With the new Secure Act passed by congress, providing new rules for the use of IRA accounts, many are wondering what effects it will have on their estate planning.  Besides taking away the cap on when you can contribute to your IRA (formerly age 70 ½), and raising the required minimum age to take distributions from your IRA (from age 70 ½ to 72), the biggest change affecting estate planning is that IRA beneficiaries will have to withdraw all of the IRA funds within 10 years after the IRA owner’s/participant’s death.  This eliminates the option of keeping the assets in the IRA for the beneficiary’s lifetime.  Unless you are a spouse of 10 years, a qualifying charity or other exception, the result of this legislation will lead to taxes needing to be paid on the withdrawn proceeds earlier than expected. Plus, in some cases, funds may become available to beneficiaries earlier than the plan participant intended.

As an alternative, many of these IRA’s are currently set up having a “conduit trust” as the initial beneficiary (for the benefit of ultimate beneficiaries named in the trust), with limited instruction only to hold the funds until the minimum distributions were required pursuant to the old law.  This in many cases is now insufficient because the new law will force that trustee to distribute ALL of the assets in 10 years after the participant’s death.  That 10-year mark for some beneficiaries may be too early (such as an age in which management of funds may be difficult).  Therefore, the IRA plan may need to be changed designating a different (or amended) trust that has more broad instruction allowing for the trustee to hold the assets longer, to use and invest the for the trust beneficiaries as the participant intended; rather than simply distribute the funds to a loved one prematurely. 

This is often known as an “accumulation trust.” Simply put, such a trust is more specifically crafted to stand the test of time as it accumulates assets under the control of a trustworthy individual (selected by the participant). With this option, though funds may still be required to be withdrawn by the trust (as the initial beneficiary) within 10 years after the participants death, resulting in a taxes coming due, the trust may still continue to hold and invest the remaining IRA funds for years to come, ensuring that the participant’s loved ones are cared for as intended and on his/her timetable. 

For more information on these plans, please feel free to contact Gee Law for a free consultation.

We all know people who are either just starting a business venture or have been doing so with fellow investors or partners for some time.  Unfortunately, many of these people we know have embarked on these business ventures without a plan.  Because they did not have a plan to deal with contingencies, partners often reach an impasse on important decisions regarding how to go forward with a particular business opportunity, putting the business at a costly standstill.  This is especially true with businesses formed by multiple investors or partners. 

A specific example of the risk behind engaging in a joint venture without a written agreement arises when one partner or investor starts a business with the ambition for it to become his/her specific line of work; while the other investors, lacking the same level of participation and commitment, demand an equal share of the company's value or profits.  Consequently, the more focused partner often ends up doing most of the work, yet the benefits are shared equally. 

The solution is for prospective investors in a business to engage in a written agreement, e.g., partnership, member or shareholder agreements.  This way, all members agree in advance on how decisions will be made, the level of commitment expected between members, compensation for that commitment, and even how disputes will be resolved.  So, before you invest in a business, invest in a plan.  This will maintain relationships with your fellow investors and ensure your business is in the best position to grow successfully and stand the test of time!

For those of us that are small business owners, our customers know us and trust us for the services we provide.  Who will they go to for service in the event we are no longer available?   Many of our businesses are either small or are set up in such a way where the owner or president is the main contact to assist customers.  In these circumstances, it is difficult to transition customers to employees or other officers as a substitute, when customers are accustomed to that contact person who runs the business; or is the decision maker that ensures the business’s proven success.

This is why a succession plan is important to document among the company’s partners or shareholders.  Most often among smaller businesses, when something is to happen to a key figurehead, the value of the business or even its good will among customers may suffer.  As such, business owners should consider protecting the company with the use of insurance to cover the costs involved to the company in loosing certain personnel.  Another protection may involve setting the company up with a consultant that can guide the business to train other personnel to power it.  This will allow customers to become accustom to other officers and employees carefully trained to drive the business to function the way its owners do.  With this goal in mind, the business is primed to run on its own in the event such owners are not available.  Such planning may also increase the value of the business as a going concern by preparing any new owner to be better positioned to take over operations down the road.

Gee Law is available to help you draft your business agreements with succession planning to structure the company to function as well as it does even when you are not there.  Gee Law is also equipped with a network of reliable consultants, to refer owners, that can guide the business to become more self-sufficient and valuable in the future.  For a consultation on how to ensure these protections, feel free to contact Gee Law for a free consultation!

As many of us are aware, powers of attorney help to avoid the need for a  court-ordered Guardianship or Conservatorship later in life, but in some instances, these powers are not drafted to cover all circumstances (even though many of these such directives are written broadly).  For example, I was involved in a case-matter in which siblings argued over who has power to make placement decisions for their mother.   One family member was made power of attorney pursuant to a directive mom had signed, which covered certain decisions concerning medical treatment.  This family member, along with her counsel, believed it was broad enough to cover living arrangements (placement) and daily living matters.  The other siblings decided this sibling did not have such authority (outside of hospital admittance) and claimed that the power of attorney directive was not specific enough. 

Therefore, the opposing siblings proceeded to petition the probate court for guardianship whereas daily living and more specific decisions concerning where mom lived can be made by a court-appointed fiduciary.  Fortunately, the family settled on having the court grant a guardianship to a neutral family member while preserving the remainder of powers instilled in the power of attorney directive. 

