Inheritance

Can You Talk to Your Aging Parents About Finances?

Published on: July 27, 2015 | By McCulloch & Miller, PLLC

Talking with aging parents about their finances, their wishes, and the future, is never an easy conversation. When it became clear that her mother was starting to suffer from memory loss, Gwen started to speak with her mother about finances, accounts and final wishes. While she felt uncomfortable pressing her own mother for information, in the long run obtaining this information made things easier when Gwen, the daughter, ultimately had to take over her mother’s finances. While not all parents are willing to have these discussions, they are important to prevent the difficulties that eventually arise. Gwen Morgan, the author of “What If…Workbook,” a guide that helps gather and convey this type of information, notes that “People hold tight to their bootstraps.” Communicating early and often can help.

Even if your parents are reluctant to discuss their finances, the sooner the conversation begins, the better for all concerned. In an article posted on Go Banking Rates, “How to Talk About Money With Your Aging Parents,” the author shares a deeply personal experience with her own mother. Some parents are simply not willing to have these conversations, and several different approaches may need to be tried before you find the one that they are comfortable with. Not knowing key information could lead to family members needing to go to court to obtain the ability to gain control of their parents' finances and make medical decisions on their behalf. These scenarios can cause serious emotional and financial hardship for families.

Here are several strategies from the article to get aging parents to discuss their finances. Make sure that the conversation is respectful. Also make certain that it’s understood that you’re not trying to take over your parents’ finances. Starting with an area that doesn’t feel like a loss of power, may be more successful, the article advises.

Having THAT Conversation with Your Houston Heirs

Published on: July 21, 2015 | By McCulloch & Miller, PLLC

While some estate planning is better than none, most Americans don't speak with their heirs about basic issues – like where the wills can be found – and most wills are not updated. A recent study from the Center on Wealth and Philanthropy at Boston College, estimates that between 2007 and 2061, as much $59 trillion will be transferred from 93.6 million American estates. The numbers are clear, but little else is. How assets are being distributed, what plans are in place for potential beneficiaries and other critical issues are murky at best, and in most cases, completely undefined.

If you've got heirs, you may want to do something few Americans do – tell them where your will can be found, and discuss your intentions for your estate. These two conversations would put you miles above what happens to most heirs – according to "5 Biggest Estate Planning Mistakes You Can Make," seen in The Street. According to a caring.com survey of adult children more than half (56 percent) of U.S. parents have a will or living trust document in place while nearly one-third of parents (27 percent) don't have estate documents in place; and 16 percent of adult children have no idea about what's in their parents' estate plans. Looks like we are setting up for a generational scavenger hunt – even when parents have an estate plan in place, most adult children don't know where the documents are located (52 percent.) Even worse, 58 percent don't know what the estate planning documents say!

The article cautions that even when you have a will or a trust, there's no absolute guarantee that your assets will be distributed without a hitch. Wills and trusts have kept families in litigation and at odds with each other for years if the estate plan isn't administered properly. To make things easier for your family and make sure your wishes are carried out properly after you pass, try to steer clear of these monstrous errors:

Hard-to-Value Houston Estates Can Be Tax Concern

Published on: July 20, 2015 | By McCulloch & Miller, PLLC

The Internal Revenue Service has won a settlement of $388 million from the estate of Detroit Pistons owner Bill Davidson. According to the IRS, the estate owned more than $2 billion in additional taxes. To gain some perspective: in 2013, the US Treasury took in a total of $12.7 billion in estate tax revenue. Davidson, who made his fortune in glass and auto products, was best known to the public as the team owner of the Pistons, the W.N.B.A.'s Detroit Shock and the N.H.L. Tampa Bay Lightning.

In an article that appeared in Forbes, "IRS Grabs $388 Million From Billionaire Davidson Estate," the case against Davidson's estate is explained in detail. Two years ago, Davidson's estate filed a matter with the U.S. tax court that challenged the agency's assessment of additional taxes. They claimed that the estate owed $187 million in gift taxes, $152 million in estate taxes, and $49 million in generation-skipping taxes, plus a $133,000 gift tax penalty bill.

Two problems factored into to these deficiencies. The IRS claims that the Davidson estate undervalued some corporate stock and improperly valued the self-cancelling installment notes (SCINs). The IRS said that the estate also underestimated the value of privately held stock held in trust for Davidson's children and grandchildren.

YOU Can Define Your Houston Legacy

Published on: July 15, 2015 | By McCulloch & Miller, PLLC

Unlike previous generations, the baby boomers are more concerned with having enough money to last through their retirement years than with leaving substantial assets to their heirs and to charities. But they are still concerned with leaving a legacy for their children and grandchildren. A new definition of a legacy is not based on dollars, but on family memories and shared values.

Money isn’t the only definition of legacy, according to the US News article titled “How Boomers Are Redefining 'Legacy.’” Baby boomers realize that their top priority is to have enough assets to support themselves, but are starting to redefine “legacy” in the process. For some individuals, it means giving away some money now. For others, it’s restructuring some assets to leave a financial inheritance. For most, the process of aligning their assets with their priorities means the opportunity to create non-financial legacies.

