Category: Estate Planning

Your retirement account may be one of the most valuable things you own. Many people consider naming their children as the beneficiaries of these accounts because they think it is a way of easily transferring their wealth if something happens to them. However, there are some factors that make this type of transfer more complicated than you may think, especially if your child is a minor.

Can a Minor Be Named Individually as a Beneficiary?

Yes, you can name your minor child as the beneficiary of your retirement account or as the contingent beneficiary who would receive it if the primary beneficiary you have named on the account dies before you pass away. However, if your child is a minor when you die and they inherit your retirement account, a court may have to appoint a guardian or conservator to handle any money distributed to the child from the account. This will take time and money, and the guardian or conservator the court chooses may not be the person you would have chosen. You can avoid this by proactively naming a conservator or guardian for your minor child in your will.  Be aware that in most states a guardianship terminates when the child is 18 (and in some instances age 21). Would you want an 18-year old to have total control over the retirement money and any other inheritance? In most cases this is not a good idea.

Under the Setting Every Community Up for Retirement Enhancement (SECURE) Act, most beneficiaries must receive an entire retirement account within ten years of the account owner’s death. However, minor children of an account owner fall into a special category of beneficiaries (called eligible designated beneficiaries or EDBs). Their mandatory ten-year payout period does not begin until they turn twenty-one, meaning the beneficiary must receive an entire inherited retirement account at age thirty-one. In the meantime, however, they are required to take required minimum distributions (RMDs), which will likely be held in a protected account overseen by their guardian or conservator, until they reach the age of majority in the state they live in (usually between the ages of eighteen and twenty-one). RMDs for these EDBs are based upon the child’s expected lifetime, and they must take them until the end of the calendar year that they turn thirty-one, at which time the retirement account must be fully distributed. It is important to note that the child will have to pay income taxes on any amounts distributed to them. This is usually favorable because the RMDs up until the year they turn thirty-one can be made in smaller amounts because of the long life expectancy of a minor and because they will likely be in a low tax bracket. However, the account must be emptied by the end of the calendar year in which the child turns thirty-one. Depending upon the size of the account, this could mean that the child will receive a large amount of taxable income at a relatively young age. In addition to the potential tax liability, one of the disadvantages of naming a minor child as the beneficiary of your account is that when they reach the age of majority (which could be as young as eighteen in your state), they will gain complete control of the funds and could choose to pull everything out of the retirement account right away, regardless of whether they are mature enough to handle that responsibility. 

Should You Name a Trust as a Beneficiary of the Retirement Account and Your Child as the Beneficiary of the Trust?

Another option is to create a trust for your child and to name the trust as the beneficiary of your retirement account. This option can work for see-through trusts that meet certain criteria under the law and allow the applicable beneficiaries of the trust to be treated as the beneficiary of your retirement account. There are two types of see-through trusts you can consider: conduit trusts and accumulation trusts.

Conduit Trust

A conduit trust requires all RMDs made from the retirement account to the trust to be distributed to the child (or used for the child’s benefit) as soon as the trust receives it. The trust will provide asset protection and tax deferral for the funds that remain in the actual retirement account. In addition, the terms of the trust can ensure that once the child reaches the age of majority in your state, they will not be able to simply withdraw the entire balance remaining in the retirement account all at once. The trustee can also have discretion to withdraw funds from the retirement account in addition to the RMDs, which would then be distributed to or for the benefit of the child, but these decisions about additional withdrawals will be made by the trustee, rather than the child. Although the remaining balance must still be fully distributed to the child by the end of the calendar year in which the child turns thirty-one, until that time, the conduit trust will provide asset protection, tax deferral, and additional time for your child to mature and learn how to handle the money responsibly before receiving a potentially large sum of money.

