Young couple holding hands

So, WHO needs an estate plan, anyway?

Who needs to be most concerned with estate planning? What age group? Ask Iowans this question, and I’ll bet most would conjure up the image of a retiree who just spent 50+ years working hard to acquire significant assets. Of course, it’s important for this demographic to have a quality estate plan, that’s fairly obvious.

But, imagine a young, married couple. They both have good jobs, live in a fine starter home, and have a baby.

 

crying newborn baby

This young couple tries to put away a little bit of money for savings, in a 529 college fund, and for retirement. Why should they worry about estate planning?

The truth is, this young couple should be just as concerned–arguably, even more concerned–with estate planning as the retiree.

Here are four reasons why:

  • Choosing guardians for minor children. In an estate plan, you can choose the guardians of minor children (e.g., children under age 18). If you should become incapacitated, or even die without any estate plan, an Iowa court would have no choice but to appoint a guardian for your children – but it may not be who you wanted or would have chosen. Better to have plenty of time to consider and make a careful, well-reasoned choice.
  • Save on fees, court costs, and taxes. A good estate plan can save you and your estate money on fees, court costs, and taxes. These savings can be even more critically important for a smaller estate (more likely when you’re younger), than for larger estate (more likely as you grow older). Often, young folks actually have the greatest need to save money to pass along the greatest amount they possibly can to family and loved ones.

 

  • Help favorite charities. Having an estate plan means that you can put into place immensely helpful donations for your favorite charities. Without an estate plan there’s no opportunity for you to help your favorite charities
  • Life is uncertain. It may be awkward to talk about, but life isn’t guaranteed for any of us, young or old. There’s an old saying in estate planning circles that goes, “People don’t always die when they are supposed to.” Wives usually outlive their husbands, parents usually outlive their children, and so on, but not always. It is best to be prepared for anything and everything.

 

Mom and daughter hugging

Who should be most concerned with estate planning? I actually think young people should be!

Whatever your age, if you are interested in estate planning (as everyone should want to check it off their list), a good place to start is my free Estate Planning Questionnaire. Questions? Want to discuss you personal situation? Contact me for a free consult!

Gordon Fischer Iowa City At Desk-Estate Plan

Estate planning.

Not exactly material for scintillating conversation. In fact, I’d bet most of us like to avoid this topic because it can be confusing, and requires lots of decision-making. And, well, yes, it forces one to think about one’s own mortality. Estate planning, after all, is a roadmap about what you want to happen after you move on from this life. While it may not be a fun topic, it is indeed a necessary one.

Estate plan: you almost surely need one

Almost everyone needs some kind of estate plan. If you’re young, healthy, unmarried, have no children, and have no significant or unusual assets…perhaps you could talk me into the idea that you don’t entirely need an estate plan. Even in such (rare) cases, I strongly recommend making sure your beneficiary designations are completed and up to date (for example, on your bank/credit union savings accounts and retirement benefit plan). But, if you are married, and/or have kids, and/or have significant or unusual assets, and/or own part or all of a business, you most definitely need an estate plan!

Baby in arms of dad

What IS an estate plan, anyway?

What do we talk about when we talk about estate planning? There are six documents that should be part of most everyone’s  estate plan. Plus, you should keep them updated and current. Also, don’t forget about assets with your beneficiary designations. For most Iowans, that’s good – six documents, keeping them current, and also remembering about those assets with beneficiary designations.

Sure, estate planning is complicated, but not that complicated. I’ll show you.

Six “must have” documents of your estate plan

There are six documents that should be part of most everyone’s estate plan:

  1. Estate planning questionnaire
  2. Will
  3. Power of attorney for health care
  4. Power of attorney for finance
  5. Disposition of personal property
  6. Disposition of final remains

We’ll go through each document briefly, so you have a sense of what each entails.

Estate Plan Questionnaire

Estate planning involves facing heavy questions, and depending on the amount of assets and beneficiaries you have, may take quite a bit of time and thought. I recommend clients (and even those who aren’t my clients) complete an estate plan questionnaire.

An estate plan questionnaire is an easy way to get all of your information in one place, and it should help you understand and prioritize estate planning goals. (I must also admit a questionnaire makes it easier for your attorney to build your estate plan!)

As with any project, it helps “to begin with the end in mind.” A questionnaire can help get you there.

Last Will and Testament

Now let’s get to the will. The will is the bedrock document of every estate plan, and it’s a little more complicated than other documents.

With your will, you’ll be answering three major questions:

  1. Who do you want to have your stuff? A will provides orderly distribution of your property at death according to your wishes. Your property includes both tangible and intangible things. (An example of tangible items would be your coin collection. An example of an intangible asset would be stocks.)
  1. Who do you want to be in charge of carrying out your wishes as expressed in the will? The “executor” is the person who will be responsible for making sure the will is carried out as written.
  1. Who do you want to take care of your kids? If you have minor children (i.e., kids under age 18), you’ll want to designate a legal guardian(s) who will take care of your children until they are adults.

Power of Attorney for Health Care

Assorted pills

A power of attorney for health care designates someone to handle your health care decisions for you if you become unable to make those decisions for yourself. This essentially gives another person the power to make decisions on your behalf. For example, if you don’t want to be kept alive with machines, you can clearly outline that in your power of attorney for health care. But keep in mind that power of attorney for health care isn’t just about end-of-life decisions – it can cover any medical situation.

