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Thursday, December 29, 2016

Lawyer Wants To Be Buried In His Yard


One of the things I always tell my estate planning clients is to make sure that a few people know where you want to be buried. Well, a lawyer up in Bluemont has taken that advice to the extreme by getting the Wall Street Journal to write a story about his burial requests.

According to the article, Brad and Tandy Bondi purchased Old Welbourne outside of Bluemont a few years ago, and have since spent a lot of time and money restoring it and fixing it up.
Read more . . .


Tuesday, December 27, 2016

‘Tis The Season For Charitable Scams: 5 Tips For Avoiding Fraudsters


One of the aspects of any good estate plan that is designed to minimize taxes is gifting and charitable giving. But knowing who to give to can sometimes be challenging. During the holiday season there are countless charities asking for donations, and not all of them are worthy recipients of your hard earned money.
Read more . . .


Tuesday, December 27, 2016

Estate Planning Matters

Remarried? Protect Your Children With Proper Planning

If you are married for the first time and are working on your estate plan, the decisions about where the assets go are usually easy. Most parents in that situation want their entire estate to go to the surviving spouse, and upon the death of the surviving spouse, equally to their children. There may be difficult decisions about who will serve as guardians of the children or trustees over the children’s property, but typically it’s easy to decide where the property will go.

However, in today’s society, there are ever-increasing numbers of blended families. There may be children from several marriages involved, making estate planning more complex.  Couples may bring an unequal number of children into the marriage, as well as unequal assets. A spouse may want to ensure that his or her spouse is provided for at death, but may be afraid to leave everything to that spouse out of fear that at the death of the second spouse, that spouse will leave everything to his or her biological children.

Planning can also be complicated when a couple gets married and either of them brings very young children into the marriage. The non-biological parent may raise those children, but unless formally adopted, for estate planning purposes, they are not considered the children of the non-biological parent. Therefore, if that parent dies without a will, the children will not inherit from the stepparent.

There are many options for estate planning for blended families that will treat everyone fairly. First, it’s imperative that parents of blended families have a will in place. If they don’t, it’s almost inevitable that someone will be treated unfairly. Also, it’s tempting for parents of blended families to create wills in which half of everything is left to the husband’s children and half is left to the wife’s children. However, as explained earlier, this approach can also lead to problems.  Moreover, it’s not at all uncommon for a surviving spouse to change his or her will at the death of the first spouse and cut the stepchildren out of the estate plan.

There are two options often recommended for blended families when doing estate planning. The first is to use a trust. Under this plan, all family assets are usually held in trust. Upon the death of the first spouse, the surviving spouse has the right to use the assets in the trust for support, with certain limits, such as rights to income or limited use of the trust principal for living expenses. However, the surviving spouse will not be able to change the beneficiaries of the trust, and hence stepchildren could not be disinherited. A second option is for a certain amount of money to be left to children at the death of the first spouse. In that situation, the children will not have to wait for the death of the stepparent in order to inherit. This works well in situations when the children are mature adults and there is sufficient money for the surviving spouse to support herself without relying on the extra funds that are inherited by the children.  One way to accomplish this is through a life insurance policy payable to the children.

Estate planning with blended families can be complex and each situation is unique. It’s important to keep the lines of communication open and to be aware that it can be a sticky situation for many families. However, with proper planning, many issues that could arise on the death of a stepparent can be avoided completely.
 


Monday, December 19, 2016

VA Aid and Attendance Benefit

Veterans’ Non-Service Connected Pension Benefits

The Veterans’ Administration’s non-service connected pension program can help supplement the income of elderly or disabled veterans. The VA deems any veteran age 65 or older to be permanently and totally disabled. This “disabled” classification entitles senior citizens who are veterans, or their widows, to tax-free pension payments regardless of their actual physical condition, provided they meet the needs-based criteria.

One significant advantage of this program is that, unlike a traditional service-connected pension, there is no requirement that your injury or disability be tied to your time in service. On the other hand, this is a needs-based assistance program, so many veterans may not qualify for benefits.

To qualify for benefits under the program, you must have served on active duty for at least 90 days, and at least one of those days must have been during a time of war. Additionally, you must not have had a dishonorable discharge from the military.

Periods of war time are determined by the U.S. Congress as follows:

  • Mexican Border Period: May 9, 1916 through April 5, 1917, only if you served in Mexico, on its borders or in adjacent waters
  • World War I: April 6th, 1917 through November 11, 1918, or through April 1, 1920 if you served in Russia
  • World War II: December 7, 1941 through December 31, 1946    
  • Korean Conflict: June 27, 1950 through January 31, 1955
  • Vietnam Era: August 5, 1964 through May 7, 1965, or beginning February 28, 1961 you served in Vietnam
  • Persian Gulf War: August 2, 1990 through the present

Once qualifying military service is established, you must also pass the income and asset tests. The VA must determine that your net worth is not enough to adequately support you during your lifetime. Your vehicle and primary residence are not counted when determining your net worth.  The VA generally caps net worth, exclusive of your car and primary residence, at $80,000 for a married veteran, or $40,000 for a single person.

