Salt Lake City Estate Planning

Can You Afford to Make These Retirement Mistakes?

On a scale of one to ten, how prepared are you for retirement? A five? An eight?

Do you know the amount of money you really need to retire?

Do you understand all the rules concerning your pension (if you have one)? What about your 401(k), IRA, and other retirement accounts in your nest egg? You also need to have a grip on when to claim Social Security benefits. These are some of the issue you need to address in the days and months ahead of your retirement.  However, don’t wait too long to do your research and ensure that you’re making the right moves.

Kiplinger’s recent article, “Retirement Planning Mistakes You'll Regret Forever,” compiled a list of the greatest retirement planning mistakes and how to avoid making them.

Spur-of-the Moment Relocation. If you’re thinking of moving to Arizona or another warm weather spot to get out of the cold, test the waters before you make a permanent move. Consider renting before you buy a home.

Not Saving for Retirement. The single greatest financial regret of Americans surveyed by Bankrate was waiting too long to start saving for retirement. Those who responded who were age 50 and older expressed this regret at a much higher rate than younger respondents. Many people don’t begin aggressively saving for retirement, until they reach their 40s or 50s. While these investors may still have enough time to change their savings behavior and achieve their goals, they’ll need to take action quickly and be extremely disciplined about their savings. Morningstar calculated the amount required to save each month to reach a goal of $1 million saved by age 65. Assuming a 7% annual rate of return, you’d need to save $381 a month if you start at age 25; $820 monthly, starting at 35; $1,920, starting at 45; and $5,778, starting at 55.

Taking Social Security Too Soon. You can start taking retirement benefits at 62. However, you should  consider delaying this if you can afford it. Most experts recommend that you wait at least until your full retirement age–67 for anyone born after 1959–before tapping Social Security. If you can wait until 70, it is even better.

For example, if your full retirement age (when you’d get 100% of your benefit amount) is 67, but you claim Social Security at 62, your monthly check will be reduced by 30% for the rest of your life. If you can wait, it’s an 8% boost in benefits each year between ages 67 and 70 because of delayed retirement credits. Talk with an elder law attorney, because the strategies can differ for couples, widows, and divorced spouses.

Avoiding Estate Planning. It is not just for the super-rich. Estate planning is for you. This is true, even if you just own a car, home and bank account. Your estate plan will instruct who you want to want to get what and who will be in charge of dispersing your money and possessions (the executor). If you pass away without a will, your estate is subject to your state’s probate laws. You should also have a durable power of attorney that names someone to manage your financial affairs, if you become incapacitated. There are also advance directives such as a living will, which spells out the treatments you do and don’t want, if you become seriously ill, and a power of attorney for health care, which names someone to make medical decisions for you, if you can’t make them yourself.

Reference: Kiplinger (February 12, 2018) “Retirement Planning Mistakes You'll Regret Forever”

If you want help drafting your Estate Plan, give our office a call for a FREE consultation 801.438.7120!

What You Need to Know About Funeral Decisions

Did you know the state will name your funeral director, if you don’t do it for yourself? In most states, your spouse also has the right to make all funeral decisions.

Investopedia’s recent article, “Estate Planning: Why You Need a Funeral Directive,” says that if a spouse doesn't intend to carry out your wishes or if he or she has other plans for your funeral, your wishes will most likely be ignored.

Of course, your family can ask the court to have your wishes respected.  However, it’s an expensive and stressful experience. In fact, your body might be cremated or buried before your family can get to the courthouse!

To avoid this situation, use a funeral directive and select the person you want to make these decisions for you. This document lets you grant someone the legal authority to carry out your funeral plan. This can be a stand-alone document, but most people include it in their will. A funeral directive allows your agent to arrange memorials, restrict the guest list and decide how you’re laid to rest. It doesn’t have to be your spouse.  It can be any person with the strength and diplomacy to order your cremation, despite any family objections.

Work with an experienced estate planning attorney to memorialize your wishes and grant your nominee adequate legal authority. This may avoid unnecessary conflict and expensive litigation.

