Estate Planning
David Postic
Top 7 Reasons People Delay Making An Estate Plan

According to a survey conducted earlier in 2019, only 40% of American adults have a Will or Trust. That percentage drops dramatically for younger age groups. For example, only 19% of people ages 18-34 have a Will or Trust.

So what’s the big deal?

As Baby Boomers pass away, experts predict that over $68 trillion (with a ‘trill’) in wealth will be transferred over the next 25 years. And the estate planning of those Boomers will control where all that wealth goes.

Despite the hugeness of those numbers and the importance of estate planning, it is easy to procrastinate when it comes to actually setting your affairs in order. Here are the top 7 reasons (in no particular order) people give us to explain why they delay estate planning:

1. “I’m too young.”

First of all, you are never too young to have an estate plan. I wrote a series of articles specifically geared toward estate planning for Millennials. (Or you can substitute “Millennials” for “Gen Z” or whatever weird thing we are on now.)

Whenever young people say “I don’t have enough assets for an estate plan” or “I’m going to wait until I have a family,” what they are really saying is, “I don’t plan on going anywhere anytime soon.” Because young people don’t die, they live forever.

Top 7 Reasons People Delay Making An Estate Plan
Estate Planning, Taxes
David Postic
Everything You Wanted To Know About Estate ...

The Internal Revenue Service (IRS) recently announced that the estate and gift tax exemption is increasing in 2024 to $13.61 million per person, up from $12.92 million in 2023.

The IRS also confirmed that the annual gift exclusion amount is increasing from $17,000 per person in 2023 to $18,000 per person in 2024.

Read more: IRS Rev. Proc. 2023-34

Okay great, you might be saying to yourself. But what does that mean, and why does it matter?

Great questions.

There are a lot of misconceptions about estate taxes and gift taxes — often referred to as “death taxes.” What they are, who has to pay them, how to avoid them.

This article is my attempt to demystify the topic for you and to help you figure out how these tax changes could affect your estate plan.

Everything You Wanted To Know About Estate & Gift Taxes
Estate Planning
David Postic
8 Questions to Prepare Your Estate Plan for 2024

2023 is almost over.

The end of the year is a time for people to gather together with family and friends, to look back on the past 365 days, and to look forward to better, happier things.

People usually don’t want to think about things like—oh, I don’t know—their mortality. Death. Stuff like that.

However, it is crucial to regularly review and, if needed, update your estate plan. The end of the year is the perfect time to do that.

So before you completely wipe 2023 from your memory, ask yourself these 8 questions to make sure your estate plan is ready for whatever 2024 throws at you.

1. Will the right people get my “stuff”?

First, make sure your will or trust correctly states who will inherit your assets.

You should then review your pay-on-death (POD) beneficiaries on insurance policies, retirement accounts, and other assets.

Do they match the beneficiaries in your will or trust?

Related post: 7 Mistakes to Avoid When Naming Beneficiaries

Many people incorrectly believe that a legal document such as a will or a trust controls what happens to all of their assets.

However, beneficiary designations can override those documents.

For example: Your trust may say that your son John will receive your entire estate and that you are disinheriting your other son, David.

But if your insurance policy lists David as beneficiary, he will still get part of your estate.

You should therefore coordinate your beneficiary designations with your will or trust to make sure all of your assets are distributed the way you want.

8 Questions to Prepare Your Estate Plan for 2024
Estate Planning
David Postic
What's the Difference Between a Will and a ...

Lawyers love to be confusing.

We use insane-sounding words from Latin and Greek and some other languages that I’m pretty sure are completely made up.

Words such as testator, force majeure, per stirpes, and inter vivos.

Our words are so weird, we have to italicize them.

So I’m not surprised when someone asks me whether a Last Will and Testament and a Living Will are the same thing.

After all, both documents have “Will” in their names, right? It would only be reasonable to think that they are similar.

But they are not similar. They are very, very different.

So I’m going to cut through the legal jargon and explain the differences between Wills and Living Wills — and help you decide which one might be best for you.

Last Will and Testament vs. Living Will

Before diving into specifics, it’s first helpful to know how to define estate planning:

An estate plan ensures (1) that the right people are able to care for your SELF in the event you become incapacitated and (2) that the right people are able to get your STUFF in the event of your death.

Every estate planning tool fits into one of those two categories, and a good estate plan should address both areas of focus.

And as luck would have it, I will be discussing both categories in this post.

What's the Difference Between a Will and a Living Will?
Estate Planning
David Postic
3 Magic Ingredients in a Great Letter of ...

So you’ve got some nifty estate planning documents?

You are awesome.

Formal estate planning document can ensure your family is cared for after your death, avoid court, and minimize the burden your loved ones will face when you are gone.

But legal documents are only one part of the equation.

Your estate plan is not complete just because you signed some fancy papers.

