Asset Protection

A Recent Survey Asks, What Are the Biggest Threats to Estate Planning?

Estate Planning
Family dynamics have always played a crucial part in estate planning.

A recent survey conducted by TD Wealth at the 53rd Annual Heckerling Institute on Estate Planning found that nearly half (46%) of respondents said that family conflict was the biggest threat to estate planning in 2019, followed by market volatility (24%) and tax reform (14%).

Insurance News Net’s recent article, “Family Conflict Reigns As Greatest Threat To Estate Planning, Survey Finds,” reported that the survey also looked at the various causes of family conflict, when engaging in estate planning. They said that the designation of beneficiaries (30%) was the most common cause of conflict. Other leading factors included not communicating the plan with family members (25%) and working with blended families (21%).

Family dynamics have always played a crucial part in estate planning. With an increase in blended families, many experts think that these conversations will become even more frequent and challenging. Estate planning comes with the responsibility of motivating families to communicate through difficult times. This requires regular conversations and total transparency. To minimize risk, families should include everyone at the table to participate in an open and honest conversation about their shared goals and objectives.

Market volatility was also a big concern of the respondents for 2019. Almost 25% said that identifying volatile markets was the biggest threat to estate planning this year, up from 12% in 2018.

Market fluctuations are worth watching and can cause worry for potential gift givers. It’s best to maintain a long-term view when investing, and know that short-term market movements are no match for a robust estate plan and a well-balanced portfolio.

The Tax Cuts and Jobs Act continues to have a large-scale effect on estate planning. After the increase in the federal gift and estate tax exemption, there are some new strategies to allow people to take advantage of the exemption. About one third of respondents (31%) propose that their clients consider creating trusts to protect assets. About 26% say their clients plan to minimize future capital gains tax consequences and 21% agree to gift now, while the exemption is high.

Experts are stressing the importance of creating trusts for the benefit of family, so assets can be protected from future claims.

A total of 40% of estate planners think their clients will continue to give the same amount to charities as they did in 2018, with 21% expecting them to donate more.

If any of these threats concern you, we invite you to start a discussion with one of our experienced Madison area estate planning attorneys.

Reference: Insurance News Net (March 13, 2019) “Family Conflict Reigns As Greatest Threat To Estate Planning, Survey Finds”


What Does the Tax Cuts and Jobs Act Mean for My Estate Plan?

If you haven’t reexamined your estate plan in light of the changes in the Tax Cuts and Jobs Act, do so now, says The Kansas City Star in its article “Talk to estate attorney about impacts of Tax Cuts and Jobs Act.”

A big change in the tax law is the doubling of the federal estate tax exemption from $5.49 million per person in 2017 to $11.18 million per person in 2018 (or $22.36 million per couple). In 2019, the federal estate tax exemption is $11.4 million per person (or $22.8 million per couple).

You should review any wills or trusts drafted prior to the passing of the 2017 legislation. If the trusts use formulas tied to the federal estate tax exemption, then there could be unintended ramifications because of the new larger exemption amount.

You should also look at trusts drafted prior to 2011, when portability was introduced. This legislation allows for “portability” of the deceased spouse’s unused estate exemption. Therefore, the surviving spouse’s estate can now use any exemption amount that wasn’t used by the first deceased spouse’s estate.

The Tax Cuts and Jobs Act didn’t change the step-up of basis. However, the unintended effects of this “non-event” are potentially more significant now. When the decedent dies, the heir’s cost basis of many assets becomes the value of the asset on the date of their death. Thus, highly appreciated assets that avoided income taxes to the decedent, could also avoid or minimize income taxes to the heirs.

Maintaining the ability for assets to receive a step-up in basis is a more important part of estate planning now, because of the larger federal estate tax exemption. However, note that beneficiaries who inherit assets from a bypass or credit shelter trust upon the surviving spouse’s death don’t benefit from a “second” step-up of basis. Instead, the basis of the heir’s inheritance would be the original basis on the first spouse’s death.

As a result, bypass trusts are much less useful than in the past and could have negative income tax impacts for the heirs. This is particularly true, if the assets appreciated significantly after the first spouse’s death or if there was a relatively long amount of time between spouses’ deaths. If your current trust establishes a bypass trust at your death, you might want to ask your estate attorney about restructuring how the bypass trust is funded for the larger federal estate tax exemption.

If you haven’t looked at your estate planning documents with an estate attorney recently, do it in 2019. We invite you to request an estate planning consultation with one of our experienced, Madison area, estate planning attorneys.


Reference: The Kansas City Star (February 7, 2019) “Talk to estate attorney about impacts of Tax Cuts and Jobs Act”

Should I Put My Firearms in a “Gun Trust”?

If you’re a gun collector, while you likely have heard the term “gun trust,” you may not know what it is, how it works or how it can be of use in an estate plan.

Kiplinger’s recent article, “Own a Gun? Careful: You Might Need a Gun Trust,” explains that a gun trust is the common name for a revocable or irrevocable management trust, that’s created to take title to firearms.

