St. Petersburg Estate Planning Attorney

Share Your Estate Plan Now to Protect Your Family When You Are Gone

If one child will receive more than his siblings, even though his need is obviously greater, will that shared info create fighting between the children? And should children even have advance knowledge that they are going to receive an inheritance? These are some of the questions examined in the article “Disclosing estate plans in advance can save strife later” from The Indiana Lawyer. In most situations, advance discussions between family members are better to ensure family harmony.

Many estate planning attorneys have the “fair does not always mean equal” discussion with their clients. For some families, there is one child who is in dire need, while the others have prospered and don’t really need help. Maybe one child has special needs, or just hasn’t been as successful in life. In other cases, one child has already received substantial property from the parents, so no portion of the estate will be left to them. Regardless of the circumstances, which vary widely, having a frank discussion with all of the children is better than a series of surprises.

Research from the Federal Reserve Board shows that more than half of any given inheritance equals $50,000 or less, and more than 80% of all inheritances are less than $250,000.

With only half of what most people inherit being generally used to invest or pay down debt, most of these inheritances are spent, invested, or donated.

Regardless of the size of the inheritance, most parents expect that the beneficiaries of their estate will protect and preserve their legacy and use the money wisely. That is not always the case. If the parents want heirs to be careful with inheritances, they need to have a plan that will prepare heirs to act as stewards of their inheritances. The plan may be as simple as a series of conversations about saving and investing, or making charitable donations. It might also be complex, like meeting with the parent’s financial advisor and estate planning attorney and discussing wealth transfer and the potential to grow the wealth for another generation.

Families with larger estates often involve their children in annual gifting to get them used to the experience of receiving significant assets and learning how to manage these gifts. This has the added impact of allowing the parents to see how their children will respond to windfalls, which may guide how they distribute wealth in their estate plan. If one child is a repeat spendthrift, for instance, a trust may be a better way to pass the wealth to the child, with a trustee who can determine when they receive assets.

Families who have worked hard to leave their children with an inheritance, regardless of the size, should prepare their children by teaching them, through the parent’s actions, how their values impact their wealth, and how to manage it for themselves and future generations.

Reference: The Indiana Lawyer (October 16, 2019) “Disclosing estate plans in advance can save strife later”

How Do I Disinherit a Family Member?

Kiplinger’s recent article, “Four Ways to Disinherit Family Members,” says that quite a few families don’t get along. However, when considering estate planning, the problem is that without a valid will leaving money to other individuals, family members are the “default” recipient of your estate. If you decide to leave any property using your will, your next-of-kin must still be given legal notice of your estate being probated (even if they’re being disinherited), and usually they’re only ones who can legitimately contest your will.

If you do have bad family relations and don’t want family members contesting your will, there are several legal tactics you can use.

  1. Leave property outside of your will. You’ll only need to probate property that’s not already effectively left to someone outside of probate. Therefore, when you name a beneficiary or co-owner on your accounts or real estate, that property won’t go through probate. Similarly, life insurance policies and retirement plans ask you to name a beneficiary, and investment and bank accounts usually let you name a “transfer on death” beneficiary. Finally, any property passing by living trusts also avoids probate.
  2. Add a ‘no-contest’ clause to your will. If you decide to disinherit your family or leave them less than they would be entitled to if you had no will, you can use a “no-contest” (aka “in terrorem”) clause. A no-contest clause states that if someone contests your will, they get nothing. However, people mess up by adding a no-contest clause, then they leave no property to the disinherited family member. Because the disowned family member is getting nothing anyway, he has nothing to lose by contesting the document. Thus, the clause serves no purpose. For a no-contest clause to be effective, leave a more-than-nominal bequest and let the potential contestant know that there’s a decent alternative to receiving nothing. Leaving them an amount acts as an incentive to not contest the will.
  3. Documenting the reasons for disinheriting. Use descriptive letters to supplement (and not supplant) your proper legal documents, and create formal, signed memorandums with notarized signatures to support but not replace those documents.
  4. Create other legal documents to disinherit your spouse. Pre-nuptial and post-nuptial agreements can address what happens, if you get divorced and when you die. You and your spouse may also “waive” estate rights in a separate document that doesn’t even deal with a potential divorce. The only downside with these agreements, is that they require both parties to agree. They also usually require separate legal counsel to make them most effective.

Work with a qualified estate panning attorney when you want to leave someone out of your will.

