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Estate Planning

Friday, July 21, 2017

Tell the World When you are Doing Business as a Limited Liabilty Company


If you are doing business as a limited liability company (LLC) and have not clearly let people know that you are operating as an LLC, you could lose the liability protection that LLCs were intended to provide.

The Alaska Supreme Court recently ruled in the case of Daggett v. Feeney, Supreme Court Opinion 7179 (June 16, 2017), that a couple who operated a contracting business was personally liable for the debts of the company because they failed to disclose to the customer that the contractor was doing business as a limited liability company.  Here were the facts.

James and Nadia Daggett set up Daggett, LLC, but they operated under the trade name Alaskan Wind Industries (AWI).
Read more . . .


Friday, January 6, 2017

Gifting: Wise Strategies for Wealth Transfer


As we turn the page on another year, it is a good time to review your estate plan and consider making financial gifts children and grandchildren.  Making annual gifts has always been an effective way to reduce or avoid estate taxes when you pass away.  Even if estate taxes are not an issue for you, making gifts to loved ones can have a huge impact on the lives of your descendants who are attending college or graduate school, trying to save for a down payment on a house, starting a business or building their own retirement savings plans.

Intergeneration gifts are a great way to establish a legacy of generosity that passes from generation to generation.   

If you have been holding off on making such a gift because you believe you are limited in how much you can give or were concerned about potential gift taxes, you may want to reconsider your gifting strategy.


Read more . . .


Thursday, October 6, 2016

What are the Duties of a Fiduciary?


Successor Trustees and Personal Representatives are sometimes called “fiduciaries” because the law imposes a high duty of loyalty toward beneficiaries, creditors, the IRS, or other interested parties to the trust or estate.  Simply put, a fiduciary is required to put the interest of others ahead of the interest of themselves as a fiduciary.  This can be a difficult task because often a fiduciary is also a beneficiary or creditor of the estate or trust and has inherent biases toward or against beneficiaries or creditors.

Here is a list of some of the specific duties of a Successor Trustee or Personal Representative:

  1. A fiduciary has a duty to administer the trust or will in accordance with its terms.  This means managing and/or distributing the property of the trust or estate to the beneficiaries in a manor directed by the trust or will.
    Read more . . .


Monday, August 22, 2016

Who is in Charge?


We all like to be in charge because it gives us a sense of control.  This is particularly true when it comes to managing our finances and a personal health.  None of us really think about giving up control or worse losing control.

The funny thing about control is it is ultimately an illusion.  Death and disability are outside of our control.


Read more . . .


Tuesday, July 5, 2016

IRA Rules - Key Points About IRA Inheritance & Distribution


A few years ago, the US News and World Report estimated that Americans held over $8.5 trillion in their IRAs and 401K plans.  Most plan participants expect to use the money for their retirement needs, but a substantial portion of this money will actually pass to the named beneficiaries of account holders. 

Here are six important things that people need to know about.

Lifetime Distribution Rules.


Read more . . .


Tuesday, April 5, 2016

De-Cluttering Your Life: Artwork, Collectibles and Jewelry, Part Three


This is the third and final article in a series about how to simplify your estate.  This article covers ways to dispose of special artwork, collections, and jewelry.

Fine artwork, jewelry, and collections pose a particularly thorny issue for successor trustees and executors that are in charge of administering a trust or probate estate.  There are a number of questions you should consider when deciding how to handle this type of property.

What is the Artwork or Collection Worth? 

People tend to over value their fine artwork, collections and jewelry.


Read more . . .


Tuesday, April 5, 2016

Where is your Red Book Stored?


Organization is often the key to a quality estate plan.  Knowing where your documents are stored and telling successor trustees and executors where you keep the documents is part of being properly organized. 

We are constantly amazed at how often estate planning documents, including wills, trusts, power of attorneys, and health care directives, become lost or misplaced.  These documents are the keys to your financial and medical kingdom.  They need to be maintained and updated from time to time and that means you need to be able to find them when it is time to make changes or amendments.


Read more . . .


Wednesday, December 23, 2015

De-Cluttering Your Life: Improve the Ease of Estate Administration, Part Two

A consistent comment  we hear from our clients goes something like this: "I want things to be easy for my family with a minimum of hassles when I pass away."  What people sometimes fail to understand is that the degree of difficulty and hassle faced by the family when administering an estate is often directly proportional to the number and types of assets that are owned by the decedent at the time of death.

