By Steve Worrall, Georgia asset protection lawyer
As your Atlanta GA asset protection lawyer, I’d like to ask how your holiday shopping is going? If you are like me you are trying your best to fit that in with all of the other holiday planning and day-to-day obligations. What if I told you to skip the malls when looking for a holiday gift idea for your grandkids? What if you give them a family limited partnership instead?
Let me explain…
While the estate tax lapse seems to be hogging the spotlight this year, there is also a lesser-known gap that is offering many people a tax-free way to pass on some of their wealth to their grandchildren.
The generation-skipping transfer tax, or GST, has also been repealed for 2010. This means that you can leave outright gifts to your grandchildren as long as those gifts meet certain conditions. The definition of a “gift” is fairly broad, but one way to take advantage of this is to set up a partnership and then give away units to your grandchildren. This will mean that you can put funds into a family limited partnership and transfer them tax-free but also transfer it in a way to keep the kids from getting control of the assets all at once and possibly squandering them.
The GST is different than income, estate and gift taxes. The purpose of this tax is to keep people from transferring property many generations down without paying any tax. So, the GST is imposed if the transfer avoids gift or estate tax.
So, say a man dies with a large estate and leaves his property in a trust with the income payable to his children. At his death, his trust assets go to his children. The man’s estate would then owe estate tax. But when his children die, the trust property would not be taxable in their name so the family will have avoided paying for a generation of estate tax. In this instance, the GST would apply.
It is important to point out that the GST applies to anyone, not just family, so this would apply to unrelated beneficiaries as long as they were at least 37 and one-half years younger than the deceased.
There are limits to what you can exempt in generation skipping gifts and you are only allowed to use them in certain circumstances. So, it is important to talk to an experienced Atlanta Georgia asset protection attorney when considering this.
So, as you are pondering your holiday list you might want to consider this for your grandchildren. This will be a gift they will remember (and thank you for!) for the rest of their lives!
By Steve Worrall, Atlanta wills and estates lawyer
Perhaps you saw it on the news a few weeks ago that economists on Wall-Street declared the recession officially over.
I’m not sure how they came to such conclusions, but I look around and still see far too many friends and family struggling to recover from the chaos to really consider it over. And while I acknowledge things may be improving on some fronts, I still find it hard to objectively look at a father who can’t find work or a mother who’s lost a huge chunk of her 401(k) plan to say our Country is officially in the clear.
I’m equally saddened by the number of bankruptcies taking place right now. For many families, bankruptcy is the only way to break free from the mountain of debt that constantly rests on their shoulders. Of course that’s not to say this decision is ever taken lightly by those who file, as the consequences of bankruptcy are long-lasting and sometimes severe—especially if you stand to inherit money.
Let’s say for example that you had a family member pass away who left you a cash gift in their will or trust. On the surface it seems like this would be a much needed and timely relief for a family going through bankruptcy. However, Federal bankruptcy rules declare that if you inherit money from a person who dies within 180 days of the date you filed for bankruptcy, you must tell the courts. In simple terms, that means the inheritance now becomes a part of your bankruptcy estate and will be distributed to your creditors as the courts see fit.
This also applies to items that you may inherit such as cars, jewelry or furniture. All of these items are subject to the administration of the bankruptcy estate. However, this doesn’t mean that items like this are certain to go up on the auction block. You can claim exclusion on certain things and the bankruptcy trustee has a certain amount of discretion in choosing what to liquidate. However, it can be extremely stressful to think about a family heirloom that has been in your family for years going to your creditors.
Hopefully your loved one had an Atlanta wills and estates attorney who knew a thing or two about protecting their inheritance from things like bankruptcy, creditors, divorce and the like. Ideally, your loved one would have been advised to set up a trust so any inheritance passed down to their family members would be out of reach from creditors and the courts. If they did not, and you have not filed bankruptcy yet, this may still be an option if your loved one is willing to have their plan looked at by a qualified Atlanta wills and estates attorney.
Planning to avoid giving your hard-earned wealth to creditors is not illegal or immoral either. You should think of it the same way you would when considering tax planning. Tax planning is fine, but tax evasion is not. The difference is whether you play by the rules and are honest. For example, not telling the courts you received an inheritance is illegal and you could face serious consequences. However, you are not skirting the rules if you are the recipient of a spendthrift trust. That wasn’t your choice.