Reference: Kiplinger (November 13, 2019) “Four Ways to Disinherit Family Members”

Why is the Cars’ Ric Ocasek’s Wife Contesting His Will?

“I have made no provision for my wife Paulina Porizkova (‘Paulina’), as we are in the process of divorcing,” the late Cars’ singer Ric Ocasek wrote in his will.

Wealth Advisor’s recent article, “Cars singer Ric Ocasek cuts supermodel wife Paulina Porizkova out of will,” reports that the will went on to state: “Even if I should die before our divorce is final … Paulina is not entitled to any elective share … because she has abandoned me.”

Porizkova was the one who discovered her estranged husband’s body in September, as she brought him a cup of coffee. Ocasek was recovering in his New York City townhouse from a recent surgery.

The couple had two sons together but ended their marriage in May 2018, after 28 years. They first met while filming the music video for the Cars’ song “Drive” in 1984.

Porizkova said that Ocasek’s death was “untimely and unexpected.”

“I found him still asleep when bringing him his Sunday morning coffee,” she wrote in a statement published to Instagram following Ocasek’s death.

“I touched his cheek to rouse him. It was then I realized that during the night he had peacefully passed on.”

Reports say that Ocasek’s will lists his assets to include $5 million in “copyrights,” but only $100,000 in “tangible personal property” and $15,000 in cash.

The document doesn’t detail what constitutes the “copyrights” assets. Even though $5 million may appear low for a rock-legend like the Cars’ Ocasek, he likely had money stashed away in trusts. One reason why people use trusts, is to protect their privacy.

Ocasek’s will looks to have excluded two of his six sons, but not the children he had with Porizkova. Perhaps these two sons may have been compensated through other financial means.

The document indicates that Ocasek signed the will on August 28, just a month before his death. The 75-year-old died of heart disease on September 15.

Pulmonary emphysema, a type of lung disease, had also contributed to his death, the medical examiner said.

Reference: Wealth Advisor (November 12, 2019) “Cars singer Ric Ocasek cuts supermodel wife Paulina Porizkova out of will”

What Happens If my Spouse Is Not on the Deed?

When one spouse has paid for or inherited the family home and the other spouse has not contributed to its purchase or upkeep, the spouse who purchased the home has to take proactive steps. Otherwise, the other spouse will inherit the home and have the right to live in it, lease it, visit once a year or do whatever he or she wishes to.

It’s their home, says a recent article from the Houston Chronicle titled “Navigating inheritance when husband is not on the deed,” and remains so, until they die or abandon the property.

In this case, the woman is the buyer of the home and she wants her son to have the house. The son will eventually own the home, but as long as the husband is alive, the son can’t take possession of the home or use it, unless given permission to do so by the husband.

The husband may remarry, and if so, he and his new wife may live in the home. If she dies before he does, according to Texas’ homesteading laws, the homestead rights don’t transfer to her. At that point, the son would inherit the home and the new wife would have to move out.

The husband doesn’t get to live in the house for free. He is responsible for paying property taxes and maintaining the house. If there is a mortgage, he must pay the interest on the mortgage, but the woman’s son would have to make principal payments. The son would also have to pay for the homeowner’s insurance.

However, there are options:

  • Move to another state, where the laws are more in the woman’s favor.
  • Sell the home.
  • Ask the husband to sign a post-nuptial agreement, where he waives his homestead right.
  • Get divorced.
  • Gift or sell the home to the son now and rent from him.

The last option is risky. If the son owns the home, there is no protection from the son’s creditor’s claims, if any, and the woman would lose her property tax homestead exemptions. If the son needs to declare bankruptcy or sell the home, or dies before his mother, there would be nothing she could do. If the son married, his wife would be an owner of the home. He (or she) could even force his mother out of the home.

Speak with an estate planning lawyer to see if gifting the house to your son is a good idea for your situation.

Reference: Houston Chronicle (Nov. 13, 2019) “Navigating inheritance when husband is not on the deed”

What’s Happens to Digital Assets After You Pass Away?

We all have many more digital assets than we realize. What happens to those assets after you pass away?, asks Investment News in the article “4 ways to help clients control their digital afterlife.” The answer is not that simple. There are a large number of rules that survivors have to untangle, and many family members are stunned, when they find that not only don’t they have access to these accounts, but the data in the accounts may be deleted permanently, when they try unsuccessfully to log in too many times.

what happens to digital assets after you pass away
Keeping a list of all your user names and passwords with your estate planning documents is a big help.

