Month: October 2018

Mind the Gap: Estate Tax Cliff

“When the Tax Cuts and Jobs Act went into effect, many clients and advisors assumed that their days of worrying about the estate tax were largely over. Not so fast.”

The big news was that the Tax Cuts and Jobs Act doubled the federal estate tax exemption to $11.18 million per person (and $22.36 million per couple, with portability). This enormous exemption increase gave many Americans who are in the highest of all tax brackets a reason to cheer. However, in reality, few wealthy Americans ever pay the tax. However, according to “Beware the Estate Tax Cliff,” an article appearing in Wealth Management, it’s not all good news. …

Getting Married Again? Protect Your Spouse and Your Children

“With the trend toward increased remarriages later in life, one spouse may prefer living in their own home of many years with the new spouse.”

One of the goals in estate planning when one spouse moves into the home of another spouse, is to ensure that if the owner spouse dies first, the new spouse will be permitted to remain in the home, while preserving the value of the home for the owner spouse’s children. It’s not always an easy situation to resolve, according to an article in the Times Herald-Record, titled “How to preserve your home’s value when remarrying,” but with good planning and an estate plan, it can be done. …

Widows Be Wise About Social Security

“Losing one’s spouse is one of life’s most difficult and overwhelming experiences. Claiming Social Security survivor benefits apparently ranks as a close second, based on a frantic phone call I received from a close friend this week.”

A friend who was unexpectedly widowed, when her husband died at age 44 of a massive heart attack, was left with a toddler, a teenager, too little life insurance and household income that had been cut in half. She managed, as reported in Investment News’ article “Inaccurate info from Social Security Administration a challenge for widows,” in part thanks to Social Security. …

He is Ready to Retire but It Doesn’t Mean You Should

“Women who retire when their husbands do, may be giving up more wealth than they realize.”

Women in their 50s and 60s are in their peak earnings years, while their male counterparts are usually on the decline, according to an associate professor of health care policy at Harvard Medical School. The associate professor is the author of a recent study about couple’s incomes and retirement patterns. As a result, reports The Berkshire Eagle in the article “Women who retire with their husbands can lose out,” women sacrifice more Social Security wealth than married men, when they retire early. …

Ready To Retire? Worried About A Bear Market? Here’s How To Prepare

“For each year in which a bull market persists, workers become likelier to retire. However, those who leave the workforce now—the ninth year of the longest U.S. bull market—are potentially setting themselves up for a tough stretch that could test their portfolio’s long-term resilience.”

Live long enough and you’ll get to experience the ups and downs of the market. If you’re about to retire, or newly-retired, you may be concerned about how long this bull market can maintain its pace. There is a way to deal with this, says The Wall Street Journal in its article “Retiring Soon? Plan for Market Downturns,” with steps that you can take to minimize the damage from losses in early retirement. …

Is Bankruptcy in Your Future?

“According to U.S. Bankruptcy Court data, 819,159 people filed for bankruptcy in 2016. Although that is down 6.9 percent from 2015, Debt.org reports that people 55 and older account for 20% of those filings, a number that has doubled among seniors since 1994.”

Overall, personal bankruptcies are on the decline.  However, the number of seniors filing for bankruptcy has reached record numbers. That is a terrible thing to have to face in your later years. According to the article “Planning key to avoid becoming a bankruptcy statistic in retirement” from nwi.com, this unpleasant fate can be avoided. However, it takes early planning. …

The Time to Plan is Now and Not Later

“The client wanted her surviving spouse to have access to her work email, but her employer shut down the email account following her death.”

This is one of those situations that does not have a happy ending. A woman died unexpectedly, and her employer shut down her email immediately after her death. Her surviving spouse knew that the woman had wanted him to have access to her emails, but it was too late. …

Business Owners: Why You Need an Estate Plan Today

“What will happen, if you die without leaving a will? It is probably the last thing you want: Instead of you deciding who gets your small business, the government decides.”

