Planning Archives | Bredemann & Shellander, PLC

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.

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.

Estate Planning for Childless Couples

June 15, 2016 by mary.r

Does Estate Planning for Childless Couples is still applicable? Many people think of estate planning for people with spouses and children. Estate planning allows you the freedom to structure your wishes for your estate, your health and your death. These issues are important to everyone and don’t depend on the structure of your family. In fact, childless couples tend to have greater financial wealth that needs to be planned for. US News wrote an article titled, “To Retire Early, Don’t Have Kids”, in this article the argument is made that without children a person has far greater financial resources to retire. In order to control what happens to your hard earned wealth and assets start planning now. Estate planning for childless couples is just as important as planning for people with children or dependents.

Estate planning gives you the ability to plan your asset distribution. Working with a skilled estate planning attorney you can create a will or trust to dictate how your assets should be distributed. You may have a beloved niece or nephew or friend from high school that you would like to name as a beneficiary, be sure to include these loved ones in your estate plan. You are able to decide how much to give each beneficiary and the terms of when each person will receive his or her inheritance. It is important to work with a skilled and experienced professional so that there are no errors or gaps in your estate plan. Your estate planning attorney can also help you structure your estate plan so that your beneficiaries are as tax efficient as possible. You don’t want the bulk of your financial gift to be diminished by taxes if it can be helped. You will also want to appoint a trusted executor to help ensure your wishes are carried out when you’re gone. The role of an executor is explained by Bernard A. Krooks in his post “Understanding the Role and Responsibilities of an Executor“, “An executor (also called a “personal representative” in some states) is a person named in a will to carry out the wishes of the deceased person. An executor typically offers the will for probate, takes action to protect the assets of the estate, makes distributions of property to beneficiaries and pays the debts and taxes of the estate.” The executor you appoint will have numerous responsibilities and should be willing and capable of fulfilling these duties. You should discuss your estate plan with your executor and make sure he or she will accept the duties that come with the position.

Charitable causes can be a part of your estate plan. If you have a favorite charity or cause that is near and dear to your heart consider including it in your estate plan. It is important to have the correct information for your charity including the legal name and tax ID number. You also have the ability to make your gift to the charity restricted. This means you can designate how the money is spent by the charity. If you decide to make a limitation on the gift be sure that you do not create an undue hardship on the charity you are trying to benefit. You can also create a charitable remainder trust or CRT for short. This trust can be part of your long term estate planning. It is described at “Charitable Remainder Trusts” as, “ an irrevocable trust that generates a potential income stream for its beneficiaries, with the remainder of the donated assets eventually going to one or more charitable organizations.
Key characteristics

Potential immediate (partial) tax deduction, based on the value of the remainder gift to charity
May eliminate capital gains tax for gifts of long-term appreciated securities
Accepts many types of assets
Income may be for life or for a fixed term of no more than 20 years
Requires setup and ongoing maintenance costs

A charitable remainder trust is one example of a structure that can benefit both you and a charity of your choice if it is appropriate with the rest of your planning strategy. A CRT is not an appropriate financial vehicle for everyone so be sure to discuss this and your entire financial picture with your estate planning professional.

Healthcare decisions need to be made. In addition to your financial planning you also need to work out a healthcare plan. Should you become injured and unable to speak for yourself you should have a person in place that can make those difficult decisions for you. Normally that person would be your spouse but if your spouse predeceases you or is unable to fill this role you should have a contingency plan in place. To properly address these issues you may need to face some difficult questions such as whether you would like to be put on life support and how you feel about organ donation. You should discuss your wishes in detail with the person or persons that you nominate to make these choices and include this information in your estate plan. Your estate planning professional can help you create a durable power of attorney for health care that will include all this information. This power of attorney will allow your designated agent to make healthcare decisions for you per your wishes.

Consider your pets. You can include your pets in your estate plan. If you have a beloved pet, consider what will happen to him or her when you’re gone. If your spouse predeceases you, where will your pet go when you pass? You can include plans for your pet and financial considerations to help pay for care in your estate plan. This may help ensure that your four legged family members are taken care of after you are gone.

Estate planning is important for anyone. Whether you are married, divorced or a childless couple it is important to create a plan. By thinking ahead and putting your wishes down in a formal, legal document you are able to make your wishes known for those left behind. Don’t leave your assets and health to chance or to the state. Have the hard conversations and then work with an experienced estate planning attorney to ensure your wishes are followed.

