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Ozzy and Sharon estate Plan

Ozzy Osbourne and Sharon Osbourne Have an Estate Plan

Ozzy Osbourne and Sharon Osbourne Have an Estate Plan.  Heavy metal rock star Ozzy Osbourne and his talk show host wife, Sharon Osbourne say that they have a plan to pass the lion’s share of their estate to their children.

Ozzy rose to fame during the 1970s as the lead vocalist of the heavy metal band Black Sabbath, and Sharon became a household name more recently, thanks to her role in the MTV reality show “The Osbournes” and her job as a daytime talk show host.

Sharon explained the couple’s plan on The Talk, while reacting to news that the late Kirk Douglas bequeathed most of his $80 million fortune to charity when he died in February 2020 at age 103, reports I Heart Radio’s recent article entitled “Ozzy, Sharon Osbourne’s Children Will Determine The Fate Of Their Fortune.”

“Everybody is different,” Sharon said. “And I just know that my husband’s body of work, that he’s written, and kept us all in the lifestyle that we love, goes to my children.”

The children will also be entrusted with determining what will happen to Ozzy’s image and likeness, Sharon also said.

“I don’t want someone that never met my husband owning his name and likeness and selling T-shirts everywhere and whatever. No, it stays in the Osbourne family.”

Ozzy’s latest solo album, Ordinary Man—which is his 12th overall—already ranks as his highest-charting solo debut ever in the United Kingdom.

Between Ozzy’s equity in Black Sabbath, the solo recordings that he and Sharon have worked so hard to control and the hours of television in which the two have starred, it’s not hard to see the fruits of the couple’s labor benefitting several future generations of Osbournes.

Estate planning is important in every field and for everyone. However, it’s particularly important in the entertainment business, where will contests and questions about inheritances frequently are publicized in the press. To that end, the estates of celebrated artists like Frank Zappa, Kurt Cobain, Prince, Tom Petty, Chris Cornell and many others have been the subject of public battles in recent years.

Even if you are not about to release your latest solo album, you still need to work with an experienced estate planning attorney to make certain that your plans for your assets and property are carried out after your death.  That probably is why Ozzy Osbourne and Sharon Osbourne Have an Estate Plan.

Reference: I Heart Radio (March 2, 2020) “Ozzy, Sharon Osbourne’s Children Will Determine The Fate Of Their Fortune”

Read more about this at:    OZZY OSBOURNE Will Leave His ‘Body Of Work’ To His Children, Says SHARON OSBOURNE

Also this might be interesting :   15 Kids Who Won’t Inherit A Dime From Their Celeb Parents (And 5 Who Are Already Millionaires)

Read about other Celebrities and their Estate planning from one of our previous Blogs: The Latest on Kirk Douglas’ Estate

How Can Celebrities’ Estate Planning Be Impacted by Alzheimer’s?

life Insurance in an estate Plan

Is Life Insurance a Good Idea for My Estate Plan?

Is Life Insurance a Good Idea for My Estate Plan? Around 57% of adults in the U.S. own a life insurance policy, according to a joint study by LIMRA, a trade group, and Life Happens, a nonprofit insurance advocate. CNBC’s recent article entitled “Why some life insurance could prove risky for consumers” goes on to state that the sales standards governing how agents and brokers can recommend certain types of life insurance to consumers are not strict. The complexity of many types of life insurance may also hide potential abuse and make it hard to know if you’re getting good advice.

There are some types of life insurance that aren’t necessarily mind-boggling. For example, term insurance is pretty clear. This type of policy covers buyers for a certain period of time, such as 10 or 20 years, for an annual fee that’s locked in and which the purchaser knows at the time of sale.

However, permanent life insurance — also called as cash-value insurance — is more complicated. With permanent life insurance, a buyer is meant to keep the insurance policy, such as whole life and universal life, until death rather than for a set term. This type of insurance also has a side investment account that earns interest and dividends. The account is designed to cover annual premiums and other insurance costs, which typically increase each year with age. But in the event that an investment account underperforms expectations or insurance charges increase more than expected, a purchaser may have to pay more money to cover a shortfall or risk losing the coverage altogether.

