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In addition to raising the capital-gains tax rate, Biden has also proposed repealing the step-up in basis on inherited assets. Under the current step-up in basis rule, if you sell an inherited asset that has appreciated in value, such as real estate or stock, the capital gains tax you owe on the sale is pegged to the value of the asset at the time you inherited it, rather than the value of the asset when it was originally purchased.

This can minimize, or even totally eliminate, the capital gains you would owe on the sale. For example, say your mother originally bought her house for $100,000. Over the years, the house grows in value, and it’s worth $500,000 upon her death. If you inherit the house, the step-up would put your tax basis for the house at $500,000, so if you immediately sold the house for $500,000, you would pay zero in capital-gains.

Alternatively, if you held onto the house for a few more years and then sold it for $700,000, you would only owe capital gains on the $200,000 difference on the house’s value from when you inherited it and when it was sold.

However, if the step-up in basis is repealed and you sell the house, you would owe capital gains tax based on the difference between the home’s original purchase price of $100,000 and the price at which you sell it. And whether you sell it right away or wait for it to increase in value, you’d be on the hook to pay exponentially more in capital gains, compared to what you’d owe with step-up in basis in effect.

At this point, it isn’t clear exactly how the new rules would work under Biden’s plan, or what, if any, exceptions would apply. That said, if step-up in basis is repealed, your loved ones most likely won’t be able to avoid paying capital gains on appreciated assets they inherit from you, but if you have highly appreciated assets, meet with us to discuss options for reducing your loved one’s tax bill as much as possible.

Another way Biden plans to bring in more tax revenue is by capping the value of itemized deductions at 28% for those earning more than $400,000. This means taxpayers in the highest bracket would get a 28%—rather than 39.6%—reduction for every deductible dollar they itemize.

Given the proposed cap, if you earn more than $400,000 and plan to itemize, you should meet with us and your CPA together to discuss alternative ways to save on your taxes to offset the new cap on itemized deductions. For example, if you would be limited by the itemized deduction cap in 2021 or later, you may want to consider increasing charitable donations in 2020.

If you’d like to make a big charitable gift this year, but aren’t yet sure which charities you would want to benefit, we have strategies that could work for you. Contact us as soon as possible to get started.

If you own a business, it’s likely a primary source of your family’s income. And depending on its revenue and entity structure, your business could see a tax hike should Democrats sweep the election.

One of the hallmarks of the TCJA was a lowering of the corporate tax rate from 35% to 21%. Biden proposes to raise the corporate rate to 28%. Additionally, under the TCJA pass-through entities—sole proprietorships, partnerships, limited liability companies (LLCs), and S corporations—were given a potential 20% deduction on Qualified Business Income (QBI). Biden plans to eliminate the 20% QBI deduction, but only for those businesses with pass-through income exceeding $400,000.

Although we don’t specialize in business tax law, if your family business stands to be affected by these proposed changes, we can work with you and an experienced business lawyer we trust to develop strategies to reduce the sting of these tax increases. Call us, as your Personal Family Lawyer®, today if you have a business and would like our support with this planning.

Regardless of how you feel about Trump, the TCJA offers a number of highly valuable tax breaks that may disappear for good should a so-called “blue wave” occur in the upcoming election. To this end, if your family has yet to take advantage of the TCJA’s favorable provisions, you still have a chance to do so, but you have to act immediately.

Given the time needed to analyze your options, create a plan, and finalize your transactions, waiting until the election is over to get started will almost certainly be too late. While you don’t need to immediately make any actual changes, we suggest you at least start strategizing now. And this means contacting us, as your Personal Family Lawyer®, right away.

Whether you need to transfer assets out of your estate to lock in the enhanced gift and estate tax exemptions, accelerate large transactions to reap favorable capital-gains rates, or would like to increase your charitable donations for 2020, we can help you get the ball rolling. Schedule your appointment today, so you don’t miss out on massive savings that may never come again.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

Investing in life insurance is a foundational part of estate planning. However, when naming your policy’s beneficiaries, there are a number of mistakes you can make that could lead to potentially dire consequences for the very people you’re trying to protect and support.

The following four mistakes are among the most common we see clients make when selecting life insurance beneficiaries. If you’ve made any of these errors, contact us right away, so we can amend your policy to ensure its proceeds provide the maximum benefit for those you love most.

Although it would seem like common sense, whether intentional or not, far too many people fail to name any beneficiary at all. Others make the mistake of naming “my estate” as the beneficiary, rather than listing a specific person. Both of these errors will mean your insurance proceeds will have to go through the court process.

A judge will determine who gets your insurance death benefits, and this process can tie the benefits up in court for months or even years, depending on who the beneficiaries of your estate are under the law. Moreover, opens up the proceeds to creditors, which can seriously deplete—or even totally wipe out—the funds.

To prevent this, make certain you name—at the very least—one primary beneficiary. In case your primary beneficiary dies before you, you should also name a contingent (alternate) beneficiary. For maximum protection, name more than one contingent beneficiary in case both your primary and secondary choices die before you.

