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Young Family Estate Plan

Young Family- Consider an Estate Plan

For a young family, when is the right time to put together an estate plan? Right before you die is the correct, but not realistic, answer. Estate planning is especially important for families with young children, and to be updated to pass on assets in later years, according to the Lodi News Sentinel in “Planning for what comes last.” Think of an estate plan as a gift for the next generation, as is making funeral plans in advance. I used to avoid doctor visits, until a friend pointed out, the visit is not just for me, but the whole family. Doing what you should is for them. You can’t assume that your adult children will know what you want for your funeral and you don’t want them to have to make decisions during a time of great sadness. These are gifts, that parents who love their children can give: taking care of the business side of their lives and their deaths, so that a difficult time is manageable. Once you have worked with an estate planning attorney to prepare all the necessary documents and made funeral plans, the next step is to share that information with your heirs. It’s not an easy conversation to have. Most of us tend to keep that side of our lives private from our kids, no matter how old we become. However, sharing this information can keep families from fighting in the future. It is not easy to know how much different members of the family can handle and who can be trusted with what information while you are living. There are times when people who appear completely selfless suddenly become greedy when an inheritance is being probated. It’s hard to anticipate this. However, there are several things that you can do now to make it easier for those you love. Have a will and if appropriate, a trust, created with an estate planning attorney. Don’t neglect a power of attorney for health and for finances. Make funeral plans and tell your family about those plans. Make an end-of-life plan. Don’t leave it to others to make these difficult decisions, if you know what you want to have done. Plan for your pets, in case they outlive you. Protect your digital assets by obtaining the correct information for all your social platforms, so your loved ones are empowered to access and close accounts after your death. An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances. Reference: Lodi News-Sentinel (July 1, 2018) “Planning for what comes last”

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Aretha Franklin and no planning

The Queen is Gone, and She Didn’t Have an Estate Plan

We all procrastinate about something. The time may never seem right to deal with your inevitable death. Aretha Franklin. the “Queen of Soul” has passed away, leaving an $80 million estate and no estate plan, according to Investment News in “Aretha Franklin estate echoes planning problems of Prince.” Franklin was not married so the estate will pass to her four children. It’s similar to the situation that occurred when Prince died unmarried and without a will in 2016. Had she been married her estate could have passed tax-free to a spouse and there would have been planning opportunities available at that time. Franklin’s four kids will now receive equal shares of her estate.  However, they will have to pay a considerable amount in taxes. She was a resident of Michigan, which does not have an estate tax, so there won’t be a state estate tax. However, the federal government takes 40% of portions of the estate valued over $11.18 million. In other words, a $27.5 million tax bill. Without the benefit of a trust being established by a will, those assets will be taxed again by the federal government at the time that the four heirs pass, when the money moves to her grandchildren. Celebrity estates, like that of Franklin, must undergo a complex valuation process to correctly assign an approximate future value of income. Like Prince, there are image rights and music royalties, and the buzz surrounding her death is likely to inflate its value and the tax that will be levied. While Michigan does not have an estate tax, the state does have a “postmortem right of publicity,” meaning that her heirs have the right to legally protect her image for commercial use. Her postmortem rights of publicity are expected to be extremely high, because of her iconic stature as a musician, songwriter and cultural touchstone. Estates of celebrities and creative artists are required to be valued and the appraisal must be reconciled with a parallel appraisal conducted by the IRS. Remember Michael Jackson’s situation? The estate initially valued his name and image at $2,015, while the IRS valued it at more than $434 million. One of Franklin’s children reportedly has special needs. This could put him in a precarious position. If he inherits a large sum of money, he will no longer be eligible for any government programs. Given the size of his inheritance that will not be a problem. For those with less wealth, however, that is why estate planners encourage the use of special needs trusts. This not only protects the child’s eligibility but protects them from misusing the money or being scammed by unscrupulous individuals. Even if you are not an entertainer with assets that total in the millions, an estate planning attorney can advise you in creating an estate plan that fits your unique circumstances. Reference: Investment News (Aug. 22, 2018) “Aretha Franklin estate echoes planning problems of Prince”

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