Month: July 2012

Digital Estate Plans in Wisconsin

Perhaps you created your will, set up a trust account for the benefit of your loved ones, and signed health care documents, but have you created a digital estate plan? Nowadays, most people regularly do business online. Many individuals use digital banking logins, create purchasing accounts with their favorite online retailers, and have social media accounts. All of these “assets” are a part of your digital estate. Because of the myriad ways the ability to access your online presence can affect your loved ones after you die, a digital estate plan should be included in everyone’s comprehensive Wisconsin estate plan.

A digital estate plan provides your executor or loved ones with the information required to access your online presence. This may not sound important, but consider what you would like to have happen to each of your digital assets after your death. A digital estate plan can provide loved ones with direction regarding how to disseminate or destroy your documents, digital photos, and other online information.

In order to create your digital estate plan, you should first create a list of each of your digital assets such as email accounts, brokerage or retirement accounts, online payment accounts like PayPal, and any websites you may own. In order to protect your account information from thieves, it is advisable to create a separate list for passwords that allow access to your accounts. Ideally, each list should be stored in a different location. The lists should also be updated at least once per year and anytime you create a new account or change your password.

Next, you should select a digital executor. A digital executor should be someone trustworthy who will carry out your wishes with regard to your digital information and accounts after you die. When selecting a digital executor, it is important to not only choose someone you trust with your sensitive information, but also someone who is comfortable with technology. After you have selected a digital executor, you should name the individual in your will or other estate planning documents and also provide that person with a power of attorney over your online accounts.

It is important that you store your digital logins and passwords in a safe location. A safety deposit box or online data management account are both popular methods for storing a digital estate plan. An added benefit of online storage is the fact that your information will be securely encrypted and released to your named beneficiaries upon your death. A trusted friend, relative, or your digital executor may also be tasked with storing your online account information.

Although information regarding disposition of your financial accounts will normally be addressed in your overall estate plan, the process will go more smoothly if your executor is provided with online access to your financial accounts. You should also ensure that you outline exactly how you would like your non-financial accounts to be handled after your death. For example, would you like your social media account left online or deactivated? Should loved ones be provided with access to your online photo accounts? Would you like a final online message or video posted for your loved ones to view? In addition to usernames and passwords, specific directions should always be provided to your digital executor. For more information regarding how to create a comprehensive estate plan to protect your loved ones following your death, you should contact a capable Wisconsin estate planning lawyer.

Taking Advantage of the Current Federal Gift-Tax Exemption as Part of Your Wisconsin Estate Plan

The federal government’s $5.12 million lifetime gift-tax exemption for individuals and $10.24 million exemption for married couples is currently scheduled to return to $1 million and $2 million, respectively, at the end of 2012. In anticipation of this decrease, it may be a good idea for some Americans to use this dwindling opportunity to clean up both their financial houses and estate plans. By making gifts to your loved ones now, you will have more leeway and a greater ability to avoid higher estate taxes in the future.

Many individuals are choosing to take advantage of the increased exemption to forgive loans to relatives, make specific gifts to their children or grandchildren, share an interest in a family company, or establish an irrevocable trust. In the past, when families reached the previous lifetime gift-tax exemption limits they would often make low-interest loans in order to continue transferring assets to children and other relatives. By formally forgiving such loans before the increased exemption limits expire, a wealthy parent may have the ability to wipe the balance sheet clean. In order to ensure the Internal Revenue Service does not attempt to claim the loan was actually a gift at the time it was made, a taxpayer should be careful give the borrower money in 2012 and allow the borrower to use that money to pay back the previous loan. By doing this, a gift giver can also protect children or other relatives from paying an income tax on a forgiven debt.

For many wealthy families, a parent or grandparent may have spent unequal amounts on their children’s weddings, educations, homes, or other expenses over their lifetime. Even well-intentioned gift givers may fail to consider that providing each child or grandchild with an equal annual gift can create a disparity for no reason other than age differences among relatives. Oftentimes, a grandparent will choose to provide each grandchild with an equal annual gift such as $13,000 per year, the maximum amount that may be transferred at this time without contributing to lifetime gift-tax exemption limits. By doing so, the grandparent may feel they are being fair yet fail to consider that one grandchild is ten years younger and received a much lower cumulative gift. Some individuals may choose to use the 2012 gift-tax exemption limits to address such disparities and avoid later conflicts.

The current gift-tax exemption combined with valuation discounts for minority shareholders in a company may make this an ideal time to transfer portions of a family business. Since officials from the United States Treasury have reportedly suggested valuation discounts should be discontinued, now might be an excellent time to use them. Finally, would-be gift givers may also choose to create an irrevocable trust to benefit a spouse, children, or grandchildren. Contact a knowledgeable Wisconsin estate planning attorney to discuss how you can take full advantage of the current lifetime gift-tax exemption before it is too late.

Important Topics Parents Should Discuss With Their Adult Children

As many parents age, they begin to face some difficult decisions regarding what to tell their children about their estate plan. Often, aging parents are reluctant to provide an estimate of their net worth to their adult children. Normally, parents either do not want to worry their offspring or do not wish for them to alter their lifestyle based upon an anticipated inheritance. Additionally, which children are financially responsible and which are not begins to become increasingly important.

Unfortunately, this means parents often fail to discuss their long term care or estate plan with their loved ones prior to incapacitation or death. Although you do not need to discuss your financial health directly with your children, you should discuss the following information with your loved ones before it becomes too late.

First, it is important to notify your children who you have selected to be the executor of your estate. The executor will be responsible for the orderly administration of your assets. It is important to notify a would-be executor ahead of time because sometimes children and others do not wish to take on such a responsibility, particularly immediately after losing a parent. A future executor should also be made aware of the name of your attorney and where your will, trust documents, and any other important documents are stored.

Next, a parent should discuss their long term care plans with their kids. Although some people have nursing home insurance and other assets to fund their care in the event of disability or incapacity, others do not. Parents who assume they will live with or be cared for by one of their children especially need to begin a long term care plan dialogue. Although a parent may believe they will eventually move in with a particular child, your offspring may have discussed different ideas. Even worse, children may not have considered the issue at all.

All aging parents ought to create an advanced health care directive or living will that outlines exactly what medical measures should and should not be taken if they become unable to communicate. Additionally, parents should make their wishes clear to their children who otherwise may find themselves with more questions than answers in the event of parental incapacitation. By providing children with information about your advanced health care directive, you can better prepare them to handle difficult end of life decisions in accordance with your wishes.

Finally, it is important for parents to make it clear to their loved ones where all of their assets are located. Families should know where to find collectibles, bank accounts, jewelry, and other items in addition to your will or trust documents. By using a computer program, you have the ability to collect all documentation in one easily accessible location. Doing so may make sorting through valuables faster and avoid struggles between children or other heirs following your death.

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