Because while formal estate planning documents can avoid legal obstacles after your death, they do not eliminate the myriad other tasks necessary to settle your affairs.

Think of it this way:

If you died today, would your family know what to do?

If they couldn’t remember anything you told them about your estate, would they be able to easily find all the information they need?

Read more: Why You Need to Have an Estate Planning Fire Drill

If you answered “no” to either of those questions, then your estate plan is not complete.

To make things easier on your loved ones after your death, the best thing you can do is create an estate planning letter of instruction.

3 Magic Ingredients in a Great Letter of Instruction

What is Asset Protection?

What is Asset Protection?

With increases in the federal estate tax exemption ($5,600,000 for single individuals or $11,200,000 for married couples in 2018) and repeal of the Oklahoma estate tax, estate-tax planning is becoming a non-issue for all but the largest estates in Oklahoma. Instead, a greater concern for most people is protecting their assets from lawsuit judgments.

Why is Asset Protection necessary?

One car wreck, for example, can have a devastating effect on your estate. What if someone is injured in the wreck and sues you? Will your insurance cover it? Your car insurance may include $300,000 in liability insurance; however, if the accident seriously injures or kills someone, a lawsuit judgment could be $1 million dollars or more. In that case, you could be personally responsible for damages above the $300,000 in liability insurance.

Will You Lose Your Long-Term Care Deduction?

Will You Lose Your Long-Term Care Deduction?

We recently wrote about several ways the House GOP tax package could impact your estate plan. However, one area we did not cover is an important proposal that could impact millions of Americans: eliminating the medical expense deduction.

What Is the Long-Term Care Deduction?

The House plan proposes eliminating the deduction (codified in Title 26, Section 213 of the U.S. Code), which generally allows taxpayers to deduct medical expenses (including long-term care insurance premiums) for income tax purposes if the expenses are greater than 10% of adjusted gross income (AGI). But there is a cap on the amount you can deduct for long-term care premiums. The IRS recently announced that, for 2018, taxpayers age 40 and under can deduct a maximum of $420; taxpayers 70 and over can deduct a maximum of $5,200.

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What Is Stepped-Up Basis?

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What Is Stepped-Up Basis?

Nobody likes taxes.

And even though the federal estate tax is not a problem for most people anymore, there is another tax that could drain your estate and reduce what your loved ones receive after your death.

The good news?

By creating a solid estate plan, you dramatically reduce (if not eliminate) the need for your heirs to pay these taxes after your death.

That’s what this post is about: How to legally avoid having to pay taxes.

Related post: IRS Increases 2020 Estate Tax Exemption

[A brief disclaimer before diving in. I will be discussing this issue only at a very basic level and only in the context of estate planning. I am not a tax professional, and nothing in this article should be construed as tax advice. Consult a certified tax professional for all tax-related questions.]

Capital Gains Tax: Explained

America has a type of tax called the capital gains tax which says if you sell a capital asset (e.g., a house, shares of stock, etc.) for more than you paid to buy it, you may be taxed on the difference.

3 Ways Tax Reform Could Impact Your Estate Plan

3 Ways Tax Reform Could Impact Your Estate Plan

Yesterday, House Republicans unveiled their tax reform legislation, called the Tax Cuts and Jobs Act. (You can read the full text of the bill here.) Although the tax plan proposes numerous changes to our current system, we wanted to review a few that could impact your estate plan.

1. Repealing the Estate Tax

We have written previously about the history of the estate tax, but pretty soon the estate tax itself could be history. Under the GOP proposal, the individual estate tax exemption would nearly double (to about $11 million) immediately -- and the federal tax would be repealed entirely in 2024. What does this mean for you? Very likely, nothing. Only 0.2% of estates owe an estate tax. However, for those who do (or may) owe an estate tax, elimination of this 40% tax could mean a difference of thousands or even millions of dollars.

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IRS Announces 2018 Estate and Gift Tax Limits

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IRS Announces 2018 Estate and Gift Tax Limits

[After this post was published, Congress passed the Tax Cuts and Jobs Act, which changed estate tax exemptions starting in 2018. Read this article for more information.]

The IRS recently (officially) announced increases in the estate and gift tax exemption for 2018. The combined exemption will be $5.6 million per individual, up from $5.49 million in 2017. In other words, if you die in 2018, you can leave $5.6 million (or $11.2 million for married couples*) to heirs without paying a federal estate or gift tax.**

The annual gift exclusion amount also has increased to $15,000 in 2018—up from $14,000 in 2017. This means you can now give away $15,000 (and a husband and wife can each gift $15,000) to as many individuals as you want each year without paying any gift tax. For example, starting in 2018, a couple could make $15,000 gifts to each of their four grandchildren, for a total of $120,000. Gifts beyond the annual exclusion amount count towards (i.e., reduce) the $5.6 million combined estate/gift tax exemption.

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