Overland Park Attorney

Estate Planning for Same Sex Couples

The United States Supreme Court is considering the issue of same sex marriage. Regardless of how the case turns out, same sex couples should proceed to create estate plans. In fact, they should not wait for the Court's decision.

Many states have legalized same sex marriage, which gives same sex couples equal inheritance rights in those states. However, many other states have not done so and same sex couples in those states need to provide for each other in carefully crafted estate plans.

Even though the Supreme Court is set to decide the issue, same sex couples cannot wait to do their estate planning.

Recently, the Nashville Business Journal published "4 key steps to creating a formal estate plan for same-sex couples."

The list includes:

• Create the basic documents - The first step is to create the basics such as wills and powers of attorney.
• Review and adjust beneficiary designations - Life insurance and retirement account beneficiaries need to be adjusted.
• Consider Joint Ownership - Couples can hold important property jointly so the surviving partner will automatically inherit the property. Think personal residence.
• Consider using a trust - Trusts can be used to make sure property is divided the way that you see fit.

Of course, it should go without saying that all of the above should be done with the assistance of an estate planning attorney for the best results.

If you want to learn more about Estate Planing in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website.

 Reference: Nashville Business Journal (April 24, 2015) "4 key steps to creating a formal estate plan for same-sex couples." 

 

 

Same-Sex Marriages Create New Strategies for Tax Planning

Now that the Supreme Court has issued its landmark ruling to overturn the Defense of Marriage Act (DOMA), same-sex couples should be hammering out joint financial plans, much like those that heterosexual pairs create when they marry. The plus side is that same-sex married couples nationwide are now afforded benefits that can lower the cost of health care and cut taxes. But it's still not a completely level playing field: While 19 states recognized same-sex unions, as of the end of May 2014, 31 still didn’t. The rift means that couples must take special precautions to have the right estate and emergency-health care legal documents in place – and often on hand.

A recent Investopedia recent article, titled "Must-Do Financial Moves For Same-Sex Marriages,"advises you need to make sure you and your partner have reviewed where you stand on several issues, whether you're already married or are planning to soon.

The IRS made it clear only weeks after the Supreme Court decision came down: On a federal level, same-sex marriages now get the tax benefits and, in many cases, the biggest headaches that come with tying the knot. The good news is that same-sex couples now enjoy many of the privileges that were previously out of reach. They include:

• Employee benefits, such as employee health insurance, can be shared tax-free and are no longer treated as taxable compensation;
• It’s now possible to use one spouse’s loss—investments, income or others—to offset the other spouse’s gains;
• Couples with a large gap in incomes—when one spouse stays home to tend to children while the other works—can also potentially lock in a lower tax rate on a joint return (the “marriage benefit”); and
• Federal estate taxes no longer apply to assets that pass to one spouse when the other dies, up to a threshold of just over $5 million.

The change also makes it possible to file amended forms for up to three years back to claim refunds, Investopedia notes. You may now be eligible for taxes you paid for health coverage or marriage benefit breaks you previously missed out on, if you were married and based upon on how you filed. You may also have grounds to file for a refund on federal estate taxes you paid on what you inherited from your same-sex spouse—provided you were married.

These new guidelines mean you may find yourself experiencing the marriage penalty, especially if both earn high incomes. In addition, if you live in a state that doesn’t recognize your marriage and whose taxes do not conform to federal guidelines, you may have to file your federal return under one status and your state return under another. To be sure, ask your estate planning attorney to review your estate and health crisis documents. You may need to draw up an entirely new set of legal documents.

For more information about Estate Planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website. 

Reference: Investopedia (June 3, 2014) "Must-Do Financial Moves For Same-Sex Marriages"

 

 

Confusion Over Assets For Cohabiting Couples In Overland Park, KS

    Here are some potential pitfalls to keep in mind for couples who are thinking of keeping some or all of their assets separate.