Additionally, your countable income must be lower than the available pension amount. Fortunately, countable income is offset by your unreimbursed, recurring health care costs, including prescriptions, insurance premiums or assisted living expenses.
 


Monday, December 12, 2016

Estate Planning Matters

Preserving and Protecting Documents Is Part of Healthy Estate Planning

In the unsettled time after a loved one’s death, imagine the added stress on the family if the loved one died without a will or any instructions on distributing his or her assets.  Now, imagine the even greater stress to grieving survivors if they know a will exists but they cannot find it!  It is not enough to prepare a will and other estate planning documents like trusts, health care directives and powers of attorney.  To ensure that your family clearly understands your wishes after death, you must also take good care to preserve and protect all of your estate planning documents.

Did you know that the original, signed version of your will is the only valid version?  If your original signed will cannot be found, the probate court may assume that you intended to revoke your will.  If the probate court makes that decision, then your assets will be distributed as if you never had a will in the first place.

Where should you keep your original signed will?  There are several safe options – the best choice for you depends on your personal circumstances.

You can keep your will at home, in a fireproof safe.  This is the lowest-cost option, since all you need to do is purchase a well-constructed fireproof document safe.  Also, keeping your will at home gives you easy access in case you want to make changes to the document.  There are two main disadvantages to keeping your will at home:

  • You may neglect to return your will to the safe after reviewing it at home, which increases the risk it will be destroyed by fire, flood, or someone’s intentional or accidental actions.
  • Your will could be difficult to find in the event of your death, unless you give clear instructions to several people on how to find it, which then creates a risk of privacy invasion.

You can keep your will in a safety deposit box.  Most banks have safety deposit boxes of various sizes available to rent for a monthly fee.  Banks, of course, tend to be more secure than private homes, which is one primary advantage.  Also, if you keep your will in a safety deposit box, then after your death, only the Executor of your estate may access the original will.  Thus, the will is strongly protected against alteration or destruction, because family members may have access to a copy but only the Executor will have access to the all-important original.

If you do keep your will and other estate planning documents in a safety deposit box, try to do so at the same bank where you keep your accounts and inform your executor of its location.  This will streamline the financial accounting process.

You can also keep your original will and other estate planning documents at your lawyer’s office.    Law firms often have systems for long-term document storage.  However, keep in mind that the law firm may dissolve before the willmaker’s death, which can make it difficult to track down your will.  

You may also be able to store your will and other documents online.  Many large financial institutions have begun offering long-term digital storage of important documents.  However, any electronic version of your original will is – by definition – a copy, not the original.  So, you still must find a safe place to store the original, signed and witnessed will.  Online storage “safes” may be an excellent back-up, but you must still find a secure place to store the paper originals.


Monday, December 5, 2016

Estate Planning Matters

What are the powers and responsibilities of an executor?

An executor is responsible for the administration of an estate. The executor’s signature carries the same weight of the person whose estate is being administered. He or she must pay the deceased’s debts and then distribute the remaining assets of the estate. If any of the assets of the estate earn money, an executor must manage those assets responsibly. The process of doing so can be intimidating for an individual who has never done so before.

After a person passes away, the executor must locate the will and file it with the local probate office. Copies of the death certificate should be obtained and sent to banks, creditors, and relevant government agencies like social security. He or she should set up a new bank account in the name of the estate. All income received for the deceased, such as remaining paychecks, rents from investment properties, and the collection of outstanding loans receivable, should go into this separate bank account. Bills that need to be paid, like mortgage payments or tax bills, can be paid from this account. Assets should be maintained for the benefit of the estate’s heirs. An executor is under no obligation to contribute to an estate’s assets to pay the estate’s expenses.

An inventory of assets should be compiled and maintained by the executor at all times. An accounting of the estate’s assets, debts, income, and expenses should also be available upon request. If probate is not necessary to distribute the assets of an estate, the executor can elect not to enter probate. Assets may need to be sold in order to be distributed to the heirs. Only the executor can transfer title on behalf of an estate. If an estate becomes insolvent, the executor must declare bankruptcy on behalf of the estate. After debts are paid and assets are distributed, an executor must dispose of any property remaining. He or she may be required to hire an attorney and appear in court on behalf of the estate if the will is challenged. For all of this trouble, an executor is permitted to take a fee from the estate’s assets. However, because the executor of an estate is usually a close family member, it is not uncommon for the executor to waive this fee. If any of these responsibilities are overwhelming for an executor, he or she may elect not to accept the position, or, if he or she has already accepted, may resign at any time.