Remember that a policy that may look fairly inexpensive today, may not be the case later in life.

It’s also important to note that state life insurance regulations frequently don’t require insurance agents to fully disclose the risks to the public. Of course, insurance companies promised that they’ll disclose the risks to buyers in the contracts they sign. However, the fine print can be more than 100 pages long.

Insurance agents are also typically permitted to recommend life insurance that will pay them a higher commission, rather than suggesting a policy that may be just as good but pay the agent less or no commission. While not every life insurance agent is misleading the public, the regulations aren’t in the buyer’s favor, say consumer advocates. Each state regulates many different aspects of life insurance, like advertising, disclosure, licensing and unfair trade practices.

State insurance regulators say that there were over 4,000 individual cases of wrongdoing by life insurers or insurance agents in 2019, according to data from the National Association of Insurance Commissioners. That’s compared with the nearly 138 million life insurance policies owned by Americans as of year-end 2018, according to ACLI.

As a reminder, you should only buy insurance policies that you understand. Be sure to ask about and be aware of risks, like potential increases in future premiums and other elements of a life insurance policy that could be changed. You should also consult with an experienced estate planning attorney to be sure that the amount of life insurance you’re considering fits into your overall financial and estate plan. We hope this answers the question of if Life Insurance is a Good Idea for My Estate Plan?

Reference: CNBC (January 19, 2020) “Why some life insurance could prove risky for consumers”

Read more related articles at : Life Insurance for Estate Planning (5 Fantastic Benefits)

Top 10 Considerations for Estate Planning with Life Insurance

Also read one of our previous Blogs at : How can Life Insurance Help my Estate Plan

 

Princes brother

How Does the Death of Prince’s Brother Impact the Late Rock Star’s Estate?

How Does the Death of Prince’s Brother Impact the Late Rock Star’s Estate?  Alfred Jackson was one of six of Prince’s siblings who were heirs to their brother’s fortune worth at least $100 million. But they sold 90% of his estate rights last year to Primary Wave, a well-funded and growing entertainment company that invests in music publishing and recording rights. Prince’s sister Tyka Nelson also struck a deal with Primary Wave, and was given cash up front as the estate proceedings drag on.

The StarTribune’s recent article entitled “Death of Prince heir complicates estate settlement even more” reports that because of these moves, about a third of Prince’s assets could wind up being controlled by parties who were not related to him—which adds to the tough job of settling the late rock star’s estate.

Just a few hours after signing with Primary Wave in August of 2019, the sixty-six-year-old Jackson succumbed to heart disease, while at his home in Kansas City. However, unlike Prince, he had signed a will. Jackson did not have a wife or children. However, in another twist, rather than leaving his estate to his siblings, he bequeathed all his assets to a friend, Raffles Van Exel, who claims to be an entertainment consultant. However, he’s best known for hanging out with Whitney Houston in her final days, as well as Michael Jackson’s family. Exel was also a creative force behind O.J. Simpson’s notorious “If I Did It” book project.

Primary Wave’s deal with Jackson is being reviewed by his own family, at least his siblings who aren’t related to Prince. They aim to contest his will.

Prince’s accidental death by fentanyl in 2016 created one of the largest and most complicated probate court proceedings in Minnesota history. That’s because the rock star failed to draft a will. The value of his estate is somewhere between $100 million to $300 million estate and is comprised of potential music royalties.

Prince’s heirs are unable to get their money from his estate until it is settled. Because the probate proceedings are dragging on, Primary Wave offered Prince’s heirs the chance to raise cash by selling their estate rights. These heirs are all approaching 60Jackson wanted to enjoy life now, rather than wait for the process to be finalized. The siblings, by that time, may be too old, sick or dead to enjoy their inheritance.

Primary Wave tried to get at least three of Prince’s siblings — Sharon, Norrine, and John Nelson, to sell their estate rights. However, the three refused and said in a recent court filing that they are concerned that Primary Wave will use its deep pockets to their detriment. The company’s involvement would only lead to more delays and tensions, the siblings said in a letter directly to the probate judge. With the case draining their “limited resources,” the three explained that they are unable to pay legal counsel in this case and are representing themselves.