The takeaway in this example is to make sure that powers of attorney are drafted specifically to include often overlooked matters, such as placement and daily living decisions in addition to  medical treatment.  It is encouraged that individuals review their power of attorney directives, for both medical and financial decisions, to ensure their needs are specifically addressed.  I am happy to help.  Readers are invited to contact me at Gee Law for a free consultation!

Many of us have a joint interest in a business or investment with other partners, which we would like to pass on to a loved one through our estate plan.  However, those interests are often not controlling interests pursuant to the business plan made among the co-owners of the business. 

These plans involve agreements that may set limits on who other decision-makers can be, such as partners in a partnership or directors in a corporation.  On the other hand, business plans can be amended to create a succession plan in the event these business partners have family that would like to carry on the growing business. 

Many co-business owners working together share these desires for family to follow in their footsteps, but have not thought this far ahead in their business plan.  These business partners, members and shareholders are invited to contact Gee Law to discuss options for such planning.  May your business enhance your family legacy as it prospers!

The Probate Court provides for the guardianship and conservatorship of the disabled, from developmentally disabled children to incapacitated adults.  In these proceedings, the Court often appoints family as guardian or conservator for their loved ones, but often do not make them aware of what their duties are. 

Though many of these family members are very qualified and are excellent caregivers, they are often unaware of the Court’s yearly requirement for these fiduciaries to provide an annual guardianship report, or conservatorship accounting.  These reports allow the Court to provide oversite and give interested parties (such as other family) the opportunity to be aware of the fiduciary’s progress.  If these reports are not timely submitted, the Court tends to enforce costly consequences.

These fiduciary duties are often very uncomplicated and is not as daunting a task as many expect, once fiduciaries are given the opportunity to learn what is involved.  If family members are looking to care for a loved one, or are currently serving as guardian and conservator, I am available to consult them on what to be prepared for so they can keep family matters out of Court.

We know that there are different types of estate planning designed to protect our assets and direct how to distribute or utilize them.  There are trusts, for example, set up as a separate entity to manage or distribute assets under certain conditions, during life and even beyond death.  There are also wills, designed to distribute assets in your name upon death, rather than manage them for an extended period thereafter.  Finally, financial powers of attorney are available to manage assets in your name during life in the event you are unable to. Once these plans are in place, does your fiduciary (such as the executor of your will, trustee of your trust, or power of attorney) know what all of those assets are and where to look for them when it’s time for them to act?

In addition, many assets are separate from our estate or trusts because they already have beneficiaries designated in a contract or policy (such as life insurance or 401k plan).  Do those beneficiaries know where to look or whom to contact in the event the money holder (e.g. the life insurance company) can no longer locate them to distribute funds?

This is an important part of your estate plan review that may even involve sitting down with your future fiduciary (who may be family or otherwise) to discuss inventory and ensure the plan is administered smoothly.  If the estate or trust inventory is not updated or reviewed periodically, some assets may be inadvertently missed.  As a result, many estates (for example) reopen after being closed when unknown assets are later discovered.  This can lead to unnecessary administrative costs or legal fees.

Therefore, it is important that my clients are guided in maintaining an inventory or schedule of assets for their estate plan.  By doing so, they and their fiduciaries are aware of what assets are in their estate or trust and how to efficiently access them.  For those who are unaware of the status of their assets as it relates to their plan, now is the time to start.  Contact Gee Law for a free consultation. 

Many of us have an estate plan in place, but are not always aware of its contents.  This may be because the documents have been drafted a long time ago, or perhaps were not fully explained.  Therefore, it is important to review our estate plans to ensure your assets are disbursed per your direction, even when your family’s circumstances change.  In doing so, it is desirable to consider placing protections within a will or trust to ensure that gifts to those who become disabled do not inadvertently disqualify them from disability benefits that may be available.
 
All too often, estate plans will devise assets, either through a will or trust, to someone who perhaps later becomes disabled.  In these instances, eligibility for benefits could be hampered or complicated.  Moreover, what they may be receiving through a trust distribution is commonly not enough to support them.  If modifications to your plan are necessary to ensure these protections, know that they can be made cost effectively, such as with a short amendment to an existing trust.
 
If anyone is uncertain about what is included in their estate plan, whether a will, trust, or power of attorney, they should take the time to review their plan and seek a trusted legal confidant to answer their questions.  If you do not have an estate plan, then now is the time to get started! We can begin today.

I have had people approach me lately, including some attorneys, who have inquired as to why it is necessary to have a power of attorney over your assets when you already have a successor trustee in a trust to manage assets when you are disabled.  My answer is very simple.  The trustee has control over what is in the trust only.  Even when you believe that all of your assets are in the name of your trustee (as many have intended), there are assets that you may acquire down the road, or that you have forgotten about, which are not yet placed into the trust and time may be needed to coordinate that.  In that time, these assets remain in your estate, separate from the trust, where a power of attorney will be needed to manage them if you are unable.
I have had people find out the hard way that assets they thought were in their trust, actually were not.  If you are uncertain about what is in your estate plan or how assets will be managed when you are unable to do so, feel free to contact Gee Law for a free consultation.