Monday, November 28, 2016

Don’t Put Your Will In Your Safe Deposit Box


Although we are moving toward being a paperless society, there are still a few key documents that every person needs to hold on to for the future. Things like social security cards, birth certificates, and the titles to vehicles aren’t something you use on a day to day basis, but it is sure a hassle to get a replacement if you somehow misplace these documents.

In order to keep these documents safe, many people store them in their safe deposit box at the bank, or in a fire-proof safe in their homes.


Read more . . .


Monday, November 28, 2016

Business and Estate Planning

Overview: Buy-Sell Agreements and Your Small Business

If you co-own a business, you need a buy-sell agreement. Also called a buyout agreement, this document is essentially the business world’s equivalent of a prenup. An effective buy-sell agreement helps prevent conflict between the company’s owners, while also preserving the company’s closely held status. Any business with more than one owner should address this issue upfront, before problems arise.

With a proper buy-sell agreement, all business owners are protected in the event one of the owners wishes to leave the company. The buy-sell agreement establishes clear procedures that must be followed if an owner retires, sells his or her shares, divorces his or her spouse, becomes disabled, or dies. The agreement will establish the price and terms of a buyout, ensuring the company continues in the absence of the departing owner.

A properly drafted buy-sell agreement takes into consideration exactly what the owners wish to happen if one owner departs, whether voluntarily or involuntarily.  Do the owners want to permit a new, unknown partner, should the departing owner wish to sell to an uninvolved third party? What happens if an owner’s spouse is involved in the business and that owner gets a divorce or passes away? How are interests valued when a triggering event occurs?

In crafting your buy-sell agreement, consider the following issues:

  • Triggering Events - What events trigger the provisions of the agreement?  These normally include death, disability, bankruptcy, divorce and retirement.
     
  • Business Valuation - How will the value of shares being transferred be determined? Owners may determine the value of shares annually, by agreement, appraisal or formula.  The agreement may require that the appraisal be performed by a business valuation expert at the time of the triggering event.  Some agreements may also include a “shotgun provision” in which one party proposes a price, giving the other party the obligation to accept or counter with a new offer.
     
  • Funding - How will the departing owner be paid?  Many business owners will obtain insurance coverage, including life, disability, or business continuation insurance on the life or disability of the other owners.  With respect to life insurance, the agreement may provide that the company redeem the departing owner’s shares (“redemption”).  Alternatively, each of the owners may purchase life insurance on the lives of the other owners to provide the liquidity needed to purchase the departing owner’s shares (“cross purchase agreement”).   The agreement may also authorize the company to use it’s cash reserves to buy-out the departing owners.  
     

Saturday, November 26, 2016

Likes After Death: What Is Your Digital Estate Plan?


There is a reason people make jokes about having someone clear their browser history when they die. Nobody wants their friends and family to know just exactly how much time they have wasted watching cat videos on YouTube, or what other embarrassing content they looked at online. Despite joking about it, however, few people have made plans about what should be done with their digital estate after they die.


Read more . . .


Tuesday, November 22, 2016

Estate Planning Matters

How Much of Your Estate Will Be Left Out of Your Will? (It’s Probably More Than You Think)

You’ve hired an attorney to draft your will, inventoried all of your assets, and have given copies of important documents to your loved ones. But your estate planning shouldn’t stop there. Regardless of how well your will is drafted, if you do not take certain steps regarding your non-probate assets, you run the risk of unintentionally disinheriting your chosen beneficiaries from a significant portion of your estate.

A will has no effect on the distribution of certain types of property after your death. Such assets, known as “non-probate” assets are typically transferred upon your death either as a beneficiary designation or automatically, by operation of law.

For example, if your 401(k) plan indicates your spouse as a designated beneficiary, he or she automatically inherits the account upon you passing.  In fact, by law, your spouse is entitled to inherit the funds in your 401(k) account.  If you wish to leave your 401(k) retirement account to someone other than a surviving spouse, you must obtain a signed waiver from your spouse indicating her agreement to waive her rights to the assets in that account.

Other types of retirement accounts also transfer to your beneficiaries outside of a probate proceeding, and therefore are not subject to the provisions of your will.  An Individual Retirement Account (IRA) does not automatically transfer to your spouse by operation of law as is the case with 401(k) plans, so you  must complete the IRA’s beneficiary designation form, naming the heirs you want to inherit the account upon your death. Your will has no effect on who inherits your IRA; the beneficiary designation on file with the financial institution controls who will receive your property.