The terms of Primary Wave’s deals with Tyka Nelson and Alfred Jackson are private. However, the company has been asserting its rights in Prince’s probate case. A 2019 court filing said that the company says it “stands in the shoes” of the two heirs. That is How  the Death of Prince’s Brother Impacts the Late Rock Star’s Estate.

Reference: StarTribune (February 22, 2020) “Death of Prince heir complicates estate settlement even more”

Read more related articles at: 

Death of Prince heir complicates estate settlement even more

Prince’s Posthumous Year In Business Was Full Of Weirdos And Chaos

Read about other Celebrity Estate stories on one of our previous Blogs at:

Luke Perry’s Estate Planning – How Well Did He Do?

Why is Angelina Jolie Leaving Her Total Estate to Just One of Her Kids?

 

What are the Penalty-Free IRA Withdrawals?

What are the Penalty-Free IRA Withdrawals?

What are the Penalty-Free IRA Withdrawals? Traditional and Roth IRA distributions can bring about a 10% penalty, if you take them too soon. However, there are several early-withdrawal exceptions that will let you avoid the fine.

Investopedia’s recent article entitled “9 Penalty-Free IRA Withdrawals” examines some IRA withdrawals that can be made during retirement.

The IRS will hit you with a 10% penalty on an early IRA withdrawal to motivate you to keep your retirement savings intact. However, you may be able to get around the penalty in some situations. Here are nine circumstances where you can take an early withdrawal from a traditional or Roth IRA without being penalized.

  1. Unreimbursed Medical Expenses. If you don’t have health insurance, or you have out-of-pocket medical expenses that aren’t covered by insurance, you may be able to take penalty-free distributions from your IRA to pay for these expenses. To be eligible, you must pay the medical expenses during the same calendar year you make the withdrawal. Further, your unreimbursed medical expenses must the more than 10% of your adjusted gross income (AGI).
  2. Health Insurance Premiums During Unemployment. If you’re unemployed, you may take penalty-free distributions from your IRA to pay for health insurance premiums. For the distributions to be eligible for the penalty-free treatment, you must satisfy these conditions:
  • You lost your job
  • You received unemployment compensation for 12 consecutive weeks
  • You took the distributions during either the year you received the unemployment compensation or the next year; and
  • You received the distributions no later than 60 days after returning to work.
  1. Permanent Disability. If you become permanently disabled and can no longer work, you can withdraw money from your IRA without the 10% penalty. You can use the distribution for any reason. Just remember that your plan administrator may need you to provide evidence of the disability, prior to approving a penalty-free withdrawal.
  2. Higher-Education Expenses. You may be able to avoid the 10% penalty, when you use IRA funds to pay for qualified education expenses for you, your spouse, or your child. These qualified education expenses include tuition, fees, books, supplies and equipment required for enrollment. Room and board are also approved for students enrolled at least half-time.
  3. An Inherited IRA. If you’re the beneficiary of an IRA, your withdrawals aren’t subject to the 10% early withdrawal penalty. However, this exception doesn’t apply if you’re the spouse of the original account holder, you are the sole beneficiary and you elect a spousal transfer (rolling over the funds into your own non-inherited IRA). In this instance, the IRA is handled as if it were yours, to start, which means the 10% early withdrawal penalties still are applicable.
  4. To Buy, Build, or Rebuild a Home. You can withdraw up to $10,000 (which is a lifetime limit) from your IRA without penalty to buy, build, or rebuild a home. To be eligible, you must be a “first-time” homebuyer, (which means that you haven’t owned a home in the previous two years). However, you could have been a homeowner in the past and still qualify as a first-time homebuyer today. If you’re married, your spouse can add an additional $10,000 from his or her IRA. You can also use the money to assist your child, grandchild, parent, or other family members, as long as they meet the first-time homebuyer definition.
  5. Substantially Equal Periodic Payments. If you need to make regular withdrawals from your IRA for several years, the IRS lets you to do so penalty-free, if you meet certain requirements. Therefore, you withdraw the same amount—determined under one of three IRS-pre-approved methods—each year for five years or until you turn 59½, whichever one comes later. This is referred to as taking substantially equal periodic payments (SEPPs) from your IRA.
  6. An IRS Levy. If you have unpaid federal taxes, the IRS can use money in your IRA to pay the bill. The 10% penalty won’t apply, if the IRS levies the money directly.
  7. Active Duty. Qualified reservist distributions aren’t subject to the 10% penalty. In some instances, you may be able to repay the distributions, even if the repayment contributions exceed annual contribution limits. However, you are required to do so within two years of the end of active duty.

