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Monday, December 28, 2015

Wise Ways to Give Holiday Money

What are some of the tax benefits of holiday giving?

Giving especially generous monetary gifts over the holidays can be helpful to the giver as well as the receiver, particularly when it comes to taxes. By giving large monetary gifts, the giver may avoid paying taxes on a block of stock or reduce a future high estate tax bill.

Possible Hazards of Gift-Giving

Profitable though it may be, emotionally and financially, to reward your children and grandchildren while you're all together to enjoy the process, there are often inherent dangers in the giving of large gifts. In many cases, the receipt of a large amount of money can be a corruptive force. If an immature person suddenly has a small fortune in his or her hands, it may result in a foolish, frivolous, or even hazardous expenditure. Young people, unprepared to invest wisely, may buy a very expensive piece of unnecessary equipment, or may even use the money to buy drugs.

Protecting Recipients from Themselves

Because of the hazards mentioned, many givers want to maintain some control over how their money will be used. There are several ways to protect both the recipient and the money.

These include:

• Setting up a custodial account for a child under the age of 18 or 21 (depending on the state) under the Uniform Gift to Minors Act or Uniform Transfer to Minors Act
• Establishing one of various types of irrevocable trust
• Setting up a trust for a married child in that child's name alone, to protect assets in case of a divorce
• Establishing a 529 Plan to help with a college education --a 529 Plan is free of federal, and sometimes state, tax when used for approved college expenses
• Making five annual tax-free gifts of $14,000 gifts to an individual
• Making tax-free payments (even over $14,000 per year) directly to a college or medical provider
• Making a large down payment for the home of another (but in this case the $14,000 rule still applies)

Things to Remember

In giving sizable gifts, it is important to be aware that:

• It's a good idea to give the gift as much as a year before any purchase is made
• You should file proper gift-tax returns, reporting the sum to the IRS as a gift
• If you give stock, the recipient will have to pay tax on all gains over original price
• The tax obligation should be taken on by the person in the lower tax-bracket, whether giver or recipient
• If the gift involves a money-losing investment, it's best to sell it first and claim the tax loss yourself

In all matters of inheritance and tax, especially when you're dealing with a large estate, it is essential to engage the services of a knowledgeable, experienced estate planning attorney.


Monday, December 14, 2015

Estate Planning in the Digital Age

Why is it important to consider computer information when engaging in estate planning?


In this age of technological acceleration, when most people are constantly increasing the daily use of their computers to include banking, personal and business record-keeping, shopping and, medical and tax information, it is essential to include conversations about computer data in estate planning consultations. Access to computer information is most often protected by not one, but a multitude, of passwords. Without finding a reliable, safe way to pass along knowledge of these passwords to your heirs, your most careful inheritance plans can be thwarted.

A case that highlights the problem occurred in the United Kingdom last year when two brothers had to fight Apple, Inc. in order to get their full inheritance. Though one of the brothers had inherited his mother's iPad, he did not have access to her password. The documents he did have -- death certificate, Will, an attorney's letter stating he was his mother's co-executor -- were all considered insufficient evidence of his mother's intention to provide him with access to her iPad. Fortunately for these brothers, Apple finally relented, saving them the expense and inconvenience of obtaining a court order. Nonetheless, this case demonstrates the problems inherent in ignoring the digital aspects of estate planning.

Managing electronically stored finances is currently vital because such digital storage is so widespread. As some estate planners have noted, a decade ago, even 5 years ago, the issue was not as crucial as it is now, and it is becoming more relevant every day. Without providing your heirs with user identification and passwords, you will certainly delay the inheritance process and may precipitate a situation in which probate is required.

Not only can the absence of password and ID information prevent financial management of a deceased monies and documents, it can prevent access to intellectual property, such as personal writings, photographs, artwork, architectural or engineering plans.

For all of these reasons, clients must, when consulting with their estate planning attorneys, go over any and all matters that they routinely handle on their computers and make sure to record important access information. What complicates this process is that such information is not static. Because people frequently change their passwords, records must be regularly updated.

When planning your estate, it is essential to have a competent estate planning attorney at your side, one who is familiar with ever-changing, laws and computer systems. Doing this will give you peace of mind that your loved ones won't have to suffer added stress at the time of your passing and that the inheritance you worked so hard to leave them will not become part of the billions of dollars of unclaimed assets that are annually turned over to the state.

