Don’t Forget to Think About the Tax Implications of The Assets You Transfer

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Passing on assets to your loved ones and even organizations you care about as you pass away is an important factor in the estate planning process. After you pass away, your chosen executor of your will must know what property you have, and your instructions for distributing it. You may accidentally reduce the value of the assets you transfer simply by gifting them outright during your life or after you pass away, so it’s valuable to speak with a New Hampshire lawyer first.

The executor plays such a crucial role in estate administration because state governments hold billions of dollars in unclaimed property, frequently because no one knew about all of the valuables and financial accounts owned by a decedent. Laying out what assets you’ll give to other people and account details is important as part of your estate plan.

Even if you don’t plan on leaving an inheritance, it’s a good idea to make this list since it will make estate administration so much easier. Another key consideration as you draft out your list of assets is taxes. The kinds of assets that you choose to pass on to others matter significantly for tax purposes. Mutual funds and stocks, for example, that are held outside of any retirement plan may be more helpful for your heirs to receive when compared with pretax funds in an IRA or a 401(k). That’s because of the step up in basis rules.

In another example, it’s better for a spouse to inherit your IRA retirement benefits due to the secure act distribution requirements when compared with children. If this seems overwhelming, contact an estate planning professional to conduct a thorough inventory of all of your assets and help you determine the most appropriate strategy and tax implications for passing these on.

Tangible Versus Intangible Assets in Your Estate Plan

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One of the first steps to take for creating an estate plan is to complete an inventory of all of the assets you own. It’s easy to overlook assets as you may not realize how many of them you have that are digital or those that are tangible versus intangible.

Common tangible assets in most people’s estate plans include vehicles like motorcycles, cars or boats, homes or other real estate, personal possessions or collectibles like antiques, coins, art or trading cards. Many people know that these belong in their estate plan and make specific efforts to include them.

Intangible assets inside someone’s estate plan, however, can include things like life insurance policies, savings or checking accounts, CDs, mutual funds, bonds and stocks, health savings accounts or ownership in a business. In addition to pulling together all of the assets, you’ll want to make a thorough list of all of your outstanding liabilities. This will make things easier for your executor when it comes time to handle the administration of your estate.

Your executor will gather all of this information, open the probate process and then follow paying out any creditors or debtors before distributing the remaining assets to your beneficiaries as you wish. Note that if you skip the important step of creating a will to name your executor or to determine the transfer of assets, the state has specific rules that will determine who receives what and will still handle the appointment of a person in the role of executor or personal representative. Speak with a talented estate planning attorney in NH now.

 

 

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Recognizing Your Residuary Estate

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What happens if you don’t plan for everything in your estate?estate

A will is the most popular estate planning tool because it allows you to determine what happens to your assets and also to name any guardians for your minor children. However, there are some reasons why certain assets may not make it into your will. These become part of what is known as your residuary estate. You may create a residuary estate intentionally or unintentionally in New Hampshire.

For example, you might decide in drafting your will that you wish to name specific items for certain people in your family or friends circle. You may also choose with the help of a knowledgeable estate planning attorney to use a residuary clause determining what happens to any other assets that were not already outlined in the will.

Residual estates can also be created accidentally, such as if you acquired new assets after drafting your will, but did not add any provisions for distributing those assets, forgot to include certain assets in your will, or someone you named in your will passes away before you or is not able to receive their inheritance for any other reason.

Consulting with a knowledgeable estate planning attorney in your area is the best way to consider all aspects of your estate plan and what you wish to include intentionally in your documents. Contact our law firm today to set up an initial consultation to talk through what estate planning looks like.

 

 

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Hiring an Estate Planning Attorney After Losing a Spouse

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Losing a spouse represents a major change in your life. You might need to work with your estate planning lawyer to update all your documents and ensure that your plan aligns with your needs after losing a spouse.attorney, estate planning, estate

If you have not previously worked with an estate planning attorney, it is strongly recommended that you identify one as soon as possible if your spouse has recently passed away. There are many different reasons that an estate planning attorney can give you peace of mind and help you to accomplish your individual estate planning goals.