While if the circumstances discussed here are exempt from the early-distribution penalty, they still may be subject to federal and state tax. To claim the early-distribution penalty exception, you may be required to file IRS Form 5329 along with your income tax return, unless your IRA custodian reports the amount as being exempt on IRS Form 1099-R.  That explains What the Penalty-Free IRA Withdrawals are.

Reference: Investopedia (Jan. 20, 2020) “9 Penalty-Free IRA Withdrawals”

Read more about this at:      11 Ways to Avoid the IRA Early Withdrawal Penalty/USNews

 Traditional IRA Withdrawal Rules /charles Schwab

And read one of our previous blogs at:    Making an IRA Part of the Estate Plan

Walt Disney and his Grandchild

What are Walt Disney’s Heirs Worth?

What are Walt Disney’s Heirs Worth?  It’s not known just how much the Disney family is worth. GOBankingRates estimated the company’s net worth to be roughly $130 billion. Roy O.’s grandson, Roy P., said at one point that the family owns less than 3% of the company. Even so, that would put their fortune around $3.9 billion (not counting any investments in addition to Disney holdings).

Wealth Advisor’s recent article entitled “Disney Family Feud As Heirs Battle For $400 Million Trust Fund” says that in 1925, Walt married Lillian Bounds, a studio inker. Eight years later, she gave birth to Diane, and the couple later adopted their daughter Sharon as a baby.

Walt Disney is said to have adored his 10 grandchildren. When he died in 1966 of lung cancer, he left numerous trusts and family foundations for his family and heirs.

Walt’s younger daughter, Sharon, adopted one child, Victoria, with her first husband, Robert Brown. She then had twins, Brad and Michelle, with her second husband, Bill Lund. She died from breast cancer in 1993 at age 56. Michelle has never had a job and owns three homes, spending a lot of time in Newport Beach, CA according to Gardner.

Victoria reportedly lived an extravagant lifestyle that included $5,000-a-night suites at the Royal Palms in Las Vegas. One report notes that she once went on a Disney cruise ship and destroyed her suite to such a degree that Michael Eisner, then-CEO of the company, had to ask the trustees to pay for the damages. Her share of the family fortune was added to Brad’s and Michelle’s after she died in 2002 from health complications. However, Sharon’s twins later became embattled in a years-long feud over their $400 million trust fund. That inheritance was supposed to be distributed in annual payments and lump sums at five-year intervals at ages 35, 40, and 45. However, the trustees dispersed the payments to Michelle and withheld Brad’s.

Michelle and the trustees argued that Brad wasn’t able to take care of his share because of a “chronic cognitive disability” and that Bill, their father, was taking advantage of this to gain money, according to NBC News.

Bill said that the trustees were manipulating his daughter Michelle. Bill was previously a trustee but resigned after an allegation that he used trust money to gain more than $3 million in kickbacks from a real-estate deal. He reportedly agreed to an annual settlement of $500,000.  So we truly do not know what the Walt Disney’s Heirs Worth.

Reference: Wealth Advisor (Feb. 11, 2020) “Disney Family Feud As Heirs Battle For $400 Million Trust Fund”

Read some related articles at:                  The Disney’s, not the happiest family on Earth. /nbcnews.com

Disney Family Networth: Meet the family behind the media empire/businessinsider.com

Also Read one of our previous Blogs:                Are You Considering the Impact of Your Estate Plan on your Heirs?

 

DIY Estate Planning

How Bad Can a Do-It-Yourself Estate Plan Be? Very!

How Bad Can a Do-It-Yourself Estate Plan Be? Very!  Here’s a real world example of why what seems like a good idea backfires, as reported in The National Law Review’s article “Unintended Consequences of a Do-It-Yourself Estate Plan.”