When two people have lived together outside of marriage for some time, the question of who owns what can get downright confusing. Obviously, jointly owned assets can be tricky. Surprising, separately owned assets can be just as complicated.

When it comes to jointly owned assets it is not too hard to understand how problems can erupt. When it comes to separately owned assets, take a look at a recent article in The Wall Street Journal titled “Separate Assets, Joint Problems.”

What are the biggest problems behind separate assets?

The original article gives four points to ponder:

1. Those assets aren’t necessarily separate under the law.
2. Separate accounts may foster a failure to communicate.
3. Separately owned property may be at greater risk in a bankruptcy or lawsuit.
4. Separate accounts can lead to administrative difficulties.

When you boil it all down, the underlying difficulty behind three of these points is simply coming to terms with what separately held assets mean for a married couple.

For example, sometimes assets are not truly separate because state law makes them marital. Like most things in life, there are trade-offs regardless. The time and money spent getting competent legal, financial and tax counsel may be well worth the investment.

Reference: The Wall Street Journal (November 10, 2013) “Separate Assets, Joint Problems”

Weekly Blog Digest - Overland Park, KS - Estate Planning

 

In review, here are the five Blog Posts from this past week for your convenience.  I welcome your feed back regarding any of these posts and your input regarding any of these areas of practice which you would like for me to address.

Same-Sex Prenuptial Agreements – in Overland Park, KS

While the urge to “rush to marriage” will probably be inescapable, perhaps some caution is warranted to do a little planning first. What I am talking about is a pre-nuptial agreement.

 The Gift of College Funding – in Overland Park, KS

The Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) are sometimes called the “granddaddies” of college savings accounts. Both allow parents to establish custodial accounts for a minor child, and a grandparent can then make gifts to the account.

 Where, Oh Where Will The Family Home Go?  Especially in Overland Park, KS?

How do children nudge often-reluctant parents toward making sound and fiscally smart decisions about the future of the family home?

 Would You Give Your Employees Skin In The Game?  In Overland Park, KS?

In family businesses, there are two main ways stock gets diluted: it gets passed on to employees or it’s passed down through the generations.  We often see the first situation occur in families when owners give out shares to non-family executives as part of a compensation package.

 Don’t Forget to Plan for Your Pets  Even in Overland Park, KS!

Why do otherwise doting pet parents fail to make such plans? Most people assume they’ll outlive their pets, says Barry Seltzer, a Toronto-based estate lawyer and co-author of Fat Cats & Lucky Dogs: How to Leave (Some of) Your Estate to Your Pet. And death and disability are topics that many people refuse to face.

Same-Sex Prenuptial Agreements - in Overland Park, KS

While the urge to “rush to marriage” will probably be inescapable, perhaps some caution is warranted to do a little planning first. What I am talking about is a pre-nuptial agreement.

Those planning to marry their same-sex partners are coming up against a hurdle known all too well by “late-in-life” marriages – combining two established lives personally, financially and legally. Enter the prenup.

A recent Forbes article titled “Before Marriage, Same Sex Couples Need Prenups,” provided some pithy advice.

The term “late-in-life marriage,” while perhaps not soft on the ego, is a term designed to acknowledge that you are not blushing eighteen-year-olds, with no assets, careers, or names in the world. In fact, most same-sex partners, couples, and married persons will have fully established and separate financial and legal lives, sometimes by design and often by strict necessity. Regardless, marriage in this new, post-DOMA world will mean a collapse of those borders.

Whether heterosexual or homosexual, couples that are comprised of well-established individuals have so much to consider, including retirement accounts and even accrued liabilities. Consequently, marriage may require planning what should be joined and what should remain separate.

The original article illustrates how prenuptial agreements are being deployed today as more and more persons marry “late-in-life” and that same-sex marriages are (now) no exception in this regard.

Either way, “marriage” is and always has been a very legally loaded term. We are still learning what same-sex marriage will mean, and to some extent we are still learning what marriage in this day and age will mean. Regardless, a solid prenuptial agreement is an important consideration. 