After you sign your funeral directive, make certain to provide sufficient funds to carry out your plans. Don't put your heirs in the position of deciding between paying for your funeral or inheriting the money. If you have something specific planned, your agent must have access to enough funds to pay the funeral bill.

In addition to executing a funeral directive, work with your estate planning attorney to arrange your estate plan, so funds are available.

Reference: Investopedia (February 8, 2018) “Estate Planning: Why You Need a Funeral Directive.”

If you want more information or would like to draft your Estate Plan, give our office a call for a FREE consultation, 801.438.7120!

 

How Does My Estate Plan Work After a Divorce?

A divorced man with two adult children is still working.  He plans to work at least another 10 years. He did his will a few years before he divorced and hasn’t made any changes. As it stands now, the will leaves everything to the spouse and, if she predeceases him, then to his two children.

Should he change his will now that he’s divorced or is his wife automatically excluded because of the divorce?

Hometown Life’s recent article, “After divorce, examine all aspects of estate planning,” says that this gentleman definitely should redo his estate plan.

If he leaves his estate plan as it is, it could mean a fight over interpretation.

In most states, the probate court typically may find that because he failed to make a change after his divorce, it was the man’s intent to continue to have his ex as his beneficiary.

He should speak with his estate planning attorney—and soon—to make things crystal clear and to remove the risk of fights and costly legal battles.

At the same time when he’s redoing his will, he should also review his medical and durable powers of attorney.  People often forget to change their beneficiaries on insurance policies, IRAs, or investment accounts. These also need to be updated.

For individuals, whenever you have a change in your family situation, like a birth, adoption, death, or divorce, you should review your estate plan.

Whether you need changes to your estate plan depends upon your individual situation. If a person is divorced, it’s a dead giveaway that his estate plan needs to be redone.

Reference: Hometown Life (February 7, 2018) “After divorce, examine all aspects of estate planning.”

If you need help setting up your Estate Plan, give our office a call for a FREE consultation, 801.438.7120!

 

Who Gets Your Bitcoin When You Pass Away?

 

The Financial Post’s recent article, “What happens to your Bitcoin when you die? Digital assets complicating estate planning process,” explains that because the idea of digital property is so new, it’s often not discussed in wills. That can mean that trustees or family members have to try to navigate a web of online accounts and assets.

In addition to cryptocurrencies, digital assets can include social media accounts, rewards programs, travel miles, and even gaming profiles. Email accounts can also have massive amounts of information, sentimental history and value. This information and content is worth safeguarding. Making conscious decisions in advance is the best way to ensure that these assets and accounts are passed along in the manner intended.

One potential solution is appointing an “electronic” estate trustee within a will. This person would have the same general duty as the executor or “traditional” estate trustee: executing the wishes of the deceased.  However, the role would be much narrower. He or she would be tasked with managing and administering digital assets and accounts. They could be selected based on their trustworthiness and technological savvy.

Just knowing what exists may not be enough. This is because cryptocurrencies, like Bitcoin, are tracked on a public ledger, and they can only be accessed by a person who has the private password. Individuals need to be sure that the electronic estate trustee gets this. Bitcoin has no central registry, so a forgotten password and backup means a huge loss.

A big part of the electronic estate trustee’s roles would be to navigate the specific rules and regulations of each digital account provider, and each provider’s terms and conditions can seemingly change at will.

For example, Facebook has stated that the handling of pages of people who have died is a growing concern. They now let users appoint a legacy contact who’s provided with limited access to a user’s page after the original user dies. While a legacy contact can write pinned posts and update a user’s profile, that person can’t technically log in to the account, or remove or change past posts.

If a legacy contact hasn’t been appointed, Facebook requires confirmation from an immediate family member or executor. This is where the electronic estate trustee can help, after he or she provides the correct confirmation. The electronic estate trustee could request removal of the Facebook account.