In the last newsletter I discussed ways to simplify your estate by discarding or giving away personal property, memorabilia, and "stuff" that you may not need or use anymore.  In this article I will discuss financial assets and investments.

As life goes on we tend accumulate wealth in a variety of forms and types.  Examples of financial and investment assets include: cash on hand or in safe deposit boxes; checking and savings accounts at banks or credit unions; investment or brokerage accounts; mutual fund accounts; retirement accounts including IRAs, Rollover IRAs, SEP IRAs, Simple IRAs, Inherited IRAs, Roth IRAs, 401Ks, annuities, 403Bs, and government pensions or retirement plans; escrow accounts; personal promissory notes receivable; commodity accounts; and business accounts.  To further complicate matters, stocks, bonds, ETFs, index funds, and mutual funds can either be held in a brokerage account or in a separate account for every separate investment.  Some people still have stock certificates, EE bonds, I bonds, and gold coins in safe deposit boxes.  Others own DRIP (dividend re-investment program) accounts for individual publicly traded stocks.

Every asset owned and every different custodian or financial institution involved creates a potential for inconvenience for your successor trustees and personal representatives.  Therefore, the greater the number of accounts or investments held at the time of death, the greater the time and trouble for your family.  

Here are some suggestions to help you simplify your investment holdings.

Hold Your Financial Investments in a Brokerage Account.  Holding original stock and bond certificates makes estate administration more difficult because they are not easily liquidated or distributed to family.  Publicly traded stocks and bonds should be held in a brokerage or investment accounts. Brokerage accounts can also invest in thousands of different mutual funds and may hold gold and other commodities.  Rather than creating different accounts for different mutual funds, put all the mutual funds into your investment accounts.

EE Bonds and I Bonds can be held in a Treasury Direct Account and monitored online, rather than holding individual certificates.  

If you are concerned about brokerage fees or costs, select a low cost brokerage company to hold your stock, bonds, and mutual fund assets.

Consolidate Bank and Credit Union Accounts.  If you have multiple bank accounts and credit union accounts, try to consolidate your holdings into fewer accounts.  Sometimes our clients are holding just a few hundred dollars in a dormant credit union or bank account.  Consider closing accounts that are not being actively used.  FDIC insures bank accounts up to $250,000 per account.  If you have a bank account titled in the name of your living trust, FDIC will insure the account for $250,000 for each beneficiary of the trust.  If the trust is a joint trust with your spouse the FDIC insurance is doubled again.  A couple with two children is insured up to $1 million per account held in a living trust.  (2 spouses x 2 beneficiaries x $250,000 = $1 million)

Consolidate Brokerage Accounts.  Consider holding all investments at one brokerage company or investment firm.  This will simplify your paperwork now and reduce the work for your successor agents, trustees and personal representatives.  Clients tell me that they have investments held at multiple brokerage firms because they don't want to put all their eggs in one basket.  One brokerage firm doesn't necessarily mean that all of your eggs are in one basket.  You can have your eggs in multiple investment baskets that are warehoused under one roof with one investment company.  

Consolidate Retirement Accounts.  Most people who have held multiple jobs over the years have accumulated a number of IRAs, Simple IRAs, Rollover IRAs, and 401Ks.  Talk with you investment advisor to see if you can consolidate any of these accounts.

For most people it isn't feasible to reduce all of their financial holdings to just one or two accounts or with just one or two banks or investment companies.  However, it is rare that some closing and consolidation can't be reasonably found.  Even closing one or two bank or brokerage accounts will simplify things for your successor trustees and personal representatives.  You might find that it also simplifies things for you.

We will discuss what to do with treasures, art-work, and collectables in our next Newsletter!



Wednesday, August 5, 2015

De-Cluttering Your Life: Improve the Ease of Estate Administration

This is the first of a three-part article about the benefits of "de-cluttering" your estate.

The most consistent theme that we hear from people about estate planning is that they want things to be simple for loved ones. The prevailing wisdom is that if the proper legal documents are in place, the surviving family members will have an easier time winding up affairs. While it is important to have up-to-date legal documents, these are only half the story.

