Executor

Could Aretha’s Handwritten Wills Be Valid?

Published on: June 10, 2019 | By McCulloch & Miller, PLLC

Despite early reports that she had no will, it seems the Queen of Soul spent a fair amount of time creating three wills to provide for her four sons and leaving behind some strong opinions of the people in her circles. She just didn’t share those wills with her attorney.

When Aretha Franklin died of pancreatic cancer last August, it seemed that she had joined the ranks of many celebrities who never created their wills or thought much about what they wanted their legacy to be.

The Detroit News’s recent article, “Handwritten wills found in Aretha Franklin home favor her four sons” reports that three handwritten wills have been discovered in one of her homes.

Why is it Difficult to Pick an Executor?

Published on: April 10, 2019 | By McCulloch & Miller, PLLC

It’s hard because you want to be sure your chosen person understands your wishes, your financial situation and can make good decisions on your behalf. Not everyone can do that.

There is considerable responsibility that comes with being named an executor of an estate, explains MoneySense in the article “Should the sole recipient of an estate be the executor too?” There have been new rules passed in the last year that make the tax reporting even more important. What happens if you realize that the person you originally named may not be up to the task? This is another reason why it’s good to review estate plans every few years. There are several factors to consider when you think about whom you might name.

Consider the person’s age. It’s smart to choose a person who’s younger than you. Although that doesn’t guarantee that they will outlive you, it certainly ups the odds. Ideally, you should try to find a person who is comfortable with the areas of money and tax and doesn’t easily get overwhelmed by paperwork. Since the role of estate executor can be an intense issue that takes a great amount of time, the person you choose ideally will be retired or have the bandwidth to dedicate the substantial time commitment required to do the job properly.

How Life Insurance Works Best in an Estate Plan

Published on: February 15, 2019 | By McCulloch & Miller, PLLC

Life insurance can help heirs avoid having to incur expenses like estate taxes, funeral costs and similar expenses. However, it also gives heirs breathing room, so they can make the best use of other assets.

Here is an example of how life insurance should work. A father, Howie, dies and leaves a large estate to daughter Eva. The estate is large enough that it triggers a huge estate tax. However, the bulk of his assets are tied up in an IRA and real estate properties, some of which could be put on the market quickly, but not quickly enough for tax deadlines.

With that scenario, Eva might not want to immediately force a sale of the real estate. However, if she accesses the inherited IRA to raise money, she’ll have to pay income tax on the withdrawal and lose a terrific opportunity for extended tax deferral.

What Singles Need to Know About the Tax Cuts and Jobs Act

Published on: January 3, 2019 | By McCulloch & Miller, PLLC

Single with a net worth less than $11.4 million in 2019? You’re in luck—you can die knowing that all of your money will pass free of any federal estate tax to your heirs.

It was good news for the wealthy—the Tax Cuts and Jobs Act (TCJA) amped up the unified federal estate and gift tax exemption to $11.4 million for 2019 (and up to $11.18 million in 2018). If that wasn’t generous enough, those exemptions will be increased annually for inflation from 2020 to 2025. As comedian Mel Brooks would say, “It’s good to be the king.”

MarketWatch’s recent article, “How single folks should handle estate-tax planning under the new tax law,” explains that taxable estates above the exemption will have the excess taxed at a flat 40% rate. An individual’s cumulative lifetime taxable gifts in excess of the exemption are taxed at the 40% rate. Likewise, taxable gifts are those that are more than the annual federal gift tax exclusion of $15,000 for 2018 and 2019.

What Will Happen to Paul Allen’s Vast Fortune?

Published on: December 27, 2018 | By McCulloch & Miller, PLLC

The co-founder of Microsoft serves as an excellent example of advance planning, maintaining privacy and creating a legacy.

Through a trust established years ago and several companies, Paul Allen began building his legacy of philanthropy long before his death. His last will and testament was a simple six-page document, according to an article from The Seattle Times, “Paul Allen’s will sheds little light on what will happen to estate.”

