Legacy Planning Law Group
Weekly Blog

Estate & Elder Law

Protect Your Family. Preserve Your Legacy

If you’re interested in learning more about our process and the solution for you and your family, please book your free 15-minute call with us today!

LLC for Estate Planning

Should I Create an LLC for Estate Planning?

Should I Create an LLC for Estate Planning?

If you want to transfer assets to your children, grandchildren or other family members but are worried about gift taxes or the weight of estate taxes your beneficiaries will owe upon your death, a LLC can help you control and protect assets during your lifetime, keep assets in the family and lessen taxes owed by you or your family members.

Investopedia’s article entitled “Using an LLC for Estate Planning” explains that a LLC is a legal entity in which its owners (called members) are protected from personal liability in case of debt, lawsuit, or other claims. This shields a member’s personal assets, like a home, automobile, personal bank account or investments.

Creating a family LLC with your children lets you effectively reduce the estate taxes your children would be required to pay on their inheritance. A LLC also lets you distribute that inheritance to your children during your lifetime, without as much in gift taxes. You can also have the ability to maintain control over your assets.

In a family LLC, the parents maintain management of the LLC, and the children or grandchildren hold shares in the LLC’s assets. However, they don’t have management or voting rights. This lets the parents purchase, sell, trade, or distribute the LLC’s assets, while the other members are restricted in their ability to sell their LLC shares, withdraw from the company, or transfer their membership in the company. Therefore, the parents keep control over the assets and can protect them from financial decisions made by younger members. Gifts of shares to younger members do come with gift taxes. However, there are significant tax benefits that let you give more, and lower the value of your estate.

As far as tax benefits, if you’re the manager of the LLC, and your children are non-managing members, the value of units transferred to them can be discounted quite steeply—frequently up to 40% of their market value—based on the fact that without management rights, LLC units become less marketable.

Your children can now get an advance on their inheritance, but at a lower tax burden than they otherwise would’ve had to pay on their personal income taxes. The overall value of your estate is reduced, which means that there is an eventual lower estate tax when you die. The ability to discount the value of units transferred to your children, also permits you to give them gifts of discounted LLC units. That lets you to gift beyond the current $15,000 gift limit, without having to pay a gift tax.

You can give significant gifts without gift taxes, and at the same time reduce the value of your estate and lower the eventual estate tax your heirs will face.

Speak to an experienced estate planning attorney about a family LLC, since estate planning is already complex. LLC planning can be even more complex and subject you to heightened IRS scrutiny. The regulations governing LLCs vary from state to state and evolve over time. In short, a family LLC is certainly not for everyone and it appropriately should be vetted thoroughly before creating one.

Reference: Investopedia (Oct. 25, 2019) “Using an LLC for Estate Planning”

Read more related articles at: 

How Limited Liability Companies Can Help with Estate Planning

LLC: The Estate Planning Tool

Also, read one of our previous Blogs at :

Small Business Owners Need Business Succession and Estate Planning

Click here to check out our Master Class!

Jeremy Renner

What’s the Problem with Actor Jeremy Renner’s Trust for His Daughter?

What’s the Problem with Actor Jeremy Renner’s Trust for His Daughter?

As some things get back to normal, some court cases are moving forward. Actor Jeremy Renner recently filed documents claiming that his ex-wife has been stealing money from their daughter’s trust fund.

Renner’s ex-wife Sonni Pacheco has already confessed to transferring money from the couple’s daughter’s trust fund more than once. An email from April 2019, which was revealed in the court documents, says that she admitted to taking money out of daughter Ava’s account to purchase gifts and keep herself afloat, after spending her own savings on legal fees.

Pacheco wrote: “The money transfers to my bank were to keep me afloat/provide [the minor] Christmas presents/birthday gift bags and essentials for her bday party – after all my savings were spent on lawyers/child custody evaluator.”

Court pleadings show that Pacheco withdrew an additional $10,701.40 to pay her property taxes, when she didn’t have the money available eight months later. In addition, the document said that she took out $20,000 on another occasion in 2019 to pay attorney’s fees. Another $12,000 was also said to have been withdrawn from the trust into her personal checking account.

In total, the court documents say that Pacheco reportedly withdrew roughly $50,000 from her daughter’s trust fund.

The way the trust fund works, is that Renner deposits the money that is supposed to go for educational or medical expenses, as well as extracurricular activities for his seven-year-old daughter. Any amount in child support that is leftover is supposed to go into the trust fund, which Ava will be able to access in 20 years when she turns 27.