You need to find an attorney who has experience in handling some of the complex situations that may now need adjustment because your partner has passed away. If the majority of your estate plan was to be passed on to your partner, you will need to adjust this to include different loved ones, friends or charitable organizations.

Likewise, you may now be dealing with different financial assets if your spouse passed away and left the majority of everything they owned to you.

There are several different circumstances when it is extremely important to work directly with an estate planning attorney, including:

  • Your estate has many different complicated assets inside.
  • Your spouse was the one who primarily handled the finances and estate planning in the past.
  • You believe that your estate may owe either state or federal estate taxes at the time that you pass away.
  • You are concerned about your loved ones, especially adult children arguing over assets in your estate plan.

All of these reasons should prompt you to communicate with a knowledgeable estate planning attorney in NH about the best way to accomplish your individual goals.

 

Three Different Approaches to Value Unique Assets

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When someone passes away, items in their estate might need to be valued for the purposes of estate taxes or so that an executor can determine fair market value for liquidating them.

If you have a unique collection or other assets inside your estate that may be difficult to value at the time you pass away, it’s important to do some advanced planning and potentially work with an experienced lawyer to come up with a process that will assist with this.

Recent news stories have highlighted some of the challenges of assets inside the estates of Prince and Michael Jackson. There are three different kinds of approaches that can be used to value unique assets. These are known as market, income and cost approaches. The market approach looks at an asset by comparing it to the prices at which other related or similar assets have changed hands close in time to the date of death of the deceased.

The income approach values the asset by calculating how much potential revenue it could produce in the future and then discounting that revenue back to current value. Finally, the cost approach values an asset by computing the cost of what it would be to recreate it. These different valuation approaches can all have significant impacts on end values for assets.

This value calculation means that it is very important to engage the services of an experienced appraiser and to include as many documentation details as possible when leaving these assets behind to your loved ones. For more information about advanced estate planning techniques, schedule a consultation with an attorney in NH today.

 

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Leaving Your House to Loved Ones? Be Careful of the Strategy

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One of the biggest assets inside your estate is likely any real estate like your personal home. But if you are not careful with determining how to transfer this to the next generation, they could end up owing money. If a person who inherits a home doesn’t want to keep ownership of it and maintain it, they could face taxes, fees and transaction costs.careful

Certain states have estate tax exemption limits that are far below the federal level that could also impact your heirs directly. If your heirs are not residents of this state it is unlikely they will move there or understand the intricacies of these laws, meaning they might need to retain and experienced probate or real estate lawyer to help them.

If the value of the home exceeds any state tax exemption limits and there are no assets from the estate for those heirs to pay the taxes, the heir could be looking at a state estate tax bill with insufficient funds to pay for it. They might need to pursue individual financing options or have to sell the home directly as a result. If they do choose to sell the home, it will be taxed based on the value at the time of the original owner’s death.

As you can see there are many different components associated with this estate planning strategy and you want to make sure you have the support of a knowledgeable estate planning lawyer to help you with any of your individual plan so that you can make the most informed decision about what happens to any real estate property you own. For further information, set aside time to speak with a dedicated estate planning lawyer in your area.

 

 

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Estate Planning: What Is a Step Up in Basis?

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Passing on assets to your loved ones is a very common goal in estate planning. It involves many different assets that you could pass on outright to your loved ones through beneficiary designation forms, such as on a life insurance policy or retirement account or through strategies like trusts.estate planning

If you are passing on assets outside of retirement accounts, be aware that these could be impacted by a step up in basis. A step up in basis at a general level refers to an adjustment’s value reassessment based on inheritance. Imagine that something you purchase appreciates in value by the time you pass it on to your loved ones. If your loved ones then inherit that asset and sell it themselves, they would only pay the different between the selling price and the value of the item at the time it transferred to them.

The current step up basis is still in place, however, be aware of shifting changes in the national landscape. The current presidential administration, for example, has currently proposed plans to eliminate the step up in basis for any gains of $1 million or more. That would be increased to $2 million or more for married couples.

