But there’s one more thing that you should add to the list – update your estate plan.

Your estate plan needs to change as often as your life changes, says an article on savannahnow.com.

Maybe there is a new member of your family at the holiday table this year. Or maybe one has gone.

If you haven’t made an estate plan, you ought to do it now. If you have assets, you need to know to whom you’d like to give those assets.

An easy way to start is to call an estate planning attorney. If you already have an existing plan and it has not been reviewed in the last couple of years, it should be reviewed and updated. Your situation may only need a simple Will or you may need something more sophisticated. You may want to set aside assets to minor children, minimize estate taxes or structure different distributions.

Wills, remember, are subject to probate. Trusts do not.

Revocable living trusts can provide for a surviving spouse, protect children’s inheritances from creditors, give loved ones an incentive to do things that are worthwhile and protect a children from losing an inheritance in a divorce or a lawsuit.

You should also make sure you have a comprehensive plan that includes a durable power of attorney, a health care directive, a medical authorization and other necessary ancillary planning documents to protect you during incapacity. Call us now so we can help you to cross off one of your items on the “To Do” list.

The post Put Estate Planning on Your Holiday “To Do” List appeared first on Desert Law Group | Kimberly T. Lee.

A story in Forbes points out that who gets the money invested in a retirement account such as an IRA depends on who is named on the account’s beneficiary form.

Lots of people make mistakes when it comes to retirement accounts.

They may fail to designate a beneficiary, or the form may not be on file with the financial institution that has custody of the account.

Either mistake can cause problems when it comes to distributing the money. For example, the money could go to the person’s estate and be subject to creditors or to someone you don’t want to see get the money.

If you name your estate as the beneficiary, the IRA asset will be subject to probate and cause immediate income tax consequences. Here are some basic IRA rules to live by:

• Designate a beneficiary.

• Designate a contingent beneficiary.

• Don’t designate your estate.

• Don’t designate your living trust, unless otherwise directed by your attorney.

• Review the beneficiary forms regularly.

• Make sure your financial institution has the form and any updated forms.

The post Take Care With IRA Beneficiary Forms appeared first on Desert Law Group | Kimberly T. Lee.

Reverse Mortgage (Photo credit: aag_photos)

But some of the plan is backfiring on the children of the borrowers. They are finding out that their inheritances are gone, according to an article in the New York Times.

Under the law, children of reverse mortgage borrowers are supposed to be offered the option of settling the loan for a percentage of the full amount. But some reverse mortgage lenders are threatening to foreclose on the home unless the amount is paid in full, the article says.

Some companies are moving to foreclose just weeks after the homeowners die. And the companies aren’t telling the children that they have the option of settling for less than the full amount.

In one case cited in the article, the children were supposed to have been offered the opportunity to settle for 95 percent of the home’s current value, with any shortfall if the home sells for less than the debt amount to be made up by a federal insurance fund, which the reverse mortgage borrowers pay into every month. But the company did not provide the information to the children.

It is important for seniors to weigh the advantages and disadvantages of a reverse mortgage strategy before making the decision. It is also important for the heirs understand their legal rights.

The post Beware of Reverse Mortgage Pitfalls appeared first on Desert Law Group | Kimberly T. Lee.

(Photo credit: Ken_Mayer)

A recent article explains that forgetting to update your beneficiary designation form is the number one mistake in estate planning.  This mistake commonly occurs when a person improperly tries to include one of the above listed assets in their Will, instead of updating the listed beneficiary. For example, if you list a payable-on-death beneficiary for your bank account, your Will does not change who receives the proceedings for that account when you pass away. The person you listed as the beneficiary of the account would probably receive this asset. The person whom you attempted to give the funds to in your Will probably gets nothing. This also exposes your estate to potential litigation.

Fortunately, the solution to this problem is simple – update your beneficiary forms. It is a good idea to review your listed beneficiaries every year to make sure the person you selected is still the person who should get the asset when you die. It is also a good idea to list a secondary or contingent beneficiary, in case the primary beneficiary should pass away before you do. If you need the recommendation of an experienced financial advisor to assist you, please call our office.

The post The Number One Estate Planning Mistake appeared first on Desert Law Group | Kimberly T. Lee.

