Grantor Trusts 101

There are many different terms used in the context of estate planning and especially in the construction of trusts. When you hear the term grantor trust, you may be curious about whether or not this fits in with your estate plan and what it means. A grantor trust states that the settler or the person creating the trust is responsible for paying income taxes on the income that is earned by that trust.

A grantor trust is a kind of living trust in which the person who creates it retains ownership of the assets and property in the trust for estate tax and income tax purposes. A grantor trust is then taxed at the personal tax rate of the grantor, which is typically lower than potential other trust tax rates.

A grantor trust can be irrevocable or revocable. If the trust is revocable, changes can be made to the assets inside and the trust as long as the creator of the trust is competent to make those changes. A grantor is also able to name a successor trustee to handle the administration of the trust in the event that that person is unable to do so because of mental incapacity or other issues.

The grantor, however, can still remain responsible for taxes due on the trust. There are strict rules related to how a grantor trust must be operated, including the ability of the grantor to change the composition of assets, change or add beneficiaries, subtract or add assets from the trust and who can borrow from the trust. This means it’s very important to work with a qualified estate planning attorney in Virginia Beach, VA to create your own and to recognize how to protect your decision.



Americans Hopeful For More Long Term Care Information And Support

A recent study completed by Nexus Insights shows that many older Americans have increasing questions about long term care and the best way to support themselves in the future. If you wind up with an illness or injury, your only option to treat it might be entering a nursing home or other long term care facility. This can be an expensive investment if you haven’t considered the possibility in advance.

Most Americans don’t realize that one in four people will develop a disability or illness in their lifetime that may require using a nursing home and tapping into long term care benefits.

Without insurance or other plans in place, such as Medicaid qualification, you may need to rely on private pay for nursing home and long term care expenses. This can be very overwhelming and frustrating, especially if you have a spouse who is also counting on that as their retirement income as well. The study found that nearly one quarter of Americans aged 50 years and above said that they or someone they loved needed long term care support in the last year. This caused frustration anxiety and many different questions.

Many of the same survey respondents said it was crucial for them to have additional information about the options to pay for long term care, the overall costs of long term care and different services available. If you haven’t revisited your long term care and elder law plan in some time, now is a great opportunity to work with a qualified elder lawyer to get those questions answered. Schedule your initial meeting with a Virginia Beach estate lawyer today.



Leveraging Strategy for Big Wealth Transfers

More than $68 trillion will flow from baby boomers to their adult children or grandchildren. In an upcoming generational wealth transfer, this can often raise many important questions about what to do with your assets and how to effectively plan ahead. Choosing the right strategy to empower your loved ones while limiting possible tax consequences is key, especially if you want to maximize the value of what you’re passing on to future generations.

A significant part of your legacy planning involves thinking about different generations of family members and the role that emotions play.

When cross-generational wealth as well as unique family dynamics become involved, it is often easy to overlook logical steps and to rule with your emotions. Intergenerational conflict can also up the ante with estate planning conversations, and it is very important to think about the value of involving outside experts.

This is especially important if your family has significant dysfunction or if you intend to purposefully disinherit. Someone working with a knowledgeable estate planning attorney can help you walk through these issues and to decide what is most important about helping your loved ones.

Finding a qualified and experienced estate planning attorney can make sure that your estate plan is in line with your individual goals and what you intend to accomplish with family members. With significant intergenerational wealth on the line, it is important to also think about tax consequences and opportunities to minimize the size of your estate. Contact a dedicated and experienced estate planning lawyer in Virginia to learn more about your options.



Study Shows Americans Are Adapting Financial Plans for 2023

A recent study from Fidelity found that many Americans are feeling uncertain and concerned about a potential coming recession or other shifts in the economy. The 2023 New Year’s Financial Resolution Study finds that Americans are mostly focused on financial resolutions due to shifting economic issues and inflation.

In fact, 1/3 of survey respondents said their financial situation is worse this year than last year, and only 65% said they believe they’ll be better off in the coming year. That’s compared with last year’s numbers of 72% of people feeling they were going to be better in the coming year. Half of the survey respondents reported that they want to plan ahead and live more sensibly in the coming year.

