Estate Planning Archives - Bredemann & Shellander, PLC

What are Some Questions that I Should Ask a Lawyer Who Does Estate Planning for People Over 50?

October 10, 2016 by mary.r

“Death, like taxes, is certain. And like taxes, it’s one of the least pleasant topics to contemplate, let alone discuss with others. Even so, a recent Gallup Poll* indicates half of American adults have faced up to the inevitable and written a last will and testament, directing where or to whom their worldly assets should be distributed when they leave this one.” If you are one of the 50% who have already created a legal document as part of your estate plan there is still some work to be done to ensure your document continues to meet your goals. If you are one of the 50% who has not created a will or trust, you need to start working on expressing your wishes in a legal document and then some. For people over 50, working with an estate planning attorney is wise, and here are some important questions you need to ask.

Do I have adequate life insurance and long term care in place? If you have minor children you should have a life insurance policy in place for the unexpected to make sure that your family and loved ones are taken care of financially. You should also have something in place in the event you need long term care down the road. There are many policies and options available to cover these possibilities. “Long-term care insurance policies reimburse policyholders a daily amount (up to a pre-selected limit) for services to assist them with activities of daily living such as bathing, dressing, or eating. You can select a range of care options and benefits that allow you to get the services you need, where you need them.” If you do not have a life or long term care policy and are unable to get one it would be prudent to put money aside for these expenses. Have your estate planning attorney review what you have in place now and make sure that you have adequate coverage or assets in place.
Is my will or trust up-to-date? This is an important item to review with your estate planning attorney. Whenever a life or financial event occurs you should have your will or trust reviewed for any needed updates. If you have additional children you will want to make sure they are included in the inheritance of your estate, and make sure that your estate plan makes provisions for their care. If you create a trust you should review it regularly to make sure your beneficiaries on all accounts and life insurance policies are listed correctly. Your estate planning attorney will guide you in determining when to name your trust as the primary beneficiary and when it is prudent to name an individual such as your spouse. You should also review your documents to ensure that your financial and medical powers of attorney are accurate. Sometimes relationships between loved ones can change and you will want to be sure that the people listed are still the individuals best suited for their respective positions.
Is my estate plan tax efficient? You want to plan ahead for retirement and possible tax consequences. Review your entire estate with an experienced estate planning attorney and explore possible tax savings vehicles such as a charitable remainder trust. There are avenues to achieve tax savings depending on your specific situation so work with a trusted expert to find those that best fit your estate plan. When looking at your long term financial plan keep in mind that once you reach 70 1/2 years of age you will be have to take Required Minimum Distributions from some of your retirement accounts.
Does my current estate plan match my goals? Do you want to save your existing accounts and assets to leave as an inheritance or are you hoping to retire early or with a higher standard of living? Consult with your estate planning attorney to make sure your accounts, assets and existing plan match your short and long term goals.
What should I do with my business? If you are 50 or older and a business owner you may be wondering what to do with your business when you are ready to retire. It’s good to start putting that plan together now; whether you want to retire tomorrow or in 30 years. There are many options for business owners; you can sell your business, leave it to your heirs, or establish a succession plan that is a melding of the two. Your financial circumstances and personal preferences will dictate how to move forward. Regardless of which choice is best for you, you will need properly drafted legal documents to successfully transfer or leave your business to others. Proper estate planning and business succession planning can make all the difference to your finances now and your heirs after your death.

Estate planning is so important to your present, future and legacy. Regardless of your age, if you do not have a will or trust in place; please start putting one together now. We often take tomorrow for granted even though it’s never guaranteed. If you are 50 or older and working with an estate planning attorney, ask the questions above to assist you in establishing your estate plan.

Tax Planning Guide: Scottsdale Lawyer’s Tax Planning Guide

October 3, 2016 by mary.r

Have you heard the saying the early bird gets the worm? When it comes to your tax filing, failing to plan can be expensive. The early bird doesn’t just file tax returns on time; he or she plans for tax time well in advance. Tax preparation is what sets you up for optimum success. The more you work with your tax planning professional the more you are able to take advantage of all available deductions and incentives. The first step in efficient tax planning is to regularly communicate with your tax planning professional and get started early. Every person’s situation is unique and your tax professional will know exactly what information is needed to get your tax strategy implemented prior to the actual filing. Here is a Scottsdale lawyer’s tax planning guide of things you can do and items you can gather to get you started:

Get organized (if you aren’t already). You will want all your paperwork and statements accessible in one safe place. Try to put all pertinent documents together, such as your W2’s, 1099’s, interest statements, and the items listed below, preferably in a fire proof safe. This will make it much easier to find everything when it is time to visit your tax professional.
Your mortgage statement. According to the IRS “You can deduct home mortgage interest if all the following conditions are met.