Almost all states have passed the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), and experts are gaining a better understanding of how this law works and what happens to digital assets after you pass away.

Start by creating a complete inventory of all digital assets. Try using these categories:

  • Communication: email, contacts, login for phone
  • Rewards programs: hotels, airlines, restaurants
  • Shopping: eBay, Craig’s List, Amazon, department stores
  • Online storage sites: iCloud, data backup sites
  • Finances: online payments, banking, investment accounts, cryptocurrency
  • Social media: Twitter, Instagram, LinkedIn, Facebook, Snap Chat, WhatsApp
  • Gaming sites and fantasy leagues—especially if there is real money involved.

Make sure you include a list of all these digital asset with your other estate planning documents.

In a separate document (or in the will itself), you can list your wishes for each and every digital asset. Do you want your social media sites memorialized or do you want them shut down? Who gets your airline frequent flier miles? Who should have access to emails, taxes and social media sites? Where should pictures go?

It may be easier to use one of several available services that generate secure passwords for each site and store the passwords and usernames. Using provisions for denial of access until death, the named digital fiduciary should have the master password to that service, plus instructions for any two-factor authentication. Remember that your will becomes a public document upon your death, so don’t put any passwords in that document.

Reference: Investment News (Oct. 22, 2019) “4 ways to help clients control their digital afterlife”

Everyone Should Have a Healthcare Power of Attorney

Before snowbirds begin their seasonal journey to warmer climates, it’s time to be sure that they have the important legal documents in place, advises LimaOhio.com in a recent article “Different seasons and documents, same peace of mind.” One of the most important documents that everyone should have is a healthcare power of attorney, and it should be prepared and be ready to be used at any time.

Having a healthcare power of attorney makes sense
A healthcare power of attorney is an often overlooked, but essential part of any good estate plan.

These documents name another person to make healthcare decisions, in case you are not able to make those decisions for yourself. We never think that anything will really happen to us, until it does. Having this document properly prepared and easily accessible helps our loved ones. They are the ones who will need the powers given by the document. Without it, they cannot act in a timely manner.

If traveling between a home state and a winter home, it is wise to have a set of documents that align with the laws of both states. It may be necessary to have a separate set of documents for each state, if the laws differ.

Healthcare powers of attorney typically need updating about every five years. The law has changed in recent years in Florida, and there are some specific powers that need to be stated precisely, so that the document can be used if needed.

If a healthcare power of attorney is not in place when it’s needed, the only way that someone else can make decisions for you, is to become your guardian. Guardianship takes considerably more time and costs more than preparing the document ahead of time. It should also be noted that once guardianship is established, the person who is the guardian will need to report to the court on a regular basis.

Another document that needs to be in place is a living will or advance directive. This is a document prepared to instruct others as to your wishes for end-of-life care. The document is created when a person is mentally competent and expresses their wishes for what they want to happen, if they are being kept alive by artificial means. For loved ones, this document is a blessing, as it lets them know very clearly what their family members wishes are.

Peace of mind is a wonderful thing to take with you as you prepare for a warm winter in a different climate. Talk with an estate planning attorney to be sure that your estate planning documents will be acceptable in your winter home.

Reference: LimaOhio.com (Oct. 26, 2019) “Different seasons and documents, same peace of mind”

Disappointing News from Social Security for 2020

The annual Cost of Living Adjustment, aka COLA, for 2020, is a smidge of an increase: 1.6%. That’s only slightly more than half of the 2.8% COLA for 2019. For the average beneficiary that means about $23.50 more per month, says the Globe Gazette’s article “Disappointed in Your Social Security Raise? 3 Steps to Take.” It’s a lot like getting a tiny raise that doesn’t budge the budget needle at all. Remember, there’s also going to be an increase in Medicare Part B, which is expected to rise by $8.80. That puts a raise of just $14.70 per month in benefits, once New Year’s Day passes.

News from Social Security
News of the meager increase in the 2020 COLA from Social Security is disappointing.

The problem is, healthcare costs are continuing to climb. That puts seniors in a bind, especially those who count on Social Security for the bulk of their retirement income. Is there anything you can do to beef up your income despite this bad news from Social Security?

Review and revise your budget. You needed a budget when you were working, and you really need one in retirement. If you are using up all your available income every month, it may be time to make some changes. Maybe it’s finally time to clear out the big sprawling ranch and downside to a two-bedroom condo. Going from a two-car household to a one-car family could net considerable savings. If you eat most of your meals out at restaurants, consider trimming those outings to cut spending.

