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Top Five Estate Concerns and Death & Disputes


Top Five Estate Concerns

Top Five Estate Concerns

    If you think estate planning is for the wealthy, think again. Everyone has an estate worth planning; some are just more complex than others. Facing your own mortality can be uncomfortable, but ignoring the inevitable can cause unnecessary pain and conflict for your loved ones. In this article, we’ll review the top five concerns when considering your estate plan.

#1 Incapacity Issues

    If you became incapacitated, who would make decisions on your behalf? If you’re married, you’d probably guess your spouse. If you’re at least eighteen years of age and living at home, you’d probably say your parents. Both answers are incorrect.
    On your 18th birthday, you are considered an adult responsible for your own decisions. Whether married or single, you must appoint agents through proper Durable Powers Of Attorney to make personal, health care and financial decisions on your behalf in the event of incapacity. Alternatively, a court process involving at least three lawyers is required to appoint agents to make such decisions for you under the ongoing supervision of the court. This can be expensive and invasive of your privacy.

#2 Minor Children Matters

    Consider how you’d feel upon hearing the story of children abandoned by their parents. After the shock, you might reflect on how much you love your own children. You nurture them. You impart morals and values. You search for just the right babysitter. However, if you die prematurely without a plan in place, your children will be in the same predicament – orphaned, with their fate determined by the court.
    In some states, you can appoint guardians for your minor children only through a Last Will & Testament. Without this, an expensive and public court process is required to appoint them. Moreover, the court may not designate the same parties you would have selected.

#3 Death & Taxes

    When it comes to transferring possessions upon your death, you can either make it easy on loved ones through proper estate planning, or you can leave it up to the court system. Prior planning is the more efficient and effective option. There are a variety of planning methods to accomplish this transfer. For example, Revocable Living Trusts are commonly used to transfer assets after death, independent of the legal system in many states.
    It is settled law that no taxpayer should pay more than his or her fair share in taxes. That said, proper estate planning can save thousands of dollars from unnecessary federal estate taxes. If you are married, is your estate plan taking full advantage of your available estate tax exemption through a combination Credit Shelter/QTIP Marital Trust or, perhaps through the new “Portability” alternative?

#4 Inheritance Risks

    Leaving an inheritance to provide for your heirs seems like a positive decision. However, the outcome may be far from what you intended if you haven’t considered the potential risks. What if that inheritance were squandered by a shortsighted eighteen-year-old on an expensive sports car, leaving the heir broke but fashionable? What about money left to a previously happy couple now engaged in a bitter divorce? What would happen if the heir were involved in a lawsuit or bankruptcy? Proper planning through one or more Long-Term Discretionary Trusts will protect and preserve an inheritance for generations to come.

#5 Procrastination Perils

    Who wants to take time out from living to think about dying? Any raised hands? Probably not many. Yet each moment you procrastinate in preparing your estate increases the likelihood that those you leave behind will grieve not only your passing but your lack of planning as well. Dying without even a basic will, or with one that is outdated and no longer meets your needs, will tie your loved ones up in legal knots at a most vulnerable time in their lives.


Death & Disputes

Death and Disputes

    “Never say you know a man until you have divided an inheritance with him.” – Johann Kaspar Lavater
    We all know a family that clashed after the death of a loved one. For those uncomfortable with emotions of sadness, fear and grief, anger seems like a safe haven. But these feelings can escalate and result in long-term feuds, especially when the estate of the deceased has not been left in order. Typically, these disputes are over tangible personal property and family business interests. However, harmony can be preserved with proper planning and communication.

Tangible Personal Property

    Real estate and other investments may come to mind when considering the cause of family unrest. However, cash, antiques and heirloom jewelry top the list of items that fan the flames of many disagreements. The items in question don’t even have to be valuable. Sentimental trinkets can cause just as much, if not more, tension. Fortunately, the laws of most states provide a flexible solution for the specific distribution of tangible personal property.
    As part of your estate planning, find out whether your state authorizes a separate writing on which you may list the specific items and who is to receive them. In most instances, this may be handwritten, but it must be signed and incorporated by reference within the estate planning legal documents. Time spent preparing this writing now as part of your overall planning can help thwart problems later.

Family Business Interests

    Ninety percent of U.S. businesses are family-owned or family-controlled, yet only one-third survive their founders. Federal estate taxes are one reason for this dismal survival record, but family feuds are also to blame. By carefully coordinating your personal estate and business succession planning, these issues can be resolved before they arise.
    For example, will your surviving spouse continue the business or sell it? Who will buy it? If your children take over, will they buy or inherit the business? If they inherit it, how will the inheritance of other children be equalized? Are there any in-laws who might stir up trouble?
    These questions may seem overwhelming, but all the more reason to plan ahead. As the proverb says, “He who fails to plan, plans to fail.” And what fails may well be the family business.

Open Communication

   For many people, the subject of death is not easy to discuss. If you are planning your estate, broach the topic with your heirs. A recent survey, conducted by the AARP/Scudder Investment Program, found that the majority of respondents who reported no conflicts over an inheritance had known what to expect and believed their inheritance was fair.
   If your affairs are settled but your parents still haven’t considered their estate, perhaps a gentle reminder is in order. Show them this newsletter. Many times people think they don’t have much of value and therefore don’t anticipate the tension they will leave behind. But history has shown that even inexpensive baubles and the smallest inequities can result in family disputes.

This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.

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