Rethink how you label the financial help you're giving now to your next generation. Are you helping them out with college tuition? Helping with the living expenses of a slow-to-launch millennial by having them stay at home or by covering some bills is not uncommon. About 62% of Americans 50 and older are providing financial support to family members, according to a recent study. The study found that the subsidies averaged $15,000 over five years, but also increased with the givers’ resources. You’re allowed to give away $14,000 per recipient, per year, without triggering any tax penalties or disclosures … more than that and the person who gives has to complete a gift tax return. Also, the gift tax is deducted from your lifetime cap on tax-free gifting.

Don’t Let Texas Decide What Happens to Your Houston Assets

Published on: July 14, 2015 | By McCulloch & Miller, PLLC

Drafting your will and testament is not exactly on most summer to-do lists. For many, the process is a memento mori, a task more foreboding than mowing the overgrown lawn. It's no surprise that according to the American Bar Association, 55 percent of Americans do not have a will or other estate plan in place when they die. And for families, the statistics are not much better, according to a survey done by the online legal service Rocket Lawyer. The firm found over half of Americans with children did not have a will in 2014. The reason most Americans said they didn't have a will, according to the survey: "They just haven't gotten around to making one."

The Denver Post says that the consequence of having no will is there's no guarantee who’s going to get your assets. The article, “How estate plans protect family assets far better than a will,”also says that you can be placing your children at risk. They could end up in Child Protective Services or in the custody of someone you wouldn’t dream of parenting your kids.

"If you don't have an estate plan, you have a 'plan' written by the state," the article states. This means you're relying on the state to decide what happens with your kids and your assets. It means that your family will be required to go through the courts, and probate may take months or even years, according to the American Bar Association. Most states have waiting periods for creditors to respond, during which time the probate estate can’t be distributed—and that's only if an individual's affairs are in order. Anything hairy means delays and more work.

How to Determine Your Trustee?

Published on: July 7, 2015 | By McCulloch & Miller, PLLC

Many people set up trusts to help provide for loved ones and favorite causes after they pass away. A trust can help manage the wealth you wish to transfer and ensures the efficient distribution of assets—such as property or a sum of money—over a set period of time. Yet a trust is only as strong as the trustee overseeing it.

A trustee is the individual or company that administers a trust for the benefit of named beneficiaries. Duties can range widely and may include paying bills and taxes, and managing property and investments.

Forbes recently had a nice article about this titled “How To Choose The Right Trustee For Your Estate.” Most importantly, the article says a trustee “has a legal fiduciary duty to manage a trust on a beneficiary’s behalf,” by always acting in the beneficiary’s best interests, as outlined by the trust.

Life Estates May Help Protect Houston Homes

Published on: July 3, 2015 | By McCulloch & Miller, PLLC

Let's take a closer look at what a life estate is and how using one could help you save your family home.

Home is where the heart is. The thought of losing your home can be devastating. What options do you have to prevent this from happening?

Motley Fool’s recent article, titled “What a Life Estate Is And How It Could Save Your Home,” tells us about life estates.

Tell Your Houston Family Your Estate Planning Goals

Published on: July 1, 2015 | By McCulloch & Miller, PLLC

What can you do to push past the emotional aspects of estate planning to make sure your surviving family members can successfully deal with issues that may arise after you pass away?

Start early. Patrick Severo is the senior vice president and financial advisor at RBC Wealth Management. He also has three kids and knew he needed a plan to take care of them after he is gone. Severo recently told Forbes in the article titled, “Don't Let Emotion Sabotage Your Estate Plan,”that, although the discussion about what happens after you pass away feels uncomfortable, the earlier you can begin, the better off you’ll be because these things take time – maybe even years!

To help the people you care about handle the financial, administrative and familial consequences of your eventual passing, be as transparent as possible about what they can expect from your estate. Mismatched expectations can often cause trouble that could’ve easily been avoided if the news wasn’t coming as such a surprise.

Don’t Have a Will? Do You Know What Happens?

Published on: June 29, 2015 | By McCulloch & Miller, PLLC

In some parts of the U.S., like West Virginia, without a will, your estate is first distributed according to your marital status and children, including those of previous marriages. However, if you have no spouse or children, you may want to pull out your family tree to see who could be in the running.

When there is no will in place, commonly in West Virginia, the current spouse of a married couple with or without one or more descendants receives the full estate. However, your spouse would receive only 60% of the estate if he or she had children with you and also a previous marriage. Your children would then receive the remaining 40% of the estate. But if you were the spouse with kids from a previous marriage(s), then all your children will inherit one-half of your estate, and the other half to your current spouse.

Confused yet? That’s what The (Huntington, WV) Herald-Dispatch asks us in its recent article titled “Planning ahead: What happens if you don't have a will.”

Wisconsin’s Northland College Receives $200K from Local Bar Owner

Published on: June 19, 2015 | By McCulloch & Miller, PLLC

A bar owner who never attended college has left $200,000 to the alma mater of her best customers. Ida F. Meyer of Lake Placid, Fla., died March 22 at 103 years of age. “I might as well give it back to the College,” she told her attorney Michael A. Rider, during her estate planning. “Those kids were good to us.”

A Northland News article, “Former bar owner bequests $200,000 to Northland College,”reported how students from that era remember a fastidious, kind couple who didn’t tolerate loud or obnoxious behavior. They ate foot-long hotdogs and brick cheese sandwiches on rye bread, and drank dime taps. They played hits on the jukebox.

Cabbie’s is credited with many chance meetings, first dates and long-lasting marriages. “I met my sweet wife of 48 years in the fall of 1964 on a Friday night at Cabbie’s,” said Northland College alumnus Tom Bogess in the article.