As we mentioned before, you can use almost any kind of asset for donations to your sponsoring organization. You can donate as often as you’d like as well.

When you work with a DAF, you don’t have to stick with just one charity. You can suggest different ones, and ask to allocate funds accordingly.

One of the biggest reasons DAFs remain popular? You get an almost instant tax refund from contributing to them — a win/win!

Different Kinds of DAFs

In general, there are three types of DAFs. Each comes with their own set of guidelines that donors and sponsoring organizations are to follow.

Here’s a quick overview of the three main kinds you’ll see:

• Single-issue funds: usually focused on one cause or institution, like a university or religious institute
• Commercial funds: managed by separate non-profit branches of commercial investment services, like Goldman Sachs
• Community-foundation funds: these are more local and engaged organizations, great for those who want to be involved but need help

There are overall legal guidelines each DAF has to follow. The type you choose to join might have its own set of rules and regulations you’ll have to abide by.

Make sure to ask questions before committing your funds in any specific organization.

Pledging Donations Through a DAF

Now that we understand the basics of sponsoring organizations, what about fulfilling pledges using a DAF? The IRS has made some changes in recent years to clarify their position on the matter.

The short answer is that no, your DAF can’t be used to fulfill a legally binding pledge. If the IRS suspects that any of your DAF funds have been used to fulfill a pledge, they’ll tax it.

Ultimately, if the donation is assumed to give some sort of benefit to the donor, it’s taxable. In this example, it would be because the donation fulfills the original donor’s pledge.

But there is a gray area. Let’s look at ways your DAF can help you fulfill a pledge.

Gray Areas for Pledges

Once an asset is handed over to the DAF, the donor loses control of it. They can’t get it back, either.

At that point, the donor becomes the advisor. The sponsoring organization is under no obligation to use funds as suggested by the original donor.

Each state has its own laws concerning what it means to fulfill a pledge. Adding on that, each case of donation is different, too.

As you can see, this muddies the waters when trying to determine if someone does or doesn’t fulfill a pledge. Because nailing down these facts is murky, the IRS doesn’t require DAFs to figure out if a donation qualifies as a pledge.

One note of concern: the charities themselves can’t ask the sponsor if the gift is for a pledge. The sponsoring organization can’t mention pledges either.

What to do Instead of a Pledge

Sounds complicated? It doesn’t have to be.

When you can’t fulfill a pledge through a DAF, you still have options.

For example, recommending a pledge isn’t the same thing as demanding it. As we mentioned before, your sponsoring organization is under no obligation to fulfill it.

As long as your pledge isn’t legally binding, you can suggest your funds be used to fulfill it. Some organizations even have online forms where you can mention non-legally-binding pledges.

Be Careful with Your Wording

The most important thing is to stay vague. Don’t make written promises and be careful with anything you say.

Some states consider verbal promises a legally binding pledge. Make sure that you’re within what local laws allow.

A non-binding letter of intent can also be your friend in this situation. That way you can give your preferred non-profit an idea of how much they can expect in the future and budget accordingly.

Make Your Donations Count and Pledge the Right Way

Pledging donations through a DAF can be a little complicated but not impossible. It’s important to make sure any promises made aren’t legally binding, or considered so, in your state.

Our guide can help you with the basics of charitable planning. If you want to do it right, consider finding someone to help you navigate the murky waters of donating with a DAF.

There are financial institutions that can help you form a sponsoring organization. There’s also those with knowledge of local laws ready to help.

We’re here to answer any legal questions you might have about charitable giving. Contact us today and get the answers you need!

The Tax Cuts and Jobs Act law created sweeping changes to the income tax system in 2018, but it also impacted federal estate and gift taxes. For high-net-worth planners, the impacts were simple in terms of legislation. However, the implications of the large increase in the estate and gift tax exemption are complex and affect everyone planning their estate – not just the small percentage who will still file estate tax returns. This article featured on The Tax Adviser reviews the changes to the tax framework and discusses how the changes affect the 99% of people who will not be filing a Form 706 (United States Estate and Generation-Skipping Transfer Tax Return).

As of 2018, only 17 states as well as Washington, D.C., maintain either an estate tax or inheritance tax. The state exemption amounts have also increased dramatically for a number of those states. Because of this, the number of taxable assets has gone from small to microscopic. Between the increase in the federal level exemption and states eliminating their estate taxes, the landscape of estate tax planning has drastically changed in the last 20 years. Pair this with how infrequently the average person revisits his estate documents and there are more likely than not a vast number of outdated estate plan documents in most people’s dusty file drawers.

Many people think estate planning does not apply to them since the federal tax exemptions are so high. However, the numerous nontax factors warrant attention. These include custody of minor children, how assets will be administered for a surviving spouse, addressing special needs and more. If you haven’t thought about planning your estate or haven’t looked at yours since you created it in the ‘90s, now is the time to give it some attention.