Revocable trusts are used more often, because they can be changed during the lifetime of the grantor.

While it’s true that any legally owned weapon can be placed into a gun trust, these trusts are specifically used for weapons that are classified under the National Firearms Act (NFA) Title II of the Gun Control Act of 1968. These include Title II weapons, such as a fully automatic machine gun, a short-barreled shotgun and a suppressor (“silencer”).

What is an important reason why a gun trust may be a component of an estate plan? When the grantor owns Title II weapons, the transport and transfer of ownership of such heavily regulated firearms can easily be a felony, without the owner or heir even realizing he or she is breaking the law.

A gun trust provides for an orderly transfer of the weapon upon the death of the grantor to a family member or other heir. However, that transferee is required to submit to a background check and identification process, before taking possession of the firearm.

An NFA Title II weapon, like a suppressor, can only be used by the person to whom it’s registered. Therefore, allowing a friend or family member to fire a few rounds with a Title II weapon at the local range is a felony! A gun trust can be used to allow for the use of the Title II weapon by multiple parties. Each party who will have access to and use of the weapon, should be a co-trustee of the gun trust and must go through the same required background check and identification requirements.

An owner of a large collection of firearms may find it easier to transfer ownership of his or her weapons to a gun trust, even if the person doesn’t own any Title II weapons. There are several benefits to doing this, such as protecting your privacy, allowing for the disposition of your collection and addressing the possibility of incapacity. A gun trust can also ease the process for your heirs. You don’t want to run afoul of the complex laws regarding the use and ownership of firearms, especially Title II firearms. Leaving a large collection of Title I weapons—or even a single Title II weapon—in an estate to be dealt with by an executor or trustee, can be extremely troublesome. Fortunately, it’s avoidable with the use of a gun trust.

Speak to one of our estate planning attorneys who are experienced and understand the federal and state laws on the ownership and transfer requirements of all firearms.


Reference: Kiplinger (February 6, 2019) “Own a Gun? Careful: You Might Need a Gun Trust”

Here’s More Insight into Why Estate Planning is Critical

Fox 5 NY says in the article “Why estate planning is important regardless of your age or wealth” that this is a great time to begin talking to your loved ones about estate planning, especially older relatives and parents.

The key to a successful discussion depends upon the right approach.

Try to always make suggestions, rather than demands. One great way to start the conversation with family members is to mention what you’re doing. You might say something like, “I just took care of my own estate planning. Have you done anything? Maybe we should talk about it.” That might get the conversation rolling.

Many people believe that, as they get older, they need a will. However, that’s just one piece of the puzzle: core estate planning includes a will, power of attorney, health care proxy and asset protection.

For most of us, the asset we most want to protect is our home. One of the best ways to do that is through an irrevocable trust. This trust may have tax advantages, could protect your home during a healthcare crisis and protect your home from your children’s creditors.

You also need to find people you trust to help with finances and health care. A power of attorney is a legal document in which you grant a person the authority to handle finances on your behalf.

Similarly, a healthcare proxy is an individual who makes healthcare decisions, if you get sick or are in an accident and can’t make decisions for yourself.

You can use one person to do both or separate individuals for each role. You can opt for a family member or a trusted friend. However, either way, it should probably be a younger person, who won’t be dealing with the same aging issues as you.

You should also note that your will doesn’t cover everything. Another important part of estate planning is making certain that any beneficiaries designated in your retirement plans or life insurance and any additional names on joint bank accounts are current. The beneficiaries you appointed by a designation form will get the money in those accounts, no matter what it says in your will.

If all of this sounds a bit complex, don’t worry because our experienced estate planning and elder law attorneys can help you with all of the forms and all of your questions. Just understand these three things before you visit our elder law firm: your assets, whose names are on the accounts and your wishes.


Reference: Fox 5 NY (December 12, 2018) “Why estate planning is important regardless of your age or wealth”

How Do I Make an Estate Planning Gift to an Adult Child?

As Forbes explains in its recent article “The Estate Planning Gift To Give Your Millennial Children In 2019,” Boomers entering their 60s and 70s are more focused than ever before on managing their family legacies. The 2018 U.S. Trust Insights on Wealth and Worth Study found that 67% of those over 50 want to use their wealth to invest in their children and grandchildren. Boomers who’ve managed their finances successfully, want to be sure their hard work doesn’t go to waste. One thing driving Baby Boomers crazy is their kids’ estate planning–or lack thereof. Boomers have been building legacies from the day they were born.

The challenge, however, is that Boomers can’t control all aspects of their financial lives. One complaint they have to their estate planning attorneys is that their kids aren’t doing the things that they ask. Gen Xers and Millennials may see estate planning as a very low priority. Most are burdened by heavy debt and trying to get their day to day financial lives on the right track. Nagging parents might make them resist this type of advice.

There is one thing that Baby Boomers can do to make certain their children do the right thing, when it comes to estate planning—they can make an estate planning gift to their adult children.