Mrs. Ann Aldrich wrote her own will, using a preprinted legal form. She listed her property, including account numbers for her financial accounts. She left each item of property to her sister, Mary Jane Eaton. If Mary Jane Eaton did not survive, then Mr. James Aldrich, Ann’s brother, was the designated beneficiary.

A few things that you don’t find on forms: wills and trusts need to contain a residuary, and other clauses so that assets are properly distributed. Ms. Aldrich, not being an experienced estate planning attorney, did not include such clauses. This one omission became a costly problem for her heir that led to litigation.

Mary Jane Eaton predeceased Ms. Aldrich. As Mary Jane Eaton had named Ms. Aldrich as her beneficiary, Ms. Aldrich then created a new account to receive her inheritance from Ms. Eaton. She also, as was appropriate, took title to Ms. Eaton’s real estate.

However, Ms. Aldrich never updated her will to include the new account and the new real estate property.

After Ms. Aldrich’s death, James Aldrich became enmeshed in litigation with two of Ms. Aldrich’s nieces over the assets that were not included in Ms. Aldrich’s will. The case went to court.

The Florida Supreme Court ruled that Ms. Aldrich’s will only addressed the property specifically listed to be distributed to Mr. James Aldrich. Those assets passed to Ms. Aldrich’s nieces.

Ms. Aldrich did not name those nieces anywhere in her will, and likely had no intention for them to receive any property. However, the intent could not be inferred by the court, which could only follow the will.

This is a real example of two basic problems that can result from do-it-yourself estate planning: unintended heirs and costly litigation.

More complex problems can arise when there are blended family or other family structure issues, incomplete tax planning or wills that are not prepared properly and that are deemed invalid by the court.

Even ‘simple’ estate plans that are not prepared by an estate planning lawyer can lead to unintended consequences. Not only was the cost of litigation far more than the cost of having an estate plan prepared, but the relationship between Ms. Aldrich’s brother and her nieces was likely damaged beyond repair.  that is how bad a Do-It-Yourself Estate Plan Be!

Reference: The National Law Review (Feb. 10, 2020) “Unintended Consequences of a Do-It-Yourself Estate Plan”

Read more about this at : Do it yourself Estate Planning by the American Bar Association

Is Do-it- yourself Estate Planning a Valid option? from Forbes

You can also read one of our previous Blogs at:  Do it yourself Wills go wrong- Fast

 

 

Kirk Douglas

The Latest on Kirk Douglas’ Estate

What is The Latest on Kirk Douglas’ Estate? Wealth Advisor’s recent article entitled “Kirk Douglas Lived Well, Died Rich And May Trigger $200M Los Angeles Range War” explains that Douglas worked steadily in a four-decade period but slowed down after the early 1980s. Since that’s almost 40 years ago, one might think that what would be considered a modest legacy by modern standards would be whittled down considerably. However, Kirk Douglas died extremely rich, despite a long life and decades of semi-retirement.

Douglas was one of the first to ask to participate in the profit of his movies and was one of the first stars to form his own production company. For example, Spartacus was big enough to gross $30 million on its $12 million budget. When he started his company, he refused to pay himself for that film. Instead he took 60% of the profit and wound up about $3 million ahead. His company owned the films and sold off distribution rights.

His widow Anne is now the only shareholder of record. She’s rolled the money into a family trust that over the decades created numerous tiers of holding companies and joint ventures. One of those joint ventures ended up owning half the land under Marina Del Rey’s high-rise Shores apartment complex, a property that cost a reported $165 million to build. The land is nearly priceless.

Now that it’s only Anne, the successor trustees will one day need to decide what to do with the land. She called the shots on the accounting side. Kirk remarked that he didn’t even know where the money was. However, when he found out, he got eager to give it all away. Tens of millions have already been committed to hospitals, schools and theaters.

Estate tax won’t be an issue because Kirk and Anne conducted thorough estate planning so that any wealth that goes to the family will transfer via a trust. That way, they’ll get a portion of the income without triggering estate tax concerns.