If you or your loved one needs help facilitating such a trust to protect your inheritance from the claims of creditors, simply call our Atlanta and Marietta GA wills and estates office at 770-425-6060 to schedule a Georgia Family Treasures Planning Session at no charge ($600 value). We will walk you through the necessary steps that must be taken to protect your inheritance from a bankruptcy filing or any other creditor’s claim. However, these appointments are limited to 10 per month, so call today,
The face of the American family is changing. As an estate planning lawyer in Atlanta, Georgia, I have certainly seen that change.
Since 1970, the number of what are considered “non-traditional” families (i.e., unmarried opposite sex couples, same sex couples, single parents with minor children and single adults with neither children or a partner) has more than doubled.
And now, with the divorce rate at almost 50%, more and more people are either on their second marriage, getting married later, or have children from previous marriages.
These changes in the structure of the American family have given rise to the need for estate planning options and considerations that had never really been talked about before the 1990’s.
If your life situation falls under the umbrella of the “non-traditional” family, here are a few things you need to take into account when you’re considering estate planning:
1. Marital Status and Your Estate
If something happens to you, your surviving spouse often has a statutory right under state law to receive property from your estate in spite of a valid enforceable will that says otherwise. The key word in this scenario is “spouse”. The person taking from the estate must be considered a spouse under state law. Domestic partners are not entitled to this right (unless your state allows you to register as domestic partners by statute and you have legally registered; Georgia does not have this option at the time of this article).
2. Understanding the Definition of Family Members
Whether or not your partner can be considered a spouse for a specific purpose is determined by state law. For example, in some cases a person can be deemed a spouse for purposes of collecting health insurance benefits from your employer, without being considered your spouse for any other reason. However, state laws with regard to certain benefits are changing rapidly, many in response to the changes in what constitutes a family relationship. Check with your estate planning lawyer to see what the current situation is in your state.
Adoption issues are another area to give serious consideration in your estate plan. In many cases, an unmarried partner has no legal rights or obligations in relation to the other partner’s children if they are not the child’s natural parent or have not legally adopted the child. They are not defined legally as a parent. And the length of time the unmarried partners have lived together makes no difference. Make sure to have provisions for the care of your children in your estate plan and that your wishes are legally enforceable.
3. Property Rights
Every state has laws that specifically deal with the rights, privileges and duties associated with marriage when it comes to real property. While some states are adding statutes to deal with the relationship of domestic partners, most unmarried couples don’t have the same rights and privileges as married couples. That is true in Georgia.
One way to establish a legal relationship between the unmarried partners and provide for legal treatment and transfer of property is through a relationship agreement between domestic partners. If permitted by state law, the agreement can be enforced as a contract and address a multitude of estate planning issues including signature authority, asset disclosure and values, life insurance, health and disability insurance, and the transfer of property. If the agreement is treated as a partnership, it can provide enforceable inheritance rights.
As American society and its view of what constitutes a “family” continues to evolve and change, we will need to be more and more creative in dealing with estate planning and tax issues to make sure that everyone receives the appropriate planning assistance. Talking to a trained estate planning lawyer to make sure all your bases are covered is the best place to start.
If you are a member of a “non-traditional” family and would like to know more about how to provide for your loved ones if something happens to you, call us to schedule your Georgia Family Treasures Planning Session today. We can explain your legal rights and help you plan properly. Our Georgia Family Treasures Planning Session is normally $750, but this month I’ve made space for the next two people who mention this article to have a complete planning session with me at no charge. Call today and mention this article.
It’s “Date Night” Friday…
The one night a week when you and your spouse spend time together…talk about the week…have a nice leisurely dinner…just the two of you.
You’ve lined up a babysitter…
You left money for the pizza delivery guy and a list of contact numbers on the refrigerator door…right under the magnet you bought in Yosemite last summer…
You’ve got everything taken care of…
Except what happens to your children if the unthinkable happens and you never make it back home.
If you have minor children and you’re severely injured or worse in an accident, the police may have no choice but to place your children with Child Protective Services if they don’t have information or documentation indicating who you would want to care for your children.
Once the immediate situation has passed, your children could then be at the mercy of the “system”. There is no way the State can know who would be the best choice as a guardian for your children.
So…what do you need to do?
First, Put Your Guardianship Wishes in Writing
Just telling your chosen guardian that you want them to take care of your children is not enough. What you “said” is not legally sufficient and you could be placing your children at the mercy of the foster care system for a long period of time. You need to have a plan in place, written instructions, and the proper legal documentation in order to ensure that your wishes are followed and that everyone knows what those wishes are.
