Though old Hollywood likes to tell stories of individuals surprised to learn that they have inherited a fortune from a far-removed relative, the days of being in the dark about family finances and estate plans is slowly coming to an end. It is increasingly common for family matriarchs and patriarchs to involve their children and grandchildren into their estate planning. Though there are certainly benefits to being transparent about estate planning goals, it is important to remember that there may be some difficult and unpopular decisions ahead.

It is important to remember that estate planning is not a singular task, but a process. Perhaps a husband and wife first meet with their estate planning attorney alone to discuss their goals. In subsequent meetings, they may bring their children, or they may choose to have a financial planning meeting with their children before returning to their attorney. It is often too difficult to go into an attorney’s office for the first time and walk out with a viable and compelte estate plan.

One of the things that a family may need to discuss is just who will receive some kind of inheritance, or, as some people may see it, who is actually part of the family. There may not be many parents who are willing to deny their children an inheritance, but what about their spouses? Some matriarchs and patriarchs will include spouses, especially if there are grandchildren involved. Others won’t, possibly fearful of a divorce.

Ultimately, families may have a lot to discuss when it comes to estate planning, and it may make more sense to include all relevant parties, not just the heads of the family.

Source:Reuters, “YOUR PRACTICE-Who is family when it comes to estate planning?” Beth Pinsker, Oct. 29, 2013

Many people in Crane County may fantasize about receiving a significant inheritance from a wealthy, far-off relative that they barely know. All of a sudden, someone would come home to a gift of a couple hundred of thousands of dollars. If it happens, it can certainly be a financial boon, but it is something that not many people should bet their financial health on. Oddly enough, however, 25 percent of people between the ages of 18 and 59 expect to receive an inheritance at some point in their lifetimes.

They may be disappointed, especially since 1/3 of wealthy baby boomers have said they plan on leaving money to charities, not to their children. Ultimately, how parents want to set up their estate plan is up to them, but it is important that they explain their decisions. Of course, they need to work with an estate planning lawyer to get everything in order, but they should also take the time to explain and to set their children’s expectations about what will happen after they die.

Perhaps the parents want their children to make their own money. Maybe they feel like they’ve already given their children enough. Or, it may be that they are concerned that they will live longer and run out of money to give to their children. Regardless of why, it is important that parents tell their children not to expect an inheritance and certainly not to plan their finances around one.

This is not to say that there won’t be some people in Texas who will receive an inheritance from their parents. Even for those that do, however, it should be more of a pleasant surprise instead of an expected certainty.

Source:Sacramento Bee, “Kid and Money: If you plan to leave an inheritance, manage expectations,” Steve Rosen, Oct. 14, 2013

Nearly everyone in Texas, at some point in their lives, will have to think about planning their estate and getting it ready for their eventual death. While this is an often awkward process for many people, it’s a necessary part of getting older and makes those difficult end-of-life decisions easier for your family members to make down the road.

But while this may be easy enough for most families across Texas, this process can create problems for less traditional families, including those in the gay and lesbian community. Because Texas does not recognize same-sex marriage as being legal, some people may not be listed as beneficiaries in a will. Same-sex couples can also run into problems with powers of attorney and those listed as the next in line to make health care decisions as well.

These and other issues were brought up recently at a Dallas church during a seminar presented by Equality Texas. The organization touched on the often difficult situations that same-sex couples in the state face when it comes to estate planning and offered advice to those who have found themselves struggling to make their plans adhere to state laws.

While naming a beneficiary in a will and allocating a health care proxy are among the top two issues facing same-sex couples in the state, they may also encounter problems with spousal inheritance and even potential issues with estate taxes as well. For those Texas residents who missed the seminar, consulting with a knowledgeable attorney in their area can be done at any time. Lawyers in this field can often help you work through this difficult challenges and help you adhere to state laws as well.

Source:Dallasvoice.com, “Local Briefs: 10-04-13,” Oct. 4, 2013

It is something that many people in west Texas haven’t thought about, but what happens to online banking, email or Facebook after someone dies? If the individual didn’t leave the login information, the data and sometimes the value of the digital property may be lost forever, but not if the individual had a thorough estate plan in place.

So, should someone leave all of his or her usernames and passwords in a will? No. Because wills can be made public, any login information should be written out in a separate letter and the letter can be inherited by a family member or friend.

But what about the pieces of digital media that rely on a license?

If something has a license, it cannot be inherited. This means that if someone wants to not only give access, but allow something online to continue, the license may need to be put into a trust. This would allow the license to continue on, even after the original owner had died. Many states, including Texas, do not have laws on the books that protect digital property. If Texas does go down this route, it may wish to give a fiduciary the right to distribute an individual’s online property.

Even though someone may not think about who should inherit online assets, there are more and more people asking about what will happen to their social media or digital assets after they die. Through traditional estate planning, individuals may have reliable ways to preserve their property and pass it on after death.

Source: TheWall Street Journal, “Make Sure You Know Who Will Inherit Your Twitter Account,” Arden Dale, Sept. 18, 2013

One of the most important things El Paso County residents can do is create an estate plan. Regardless of age, an estate plan is the only way to ensure that an individual’s wishes are carried out after his or her death. Creating the estate plan, however, is only the first step, as estate planning should be a continual process. Things change, how people want their estates dealt with change and the benefits of one estate planning vehicle may change over time, too.

Take, for example, trusts. There are numerous tax advantages associated with trusts, but some of those advantages may no longer be as important as they once were. One of the biggest benefits to a trust is that it avoids federal estate taxes, but since the individual exemption for estate taxes is now $5.25 million and $10.5 million for couples, estate taxes really only apply to very wealthy people. Perhaps it would be worthwhile to talk with an estate planning lawyer and end a trust and explore other vehicles.

