The Importance of Estate Planning
Estate Planning is not just about preparing a will. Estate Planning involves the process of looking at all your assets, family make-up, and goals, and creating a comprehensive plan to address each of them in a way that results in the effective and efficient administration of your estate ultimately for the beneficiaries you select.
Sodoma Law provides peace of mind planning for individuals, families, and business owners regarding a wide variety of estate, trust and business issues through our Estate Planning Group. Whether you need to ensure your minor children will be personally and financially cared for, sophisticated tax planning to minimize estate taxes, or want to develop a concise and equitable plan to transfer the family business from this generation to the next, Sodoma Law can prepare a personalized estate plan, or update an existing plan, to meet your individual, family or business needs. If you need tax planning, structured estate plans or trust administration, Sodoma Law’s Estate Planning Practice Group will help you design the future of your family or your business. And, with the assistance of our Family Law and Business Practice Groups, we can accommodate most, if not all, your needs under one roof.
Long Term Care Planning
Long-term care is quickly becoming one of the most important parts of comprehensive estate planning. With the uncertainty about healthcare coverage and the annually increasing costs associated with long-term care, preparing for your health coverage after you’ve stopped working is paramount. Medicaid eligibility requirements can be confusing and often punitive in nature if assets are transferred to create eligibility. Meanwhile, long-term care insurance can be very expensive, with more options than most people can understand. At Sodoma Law, we can help you sort through the variables and incorporate a long-term care solution that works for you and your overall estate plan.
Beneficiary designations can be one of the most overlooked aspects in estate planning. Life insurance, retirement plans, and payable transfer-on-death accounts all utilize contract law to determine who will receive benefits as a result of another party’s death. Poorly chosen or non-existent beneficiary designations can result in assets being subject to probate tax or freely available to persons not equipped to handle or manage them. In other circumstances, the absence of a beneficiary designation can lead to the necessity of a court-appointed guardian of the estate for a minor, a costly and complicated process.
As part of your overall estate plan, Sodoma Law Estate Planning attorneys can assist you in making, updating or correcting beneficiary designations to be sure your assets are passed along in such a way that they can be managed and maintained effectively and efficiently for your intended recipients. Included in our fixed fee services for estate planning, we will walk you through the process of obtaining the necessary forms, reviewing the actual beneficiary designations, and making sure the beneficiary designations carry-out, not disrupt, your plan.
Sodoma Law’s Estate Planning attorneys can also advise you on the pros and cons of choosing one beneficiary designation over another, especially if minor children are involved. It’s not uncommon for a parent of a minor child to understand the limitations involved when naming a minor as the beneficiary of a life insurance policy or retirement account. However, often the ‘solution’ from the parent’s perspective is to name the child’s grandparent, aunt or uncle as the beneficiary, thinking that the familial relationship will result in the beneficiary doing the right the thing for the benefit of the child in the end.
While this may seem practical, it can create an entire new set of challenges: what if the beneficiary dies after receiving the proceeds? Has the beneficiary made a separate provision in his or her estate plan to ensure those monies pass for the benefit of the child they were originally intended for? Are the death benefits large enough to result in estate taxation when such considerations were not necessary before receiving the insurance? These are just a few of the issues that a conversation with your Estate Planning attorney can help avoid.
Asset Protection Planning
You’ve worked hard to build and accumulate assets during your life. Asset protection planning can keep those assets from disappearing. Asset protection can involve tax planning to reduce or defer estate taxes at death; marital planning through prenuptial and post-nuptial agreements to protect assets in the event of the marriage dissolution; protecting assets from litigation or other unexpected events; or structuring the way your heirs receive their inheritance so it can be protected from their creditors or spouses.
For parents of minor children, often the most important part of the estate plan is who you will select to care for them in the event of your death before they attain the age of majority at 18 in North Carolina. No child should be forced to face the loss of a parent, but the trauma is certainly multiplied when a child loses both mom and dad. Parents should put significant thought into the selection of a guardian for their minor child. Ideally, the selection would be the person most likely to raise your child in the same way you would, with a minimum of disruption. If that is not possible, Sodoma Law’s Estate Planning attorneys will discuss with you the pros and cons of your options so you can make the best decision for your family.
