How to Talk to a Loved One About Estate Planning

6 Jan

Estate planning rarely comes up in the course of regular conversation and if it does, it is usually involves what has happened to a celebrity’s fortune after his or her death.  The distance is safe, so the conversation can take place.

But what if you need to discuss estate planning with a loved one – either your own estate plan or the one they have (or should have)?  Because no one likes to talk about the death of someone close to them, we rarely have this critical conversation.  But we all should.

So how do you talk to a loved one about estate planning?  A recent Forbes.com article provides some good tips:

Pick the right time.  If it is too difficult to schedule a time for this conversation, have it when you’re doing something else, like taking a walk.

Start with a story.  Use a story as an opener to the conversation, like the death of a celebrity and the havoc that failure to plan is wreaking on his or her estate or how you created your own estate plan.

Talk separately.  It may be easier for parents with more than one child to have separate conversations with each child rather than talking to a group.

Use a team approach.  If you are having difficulty getting your spouse to focus on estate planning issues, communicate your concerns as a couple.  Talk about how aging means making mature decisions and how you need to protect children with estate planning.

Ask for feedback.  After discussing your estate plan with your children, ask them individually how they feel about what you have explained.  It may not change what you are doing, but it will let them feel they have a voice.

Explain why.  Explain to your children the principles that guided your decision about how your estate is being divided.  This lessens the chance of conflict among siblings.

If you’d like to learn more about estate planning strategies for your family, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session™, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

Call our office today and schedule a FREE Family Wealth Planning Session™. Just mention this article by name, and we will waive our customary $750 fee. You literally have nothing to lose…except for all that money you could potentially spend on estate taxes if you don’t call us!

Get your copy of Life, Law, & Money, the Free Monthly Newsletter from Ron Hatfield and Hatfield Legal Services.

HLS has locations in Charleston and Fairmont, WV

HLS operates under the trademarked name: Personal Family Lawyer™ for all of your personal and family estate and asset protection planning services.

HLS operates under the trademarked name: Creative Business Lawyer™ for all of your small business formation and asset protection planning services.

Check out Ron’s small business blog at: http://wvsmallbizz.com/

HLS is pleased to announce the roll-out of its new and improved Fresh Start Bankruptcy System™ for clients seeking asset protection and peace of mind from overwhelming debt and overzealous creditors. Go to: http://www.wvdebtrelief.com for more information.

If you are facing foreclosure, repossession, non-stop harassing collection calls, mountains of medical bills, or overwhelming credit card debt and can’t seem to find a way out, get your free copy of Ron’s book: “Time to Breathe Again: The Truth about Bankruptcy and Your Fresh Start!”

 

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Changes in Retirement Benefits for 2013

30 Dec

There are several important changes to retirement benefits coming in 2013, including:

Increased limits on IRA and 401(k) contributions.  You will be able to contribute another $500 in 2013 to your 401(k) or 403(b) plans when limits increase to $17,500 from $17,000 this year.  The IRA contribution limit also increases by $500, to $5,500 in 2013.  If you are over the age of 50, your catch-up contribution level remains the same:  $1,000 for IRAs and $5,500 for 401(k)s.

Increased Income Limits for Roth IRAs.  For singles and heads of households, the earnings limit for contributions to a Roth IRA increase by $2,000 in 2013, to $127,000.  For married couples, the increase is $5,000 for earnings between $178,000 and $188,000.  Those limits can be bypassed if you convert a traditional IRA to a Roth.

Increased pension insurance limits.  The Pension Benefit Guaranty Corp. that insures private pension plans is increasing the maximum guaranteed benefit for retirees over the age of 65 to $57,477 in 2013 from $55,841 in 2012.

Increase in Social Security benefits.  Social Security benefits checks will increase by 1.7 percent beginning in January 2013.

Increase in Social Security taxes.  Most workers will see a 2 percent hike in their Social Security taxes, as the temporary payroll tax reduction that cut this tax from 6.2 percent to 4.2 percent is set to expire in 2013.

Bigger Medicare Part B premiums.  The Medicare Part B premium is set to increase from $99.90 per month to $104.90 in 2013.  The Part B deductible will also increase, from $140 to $147.

Saver’s tax credit income limit increase.  The modified adjusted gross income (AGI) for workers that participate in a 401(k) or IRA increases by $1,500 to $59,000 for married couples, $29,500 for singles and $44,250 for heads of household in 2013.  Those that meet these limits qualify for a saver’s tax credit of $1,000 for individuals and $2,000 for couples.