At the time of the report in March, Renner was estimated to be paying $30,000 a month to Pacheco in child support before taxes. Pacheco said at the time that she wasn’t getting that much money from Renner and that a large portion of it was going to court bills. She now says she is being “bullied” in this situation.

The couple was first married in 2014, but they separated later that year. That split has become more contentious over time and led to additional court filings and court appearances concerning the well-being of their daughter.

Reference: Wealth Advisor (May 26, 2020) “Jeremy Renner Alleges Ex-Wife Misused Daughter’s Trust Fund In New Filing”

Read more related articles at:

Jeremy Renner Accuses Ex-Wife of Taking $50,000 From Daughter’s Trust Fund

Jeremy Renner Accuses Ex-Wife Sonni Pacheco of Taking $50,000 From Daughter’s Trust Fund

Also, read on of our previous Blogs at :

Why is Ashton Kutcher So Stingy with his Kids’ Inheritance?

 

Last will

What You Need to Know about Drafting Your Will

What You Need to Know about Drafting Your Will

A last will and testament is just one of the legal documents that you should have in place to help your loved ones know what your wishes are, if you can’t say so yourself, advises CNBC’s recent article entitled, “Here’s what you need to know about creating a will.” In this pandemic, the coronavirus may have you thinking more about your mortality.

Despite COVID-19, it’s important to ponder what would happen to your bank accounts, your home, your belongings or even your minor children, if you’re no longer here. You should prepare a will, if you don’t already have one. It is also important to update your will, if it’s been written.

If you don’t have a valid will, your property will pass on to your heirs by law. These individuals may or may not be who you would have provided for in a will. If you pass away with no will —dying intestate — a state court decides who gets your assets and, if you have children, a judge says who will care for them. As a result, if you have an unmarried partner or a favorite charity but have no legal no will, your assets may not go to them.

The courts will typically pass on assets to your closest blood relatives, despite the fact that it wouldn’t have been your first choice.

Your will is just one part of a complete estate plan. Putting a plan in place for your assets helps ensure that at your death, your wishes will be carried out and that family fights and hurt feelings don’t make for destroyed relationships.

There are some assets that pass outside of the will, such as retirement accounts, 401(k) plans, pensions, IRAs and life insurance policies.

Therefore, the individual designated as beneficiary on those accounts will receive the money, despite any directions to the contrary in your will. If there’s no beneficiary is listed on those accounts, or the beneficiary has already passed away, the assets automatically go into probate—the process by which all of your debt is paid off and then the remaining assets are distributed to heirs.

If you own a home, be certain that you know the way in which it should be titled. This will help it end up with those you intend, since laws vary from state to state.

Ask an estate planning attorney in your area — to ensure familiarity with state laws—for help with your will and the rest of your estate plan.

Reference: CNBC (June 1, 2020) “Here’s what you need to know about creating a will”

Read more related articles at :

9 Things You Need to Know About Creating a Will

6 important things to think about when writing your will

Also, read one of our previous Blogs at :

Do It Yourself Wills Go Wrong–Fast

Click here to check out our Master Class!

Estate Plan Covid-19

What are the Most Important Items in an Estate Plan During the Pandemic?

What are the Most Important Items in an Estate Plan During the Pandemic?

KCRA’s article entitled“5 things to know about estate planning” says that estate planning is a topic that people frequently don’t like to think about. However, more people now want to create a will or revise one that’s already in existence, because of the COVID-19 pandemic.

You should have a will. You can find forms online, or you can (in some states) use a holographic will, which is handwritten. However, a holographic will can be incomplete and unclear. DIY estate planning isn’t a good idea if you have any property, minor children, or want to save on taxes for your family. Use an experienced estate planning attorney to ensure that you are covering all of your bases.

Without a will, your “state” makes one for you. If you die intestate, state law will dictate how your probate estate will be distributed at your death. However, this makes it take longer to administer your estate, which extends the grieving process for family members.  It is also more expensive, more time-consuming and more work for those you leave behind. Lastly, you have no say in how you want your property distributed.

Why do I need a will? Everyone should think about estate planning and have an estate plan in place. This should include what would happen, if you’re incapacitated. With the coronavirus pandemic, this might mean contracting the disease and being in a hospital on a ventilator for weeks and unable to care for your children.

