757.301.9500
Share

Wills & Trusts

Friday, September 18, 2020

Should A Charitable Trust - Not Your Kids - Be The Beneficiary Of Your IRA?


The recent passage of the SECURE Act eliminated the ability to "stretch" your taxable distributions and related tax payments over your life expectancy if you inherit IRAs from a family member. With a few exceptions, if you inherit an IRA on or after January 1, 2020, you must now withdraw all assets from the inherited account within 10 years. The shorter amount of time you now have as a beneficiary to hold on to an inherited IRA can cause major tax burdens which can severely diminish what you ultimately have at the end of the ten year period. Moreover, the compressed withdrawal time frame will also cause personal income tax increases on many beneficiaries based upon the size of the IRA they inherited and what their own income rates are in the future. What is a possible tax savings alternative? Instead of having your family members as beneficiaries on your IRA when you pass you can name a Charitable Remainder Trust (CRT) as the sole beneficiary.
Read more . . .


Monday, August 31, 2020

Death is not an ending: the profitable word of literary estates


When the famed author of Jurassic Park, Micheal Crichton, died in 2008, he left two unfinished books and a wealth of publishing and media royalties for his estate to earn in practical endless perpetuity. While much of the publishing industry is primarily concerned on new writers and the living, the estates of deceased famous authors can be immensely lucrative to publishing, film and media companies. For instance, the books of Agatha Christie still earn millions of dollars annually. A few of my clients have royalty contracts with traditional publishers, as well as modern publishers, like Amazon. Your book or media royalties may only be earning a few thousand dollars a year, but they still require planning in the event you become incapacitated or pass away.
Read more . . .


Wednesday, August 26, 2020

Olivia Lee Joins Firm as Partner.


The law firm of J.S. Burton, P.L.C.
Read more . . .


Wednesday, August 12, 2020

Patrick Mahomes Signed A $500 Million Dollar Contract. Five Estate Planning Strategies Patrick Needs To Do Now.


NFL quarterback, Patrick Mahomes, II recently signed a 10 year, $500 million dollar contract; the highest in league history. Although it is not uncommon for elite football players to sign multi-million dollar deals, Mr Mahome’s deal provides him with the type of wealth which requires a multi-generational estate plan. Here are some of the top 5 estate planning strategies Mr. Mahomes needs to do now: 1) Implement advance estate planning utilizing trusts. Trusts can pass on his wealth without public knowledge and save in his case millions of dollars in court fees, taxes and professional service costs.
Read more . . .


Thursday, February 1, 2018

How Does The New Tax Law Impact Estate Planning?


The “Tax Cuts and Jobs Act” that President Trump signed into law last month still has a lot of the country scratching their heads, trying to figure out if their taxes will be going up or down. One thing that is clear is that the new law makes a big change to estate taxes.

According to a recent survey from the Pew Research Center, about two-thirds (65%) of those surveyed feel they understand how the tax law might affect them and their families at least somewhat well. Before sitting down to look through the legislation, we would have put ourselves in that camp too. But the deeper into the weeds we got, the more we realized there was a lot in the bill that we did not know was there.
Read more . . .


Sunday, January 28, 2018

Playboy Founder Parents From Beyond The Grave


As you probably heard, Hugh Hefner, the magazine mogul and vanguard of the sexual revolution, died last fall. At first all we knew about his estate plan was that he would laid to rest in the crypt next to Marilyn Monroe, his first cover girl, which he purchased for $75,000 back in the 1990s. Now some other details have emerged, and they are pretty intriguing.

Although the “Playboy lifestyle” involves a certain amount of partying, it is no secret that Hef was not a fan of those who partied to excess or relied on drugs to have a good time. After becoming addicted to prescription amphetamines and mourning the loss of his secretary and confidant, Bobbie Arnstein, who committed suicide after a drug arrest, Hefner lived a substantially substance-free lifestyle.


Read more . . .


Friday, December 29, 2017

Did Santa Bring Your Family A Furry Friend?


Jolly Old Saint Nick must run one heck of an animal adoption agency at the North Pole. Each year he delivers new furry friends to good boys and girls around the world... and then counts on their parents to make sure the new pets are well taken care of! 