In addition, the Social Security Administration will halt paper checks on March 1, 2013.  Benefit payments will be made via direct deposit into a financial institution account, or applied to a debit card.  Retirees who do not opt for the electronic payment option will be automatically enrolled in the debit card program.

If you’d like to learn more about retirement planning, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session™, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

Call our office today and schedule a FREE Family Wealth Planning Session™. Just mention this article by name, and we will waive our customary $750 fee. You literally have nothing to lose…except for all that money you could potentially spend on estate taxes if you don’t call us!

Get your copy of Life, Law, & Money, the Free Monthly Newsletter from Ron Hatfield and Hatfield Legal Services.

HLS has locations in Charleston and Fairmont, WV

HLS operates under the trademarked name: Personal Family Lawyer™ for all of your personal and family estate and asset protection planning services.

HLS operates under the trademarked name: Creative Business Lawyer™ for all of your small business formation and asset protection planning services.

Check out Ron’s small business blog at: http://wvsmallbizz.com/

HLS is pleased to announce the roll-out of its new and improved Fresh Start Bankruptcy System™ for clients seeking asset protection and peace of mind from overwhelming debt and overzealous creditors. Go to: http://www.wvdebtrelief.com for more information.

If you are facing foreclosure, repossession, non-stop harassing collection calls, mountains of medical bills, or overwhelming credit card debt and can’t seem to find a way out, get your free copy of Ron’s book: “Time to Breathe Again: The Truth about Bankruptcy and Your Fresh Start!”

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Avoid these 10 Common Estate Planning Mistakes

11 Jul

As a Personal Family Lawyer®, I see many of the same estate planning mistakes made time and again by people who either fail to plan properly or who use “do-it-yourself” estate planning websites or forms in an effort to save money.

Without professional guidance, this can cause more problems for your heirs and end up depleting estate assets by far more than what you could potentially “save” by doing it yourself online.

A qualified estate planning attorney or Personal Family Lawyer® can help you avoid these 10 common estate planning mistakes:

1.  Failure to leave any written documentation of your assets, including a list of your online accounts and passwords

2.  Failure to let family members know where to find important estate planning documents

3.  Failure to name a guardian for minor children or choosing a guardian who lives far away without planning for temporary, local guardianship (solved with a comprehensive Kids Protection Plan®)

4.  Failure to name recipients for your personal possessions

5.  Failure to designate beneficiaries for retirement and other financial accounts

6.  Failure to name secondary beneficiaries

7.  Failure to name alternative trustees or executors

8.  Failure to properly fund or title assets to any trusts you have established

9.  Failure to update your estate plan as life circumstances change

10.  Failure to create an estate plan of any kind and instead leaving it to the court system to decide how your assets will be distributed

If you’d like to learn more about how to avoid common estate planning mistakes that could cost your heirs dearly, call our office today at 1-866-606-6125 to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article

Call our office today and schedule a FREE Family Wealth Planning Session™. Just mention this article by name, and we will waive our customary $750 fee. You literally have nothing to lose…except for all that money you could potentially spend on estate taxes if you don’t call us!  Toll Free at 1-866-606-6125.

Get your copy of Life, Law, & Money, the Free Monthly Newsletter from Ron Hatfield and Hatfield Legal Services.

HLS has locations in Charleston and Fairmont, WV

HLS operates under the trademarked name: Personal Family Lawyer™ for all of your personal and family estate and asset protection planning services.

HLS operates under the trademarked name: Creative Business Lawyer™ for all of your small business formation and asset protection planning services.

Check out Ron’s small business blog at: http://wvsmallbizz.com/

HLS is pleased to announce the roll-out of its new and improved Fresh Start Bankruptcy System™ for clients seeking asset protection and peace of mind from overwhelming debt and overzealous creditors. Go to: http://www.wvdebtrelief.com for more information.

If you are facing foreclosure, repossession, non-stop harassing collection calls, mountains of medical bills, or overwhelming credit card debt and can’t seem to find a way out, get your free copy of Ron’s book: “Time to Breathe Again: The Truth about Bankruptcy and Your Fresh Start!”

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Portability Could Be Ending

19 Apr

If you are currently married with significant assets, you and your spouse have a very limited time to save a lot of money, because after that it’s very likely that Congress will change the rules now in existence and make dying much tougher on your loved ones in terms of federal estate taxes. That is, of course, unless you take this moment . . . right . . . now . . . to do some very creative planning that will lock in what’s called spousal portability.

What is Spousal Portability?

