Wills

Houston, Do You Know the True Cost of Divorce?

Published on: March 24, 2016 | By McCulloch & Miller, PLLC

Once the initial emotional trauma is past and the couple starts working towards creating separation agreements, it's time to consider the day-to-day costs of living that change as the result of a divorce. The family economic unit that formerly had one mortgage or rent payment, one cable bill, one energy bill, etc., now has two of each of these bills. Wise planning for life after divorce includes living expenses, taxes and retirement planning.

Money's recent article, "Keep a Divorce From Killing Your Finances," offers several important tips for those going through or recently completing the divorce process.

Monitor assets in your divorce settlement: If you're in the midst of a divorce, examine the type of assets that you receive as part of your divorce property settlement. The reason for this is your cash flow. Even in cases where the math demonstrates an equal split between the two parties, one spouse could get stuck with a non-liquid asset, which might end up being difficult to liquidate if cash flow becomes a problem.

Executor Fees Can be Complicated if Will Does Not Specify Details

Published on: February 17, 2016 | By McCulloch & Miller, PLLC

A jumbo sized battle in a high profile and seemingly never-ending estate matter highlights what may appear to be a minor detail in estate planning but what is in fact an important consideration: the executor fee.

According to a recent Wall Street Journal article, "Battle Involving Leona Helmsley Estate Spotlights Issue of Executor Pay," the New York attorney general has challenged the proposed fee on the estate of real estate mogul Leona Helmsley. The $100 million sought by the executors, including two of Helmsley's grandchildren, is "astronomical" and should be reduced by 90%, the state Attorney General Eric Schneiderman said.

An issue in this case is that the will does not specify how the executor fees should be calculated, while ruling out the use of a fee schedule in state law, according to the attorney general's filing.

Divorced? Who’s Your Beneficiary Designation?

Published on: February 8, 2016 | By McCulloch & Miller, PLLC

Updating beneficiary designations is usually the simplest part of estate planning, but it's also the most likely part of estate planning to be overlooked. You have beneficiaries on pretty much every account, from 401(k)s to life insurance policies. Do you know who your beneficiaries are?

USA Today says that it's not just because many of us have the majority of our assets tied up in products like these. The article, "Your ex could get rich if you don't update your beneficiaries," explains that it's also because beneficiary designations on a 401(k) or IRA are legally binding and often take precedent over anything in your will. This can lead to some serious unpleasantries if your beneficiary information isn't updated.

Many times a person who has worked at the same company for 20 years has a beneficiary designation that they set up on their first day of work, and they never think about it again. However, their lives are rarely the same fifteen or twenty years down the line. For example, they might be divorced and remarried, or they might have children or grandchildren who weren't even a twinkle in someone's eyes way back then. Leaving an estate to an ex-spouse or disinheriting your own children is not a rare event when people don't update their beneficiary designations.

Estate Planning? Don’t Forget Digital Assets

Published on: December 4, 2015 | By McCulloch & Miller, PLLC

Today’s millennials understand that their digital assets, which include everything from family movies hosted in the cloud, to social media accounts, digital currencies like Bitcoin and domain names, have value that can be passed to others when they die. One young man created a will that listed all of his digital assets and used a password manager to gather all passwords in a central location. He gave the password manager to his brother, who is his estate executor. He also moved certain digital assets, particularly photos and movies, to a file sharing service so that other family members would have access to them in the event of his demise.

Many people neglect to include digital effects in their estate plans, which can be a huge mistake, as valuable assets may go unnoticed, or money and time might be spent attempting to find them.

There are some assets like digital currencies, video game characters, and Internet domain names that exist only in cyberspace. You can’t put these in a safety deposit box: they can be overlooked because they aren’t as tangible. These days, folks are acquiring more digital assets like Facebook photos or email addresses all the time. However, getting access to social media accounts can be difficult because laws governing digital assets vary by state. Online sites concerned with user privacy have drastically different terms and conditions that sometimes exclude executors.

TV Crime Boss Not Wise Guy About Estate Planning

Published on: November 25, 2015 | By McCulloch & Miller, PLLC

The irrevocable charitable lead trust is a trust that cannot be amended, revised or cancelled. We would call that bullet-proof, and it would have been a good idea for preventing James Gandolfini's estate from being "whacked" by estate taxes. The financial website thestreet.com took a closer look at this powerful estate planning tool in"How to Protect Your Estate From Getting 'Whacked' Like James Gandolfini's.

This trustprovides a stream of income for a designated number of years to the specified charity. At the end of that period, the property held in trust reverts back to the donor or to the donor's designated beneficiary.

When the donor makes the gift under a charitable lead trust, he or she immediately receives a federal income tax deduction equal to the present value of the future income stream. But the donor is taxed every year on the value of the income interest that is payable to the charity.