Power of Attorney for Finances

The power of attorney for financial matters is similar, only your designated agent has the power to make decisions and act on your behalf when it comes to your finances. This gives them the authority to pay bills, settle debts, sell property, or anything else that needs to be done if you become incapacitated and unable to do this yourself.

It might be obvious by now, but I’ll say it just in case: choosing an agent for a power of attorney requires that you think long and hard about who would be best suited for the job and who you trust.

Disposition of Personal Property

Now, let’s get to the disposition of the personal property. This is where you get specific about items you want particular people to have. If you’re leaving everything to one or two people, then you may not need to fill this out. But, if you know you want your niece Suzie to have a specific piece of jewelry, and your nephew Karl to have that bookshelf he loved, then you’d say so in this document.

Disposition of Final Remains

We come to the disposition of final remains. This document is where you get to tell your loved ones exactly how you want your body to be treated after you pass away. If you want a marching band and fireworks shooting your ashes into the sky (that’s a thing, by the way), then this is where you make it known. It can be as general as simply saying “I want to be cremated,” or it can be specific and include details of plots you’ve already purchased or arrangements you’ve already made.

Keep updated and current

OK, so you’ve gone to an estate planning lawyer, and these six “must have” estate planning documents have been drafted and signed. What else? You need to keep these documents updated and current.

If you undergo a major life event, you may well want to revisit with your estate planning lawyer, to see if this life event requires changing your estate planning documents.

What do I mean by a major life event? Some common such events would include:

  • The birth or adoption of a child or grandchild
  • Marriage or divorce
  • Illness or disability of your spouse
  • Purchasing a home or other large asset
  • Moving to another state
  • Large increases or decreases in the value of assets, such as investments
  • If you or your spouse receives a large inheritance or gift
  • If any family member, or other heir dies, becomes ill, or becomes disabled

This is just a short list of life events that should cause you to re consider your estate plan. There are many others.

Don’t forget about your beneficiary designations

There are six “must have” estate planning documents, plus you need to keep them current. Also, don’t forget about your beneficiary designations. For example, savings and checking accounts, life insurance, annuities, 401(k)s, pensions, and IRAs are all transferred via beneficiary designations. These beneficiary designations actually trump your will.

Regarding assets with beneficiary designations, you must make sure that designations are correctly filled out and supplied to appropriate institution

What other documents might you need resides these six “must have” estate planning documents?

For most Iowans, probably the vast majority, what I’ve outlined above is enough. There may be folks who have more that $5 million in assets, or who have complex assets (for example, more than one piece of real estate), or own part or all of a robust business, or otherwise have unusual situations. In such cases, a trust may be helpful. But that will be more “advanced” estate planning. What I’ve described above is an excellent start.

See? That wasn’t so bad!

Glasses on estate planning documents

There it is in a nutshell. This is what goes into an estate plan.

Whether it’s complicated or simple, it does require some thought and time. But, it’s worth the investment – a proper estate plan can save you and your estate costs and fees; help your family and friends; and provide you peace of mind.

Perhaps most importantly, through proper estate planning, you can help your favorite charities in ways large and small. Really, without estate planning, it’s not possible, at your death, to help nonprofits you care about.

Begin today

Why not start right now on your own plan for the future with my free estate plan questionnaire? It’s provided to you free, without any obligation. I would love to discuss your estate plan with you; reach out at any time by email, gordon@gordonfischerlawfirm.com, or cell phone, 515-371-6077.

tenancy by entirety

When you create an estate plan one of the key benefits is that you’re dictating how you want your executor to distribute your assets when you pass away. An estate planning-related question I’ve gotten over the years is: “What about the house? Doesn’t my spouse just get the house straight away?” It’s true, many people do co-own real property (like a house) with their spouse. But, different types of concurrent estates (meaning co-ownership by two or more people) afford different rights to said co-owners.

So, the short answer to that commonly asked question about the house is: it depends.

house under tree

Tenancy by Entirety

One type of co-ownership is called tenancy by entirety. This type exists only between spouses, and they hold the property (like a house) as one legal entity. If one spouse passes away, the surviving spouse takes the whole–becomes the sole owner–of the property.

This means the property would pass outside of probate, making for a simpler answer to the aforementioned “what about our house?” question. So, if something different was written in the deceased spouse’s will, this tenancy by entirety situation “wins” out. The same goes for if the spouse died intestate (without a will) and there’s no messing with which of the heirs-at-law gets what.

Another benefit is that the property is usually exempt from one spouse’s individual debts and liabilities. This means that a creditor couldn’t seize the property from the innocent spouse who is not legally responsible for the other spouse’s sole debts.

However, while this “special” concurrent estate come with the benefit of right of survivorship, there are certain limitations that come with it as well.

Spouses can choose to sever, mortgage, transfer, or sell the tenancy by the entirety, but neither can do so acting alone; both have to be in agreement.

It should also be noted that divorce terminates the tenancy by entirety.