Another misconception is that if you name a guardian in your Will, that’s all you have to do.
A guardianship provided for in a Will only takes effect after you die. If you become incapacitated but are still alive, it means nothing.
Proper Documentation for Guardianship
A good, solid guardianship plan will allow you to choose guardians either on a permanent or temporary basis and leave instructions for those guardians so they know exactly what you want them to do and under what circumstances.
You need to have at least these documents in place at all times if you have minor children:
1. Legal documentation naming a short term or temporary guardian in case you become incapacitated for a short period of time, or in the interim between your death and the time your permanent guardian can arrive. The best option for this guardianship is someone close by that can take immediate custody of your children and keep them out of the court system. Make sure that you talk to these individuals about your plans and that they are willing to serve as temporary guardians. Have their names at the top of a contact list that is available immediately in the event you are not able to communicate. And always make sure they have a copy of the documents naming them as temporary guardians.
2. Legal documents naming permanent guardians. The same information applies for this document as for temporary guardianship papers. Make sure you talk to the people you select and that they have copies of these documents to provide to the court.
3. Make sure you have written instructions for anyone taking care of your children so they know exactly what needs to be done if something happens to you. Make sure they know who to call. Even if you’re leaving your kids with the 16 year old kid next door to babysit on Friday night, make sure she or he knows what needs to be done if the worst happens. And always have written instructions in place for the person or persons you choose as a guardian to tell them how you want your children to be raised.
4. Always have a Medical Authorization and Power of Attorney for your children, especially if you’re sending them to Grandma’s on their own. These documents will allow the person taking care of your children in your absence to make medical decisions that could be a matter of life and death.
Really makes you think, doesn’t it?
He said/She said will not hold up in court, so if that is the only plan you’ve made for your chiildren if the unthinkable happens, you could be placing them at the mercy of the foster care system without even realizing it.
If all this has made you realize you would like to get your documents in order to make sure that your children and your property are taken care of, call us to schedule your Georgia Family Treasures Planning Session today. We can identify what you need to do to plan for your family’s future and answer any questions you have about an effective estate plan. Our Georgia Family Treasures Planning Session is normally $750, but this month I’ve made space for the next two people who mention this article to have a complete planning session with me at no charge. Call today and mention this article.
By Steve Worrall, Atlanta estate planning attorney
As an Atlanta estate planning attorney, I know Generation Y has a lot to think about…starting their careers, buying their first home, starting a family. All of these things are beginnings, so it’s a rare day when someone in this generation wants to think about The End. But there are 4 reasons that they might need to…
A lot of people think that youth is an excuse for putting off doing a will or trust. But estate planning is not just about planning for your death. It is also prepares you in the event you experience an incapacitating injury and are unable to make your own financial or medical decisions. While the odds are certainly in your favor that you will not need an estate plan, you should still consider these four scenarios…
1. You need a plan in the event that you become disabled or incapacitated.
Unfortunately tragedies happen every day. And you are not immune to them because you are young. If something happens to you and you are no longer able to make decisions regarding your own financial, legal, and medical affairs you’ll need to make sure that there are basic documents in place such as a medical directive, power of attorney and HIPAA authorization so someone can.
2. You need to pass your assets.
You might be asking, “What assets?” Even if you do not yet own your own home, you need to consider IRAs, retirement accounts and life insurance accounts offered through your employer. You need to make sure that beneficiaries are named in the right way to make sure that the people you want to leave them to get maximum benefit.
3. You need to name guardians for your kids.
If you have children, you simply must name guardians. You should be the one who decides who will raise them if you are no longer around. You do not want this decision left to squabbling relatives or to a court system who doesn’t know you or your child.
4. You need to plan for your pets.
If you have a pet, chances are they are a big part of your life. They are totally devoted to you and also totally dependent on you. Have you stopped to think what might happen to them if something were to happen to you? If you want to make sure your companion is cared for if the unexpected happens, you could choose to put together a plan for their continued care. The plan may include directions about feeding, medical care and other needs along with funds necessary to provide for your pet’s support and to compensate the caretaker.
The scenarios above are just a few to consider when deciding if you need a will or trust. If you are in the Atlanta area, I encourage you to talk with an Atlanta and Marietta wills and trusts lawyer. Only then will you have the peace of mind of knowing that you are fully protected.