6 Tough Estate Planning Questions Your Attorney Should Ask

June 8, 2016 by mary.r

No one wants to think about dying or becoming unable to make decisions for themselves, but as uncomfortable it is to think about, eventually everyone will die—and everyone will leave things behind. That’s why estate planning is so important. It allows you to control how your belongings are distributed and how your family is taken care of after your death.

In order for estate planning documents to carry out your wishes successfully, you need to think about and answer some tough questions while working with your estate planning attorney. It is important to note that conversations with your estate planning attorney are completely confidential and that the more information about your situation that you can provide to your attorney, the stronger the estate plan can be.

Information you should provide to your estate planning attorney include:

Do you have any other children out there?

If you have other children that you haven’t told your estate planning attorney about—tell him or her now. If your attorney doesn’t know about all of your children, it’s possible that a descendant with whom you have had no contact or whom you didn’t know existed could turn up after your death and claim part of your estate.

As technology progresses, it’s also important to think about the potential rights to your inheritance of any children that are born from eggs, sperm or fertilized embryos that you are currently storing for later use.

Were you ever married before?

If you were married previously and named your ex-spouse as a beneficiary on a pension plan or life insurance policy, he or she could inherit that money. So be sure to update your beneficiary information when big life changes happen, like if you are divorced, separated or widowed. If you are in the midst of divorce proceedings, consult with your divorce attorney before making changes to your beneficiary designations or, for that matter, any of your estate planning documents.

Also, if you were married before and your divorce was never finalized, or if you are separated, your ex-spouse could be entitled to part of your estate under your divorce decree. So be upfront with your estate planning attorney and provide as much information about your personal life as possible. Doing so could keep your estate from being subject to an expensive litigation after you die.

Who do you want to raise your kids if you die?

This is a particularly hard topic to discuss for parents. Not only is it difficult to think about leaving your children, the actual task of deciding on a guardian can be excruciating, leading to family arguments and stress. That being said, if you don’t name a guardian and the unthinkable were to happen, a judge would be the one to decide who raises your children. If you aren’t comfortable leaving that decision up to a stranger, then you need to discuss this with your attorney and name a guardian whom you trust.

If you have pets, you may also want to think about who will take them when you die. This is especially important if you have animals with long life expectancies, like horses.

What if you and your immediate family all die in a common disaster?

Since many people name their close family members in their will, the question remains: who gets the estate if the whole family dies at the same time? While unlikely, this scenario is not impossible and you should plan for this just in case.

If you don’t come up with a plan for this scenario, state law will determine who is the next of kin for each person who died. If you would rather your estate go to a close friend or charity instead of a second cousin twice removed that you’ve never met, you should include them in in your estate planning documents.

When do you want to be taken off life support?

As medical technology advances, people with injuries that would have killed them in the past can be put on life support. This can put a large financial and emotional burden on loved ones. For many people, the thought of being kept alive by machines with no hope of rehabilitation sounds like a nightmare, but in some cases family members can find it difficult to make the decision to take someone they love off of life support.

You should discuss and if appropriate, sign health care directives so your wishes can be made clear if you are unable to speak for yourself. You should also talk with your loved ones and make sure they know what you want to happen in case you become incapacitated.

Having these conversations now, although uncomfortable, can ensure that your wishes are carried out in the way you had planned. For example, if you find out that your son or daughter is not comfortable making the decision to take you off life support, you will know that he or she isn’t the right person to step in for you if that decision needs to be made and you can name someone else in your health care directive.

What are your passwords, usernames and answers to security questions?

In our increasingly technology-driven world, most people have a lot of information stored online. You may have online accounts for bank accounts, social media, email and other important assets.

Create a list of these accounts and their login information and then make a plan for how you want the person to whom you are leaving access to be able to access the accounts. Some people choose to leave this information in a safe deposit box, but that isn’t always the best option because many banks won’t allow anyone access to the safe deposit box until the deceased box owner’s will is probated.

A better option is placing the information in a fire proof safe or lock box at home and then provide your family member or your attorney with the combination or the location of the key. There are also some online storage services that allow you to keep all your passwords in one place.

If you have questions about estate planning in Arizona or Wiscosnin, please reach out to an experienced attorney. At Bredemann & Shellander PLC (LINK), we specialize in estate planning and pride ourselves on taking the time to understand your unique situation so we can guide you through the estate planning process. Give us a call at 480-998-0999 or schedule a consultation online (LINK).

The article above is intended for education purposes only and should not be considered legal advice. If you need legal advice, contact an attorney regarding your situation.