Not in Iowa

Iowa does NOT recognize tenancy by entirety, but these 26 other states do. So, if you’re sharing this info with loved ones or if you co-own property in one of those states, you’ll want to speak with an experienced estate planner about how this type of concurrent estate fits in with your estate planning goals.

What about other types of concurrent estates?

There’s much more that can be said on this phrase and I’d be happy to consult with you personally.

If this post wasn’t exciting enough for you and you want to learn even more about concurrent estates, you’re in luck! We’ll talk about tenancy in common and joint tenancy in the next couple posts.

Want to make certain your assets, including big ones like land or a house, pass how and to whom you choose? Schedule a free consult at your convenience and get started on my free, no-obligation estate plan questionnaire.

Couple overlooking ocean on boat

Iowans’ retirement benefit plans hold tremendous wealth. Your IRAs, 401(k)s, 403(b)s, and so on, could have a huge impact on the charities you care about most.

Nonprofits should be aware that retirement benefit plans are incredibly underutilized for charitable giving. It’s in nonprofit stakeholders’ best interest to educate themselves and potential donors about the benefits of charitable giving of retirement benefit plans.

Categories of Charitable Giving

There are several ways to categorize charitable giving. For example:

  • Cash versus non-cash gifts
  • Planned giving versus “unplanned” giving
  • Income producing charitable gifts (such as charitable gift annuities and charitable remainder trusts) versus non income producing gifts
  • Gifts of different types or classes of assets

When discussing gifts of retirement assets, perhaps the most helpful categorization is lifetime gifts versus gifts at death. Lawyers sometimes call charitable gifts made during lifetime as inter vivos gifts and gifts at death as testamentary gifts.

Let’s start with testamentary gifts of retirement plan assets. This can be an easy and convenient way for your clients to support their favorite causes.

Couple dancing

Testamentary Gifts of Retirement Plan Assets

Name charity as beneficiary

You can make a very meaningful gift simply by naming your favorite charity or charities as beneficiary of an IRA, 401(k), 403(b), or other retirement plan. Giving retirement assets in this way is quite easy.  Just contact the institution holding your retirement plan, request a change of beneficiary form, fill the form out completely and correctly, and return the form. Typically naming a beneficiary in this way does not require drafting or amending a will or trust.

Keep in mind, however, that if the account holder is married, the spouse should be informed. Depending on the type and terms of the plan, the spouse may have to consent to the gift.

Tax rules may make testamentary gifts of retirement plan assets more favorable

Retirement plan assets are a good choice for testamentary gifts for tax reasons, too. In fact, the interplay of a few tax rules may make charitable gifts of retirement plan assets more attractive to you than charitable gifts of other kind of assets.

To understand why this might be so, we need to look at three important concepts:

  1. Inheritance generally is not income.
  2. Income in respect of a decedent (IRD)
  3. Step-up in basis (also called, stepped up basis)
Inheritance is not income

Generally speaking, inheritance is not income, for federal tax purposes. Most inherited property passes tax-free.

(It’s true there is an Iowa inheritance tax. To keep this simple, I’ll focus on federal tax.)

Income in respect of a decedent (IRD)

Most inherited property passes tax-free, but not all. IRD is income that the deceased was entitled to, but had not yet received, at the time of death. IRD can come from various sources, including:

  1. Unpaid salary, fees, commissions, and/or bonuses;
  2. Deferred compensation benefits;
  3. Accrued but unpaid interest, dividends, and rent; and
  4. Distributions from retirement benefit plans

That’s right—retirement benefit plans are IRD.

Federal tax law provides for IRD to be taxed when it’s distributed to the deceased’s beneficiaries. IRD retains the character it would have had in the deceased’s hands.

Step-up in basis

Step-up in basis refers to the readjustment of the value of an appreciated asset for tax purposes upon inheritance. With a step-up in basis, the value of the asset is determined to be the higher market value of the asset at the time of inheritance, not the value at which the original party purchased the asset.

Interplay Between Tax-Free Inheritance, IRD, and Step-Up in Basis

There can be interesting interplay between tax-free inheritance, IRD, and step-up in basis, which may make testamentary gifts of retirement benefit plans very attractive. Here’s a simple example:

Alex dies, with three surviving children, Brett, Casey, and Dana. At her death, Alex owned three major assets: a house, stock, and an IRA. She bequests each child one asset. What result?

Assume:

  • Alex’s house is worth $100,000. She purchased it for only $20,000.
  • Alex owns shares of stock in Acme Company, worth $170,000. She purchased the stock for just $50,000.
  • Alex’s IRA is worth $200,000.

Alex’s house is inherited by Brett. There’s no federal tax on this transfer. Brett sells the house shortly thereafter. Still no federal tax. Although Alex purchased the house for only $20,000, Brett receives a step up in basis. Brett’s basis is $100,000, the value of the house. Since she sells it for $100,000, there’s nothing to tax.

When Casey inherits the stock, no tax—as there’s no taxable event. Later, Casey sells the stock. Although Alex purchased the stock for only $50,000, Casey receives a step up in basis. Casey’s basis is $170,000, the value of the stock. Since Casey sells the stock for $170,000, there’s nothing to tax.