Estate planning is critical to everyday living for adults over the age of 18, and should be one of the priorities regardless of your age or marital status. If you have not yet planned your estate, we encourage you to do so right away. It’s important to prepare for the unexpected. Remember that ole saying, “tomorrow is not promised?” If you think about it, what would happen to your children, your home, and all you have worked for in the event of your unexpected death or disability if you don’t have an estate plan in place?  Let’s go over the basic estate planning that everyone should consider.

–A Will to establish what would happen to your assets. It also names the guardian for your children. Dying without a will is called dying “intestate,” and gives you no voice. It can be costly to your heirs and can bring with it issues such as family dissension and probate court intervention. Even if you have a trust, you still need to take care of any holdings outside of that trust when you die.

–A Durable Financial Power of Attorney to handle your financial affairs in case of incapacity.

-A Healthcare Directive to specify the measures that can or cannot be taken to sustain life, and to make medical decisions for you in the event you are unable to do so.

Depending on your individual circumstances, here are some additional areas of estate planning you might wish to consider:

-A Revocable Living Trust. If you hold property in a well crafted living trust, your survivors won’t have to go through the probate proceedings, which can be a very lengthy, stressful, and expensive process.

-Planning For The inheritance of Your Children. It is always wise to name an adult to manage any money and property your minor children may inherit from you.

-File Beneficiary Forms. Appointing a beneficiary for all bank and retirement accounts make those accounts automatically payable at death to your beneficiary, thus bypassing the probate process.

 -Secure life Insurance. If you have children, own a house or have substantial debt or estate tax, life insurance may be a great choice. For example, in addition to helping to support the minor children, life insurance can help provide immediate cash at death. Insurance proceeds are also a good source for paying your debts, funeral expenses and income or estate taxes.

-Understand Estate Taxes. Due to the increase in the amount of exemption amount, most estates will not owe federal estate taxes, because this tax is only imposed on persons whose taxable estate is worth more than 5.25 million (for 2013). For deaths occurring in the year 2012, the exempt amount is 5.12 million. Married couples can transfer up to two times the exempt amount tax-free.  Also, property left to a spouse (must be U.S. citizen) or tax exempt charity is not subject to the estate tax.

-Cover Funeral Expenses. An account can be established at your bank where funds can be deposited to pay for funeral expenses.

-Business Protection.  If you are a sole proprietor, setting up a successor plan is crucial. If you are in a business partnership, you should consider creating

If you don’t have an estate plan, or have an existing estate plan that needs to be reviewed and updated, please contact our office and we would welcome the opportunity to assist you.

The post The Right Time for Estate Planning appeared first on Desert Law Group | Kimberly T. Lee.

(Photo credit: Wikipedia)

Parents need to first consider how they would like their estate distributed if only one parent passes away. For example, the parent could leave some assets directly to the children. Alternatively, the parents could both choose to leave everything to the other parent, with the understanding that the surviving parent would provide for the child. When considering this option, parents must consider the possibility that the surviving spouse will remarry and have more children.

Parents also need to consider how they would like their estate distributed if both parents pass away. It is typically dangerous to allow children to directly access their inheritance while they are young, as they will not be able to appropriately handle it. Many parents instead choose to set up trust accounts for their children. Parents must also consider who they would like to serve as the guardian for their children, as well as who they would like to manage their children’s assets.

The post Factoring Your Children Into Your Estate Plan appeared first on Desert Law Group | Kimberly T. Lee.

Generally, it is better to let your child inherit homes that have appreciated in value since your original purchase. For homes that have not increased in value or have even decreased in value, it doesn’t matter whether you give the property to your children as a gift or allow them to inherit it.

To illustrate, if you give your home away as a gift, the recipient’s cost basis is the same basis as yours. For example, if you purchased your home for $25,000 and then gifted it to your child, your child’s basis in the home would be $25,000. If your child later sells the house when it is worth $100,000, he or she would have to pay capital gains tax on the profit of $75,000.

On the other hand, when your child inherits your home, he or she takes a “stepped-up” basis for the home. A “stepped-up” basis is essentially the fair market value of the home at the time of your death. So, if your same $25,000 house was worth $50,000 when you died, your child would have a $50,000 basis in the house. If the child were to then sell the home shortly after your death, he or she would likely pay no federal income taxes on the sale, since the basis would hypothetically be the same as the sale price.

The answer to how you should give away your home will be based on factors specific to your situation. If you have questions about how to transfer your home to your children, it is important to speak with an experienced estate planning attorney.

The post How to Give Away Your Home appeared first on Desert Law Group | Kimberly T. Lee.