Monday, November 30, 2015

Five Common Reasons a Will Might Be Invalid

There are several reasons that a will may prove invalid. It is important for testators to be aware of these pitfalls in order to avoid them.

Improper Execution

The requirements vary from state to state, but most states require a valid will to be witnessed by two people not named in the will. Some jurisdictions require the document to be notarized as well. Although these restrictions may be relaxed if the will is holographic (handwritten), it is best to satisfy these requirements to ensure that the testamentary document will be honored by the probate court.

Lack of Testamentary Capacity

Anyone over the age of 18 is presumed to understand what a will is. At the end of life, individuals are often not in the best state of mind. If court finds that an individual is suffering from dementia, is under the influence of drugs or alcohol, or is incapable of understanding the document being executed for some other reason, the court may invalidate the will on the grounds that the individual does  not have testamentary capacity.

Replacement by a Later Will

Whenever an individual writes a new will, it invalidates all wills made previously. This means that a will might be believed to be valid for months until a more recently executed document surfaces. The newest will always takes precedence, controlling how assets should be distributed.

Lack of Required Content

Every will is required to contain certain provisions to carry out its purpose. These provisions, ensure that the testator understands the reason for executing the document.  Although these provisions vary from state to  state, some are common to all jurisdictions. It should be clear that the document is intended to be a will. The document  should demonstrate an individual’s wishes in regard to what should happen to his or her property after death. A proper will should also include a provision to appoint an executor to act as an agent for the estate and enforce the terms of the will. If the document  lacks any of these provisions, the will may be declared invalid. 

Undue influence or fraud

A will that was executed under undue influence, coercion or fraud will be invalidated by a court. If a will has been presented to a testator for a signature as if it were any other document, like a power of attorney or a business contract, the court will find that the will was fraudulently obtained and will not honor it. If an individual providing end of life care with exclusive access to the testator threatens to stop care unless a will is modified, that modification is considered to be the result of undue influence and the court will not accept it.


Monday, November 16, 2015

Glossary of Estate Planning Terms

Will - a written document specifying a person’s wishes concerning his or her property distribution upon his or her death.

In order to be enforced by a court of law, a will must be signed in accordance with the applicable wills act.

Testator/Testatrix - the person who signs the will.

Heirs - beneficiaries of an estate.

Executor/Executrix - the individual given authority by the testator to make decisions to put the testator’s written directions into effect.

Once the will is entered into probate, the executor’s signature is equivalent to the testator’s. The executor has a legal duty to the heirs of the estate to act in the best interest of the estate, and may collect a fee for performing such service.

Administrator/Administratrix - the person who assumes the role of the executor when a person dies without a will (intestate).

The Administrator must apply with the local probate office and may be required to provide a bond to be held in escrow as collateral for control over the assets of the estate.

Codicil - an amendment to a will.

In order to be valid, a codicil must comply with all the requirements of the applicable wills act.

Holographic Will- a handwritten will. 

Holographic wills are often exempt from requirements of the applicable wills act.

Bequest - a gift given by the testator to his or her heirs through a will.

Residual Estate - the balance of a testator’s belongings after debts have been paid and specific bequests have been distributed. 

Intestate - not having signed a will before one dies; a person who dies without having signed a will.

Life Estate - a bequest that gives an heir the right to have exclusive use of a property for the remainder of his or her life, but without the power to transfer such property upon the death of that heir.

The property will transfer to the heirs of the residual estate after the death of the beneficiary of the life estate.

Per stirpes - a Latin phrase precisely translated as “by the branch” meaning that, if an heir named in the will dies before the testator, that heir’s share will be divided equally among that beneficiary’s own heirs.

 An alternative to per capita, described below.

Per capita - a Latin phrase precisely translated as “by the head” meaning that, if an heir named in the will dies before the testator, that heir’s share will be divided among the testator’s remaining heirs.

 An alternative to per stirpes, described above.

While it is a good idea to have a basic understanding of fundamental estate planning vocabulary, this cannot serve as a substitute for the services of an experienced attorney.


Saturday, November 7, 2015

Why Choosing an Executor is One of the Most Important Decisions in the Estate Planning Process

Should I appoint all four of my children to serve as co-executors?

When a person dies, it becomes necessary to begin the estate administration process. For those dying with a Last Will and Testament, the terms of this document dictate not only the distribution of the estate, but the person(s) responsible for ensuring that all debts are paid, properties are sold, and beneficiaries are paid. In sum, it’s a big job, not for the faint of heart.

