San Antonio, TX Estate Planning

Alzheimer's Is a Potential Future Problem - Are You Ready for It?

Waiting to create an estate plan could result in significant out-of-pocket costs at the end of life. Or even worse, it could result in a person with Alzheimer’s disease being subject to the will of the courts. With the number of individuals suffering from Alzheimer’s skyrocketing, there is no time to wait to get your affairs in order.

What will you do if you develop Alzheimer's? This unfortunate disease gets to the core of who we think we are. People with the disease often forget their friends and family members.

Anyone who has ever known someone with Alzheimer's knows how frustrating this disease can be for the patients and their loved ones. A recent article in UT San Diego, titled "Legal, financial planning for Alzheimer's patients," details some steps people can take to be prepared should they or their loved ones ever get the disease.

The key thing to know is that you need to prepare ahead of time.

People with dementia normally lack the capacity to sign legal documents. That means you cannot make plans after you get Alzheimer's. If you wait, then a court might be required to make plans for you.

The basic documents you need to prepare in advance (i.e., right now) include a general durable power of attorney and a health care power of attorney. These two documents allow someone of your own choosing to handle your financial and health care matters when you are no longer able to do so.

While you are at it, make sure you have an up-to-date estate plan (i.e., a last will and testament, or revocable living trust), to provide for the efficient transfer of your assets upon your death. Your beneficiary designations should be reviewed, too.

If you or your loved ones have not yet planned for the possibility of Alzheimer's and the costs associated with long-term care, click here to read more about preparing for long-term care.

Reference: UT San Diego (October 23, 2014) "Legal, financial planning for Alzheimer's patients"

Timing Is Everything - Have Your Estate Planning Talks before It's Too Late

Gresham advocates laying the groundwork for the estate-planning talk with a few separately held, lead-up discussions on family values and history. After all, she said, “You want to build a sense of bonding and family before you introduce material that could be emotionally loaded.”

When is the right time to discuss your estate plans with your loved ones?

I think most people would agree that talking to loved ones about death and dying is a delicate matter. People do not even want to discuss anything related to their own deaths, including discussing the contents of their estate plans. Unfortunately, as reported by Market Watch,in an article titled "Estate: Planning: It's never too early to start," not communicating your estate plan often leads to problems later on.

The biggest problem, on the other hand, is that when families do not know what to do, they often fight. If your family does not know what you want them to do, each family member may have his or her own ideas about what you would want.

Sometimes, these fights end up in court.

There is another benefit to discussing estate planning with your family. It often leads to better problem solving in other areas, such as elder care.

As the original article says, experts suggest that you should begin talking to your children about your estate plan when the children are in their 20s. They are old enough to know at that point. If your children are already older, however, talk to them as soon as you can.

You can never talk to your family about your estate plan too soon. However, if you wait too long, it will be too late. It's never too early to protect you and your heirs. Click here to read more about what is involved with setting up your estate plan.

Reference: Market Watch (October 23, 2014) "Estate Planning: It's never too early to start"

Choosing Guardians: Will You Hurt Someone's Feelings?

My husband and I have decided we would want our kids to go to my brother and his family, who live in another city, a 10-hour drive away. We think my brother and his wife would raise them more how we would want them to be raised, especially when it comes to the big decisions.

What can we say to my husband’s brother and his wife that won’t hurt their feelings? Do we even have to say anything?

Parents do not want to contemplate not being around to rear their own children. They also do not want to choose between relatives to raise the children. It can feel like those relatives who are not chosen are being rejected and insulted. Parents do not want to leave those relatives with lingering hurt feelings. But choosing guardians is an extremely important task, and one that should not be avoided.

The Washington Post, in a recent article titled "Carolyn Hax: Should couple explain to kin their will's directive on guardianship?," has a discussion over whether relatives who are not chosen as the potential guardian should be told that and the reasoning why.

It is an interesting discussion.

On the one hand, not telling them could lead to family feuds and hurt feelings when and if they later find out. On the other hand, telling them could lead to hurt feelings and feuds now. This is a situation where there is not necessarily a right answer that is generally applicable.

What to do depends on the individuals involved.

The article does make one very important point, however. Anyone who is chosen to be a guardian of minor children should be told beforehand.

Before making an estate plan that nominates someone for guardianship of minor children, it is important to make sure that the potential guardian is willing to do the job. An experienced estate planning attorney can assist you every step of the way.

If you have young children and want to ensure their utmost care if something were to happen to your or a spouse, contact us to receive legal advice for protecting your children and nominating guardians.

Reference: The Washington Post (October 29, 2014) "Carolyn Hax: Should couple explain to kin their will's directive on guardianship?"

What Is an Ethical Will and Do You Need One?

These days, ethical wills are nonbinding documents that are increasingly seen as important legacy-building ingredients, say experts, because they can convey a person’s deep inner values and beliefs, even helping soothe ruffled feathers when dispensing family assets.

If you want to pass down more than just your assets, you may want to consider an "ethical will" in your estate planning to-dos.

Upon hearing the term "ethical will" your first thought might be that it describes a specific ethical way to draft your legal will. Perhaps it could be a way to divide your property ethically between different people. Perhaps it could refer to giving a certain percentage of your estate to charities or religious institutions.

An ethical will, however, is actually an ancient Jewish tradition. It refers to a separate document that passes on wisdom and life lessons to future generations.

As The New York Timesreports, in an article titled "The Ethical Will, an Ancient Concept, Is Revamped for the Tech Age," the ancient idea of an ethical will is getting new life.

Increasingly people are using technology to pass wisdom onto future generations. They are creating videos and slideshows, for example.

