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If you have Charitable Intent in your Estate Plan, don’t overlook your IRA!

By Estate Planning, Wills

If you have Charitable Intent in your Estate Plan, don’t overlook your IRA!



If you have charitable intent in your estate plan, don’t overlook your IRA. 

We often see people come in and want to leave, say, twenty-five or fifty thousand dollars to a charity of their choice, and they think the right way to do that is by leaving it to them in their Will. 

That could be a good way and it could be their only way, but if you have an IRA, it might make more sense to leave that money to the charity from the IRA. 

That is because the charity doesn’t pay taxes. If you leave fifty thousand dollars of your IRA to your favorite charity that whole fifty thousand dollars goes to the charity. If you leave that fifty thousand dollars to your child through your IRA and your child is a high earner they could pay up to twenty thousand dollars in tax on that fifty thousand dollars. 

It would make more sense to funnel cash to your heir and IRA money to the charity. This is all within the confines of what you want to give away. In this case, you can maximize your giving by either giving more to the charity or more to your child and less to the IRS.

Do you need a Will?

By Estate Planning, Wills

Do you need a Will?



The answer to that question is yes. If you are an adult who is not destitute, you should have a Will.

In your Will, you specify who gets your stuff and if you have minor kids, who raises them. It makes things much easier for your loved ones to take care of all this if you have written it down in a properly signed and executed Will before you die.

The executor is the person who distributes your stuff according to what you want. Your guardians are who raise your minor children if you have them. If you set up any trusts in your Will, you would have a trustee, and the trustee would take care of the money in the way that you specify. If you have Wills, this all becomes much less complicated when you die.

It makes things so much easier for your loved ones and they know what you want. They’re not trying to figure out like what you would want versus what they have to do because of what the rules are.

If you don’t have a Will, the court system will decide who raises your children and the state rules of intestate succession will determine who gets your stuff. I don’t know that anybody would want that. If you want to have a say in who raises your kids and who gets your stuff, you need to do a Will.

Creating a Will is not that hard. It is not that expensive. It is not that time-consuming. People are relieved and happy when they walk out of here after signing their Will.

Do you need a Durable Power of Attorney?

By Estate Planning, Powers of Attorney, Wills

Do you need a Durable Power of Attorney?


I think most people probably do. By having a Durable Power of Attorney, you give a loved one the ability to make financial decisions for you and take care of your finances if you become incapacitated or if you can’t do it. So I think most married couples or long-term partners should have them and name each other as their agent at the least. I think most people should probably have their kids, if they have them, as backups as long as the kids are adults, and you trust them.

What do we mean when we say durable? Durable means that the power of attorney is effective even if you have lost your capacity. Ordinarily, when you give someone a power of attorney, it’s for a specific thing or a specific time. A lot of people do that to close real estate transactions if they can’t be there at the closing date. That kind of Power of Attorney would lapse if you become incapacitated. A Durable one, however, stays in effect even if you do lose your capacity.

The reason we use Durable powers is that we’re planning for advanced age, or some sort of accident. And we need it to be effective, even if, if you don’t have capacity.

The Power of Attorney could either be springing or not. Some people like the idea of springing because that would only happen should you have the need for it, so somebody couldn’t take action right now. The problem with that is that if it is springing, you only give that power if you lack capacity. But you’d have to go in front of a court, and that the agent would have to go and show that you are incapacitated. And no one really wants to deal with that. I mean, I wouldn’t want to stand up in court and have someone prove that I no longer have capacity.

And then the other thing is that there’s some risk associated with it, right? Like you’re giving this person, your agent, the power to make these decisions for you. And, you know, we only give them to people that we love and trust. But even with that, once in a while, somebody does something bad. Now, if your agent acts against you know, you can go after them civilly, you can sue them. You can ask a local district attorney to press charges if they commit a criminal act. But usually, when people go against or use these documents for ill, they don’t buy a CD with them. They do something bad, like cover up gambling addiction or drug addiction. So you really do need to limit it to people that you love and trust.

Don’t Wait Until it’s Too Late for Your Estate Planning

By Estate Planning, Wills

Don’t Wait Until it’s Too Late for Your Estate Planning

Estate planning is a critical component of financial planning that many people leave until it’s too late. While this is perfectly understandable—after all, most of us don’t really enjoy sitting around thinking about our own mortality—it’s also extremely unfortunate. You don’t have to like it, but you do have to do it. And estate planning isn’t just about securing your legacy or carrying your wishes forward. It’s also, frankly, about saving your family a pile of misery. They’re already going to be (hopefully) mourning your loss. Don’t burden them with the expensive, difficult, and sometimes years-long labor of sorting out your estate on top of their grief. 