Choosing an executor is an extremely important component of the estate planning process. When it comes time to make this decision, testators often assume that the best course of action is to simply appoint all of their children, who will then work together to get the job done in a timely and efficient manner. In some cases, this may be the best arrangement. More often than not, , however, appointing a group of individuals – particularly the children of the decedent– to handle the administration of the estate leads to conflicts, bickering, and tension.

When choosing an executor, it is often advised to select one person who possesses a responsible nature, is somewhat savvy financially and has the ability to complete the task at hand. When selecting an executor, consider each candidate’s place of residence, as it is often difficult to administer an estate from several states away. Likewise, consider whether the candidate is responsible, punctual and trustworthy – as these are all necessary qualities for the proper administration of an estate.

After selecting an executor, it is usually a good idea to select an alternate person to take over in the event the first executor is unable, unwilling, or predeceases the testator. In any event, all executors should be notified of their role, and should be willing to take on the responsibility from the outset.


Monday, October 26, 2015

8 Things to Consider When Selecting a Caregiver for Your Senior Parent

As a child of a senior citizen, you are faced with many choices in helping to care for your parent. You want the very best care for your mother or father, but you also have to take into consideration your personal needs, family obligations and finances.

When choosing a caregiver for a loved one, there are a number of things to take into consideration.

  1. Time. Do you require part- or full-time care for your parent? Are you looking for a caregiver to come into your home? Will your parent live with the caregiver or will you put your parent into a senior care facility? According to the National Alliance for Caregiving, 58 percent of care recipients live in their own home and 20 percent live with the caregiver. You should consider your current arrangement but also take time to identify some alternatives in the event that the requirements of care should change in the future.
  2. Family ties. If you have siblings, they probably want to be involved in the decision of your parent’s care. If you have a sibling who lives far away, sharing in the care responsibilities or decision-making process may prove to be a challenge. It’s important that you open up the lines of communication with your parents and your siblings so everyone is aware and in agreement about the best course of care.
  3. Specialized care. Some caregivers and care facilities specialize in specific conditions or treatments. For instance, there are special residences for those with Alzheimer’s and others for those suffering from various types of cancer. If your parent suffers from a disease or physical ailment, you may want to take this into consideration during the selection process
  4. Social interaction. Many seniors fear that caregivers or care facilities will be isolating, limiting their social interaction with friends and loved ones. It’s important to keep this in mind throughout the process and identify the activities that he or she may enjoy such as playing games, exercising or cooking. Make sure to inquire about the caregiver’s ability to allow social interaction. Someone who is able to accommodate your parent’s individual preferences or cultural activities will likely be a better fit for your mother or father.
  5. Credentials. Obviously, it is important to make sure that the person or team who cares for your parent has the required credentials. Run background checks and look at facility reviews to ensure you are dealing with licensed, accredited individuals. You may choose to run an independent background check or check references for added peace of mind.
  6. Scope of care. If you are looking for a live-in caregiver, that person is responsible for more than just keeping an eye on your mother or father—he or she may be responsible for preparing meals, distributing medication, transporting your parent, or managing the home. Facilities typically have multidisciplinary personnel to care for residents, but an individual will likely need to complete a variety of tasks and have a broad skill set to do it all.
  7. Money.Talk to your parent about the financial arrangements that he or she may have in place. If this isn’t an option, you will likely need to discuss the options with your siblings or your parent’s lawyer—or check your mother’s or father’s estate plan—to find out more about available assets and how to make financial choices pertaining to your parent’s care.
  8. Prepare. Upon meeting the prospective caregiver or visiting a facility, it is important to have questions prepared ahead of time so you can gather all of the information necessary to make an informed choice. Finally, be prepared to listen to your parent’s concerns or observations so you can consider their input in the decision. If he or she is able, they will likely want to make the choice themselves.

Choosing a caregiver for your parent is an important decision that weighs heavily on most adult children but with the right planning and guidance, you can make the best choice for your family. Once you find the right person, make sure to follow up as care continues and to check in with your mother or father to ensure the caregiver is the perfect fit.

 


Thursday, October 22, 2015

Estate Planning Lawyer to Take Plea: Victims Say She Stole Millions

Why is it important to choose a fully reputable estate planning lawyer?