Thanks to all of Kirk’s films—many of which he owned like Spartacus—he compiled tens of millions of dollars in cash and stock during his lifetime. In almost 70 years of marital bliss, his planning added up to a lot of marital property. It was good life with good things yet to come.

It’s a testament to the power of long-term thinking. Kirk Douglas’ fortune has remained intact for generations and will undoubtedly keep helping the world for many years to come.

So that is the Latest on Kirk Douglas’ Estate.

Reference:  Wealth Advisor (Feb. 4, 2020) “Kirk Douglas Lived Well, Died Rich And May Trigger $200M Los Angeles Range War”

Read these articles for more information:    Kirk Douglas gives most of $61M fortune to charity, leaving nothing for son Michael

                                                                                             Kirk Douglas leaves most of his $80 million fortune to charity

Also read one of our previous Blogs about other celebrities who left their Estate’s to charity:

George Michael’s Charity Continues

If you are interested in leaving part of your Estate to charity, we also have experience in this area. Visit our Website at:

Charitable Planning In Northeast Florida

 

Special Needs

Special Needs Guardianship Can Be a Challenge

Special Needs Guardianship Can Be a Challenge. A person who’s diagnosed with autism should have a named guardian before turning 18. At that point, the person can sign binding contracts, make health care decisions and sign IEPs (Individualized Education Plan) without parental involvement.

Autism Parenting’s recent article entitled “A Brief Overview of Special Needs Guardianship” explains that guardianship is a legal process in which a responsible person is named as the final decision maker for another. When it’s the parent and their child with autism, the parent can become the guardian of the 18-year-old with autism in a specific legal process. Guardianship gives the parent the final say, on all decisions regarding the child.

It’s not uncommon for a parent to be hesitant about becoming the guardian, especially if the child is developing well and has several abilities. One question to ask in this situation concerns the intellectual or developmental age of my child. If the honest answer is below the age 18 (like 14 or 12 years old), then you’ll want to ask yourself if you’d allow your 14-year-old make all healthcare, education, housing and financial decisions and have those decisions be legally binding. Probably not. In that case, you should look into guardianship.

If your adult child continues to develop and at some point down the road can make decisions on her own, the guardian can petition the court to have relationship revoked.

Another important time period that guardianship needs to be considered is when the parents die. The appointed guardian then will be responsible for day-to-day care or decisions on that day to day care. The selection of a guardian for this situation is often a large roadblock to finishing up a family’s plan.

The reason is because parents must make this decision before completing their will. If parents have trouble with choosing a potential guardian, consider these criteria when considering each person: location, family circumstances, their personality qualities and demeanor, their age, their experience with special needs individuals, the fact that the person knows your family member, your parent or your loved one knows the individual, their financial position, marital status and work schedule.

By the following factors, parents can rank each possible future guardian and settle on the best possible choice.

Although the guardian might never be as committed as a parent, if you use a more objective process (like the criteria above), parents will be better able to find a qualified future guardian.

Special Needs Guardianship Can Be a Challenge but with careful planning it can be achieved.

Reference: Autism Parenting (undated) “A Brief Overview of Special Needs Guardianship”

For More Information on this subject Click here: Guardianship and Conservatorship | Autism Speaks

Special Needs Children turning 18 Years Old -Caregiver.com

Also Read our Previous Blog at :  Estate Planning for Special Needs Family Members

 

Estate Tax

What Exactly Is the Estate Tax?

What Exactly Is the Estate Tax? In the U.S., we treat the estate tax and gift tax as a single tax system with unified limits and tax rates—but it is not very well understood by many people. The Motley Fool’s recent article entitled “What Is the Estate Tax in the United States?” gives us an overview of the U.S. estate and gift tax, including what assets are included, tax rates and exemptions in 2020.

The U.S. estate tax only impacts the wealthiest households. Let’s look at why that’s the case. Americans can exempt a certain amount of assets from their taxable estate—the lifetime exemption. This amount is modified every year to keep pace with inflation and according to policy modifications. This year, the lifetime exemption is $11.58 million per person. Therefore, if you’re married, you and your spouse can collectively exclude twice this amount from taxation ($23.16 million). To say it another way, if you’re single and die in 2020 with assets worth a total of $13 million, just $1.42 million of your estate would be taxable.