Reference: Financial Post (January 29, 2018) “What happens to your Bitcoin when you die? Digital assets complicating estate planning process”

If you would like more information, please give our office a call for a FREE consultation 801.438.7120

The Fight Continues Over Charlie Manson’s Remains

Judge David Cowan ruled that Los Angeles Superior Court wasn’t the right venue for the question of who gets Charles Manson’s remains.  However, the judge did rule that LA is the correct place for court hearings on his will and other related matters. As a result, the parties need to file their petitions for Manson’s body in Kings County, where the cult leader was in prison for more than 50 years, or in Kern County, where he died in a Bakersfield hospital in November 2017.

The Pasadena Star News reported in its report, “Battle for Charles Manson’s remains, estate will be split between counties,” that another hearing is scheduled in response to a petition filed by Bryan Walters, a deputy attorney in the county. The County wants to know who should take Manson’s remains.

“He was incarcerated in Kings County, not L.A. County,” Cowan said. “It should be Kings County or Kern County, not L.A. County for the venue.”

Because there are competing claims, government attorneys filed a petition for instructions. “If this was the simple case,” Walters told Judge Cowan, “we wouldn’t file a petition for instructions.”

Forty-one-year-old Jason Freeman is the son of late Charles Manson Jr. and the grandson of Manson and his former wife Rosalie Willis. He filed his petition with the probate court to have the hearing in Los Angeles because Manson and his followers lived in Spahn Ranch in Chatsworth before he went to prison.

Freeman’s petition is competing with Manson’s longtime pen pal Michael Channels. Channels visited the mass murderer in prison in 2002 and claims that he has a will signed by Manson. The will, which Channels filed in Kern County, names him the executor of Manson’s estate and gives him control of his remains. But when Channels attempted to gain custody of the body in Kern County, his petition was objected to by Freeman, who argues that Manson’s signature on the will was forged.

In another twist, Attorney Daniel Mortensen represented Michael Brunner, a purported son Manson had with Mary Brunner, a member of his “family.” Mortensen said his client wants to cremate Manson’s remains immediately.

Manson died in 2017 at the age of 83 after spending 50 years in prison for masterminding the 1969 killings of pregnant actress Sharon Tate and eight others.

Reference: Pasadena Star News (January 26, 2018) “Battle for Charles Manson’s remains, estate will be split between counties”

If you would like help setting up your Estate Plan give our office a call for a FREE consultation, 801.438.7120!

How Do I Pay My Late Spouse’s Debts?

A spouse recently died, and while the couple had separate bank and credit card accounts, they filed joint tax returns. When the husband passed away, his outstanding bills were more than his assets.

While the widow isn’t personally liable for his debts, as the executor she may need to understand if there's an order as to who gets paid first.

nj.com’s recent article, “How to pay off dead spouse's debt” explains that when an estate doesn’t have sufficient assets to pay all debts in full, the debts are prioritized.

First to be paid are reasonable funeral expenses.  This is followed by the costs and expenses of administration.

If the widow advanced the funeral expenses, then she should be paid back first. She can also reimburse herself for the costs of probating her husband's will and any costs related to the administration of his estate, like legal fees.

The next items to be paid are debts and taxes entitled to preference under federal or state law.

Reasonable medical and hospital expenses related to the husband's last illness are the next to be paid. Any medical bills would fall in this category, if they’re related to his last illness.

Any medical expenses for treatment and care that’s unrelated to the husband’s last illness wouldn’t be included in this category. Instead, that is grouped with any credit card bills, unsecured loans, and other debts.

The executor of the estate should pay every legitimate claim in each category, before moving to the next category. If there’s not enough money to pay everyone in a specific category, the creditors are paid proportionally. For instance, if there was $50,000 left to pay medical bills from your husband's last illness, but there are $100,000 in bills, each creditor should receive 50% of its overall bill.

As a result, when the money runs out, there will be nothing left to pay the credit card bills which fall into the next category. Creditors must submit their claims within a specified period of time. If the personal representative of the estate disagrees with the amount claimed, she must inform the creditor.

There is then a procedure where the creditor must prove its claim and seek a judgment before you’re required to pay.

If you are unsure of what to do, speak to an experienced estate planning attorney. He or she will be knowledgeable about estate administration process.