It is an estate planning attorney’s job to track changes in federal and state laws that affect existing estate plans. If a plan no longer works or is no longer the best option for an individual, he or she will want to modify his or her estate plan with an attorney’s help.

Instead of relying on trusts to avoid estate taxes, many people are using intrafamily loans to avoid high income taxes. This certainly doesn’t make sense for everyone, but it is an important option that many people in El Paso County will want to take into consideration.

Source:Wall Street Journal, “Estate Plans Shift Focus to Income Tax,” Arden Dale, Sept. 6, 2013

A new study has found that baby boomers are nearly twice as likely to make charitable gifts as the next most likely generation. Since boomers are responsible for 43 percent of charitable giving, it is safe to say that there are likely many people between the ages 49 and 67 in Socorro who are interested in giving to charities and nonprofits. Unfortunately, not everyone in that age group, or really any age group, can afford to give.

So, instead of giving now, many people in Texas have turned to estate planning as a way to have enough money while still alive, but be able to give to important organizations after they are dead. By either leaving a nonprofit or charity money in a will or creating a trust that can give to organizations on an individual’s behalf, estate planning is an important charitable giving tool for any generation.

Many people in younger generations may not think they need a will or an estate plan, believing that it will be quite a while before they die or that their estate is so minimal that there is no point. This kind of thinking, however, means many younger people die without ever creating a plan for how they’d like their estate divided. Fortunately, baby boomers are getting older and recognizing the need to carefully plan for the ends of their lives.

Many people in Texas recognize the importance of charitable giving and want to do what they can for the organizations that are closest to them. At the same time, they may not be able to give right now, preferring to give through a will or trust. 

Source:Forbes, “Charitable Giving: Baby Boomers Donate More, Study Shows,” Deborah Jacobs, Aug. 8, 2013

The term estate planning itself tends to lean towards the idea that these plans only matter after we are gone. It is true that a large part of the focus is placed on how our assets will be distibuted after death, but let us not forget that these tools provide significant benefit during life as well.

For instance, one type of trust is gaining popularity and replacing the use of a popular alternative for asset protection. Whether it is a surgeon who has a high risk for a malpractice lawsuit, a business owner facing environmental or other regulatory issues or even a parent worried that their child may get a divorce, tools that prevent creditors from laying claim to them are important.

Offshore accounts were once, and still are, a popular option for shielding assets from creditors. However, the Internal Revenue Service has tightened the reporting restrictions on these accounts, and the agency is coming down harder on those taxpayers who fail to report or pay the associated liability.

As a solution, many financial and estate planners are directing their clients towards another, on-shore option. A domestic asset protection trust is a way to proactively protect these financial interests. The irrevocable trust also provides this benefit to any claims made against the estate.

Although these trusts can only be created in 15 states, they are still available to those that live in a jurisdiction where this type of trust cannot be established.

An estate planning attorney in Texas not only provides a client with available options in the state, but will also advise on all options. The attorney can also work with any third-party professional necessary to create a complete plan.

Source:The Wall Street Journal, “Creditor-Proof Trusts Replacing Offshore Accounts,” Arden Dale, Aug. 8, 2013

Almost one month ago, we brought you the tragic story of James Gandolfini’s death. We also discussed how he had intelligently created a will that made specific provisions for his loved ones, something of a rarity among the Hollywood elite. Although the people in El Paso may have been impressed by Gandolfini’s generosity, they may also have noticed how much in estate taxes his friends and family will have to pay.

Estate taxes can be a burden for many people in Texas and anyone with an estate over $5.25 million. One way to get around those taxes, however, is to establish trusts for people who would otherwise have to pay those taxes. For Gandolfini, that would be anyone but his wife.

In Gandolfini’s will, he left a little less than 20 percent of his money to his wife, meaning more than 80 percent of his estate was subject to estate taxes. Had he created a trust for his other family members and friends, they would have received much more.

Setting up a trust can be difficult and many people think it would just be easier to write a will. It is important to remember, however, that you worked hard for your money and you should be able to give nearly all of it to the people of your choosing, not paying the federal government up to 55 percent of your bequests. Working with an estate planning attorney can help to create trusts and avoid the cost of estate taxes.

While it is certainly clear that Gandolfini’s friends and family will not be wanting after the bequests they received, they could have received even more if Gandolfini had used trusts to provide for them.

If you would like more information, please see our previous post on specifics of Gandolfini’s will.

Source:CNBC, “Gandolfini’s will a case study on what not to do,” Kelley Holland, July 26, 2013

It is a part of estate planning that no one in Texas would have thought of 40 years ago, but the problem of how to deal with emails and other digital information after death is something that many estate planning attorneys are now tackling. In an effort to help individuals contemplating what to do with their digital information after they have died, Google has recently released a tool that will delete or send your data along to another person after your death.

Planning for your death may seem morbid and something that many younger people in Fort Stockton don’t feel is that important, but there is no guarantee that everyone will live to a ripe old age. Sometimes, tragic accidents or illnesses take people who have no estate plan in place and there are very limited options with what to do with the person’s possessions. Creating an estate plan, however, protects the individuals’ wishes.

Part of those wishes may be that no one has access to emails, YouTube accounts and online profiles. Maybe there is some personal information in there, maybe there are some things that individuals just don’t want others to see. Regardless, using the Google Inactive Account Manager provides a way for individuals to protect their online information from family and friends after death.

On the other hand, however, there are some people in Fort Stockton who want family members or friends to have access to their emails and other online accounts after death, and this tool also gives them the ability to choose who can and who cannot have access. Ultimately, it is a matter of having a complete and thorough estate plan that protects individuals’ wishes after their death.

Source:CBS Pittsburgh, “Google launches digital afterlife manager,” April 13, 2013