Work part-time. You may have a lot of time on your hands, as a retired person. Getting a part-time job during retirement has a number of benefits. One, you have less free time to spend money, two, you have income and three, you have more social interactions during working hours. There’s also no need to accept a job that you wouldn’t want. Maybe you are great at baking and can turn that into a side business, or dog walking or crafting. Pet-sitting and babysitting are in demand.

Move somewhere less expensive. The cost of living varies greatly from state to state. Look for states that don’t tax Social Security and that offer a lower cost of living and a relatively low income tax rate. However, check your Medicare benefits. Medicare Advantage and Part D plans vary from state to state. If you have supplemental insurance through Medigap, the cost of your plan may change.

If so much of your retirement income budget is based on Social Security, be prepared to make some changes. You can stretch those benefits and, at the same time, lessen your stress.

Reference: Globe Gazette (October 14, 2019) “Disappointed in Your Social Security Raise? 3 Steps to Take”

Where Not To Retire

Where you live during retirement has financial considerations that may override personal preferences, says Financial Advisor’s article “Bankrates’ Top 10 Worst States to Retire.” Deciding where to live in retirement, proximity to family and friends, affordable living costs, access to excellent health care and hospitals, good weather and a low crime rate are the key factors. That’s according to a 2018 study from Transamerica Center for Retirement Studies. Therefore, here’s a list of where not to retire.

Where Not to Retire
You might want to steer clear of these states in retirement.

10—South Carolina ranked 50th for wellness and 45 for crime. It’s overall ranking in 41st place is a surprise, given how many Northerners are finding their way to the Palmetto State.

9—New Jersey also came in at 41st place, but that’s because it ranked 48th in affordability. It’s expensive to live between New York City and Philadelphia.

8—California dreaming is great when you’re a Silicon Valley billionaire, but despite great weather and a wellness culture, the state ranks at 49th for affordability. It ranks 43rd overall.

7—Oregon has some of the same issues as California – very expensive to live here. The Beaver State ranks sixth in culture, but the price is very high.

6—Nevada is finding its way onto a lot of retirement lists, but at 17th in culture and 27th in weather, crime comes in at 40th and 48th at wellness. Tourism is the anchor of the state, and economic downturns take a big hit on the Silver State.

5—Washington is 41st in affordability and 46th overall. It does rain a lot.

4—Illinois is a nice blend of midwestern wide open spaces and big cities, but if you are planning on retiring near Chicago, bring lots of cash. Illinois ranks at 40th in affordability and 49th in wellness. Overall, the state came in at 47th.

3—Alaska is a chilly place to retire, and far from families living in the lower 48. It has become one of the most expensive, dangerous and inhospitable places to live, according to this article. Ranking 38th in affordability, 49th in crime and 50 in weather, Alaska comes in at 48th overall.

2—New York is wonderful for culture, coming in at 7th place, but so expensive that most people prefer to visit. It comes in at 50th for affordability.

1—Maryland’s closeness to our nation’s capital is expensive, ranking 47th in affordability. The weather is mild, which makes it attractive to many, and there’s always something to do in or near Washington, D.C. However, the cost makes it tough for people on fixed incomes. It ranks 50th overall.

The survey found that almost four in ten retirees say they’ve moved at least once after retirement When it comes to relocating for retirement, do more than visit. Rent for a few months, or even a year. If you do move to another state, make sure to update your estate plan. State laws regarding estate planning vary, and what is legal in one state may not work in another.

Reference: Financial Advisor (October 18, 2019) “Bankrates’ Top 10 Worst States to Retire.”

The Downside of an Inheritance

As many as 1.7 million American households inherit assets every year. However, almost seventy-five percent of all heirs lose their inheritance within a few years. More than a third see no change or even a decline in their economic standing, says Canyon News in the article “Three Setbacks Associated With Receiving An Inheritance.” Receiving an inheritance should be a positive event, but that’s often not the case. What goes wrong?

Problems with inheritance
Inheritances can be great, but they can have a downside too.

Family battles. A survey of lawyers, trust officers, and accountants conducted by TD Wealth found that at 44 percent of all inheritance setbacks are caused by family disagreements. Conflicts often arise, when individuals die without a properly executed estate plan. Without a will, asset distributions are left to the law of the state and the probate court.