The will was filed with King County on October 24—the same day his sister Jody announced she was named the executor and trustee of his estate.

One Dozen Must-Have Documents

Published on: November 6, 2018 | By McCulloch & Miller, PLLC

To make sure that your wishes are carried out, you’ll have to do your homework. Make sure that you cover these most important documents.

The last thing you want to do, is leave a bureaucratic mess for your loved ones when you die. Not only will it cause the family stress during a difficult time, it could change how your family thinks of you. That should be more than enough reason to get this done in advance!

US News & World Report’s recent article, “12 Documents to Prepare Now for Your Heirs,” says that when people don't have their paperwork ready, it can be a huge headache for the family. A family can be left with all kinds of paperwork to sort out while dealing with grief. Even worse, heirs may forfeit life insurance proceeds and tax deductions or overlook accounts they don't know exist. That's why it's critical to have important documents ready for loved ones. Here are the documents you should start preparing right away:

What are the Taxes When Inheriting an Out of State Vacation Home?

Published on: August 15, 2018 | By McCulloch & Miller, PLLC

When the family vacation home is passed from one generation to the next, there are certain tax issues to be aware of, particularly the step-up in basis. However, there may also be state taxes.

The first part of understanding the tax responsibility when you plan on giving it to your family vacation home to adult children who live out of state, is to understand the definition of “basis” and “step-up in basis.” These terms refer to income taxes and are used to determine any gains or losses on the sale of the property.

When you die, property that you own or control is valued as of the date of death. The children who inherit the property take it with that value as their basis. The first thing is to determine the parent’s basis in the property. You should then look at how the basis of inherited property is handled. Generally, the basis of property inherited from a decedent is one of the following:

Choose Executor, Agent and Trustees Carefully

Published on: August 13, 2018 | By McCulloch & Miller, PLLC

Selecting the individuals who will make important decisions on your behalf, when you are incapacitated or have passed away, is not to be done lightly.

Is there a bomb ticking quietly in your estate plan? The chances are good that there is, says Forbes in “Defusing The Time Bombs In Your Estate Plan.” The only question is, how big will that explosion be? The “bombs” are the people, or the individual, who you name to act on your behalf.

Whether they act during your lifetime or after you pass away, these individuals frequently can make or break your estate plan. They can determine the fates of family relationships and financial security. However, most people don’t realize the potential consequences of their surrogates’ actions. As a result, they don’t give sufficient thought to whom they appoint to these important roles.

The Unexpected Threat to Estate Planning

Published on: July 19, 2018 | By McCulloch & Miller, PLLC

Neglecting to plan for family dynamics can destroy the best estate plans. Make sure to address both difficult personalities and tax liabilities. They can be equally problematic.

Saving loved ones from a large tax bill and maximizing the transfer of wealth across generations is great, but your estate plan needs to do more than that. The plan must consider the dynamics of your family, how they may treat each other after you pass and what can be done to protect them from each other.

CNBC’s recent article, “This threat could devour thousands of dollars from your estate,” notes that even families that look like they're perfect, are not. Perfection doesn't exist. When families fail to address these types of issues in their estate plans, it can create conflict between beneficiaries.

How Singles Can Address Estate, Financial and Emergency Planning

Published on: July 16, 2018 | By McCulloch & Miller, PLLC

Not having a spouse makes it more important for singles to plan to protect themselves from a legal and financial standpoint.

Everyone should have a plan in place for incapacity, affirms fox5atlanta.com in a recent article, “Estate, emergency planning for single people.” This is especially true for singles. While married couples can usually rely on each other, or their adult children, in case of emergency, what happens to singles who don’t have family members? You need a backup plan and a backup person.

In many instances, singles don’t have a backup plan. If you are young and single, then you typically aren’t thinking about a worst-case scenario at all.