Sodoma Law’s Estate Planning attorneys will address this issue as part of your overall estate plan, but we’ll also go one step further and guide you through short-term or emergency guardianship provisions as well. Most parents would dread the thought of their child being taken into government care while a guardian is appointed or arrives. Short-term or emergency guardianship provisions allow you to identify the people closest to your child (both physically and emotionally) as the persons to provide immediate care until a more permanent solution can be put in place. Again, the process of planning for the unexpected can prevent your child (and you) from additional stress. Life happens, taking the time to prepare before the unthinkable occurs will give your family the best tools to cope when it does.
These guardianships can also be known as guardianships of the person because they are concerned with the placement of the physical being of some body. Guardianships of the person typically arise when a parent has died leaving a minor child (less than 18 years of age) behind. Guardianships of the person can also be necessary if an adult suffers an incapacitating injury, such as a traumatic brain injury. In those circumstances, even though the individual is over 18 years of age, a guardian of his or her person is recommended and necessary to make decisions regarding personal matters and medical care.
Sodoma Law’s Estate Planning Group can help you navigate the guardianship process as well by working with the potential guardian, the affected person (ward), and the medical providers to ensure a proper guardian is appointed and that the ward can maintain as much autonomy as he or she can handle.
Finally, guardianships can also involve an individual’s estate or their assets. A minor child who inherits property from a deceased parent will, absent other estate planning, likely need a guardian to hold and manage that property until the child attains the age of 18. Sodoma Law’s Estate Planning Practice Group will sit down and discuss all the options with you to either avoid the need for these ‘guardians of the estate’ by suggesting other alternatives for leaving property to minors – such as trusts; Or, in the event a guardian of the estate is necessary, our attorneys can assist with that process as well.
Business Succession Planning
For the business owner, business succession planning can be an ideal way to pass the family business down to the next generation. However, structuring this process can be confusing and complicated without the guidance of an experience attorney.
A solid business succession plan will consider the value of your business, the persons best equipped to continue the operation of your business profitably, and most importantly, your wishes as to who should inherit the business you’ve worked long and hard to establish. Working with your other professional advisors, Sodoma Law can help you achieve the right business succession plan for your family and your business.
Estate Tax Planning
If estate tax planning is required, Sodoma Law attorneys have advanced education and experience in tax planning. Whether its gift taxes or estate taxes, we can create a plan to take advantage of the tax benefits available to minimize or defer taxes. Tax law is changing all the time. This is just one more reason that you need an estate planning attorney familiar and up-to-date with the complexities of the current tax law, and knowledgeable of the options available to you, your family and your business.
Life Insurance Trusts
Life insurance trusts are one of the more common ways of creating readily available cash for estate taxes and other expenses after death. Many people believe that life insurance proceeds are completely ‘tax-free’. But, this is not always the case. The receipt of life insurance proceeds is not includible as part of the recipient’s taxable income, but depending on ownership of the policy, the proceeds can be includible when determining whether a deceased person’s estate will owe estate or ‘death’ taxes. Because life insurance can be one of the more affordable ways of passing wealth, it becomes very important to know whether the insurance proceeds payable because of your death might trigger an estate tax.
When structured properly, life insurance proceeds can remain outside of your estate and as such are not subject to estate taxes. Life insurance trusts (commonly known as ILITs because they are irrevocable – Irrevocable Life Insurance Trusts) can be an effective way of transferring assets out of your estate during your lifetime.
For taxable estates, funding a life insurance trust with a policy will provide an almost immediate liquid asset from which estate taxes can thereafter be paid, without the need of selling off, possibly at a significant discount, other assets to raise funds. For estates that aren’t expected to face estate taxation, life insurance trusts can still be a useful tool for transferring wealth to the next generation through an annual gifting program.
Because life insurance trusts are irrevocable, their use should not be implemented without serious thought. Sodoma Law’s Estate Planning attorneys can review your situation and provide a sound recommendation about the use or need for a life insurance trust.
Irrevocable trusts present advanced estate planning opportunities typically tailored to achieve very specific ends, often because of the taxes associated with the transfers to create them. Like life insurance trusts, the group of irrevocable trusts are typically useful in removing assets from your estate to avoid taxation, but with the added benefit of achieving some other specific result. If you want to include charitable giving, as part of your estate plan, Charitable Remainder Trusts and Charitable Lead Trusts can be useful tools to provide both current income for you and charitable transfers at death.