However, there are also times when even the best of plans are created and problems occur. This can happen when there are issues with trustees. Trusts are commonly used estate planning tools, a legal device that includes directions on how and when assets are to be distributed to beneficiaries. Many people use them to shield assets from estate taxes, which is all well and good. However, if a trustee is named who is adverse to the interests of the family members, or not capable of properly managing the trust, lengthy and expensive estate battles can occur. Filing a claim against an adversarial trustee can lead to divisions among beneficiaries and take a bite out of the inheritance.

Poor tax planning. Depending upon the inheritance and the beneficiaries, there could be tax consequences including:

  • Estate Taxes. This is the tax applied to the value of a decedent’s assets, properties and financial accounts. The federal estate tax exemption as of this writing is very high—$11.4 million per individual—but there are also state estate taxes. Although the executor of the estate and not the beneficiary is typically responsible for the estate taxes, it may also impact the beneficiaries.
  • Inheritance Taxes. Some states have inheritance taxes, which are based upon the kinship between the decedent and the heir, their state of residence and the value of the inheritance. These are paid by the beneficiary, and not the estate. Six states collect inheritance taxes: Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. Spouses do not pay inheritance taxes, when their spouse’s die. Beneficiaries who are not related to decedents will usually pay higher inheritance taxes.
  • Capital Gains Tax. In certain circumstances, heirs pay capital gains taxes. Recipients may be subject to capital gains taxes, if they make a profit selling the assets that they inherited. For instance, if someone inherits $300,000 in stocks and the beneficiary sells them a few years later for $500,000, the beneficiary may have to pay capital gains taxes on the $200,000 profit.

Impacts on Government Benefits. If an heir is receiving government benefits like Social Security Disability Insurance (SSDI), Supplemental Social Security (SSS) or Medicaid, receiving an inheritance could make them ineligible for the government benefit. These programs are generally needs-based, and recipients are bound to strict income and asset levels. An estate planning attorney will usually plan for this with the use of a Special Needs Trust, where the trust inherits the assets, which can then be used by the heir without losing their eligibility. A trustee is in charge of the assets and their distributions.

An estate planning attorney can work with the entire family, planning for the transfer of wealth and helping educate the family, so that the efforts of a lifetime of work are not lost in a few years’ time.

Reference: Canyon News (October 15, 2019) “Three Setbacks Associated With Receiving An Inheritance”

What has the Average American Saved for Retirement?

It’s the question we all wonder about, but not very many of us will come out and ask. A 2019 analysis of more than 30 million retirement accounts by Fidelity Investments found that the average balance in corporate sponsored 401(k) plans at the end of 2018 was $95,600. When it came to traditional, Roth and rollover IRAs, the number was $98,400, reports Investopedia in a recent article titled “What Is the Size of the Average Retirement Nest Egg?” A look at 403(b) and other defined contribution retirement plans in the non-profit sector found that it was $78,7000. These numbers were down between 7.8%-8% from the same quarter of the prior year. Blame the stock market for that.

Averages like this only indicate a few things. Younger workers, for example, tend to have less in their retirement accounts than older workers. Their salaries are smaller, and they haven’t had decades to accumulate tax deferred income in their accounts. However, that gap is wide.

A June 2018 report from the Transamerica Center for Retirement Studies looked at a nationally representative sample of more than 6,000 workers and broke out retirement savings by generation. The boomer members had estimated median retirement savings of $164,000 in 2017, while Gen Xers had $72,000 and millennials had $37,000.

Aside from age, the big factors in retirement savings success seem to be education and income. People with higher income put more money into their retirement accounts. The Transamerica study shows that households with incomes of under $50,000 had estimated median retirement savings of $11,000. Households with incomes between $50,000 and $99,999 had median savings of $61,000 and those with incomes of $100,000 or more had $215,000.

The higher the level of education, the more money people have set aside for retirement.

Therefore, if you’re wondering how your nest egg compares to the average nest egg, the first thing you’ll want to do is decide to whom you want to compare yourself and your nest egg. You can compare yourself to the U.S. population in general, or to people who are more like you in education, age and income.

Here’s an unnerving thought: no matter if your nest egg is way above your peer group, that doesn’t mean it will be enough when retirement rolls around. Everyone’s situation is different, and life hands us unexpected surprises.

One way to prepare is to have an estate plan. If you don’t already have an estate plan, which includes a will, power of attorney, health care power of attorney, possibly trusts and other strategic tools for tax planning and wealth transfer, make an appointment with an estate planning attorney.

Reference: Investopedia (Sep. 24, 2019) “What Is the Size of the Average Retirement Nest Egg?”

Scroll to Top