How long does a will take? Drafting your will is a very personal and customized process that usually happens over several meetings with a qualified estate planning attorney. It could be weeks or months, but the average length of time it takes to create a will is 30 to 60 days. However, in the midst of the pandemic, estate planning attorneys are able to get these completed much more quickly, when necessary.

What about COVID-19? When your will is complete, there’s usually a signing meeting set with the attorney, witnesses, a notary and the person creating the will. However, now there’s no way to safely gather to sign these critical documents. Many states have made exceptions to the witness rule or are allowing processes using technology, known as remote notarization.

Reference: KCRA (April 16, 2020). “5 things to know about estate planning”

Read more related articles at:

The Covid-19 Essential Estate Planning “Go Package”

A Guide To Estate Planning During The Coronavirus Pandemic

Also, read one of our previous Blogs at:

Requests for Estate Plans Reflect Fears about Coronavirus

Click here to check out our Master Class!

 

Intestate

What If Grandma Didn’t Have a Will and Died from COVID-19?

What If Grandma Didn’t Have a Will and Died from COVID-19?

What if Grandma didin’t have a will and died from COVID-19? The latest report shows about 1.87 million reported cases and at least 108,000 COVID-19-related deaths were reported in the U.S., according to data released by Johns Hopkins University and Medicine.

Here’s a question that is being asked a lot these days: What happens if someone dies “intestate,” or without having established a will or estate plans?

If you die without a will in California and many other states, your assets will go to your closest relatives under state “intestate succession” statutes.

Yahoo Finance’s recent article entitled “My loved one died without a will – now what?” explains that there are laws in each state that will dictate what happens, if you die without a will.

In Pennsylvania, the laws list the order of who receives upon your death, if you die without a will: your spouse, your children, and then your parents (if still alive), your siblings, and then on down the line to cousins, aunts and uncles, and the like. Typically, first on every state’s list is the spouse and the children.

You may also have some valuable assets that will not pass via your will and aren’t affected by your state’s intestate succession laws. Here are some of the common ones:

  • Any property that you’ve transferred to a living trust
  • Your life insurance proceeds
  • Funds in an IRA, 401(k), or other retirement accounts
  • Any securities held in a transfer-on-death account
  • A payable-on-death bank account
  • Your vehicles held by transfer-on-death registration; or
  • Property you own with someone else in joint tenancy or as community property with the right of survivorship.

These types of assets will pass to the surviving co-owner or to the beneficiary you named, whether or not you have a will.

It’s quite unusual for the government to claim a deceased person’s estate. While it might be allowed in some states, it’s considered a last resort. Typically, we all have some relatives.

If you have a loved one who has died without a will, speak with an experienced estate planning attorney about your next steps.

Reference: Yahoo Finance (June 1, 2020) “My loved one died without a will – now what?”

Read more related articles at :

Florida Laws of Intestacy Succession

What Happens If You Die Without a Will?

Also, read one of our previous Blogs at:

What if I Don’t Have a Will in the Pandemic?

Click here to check out our Master Class!

 

Advanced Healthcare Directive

Why Do I Need an Advanced Healthcare Directive?

Why Do I Need an Advanced Healthcare Directive?

During the prime of our lives, we typically don’t give much attention to thoughts about becoming seriously ill or about the end of life. Conversations about sickness and your own mortality aren’t easy topics to raise. However, it’s important for us to approach these heavy topics with our families, so we rest easy knowing their needs will be met if or when our health fails.

Rome News-Tribune’s recent article entitled “Things to know before drafting a living will” explains that an advanced healthcare directive, also called a living will, is a legal document in which you can detail the specific types of medical care and comfort treatment that you want, if you are unable to make decisions for yourself because of illness or incapacity. A living will can state whether life support should be used and whether pain medication should be administered.

A living will is separate and distinct from a traditional will. A will is a legal document that states how you would like your assets distributed after you pass away.

A living will is not always required, if you don’t have any strong feelings about the decisions made on your behalf while you are incapacitated. However, if you do want to provide instruction about your treatment and care, a living will is the best way to be certain that your choices will be carried out. Here are some other questions you may want to ask yourself about a living will.

  • Do I want to eliminate the stress of difficult decisions from my family? A living will can relieve your grieving family of the responsibility of making very tough decisions of invoking lifesaving (“heroic”) measures.
  • Do I have strong feelings about life-saving methods? A living will allows you to state your exact preferences on feeding tubes, life support when brain function is minimal and many other circumstances.
  • Do I have a trusted person who is able to carry out wishes? A health care proxy is an individual that you name and give the power to make decisions for you, if you are unable to express your preferences for medical treatment. Along with a living will, the health care proxy or “durable medical power of attorney” can fulfill your wishes accordingly.