Sarah Laux is an estate planning attorney from Wisconsin who has been accused in a 33-count criminal indictment of stealing $3 million from two of her wealthy older clients. Her indictment includes five counts, including fraud, money laundering and filing a false tax return, which could have resulted in a four-year prison term. It now appears that she will plead guilty to all five counts in exchange for cooperating in the attempt to restore as much of her clients' money as possible from her remaining assets.

Apparently, until her downfall, Laux was successful in luring older wealthy clients with seminars at which she provided food and drinks. Her background did not raise anyone's suspicions. After earning her law degree from Marquette University in 2004, she worked for her father's small law firm until 2009. Though the details have yet to be uncovered, she ended up owing eight of her clients $626,000. This information came to light when she admitted it in a petition seeking to give up her law license.

It is unknown how she met her first victim, an old-money client from Milwaukee from whose estate she managed to divert approximately $1 million. In her most lucrative crime, she is accused of taking $2 million from a couple whose son says she persuaded them to invest in particular funds, but never invested the money she received from them. Their claimed loss is substantiated in federal and state insurance commission records.

Such outrageous fraudulent behavior, though rare among estate planning lawyers, does occur and can be financially and emotionally devastating to its victims. This is why it is extremely important that you trust your estate only to a well-established attorney who not only has strong credentials, but who also has a well-earned reputation for honesty and dependability.


Monday, October 19, 2015

Start-up Business: When is the Best Time to Consult with a Lawyer?

If you are starting a new business venture, it is vital that you assemble your team of advisors immediately. Many entrepreneurs are short on cash during the start-up phase and forego hiring of legal counsel or other professional advisors in order to preserve capital for other aspects of the business venture. But this approach is usually penny-wise and pound-foolish. Especially since many small business start-up lawyers are a lot more affordable than you think.

Your attorney can be an invaluable member of your team of advisors. Business attorneys have seen first-hand the mistakes entrepreneurs make and know how to structure transactions to avoid them. It is best to consult with an attorney early on in the process, before you formally organize the company because the foundational issues are critical to the long-term success of your new venture.

There are many issues to be considered; and the earlier you do so, the better. You’ll want to ensure you choose the most advantageous business structure. From C-Corporations to S-Corporations to Limited Liability Companies and other hybrid entities, you have many options. They must all be carefully considered, in light of your particular situation. How many owners and who they are, liability issues, licensing restrictions, and anticipated profits all play a role in determining what type of entity affords you the most asset protection, and costs you the least in taxes.

During this foundational process, your legal advisors can also help you determine equity splits, which can save you headaches down the road. For example, it is generally advisable to avoid dividing business ownership according to percentages. Doing so can create problems later if additional investors need to be brought in. However, if the appropriate number of shares are authorized at the outset, and issued according to a plan for long-term company growth, you ensure your company can access capital in the future.

Vesting schedules can also be established before stock is issued to the company founders, enabling the initial shareholders to obtain full ownership rights to their shares over a period of time. However, this may not be advantageous in every situation, and must be carefully considered.

Even after your initial formation is complete, there are still a number of legal issues that require your attention. There are agreements to negotiate which may include leases, employment contracts, independent contractor agreements, customer purchase or service agreements and many more.

Steps should be taken early on to protect your intellectual property. Depending on the nature of your business, you may need to obtain and enforce patents and copyrights. If your company has a “brand” you will likely want to obtain a federal or state trademark to protect it for your own exclusive use.

The federal and state employment regulations can be onerous. From verboten interview questions to potential allegations of discriminatory hiring practices, a start-up lawyer can help you avoid the pitfalls and ensure you have a happy, productive work force.

Finally, your attorney can help you identify and secure other professionals and services, such as accountants, recruiters, bankers and even start-up friendly print shops and website development and hosting services.


Tuesday, October 13, 2015

Wills vs. Trusts 101

What is the difference between a will and a trust? Do I need one, either, both or neither?

First of all, there is a wide range of differences among types of trusts, but here we will focus on revocable living trusts. A revocable living trust is basically a separate entity in which assets are deposited and withdrawn during one's lifetime. The person who contributes assets to the trust is called the “settlor.” The person who receives the benefits of the trust is called the “beneficiary.” The person who maintains the trust is known as the “trustee.” When the assets are in the trust, they are titled in the name of the trustee. A key benefit to any type of trust is that the assets bypass the probate process upon the death of the settlor.

One of the most obvious benefits to a trust is that the “settlor” can keep his or her estate plan private. A will is filed in court upon the death of the testator, and thus becomes a public record. A trust, however, is a private document. Therefore, if privacy is necessary, a trust may be the way to go.