However, before Boomers do this, they should think about several issues to put their family on the path to success. Family dynamics can be challenging, and family patterns are often hard to break.

Parents who want to offer to pay for an adult child’s estate plan should consider how best to broach the issue. A wrong start could torpedo the wrong situation and end in a family drama. Timing is crucial for these discussions. The assistance of your estate planning attorney can smooth the way for a successful approach. He can outline the process for everyone to feel that they have a voice. This can be done with a family meeting.

The advice for Boomers interested in making an estate planning gift is quite simple: these conversations need to be more intentional in the why and the how. Boomers must also respect boundaries, once the estate plan is completed. They may have paid for the estate plan, but that does not mean they’re entitled to see the child’s documents. The burden of enforcing this parameter falls to the estate attorney.

The best gift a parent can give their children for 2019, is to help them organize and manage their affairs. If they offer to pay for an estate plan, Baby Boomers can take the right actions to be sure their legacies will continue after they are gone.


Reference: Forbes (December 12, 2018) “The Estate Planning Gift To Give Your Millennial Children In 2019”

Does My Living Trust Shield My Assets From Creditors?

Do you remember that episode of the U.S. version of “The Office” where Michael Scott thinks he can seek bankruptcy protection from his creditors simply by walking into the office and stating, “I declare bankruptcy!” Obviously, that is not how bankruptcy works. Yet, when it comes to estate planning, some people operate under a similar misunderstanding of the law; they think they can shield their assets from their creditors by placing it in a trust.

How the Law Treats Revocable Living Trusts

Now, there are ways to use trusts as a legal means of asset protection, but when it comes to a revocable living trust–the most common form of trust used in estate planning–that is not the case. A revocable living trust is a means of avoiding probate, not a way to avoid paying back your creditors.

Do I Need to Include Bitcoin in My Estate Plan?

Estate planning is only effective if it includes all of your assets. In most cases this is not a big deal. Major assets like your home have a deed that clearly establishes legal title. Other liquid assets such as a brokerage account are maintained by a trusted third party that must follow certain regulatory standards.

How Cryptocurrencies Work

How can a Family Business Complicate My Estate Planning?

Family-owned businesses are often the most complex type of asset to deal with in estate planning. There are multiple stakeholders to consider. On the one hand, you may want your family to continue enjoying the benefits of owning the business. But you may also want to make sure the business continues to run in a professional manner.

Asking a Fiduciary to Take on Multiple Roles can Lead to Conflicts

Should My Child’s Bankruptcy Affect My Own Estate Planning?

One of the biggest estate planning concerns that we hear about from parents is that they are reluctant to leave a potentially sizable inheritance to their financially irresponsible adult children. This raises an interesting question that you probably have not considered in connection with your own estate plan: What happens if my child files for bankruptcy just before I die? Will my estate be forced to pay off my son or daughter’s creditors?

Which Of These Powerful Secrets Could You Use To Build Your Ideal Estate Planning Legal Program

Which Of These Powerful Secrets Could You Use To Build Your Ideal Estate Planning Legal Program

  • Keep your estate settlement simple;
  • Avoid the court-supervised Probate process when you die;
  • Avoid federal and state estate and gift tax;
  • Avoid losing your home and life-savings to nursing home expenses;
  • Designate the right person or people to handle your estate when you’re gone;
  • Set up your estate legal program so that it takes days or weeks to settle your estate – rather than months or years;
  • Avoid assets from having to be sold within nine months of your death to pay estate tax;
  • Protect your children’s inheritance from their past, present, or future divorces;
  • Provide for your special needs children and grandchildren so that their government benefits are protected;
  • Protect both your spouse AND your children in a blended family situation;
  • Set up your retirement accounts and IRAs to minimize tax and maximize the benefit to your family;
  • Provide for the distribution of your personal effects without causing a fight among surviving family members;
  • Provide for your unstable children or heirs (on drugs or alcohol, or unable to responsibly handle money) so their inheritance is protected from themselves;
  • Keep your financial affairs private when you die, outside of the public records, and off the internet;
  • Keep your family from having to pay capital gains tax when they sell your property after you die;
  • Ensure that the right family members have access and authority when you become incapacitated and protect what you have while you are alive and need it most;
  • Avoid Medicaid’s Estate Recovery liens from taking your home and vehicles after you pass away;
  • Keep your loved ones from having to make the often-difficult decision to terminate your life and withdraw life-support machines when you are in a profound vegetative state, hooked up to machines, with no chance of recovery;
  • Arrange your estate legal affairs so that when you have a stroke, illness, or accident and become incapacitated, the right people will have the authority to make decisions for you, without interference from other difficult family members, and without the need for a court guardianship proceeding;
  • Provide for your grandchildren in a way that they benefit from the inheritance for decades after you die.

To learn more about these secrets talk to the estate 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.

Contact our office by calling (608) 268-5751 to schedule a consultation or use our online contact form.

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