Many people are stepping back to look at their overall financial picture and to figure out the best ways to move forward and protect their interests. When there’s so much uncertainty at stake, it can be beneficial not just to review your financial plan and strategy, but also to think about adapting your estate plan. You may need to reevaluate different financial opportunities and set aside more savings for yourself, especially if you’re anticipating a potential healthcare expense in the future or leaving the workforce sooner than you expected.

Looking over your financial plan and your estate plan are great tasks to be done together.

Working with a qualified and knowledgeable estate planning lawyer helps you plan ahead for what might happen if you experience an unexpected financial or health-related issue, and it also gives you clarity and peace of mind over how you’re structuring your plan for the future for your heirs. Set aside a time to meet with an experienced and knowledgeable estate planning lawyer to learn more.



Start Your Year-End Planning Now

You might be tempted to wait until the end of December to evaluate your current savings, investment, retirement and other financial strategies. But because you may want to adapt these before the New Year, now is the perfect time to assess and evaluate these issues and ask questions. Waiting until the last minute could lead to missed savings opportunities and lag time into 2023 for implementing these changes. Many of the strategies involved in maximizing your financial situation and minimizing taxes can take time to analyze and to decide the most appropriate strategy.

Once your year-end plan has been created, you’ll want to make a schedule for staying in touch with your financial tax and legal advisors over the course of the year. Changes in state or federal laws or even shifting markets may call for an update to your estate plan and financial strategy overall.

Looking at the big picture of your financial plan may open up realizations that you have not adequately prepared for disability concerns, long term care expenses or distribution of these assets through your estate plan. By working with a qualified estate planning attorney in your region, you’ll have a better handle of all of the assets and liabilities inside your estate plan and the best strategies for aligning these.

Whether you have lived in the Hampton Roads area for many years or only recently relocated to Virginia Beach, working with the right estate planning lawyer is critical for covering all of your bases and making sure you have everything you need should something happen to you. Set up a time to meet with a talented Virginia Beach, VA estate planning law firm now.



Communication Is Key for Creating Your Estate Plan

Many people know firsthand the frustration and confusion that can come when a loved one doesn’t complete their estate plan. In many scenarios, this can involve family members looking for old copies of wills and disputes filed over which version of the will is accurate.

It can also lead to the state distributing your loved ones’ assets in accordance with their intestate succession rules. So many estate plans also fall off track because even if your loved one has done the necessary planning, you may not know where to find these documents or to understand their reasons for why they drafted things the way they did. One research study from the Williams Group found that the breakdown of trust and communication represents 60% of wealth transfer breakdowns.

The final step in the estate planning process involves communicating the plans to your loved ones. These conversations can feel uncomfortable, and your family members may even resist discussing it. However, it is important to deliver the message as effectively as possible.

If no one but you know what you have arranged or where your documents are stored, it will be problematic for your executor or personal representative to find this information and to open your estate in a timely manner. There can also be confusion and arguing within your family about what you intended until the appropriate documents have been found. Set aside a time to complete your estate planning and to talk about your estate planning intentions with your family members.



Have You Thought About How Your Children Will Divide Household Items?

These items can easily be overlooked in your comprehensive estate plan, especially when there are bigger ticket items such as a piece of property or substantial assets in a retirement account.

But household items can also easily become the subject of an estate planning dispute or arguments among your children and other family members. There are several different strategies you can use to distribute your household items. You may, for example, spell out specific items that are to be received by someone in the family.

If you have a child who loves your wine collection or is also an art aficionado have a conversation with them in advance about what it would mean for them to receive these assets. If you intend to distribute other things equally, you may want to discuss with them how this could alter what else they receive in the estate. A lottery is another opportunity to dispose of household items that you may spell out in your estate plans.