Housebreaking or litter training and obedience school are the first order of business, but once those tasks are accomplished, it is time to consider more long-term issues.
Read more . . .


Wednesday, September 27, 2017

Common Estate Planning Myths

Common Estate Planning Myths

Estate planning is a powerful tool that among other things, enables you to direct exactly how your assets will be handled upon your death or disability. A well-crafted estate plan will ensure you and your family avoid the hassles of guardianship, conservatorship, probate or unpleasant estate tax surprises. Unfortunately, many individuals have fallen victim to several persistent myths and misconceptions about estate planning and what happens if you die or become incapacitated.

Some of these misconceptions about living trusts and wills cause people to postpone their estate planning – often until it is too late. Which myths have you heard? Which ones have you believed?

Myth: I’m not rich so I don’t need estate planning.
Fact: Estate planning is not just for the wealthy, and provides many benefits regardless of your income or assets. For example, a good estate plan includes provisions for caring for a minor or disabled child, caring for a surviving spouse, caring for pets, transferring ownership of property or business interests according to your wishes, tax savings, and probate avoidance.

Myth: I’m too young to create an estate plan.
Fact: Accidents happen. None of us knows exactly when we will die or become incapacitated. Even if you have no assets and no family to support, you should have a power of attorney and health care directive in place, in case you ever become disabled or incapacitated.

Myth: Owning property in joint tenancy is an easier, more affordable way to avoid probate than placing it in a revocable living trust.
Fact: It is true that property held in joint tenancy will pass to the other owner(s) outside of the probate process. However, it is a usually a very bad idea. Placing property in joint tenancy constitutes a gift to the joint tenant, and may result in a sizable gift tax being owed. Furthermore, once the deed is executed, the property is legally owned by all joint tenants and may be subject to the claims of any joint tenant’s creditors. Transferring a property into joint tenancy is irrevocable, unless all parties consent to a future transfer; whereas property owned in a living trust remains under your control and the transfer is fully revocable until your death.

Myth: Keeping property out of probate saves money on federal estate taxes.
Fact: Probate, and probate avoidance, are governed by state law and address how property passes upon your death; they have nothing to do with federal estate taxes, which are set forth in the Internal Revenue Code. Estate planning can reduce estate taxes, but that has nothing to do with a discussion regarding probate avoidance.

Myth: I don’t need a living trust if I have a will.
Fact: A properly drafted trust contains provisions addressing what happens to your property if you become incapacitated. On the other hand, a will only becomes effective upon your death and specifies who will inherit the property. If you own real property, or have more than $100,000 in assets, both a will and a living trust are generally recommended.

Myth: With a living trust, a surviving spouse need not take any action after the other spouse’s death.
Fact: Failure to adhere to the proper legal formalities following a death could result in significant administrative and tax implications. While a properly drafted and funded living trust will avoid probate, there are still many tasks that have to be performed such as filing documents, sending notices and transferring assets.  
 


Wednesday, September 13, 2017

You’ve Established an Estate Plan. Do You Know Where the Documents Are? Does Your Family?

 

You’ve Established an Estate Plan. Do You Know Where the Documents Are? Does Your Family?

For most people, finally establishing an estate plan is a big step that they have undertaken after years of delay. A second step is making decisions regarding the executor, trustees, beneficiaries, funeral costs and debt, and a third step is actually completing the will. There is, however, a fourth step that is often skipped: placing the original will and other critical documents in a place where it can be found when it is needed.

As far as wills are concerned, this step is more important than you might think, for two reasons:

  1. If your will can’t be found upon your death then, legally, you will have passed away intestate, i.e. without a will.
  2. If your loved ones can only locate a photocopy of your will, chances are the photocopy will be ruled invalid by the courts. This is because the courts assume that, if an original will can’t be located, the willmaker destroyed it with the intention of revoking it.


Options for Storing the Original Copy of Your Will


Because an original will is usually needed by the probate court, it makes sense to store it in a strategic location. Common locations recommended by estate planning attorneys include:

  • A fireproof safe or lock box
  • Stored at the local probate court, if such service is provided.
  • A safety deposit box in a bank

There are advantages to each choice. For many, a fireproof safe is simplest: it’s in the home, doesn’t need to leave the house and can be altered and replaced with maximum convenience. The probate court makes sense because it is the place where the last will and testament may end up when you pass away. A safety deposit box also makes sense, especially if you already have one for which you’re paying.  Just make sure that your executor can access it.