Thanksgiving Dinner: Time to Discuss Estate Planning?

Published on: November 24, 2015 | By McCulloch & Miller, PLLC

Long-standing American family traditions are changing with the times. The sled trips through snowy woods and icy rivers have given way to cross-country jet flights and international Skype visits. But regardless of the changes, when you all do sit down to a holiday meal, according to thestreet.com's "Estate Planning Over Thanksgiving? Time to Talk Turkey," this is a perfect time to start talking about important family matters, including estate planning.

If families or cultures are averse to raising such topics around the holidays, there should be an annual meeting to let family members know where an estate plan stands.

When combing through assets, remember that no item is too small for discussion, especially during the holidays. It is a natural time for emotions to run high, but it is a great time to discuss items of seemingly insignificant value that may take on added significance for each potential heir.

Take Time After Receiving an Inheritance Before Investing

Published on: November 23, 2015 | By McCulloch & Miller, PLLC

If you inherit a portfolio or a large amount of money, proceed with caution, according to "What to Do When You Get an Inheritance," in US News & World Report. Every situation is different, but a few basics need to be kept in mind for heirs who are thinking about investing their inheritance in stocks, bonds, hedge funds or any other investment vehicles.

First, get good information and consider assistance from an expert: speak with an experienced estate planning attorney, one who worked with those giving the inheritance. Heirs should find a CERTIFIED FINANCIAL PLANNER™ practitioner who works for a registered investment advisor with a fiduciary duty to their clients. They aren't commissioned salespeople.

If the inheritance involves a larger sum, it can be administered via a trust that needs to be funded properly due to tax ramifications and expenses.

Avoiding Estate Planning Mishaps

Published on: November 16, 2015 | By McCulloch & Miller, PLLC

In many cases, knowledge is power. But in estate planning, knowledge by itself can be a dangerous thing. You need to pair knowledge of the most common estate planning mistakes with another kind of knowledge: what to DO about those mistakes. And we would even add a third thing: knowing WHO to ask for help!

For example, you might know that it is desirable to avoid probate, but that is of little use unless you also know how to create an estate plan that will keep an estate out of probate. For the same reason it is important to not only know what common estate planning mistakes are but also to know how to avoid them.

A recent article by The Street entitled "How to Avoid the Most Common Estate Planning Mistake" discusses the most common mistakes and how to avoid them. Tips from the article include:

Is Your Estate Plan In Place?

Published on: October 22, 2015 | By McCulloch & Miller, PLLC

Perhaps the biggest reason to have an estate plan is to decide who will raise and care for your children if you and your spouse should both pass away. An experienced estate attorney who is knowledgeable about guardian ship laws in your state can help you make a plan, as noted in Houston (MO) Herald's recently published article, "Establish an estate plan before death comes knocking."

It is easy to put off these tough decisions by thinking we have plenty of time, but the truth is that we really don't know how much time we're going to have.

It's also easy for disagreements and misunderstandings to occur when someone passes away, particularly when the ownership of assets isn't clear. A professionally drafted will and other estate planning documents can eliminate much of this stress and heartache. The cost of settling an estate may be high, but it's even higher if an estate plan isn't in place.

Estate Planning for Blended Families Takes Special Consideration

Published on: October 12, 2015 | By McCulloch & Miller, PLLC

Anytime a blended family includes children from prior marriages, estate planning becomes more challenging, as reported in The Meridian Star, in “Estate planning after a second marriage.” If there are young children, how can you ensure that the surviving spouse will take care of them? And what if you pass away and your surviving spouse remarries? One way to prepare for this possibility is to make a child the primary beneficiary of a life insurance policy, place certain property under joint ownership with the child or set up a trust for your children. But none of these steps are simple, and all require the hard conversation with your spouse and with an experienced estate planning attorney.

If you have a written a will, it may require an update. Be extremely specific about which heir gets what and state bequests convincingly. The more convincing your bequest, the less ambiguity and the fewer issues that will arise. Also, update your beneficiary designations for retirement plans, investment accounts, and insurance policies. However, if you’ve been divorced, you may be precluded from changing beneficiaries in certain cases. Talk to a qualified estate planning lawyer. Take a copy of your divorcee decree with you and ask if revising your beneficiary designations will violate it.

You can also take a look at irrevocable trusts, which can be used to provide for your spouse and your kids. Some people establish a separate property trust to provide for their spouse after their death and designate their real property to their children. Parents can also create irrevocable trusts to direct assets to particular children. These can be great estate planning vehicles because: (i) a trust agreement isn’t a public document; (ii) assets within irrevocable trusts are shielded from creditors and from inheritance claims of spouses of the adult children named as heirs; and (iii) an irrevocable trust represents a “finalized” estate planning decision—which guarantees that particular assets transfer to a parent’s biological children. In addition, irrevocable trusts are rarely undone.