Even for high-net-worth individuals, estate planning can be fairly straightforward. But no matter how simple your wishes (or your assets), you do need to bring in outside help. Obviously, for people with large families, complex bequests, or multiple significant assets, the process gets more complicated. That’s no excuse to procrastinate.

To draw up the necessary legal documents, you need to see a lawyer. Only a lawyer can draw up legal documents. Don’t trust any non-lawyer who says they can provide them for you. Your financial planner might ask to review these documents for you—this is fairly common. However, if they are not lawyers, they don’t necessarily know what they should be looking for other than to see that you have the documents in place. Of course, you may not be able to tell that either. Most good lawyers who do not practice estate planning law will not even write wills for themselves! 

Some people advocate using computer software to write your estate planning documents. There is cheap legal software out there that seems pretty good and is fairly easy to use. Should you use it? I would advise against it. How do you know that the law hasn’t changed since the software was written? How do you know that your situation fits exactly into those incorporated within the software? The software will guide you down a single path by asking you specific questions as you fill out forms. What if there is something outside that narrow path that would make you really, really happy? You’ll never know, because your needs are outside the program’s scope. 

Every so often you see some statistic about the number of adults walking around without a will. I have seen estimates ranging from 40–70%. Don’t be one of them! The amount it will cost to finalize your will depends a great deal on the complexity of your assets and wishes. For a single individual with simple requests and a fairly small estate, the amount will probably start around $500-$1,000. Wills for larger estates or involving more complicated bequests might cost up to a few thousand dollars. But keep in mind this is ideally a one-time, (relatively) small investment, and it will save your family a tremendous amount of trouble—and money—in the long run.

Where There’s a Will, There’s a Plan

By Estate Planning, Food for thought, Wills

Throughout history, people have made inheritance choices that are inexplicable to others. In 1926, Harry Houdini left his magical equipment to his brother, his pulled-from-the-hat rabbits to the children of friends, and a series of random words to his wife. The words were a code that would let her know when he was in touch from the afterlife.1

In 1968, Quaker State Refining Corporation heir Eleanor Ritchey left $4.5 million to her dogs. She had 150 of them. The will was contested and, by the time it settled, the value of the estate had increased to $14 million. The 73 surviving dogs received $9 million.2

Radio and television funnyman Jack Benny set aside a significant sum of money so that his wife would receive one long-stemmed red rose every day for the rest of her life.3

In a similar vein, in 1970, Janis Joplin bequeathed $2,500 “so my friends can get blasted after I’m gone.” Today, the amount would be equal to more than $16,000.4

Don’t follow Prince’s example

End-of-life planning can be complicated and a little scary. That may be why so many people don’t do it. After musician Prince Rogers Nelson died without a will in 2016, Gallup conducted a poll and found the majority of Americans don’t have wills. Gallup reported:5

• 32 percent of Americans age 65 and older don’t have a will
• 86 percent of Americans age 30 or younger don’t have a will
• 45 percent of Americans with income of $75,000 or more don’t have a will
• 39 percent of Americans with post-graduate education don’t have a will

Not everyone has an estate like Prince, but we can all learn from the unenviable state of his estate. In 2018, The Washington Post reported:6

“This month, the six heirs filed a heavily redacted motion challenging a potential ‘entertainment transaction’ they claim would be ‘an embarrassment to Prince’s legacy.’ And three half siblings have filed a petition questioning the estate administrator’s high legal fees, noting concern that ‘at the end…there will be little, if anything left to pass on to the Heirs.’ Draining the estate is also a fear for former colleagues who yearn to see Prince’s quiet dedication to philanthropy continued.”

Have a will and a plan

Clearly, procrastinating about writing a will or securing an estate plan is not unusual. There is a downside to procrastination, though. The momentary relief it provides often is overwhelmed by negative feelings, as well as heightened anxiety and stress.7

If you ever wake in the middle of the night troubled about what will happen to your children if something happens to you, or concerned your ex may be the beneficiary named on your 401(k) plan, or worried your spouse will be able to keep the house when you’re gone, it’s time to put a plan in place.