By making sure that your original will is safe and can be found when needed, you don’t just ensure that it can be used when the allocation of your assets and debt occurs. You also ensure that disputes, confusion and disappointment don’t occur years after your death; while uncommon, in some cases, by the time the will has been discovered, the assets of the decedent have long been distributed according to intestacy laws and not the decedent’s will. Intestacy laws are essentially the “default will” that the state establishes for individuals who do not have their own estate plan.

You’ve taken the trouble to protect your assets and loved ones by creating an estate plan. Don’t leave its discovery to chance. Ensure that your executor or trustee can easily and reliably find it when it comes time to put it into effect. 

 


Tuesday, August 22, 2017

Why shouldn't I use a form from the internet for my will?

In this computer age, when so many tasks are accomplished via the internet -- including banking, shopping, and important business communications -- it may seem logical to turn to the internet when creating a legal document such as a will . Certainly, there are several websites advertising how easy and inexpensive it is to do this. Nonetheless, most of us know that, while the internet can be a wonderful tool, it also contains a tremendous amount of erroneous, misleading, and even dangerous information.

In most cases, as with so many do-it-yourself projects, creating a will most often ends up being a more efficient, less expensive process if you engage the services of a qualified attorney.  Just as most of us are not equipped to do our own plumbing repairs or automotive repairs, most of us do not have the background or experience to create our own legal documents, even with the help of written directions.

Situations that Require an Attorney for Will Creation

 In certain cases, the need for an estate planning attorney is inarguable. These include situations in which:

  • Your estate is large enough to make estate planning guidance necessary
  • You want to disinherit your legal spouse
  • You have concerns that someone may contest your will
  • You worry that someone will claim your mind wasn't sound at the signing

Mistakes and Omissions 

It has always been possible to write a will all by yourself, even before the advent of the typewriter, let alone the computer.  Such a document, however, is unlikely to deal with the complexities of modern life.  Many estate planning attorneys have seen, and often been asked to repair, wills that have mistakes or significant omissions. These experts have also become aware of situations in which the survivors of the deceased wind up in court, spending thousands of dollars to contest ambiguously worded or incomplete wills. Without legal guidance from a competent estate planning attorney, creating a "boxtop" will can result in tremendous financial and emotional risk.

Evidence that Online Wills Are Not Foolproof

Evidence that many other complications can arise when an individual creates a will using generalized online directions can be found in the following facts: 

  • Each state has its own rules (e.g. requiring differing numbers of disinterested party signatures)
  • Even uncontested wills can remain in probate if not executed in an exacting fashion
  • Estate planning attorneys find legal software programs inadequate
  • Even legal websites themselves recommend bringing in an attorney in all but the very simplest cases
  • Some legal websites provide inexpensive monthly legal consultations with attorneys to protect their client and themselves

Areas that Frequently Cause Problems 

Self-constructed wills often become problematic when the testator:

  • Names an executor who has no financial or legal knowledge
  • Leaves a bequest to a pet  (legally, you must leave the bequest to an appointed caretaker)
  • Puts conditions on payouts to an that are difficult, or impossible, to enforce
  • Makes unusual end-of-life decisions or puts living will information into the will
  • Designates guardians for children, but neglects to name successor guardians
  • Neglects to coordinate beneficiary designations where, for example, the will and  insurance policy designations contradict one another
  • Leaves funeral instructions into the will since the document will most likely not be read until after the funeral has taken place
  • Leaves inexact or ambiguous instructions dealing with blended families
  • Neglects to mention small items in the will which, though of small financial value, are meaningful to loved ones and may cause contention

In order to ensure that you leave your assets in the hands of those you wish, and to avoid leaving your loved ones with bitter disputes and expensive probate costs, it  is always wise to consult with an experienced estate planning attorney when making a will.  In this area, as in so many others, it is best, and safest, to make use of those with expertise in the field.