Reference: Forbes (June 27, 2013) “Before Marriage, Same Sex Couples Need Prenups”

For more information about this issue in Overland Park, KS, please visit my website.

Weekly Blog Digest - Overland Park, KS - Estate Planning

In review, here are the five Blog Posts from this past week for your convenience.  I welcome your feed back regarding any of these posts and your input regarding any of these areas of practice which you would like for me to address.

“Portability” Does Not Apply To All Wealth Transfers - even in Overland Park, KS

My father is a widower. My mother passed away in 2006. Does the permanent change to "portability" that you have discussed in your columns on estate and gift taxes apply here? And would it affect my father's annual gift-tax exclusion amount this year?

How Does The Supreme Court Ruling On Same-Sex Marriage Affect Estate Planning? Even in Overland Park, KS?

The ruling makes clear that married gay couples living in states that recognize their unions will immediately gain access to more than 1,000 federal benefits, like Social Security and family leave rights. Less certain is how couples living in the remaining 37 states will fare.

Giving Before The End - even in Overland Park, KS

It’s a great idea to try to make a difference for your child while you’re here to see the process unfold – it could be one of your most gratifying life moments. Just take your time, think through your approach carefully and don’t do it alone.

Business Succession – A Double–Edged Sword - even in Overland Park, KS

If you run a family business, you probably already know research indicates family-owned businesses tend to have better long-term financial performance than their counterparts that aren’t run by blood relations. And you’re probably well aware infighting among family members can lead to breakups, selloffs, and bankruptcies …

Planning for Digital Assets Leaves Computer Scientists Scratching Their Heads - even in Overland Park, KS

A number of services can help with digital estate planning by designating password recipients or deleting accounts or files when you die. But communication and privacy laws have yet to catch up with technology.

How Does The Supreme Court Ruling On Same-Sex Marriage Affect Estate Planning? Even in Overland Park, KS?

The ruling makes clear that married gay couples living in states that recognize their unions will immediately gain access to more than 1,000 federal benefits, like Social Security and family leave rights. Less certain is how couples living in the remaining 37 states will fare.

The Supreme Court has been busy this year, dealing with many important topics all around. But few issues have been so drastically altered as that of same-sex marriage.

The Supreme Court, in its last actions of this term, rendered two important decisions on the topic of same-sex marriage. Now it’s time to figure out what these rulings mean moving forward. A recent article in The New York Times, titled “How the Court’s Ruling Will Affect Same-Sex Spouses,” provides a good start.

For those planning for their estates, the important decision was rendered in US v. Windsor, a case many have been following quite intently and for good reason. The case centered on a common conundrum of many in same-sex marriages: married by state law, but strangers by federal law. And of course, the Federal law in issue was The Defense of Marriage Act, or DOMA, as signed into law by President Clinton. DOMA changed the definition of marriage to literally require different gender partners, but this has been struck down.

Consequently, all of the federal benefits ascribed to the term “marriage” will extend to same-sex marriages as well. These include, but are not limited to, social security, estate and gift tax law, and common law spousal provisions. In short, it’s a groundswell and the ground won’t stop moving until we figure out all of the ramifications.

Read the original article for more specifics, but many questions remain. For example, will estate planning be just the same for same-sex marriage now?

Reference: The New York Times (June 26, 2013) “How the Court’s Ruling Will Affect Same-Sex Spouses”

For more information about Same-Sex issues in Overland Park, KS, please visit my website.

Weekly Blog Digest - Overland Park, KS - Estate Planning

Don’t Delay Discussing Your End-Of-Life Wishes

This uncomfortable, ethically questionable, confusing scene over Ms. Bayliss’ end of life did not have to happen the way it did.  If you don’t want to be in that kind of situation, you need to be responsible for deciding what you want and communicating it to those who will have to act on your behalf.