If you are ready to discuss your estate plan, give Rhodes Law Firm a call today!

It is interesting to note that fewer Americans are giving to charity, yet the dollar amount is at an all-time high.

According to the Giving USA 2019 report, in 2018, there was a $20 billion increase from slightly over $400 billion donated in 2017. The donations mostly went to environmental causes, higher education institutions and disaster recovery projects.

Before you decide to donate, there are certain things financial advisers would want you to know. We’ll explore some of these in a little more detail below.

What Should You Know Before Giving to Charity

Making charitable contributions has the advantage of the “feel good” factor for the individual. You can also benefit from tax incentives. Talk to your financial adviser so that you can plan appropriately. Consider the following before writing that check.

1. What Charity Are You Donating To

Many people will donate money to charities that deal with issues close to their hearts. It could be about health, economic issues, social issues or even arts and culture. Make sure that they are using your money efficiently and effectively.

Look at the reputation of the programs they’re running, so that you’re sure that your money is making a difference. Factor in whether they get tax deductions because not all non-profit organizations qualify.

Remember there are so many organizations you can donate to, and it can get confusing. With over 1.5 million registered charities, you need to use the resources available to find the right one. Don’t rush the process, avoid telemarketers who’re asking for money, seek relevant facts and most importantly follow your gut instinct.

Avoid sharing any personal information because you can never quite know who you’re dealing with. Be especially careful about any new organization, because many scammers are operating under the guise of charities.

2. Organize Your Donations to Charities

Donating money to charities is very much like coming up with a business plan. It’s not something you do on the whim of the moment. Try and spread your donations, so that you avoid giving to the same charity over and over again.

Also, ensure that you get a receipt so that you use it for your tax returns.

3. Donating to Appreciated Stocks or Assets Is a Good Idea

You could have avoided paying capital gains tax by donating appreciated stock. The value of the charitable tax deduction will be the full market value, thus savings for you. You will not get the same benefit if you donate cash.

The charity then has the option of selling the stock when they require money for a mission. If you’re giving money to those you love, give them appreciated stocks so that when they sell the assets, they pay less tax.

If you’re dealing with depreciated assets, sell them yourself and give away the cash. You’ll have to bear the tax loss.

4. Gift Tax Exclusions

It’s a good idea to take time to think before you donate. It’ll help you choose the right option. You can, for example, give up to $15,000 as an individual, or $30,000 together with your spouse. You’ll not face any consequences with regards to the gift tax; neither will you require filing a gift tax return.

The best way to do it is to spread your donations as opposed to giving it all at once. You can also avoid gift tax by donating to medical or educational institutions, or paying tuition for healthcare bills for an individual. Talk to your financial adviser on the different consequences of making the donations.

5. Life Insurance Is an Excellent Way to Donate to Charity

You have many options concerning contributions. You can donate a car to charity, or even give a life insurance policy. The death benefit amount will be larger than if you give cash. You also have the option of changing beneficiaries without having to explain yourself to anyone.

If you don’t want to deal with the hassle, you can give up full control of the policy to the charity, but continue to have it as a deduction on your income tax. You’ll enjoy the tax benefit if you continue to pay the premiums.

6. Non-Cash Donations; Best Charity to Donate To

You’ll find several items in your home that you have no use for. How about using this as your donation instead of giving out money. You help retain your cash flow while getting rid of clutter. Since it is a donation, don’t give out anything that no longer has value.

Only donate what you can still use; meaning it should be in good condition. Make sure you have receipts for anything less than $250. Also, have a written acknowledgement for anything you donate that is $250 or more. You may also need an appraisal for items worth $500 and above.

Your time can also be a valuable asset. Volunteer services for certain missions, and enjoy tax deductibles by noting your expenses like auto mileage.

7. Charity Should Not Be a One-Off

Giving donations to charities should be part of your life plan. Allocate charitable donations by setting up trust funds two organizations or even family members. Depending on the advice your financial adviser gives you, you can provide an income to charities long after your demise. A good plan will also include your beneficiaries.

Donor-advised funding will also allow you to claim the tax deductions for any money you give to an investment account, for a charitable organization. You get to recommend how you’d want the money allocated.

By having a plan, you don’t have to deal with every appeal that comes your way. You only give to those you really care about and can leave a lasting legacy.

Donating to Charities Is Fulfilling

We’ve shared with your seven important factors to consider when thinking of giving to charity. You have the benefits of tax deductions and the peace of mind of knowing that you are doing your bit to make a difference in this world. Getting proper legal and financial advice will protect you in the long run.

Remember, it is not all about giving to every charity out there; it requires a more organized thought process on your part to be able to make the most difference. You need a plan, and we can set you on the right path. Contact us for more information.