How about Dana and the IRA? The IRA was registered with Dana as beneficiary, but no money is taken out of it immediately, so no taxes. When Dana withdraws money from the IRA, however, Dana must pay federal income tax of up to 39.6 percent. (It is true that Dana could defer withdrawals from the IRA for a long time, and of course such deferral reduces the impact of taxes.)

To sum up, in this hypothetical, the house and stock passed to the beneficiaries without any taxable event. The IRA passed to the beneficiary, but the beneficiary will have to pay taxes when she withdraws funds.

As can be seen, testamentary gifts of retirement benefits to a worthy charity can be tax-savvy. Let’s move on to inter vivos gifts of retirement benefits to charity.

Inter Vivos Gifts of Retirement to Charity

A helpful way to discuss charitable gifts of retirement plan assets during lifetime is to break them down into three categories:

  1. IRA Charitable Rollover;
  2. Required Minimum Distributions (RMDs), and
  3. NonRMDs

 IRA Charitable Rollover

The federal law known as the IRA Charitable Rollover allows individuals aged 70½ and older to donate up to $100,000 from their IRAs directly to charities without having to count the distributions as taxable income. This gift transfer is called a “qualified charitable distribution” or “QCD.”

couple in red car

To be a valid QCD, there are two threshold requirements. First, you must be age 70½ or older. Second, the retirement plan account must be an IRA.

Age requirement of 70½

Taxpayers who are 70½ and older are required to make annual distributions from IRAs which are then included in the taxpayers’ adjusted gross income (AGI) and subject to taxes. The IRA Charitable Rollover permits those taxpayers to make donations directly to charitable organizations from their IRAs without counting them as part of their AGI and, consequently, without paying taxes on them. You can be either an IRA participant donating from your own IRA, or a beneficiary donating from an inherited IRA.

Again, the IRA Charitable Rollover requires you (whether owner or beneficiary) to be age 70½ or older. This is based on the year you reach age 70½, not the day you reach that age.

IRA Charitable Rollover is for IRAs only

QCD can only be made from traditional IRAs or Roth IRAs. Charitable donations from 403(b) plans, 401(k) plans, pension plans, and other retirement plans are not eligible for the IRA Charitable Rollover law.

Annual cap of $100,000

Your total combined IRA Charitable Rollover contributions cannot exceed $100,000 in any one year. The limit is per IRA owner, not per IRA. Also, this amount is not portable between spouses.

Eligible charities

Under the IRA Charitable Rollover, charitable contributions from an IRA must go directly to a public charity that is not a supporting organization. Contributions to client-advised funds and private foundations, except in narrow circumstances, do not qualify for tax-free IRA rollover contributions.

I must emphasize that QCD must go directly to charity. You can’t withdraw the money, and then give it to charity – rather, the IRA administrator must send QCD straight to the charity.

IRA Charitable Rollover & quid pro quo

What about gifts to your client from a charity, in return for QCD? You cannot receive any goods or services in return for QCD to qualify for tax-free treatment.

IRA Charitable Rollover and IRS substantiation

The IRA Charitable Rollover requires substantiation for the IRS. You must obtain written receipt of each IRA rollover contribution from each recipient charity.

Specific tax advantages of QCD

Keep in mind the specific tax advantages of QCD under the IRA Charitable Rollover. For Iowans who don’t itemize deductions, and so thereby don’t get to deduct their charitable contribution, the IRA Charitable Rollover obviously helps. This is even more applicable after the passing of the new tax law.

For Iowans who are “itemizers,” it may also be tax-advantaged, particularly for those who practice strategies like “bunching” donations.

IRA Charitable Rollover and QCD can’t fund split interest gifts

QCD must be a contribution that would be 100 percent deductible if paid from the owner’s non-IRA assets, so a split-interest gift will not qualify. Therefore, IRA Charitable Rollover funds generally cannot be made to a charitable remainder trust, charitable gift annuity, or pooled income fund.

No federal income tax charitable deduction with IRA Charitable Rollover

QCD, from the IRA Charitable Rollover, are excluded from your gross income for all purposes. Of course, there is no charitable deduction for any IRA Charitable Rollover funds.

IRA Charitable Rollover helps with three notable challenges to lifetime giving

Speaking very generally, there are three notable challenges to lifetime giving:

First, consider taxpayers who don’t itemize. Most fundamentally, a taxpayer has to itemize to take advantage of the charitable deduction. A taxpayer who uses the “standard deduction,” rather than itemized deductions, of course wouldn’t see any tax benefit from the charitable deduction.

Second, look at AGI percentage limits on charitable deductions. The federal income tax charitable deduction is limited to a certain percentage of adjusted gross income. The percentage is either 30% or 50%, depending on the type of property given and the type of donee charity.

Third, remember the Pease limitation. The “Limitation on Itemized Deductions” (known as the “Pease limitation,” after Donald Pease, the Ohio congressman who helped create the law), reduces most itemized deductions by 3 percent of the amount by which AGI exceeds a specified threshold, up to a maximum reduction of 80 percent of itemized deductions. The income thresholds for Pease vary by filing status.

You can readily see these three potential obstacles are just not at issue at all with the IRA Charitable Rollover. Again, simply put, QCD does not increase AGI.