When I graduated from college, everything I owned could be packed into three bags. That sure made life easy when I moved to a new city. But that simple life has given way under years of accumulating personal property.

I have furniture, books, tools, automobiles, bicycles, golf clubs, camping gear, artwork, jewelry, computers, radios, TVs, children's toys, games, yard equipment, kitchen appliances, decorations, clothing, paperwork, photo-graphs, and personal memorabilia of all sorts. I use much of this stuff regularly, but honestly, there are boxes, closets, and drawers filled with things that haven't been disturbed for years. I like to think I haven't accumulated as much as other people because I'm not particularly sentimental about things.

Unfortunately, I'm probably fooling myself. It is frightening for me to consider the task that my children would face deciding what to save, sell, or give away if I passed suddenly. The reality of dealing with this stuff became even clearer recently when my wife was sorting through a storage unit filled with items from her mother's estate and found boxes and boxes of things that belonged to her grandmother, which had never been sorted.

Many of my clients find themselves in similar situations. So what steps can we take to "de-clutter" our lives and our estates from some of the stuff?

Here are a few suggestions that I offer to you and to myself.

1. Get Started. This may be the hardest part of the job. Pick a room, a storage unit, a closet, a file cabinet. Just choose one place to begin. If the job seems overwhelming, imagine what your family is going to feel if they have to undertake this task without your help.

2. Sort. Sort things into the following six piles:

Keep—Be honest. Ask yourself, "Do I really need this?"

Sell—You can try to sell your unneeded items on Craigslist or E-Bay or in a garage sale.

Give to family or friends—You are bound to find things that will be cherished by friends or family members. Delight them with a gift of your old treasures.

Give to charity—The Salvation Army and Big Brothers and Sisters run thrift stores that will pick up items you no longer want or need.

Throw away—Have a large garbage bag so you can throw things away. This is a particularly good idea when you are sorting old paperwork.

Treasures—You will come across some things that are genuine treasures. We will discuss what to do with treasures, artwork, and collectables in our next Newsletter!

 

 


Thursday, July 23, 2015

Prepare for the Worst; Expect the Best - Making Emergency Rooms Less Scary

If you’ve ever been to an emergency room, you know the importance of being able to answer a multitude of questions quickly and accurately.  Your life, or that of a loved one, may depend on the ability to provide the right information to those caring for you. If you are a Generations client, part of what’s needed is already right there in your Estate Planning Portfolio. We suggest you put all of the information that might be needed in a location that’s easily accessible, no matter where you are. It should be available when you travel - make sure a close family member or friend has access, as well.

As many of you know, I’ve dealt with a chronic medical condition since I was a teen. As a result my husband, Richard, and I have made a number of trips to the emergency room over the years.  The care has been excellent, partially because we’re prepared for those episodes. Here’s some of what we’ve learned:

  1. “Just the facts, Ma’am.” Doctors can’t help you unless they know what you’ve been through. You’re never at your best when you arrive at the ER. It’s ideal to put your medical history down in writing. Do not use a narrative format - List only the facts. The ER is not the time or place to tell people what your feelings were or how rude the store employees were when you broke your ankle. Be accurate in your descriptions, but don’t use medical terminology unless you are CERTAIN it’s correct.  Words that sound similar can mean very different things. Think about the similar sounds, but different meanings of “conscience” and “conscious.” List all prior hospitalizations and surgeries and their dates. Be accurate and truthful, even if it’s embarrassing.

  2. Bring your ID and insurance card. Leave personal items and valuables behind, if possible.

  3. List your drug allergies and sensitivities. Specify the name of the medication and what allergy symptoms it causes. Do you get hives? Become short of breath? Or something else. List any medications that have caused problems that meant they were discontinued. If one antibiotic, for instance, caused problems but another worked, list both and detail the chain of events.

  4. Keep a list of the medications, immunizations, vitamins and supplements you take. Keep it current. This should include:
    1. Medication name.
    2. Medication Strength.
    3. Dosage: How many do you take at a time, how many times a day or week, what days?
    4. How is it administered? Is it a capsule taken by mouth, an injection, a patch, a lozenge?
    5. For vitamins and supplements, include all of this information, plus the brand name.
    6. Immunizations by date.