Reference: nj.com (January 24, 2018) “How to pay off dead spouse's debt”

If you would like more information, give our office a call for a FREE consultation 801.438.7120!

Britney Spears’ Assets Still Controlled by Dad

 

On January 24, attorneys met in Los Angeles Superior Court for a hearing to ask a county court judge to seal a portion of an upcoming order, according to Radar’s report, “Britney Spears’ Dad Begs Judge To Seal Conservator Case Docs For Kids’ Sakes.”

Britney is leaving Las Vegas, with her residency concluding. However, the conservatorship set up with her father, Jamie Spears, in control over her life may continue indefinitely.

“The Order contains information that relates to and reveals details relating to Ms. Spears’ estate planning, attorney-client privileged documents, and personal and private information relating to Ms. Spears and her minor children,” estate co-conservator Andrew M. Wallet wrote in the most recent filing on December 27, 2017.

Wallet argued that there was no “constitutional right” to public access of the documents, and Britney and her boys have a “right to privacy” in the matter.

During the hearing, the judge granted the motion to seal.

In the past, documents relating to the case have contained shocking information about her prior drug abuse, partying and wild spending.

Britney, who’s now 36, has been under conservatorship since 2008, after her very public meltdown and custody loss of her sons Sean Preston, 12, and Jayden James, 11, to ex-husband Kevin Federline.

The New York Times reported last year that every purchase Britney makes is tracked in court documents to protect her fortune. She pays her dad $130,000 a year to manage her affairs.

Under her father’s monitoring, Britney has regained joint custody. She has also continued to be a pop superstar with a recent successful residency in Las Vegas.

Reference: Radar (January 24, 2018) “Britney Spears’ Dad Begs Judge To Seal Conservator Case Docs For Kids’ Sakes”

If you would like to set up your Estate Plan, give our office a call for a FREE consultation, 801.438.7120!

Widow/Widower Preparation 101

According to USA Today’s recent article, “How to prepare financially for being a widow/widower,” the death of a spouse frequently results in a decline in economic status. For example:

• Some income may cease when a spouse or former spouse dies.
• The death of a disabled person’s caregiver spouse may result in financial issues at a very difficult time.
• The surviving spouse may be unable or unwilling to manage the family’s finances.
• The inability to cope with a spouse’s death or terminal illness plays a part in high rates of depression and suicide among the elderly.

There are several things you and your spouse can do to manage the risks associated with becoming a widow or widower. One is talking about money matters together.

First, spouses (especially women) need to know about the household’s finances. This includes where all accounts are located. In addition, it’s critical that they know what benefits might be available from employment-based plans, like pensions, 401(k)s, life insurance and medical insurance, and how to contact the appropriate people to access any benefits that may be due.

Figure out if your financial plan will provide enough lifetime income for the surviving spouse. Note that the surviving spouse may have less to live on, if he or she has to spend down assets to take care of the spouse that dies. If, after running all the variables, there’s a shortfall, think about upping your savings, decreasing expenses, downsizing and buying life insurance.

If you’re the higher earner, you might delay Social Security until at least full retirement age (FRA)—or better yet until age 70—if there’s a good possibility your spouse will outlive you, because the surviving spouse collects a higher lifetime benefit based on the primary earner’s benefit.

Investigate whether you have a traditional defined benefit pension plan and select the joint-and-survivor annuity, instead of the single life annuity.  You should also check your beneficiary designations.

Make a list of your employer-sponsored retirement plans, as well as your life insurance plans, bank and credit union checking and savings accounts and titling on real estate. Be sure the credit cards and other accounts are set up so that both spouses have access.

You might also look at long-term care and consider what would happen if one or both spouses needed LTC.

Create or update your estate planning documents. This includes your will, trusts, powers of attorney for financial matters, advance directives, living wills and powers of attorney for health care and physician orders for end-of-life care. You may want to file a “do not resuscitate” or DNR order with your hospital to avoid aggressive attempts to prolong your life. It can also help to prevent incurring large medical bills for the surviving spouse to pay.

Consider planning your funeral arrangements in advance.