IRA Charitable Rollover can fulfill RMDs

QCD, from the IRA Charitable Rollover, can fulfill RMDs. So, it’s an excellent way for Iowans over 70½ to both fulfill RMDs and help favorite causes.

Don’t confuse RMDs and QCDs

QCD and RMDs are actually completely different. It’s true that QCD counts toward RMDs, to the extent RMDs have not already been taken. But QCD can be taken, regardless of whether RMD for the year is more or less than $100,000; regardless of whether the plan participant has already taken RMD; and regardless of any other distributions from the IRA.

Charitable Giving and RMDS

two chairs on beach

The IRA Charitable Rollover applies only to IRAs. Generally, a retirement plan participant, aged 70½ or older, must take annual RMDs – whether the plan is an IRA, or a 401(k), another type of plan.

These RMDs would seem to be an ideal charitable gift. After all, if a plan participant must take an RMD anyway, why not use it to support her favorite causes?

A beneficiary who inherits a retirement benefit plan is also generally required to take annual RMDs. The same analysis would presumably apply.

Charitable Giving and Non-RMDs

Depending on individual circumstances, taxpayers may also choose to make lifetime charitable gifts using funds withdrawn from retirement benefit plans. Individuals over age 59½ may generally withdraw funds from retirement plans without penalty, make a gift with these funds, and then claim an offsetting charitable deduction. In most cases, charitable gifts made in this manner will be a “wash” for tax purposes.

Let’s Talk About Retirement

Whether you are a donor or a donee charity, I would be happy to visit with you about increasing your charitable giving. Please feel free to contact me any time for a free one-hour consultation. I am always available at gordon@gordonfischerlawfirm.com or 515-371-6077.

give thanks table with autumn leaves

Thanksgiving weekend is chock full of traditions for families from parade watching and football playing to pie eating and Black Friday shopping. One less obvious activity you should add to the weekend roster is a discussion on estate planning. America’s second favorite holiday, where family and friends come together from near and far, to eat good food and spend quality time together is a prime opportunity to make sure your loved ones have a plan for the future in the case of unexpected death or incapacitation.

thanksgiving table

Now, I don’t recommend questioning your uncle if he has a living will over the turkey table. But, after the food coma wears off gather your loved ones around in a comfortable spot and strike up a conversation about how estate planning is important for everyone. That includes your brother who has young kids, your mom who donates regularly to the local food bank, and even your cousins who are obsessed with their dogs…there’s a place in estate planning for all of them. Here’s a couple tips to make the discussion a success as great as pumpkin pie.

Non-Disclosure is Best

No one should be pressured or needs to disclose whom they have named as heirs! That could be awkward depending on who’s in the room. But, you should pass along the great advice that estate plans should be reviewed at least annually and always after a major life event like a birth, death, marriage, divorce, or moving across state lines.

Explain Why Estate Planning is Essential

The benefits of estate planning are numerous and estate planning can be tailored to meet each individual’s unique needs and goals. But, you don’t have to get too into the weeds. Leave that part to the estate planner who’s job it is!

If anyone needs convincing to get started on their estate plan ASAP, simply explain that estate planning is an opportunity to take action as opposed to passing the burden to family members to figure out what to do with their stuff, how to access important accounts/information, and slog through the tedious intestate probate process. Estate planning can create chaos and even incite litigation between heirs over the deceased’s estate. Just like Thanksgiving traditions create a lasting memory, estate planning is your opportunity to leave a lasting legacy.

Offer to Help 

Estate planning can sound intimidating to someone who’s never gone through the steps before. Offer to help by recommending an experienced estate planning attorney they can trust.

Pass Along Something Tangible

Want to pass along something beyond just words? You can also share this handy dandy checklist and free, no-obligation Estate Plan Questionnaire.

thanksgiving table

Encouraging all the people you care about to articulate their wishes is truly something to be thankful for! If you or any of your loved ones want more information feel free to contact GFLF for a complimentary consult.

Flag in field with sun

“True heroism is remarkably sober, very undramatic. It is not the urge to surpass all others at whatever cost, but the urge to serve others at whatever cost.” -Arthur Ashe

On Veterans Day and every day, we at Gordon Fischer Law Firm want to say a heartfelt thanks for our veterans’ sacrifice and service. We work with many veterans on estate planning and in nonprofit-related work, and it’s always an honor. There are not enough “thank you’s” in the world to express our gratitude for what you have done for our country. We would also like to extend this sentiment to first responders as well—police, fire, and EMS personnel.

 

Veterans Day flags

As a veteran your story is important. Your legacy is important. To preserve that legacy of strength and service, you need an estate plan to ensure your property and assets are distributed to your loved ones and favorite charities in accordance with your wishes.

So, in an attempt to express our gratitude we would like to offer 25% off the cost of an estate plan package to all Iowan active duty or retired service members and first responders. The discount will be honored through 11/30/2018. Contact GFLF via email or by phone (515-371-6077) to discuss your estate planning needs.

What does an Estate Plan include?

There are six documents that should be part of most everyone’s estate plan.

  1. Estate planning questionnaire
  2. Will
  3. Power of attorney for health care
  4. Power of attorney for finances
  5. Disposition of personal property
  6. Disposition of final remains

You should keep these documents updated and current. (Here are a few common “big” events that necessitate estate plan revisions.) Also, don’t forget about assets with your beneficiary designations. For most Iowans, that’s good – six documents, keeping them current, and also remembering about those assets with beneficiary designations.