Accumulation Trust

An accumulation trust, unlike a conduit trust, provides the trustee with the discretion to decide whether to pay out the RMDs to the child (or for the child’s benefit) from the retirement account or to retain the funds in the trust. As a result, the full amount of the funds distributed from the retirement account to the trust can stay in the trust and can potentially be protected from claims made by outside creditors. An accumulation trust will enable you to ensure that the funds are not distributed to your child sooner than necessary or desired and that the child does not gain access to the entire amount in your retirement account as young as eighteen. However, the funds must still be fully withdrawn from the retirement account by the end of the calendar year in which your child turns thirty-one. Any funds retained by the trust instead of distributed to your child will be taxed at the much higher tax rates applicable to trusts rather than the lower rate that is likely to be applicable to your child.

We Can Help

There are pros and cons for each option, and the one that is best for you and your child will depend on your unique circumstances and goals. We can help you think through whether asset protection, tax minimization, or another goal should be your priority. If you already have made your minor child a beneficiary of your retirement account or have set up a trust as the beneficiary of your retirement plan for the benefit of your children, it is important to review and update your beneficiary designations and your trust if needed. Some recent changes in the rules that govern these important accounts will have a big impact on when the funds must be distributed—and may necessitate a change in your plan. Please call us to schedule an appointment so we can help you think through the best plan for your retirement accounts, as well as any other estate planning concerns.

Although cryptocurrency may be one of the latest investment strategies with great potential, for some individuals and their loved ones, investing in cryptocurrency has not gone as planned. The following stories are each a little different, but they all underline one simple warning: if you own cryptocurrency, you need a plan.

Impact of Volatility on Estate Administration

Matthew Mellon, an investor and businessperson who was a member of two prominent families, the Mellons and the Drexels, died in April 2018. At the time of his death, his estate was estimated to be worth approximately $200 million. Much of his wealth came from a $2 million investment in the cryptocurrency XRP, managed by the company Ripple. 

Mellon died with an outdated will that did not mention his cryptocurrency. It was later discovered that he kept the keys to his cryptocurrency on various devices throughout the country and under other people’s names. Fortunately, his lawyers were able to access his cryptocurrency by working with Ripple. However, it is extremely rare for anyone to be able to access cryptocurrency without a plan.

Because the value of the XRP fluctuated by approximately 30 percent in the weeks after Mellon’s death, it was crucial that the XRP be liquidated quickly to pay his outstanding debts, income tax obligations, and estate tax. However, Mellon had entered into an agreement with Ripple that limited the amount of XRP that could be sold at a given time. This delayed the wrapping up of his affairs. By the end of 2019, his estate was worth less than half of the original value at his time of death because the XRP had lost about two-thirds of its value.

Had Mellon been up front with his trusted decision makers and advisors, they might have been able to craft a plan that provided his estate with the necessary funds to pay his outstanding obligations without having to rely primarily on the XRP. Additionally, if his plan had made it easier for his fiduciaries to gain access to the cryptocurrency, they might have been able to start the sell-off sooner, when the value was higher.

Forgetting Your Password Can Be Expensive

Stefan Thomas, a software developer, was an early adopter of Bitcoin. In fact, he created a video in 2011 about how digital currency works and was awarded 7,002 Bitcoins. To store his Bitcoins, Thomas used a USB hard drive known as an IronKey that contained his digital wallet. Later that same year, he lost the password to his IronKey. IronKey allows only ten attempts to enter the password before it is encrypted forever. As of January 2021, he had only two attempts remaining. Although the value of Bitcoin has dropped significantly, his Bitcoin is still worth well over $100 million dollars. Unfortunately, unless he remembers his password or is somehow able to get around it, he will never see that money.

This should serve as an important lesson for all of us. Items that require a password do so for a reason. However, we cannot always assume that we will remember it or that someone else will be able to retrieve it for us. You must have a system in place to make sure that you or your trusted decision makers can access your passwords when necessary.

Dead and Gone

Matthew Moody, a miner of Bitcoin, tragically passed away at the age of twenty-six in a plane crash. At the time of his death, he owned Bitcoin that he mined. However, no one, not even his parents, knows how to go about finding it. No one knows how much he owned, where it was stored, or how to access it. Depending on how much he owned at the time of his death, this could be a nice sum of money for his loved ones; but because Moody did not share this information with his family and, like most twenty-somethings, did not have an estate plan, it will remain a mystery to his family.