You file Form 1040 and itemize deductions on Schedule A (Form 1040).
The mortgage is a secured debt on a qualified home in which you have an ownership interest.”

Second homes and home equity loans may also qualify for the mortgage interest deduction. Second homes are eligible provided they are not classified as rental homes and home equity debt may qualify for the mortgage interest deduction with limitations.

Charitable donation receipts. Charitable donations are only deductible if you itemize on the 1040. Charitable donations must be made to qualifying organizations to qualify for the deduction and you must retain a record of the donation such as a receipt or acknowledgment letter. There are various IRS forms that will need to be filled out depending on the type and amount of your donation. Keep meticulous records and receipts of all charitable giving.
Healthcare: proof of coverage and expenses. For 2015, the IRS has created three different information forms relating to your healthcare coverage. You will determine which form to use based on how you obtained healthcare coverage for the year. If you obtained healthcare through the Marketplace you may be eligible for a premium tax credit and should receive a form 1095-A. While the IRS does not require you to send proof of your healthcare coverage with your return, you should keep these records on file and provide them to your tax planning professional in case of an audit down the road.

You may also want to calculate your medical expenses for the year. Your medical and dental expenses may be tax deductible. The IRS stipulates that you must itemize in order to take the deduction and you can only deduct expenses over 10% of your adjusted gross income, (7.5% for certain tax payers). Work with your tax planning professional to determine if your medical expenditures meet the minimum IRS requirements.

Mileage documentation: Mileage deductions can be taken but you must have carefully documented records. Miles for business, charity or medical purposes may be deductible. The news is even better if you are self-employed. According to usnews.com “For 2016 tax filings, the self-employed can claim a 54 cent deduction per business mile. Those miles could be racked up from meetings with clients, travel to secondary work sites or errands to pick up supplies. “You may be going to Office Max to buy paper for your printer,” Dietrich says, “or scouting out locations for a photography shoot.” Unlike some of the other mileage deductions available, mileage for self-employed workers isn’t subject to any threshold requirements. In other words, all miles are deductible regardless of how much a person drives for work.”
Business reports and deductions. The list of possible business deductions is extensive. In a perfect world you have already consulted with your tax planning professional in order to establish your business entity and strategize for your taxes. It is helpful to submit your profit and loss statement and balance sheet to your tax planning professional so that he or she can confirm you have allocated and categorized your books correctly.

According to the IRS business expenses may be deductible if they are ordinary and necessary. “It is important to separate business expenses from the following expenses:

The expenses used to figure the cost of goods sold,
Capital Expenses, and
Personal Expenses.”

Other possible business deductions include automobile expenses, employee gifts, startup costs, legal and professional fees, home office expenses and furniture and equipment costs and depreciation. Each of these deductions has specific criteria, established by the IRS, which must be met. For your protection, you should always keep receipts and records in the event of an audit.

Most recent account statements. Your most current account statements will give your tax professional valuable information. These statements will help determine if you have maxed out your 401k contributions. The statements will also reflect any required minimum distributions (RMD’s) if you are 70 1/2 or older.

Every person’s finances are unique and need specific and detailed planning. This Scottsdale lawyer’s tax planning guide should give you a good starting place. The best strategy you can have when tax planning is to partner with a tax planning professional. Together you can map out your tax savings strategy and put as much of your hard earned money as possible where it belongs; back in your pocket.

When Should You Go Visit A Tax Planning Attorney?

September 26, 2016 by mary.r

Would you rather leave your hard earned money to your loved ones or to the tax man? Tax laws can be complicated and convoluted and estate planning is just one of many reasons you need to visit a tax planning attorney. If you find yourself in any of the situations below, be sure to consult with an experienced attorney and save yourself as many tax dollars as possible. Put your hard earned dollars where you want them to go, and not into Uncle Sam’s pocket.