While failing to name any beneficiary at all is a huge mistake, not keeping your beneficiary designations up to date can be even worse. This is particularly true if you are in a second (or more) marriage and fail to remove an ex-spouse as beneficiary, which can leave your current spouse with nothing when you die.

To prevent this, you should review your beneficiary designations annually as part of an overall review of your estate plan, and immediately update your beneficiaries upon events like divorce, deaths, and births. When you are a client of ours, we have built-in systems to ensure your beneficiary designations (along with all other documents in your plan) are regularly reviewed and updated.

Though you are technically allowed to name a minor child as beneficiary, it’s never a good idea. Minor children cannot receive insurance benefits until they reach the age of majority—which can be as old as 21 in some states. If a minor is listed as the beneficiary, the proceeds of your insurance will  be distributed to a court-appointed custodian, who will be in charge of managing the funds (often for a fee) until the age of majority, at which point all benefits are distributed to the beneficiary outright.

This is true even if the minor has a living parent. A child’s living parent could petition to the court to be appointed custodian, but there is no guarantee that a parent would be appointed as custodian, especially if the parent cannot qualify or pay for a bond.  In many cases, a court could deem a parent unsuitable (if they have poor credit, for example) and instead appoint a paid fiduciary to control the funds.

Rather than naming a minor as beneficiary, you should set up a trust to receive the insurance proceeds, and name a trustee to hold and distribute  the funds to a minor child you would want to benefit from your insurance proceeds. By doing so, you get to choose not only who would manage your child’s money, but also how and when the funds are distributed and used.

Although a loved one with special needs is likely one of the first people you’d think of naming as beneficiary of your life insurance policy, doing so can have tragic consequences. If you leave the money directly to someone with special needs, it could disqualify that individual from receiving much-needed government benefits.

Rather than naming someone with special needs as beneficiary, you should create a “special needs trust” to receive the insurance proceeds. This way, the money won’t go directly to the beneficiary upon your death, but it would be managed by the trustee you name and dispersed according to the trust’s terms, without affecting benefit eligibility.

The rules governing special needs trusts are complicated and vary greatly from state to state, so if you have a child with special needs, meet with us today to discuss your options. In the end, special needs planning involves much more than just life insurance—it’s about providing for a lifetime of care and protection.

While naming life insurance beneficiaries might seem like a simple task, if you’re not careful, you can create major problems for the loved ones you’re trying to benefit. Meet with us today to be certain you’ve done everything properly.

We can also support you in putting in place planning tools like trusts—special needs or otherwise—to ensure the proceeds provide the maximum benefit for your beneficiaries without negatively affecting them in any way. Schedule a Family Wealth Planning Session to get started.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

preference to the ward’s spouse or other close family members. In some cases, the guardian is required to post a bond, which typically requires good credit and some level of deposit to be held in the event of the guardian’s wrongdoing. This bond requirement often disqualifies friends and family, who either don’t have good credit or the resources to post a bond.

If a relative or friend is not willing—or capable—of serving, the court will appoint a professional guardian or public guardian. This is one of the ways that an estate can be drained extremely quickly. If you want to hear more about how this can happen, read this terrifying article about the way public and professional guardians are stealing from our elders.

A guardian will only be appointed if a court determines there is enough evidence to show a person is mentally incapacitated, such that they can no longer make legal, financial, and/or health-care decisions.

Depending on the extent of the ward’s mental capacity, a court-appointed guardian can be given near complete control over a person’s life and finances. Some of the most common duties include:

• Paying the ward’s bills
• Determining where they live
• Monitoring their residence and living conditions
• Providing consent for medical treatments
• Deciding how their finances are handled, including how their assets are invested and if any assets should be liquidated
• Managing real estate and other tangible personal property
• Keeping detailed records of all their expenditures and other financial transactions
• Making end-of-life and other palliative-care decisions
• Reporting to the court about the ward’s status at least annually

The extent of duties the guardian is responsible for is up to the court, and the guardian will not be allowed to act in areas the court has not authorized. Moreover, guardians are required to seek the ward’s preferences whenever possible—though ultimately, the decision about what action to take will be in the guardian’s hands. 

The court can also divide out responsibilities to multiple parties. For example, one person may oversee the financial decisions, while another handles living arrangements and health-care decisions. What’s more, the court often requires detailed status reports, such as financial accounting, at regular intervals or whenever important decisions are made, such as the sale of assets.

Whether you’ve met with an estate planning lawyer before or it’s your first time, it’s important to understand how working with us, your Personal Family Lawyer® is different from meeting with a traditional lawyer.

Here we will explain what’s involved with our process, in hopes that it will inspire you to meet with us, your Personal Family Lawyer® and get clear on what your family needs you to have in place, so you don’t leave behind a mess if you become incapacitated or when you die. We promise to help you make the wisest, most affordable, most effective, time-saving plan for yourself and the people you love.