While it may be easy for your loved ones to determine most of what you own at the time of your death by going through your mail, searching your computer, or looking through your residence, cryptocurrency can be a lot harder to find. Depending on the type of wallet you use, it may not be obvious to your loved ones that you own something of potentially high value. This is why it is important that you have a plan for your cryptocurrency. A trusted person needs to know that you own cryptocurrency, the type you own, how it is stored, how to access it when necessary, and what your wishes are for it after your death. Failing to address this planning will leave your family without a clue as to what you truly owned at your death. 

Cryptocurrency is an amazing advancement for secure and private transactions. This groundbreaking investment strategy has the potential to forever change how we view money and financial transactions. Because it is so new, finding and managing cryptocurrency may present some barriers. To best protect yourself and your loved ones, we encourage you to speak with a trusted advisor to craft your cryptocurrency plan.

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Footnotes

1. Grace Ferguson, How a cryptocurrency fortune crippled a deceased billionaire’s estate, The Daily Dot (Dec. 23, 2021), https://www.dailydot.com/debug/death-internet-cryptocurrency-matthew-mellon/.
2. This man owns $321M in bitcoin — but he can’t access it because he lost his password, CBC Radio-Canada (Jan. 15, 2021), https://www.cbc.ca/radio/asithappens/as-it-happens-friday-edition-1.5875363/this-man-owns-321m-in-bitcoin-but-he-can-t-access-it-because-he-lost-his-password-1.5875366.
3. Steve Marshall, The latest gamble to recover man’s lost Bitcoin fortune, A Current Affair, 9 Now, https://9now.nine.com.au/a-current-affair/bitcoin-software-developer-stefan-thomas-fortune-rising-forgotten-millions/1e0f32bb-62ed-464c-8ac1-63716779bdfe (last visited Dec. 2, 2022).
4. Bitcoin Price, CoinDesk, https://www.coindesk.com/price/bitcoin/ (last visited Nov. 23, 2022).
5. Bloomberg News, Legislation is needed to help heirs access bitcoin accounts, Investment News (Feb. 18, 2022), https://www.investmentnews.com/legislation-is-needed-to-help-heirs-access-bitcoin-accounts-73449.

Although we would all like to believe that our family and loved ones will honor our wishes as expressed in our estate plan, contests are more common than you might think. Sometimes, a family member does not receive what they thought they would after a loved one passes away. To try to get what they think they are entitled to, they may file a lawsuit alleging that the person who made the will (the testator) or trust (the grantor) was not mentally competent to create it. There is a heightened risk that your estate planning documents will be challenged if you disinherit someone who ordinarily would have received money and property at your death or if you have been diagnosed with a medical condition that will slowly decrease your mental capacity. If a court finds that you did not have the mental capacity to sign your estate planning documents, the documents will be invalidated. Your money and property will be transferred to the people identified by state law, who may not be the individuals you would have chosen.

In most states, there is a legal presumption that people have capacity to create their estate planning documents and that they can transfer their property to whomever they would like. This means that the person challenging your plan has the burden of proving that you did not have capacity at the time your documents were signed. Nevertheless, there are some proactive steps you can take to provide evidence that you were competent when you created or updated your estate plan. 

Get a doctor’s evaluation. As close in time to signing your estate planning documents as possible (optimally the same day), ask a doctor (preferably your primary doctor or a specialist in cognition such as a neurologist) to evaluate your mental capacity and document their opinion in writing. As your attorney, we can provide information to educate the doctor about the standards that must be met to have capacity to execute your estate planning documents. This will assist them in determining and documenting whether you have the necessary competency.

Make a gift. If you plan to disinherit or provide a proportionally smaller inheritance to a family member than they expect, consider making a gift to the family member close in time to when you sign your estate planning documents. If the family member accepts the gift and wants to keep it, they are admitting that you had the capacity to make the gift. If you had capacity to make the gift, you more than likely had capacity to sign your estate planning documents. This strategy will only work if your state’s rules regarding the capacity needed for making a gift and signing the will or trust that gives away your money and property are the same. If a higher level of capacity is needed to sign a will or trust than to make a gift, this strategy will not work for you.