You are leaving money or assets to loved ones. Whenever you are considering estate planning you should also take into consideration tax implications and visit a tax planning attorney. Tax planning and estate planning go hand in hand and work in tandem to plan for your wealth long-term. By consulting with a tax attorney you can often save yourself taxes on your estate now as well as your beneficiaries when it comes time for them to inherit. In some situations, it is better to gift your estate to your heirs a little at a time while you are still alive. You should also consider your state’s tax laws and how they will impact your estate. If you are creating a will or trust to distribute your assets, consult with a tax planning attorney to maximize the amount your heirs will inherit and minimize estate taxes.
You want to build a legacy. Leaving part of your wealth behind as a legacy might include creating a scholarship fund or gifting your estate to an educational institution. However you decide to leave your legacy, you need to plan and strategize. You should articulate what your financial goals are and make sure you are using tax laws to maximize benefits and available deductions while achieving those goals. Visit a tax planning attorney and ask for a sound advice.
You need specialized trusts. If you are considering a charitable trust or want to utilize a specialized trust to improve your estate tax, work with a tax planning attorney. For instance, a charitable remainder trust can be established and your estate and the charity of your choice can both enjoy tax benefits.

A specialized trust could also be used to address the disbursement of your estate for a child that has special needs or has excessive spending habits. Any of these scenarios greatly benefit from a knowledgeable tax attorney.

You are moving out of state. While it sounds so simple, an out of state move should warrant a visit to a tax attorney. Tax laws vary drastically from state to state and you will want to consult with an expert in your new location to make sure your current plan still makes sense. For instance, according to retirementliving.com, “Many people planning to retire use the presence or absence of a state income tax as a litmus test for a retirement destination. This is a serious miscalculation since higher sales and property taxes can more than offset the lack of a state income tax. The lack of a state income tax doesn’t necessarily ensure a low total tax burden.” A skilled tax attorney can looks at the state’s tax laws and help make sure you are taking advantage of all available deductions and not getting penalized with state tax unnecessarily.
Life changes happen, whether by choice or unexpectedly. Hopefully, you already have a tax strategy in place. Many factors go into this strategy such as your gross income, number of deductions, when you’d like to retire, etc. If you suffer a job loss, death of a close relative, birth of a child or any other life altering event; you should consult with your tax planning attorney. Any one of these items could impact your overall tax strategy which may need to be adjusted. Your tax planning should be an ongoing conversation that has room to be maneuvered and changed if needed.
You are starting a business. Congratulations! Starting a business is a huge step. Before you file any entity paperwork, consult a tax planning attorney. The specifics of your business setup can cost or save you a bundle in taxes. Your situation and financial projections will help determine if you need to set up an S-corp, C-corp, or LLC. The structure of your business and your long term plans need to be assessed to make sure your money is going back into your business and not to taxes.
You currently own a business. If you already have an established business you may still benefit from meeting with a tax attorney. There are many strategies and deductions available and you should be taking advantage of as many as possible. Entrepreneur.com gives a small sampling of tax tips for businesses. They list items such as putting your children on the payroll, implementing a 401k and purchasing a vehicle and taking advantage of the depreciation deduction. Not every available deduction will fit your situation and this list given by Entreprenuer.com is far from comprehensive. Existing business owners also need to consider their exit strategy. What does your business succession plan look like? Are you planning on selling your business or passing it down to your children? These are all questions that have potentially expensive tax implications. Work with your tax planning attorney to see which tax saving solutions fit your business.
You are considering paying medical or educational expenses for a loved one. If you would like to financially assist a loved one, work with a tax planning expert to see if paying for educational or medical expenses is the best financial route. While there is a gift exclusion of $14,000 for 2016, per the IRS, you may be able to give more money tax free by paying directly for medical or educational expenses. In each instance, the money has to go to the institution directly; but there is no dollar amount cap to how much you can pay for your loved ones medical care or education tax free. There are other limitations and caveats for each, so work with your tax attorney to make sure you are correctly using this strategy.

Your hard earned money is your own. Work with a tax planning attorney to keep it that way. If you find yourself in any of the scenarios above, it is particularly important to make the most of every tax advantage possible.

About Bredemann and Shellander

August 8, 2016 by mary.r

Richard Bredemann has been a practicing partner of Bredemann and McFarlane PLC since 2004. He has been practicing law and serving the residents of Arizona for over 40 years. Together with Thomas Shellander he has created a new firm, Bredemann and Shellander PLC, located in Scottsdale, Arizona. Thomas Shellander is an experienced estate planning and tax attorney and CPA. The new firm of Bredemann and Shellander bring a combined 65 years of experience and expertise to their clients. Richard and Tom are excited to continue to serve their Arizona and Wisconsin clients and all their estate planning needs.