 

American flag on chair

Cost of an Estate Plan

Because I want every Iowan to have an up-to-date estate plan I’m very transparent with the cost of an estate plan that that takes into full consideration YOUR situation. (This is why you need an experienced estate planner to draft your documents.) Speaking very generally, an estate plan from my Firm usually costs a single person about $790, and a family about $990. So, with this Veterans Day discount, that’s a saving of about $197.50 for singletons to $247.50 for a family.

Estate Planning Process

I write about my process at length, but it’s just five steps! Seriously, it’s not that painful. My clients report back to me that they have such relief and peace of mind when it’s completed.

Contact

If you’ve been making excuses or have an extremely outdated estate plan now’s the time to check it off your list (and get a discount while doing so!).

How to get started? Contact me by the end of the month (11/30) via email (gordon@gordonfischerlawfirm.com) or phone (515-371-6077) and fill out my free Estate Plan Questionnaire.


DISCLAIMERS

The “Veterans Day discount” is only applicable for estate plans created by active or retired veterans and first responders (and their spouses). Availability of the discount ends after November 30, 2018 at which point prospective client must have contacted Gordon Fischer Law Firm and indicated an intention to make an estate plan.
Veterans Day discount merely relates to pricing and in no way creates an attorney-client relationship, nor any other kind of professional relationship. The Veterans Day discount does not create a contract or agreement of any kind.
Gordon Fischer Law Firm, P.C. retains full and total discretion as to who it chooses to serve as clients and why. Gordon Fischer Law Firm, P.C. retains the right to refuse service to anyone it so chooses.
The Veterans Day discount may not apply to individuals or families with a net worth of more than $1 million dollars. (You still need an estate plan, very much so, but it necessarily needs to be more “complex” to adequately account for all assets.).
Gordon Fischer at desk with client

“The first thing we do, let’s kill all the lawyers.” —Shakespeare, Henry VI

This line is oft-quoted to suggest the Bard felt contempt for lawyers. But, it’s notable that Will, one of the most acclaimed writers of the English language, hired a lawyer (Francis Collins of Warwick) to craft a very detailed will.

DIY Will?

Still, a common question I get all the time is, “Can I write my own will? Do I really need an attorney?” It’s a fair question.

In this age, you can watch a YouTube video, read a DIY blog post, or ask your network on Twitter, to fix or build or make almost anything. There’s limitless information, which makes it feel like you can bypass the “pros” for a cheaper, simpler fix. So, yes, you can write your own will or use an internet service like LegalZoom.

The question, though, isn’t whether you can write your own will, with some research surely you can. The question is instead: should you write your own will? And, if so, will it be valid and hold up in court?

To this point, hypothetically, with lots of study, you could perform oral surgery on yourself, but should you do so and will it turn out well?

Economic Self-Interest?

Before I provide nine reasons you should hire a lawyer to draft your estate plan, let’s deal head on with the idea that my conclusion is based on my own economic self-interest. “Of course you want people to hire an estate planning lawyer, because you are one!”

But, I’m not saying you should hire a lawyer only if that lawyer is me, Gordon Fischer of Gordon Fischer Law Firm…although, if you’re interested, we can certainly schedule a free consultation with no obligation. Rather, I’m just saying you should hire a competent lawyer well-versed in estate planning and probate law. There are many fine Iowa attorneys. This is not about me and my money, this is about you and your money.

The plain truth is you need a lawyer to help you with your estate planning. Here are nine reasons why.

Reason #1: You need more than just a will

Always remember, and never forget, you don’t just need a will, you need an estate plan. While the two terms “will” and “estate plan” are often used interchangeably, this is wrong, as they are two different things. An estate plan is a set of legal documents to prepare for your death or disability. A will is just one of those legal documents, albeit an important one.

In fact, there are at least six “must have” estate planning documents you need. So, you don’t need to draft just one legal document and get it right, but several.

Reason #2: Save time and energy

Handing off the complex task of drafting a thorough estate plan to a responsible professional will alleviate an immense burden on you. It’s simply a lot of work to write an estate plan.

Reason #3: Save money

stacked up coins

Without an estate plan, you and your estate may end up paying more in the long run in professional fees, court costs, and taxes. Using  a flat rate with an attorney will be much more straightforward and to your long-term economic advantage.

Reason #4: Save more money

An experienced attorney knows where to look and what questions to ask to help you secure additional tax and financial benefits.

Reason #5: It’s complicated

I’ve mentioned this before, but this stuff is hard. It’s part art and part science. Every phrase, every word, can undo an estate plan.

Plus, the law is dynamically changing all the time. The federal government, Iowa government, agencies like the IRS, and courts at every level are changing the rules of the game constantly. It’s almost a full-time job keeping track of the current play of the rules, let alone learning the rules to begin.

Reason #6: One Shot

After you shuffle off this mortal coil, how many chances do you get to get your estate plan right? One! There is no second chance. Don’t get me wrong, you can always invest in a new estate plan if you realize your DIY attempt at an estate plan stinks. But, you shouldn’t have to if you get it right the first time! And, if something happens to you before you have the chance to make said second estate plan you’re out of luck. It’s done.