There are a number of reasons why people avoid estate planning, writes elder law attorney Stuart Furman in the Senior Living Blog. They include:8

• Estate planning isn’t easy. It requires thoughtful decisions about who should receive what and why.
• People don’t want to pay a financial planner or an attorney to draft and execute an estate plan, even if the plan will save money in taxes and legal costs over time.
• People fear giving too much authority to others, such as adult children who could make poor decisions about a parent’s care.
• People avoid discussions about death. No one likes to look potential mental incapacity or mortality in the face.

One way to get past some of these obstacles is to work with a trusted financial advisor who can coach you through the process. An advisor can help with many aspects of planning to make sure the plan you want is the one put into place. A good advisor can:

• Ask questions that will help clarify your thinking about how to divide your estate
• Recommend options that help meet the goals you set for your estate
• Facilitate meetings to communicate the plan to your family and other heirs
• Coordinate with your attorney, accountant, or any other advisors to put your plan in place
• Review the plan and make recommendations required over time

Even if you don’t wake up in the middle of the night, it’s a good idea to have a will so any assets left behind go to the people or organizations you choose – and not to legal fees, taxes, and heirs chosen by a probate judge.9

If you would like to learn more about the estate planning process or have a will and estate plan that have not been updated recently, get in touch. We’re happy to help.


Should I use Software for my Estate Planning Needs?

By Estate Planning, Food for thought, Wills

Something that we’ve seen in the last couple of months that I’d like to point out, is that we’ve had three different set of married clients come in, having had done their prior Wills using software. They all used different packages, but they used software.

While it’s tempting to do that because the price tag is pretty cheap (I think they paid like fifty or seventy-five dollars each) and it’s tempting to do it in a pinch, I would be cautious. The software doesn’t know your entire situation within the context of the estate planning landscape and it doesn’t know the practical realities of the decisions you are making.

A lot of the decisions that clients need to make, it’s hard for clients to know what the repercussions are when they are going through the workflow of the software program.

I’m not bashing software, because we actually use software to create and draft our documents. We also have over 20 years of practical experience, so we know what will happen with the different choices clients make. We can talk to clients and guide them as they make some difficult decisions and let them know things that they’re not thinking about, the practical realities of administering their Wills or dealing with their advanced directives or any of the other documents. I’m not bashing software, but I’d be wary about using it for documents like these.

Don’t Die Without a Will

By Estate Planning, Wills

The other night I was out, and I heard people talking about the fact that, the Queen of Soul, Aretha Franklin died without a Will; and they thought that that meant that her money went to the state. It does not.

I think that the problem is that the term for it is really an unusual term. What happens if you die without a Will is that your stuff goes by intestate succession. So each state lays out its own rules for how your stuff would be divided if you died without a Will, and it typically goes to family members like spouses and children and parents.

It’s a little bit different in the different states, but it doesn’t go to the state. Even though it doesn’t, you should still have a Will, because what if you don’t want your spouse, your kids, or your parents or whoever to get your stuff?

You need to take the time to figure out and settle your affairs. You need to figure out what you want to happen and make it happen. Don’t be like the Queen of Soul and countless other celebrities, that didn’t plan; it’s really a shame.

Fully Fund or Even Over Fund a #529 Plan Account?

By Estate Planning, Food for thought, Wills

If you have the means, and want to support your kids’ or grandkids’ educational efforts, I would consider funding or even overfunding 529s for them.

If you use a 529 plan, and you use the Pennsylvania plan, it escapes inheritance taxes and grows tax free if the money is used for education for as long as the money is in the plan. Now that means, you might want to consider funding it more fully than it might have been in the past or fully funding it if you can keep it in the plan for a long time.

It’s tricky with education because you don’t know how much they’re going to need because few pay the sticker price for private schools, and you don’t want to overfund it because it is stuck with education; but if you think about it, if you do have the means, and you have enough for your own retirement and are otherwise secure, if there’s more in the child’s plan then they need and there’s money left over, that money can stay in that plan and then you can change it to another beneficiary, like say their children, and grow tax free and compounding for a generation.

That can really have a nice snowball effect, it might even be able to keep up with the cost of college inflation! Anyway, it’s not something that a lot of people can think about or do, but it’s something that I’ve been thinking a lot about the past couple months and I think for some, it’s something to consider. Think about full funding your 529 fully or even putting in more than you necessarily need. Again, if your retirement is secure and you don’t otherwise need the money. You could get some great tax and investment gains out of that.