Portability is the ability to pass one’s unused estate tax exemption to his or her spouse upon death. It works like this:

The current estate tax exemption (at least until 2013) is $5 million. That means that if you die with less than $5 million, you pay no estate taxes. Five million is a pretty high number, so this exemption is very favorable. It gets even better. Since each spouse in a marriage has a $5 million exemption, the total exemption available to the couple is $10 million. If one spouse dies and has an estate valued at only $3 million, the unused exemption ($5 million – $3 million = $2 million) “ports” to the surviving spouse. He or she can now leave an estate of up to $7 million without incurring any estate taxes.

Portability Hasn’t Always Been The Rule . . . And It Could Very Easily Go Away

The benefits of estate tax exemption portability are obvious. In short, it means that even with little or no estate tax planning, a couple can very likely get away without paying any federal estate taxes (though without planning, your heirs will have to go through a lengthy and expensive probate process). All of these benefits will likely disappear in 2013, when it looks like the estate tax exemption will be reduced to $1 million and portability could very well disappear.

That means you have two choices if you want to take advantage of current laws: Do some planning that permanently takes advantage of the current $5 million portable exemption before it disappears, or plan for you and your spouse to die before 2013 (not the best option!).

There are a number of estate planning tools that allow for married couples to take advantage of the current estate tax laws without dying, and that’s our preferred method of operation. Of course, if you’re below the threshold of $5 million (or $10 million for married couples), you still need an estate plan that will allow your loved ones to avoid lengthy and expensive probate court proceedings.

A little bit of planning can go a very long way, and there has never been a better time to put a plan in place. It could literally be the difference between being taxed on millions of dollars and letting those dollars pass to your loved ones 100% tax free.

Understanding What You Need

That’s what we do best. Our estate plans are customized to meet your needs. Whether that means setting up a complicated network of trusts to avoid taxes or a more simplified plan designed to avoid probate, we have you covered from A to Z. And we want to get to know you. We share a wonderful sense of community with our clients, and it’s our goal to help you plan today so that nobody has to worry tomorrow.

Call our office today and schedule a FREE Family Wealth Planning Session™. Just mention this article by name, and we will waive our customary $750 fee. You literally have nothing to lose . . . except for all that money you could potentially spend on estate taxes if you don’t call us!

Get your copy of Life, Law, & Money, the Free Monthly Newsletter from Ron Hatfield and Hatfield Legal Services.

HLS has locations in Charleston and Fairmont, WV

HLS operates under the trademarked name: Personal Family Lawyer™ for all of your personal and family estate and asset protection planning services.

HLS operates under the trademarked name: Creative Business Lawyer™ for all of your small business formation and asset protection planning services.

Check out Ron’s small business blog at: http://wvsmallbizz.com/

HLS is pleased to announce the roll-out of its new and improved Fresh Start Bankruptcy System™ for clients seeking asset protection and peace of mind from overwhelming debt and overzealous creditors. Go to: http://www.wvdebtrelief.com for more information.

If you are facing foreclosure, repossession, non-stop harassing collection calls, mountains of medical bills, or overwhelming credit card debt and can’t seem to find a way out, get your free copy of Ron’s book: “Time to Breathe Again: The Truth about Bankruptcy and Your Fresh Start!”

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More About Your Estate Plan

7 Apr

The revocable living trust is the basic building block of most estate plans. It’s the tool that allows your estate to avoid the expense, time consumption, and uncertainty of probate court, and it is the tool that can hold just about any of your assets.

While revocable living trusts are ubiquitous in the world of estate planning, it seems that many people are still confused about them, so we are going to clear up a few commonly asked questions.

What does revocable mean?

It means that you can “undo” the trust at any time. In almost all cases, it also means that you can amend or change the terms of the trust. Revocable trusts are the ultimate in terms of flexibility, so don’t worry if circumstances change down the road and you want to make adjustments to your plan. You can make any changes you want (with legal guidance, of course).

It’s a trust, so who controls it?

You do! Revocable living trusts are also known as grantor trusts. A trust is a grantor trust when the trust creator (“grantor”) is also the trust beneficiary. In the case of revocable living trusts, grantors (often joint grantors, since married couples often form these types of trusts) retain authority over the assets as trustees. In short, that gives them full, unfettered discretion over the management of the trust.

Are assets in a revocable living trust protected from creditors?

Generally speaking, no. In the vast majority of states, spendthrift provisions—the clauses that make trust assets inaccessible to creditors—are not generally enforceable for the grantor of a grantor trust (e.g. revocable living trust). In a few states, however, grantor trusts can gain asset protection benefits. Grantor trusts in these states are termed “domestic asset protection trusts,” and they require grantors to comply with very specific rules.

Now that assets are in the trust, what can I do with them?