Plus, your estate plan will probably need updates and revisions following any big life or applicable legislative changes that you’ll want an attorney to help you address. (See reason #8 for more on this.)

Reason #7: Objectivity

Along with expertise, lawyers offer objectivity. By working with a lawyer, you’re going to bring that extra voice of reason to bear on current and future estate planning needs. Is it a good idea to leave your entire estate to your dog Buster? Is your 18-year-old kid truly mature enough to handle your IRA worth a million dollars? A lawyer can give you direct, unvarnished, and unbiased advice.

Reason #8: The only constant in your life is change.

As your life changes, your estate plan must adapt. Perhaps you move to a new state. Maybe you have a kid and then some more kids. The kids grow up and have kids of their own. Throughout, perhaps you marry or divorce. Your financial situation significantly changes. All these life events, and many more, necessitate changes to your estate plan. You need a lawyer to tell you when your estate plan needs a tune-up and to perform the tune-up.

Reason #9: Lawyers themselves!

lawyer probate

It’s funny to think about, but nonetheless true. After you die, who will determine if your estate planning documents are valid? Lawyers! State judges (who will, of course, be attorneys) are going to review your estate plan documents. These judges will determine whether your documents meet the necessary requirements. You don’t want to leave it up to a judge, trained as a lawyer, to try to figure out if your DIY documents are valid under the Iowa Probate Code.

Closing Argument

Have I convinced you? Or do you still want to go it alone?

Feel free to contact me any time to discuss further why you need a lawyer to draft an estate plan. I offer a one-hour free consultation, without any obligation. I can be reached any time at my email, gordon@gordonfischerlawfirm.com, or on my cell, 515-371-6077.

fiduciary

A fiduciary role is one of the highest, strongest relationships between people. It is a role involving the highest care and the greatest importance. The people you choose to fulfill these roles should be carefully considered; they should be those whom you have the utmost confidence in.

Examples of common fiduciary roles include the executor of your will, trustees of your trusts, guardianships of your children, and agents for your financial and healthcare power of attorney. Other fiduciary roles include attorney, accountant, banker and/or credit union manager.

Often times, people choose corporate executors to remove some of the liability and risk, since corporate executors are familiar with the estate planning process. A corporate executor is going to know the drill. With a corporate executor, you have a true estate planning professional that knows and understands

If you DO choose to name a private individual to a fiduciary role within your estate plan, you need to ensure they are trustworthy, organized, and reliable.

The American Bar Association has comprehensively defined the different fiduciary duties as:

  • Duty of care;
  • Duty of loyalty;
  • Duty to account;
  • Duty of confidentiality;
  • Duty of full disclosure;
  • Duty to act fairly; and
  • Duty of good faith and fair dealing.

Understanding fiduciary duties and selecting the right individuals will help you feel content, secure and satisfied with your estate plan.

Have questions? Need more information?

I would love to discuss your estate plan with you. You can contact me by email at Gordon@gordonfischerlawfirm.com or give me a call at 515-371-6077. Don’t have an estate plan? The best place to start is the Estate Plan Questionnaire.

brown books on shelf

When you hear the word “trust” it’s usually in the context of a belief of reliability of someone, such as: “I trust her to read about the past legal word of the day, quid pro quo.” Trust in the world of estate planning is entirely different, although you can certainly put trust in a well-crafted trust to maximize the benefits of an estate plan!

What is a Trust?

In simplest terms, a trust is a legal agreement between three parties: grantor, trustee, and beneficiary. This allows a third party (the trustee) to hold assets for a beneficiary (or beneficiaries). Trusts can be set up in a variety of ways and specify the details of when and how the assets will pass to the beneficiary. Trusts are a part of a well-crafted estate plan and can be used to minimize fees, costs, and taxes.

Let’s break it down further by looking at each of the three parties to a trust.

Grantor

 

All trusts have a grantor, sometimes called the “settler” or “trustor.” The grantor creates the trust, and also has legal authority to transfer property to the trust.

Trustee

The trustee can be any person or entity that can take title to property on behalf of a beneficiary. The trustee is responsible for managing the property according to the rules outlined in the trust document, and must do so in the best interests of the beneficiary.

Beneficiary

The beneficiary is the person or entity benefiting from the trust. The beneficiary can be one person/entity or multiple parties (true also of grantor and trustee). Multiple trust beneficiaries do not have to have the same interests in the trust property. Also, trust beneficiaries do not have to even exist at the time the trust is created (such as a future grandchild, or charitable foundation that has been set up yet).

Trust Property

A trust can be either funded or unfunded. By funded, we mean that property has been placed “inside” the trust. This property is sometimes called the “principal” or the “corpus.”

Any Asset

Any asset can be held by a trust. Trust property can be real estate, intangible property, business interests, and personal property. Some common examples of trust property include farms, buildings, vacation homes, money, stocks, bonds, collections, personal possessions, vehicles, and so on.