Given the unique approach of Personal Family Lawyer® firms, an initial consultation with our firm is quite different from an initial consultation with a typical estate planning attorney. A typical “initial consultation” would be a meet-and-greet-type of meeting, in which the lawyer describes the various legal documents you need to put in place and quotes you a fee to provide those documents.

In those types of meetings, it will likely be quite difficult for you to know exactly what you need for your unique family situation, assets, and how to make the right decision, outside of simply considering whether the cost of these documents fits within your budget. Deciding what you need based solely on the cost of documents will likely lead to you receiving a set of documents that won’t serve and protect your family or your assets when they need the most support.

Unfortunately, we’ve seen it all too often: You have the best of intentions to do the right thing and get a will or trust in place, but you either don’t do it, don’t complete it, or work with a lawyer who puts in place a documents-only plan that is little more than what you could do yourself online through an online document service. And then you become incapacitated or die, and your family is left with a mess: They don’t know where your assets are, they don’t know who to turn to, your documents are out-of-date, and your loved ones are lost, confused, and grieving all at once.

We’ve designed our entire process, which we call Life & Legacy Planning, to support an entirely different reality—one in which you use the estate planning process to not only leave behind a plan for the people you love, but to make your life even better right now. Let me explain how we do that.

As your Personal Family Lawyer® firm, our entire process is designed to support you to make the right decisions for yourself and the people you love during your life and to leave a legacy of support and love to the people you care about most.

In service to that, our initial meeting with you is a two-hour working session, called a Family Wealth Planning Session. During this session, you’ll educate us on everything you own and all of your family dynamics, and we’ll educate you on how the law would apply to you, your assets, and your family in the event of your incapacity or death. Then, together we will create a plan for how to structure your affairs, how you’d like to have your family supported, and how to keep track of your assets, so your family never feels lost, confused, or alone during a time of grief. And by the time you leave the Session, you’ll feel relieved, cared for, and more clear than you’ve ever been about how to make life choices in alignment with the legacy you desire to leave, as a parent, as a business owner or professional, and as the CEO of your life.

This Planning Session is $750. But if you’d like us to waive this fee, we will do so if you are willing to do a bit of homework ahead of time. This homework is a critical part of the planning process, and it will benefit your loved ones whether you engage in a full plan with us or not. The homework will guide you to find everything you own, and document it, using our Personal Resource Map: Family Wealth Inventory and Assessment.

Just completing this initial assessment will likely get you more financially organized than you’ve ever been before.

We are consistently surprised to see that many of our clients do not have a clear awareness of what they own or how to locate all of their assets. And if you don’t know what you have and where it is and you haven’t documented it, how will your family know? This is exactly why there is more than $58 billion (yes, that’s billion with a “b”) of lost and unclaimed assets held by state and federal agencies in the U.S. This happens when you become incapacitated or die, and your family is unable to find or simply overlooks assets you’ve worked so hard to create because most people fail to properly inventory their assets and/ or keep that inventory regularly updated. So we support you to start there.

We know you haven’t devoted years of your precious time and energy to build your family wealth only for your heirs to lose track of it when something happens to you. That’s one reason the Family Wealth Planning Session is so beneficial. Whether you decide to create a full estate plan or just rework the one you have, after working with us, at the very least your family will know what you have and how to locate it should anything happen to you.

And if you do decide to create an estate plan or redesign an existing plan with us, the Family Wealth Planning Session will guide you to choose the type of plan you want based on your budget, what’s most important to you, what’s not important to you, and with a clear understanding of the impact of your choices. We will guide you to choose the most affordable and effective planning solution for your life and the people you love, so you can get your affairs in order and keep them that way throughout your lifetime and through all of life’s changes.

This investment of your time now will save your family countless hours of heartache and work down the road, while also keeping your loved ones out of conflict and out of court. If you choose to work with us, you’ll get the peace of mind that comes with knowing you never have to make another financial or legal decision without our guidance again. And if and when something happens to you, your loved ones will get the same type of trusted advisor, who will be there for them when you can’t be.

Death is unavoidable. But you can make it far easier on the people you love by the choices you make now. And facing the reality of this fact allows you to make choices that will let you enjoy your current life even more. In fact, our clients often report a huge sense of relief after meeting with us, and they frequently say they wished they’d created a life and legacy plan sooner.

You see, we’ve discovered that estate planning is about far more than planning for your death and passing on your “estate” and assets to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today—and this is why we call our services Life & Legacy Planning.

As your Personal Family Lawyer®, we are specially trained to educate, empower, and support you to make the right decisions for your life and for the people you love. Furthermore, because your plan will be designed to provide for your loved ones in the event of your death or incapacity, we aren’t just here to serve you—we’re here to serve your entire family.

In the end, your Life & Legacy Plan goes far beyond simply creating documents and then never seeing us again. We will develop a relationship with you and your family that lasts not only for your lifetime but for the lifetime of your children and their children if that’s your wish. And this all starts with our Family Wealth Planning Session. If you’d like to learn more about this process or schedule your appointment, contact us, your Personal Family Lawyer® today.

This article is a service of a Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.