Ethical wills give the dying an opportunity to teach younger people about what they have learned during their lives. They also give loved ones something that can be cherished for many years.

Not everyone will want to make an ethical will. Those who are interested, however, might want to think about how technology can assist them in the process.

An estate plan does not have to be pile of legal documents. It can also include other things, such as an ethical will.

For the creation of your ethical will and to obtain legal guidance please contact us.

Reference: The New York Times (October 31, 2014) The Ethical Will, an Ancient Concept, Is Revamped for the Tech Age"

Estate Taxes: Federal Vs. State

In the past, most people didn't have to worry about state estate taxes. Federal law provided an estate tax credit that reduced the federal tax bill by the amount paid in state estate taxes. In 2005, though, the credit was repealed, leaving big gaps between federal and state estate tax thresholds in the states that still had estate taxes on the books. The 2013 law that lifted the federal estate tax threshold to more than $5 million (adjusted for inflation) ensured that the tax remains a nonissue for the vast majority of taxpayers. But state estate taxes remain a real threat to some family legacies.

Are you affected by the estate tax? And not just the federal estate tax ... your state may have its own estate tax you should be aware.

The federal estate tax is a big issue in every federal election cycle. People disagree greatly over what the estate tax exemption limit should be, what the estate tax rate should be and whether there should even be an estate tax at all.

Quite often accusations of class warfare are thrown around by candidates and their supporters. However, as the current federal estate tax exemption is $5 million (adjusted to $5.34 million for inflation in 2014) the reality is that it effects a very small percentage of American families.

Many states have estate tax exemptions far lower than the federal exemption. As a consequence, these state taxes effect more people.

Until 2005, a federal credit was given for any state estate tax paid, but that is no longer the case. That means that some families are paying estate taxes to both the federal and state governments on the same money.

A recent article in Kiplinger,titled "States Are Lowering Their Estate Taxes to Lure Retirees," reports that four states will lower their estate taxes in 2015 in an effort to bring wealthy families into their states.

When planning your estate it is important to remember the consequences of any estate taxes in your state. This is particularly key if you move to another state for retirement.

Do your homework and consult an experienced estate planning attorney in the new state to discuss any state estate taxes and get a fresh review of your estate planning documents while you are at it.

If you live in Texas or just moved to Texas contact us to find out how we can help you navigate the Texas estate taxes.

Reference: Kiplinger (October 31, 2014) "States Are Lowering Their Estate Taxes to Lure Retirees"

IRS Increases Gift Tax Exemption for Next Year

As many estate planners anticipated, the Internal Revenue Service has raised the limit on tax-free transfers during life or at death. Starting in 2015 that amount, known as the basic exclusion, will go up to $5.43 million per person, from $5.34 million this year.

In the spirit of year-end planning, there will be a change in the gift tax exemption for 2015. Have you heard the news?

A single person can currently give $5.34 million total to other people tax-free. After that, any gifts are taxed.

Forbes, in a recent article titled "IRS Raises Limit on Tax-Free Lifetime Gifts for 2015," reports that this limit will increase to $5.43 million in 2015.

Gifting is an important part of estate planning for wealthy people. It provides a way to give money to family members before you pass away and lower the total value of an estate to minimize the impact of the estate tax.

This gift tax change will allow people who have already reached the exemption limit to give a little more, perhaps to a relative who was not yet born when the lifetime limit was previously reached.

The extra $90,000 could also be used to give to other relatives who might be in need. While it might not seem like very much, $90,000 could do a lot of good for one individual.

Because of this exemption increase, now would be a good time to consult an experienced estate planning attorney to revisit your gifting plan.

At the same time you could talk to the attorney to determine whether any other portion of your estate plan needs to be revised to account for other laws that might have changed.

For more information about estate planning in San Antonio, Texas and the surrounding areas click here to contact us.

Reference: Forbes (October 30, 2014) "IRS Raises Limit on Tax-Free Lifetime Gifts for 2015"

How to Manage Unequal Inheritances

Of course, in most families, the split is an equal one, giving adult siblings no reason to quibble over the disposition of cash and other assets. Yet some parents decide to single out one or more children for a bigger, smaller or differently structured inheritance. Even if the reasoning is valid — perhaps one child has special needs, or offered the parents much more care than other siblings did — the resulting powder keg can put financial advisors in a tricky position.

Will you split your estate equally between your children? If not, how will you handle the potential emotions that could arise from unequal inheritances?

For most people the idea that parents would want to leave more of an estate to one child than another conjures up the idea that the parents do not love one child as much as the other. Estate planning attorneys, however, know that is rarely the case.

There are many valid reasons why parents would leave more to one child than another.

In some cases, the parents have given one child more money already to help the child out when needed. In other cases, one of the children has special needs and needs more money to take care of him or herself. Another common reason is that one child might have a serious drug addiction and access to more money could just make the addiction worse.

In all of these cases, the problem parents have is how to leave unequal inheritances without destroying any familial bonds between the children.

Financial Planning, in an article titled "Family Drama: 'But She Got More!," provides pointers parents should consider to minimize the chances of squabbling children.

One of their best suggestions is to use a trust instead of a will.

Because trusts are private documents that do not have to go through probate, it is much more difficult to challenge them. That makes it difficult for any siblings with hurt feelings to use the court system to fight it out in public.

If you have a good reason for leaving unequal inheritances to your children, talk to your estate planning attorney about the best way to do so. Trusts are just one way, but your attorney likely will have other options and suggestions for you.

Reference: Financial Planning (October 27, 2014) "Family Drama: 'But She Got More!"

Suggested Key Words: Estate Planning, Unequal Inheritances