“Imaginary Container”

We speak of putting assets “in” a trust, but assets don’t actually change location. Think of a trust as an “imaginary container.” It’s not a geographical place that protects your car, for example, but a form of ownership that holds it for your benefit. For instance, on your car title the owner blank would simply read “the Jane Smith Trust.” It’s common to put real estate (such as farms, homes, vacation homes) and entire accounts (like bank, credit union, and brokerage accounts) into a trust.

After the trust is funded, the trust property will still be in the same place before the trust was created—your land where it always was, your car in the garage, your money in the bank, your stamp collection in the study, and so on. The only difference is the property will have a different owner: “The Jane Smith Trust,” not Jane Smith.

Transfer of Ownership

 

 

Putting property in a trust transfers it from personal ownership to the trustee, who holds the property for the beneficiary. The trustee has legal title to the trust property. For most purposes, the law treats trust property as if it were now owned by the trustee. For example, trusts may have separate taxpayer identification numbers.

But trustees are not the full owners of trust property. Trustees have a legal duty to use trust property as provided in the trust agreement and permitted by law. The beneficiaries retain what is known as equitable title: the right to benefit from trust property as specified in the trust.

Assets to Beneficiary

The grantor provides terms in a trust agreement as to how the fund’s assets are to be distributed to a beneficiary. The grantor can provide for the distribution of funds in any way that is not against the law or against public policy.

game of chess

Types of Trusts

The types of trusts are almost limitless. Trusts may be classified by their purpose, duration, creation method, or by the nature of the trust property.

One common way to describe trusts is by their relationship to the life of their creator. Those created while the grantor is alive are referred to as inter vivos trusts or living trusts. Trusts created after the grantor has died are called testamentary trusts.

Another way you can describe trusts is by whether they are revocable or irrevocable. A revocable trust can be modified by the grantor; an irrevocable trust cannot be modified or terminated without the beneficiary’s permission.”

But again, there are so many types of trusts, and the aforementioned are just a few examples.

Do YOU need a trust?

If you have substantial or complicated assets (for example, you own more than one piece of real estate), own part or all of a robust business, or have any other special circumstances, a trust may be incredibly helpful.

Great Place to Start: Estate Planning Questionnaire

A great place to start is with the estate plan questionnaire, provided to you free, without any obligation. Also, feel free to reach out at any time by email, gordon@gordonfischerlawfirm.com, or on my cell, 515-371-6077.

Estate planning is all about strategy—leaving the right assets and inheritances to the right beneficiaries; timely distributions of the estate; and avoiding as many taxes and fees as possible. Another strategic move is deciding whether you and your spouse should use the same lawyer, or whether you should each have your own lawyer.

If you are married, please note you have the option of hiring separate attorneys for your estate planning needs.

Though the goals of most married persons are the same when it comes to wills, trusts, and estate planning, some married individuals (especially individuals who have children from prior marriages) have differing views on the ownership of property and beneficiaries, and naming executors, trustees, and guardians.

Likewise, some married individuals have private information they do not wish to share with their spouse — information that may be essential to the estate planning process that would have to be disclosed to the attorney and, therefore, disclosed to the spouse if I am representing both spouses.

Additionally, sometimes married individuals have “awkward” questions they wish to ask the attorney — questions they would not be comfortable asking in the presence of their spouse, such as how a divorce might affect their estate plan.

By obtaining separate attorneys, you would be able to:

  1. share in confidence any secrets or private information with your attorney that may be important to the estate planning process;
  2. ask in confidence whatever questions you may have; and
  3. receive completely confidential advice and counsel. 

If represented jointly, you will be waiving and losing all three of the above rights with respect to your spouse.

If you decide to obtain separate attorneys, this firm would be pleased to represent either one of you separately. If you are married and decide you would like this firm to represent both of you, then complete this Estate Plan Questionnaire jointly (please do not fill out two separate forms).

Joint Representation

 

Two brides in white wedding dresses

For many married couples, joint representation is a likely choice. The benefits are obvious; joint representation can be cost-effective and can be more efficient since you can work together on a single Estate Plan Questionnaire in preparation to meet with the estate planning lawyer. Another advantage is that the joint representation somewhat forces open and honest communication between you as a couple as you make decisions on beneficiaries (such as children and grandchildren), executors, and disposition of property.

It’s important for your lawyer to avoid conflicts of interest, so they can uphold and respect your attorney-client privilege. If you choose to have joint representation you may waive the conflict of interest clause so that you may be represented together. Or, of course, you can seek separate legal counsel and not sign such a clause.

This communication is critical if you opt for joint representation. Without it, disaster can strike mid-meeting with the lawyer if couples disagree about which child is most responsible in terms of estate execution or how much of a trust fund each beneficiary should receive at age 18.

Individual Representation

 

couple holding hands in green space

There are times when it is best for each spouse to seek separate legal counsel. One such time is when there are different interests that are at odds with each other. For example, if one or both people have children from a previous marriage/relationship that will be named as beneficiaries. There can be conflicting interests between stepparents and stepchildren when it comes to the estate. Additionally, if you both have your own individual estate planning lawyer, you may have more freedom to voice individual concerns, without having to audit your opinions in accordance with your partner’s desires.


Have questions? Need more information? A great place to start is by downloading my Estate Plan Questionnaire, or feel free to reach out at any time; my email is Gordon@gordonfischerlawfirm.com and cell phone is 515-371-6077.