Getting married is an exciting and hectic time. Here are the financial steps you should be taking once you are "official."Read More
Blogs Written by PWR Advisors
When estate planning is done wrong, it can create havoc on heirs after a family member passes. Estate Planning is not a fun topic to discuss, but it is an essential part of financial planning.Read More
Unfortunately, when a parent passes away, you as their child most likely have an obligation to close their estate and finalize their financials. Below is a list of questions you should go to your parents with and have them answer.Read More
I am a widow and want to gift some of the individual, concentrated stock in my brokerage account to my only child, my adult son. I am tired of managing the stock and feeling like I need to stay on top of the earnings reports, news, etc. I would rather gift it to him and have the rest of my portfolio in low-cost, diversified positions. The stock has a very low basis and will incur a large amount of long-term capital gains upon selling. What are your thoughts?Read More
My father was recently diagnosed with a serious progressive illness. After the initial shock, my siblings and I feel this is a good time to make sure his finances are in order, particularly with regards to estate planning. What do you recommend?Read More
A client shared this interesting article & video recently. It is the story of a man whose mother passed away. Subsequently, he spent 20 hours trying to locate her various online accounts to appropriately shut them down or to gain access to her online assets, such as airline miles. Many of us have a plan for our traditional assets in the event of our passing. What about digital assets? We tend to disregard or forget about these. Examples of digital assets include emails, texts, airline miles, music files, and photos. Ideally, these accounts should be closed after someone passes to prevent the chance the deceased might become a victim of identity theft. Anything of value should be distributed according to the deceased owner's wishes.
In practice, most deceased don't have information on their digital assets in writing. Their beneficiaries are left trying to piece together what clues they can find and, in many cases, never get all the answers. There is some hope that state legislation will help improve the situation, but as it is, only seven states have legislation regarding digital assets in place.
Consider the following tips:
(1) Create an inventory of your digital accounts along with the username, password and email addresses associated with the accounts.
(2) Stipulate what you want your beneficiaries to do with each account, if you were to pass, and whether or not there is anything of value associated with the account.
(3) Prioritize the list.
(5) Speak with your estate planning attorney to make sure everything is coordinated with their processes and procedures.
Source: Bissett, William and Andrew W. Blair. "Planning Implications of New Legislation for Digital Assets". Journal of Financial Planning. (December 2014): 23-24. Print.
Ms. Fletcher is the Founder and Principal Attorney at Fletcher Law in San Diego. She serves clients throughout California in the area of Estate Planning. I recently had Kylie answer some frequently asked questions. Linda Rogers: What is the biggest mistake that families with young children make with regards to their Estate Planning?
Kylie Fletcher: Often, young parents avoid estate planning because they believe that they are young and healthy and need not be concerned yet. Sometimes, they feel they can’t afford an attorney. However, estate planning is a vital part of caring for your young child. Doing nothing can be a very serious and costly mistake. The most important part of an estate plan for young parents is naming a guardian for their children. The guardian is the person who will care for the children who have not reached the age of majority before both parents die. Select someone you trust to raise your children and determine if that person is agreeable before finalizing your will. When selecting a guardian, consider the age of the person and whether they will be able to provide adequate care. Name a secondary guardian in the event that the primary guardian is unable or unwilling to serve.
Linda Rogers: For children under 18, do you recommend a Trust be listed as the contingent beneficiary (assuming the primary beneficiary is the spouse) as opposed to the children themselves?
Kylie Fletcher: Yes. If the child is still a minor when the parent dies, the court will usually get involved, especially if the inheritance is significant. Minor children can be on a title, but they cannot conduct business in their own names. When the owner’s signature is required to make a sale, refinance or transact other business, the court will have to get involved to protect the child’s interests. When the court is involved things move slowly and can become very expensive. Every expense must be documented, audited and approved by the court and an Attorney will need to represent the child.
If you establish a Trust as the contingent beneficiary, a person you select, not the court, will be able to manage the inheritance for your minor children until they reach the age(s) that you determine. A Trust can accommodate each child’s needs and circumstances and protect your children’s inheritance from the courts, irresponsible spending and creditors (even divorce proceedings).
Linda Rogers: Can you give us examples of plans that you have seen parents use to stipulate how children will receive an inheritance upon their passing?
Kylie Fletcher: Often parents worry about leaving money to their children. They want their children to have enough to do whatever they wish, but not so much that they will be lazy and unproductive. Therefore, parents who create estate plans usually create a Trust to hold assets for their children. Below are two very common planning options:
Option #1: Lump Sum
Parents will create a Trust to hold assets for children until they reach a certain age. Once the child reaches a designated age (usually 25, 30 or 35 years old) he or she will receive a lump sum payment.
Option #2: Installments
Many parents like to give their children more than one opportunity to invest or use the inheritance wisely, which doesn’t always happen the first time around. Installments can be made at certain intervals (say, one-third upon your death, one-third five years later, and the final third five years after that) or at certain ages (say, age 25, age 30 and age 35).
To learn more, Fletcher Law is hosting a Special Needs and General Needs Seminar on Sunday, November 10th from 9:30am to 11:00am at Pump It Up in Sorrento Valley. Child Care will be provided. Contact Kylie if you are interested in attending.