That answer is simple. You can do anything you want with the assets! You are the trustee, so management of the trust is in your discretion. If you have cash in your revocable living trust, you can open brokerage accounts and trade stocks, bonds, and other financial products through your trust. You also have the option to hold your cash in regular bank accounts or in overseas accounts. In short, you have full discretion over the investment decisions inside your revocable trust.

One word of caution: If you have rental real estate, you probably need to add another layer to your estate plan. The reason is that rental real estate is sometimes classified as a “risky” asset and, therefore, needs to be insulated from the other assets inside your revocable trust.

Finally, it’s not necessary to put your retirement investments (e.g. 401(k) or IRA accounts) into your revocable living trust. The better course of action is to specify beneficiaries through your retirement plan administrator, which will still allow you to avoid probate.

Pull the trigger

We have a message for you if you haven’t yet created an estate plan for yourself: One day it will be too late. Right now you have the power and the opportunity to make some difficult choices that simply shouldn’t be left to your loved ones. If you are interested in meeting with an estate-planning attorney, please call our office, mention this article by name, and request an appointment. We normally charge $750 for Family Wealth Planning Sessions™, but if you mention this article, we will waive that fee. So don’t wait. Time is yours to use or lose!

Get your copy of Life, Law, & Money, the Free Monthly Newsletter from Ron Hatfield and Hatfield Legal Services.

HLS has locations in Charleston and Fairmont, WV

HLS operates under the trademarked name: Personal Family Lawyer™ for all of your personal and family estate and asset protection planning services.

HLS operates under the trademarked name: Creative Business Lawyer™ for all of your small business formation and asset protection planning services.

Check out Ron’s small business blog at: http://wvsmallbizz.com/

HLS is pleased to announce the roll-out of its new and improved Fresh Start Bankruptcy System™ for clients seeking asset protection and peace of mind from overwhelming debt and overzealous creditors. Go to: http://www.wvdebtrelief.com for more information.

If you are facing foreclosure, repossession, non-stop harassing collection calls, mountains of medical bills, or overwhelming credit card debt and can’t seem to find a way out, get your free copy of Ron’s book: “Time to Breathe Again: The Truth about Bankruptcy and Your Fresh Start!”

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QTIP Trusts

20 Mar

A QTIP trust, or Qualified Terminable Interest Property trust, is a special type of A/B trust. Have I lost you yet?

Not to worry… keep reading!

Let’s start at the beginning. An A/B trust is a marital trust system comprised of two trusts, an A trust and a B trust.  The A trust is typically referred to as the marital trust, though sometimes it is a QTIP trust (just keep that in mind for now). The B trust is the trust that benefits the broader family.

Here’s how it works

  1. A married couple puts the appropriate language to create A/B trusts in their last wills or revocable living trusts.
  2. Assets are divided so that they are owned in relatively even proportions between the spouses. The entire A/B plan falls apart if assets are owned jointly, since then the assets pass directly to surviving spouses without the tax benefits of the A/B system.
  3. When one spouse dies, the entire tax-free portion of his or her estate is transferred to the B trust. This trust can be for the benefit of the surviving spouse, children, grandchildren, and just about anyone else. It is very flexible.
  4. The taxable portion of the deceased spouse’s estate is transferred into the A trust. This is a very strict trust that must benefit only the surviving spouse and no one else. By doing this, the law provides that taxes are deferred on the taxable portion until the surviving spouse passes away. When the surviving spouse dies, if his or estate is taxable—if it is greater than the available exemption—then the excess will be taxed at the applicable rate.

Where the QTIP Comes Into Play

The QTIP comes into play at step 4 above. One can elect to make the A trust a QTIP trust.

Why?

Spouses can give unlimited gifts to one another tax-free, but the law is very strictly construed. It MUST be a gift only between spouses. The QTIP election is an exception to that rule. It allows for the creation of a trust that benefits only the surviving spouse during his or her life but then passes on to other beneficiaries like children or grandchildren.

So when might a QTIP election be wise? Well, how about in a blended family situation where both spouses have children from previous marriages? You want to make sure that your spouse is cared for after you die, but then you want the remaining interest in the trust to go to your children (or to whomever else you want) rather than just to your stepchildren.

QTIP elections are the primary reason for using A/B trusts at all, at least until 2013 when the estate tax laws are likely to change and the portability of the estate tax exemption could very well go away.

Let us guide you

This is all very complicated stuff. There’s no way to explain it all in the course of one short article, but then again . . . we don’t need to, because we are here to meet with you in person, and we would very much like an opportunity to do that. Please call our offices and mention this article when scheduling an appointment, and we’ll waive the customary $750 that we charge for Family Wealth Planning Sessions™. Don’t wait. Our calendar fills up very quickly these days!