  5. Put all of your medicine and supplement containers in a bag and bring them with you if you don’t have a current list of medications.

  6. List the names and phone numbers of all of your regular doctors. If you have lab work done regularly, include the name and phone number of the lab.

  7. Know where your Advance Health Care Directive is (behind the “Healthcare” tab in your Estate Planning Portfolio). Bring a copy of it with you or assure you have access to it when you travel. Make sure those you’ve asked to make health care decisions if you can’t do so have access to it. Bring their names and current phone numbers with you.

  8. Put the name and phone number of someone to contact in the event of emergency into your mobile phone. If you use a passcode, make sure this information is visible on the screen without needing the passcode. Place the initials “ICE” in front of this person’s name. This is recognized as an abbreviation for “In Case of Emergency” by emergency personnel.

  9. Bring essentials for an overnight stay if there’s a chance a stay will be required. Leave them in the car so the person who accompanies you can retrieve them if necessary.

  10. Be prepared to wait. And wait some more. Hopefully, you are not the sickest person in the waiting room. ER workers are trained to treat people in order of urgency. Don’t rely on the hospital’s magazines to pass the time.

  11. Express gratitude. ER doctors and staff work hard!

I wish I could say that I have all of this information at my fingertips 24/7, but that’s not the case. Don’t worry - even if you don’t have it all, bringing any of it along can make a visit to the ER easier. Better yet, just stay healthy so the need doesn’t arise!


Wednesday, December 17, 2014

Inherited IRAs - Naming Your Beneficiary

Over the last few years there have been a number of changes about how the IRS treats inherited IRAs and the necessary provisions if you name a trust as the IRA beneficiary.  On June 12th of this year, the United States Supreme Court unanimously ruled in the Clark case that inherited IRAs are not afforded the same protections from creditors as regular IRAs.  We don't yet have certainty about the impact of this decision for Alaskans.  These changes make this a great time to think again about who you have designated as beneficiary for your IRAs.

Following are some general guidelines on naming the beneficiary for your IRA.  Remember though, that there are always exceptions to the rules.  One of the benefits of being a Generations member is that we're here to help you assess your options.

In most circumstances, if you are married, the primary beneficiary should be your spouse. Having your spouse as the beneficiary allows them, upon your death, to make your IRA their own. This gives the greatest flexibility to "stretch out" the distributions from the IRA, have creditor protection, and get maximum tax deferral. However, asset protection concerns for your spouse in the event of your death, such as creditors or potential nursing home costs, might favor a different beneficiary.

If your spouse does not survive you, or if you have no spouse, the question or who to name as beneficiary is a bit more complicated. The answer depends upon the size of the IRA and, if there are multiple beneficiaries, the difference in their ages.

If the size of each beneficiary's share is too small to make sense of stretching out distributions over their life expectancy, you may want to name them directly as beneficiaries unless asset protection is a concern, in which case you might name your trust.

Naming a trust as beneficiary of an IRA adds an element of creditor protection that's not present when an individual is the named beneficiary.  If you want to have the beneficiaries receive distributions in annual increments over their life expectancies, and you name your living trust as the beneficiary, the oldest beneficiary's life expectancy is used to determine the payout period for all of the shares.

Instead, it may be a good idea to name the individual inherited trust shares as the beneficiaries of the IRA. This gives each beneficiary the ability to receive distributions over their life expectancy while their inheritance is still protected from creditors, judgments, and possible divorces. For this to work your trust must have "conduit" provisions, which are included in most of our recent trusts.

Another option, when you want different provisions for the distribution of the IRA than for the rest of your assets, is to use stand-alone IRA beneficiary trusts. This option is probably only viable if the IRA is worth enough to justify the costs of creation and administrative expenses of having separate trusts for the beneficiary IRAs, but it does provide excellent asset protection.

If you have any questions about your IRA beneficiaries, please do not hesitate to contact our office.

 



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Foley, Foley & Pearson, P.C. is a full service Estate Planning law firm. We offer our clients services in Probate Administration, Estate Taxes, Wills, Trusts, Disability and Incapacity Planning, Estate Administration, Corporate and Business Law, Business Succession Planning, and Planned Giving and Charitable Bequests.