Monday, March 13, 2017

Estate Planning Matters

Common Estate Planning Mistakes Regarding Individual Retirement Accounts (IRAs)

For many people, retirement savings accounts are among the largest assets they have to bequeath to their children and grandchildren in their estate plans.  Sadly, without professional and personally tailored advice about how best to include IRAs in one’s estate plan, there may be a failure to take advantage of techniques that will maximize the amount of assets that will be available for future generations.

Failure to Update Contingent Beneficiaries

Assets in an IRA account usually transfer automatically to the named beneficiaries upon the death of the account holder, outside of the probate process.  If the account holder’s desired beneficiaries change, due to marriage, divorce, or other major life events, it is critically important to update the named beneficiaries as quickly as possible to prevent the asset from passing to an outdated beneficiary.  When updating beneficiaries, account holders should not neglect contingent beneficiaries – those individuals named to receive the asset if the primary named beneficiary is already deceased when the account holder dies.

Example:  Sarah’s IRA documents name her husband, Harold, as the primary beneficiary of her IRA.  The contingent beneficiary is Harold’s son, George, from Harold’s first marriage.  Sarah and Harold divorce.  Harold dies.  If Sarah dies before changing her IRA beneficiaries, George will receive the IRA.  This may no longer be the result Sarah would have wanted.

Failure to Consider a Trust as the Contingent Beneficiary of an IRA


There are three main advantages of naming a trust as the contingent beneficiary of your IRA: 

  1. It avoids the problem described above of having incorrect contingent beneficiaries named at death.
  2. It protects the IRA if the desired beneficiary is a minor, has debt or marital troubles, or is irresponsible with money.
  3. It protects the IRA from intentional or unintentional withdrawal.

Since 2005, the IRS has allowed a type of trust created specifically to be the beneficiary of an IRA.  The IRA Beneficiary Trust is also known as an IRA trust, an IRA stretch trust, an IRA protection trust, or a standalone IRA trust.

The main advantage of using an IRA Beneficiary Trust instead of a standard revocable living trust is that the IRA trust can restrict distributions to ensure compliance with tax rules and minimum distribution requirements – thus maximizing the amount of tax-free growth of the investments.

Another advantage is that the IRA stretch trust has a framework that allows it to be structured in a way that guarantees protection of the distributions from the IRA as well as protection of the principal of the IRA.  When you first establish the IRA protection trust, you structure the trust as either a conduit trust or an accumulation trust.  A conduit trust will pass the required minimum distributions directly to your named beneficiaries, maximizing the tax deferral benefits.  An accumulation trust passes the required minimum distributions into another trust over which a named trustee has discretion to accumulate the funds, resulting in greater asset protection for the benefit of the beneficiary.

During your lifetime, the IRS allows you to switch between the conduit trust and accumulation trust for each of your beneficiaries, as circumstances change.  Furthermore, you may name a “trust protector” who may change the type of trust one last time after your death.  This change may be made on a beneficiary-by-beneficiary basis, so that some of your intended heirs have accumulation trusts for their portion of the IRA and others have conduit trusts.

IRA Beneficiary Trusts are complicated legal documents with intricate IRS rules and tremendous implications for your family’s wealth accumulation for future generations.  It is wise to seek advice specific to your family’s unique circumstances when considering the establishment of this powerful type of trust.


 


Archived Posts

2020
2019
2018
September
August
July
June
May
April
March
February
January
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
December
November
October
September
August
July
June
May
April
March
February
January
2015

← Newer12 3 4 Older →



© 2020 JS Burton, P.L.C. | Disclaimer
477 Viking Drive, Suite 410, Virginia Beach, VA 23452
| Phone: 757.301.9500
5425 Discovery Park Blvd., Suite 101, Williamsburg, VA 23188
| Phone: 757.301.9500

Practice Areas | About Us

Law Firm Website Design by
Amicus Creative


© JS Burton, P.L.C. | Disclaimer | Law Firm Website Design by Zola Creative
477 Viking Drive, Suite 410 , Virginia Beach, VA 23452 | Phone: 757.301.9500
5425 Discovery Park Blvd., Suite 101, Williamsburg, VA 23188 | Phone: 757.301.9500