For example, a brief description of every item you own may be put on a slip of paper and siblings can take turns drawing them out until the hat is empty. Another popular method for distributing household items that may not have been specifically called out in your will is to take turns. This allows each sibling to pick a desired item one at a time until everything has been disposed of. If there are remaining items of personal property, those can be donated to somewhere that needs it.

Planning ahead can help decrease the possibility of serious arguments and conflicts that can delay administration of your estate. Meeting with an estate planning lawyer is also strongly recommended so that you can discuss all assets in your estate and whether or not your estate planning strategies still align with your personal goals.



Study Shows Estate Planning More Accessible, But Still Confusing to Many

Most people understand the basic concept of estate planning. If they’ve had a personal interaction with estate planning, it’s usually due to a loved one who either had an extremely organized estate or someone who had no estate plan at all.

Working with a qualified estate planning attorney is one way to make this process easier for you, and to ensure that you have not only documents, such as a will that determine what happen to your assets after you pass away, but other important documents, such as powers of attorney, who name agents to make decisions and take actions on your behalf.

One study found that out of 10,000 Americans surveyed, 57% of them have fear that their loved ones will struggle to find important documents or handle the closing out of estate administration. If you’re worried about these challenges, one of the most important things you can do is begin the process by taking an inventory of all of your assets and liabilities.

Having this in an organized location, in addition to having someone in your family know where to find important funeral or burial instructions, can make things easy for your loved ones. There are many tools out there that can help you with the estate planning process, but the cornerstone of all of these is having a dedicated estate plan drafted by an experienced attorney. Meet with a Virginia Beach lawyer to review any existing documents and to determine if other tools are needed to structure your future plans.



How Does Gray Divorce Affect Your Estate Planning?

Any major change in your life should warrant an update in your estate planning, and divorce is no exception.

Getting divorced later on in life can have a significant impact on your finances. Although it is certainly true that divorce can alter your finances at any age, it is extremely important to consider how you’ll split your assets and any impacts this may have on your estate, especially if you are part of a blended family or have adult children. Gray Divorce is a term used to describe the growing number of older couples who contemplate getting a divorce. 

Getting divorced in your 50s, 60s or even 70s may dramatically alter not only your retirement plans and savings, but your overall financial and estate planning health. Meeting with a qualified financial adviser as soon as possible after deciding to get a divorce is a crucial first step in protecting your interests.

But you must from there go forward to meet with your estate planning attorney as well. If a substantial portion of your retirement or your estate planning strategy was based on being married to this person, and assets and properties you own together, you will need to make substantial changes to this plan in order to move forward.

Because there are so many potential alterations in your life at play with gray divorce, it is far better to work with an estate planning attorney and your financial advisor well in advance of actually filing for divorce. This gives you a good opportunity to plan for this transition and to avoid catastrophic financial consequences.

Meet with a Virginia Beach, VA estate planning lawyer to learn more about updating your plan to align with your new needs.

How To Review Benefits And Insurance For Possible Incapacity Planning

Working through the financial and estate planning process means thinking about what happens to you or your assets if you become unable to speak for yourself or care for yourself. Planning for the unexpected and developing contingency plans is crucial, even though you hope you never have to activate these plans.

Unwelcome events can turn your life upside down, and you should start by considering what benefits you really do have in order to decide other ways you need to invest in potential benefits. Look at your employer’s insurance policies and benefits. For example, do you have any other insurance coverage that may apply if you were to become disabled or unable to work? Short term and long term disability policies may come with your employment, or you may have purchased these privately. They will give you a portion of your income if your claim is approved and you’re unable to work.

However, review details about the waiting period before benefits begin and how long they will pay out and at what rate. Disability benefits can be taxable if your employer pays the premium on this disability insurance policy. However, if you are personally paying the premiums, the disability benefits may be tax free. Consider the potential income received through Social Security Disability Income should your assigned disability be expected to last for longer than a year.

If you are concerned about losing your ability to work in Virginia because of a disability, you need to consult with an experienced and qualified estate planning lawyer. A lawyer can help you walk through the important questions for incapacity planning and to put you on track for what you need to evaluate.