Planning Challenges for a Later-In-Life Marriage

…More than 40% of women and more than half of men over 50 who get divorced end up remarrying, according to Census Bureau data.

For folks like these, all sorts of financial considerations can complicate the question of whether and how to go about remarrying.

Decanting a Bottle of Wine …or an Irrevocable Trust?

"It's like decanting a bottle of wine; you pour the wine into a new bottle to air it out," says Mark Haranzo, a partner at law firm Withers Bergman. In trust terms, you pour the assets of an old trust into a brand-new trust that essentially allows a redo.

High Court Sees an Estate Tax Case Regarding Same-Sex Marriage

In bringing her case to the Supreme Court, Windsor argues that DOMA violates the U.S. Constitution's guarantee of equal protection. DOMA backers say the law is valid.

Tax Pointers for Business Transfers within the Family

Dad wants to eventually sell the family business to his daughter. She has the smarts, drive and desire, and he doesn’t want to work forever. Not only does he want the business to be a success for her; but, part of his retirement income will be dependent on her making the payments for the business.

High Court Sees an Estate Tax Case Regarding Same-Sex Marriage - even in Overland Park, KS

In bringing her case to the Supreme Court, Windsor argues that DOMA violates the U.S. Constitution's guarantee of equal protection. DOMA backers say the law is valid.

Same-sex marriage has been a controversial issue in American politics, and will likely continue to be a hot button for many. But On March 27, the Supreme Court is set to rule in a case that may impact both politics and same-sex estate planning as we know them.

The case going before the Supreme Court is the story of Edith Windsor and Thea Spyer. The subject: the application of the federal estate tax in the context of a “same-sex marriage.” A recent article in Reuters considered the case and its implications. The article titled “Analysis: Death, taxes and Supreme Court's gay marriage case,” notes that the case began when Thea Spyer passed away and left her estate to Edith Windsor, her spouse under Canadian law. However, because the Defense of Marriage Act (DOMA) precludes same-sex marriage, Spyer’s estate was not recognized for purposes of affording the unlimited marital exemption.

This exemption permits a spouse to pass his or her estate to their surviving spouse without federal estate taxation. Because her marital status is not recognized under DOMA, Windsor had to pay the estate tax and her suit is to recover that payment. She is alleging that the basis of the tax, DOMA, is itself unconstitutional.

If the Supreme Court agrees with Windsor, the implications are profound on many levels, to include social and legal. Should DOMA remain the law of the land, then traditional same-sex estate planning will remain unchanged, but no less important.

Reference: Reuters (March 12, 2013) “Analysis: Death, taxes and Supreme Court's gay marriage case”

For more information about inheritance planning, as it relates to same-sex couples, please refer to my website.

Weekly Blog Digest - Overland Park, KS - Estate Planning

Inherited Stock and Cost Basis

I just inherited some stock from my uncle, and I know that he bought the stock for more than the present cost. Should I find the original cost, or do I use the cost as of the date I inherited the stock?

Necessary Planning for Children Adopted by Same-Sex Couples

… Financial and estate planning is especially important for LGBT parents who adopt ….

Estate Planning for Blended Families – What You Need to Know

With more than 50 percent of first marriages failing and 75 percent of the partners remarrying, “blended” families — which include children from earlier unions — have become the norm.

Family Wealth: A Blessing or Curse? You Decide

The blessings of wealth can be yours, but they are not delivered on a silver platter. Counter intuitive as it may seem, you must work for them. But your hard work will yield ample rewards.

The Gun Trust: Your Estate Planning “Weapon”

The national trend is driven by the National Firearms Act (NFA), which regulates the transfer or sale of certain guns and other weapons, in part by requiring a sheriff or police chief to approve the transfer with an authorized signature. However, NFA Gun Trusts allow firearm enthusiasts and gun collectors to legally bypass the law enforcement signature requirements and transfer ownership of their weapons without a local police chief or sheriff approval. It also bypasses the need for fingerprints.