Similarly, you must name a beneficiary on your life insurance policy. Upon your death, the insurance proceeds are not subject to the terms of a will and will be paid directly to your named beneficiary.

Probate avoidance is a noble goal, saving your loved ones both time and money as they close your estate. In addition to the assets listed above, which must be handled through beneficiary designations, there are other types of assets that may be disposed of using a similar procedure.   These include assets such as bank accounts and brokerage accounts, including stocks and bonds, in which you have named a pay-on-death (POD) or transfer-on-death (TOD) beneficiary; upon your passing, the asset will be transferred directly to the named beneficiary, regardless of what provisions are in your will. Depending on the state, vehicles may also be titled with a TOD beneficiary.

To make these arrangements, submit a beneficiary designation form to the applicable financial institution or motor vehicle department. Be sure to keep the beneficiary designations current, and provide instructions to your executor listing which assets are to be transferred in this manner.  Most such designations also allow for listing of alternate beneficiaries in case they predecease you.

Another common non-probate asset is real estate that is co-owned with someone else where the deed has a survivorship provision in it.  For example, many deeds to real property owned by married couples are owned jointly by both husband and wife, with right of survivorship.  Upon the passing of either spouse, the interest of the passing spouse immediately passes to the surviving spouse by operation of law, irrespective of any conflicting instructions in your will.  Keep in mind that you need not be married for such a provision to be in effect; joint ownership of real property with right of survivorship can exist among any group of co-owners.  If you want your will to be controlling with regard to disposition of such property, you need to have a new deed prepared (and recorded) that does not have a right of survivorship provision among the co-owners.

You’ve spent a lifetime of hard work to accumulate your assets and it’s important that you take all necessary steps to ensure that your wishes regarding who will get your assets will be honored as you intend. Carve a few hours out of your busy schedule, several times a year, to review all of your deeds and beneficiary designations to make certain that they remain consistent with your objectives.
 


Friday, November 18, 2016

Estate Planning Matters

Do Heirs Have to Pay Off Their Loved One’s Debts?

The recent economic recession, and staggering increases in health care costs have left millions of Americans facing incredible losses and mounting debt in their final years. Are you concerned that, rather than inheriting wealth from your parents, you will instead inherit bills? The good news is, you probably won’t have to pay them.

As you are dealing with the emotional loss, while also wrapping up your loved one’s affairs and closing the estate, the last thing you need to worry about is whether you will be on the hook for the debts your parents leave behind. Generally, heirs are not responsible for their parents’ outstanding bills. Creditors can go after the assets within the estate in an effort to satisfy the debt, but they cannot come after you personally. Nevertheless, assets within the estate may have to be sold to cover the decedent’s debts, or to provide for the living expenses of a surviving spouse or other dependents.

Heirs are not responsible for a decedent’s unsecured debts, such as credit cards, medical bills or personal loans, and many of these go unpaid or are settled for pennies on the dollar. However, there are some circumstances in which you may share liability for an unsecured debt, and therefore are fully responsible for future payments. For example, if you were a co-signer on a loan with the decedent, or if you were a joint account holder, you will bear ultimate financial responsibility for the debt.

Unsecured debts which were solely held by the deceased parent do not require you to satisfy the outstanding obligation. Regardless, many aggressive collection agencies continue to pursue collection even after death, often implying that you are ultimately responsible to repay your loved one’s debts, or that you are morally obligated to do so. Both of these assertions are entirely untrue.

Secured debts, on the other hand, must be repaid or the lender can repossess the underlying asset. Common secured debts include home mortgages and vehicle loans. If your parents had any equity in their house or car, you should consider doing whatever is necessary to keep the payments current, so the equity is preserved until the property can be sold or transferred. But this must be weighed within the context of the overall estate.

Executors and estate administrators have a duty to locate and inventory all of the decedent’s assets and debts, and must notify creditors and financial institutions of the death. Avoid making the mistake of automatically paying off all of your loved one’s bills right away. If you rush to pay off debts, without a clear picture of your parents’ overall financial situation, you run the risk of coming up short on cash, within the estate, to cover higher priority bills, such as medical expenses, funeral costs or legal fees required to settle the estate.


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© J.S. Burton, P.L.C. | Disclaimer | Law Firm Website Design by Amicus Creative
575 Lynnhaven Parkway, Suite 301 , Virginia Beach, VA 23452 | Phone: 757-215-4051
5425 Discovery Park Blvd., Suite 101, Williamsburg, VA 23188 | Phone: 757-215-4051