By having an established relationship with an experienced estate planning and asset protection planning lawyer in NH, you can increase your chances of being aware of these challenges before they occur and creating adaptable plans that align with your individual needs.

 

Advantages of Using a Revocable Living Trust for Asset Transfer

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There are many different advantages to using a revocable living trust as part of your estate planning. If an accident or an illness leaves you incapacitated but still alive, your successor trustee is able to handle your financial affairs without the need for appointing a conservator or a guardian by the court.

Another major benefit to using a revocable living trust is that if the beneficiaries of your trust are minor children or others who may not be capable of handling an inheritance as you intend, the trust can keep those assets and hold them until those individuals reach a more mature age.

This gives a great deal more control and flexibility to the creator of the trust for those who may be concerned about children who are spendthrifts or not capable of properly managing a significant inheritance.

You can also avoid the hassle, time, and expense of multiple probate proceedings if you own real property in more than one state. A husband and wife may even be able to maximize their federal estate tax exemptions when partnering with an experienced revocable living trust attorney to craft this document. Finally, it is more difficult to contest a living trust.

When a will is contested, the assets are frozen and they cannot be distributed until the claim has been addressed. Assets placed in a living trust, however, are not frozen pending the outcome of a legal challenge. Discover more about the benefits of using a revocable living trust by scheduling a consultation with an experienced estate planning lawyer in Maine.

 

 

How Do Assets in Multiple States Affect Your Estate Planning?

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Geographic borders might seem like not that big of a deal when you can easily drive or fly from one state to another, but when it comes to the distribution of your assets after you pass away, geographic borders matter.

If you have a loved one who owned property in more than one state, probate administration in each state might be required which is extremely important if you are appointed as the personal representative or executor in either one. This is because matters of real estate are always governed by the laws of the state in which the property is physically located.

While some states will allow family members to conduct probate administrations within that second state without hiring an attorney, others will require you to work directly with a probate lawyer to open that estate matter. Great examples include snowbirds because probate might be required in both their home state and in the place where they spend the winter. For example, imagine someone who has a second home in Florida. Florida proceedings might control all of the tangible personal property that was owned by the decedent and any real estate holdings in the state of Florida.

A separate probate proceeding might be required in the snowbird’s home state which will need to be filed in the county in which the deceased lived at the time that they passed. This can add significant complications and delays to the probate process, making it all the more important to carry out a conversation with an estate planning lawyer if you are approaching your estate planning and own property in more than one location.

Whether New Hampshire is your home base or where your vacation home is, you need the support of a dedicated estate planning lawyer to guide you through the process.

 

What Does It Mean to Say an Account Is “Transfer on Death?”

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A transfer on death designation allows beneficiaries to receive assets at the time an individual passes away rather than waiting for the entire estate to go through probate. This also lets the security or account holder specify the specific percentage of assets that every beneficiary will receive.

This is very helpful for an executor to distribute a person’s assets after the creator passes away. Transfer on death designations only apply to those assets that have a named beneficiary. In order to initiate a transfer on death, a brokerage has to have appropriate documents to verify that those assets can be transferred.

Retirement accounts, such as 401(k)s and IRAs are transfer on death. This means that an unmarried individual can choose anyone as a beneficiary whereas a married person’s spouse may have rights to some or all of a retirement account at the time the spouse passes away.

A surviving spouse generally has more withdrawal opportunities and flexibility than other beneficiaries do. The uniform transfer on death securities registration act governs these transfers. This allows owners to name beneficiaries for bonds, stocks and brokerage accounts which is similar to a payable on death bank account. Each individual brokerage firm would need to have their own paperwork filed for this purpose.

Bear in mind that not all accounts will automatically default to transfer on death. As a result, you need to work with an estate planning lawyer to ensure you’ve covered all your assets in a transfer plan. Tools like a trust and will can help you achieve the right balance for your estate.

Work with our NH and ME estate planning lawyers today.