If your family has a special beach, mountain or vacation home that you want to ensure stays in the family, another kind of irrevocable trust known as a Qualified Personal Residence Trust might be useful. Further other irrevocable trusts in which you as the ‘grantor’ retain some interest or use of the trust property, so-called grantor retained trusts can also be effective estate planning tools in the advanced estate.
Regardless of the kind of irrevocable trust that might be beneficial to you, a careful and thorough review of the options is necessary. Irrevocable trusts often used annual exclusion gifts or other lifetime gifting mechanisms to get property to the irrevocable trust. There can be significant and severe consequences for transfers not properly documented. Let a Sodoma Law attorney review your situation and guide through the options. The benefits might surprise you
Professionally Reviewed Estate Plan (PREP)
Now that you’ve taken the time to put a comprehensive estate plan in place, what do you do with it? How often should it be reviewed? It depends. Any time a life-changing event occurs – marriage, divorce, birth of child, death of a named fiduciary (Executor, Guardian, Trustee, Power of Attorney) – it is time to review your estate plan.
Also, tax laws can and will change (for instance recent changes to the tax law will affect taxation on alimony payments, personal exemptions, and child tax credits). But often there are smaller changes that might seem less important, but that still have an effect on your plan.
For clients wishing to stay abreast of tax and other law changes, Sodoma Law’s Estate Planning Practice Group offers our Professionally Reviewed Estate Plan (PREP) Program.
For an annual fee, PREP Program clients receive:
1) annual review of their estate plans;
2) minor revisions to fiduciary appointments;
3) review of beneficiary designations and trust-funding recommendations, as applicable;
4) review of fiduciary obligations in the event the client suffers an incapacitating event or becomes disabled; and
5) a 10 % discount on the Estate Planning Practice Group’s regular fees for estate or trust administration services.
Estate Planning and Divorce
Separation and divorce are emotional situations. When you are focused on the important issues of alimony, equitable distribution, child custody and child support, the fact that you may or may not have an estate plan that also needs updating is likely the furthest thing from your mind. In fact, most clients would be surprised to learn a separation doesn’t immediately end an existing estate plan.
Sodoma Law’s Family Law Practice Group is keenly aware of the traps for the unwary that can befall an estate plan not revisited after a separation or divorce. If you have named your soon-to-be ex-spouse as your durable power of attorney, healthcare agent, executor or trustee, he or she may have broader powers than you would want. Depending on the nature of the circumstances, at best it would be less than ideal and at worst it could be a disaster.
That’s why we believe in using a teamwork approach to bring clients to together with the right practice group when the need arises. If you’re working with our Family Law Practice Group and have questions about your existing estate plan or creating a new plan, ask to speak with our Estate Planning attorneys. We can update or prepare a comprehensive estate plan that takes account of your current and future needs.
Estate Planning For Surrogates
Surrogate families and same-sex families require planning like everyone else, and cookie-cutter estate plans won’t always work. The current state of North Carolina’s laws on the recognition of same-sex marriage and gender equality make the need to establish or update plans even more pressing. Let Sodoma Law’s Estate Planning Group work with you to create a personalized plan for your family.
Failing to properly plan or hoping that jointly owned property or survivorship accounts will solve the problem, may effectively relinquish any control you have over the disposition of your estate. The lack of any kind of estate plan can result in the people you wanted, or expected, to receive your property being completely left out. Don’t let a failure to plan determine who is most important in your life.
While estate planning is most often thought of in terms of having a Last Will and Testament, it also encompasses the practice of preparing durable powers of attorney, healthcare directives, guardianship and hospital visitation letters. For surrogate families, the inclusion of these ‘lifetime’ documents may be even more pressing. This makes the need for lifetime estate planning with powers of attorney of utmost concern. Protect yourself and your loved ones by taking the time to talk with our Estate Planning Practice Group. You have options and we can help you structure a plan to serve all your needs.
Many people make charitable giving a part of their daily lives. For some, however, charitable giving is an important part of their estate plan too. Sodoma Law attorneys can suggest different options to assist you in taking full advantage of the various charitable opportunities available in estate planning. Whether through a simple testamentary gift in your will, or creating a charitable trust, we can help you with opportunities that will benefit not only your chosen charity, but also you, your estate and your heirs.
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