The 2018 Tax Law Changes & Your Estate Plans

The 2018 Tax Law Changes & Your Estate Plans

The updated 2018 tax bill signed into law in December has many people worried about how the changes will impact them. Among a host of changes, the bill increases the standard deduction, expands the Child Tax Credit, removes the “marriage penalty” for most individuals, limits the deduction for state and local taxes, and changes the rules on deducting mortgage interest, charitable donations, and medical expenses. The new tax bill also lowers tax rates for most corporations and for many individuals, and changes how pass-through income earned by owners of sole proprietorships, LLCs, and S corporations, is handled (different limits apply to professional services business owners). In terms of estate planning, the estate tax in 2017 was set at $5.6 million (lifetime limit) for individuals and $11.2 million for married couples; under the new tax law, this has doubled to $11.2 for individuals and $22.4 million for married couples. A much smaller number of people will now pay estate tax on money and assets they inherit. By contrast, those high wealth individuals and couples may wish to pursue aggressive planning opportunities by making tax-free gifts to heirs now in the event the law ever sunsets in the future. If you had previously structured your estate plans to minimize taxes paid by your heirs due to estate tax, now would be a good time to sit down with your estate planning attorney and review your plans. It may be possible to adjust or eliminate counterproductive measures included in your old estate plan based on the new tax laws. For example, a typical estate plan for a married couple whose estate exceeded...
My Child with Special Needs is Turning 18 – Now What?

My Child with Special Needs is Turning 18 – Now What?

As children approach adulthood, parents may have many different reactions, from stress about paying for college, to excitement for their child’s new adventure, to a plan to buy a smaller house once junior moves out. For parents of children with special needs, the legal transition from child to adult often adds a layer of complexity and worry to the equation. When a child turns 18, he or she legally becomes an adult (or emancipated) in the eyes of law. At that point, you, as a parent, lose your legal rights to make decisions for your child. You no longer have the right to your child’s medical records; you cannot see school grades without permission from your child; your child may now sign contracts for which he/she is legally responsible; and there are tax ramifications in giving money to an adult child for their support. If you have a child with special needs who will continue to need your support after reaching adulthood, it is critical you plan ahead to ensure you do not encounter problems. We recommend starting the process six to 12 months prior to your child reaching adulthood. The severity of your child’s impairment will dictate the actions you may need to take. It is also important to consider how your actions will impact your adult child’s eligibility for public assistance. Here are some options available to you: A power of attorney is the simplest option available to allow you to continue to make financial decisions on behalf of your child. If your child does not have a significant cognitive impairment and is fully able to understand...
5 Estate Planning Myths (and Why You Need to Know the Truth)

5 Estate Planning Myths (and Why You Need to Know the Truth)

In recognition of National Estate Planning Awareness Week (October 16-22), we are sharing 5 myths we frequently hear about estate planning. These myths often prevent people from taking action to protect their assets and ensure their loved ones receive the benefits of careful stewardship. Which of these myths do you believe? Myth #1: I only need an estate plan if I am rich. Truth: Almost everyone can benefit from estate planning. Estate planning allows you to determine how your estate is managed during your lifetime and how it is distributed upon your death. It also allows you to decide who manages those things for you. When you meet with an estate planning attorney, some of the things you may discuss include: Guardians for your minor children or an adult child (or parent) with special needs. Concerns about your assets or beneficiaries. An appropriate executor for your estate. Advance directives and healthcare power of attorney: These documents take estate planning a step further by allowing you to designate someone to represent you and carry out your wishes regarding health treatment should you be unable to make those decisions. Ownership of any businesses and how those will be handled upon your death. Is there a succession plan in place? Questions you may have about your online presence after you are gone. Whether a trust makes sense. Even if you are young and still have limited assets, estate planning is a good idea to make sure things are handled the way you want them to be. Myth #2: I should start with my estate planning in my 50’s or 60’s when I...
What Are My Responsibilities Under a Power of Attorney?

What Are My Responsibilities Under a Power of Attorney?

If you have been named as an agent for a loved one under a power of attorney, you have some new legal responsibilities. A power of attorney is a legal document naming another party as an agent – someone who has the legal right to make decisions about money and property on behalf of the person who executed the power of attorney. This agent is also called a fiduciary. There are several types of powers of attorney, ranging from those covering a single transaction, i.e., a wife might sign residential closing documents on behalf of a husband who is unable to attend closing, to an elderly parent worried about becoming unable to care for him or herself. Each power of attorney should specify when the document goes into effect and what responsibilities are covered under the document. If your father (for example) has named you as his agent, and he has reached the point where he is not able to make decisions by himself any longer, it becomes your job to act on his behalf. You have four primary responsibilities under the power of attorney: You must act in your father’s best interests. The power of attorney may outline exactly what role he wants you to play. Make sure you read it carefully. If your father is still able to help, it is a good idea to involve him in decision-making. You must maintain your father’s money and property separately from yours. You do not want there to be any question about your intentions or actions. Money belonging to him should go into accounts in his name, and expenses...
Should I Write Out My Own Will?

Should I Write Out My Own Will?

By David Inabinett, Attorney Clients often ask, “Is it ‘legal’ to write up my own will” or “can I just write in changes to my will?” While a handwritten Will is recognized as “legal” in North Carolina, a June 2017 case decided by the NC Court of Appeals illustrates why that may not be such a good idea. The Matter of the Will of James Paul Allen In The Matter of the Will of James Paul Allen, Mr. Allen had a valid typewritten signed and properly attested will leaving in Article IV a life estate or “lifetime rights” in certain lands to an individual with full ownership in those lands passing to two other people upon the later death of the person given the lifetime right. However, Mr. Allen apparently wrote in the margins of that Will his own handwritten notes saying, “Beginning 7-7-03 do not honor Article IV Void Article IV James Paul Allen.” A dispute arose as to whether there was any legal effect of those handwritten notes since those effectively omitted the life estate and gave all of the land fully to the individual who had previously only been given a lifetime right. The Rules for Handwritten Wills A hand written or “holographic” will must be: Written entirely in the handwriting of the deceased but when all the words appearing on the paper in the handwriting of the deceased are sufficient to constitute a valid holographic will, the fact that other words or printed matter appear thereon not in the handwriting of the deceased, and not affecting the meaning of the words in such handwriting, shall...