Get your copy of Life, Law, & Money, the Free Monthly Newsletter from Ron Hatfield and Hatfield Legal Services.

HLS has locations in Charleston and Fairmont, WV

HLS operates under the trademarked name: Personal Family Lawyer™ for all of your personal and family estate and asset protection planning services.

HLS operates under the trademarked name: Creative Business Lawyer™ for all of your small business formation and asset protection planning services.

Check out Ron’s small business blog at: http://wvsmallbizz.com/

HLS is pleased to announce the roll-out of its new and improved Fresh Start Bankruptcy System™ for clients seeking asset protection and peace of mind from overwhelming debt and overzealous creditors. Go to: http://www.wvdebtrelief.com for more information.

If you are facing foreclosure, repossession, non-stop harassing collection calls, mountains of medical bills, or overwhelming credit card debt and can’t seem to find a way out, get your free copy of Ron’s book: “Time to Breathe Again: The Truth about Bankruptcy and Your Fresh Start!”

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Creating Liabilities Out of Love

11 Mar

Creating Liabilities Out of Love

There are some pretty basic reasons to carry life insurance. One of the top reasons we hear is that clients simply want to make sure that their loved ones will be cared for if the client dies other than “as planned.”

That’s certainly fair enough. We all want to make sure that our spouses and children have their financial needs met. With respect to children, they will have financial needs until they are out of college and on their own career paths. Spouses have a range of varying needs, depending on whether or not they work and whether or not they are the primary breadwinners in the family.

It Should Change At Retirement

In theory, the need for life insurance diminishes and should, in theory, disappear at retirement. The reason is that by the time you retire, your children should have their own careers, and you and your spouse should have enough money to live the rest of your lives in relative comfort. So the need for life insurance certainly diminishes over time (even though premiums often increase later in life).

The fact that the need for insurance diminishes over time does absolutely nothing to negate the fact that you likely need life insurance right now. So what is the point that we’re trying to make?

Ownership of your policy matters . . . tremendously.

What we’ve been talking about is insurance on your life. The question, however, is who should own the insurance policy on your life?

Well, who do you trust not to kill you for . . . wait, that’s not where we’re going with this.

Ownership of your life insurance policy matters because if you own the policy yourself, proceeds from the insurance will be included in your estate when you die. Yes, this is true even if you’ve designated a beneficiary other than your estate.

So in reality, something bought out of love (life insurance) can create a huge potential liability for your heirs, since tax rates on estates are some of the highest around.

And That Could Make Your Estate Taxable

On occasion, life insurance policies are large enough to move an estate from non-taxable status to taxable status. That’s simply a waste of your family’s dollars, because some very simple planning can solve the tax problem completely.

There are two simple ways to remove life insurance proceeds from your estate:

  1. Totally relinquish control and ownership of the policy, or
  2. Create a life insurance trust to hold the policy.

In reality, these two solutions are really the same thing. They involve you giving up the rights associated with ownership of insurance policies on your life, but the result is that the proceeds from insurance will not be included in your estate, and as a result, they will not be taxable in any manner whatsoever.

Setting Up a Life Insurance Trust

It’s not difficult for you to set up life insurance trusts – simply call us. If you have questions regarding whether or not your existing policies will move your estate into the taxable bracket and you’d like to do something about it, contact our offices. We normally charge $750 for Family Wealth Planning Sessions™, but if you mention this article when you call (and if we still have space on our calendar), then we will meet with you for free.

Get your copy of Life, Law, & Money, the Free Monthly Newsletter from Ron Hatfield and Hatfield Legal Services.

HLS has locations in Charleston and Fairmont, WV

HLS operates under the trademarked name: Personal Family Lawyer™ for all of your personal and family estate and asset protection planning services.

HLS operates under the trademarked name: Creative Business Lawyer™ for all of your small business formation and asset protection planning services.

Check out Ron’s small business blog at: http://wvsmallbizz.com/

HLS is pleased to announce the roll-out of its new and improved Fresh Start Bankruptcy System™ for clients seeking asset protection and peace of mind from overwhelming debt and overzealous creditors. Go to: http://www.wvdebtrelief.com for more information.

If you are facing foreclosure, repossession, non-stop harassing collection calls, mountains of medical bills, or overwhelming credit card debt and can’t seem to find a way out, get your free copy of Ron’s book: “Time to Breathe Again: The Truth about Bankruptcy and Your Fresh Start!”

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