Another less obvious benefit to having a trust is that it makes handling an estate with real property in multiple states much easier. Without a trust, if the decedent owns real property in more than one state, a probate proceeding must be opened in both states to handle the disposition of that property upon the decedent’s death. If a trust is the owner of the property, however, it can pass to the beneficiary without the unnecessary expense of duplicative probate proceedings.

If you are married, and have substantial assets, a trust can lower your estate’s tax bill. Also, if you are in a second or subsequent marriage, and you and your spouse have separate beneficiaries, you will find that avoiding the probate process altogether can be significantly easier. For those who are single, trusts can, among other benefits, help avoid a court-supervised guardianship. If you have minor beneficiaries, trusts can help your children avoid the pitfalls of inheriting wealth at a young age.

To explore the differences between these two common types of estate planning, consult the experienced attorneys at the Winters Law Firm, serving clients throughout Northwest Indiana. Call us at 219-307-4373.


Monday, October 12, 2015

Protecting Your Vacation Home with a Cabin Trust

Many people own a family vacation home--a lakeside cabin, a beachfront condo--a place where parents, children and grandchildren can gather for vacations, holidays and a bit of relaxation. It is important that the treasured family vacation home be considered as part of a thorough estate plan. In many cases, the owner wants to ensure that the vacation home remains within the family after his or her death, and not be sold as part of an estate liquidation.

There are generally two ways to do this: Within a revocable living trust, a popular option is to create a separate sub-trust called a "Cabin Trust" that will come into existence upon the death of the original owner(s). The vacation home would then be transferred into this Trust, along with a specific amount of money that will cover the cost of upkeep for the vacation home for a certain period of time. The Trust should also designate who may use the vacation home (usually the children or grandchildren). Usually, when a child dies, his/her right to use the property would pass to his/her children.

The Cabin Trust should also name a Trustee, who would be responsible for the general management of the property and the funds retained for upkeep of the vacation home. The Trust can specify what will happen when the Cabin Trust money runs out, and the circumstances under which the vacation property can be sold. Often the Trust will allow the children the first option to buy the property.

Another method of preserving the family vacation home is the creation of a Limited Liability Partnership to hold the house. The parents can assign shares to their children, and provide for a mechanism to determine how to pay for the vacation home taxes and upkeep. An LLP provides protection from liability, in case someone is injured on the property.

It is always wise to consult with an estate planning attorney about how to best protect and preserve a vacation home for future generations.


Friday, October 2, 2015

Elder Abuse in the State of Indiana

What is elder abuse?

People are living longer than ever before. With increasing lifespan comes the undeniable fact that more and more elderly people will be unable to care for themselves. Some of these people will be cared for in long-term care facilities and others will be cared for by their loved ones in a home setting. While it may seem safer to be cared for by a loved one at home, it seems that the great majority of the elderly who are abused suffer mistreatment at the hands of their families and friends. The Indiana Prosecuting Attorneys Council (IPAC) recently held a conference addressing many of the issues posed by elder abuse in the state.

Elder abuse is the willful or negligent mistreatment of a vulnerable older person that results in harm or the risk of harm. Elder abuse can be physical, emotional, sexual, financial and may stem from neglect as well as intervention. This abuse is illegal in all 50 states and is often regulated by an agency devoted to protecting vulnerable adults, such as Adult Protective Services. Unfortunately, many of the abused never speak up , either because they are either embarrassed, afraid, unaware, or unable to communicate.

Although elder abuse can go undetected, there are signs to look out for. Unexplained injuries, suspicious financial transactions, and changes in the relationship between the elder and the caregiver often point to abuse of some kind. In Indiana, local prosecutors handle the work of Adult Protective Services. There are only about 40 investigators in the state and last year they handled approximately 10,000 cases. Needless to say, the agency is understaffed. IPAC has determined that they are in need of more investigators but are unsure of the exact number. The above-mentioned conference can be seen as the first step to reforming Indiana’s elder care system. It brought together professionals from various fields to discuss important issues relating to elder care. IPAC hopes to have a clearer picture of what reforms are needed by the beginning of the coming legislative session.

Elder abuse is a huge problem across the country. Fortunately, you can take estate planning measures to decrease your chances of becoming a target. Contact Gerald Winter of Winters Law Firm in Porter County and Valparaiso, Indiana to learn more by calling 219.307.4373.


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