Ask your estate planning attorney about this important component of medical and estate planning.

Reference: Rome News-Tribune (March 7, 2020) “Things to know before drafting a living will”

Read more related articles at:

Advance Care Planning: Healthcare Directives

Do You Need an Advance Health Care Directive?

Also, read one of our previous Blogs at:

Do I Really Need a Health Care Proxy?

Guardianship

What Should I Know about Guardianship?

What Should I Know about Guardianship?

In a perfect world, a child would be raised by its parents. However, this isn’t always possible, and legally enforceable decisions must sometimes be made to name the person who is best positioned to look after a child.

Guardianship is generally only needed when a person is incapable—whether legally or practically—of looking after their own affairs, says VENTS Magazine in the article “Legal Guardianship 101: What You Need to Know.”

Courts have the power to appoint guardians for adults and children. This is usually a person who is unable to make decisions for themselves.

It may be a disabled person, and guardians are appointed for children when parents consent to it, when their parental rights are removed by a court, or when both parents are dead or permanently incapacitated.

Guardians have duties as to both the protected person and their estate. The duties to the person include providing necessities, education and appropriate medical treatment, where necessary. As far as the estate of the protected person, the duties are to manage any funds properly and to spend them, pursuant to the protected person’s needs. Guardians must prepare an inventory of assets within 60 days of their appointment to the role.

Custody is only granted for children. When appointed, a custodian is given parental rights over the child. Guardianship does not bestow these rights.

A guardian is appointed to take care of a protected person and to safeguard their estate. Biological parents, if alive, keep their parental rights over the child.

To become a guardian, you must file a petition with the court. There will be a hearing on your application. You must present proof (from a doctor, for example) that guardianship is necessary under the circumstances.

Guardianship litigation can eb stressful, but it is frequently necessary, so engage an attorney to help you.

Reference: VENTS Magazine (April 13, 2020) “Legal Guardianship 101: What You Need to Know”

Read some related articles at :

What You Should Know About Guardianship

5 Ways To Know You Need A Guardianship For Mom (Or Dad)

Also, read one of our previous Blogs at : 

How is a Guardianship Determined?

 

 

money and art

Does Artwork Belong in a Charitable Remainder Trust?

Does Artwork Belong in a Charitable Remainder Trust?

A charitable remainder trust is a tax-exempt irrevocable trust that is created to decrease taxable income of people, by initially giving income to the beneficiaries of the trust for a set period of time and then donating the rest of the trust funds to a designated charity.

Financial Advisor’s recent article entitled “Putting Art Into Charitable Remainder Trusts” says that people who have valuable artwork or other collectibles that are hard to divide or that their kids don’t want, can investigate a charitable remainder trust with an estate planning attorney as an option.

A Charitable Remainder Trust is designed to save asset owners taxes that they would have to pay, if they sold their artworks on the open market. CRTs are also designed so that when they expire, they allow philanthropically inclined individuals help their favorite charitable organizations.

Many people with higher net worth hold about a tenth of their wealth in art and collectibles.  Due to the nature of the assets, the value may be hard to split up among their heirs, or no one heir may want that specific piece of art. A charitable remainder trust gives the art or collectible owner a solution to that issue. The trust will reduce her taxable income, by first dispersing income to the trust beneficiaries for a certain period of time and then the remainder is donated to a charity.

It’s important to note that art markets are quirky, and a CRT protects an owner from forcing her into a fire sale, when she or a trustee is trying to divide the estate.

For example, say the parents purchased a number of pieces of artwork on a European vacation and shipped them back to the United States. They have three children, but there’s one piece of art that’s more valuable than the others. As a result, there was no way to equitably divide the pieces. If they sold the pieces outright, there would be a 28% tax imposed.

However, the parents could instead place the artwork in a charitable remainder trust, get a tax deduction for part of the value, get income from the trust and then give a sum to a selected charity.

The asset can be held in the trust until one owner dies, until both parents pass, or for up to a certain number of years, based on how the trust is set up. Contact an estate planning attorney experienced in charitable planning strategies.

Reference: Financial Advisor (Feb. 21, 2020) “Putting Art Into Charitable Remainder Trusts”

Read more related articles at:

New IRS Rule Opens Tax Saving Strategy To Art Collectors

Charitable Remainder Trusts

Also Read one of our previous Blogs at :

Charitable Giving and Your Estate Plan

 

HIPPA

Rules for the HIPAA Waiver Relaxed?