Every state has its own rules about how assets are distributed after someone dies, and what happens when the person has not created as will. This is also known as dying “intestate.” If you need a reason to finally get your will done, or to take care of an outstanding legal matter, the article “Head off a small-business skirmish: Draw up your will or estate plan today” from KREM.com should get you started. …

Business Owners: Why You Need an Estate Plan Today

“What will happen, if you die without leaving a will? It is probably the last thing you want: Instead of you deciding who gets your small business, the government decides.”

Every state has its own rules about how assets are distributed after someone dies, and what happens when the person has not created as will. This is also known as dying “intestate.” If you need a reason to finally get your will done, or to take care of an outstanding legal matter, the article “Head off a small-business skirmish: Draw up your will or estate plan today” from KREM.com should get you started.

Here’s a tale from one law office that makes it all very clear.

A business owner died unexpectedly. He had never completed his divorce from his first wife after 20 years. What was he waiting for? It is hard to tell, since he had been in a relationship with another woman for 10 years and they had two children together. Because he never divorced his wife, she inherited his business.

No one likes to consider that they will die, or in this case, that it is really time to deal with their marital status. He probably thought he had plenty of time to plan. However, the result was not pretty. Here’s how you can avoid your own unintended consequence:

Preplan. A business owner needs to do a complete estate plan, so your property, family and business will be protected, if you should become incapacitated or die. You’ll need the following:

Disability insurance. This is a relatively affordable product that replaces up to 60% of your income, if injury or illness prevents you from working.

Life insurance. Consider the cost of providing food, shelter, education and care for your family. How would that be replaced, if you died tomorrow?

Another thing life insurance can do is keep a business alive after the owner dies. Proceeds can be earmarked in your estate plan to be used to meet business costs and spare your loved ones from selling the business for a low amount, because they need to raise funds fast.

Create a succession plan. How will your business go forward without you?

Have your documents prepared. Hire an estate planning attorney who can protect your business and your family. Here’s what you’ll need:

A will and/or a trust. You need a will, especially if you have small children. This is because you’ll want to name guardians for them. A will does go through probate. However, this is only true if your assets are not placed in trusts. Your estate planning attorney will create a plan that fits your needs.

Health care directives. This gives a family member or friend the ability to make health care decisions, if you are unable.

Financial power of attorney. Someone you trust and who has strong business acumen will be able to make financial decisions on your behalf.

Beneficiary designations.  This is where most people make big mistakes. Don’t leave your entire insurance policy to your ex because you forgot to update these. Whoever you name as a beneficiary on your designation form gets the asset, regardless of what your will says. This includes bank accounts, retirement accounts, etc.

Tell your family and/or friends about your plan and your wishes. Let more than one person know that these documents exist, who to contact in the event of an emergency and your wishes.

It’s not as much fun as a day of apple picking. However, planning now is the right thing to do.  It is part of being a responsible adult, business owner and family member.


ReferenceKREM.com (Sep. 18, 2018) “Head off a small-business skirmish: Draw up your will or estate plan today”

Get Help from a Wisconsin Probate and Estate Planning Attorney

The estate planning lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate matters. Our dedicated attorneys will even make house calls if you are unable to come to our office.

To attend a free estate planning workshop or to receive our client planner to assess your estate planning mindset, contact our office by calling (608) 268-5751 or use our online contact form.

You Can Avoid Elder Financial Abuse, But How?

“While a longer life is a good thing, it will also present challenges – and unfortunately, sometimes financial predators.”

The prospect of a long, healthy and active life is a wonderful thing to consider. However, one in 10 seniors have suffered financial abuse, according to The Kansas City Star’s article “Five ways to avoid elder financial abuse.” The grandson of Brooke Astor spoke at a conference about how his grandmother’s last years were spent living in squalor, as a result of her son and guardian stealing from the estate and cutting the amount of money available for her care. The grandson and his brother sued their father to protect their beloved grandmother, a leading philanthropist and one of New York’s high-profile society figures.

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