Learn more about the firm, its philosophy and areas of practice at the new website which is now live: https://estateplanaz.com/.

Why Estate Planning is Important if You are Single?

July 7, 2016 by mary.r

Estate planning for singles is as important as for estate planning for couples. Many people think of estate planning and think that is the opportunity to leave your assets to your children or spouse. If you are single you may think that estate planning is not something you need to consider. Single or married, estate planning is something you should do. Below are four reasons why estate planning is important if you are single.

Estate planning gives you the opportunity to decide what happens to your assets when you die. If you do not create and execute an estate plan, including a will or trust, your assets will be distributed as determined by state law. About money describes what can happen to your assets after death if you do not have a will or trust in place. “Here is what will happen under the Arizona intestacy laws if the deceased person is…

Survived by descendants and no spouse – In this case the deceased person’s descendants will inherit the entire probate estate, per stirpes.

Survived by a parent or parents and no spouse or descendants – In this case the parents will inherit the entire estate in equal shares or the surviving parent will inherit the entire estate.

Survived by a sibling or siblings and no parents, spouse or descendants – In this case the siblings will inherit the entire estate, per stirpes.

…In the unlikely circumstance that the deceased person is not survived by any family members as described above, then the entire probate estate will escheat to the State of Arizona.” If you have strained family relationships or would like a distribution different than those listed above you should invest some time in estate planning. State laws are also subject to change. The guidelines given above could be changed and your assets distributed in a way that you do not agree with. If you are single, you can create a will or trust that dictates how to distribute your assets to family members, friends or charitable organizations. Use estate planning to establish who your beneficiaries are and how much of your estate each will receive. Don’t leave this to be determined by the state.

Estate planning allows you to be in control of your healthcare. If you are in a serious accident and need medical care you may not be in a position to communicate your wishes. The official website of the Arizona Medical Board describes advance care directives and why they are important stating, “Advance care directives, like a Living Will and/or a Durable Health Care Power of Attorney, allow others to follow your directions about your health care. They are your “blueprint” for what you do or do not want done in given situations. Advance care directives can provide specific instructions on how to proceed or the information your surrogates need to fulfill your intent. For a directive to be useful and effective, you must discuss your wishes with your primary care physician and close family members, especially the person you want to be in charge of carrying out your wishes.” The site goes on to explain that if you do not have a healthcare directive in place the healthcare provider may contact the following, in this order: your adult children, your parents, your siblings, and then close friends. An advanced care directive, will or healthcare power of attorney is critical to make sure that the person you designate is making vital healthcare decisions for you in the event of your incapacitation. You can also make sure that your wishes after death are carried out such as having a burial or cremation. It can be difficult to think about things like life support, levels of medical care in serious situations and death, but it is important for you to decide how you would like these situations handled. It is also important to make sure you communicate your wishes through your estate plan, especially if you are single, and do not have a spouse to automatically make these decisions for you. After consulting with an estate planning expert and completing your estate plan, you can file your healthcare directives with the state of Arizona at: http://www.azsos.gov/services/advance-directives.

Estate planning may give you the ability to keep your assets and distribution private. When working with an experienced estate planner you will want to communicate your wishes to keep your estate private. If you use a will to designate your beneficiaries and distribution of your estate you will may go to probate which is a public process. However, if you utilize a trust, you may be able to keep the terms of your estate’s distribution and beneficiaries private.

Estate planning can set your heirs up for success. You need to consider that depending on the size of your estate your heirs may face high estate and income tax penalties. Working with an estate planning professional you may strategically distribute your wealth to help your loved ones avoid high tax penalties. Different types of assets can also be taxed differently. It is important to consult with someone who understands the tax implications for each of your assets and can help you determine the best way to distribute them. You can also decide the timetable in which your assets are distributed. If you have two siblings you would like to make your beneficiaries and one is terrible with money while the other is not, you may setup a distribution so that the first sibling receives a portion of your estate every year for 10 years while the other sibling receives a lump sum. You know your loved ones best and how your estate could be structured to best benefit each individual person.

Whether you are married, single or divorced estate planning is a critical tool in executing your wishes for your medical care and asset distribution once you are gone. If you have friends or family that you would like to act for you as a healthcare representative, plan ahead. If you have accumulated wealth you would like to leave to specific people or charities, plan ahead. Your health and wealth decisions are both excellent reasons estate planning is important for single people and married people alike.