 

Rules for the HIPAA Waiver Relaxed?

The United States Department of Health and Human Services has announced that it won’t enforce penalties for violations of certain provisions of the HIPAA privacy rule against healthcare providers or their business associates for good-faith disclosures of protected health information (PHI) for public health purposes during the COVID-19 emergency.

The HHS Office for Civil Rights said that it was exercising its “enforcement discrimination” in announcing its change in policy during the coronavirus pandemic, a declared emergency period, reports Modern Healthcare in its article “HHS eases HIPAA enforcement on data releases during COVID-19.”

A HIPAA waiver of authorization is a legal document that permits an individual’s protected health information (PHI) to be used or disclosed to a third party. This waiver is part of a series of patient-privacy measures set forth in the Health Insurance Portability and Accountability Act (HIPAA) of 1996.

PHI covered under HIPAA is information that can be connected to a specific individual and is held by a covered entity, like a healthcare provider. HIPAA has set out 18 specific identifiers that create PHI, when linked to health information.

The notification was issued to support federal and state agencies, including the CMS and the Centers for Disease Control and Prevention, that require access to COVID-19 related data, including protected health information.

“The CDC, CMS, and state and local health departments need quick access to COVID-19 related health data to fight this pandemic,” OCR director Roger Severino said in a statement. “Granting HIPAA business associates greater freedom to cooperate and exchange information with public health and oversight agencies, can help flatten the curve and potentially save lives.”

HIPAA’s privacy rule only permits business associates of HIPAA-covered entities to disclose protected health information for certain purposes, under explicit terms of a written agreement.

The moratorium enforcement doesn’t extend to other requirements or prohibitions under the privacy rule, nor to any obligations under the HIPAA security and breach notification rules, OCR said.

Reference: Modern Healthcare (April 2, 2020) “HHS eases HIPAA enforcement on data releases during COVID-19”

Read related Articles at :

Relaxing Of HIPAA Laws During COVID-19 Pandemic

Medicare and OCR Relax Telehealth Rules Under Medicare and HIPAA

Also read one of our previous blogs at: 

Medicare is Expanding Telehealth Services During Coronavirus Pandemic

 

 

Will-COVID-19

A Good Move to Make during the Pandemic

While most of those infected with COVID-19 will recover, about 20% need hospitalization, and in the absence of widely approved treatment, those who are placed in the ICU can be in grave danger.

Thousands of deaths from the coronavirus is making many of us look at death more seriously than we would otherwise. Many Americans are looking to create a will, and if you don’t have this important document in place, it’s critical that you create one immediately — just in case.

Motley Fool’s recent article entitled “The 1 Move You Must Make During the COVID-19 Crisis” says that about 37% of Americans have a will. Without one, you’ll risk having little to no say over what happens to your assets in the event of your passing.

It’s not uncommon for people to say things like, “I’m not rich and have very little money to my name, so who cares who gets it after I pass?” This is not so. Even if you only have a modest amount of assets, it’s wise to make out a will, so your wishes are carried out.

If you have minor children, you need to designate a guardian to care for them, if you should die and they don’t have another living parent. This isn’t a question you want to leave unanswered, and you don’t want to leave your family members to fight over who will take on the assume the responsibility of taking in your children.

Create a will with the help of an estate planning attorney. If you create one online, you risk missing nuances that may be important in the event of your passing. If your estate is somewhat complex, it’s worth the money to use a legal expert.

Another estate-planning document to create includes a financial power of attorney, which designates someone to make financial decisions on your behalf, if you can’t.

A healthcare proxy is a person who can make medical decisions on your behalf. Ask your estate planning attorney to help you determine which documents will benefit you.

With our major health crisis, it’s not really the time to delay creating a will, if you don’t have one already. This document could give you and your loved ones peace of mind, when comfort goes a long way.

Reference: Motley Fool (April 6, 2020) “The 1 Move You Must Make During the COVID-19 Crisis”

Read some related articles at :

Americans rush to make online wills in the face of the coronavirus pandemic

Coronavirus leads to surge in wills: ‘Everyone is thinking about their mortality’

Also read one of our Previous Blogs at :

C19 UPDATE: Beware the Rush to Make Your Own Will Online

 

 

Join Our eNews

WATCH OUR MASTERCLASS