Review all of your assets and property with an experienced estate planning attorney and be sure that you understand what is in individual and joint names, and the way it might be disposed.

Reference: USA Today (January 19, 2018) “How to prepare financially for being a widow/widower”

If you want more information or would like to set up your Estate Plan, give our office a call for a FREE consultation, 801.438.7120!

Remember Your Heirs in Estate Planning

For those without children or close family, it can be difficult to choose who will handle your affairs, let alone who will inherit your estate when you die. The most common concern for many, is who should be trusted with important decisions, should you become incapacitated.

The Green Bay Press-Gazette says in its recent article, “Intimidated by estate planning? Here are key first steps,” that not knowing the precise way to draft an estate plan may lead you to do nothing.

Remember, if you die intestate, or without a will in place, your assets and property will be disbursed according to state statutes by the probate court. This may result in leaving your estate in limbo, transferring it to relatives you hardly know, or giving a big chunk in probate costs to the state.

While estate planning can raise difficult questions—for those with and without children—there are four key topics that need your immediate attention.

Estate Executor. Select an executor for your estate. It doesn’t have to be a family member or friend. Many lawyers, banks, and other planning professionals can be named to carry out your wishes.

Living Will. A living will is a document that states your wishes, in the event you become incapacitated, placed on life support or suffer from a terminal condition.

Designate Your Agents. Name a health care proxy or power of attorney who is tasked with making decisions about your health in situations that aren’t covered by your living will.

Update Beneficiaries. Be sure you designate and keep current your named beneficiaries for your 401(k) plans and life insurance policies. These assets aren’t tied to your will, so you need to be clear on your directions for these proceeds.

These are crucial first steps to making certain your estate is passed on the way you want. Review your options regularly to ensure that everything is accurate.

Reference: Green Bay Press-Gazette (January 17, 2018) “Intimidated by estate planning? Here are key first steps”

If you would like to set up your Estate Plan, give our office a call for a free consultation, 801.438.7120!

Be Smart and Front-Load Your 529 Plan

 

A 529 plan is designed to pay for future education costs, usually for a child or grandchild. With the new tax law, 529s can now be used for K-12 education costs, as well as certain college costs. Front-loading a 529 plan allows earnings to be compounded on more money over a longer period of time.

Investopedia’s recent article, “Why You Should Front-Load Your 529 Plan,” reminds us that the total amount you can contribute to a single 529 plan is set by the state in which the plan is established. Your contribution is deposited after taxes, so there’s no federal tax deduction. Some states, however, give a deduction for some of your contribution.

Contributions grow tax free and can be withdrawn tax free, provided the money is used for qualified educational expenses. But there can be gift tax consequences, if you exceed the annual gift tax limit–$15,000 per child or grandchild ($30,000 for spouses who give jointly) in 2018. You can avoid this by using an IRS rule that lets you front-load a 529 plan for up to five years at one time with no gift tax consequences. You can’t make additional contributions (or take money out) until the five years are up, at which time you can contribute another $75,000 for the next five years, if you want. If you and your spouse both contribute (and file jointly), the total amount can be as much as $150,000 in 2018 for each five-year period.

The advantage of front loading becomes clear when you compare the savings outcome with regular annual contributions.

A realistic look at the future cost of college for your child or grandchild shows the importance of leveraging every dollar of earnings in your 529 plan. By 2034, one year at a public university will cost $47,045, and the average one-year cost of a private school will be $105,071, according to J.P. Morgan. Those costs translate to $188,180 for a four-year degree from a public school and $420,284 for four years at a private institution.

You must be pretty well-off to afford the large amount needed to front-load a 529 education savings plan.  However, some grandparents are in that position.

The ability to start a 529 plan, front-load it, and, at the same time, eliminate that amount from potential estate taxes, can be a real benefit. It's also a very wise use for a large bonus or inheritance, if you happen to have one come your way.

Reference: Investopedia (December 22, 2017) “Why You Should Front-Load Your 529 Plan”

Call our office for more information or to schedule your Free Consultation 801.438.7120!