However, most Americans don’t have more than $11.58 million worth of assets when they pass away. This is why the estate tax only impacts the wealthiest households in the country. It is estimated that less than 0.1% of all estates are taxable. Therefore, 99.9% of us don’t owe any federal estate taxes whatsoever at death. You should also be aware that the lifetime exemption includes taxable gifts as well. If you give $1 million to your children, for example, that counts toward your lifetime exemption. As a result, the amount of assets that could be excluded from estate taxes would be then decreased by this amount at your death.

You don’t have to pay any estate or gift tax until after your death, or until you’ve used up your entire lifetime exemption. However, if you give any major gifts throughout the year, you might have to file a gift tax return with the IRS to monitor your giving. There’s also an annual gift exclusion that lets you give up to $15,000 in gifts each year without touching your lifetime exemption. There are two key points to remember:

  • The exclusion amount is per recipient. Therefore, you can give $15,000 to as many people as you want every year, and they don’t even need to be a relative; and
  • The exclusion is per donor. This means that you and your spouse (if applicable) can give $15,000 apiece to as many people as you want. If you give $30,000 to your child to help her buy their first home and you’re married, you can consider half of the gift from each spouse.

The annual gift exclusion is an effective way for you to reduce or even eliminate estate tax liability. The estate tax rate is effectively 40% on all taxable estate assets.

Finally, the following kinds of assets aren’t considered part of your taxable estate:

  • Anything left to a surviving spouse, called “the unlimited marital deduction”;
  • Any amount of money or property you leave to a charity;
  • Gifts you’ve given that are less than the annual exclusion for the year in which they were given; and
  • Some types of trust assets.

Reference: The Motley Fool (Jan. 25, 2020) “What Is the Estate Tax in the United States?”

Read more about this subject at: Florida Department of Revenue- Estate Tax

Ten Facts You Should know about the Federal Estate Tax

Also check out our previous Blog at:  As a Trust Beneficiary, Am I Required to pay Taxes

Credit Card Debt

Does My Mom Have to Pay My Dad’s Credit Card Debt after He Dies?

Does My Mom Have to Pay My Dad’s Credit Card Debt after He Dies? When a family is grieving after the death of a loved one, the last thing any of them wants to deal with is unpaid debts and debt collectors.

nj.com’s recent article asks “Is mom liable for my dead father’s credit card debt?” The answer: generally, any unpaid debts are paid from the deceased person’s estate.

In many states, family members, including the surviving spouse, typically aren’t required to pay the debts from their own assets, unless they co-signed on the account or loan.

All the stuff that a person owns at the time of death, including everything from money in the bank to their possessions to debts they owe, is called an estate. When the deceased person has debt, the executor of the estate will go through the probate process.

During the probate process, all the deceased’s debts are paid off from the estate’s assets. Some assets—like retirement accounts, IRAs and life insurance proceeds—aren’t included in the probate process. As a result, these accounts may not be available to pay creditors. Other assets can be sold to pay off outstanding debts.

A relative or the estate executor will typically notify any lenders, like credit card companies, when that person passes away. The credit card company will then contact the executor about any balances due. Note: the creditor can’t add any additional fees, while the estate is being settled.

If there’s not enough money in the estate to cover credit card balances, the card issuer may have no recourse. The executor and the heirs aren’t responsible for these debts. Unlike some debts, like a mortgage or a car loan, most credit card debt isn’t secured. Therefore, the credit card company may need to write off that debt as a loss.

You should start learning about the probate process in your state to have the best defense for dealing with creditors and debt collectors.

So, Does My Mom Have to Pay My Dad’s Credit Card Debt after He Dies?

If you need help, talk to an experienced estate planning attorney.

Reference: nj.com (Jan. 15, 2020) “Is mom liable for my dead father’s credit card debt?”

Read more about this subject at:

Can I be responsible to pay off the debts of my deceased spouse?

What Happens to Credit Card Debt When You Die?

And read one of our Previous Blogs at:

Who Will Cover My Debt When I Die?

 

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