Document the reasons for your decision. If you are disinheriting a child or other family member or providing an inheritance that may be less than they expect, tell your estate planning attorney the reasons for your decision. It may also be prudent to write down those reasons and record the names of other people you have told about your decision, such as friends or financial advisors. You can keep a copy of this document with your will, and it may be evidence of the rationale and deliberation underlying your decision. However, it is important that you not list these reasons in your will or trust to avoid further complications during the contest.

What Standards Must Be Met to Show Mental Competence?

Under state law, there is a certain level of understanding that you must have at the time you sign your estate planning documents. Even if you do not have the required level of mental competence before or after you sign your documents, if you are competent at the exact time you sign them, your documents will be valid. This is an important point because, for example, individuals who suffer from dementia may still be mentally competent when signing their estate planning documents if they have days of lucidity or times of day when they are more lucid. 

Having the mental competence to sign your documents does not mean you must understand all the legal terminology that those documents contain, but rather, that you have a basic understanding of what you are doing when you sign. Depending upon your state’s law, there may be different standards for determining capacity depending upon the type of document you are signing. Listed below are what you may generally see in a state’s laws.

Wills. There is a relatively low threshold for showing mental competence (typically called testamentary capacity) to sign a will. To have the capacity to make a will, you simply must be able to know (1) generally what type and how much property you own (actual knowledge of every piece of property is not required), (2) generally who you plan to leave your property to (it is not necessary for you to be able to name every relative that may benefit), and (3) that the will transfers your property upon your death. 

Lifetime gifts. Although some states apply the same standard that is applicable to wills to lifetime gifts, others apply a stricter standard. In states that apply a higher standard to gifts, you must satisfy the threshold for testamentary capacity, and you also must understand the financial impact of your gift—this means its effect on your future financial security or the financial security of those who are dependent on you.

Trusts. Some states apply the same rules to trusts that are used to determine the capacity to make a will, but others apply the more stringent threshold that is used to determine the capacity to enter a contract. If this stricter threshold for contracts is used, the person creating the trust must be able to understand the nature of the transaction, including the rights, duties, and responsibilities created or affected by the trust, its significance, the consequences for the creator of the trust and others affected by its creation, and the risks and benefits involved in the transaction. 

The applicable standard may also vary depending on the type of trust at issue. A testamentary trust (i.e., a trust that is created by the terms of a will) may be evaluated using the same less stringent standard applied to determine the capacity to make a will. The lower threshold applicable to wills may also be applied to a revocable living trust, which can be revoked or amended during your lifetime. In contrast, the higher threshold applicable to contracts may be used to evaluate capacity to establish an irrevocable trust, which cannot be amended or revoked.

Give Us a Call

If you are concerned that someone may be dissatisfied with their inheritance and may attempt to challenge your plan, there are steps you can take to avoid lawsuits or conflicts after you pass away, including measures aimed at proving your mental competency at the time your estate plan was created. Please contact us so we can assist you in creating or updating your estate plan before serious competency issues arise.

When you form a trust as part of your estate plan, one of the most important decisions you will make is who will oversee the trust’s management when you are no longer able to manage it (also known as your successor trustee). Because a trustee’s work may be time-consuming, complicated, and risk liability, many people who create a trust consider naming a professional fiduciary as their trustee. Keep in mind that if you ask your estate planning attorney to serve as your successor trustee, you should ask for a separate engagement letter from the one you sign engaging them to create your estate plan. When looking to hire a professional to serve as your trustee, the following are several red flags you should keep in mind.

Do They Have Adequate Resources?

A professional’s agreement to act as your trustee does not guarantee that they have the resources needed to administer your trust properly. Be proactive about asking questions. Trust administration is an important job, and you should satisfy yourself that the person you appoint as your trustee is well-equipped to fulfill the role. The following are some of the important functions you should ask the professional about:

• Bookkeeping. The professional you hire should have a good system for trust accounting. Trust funds must be held in a separate account that is not commingled with their business’s funds, and there must be a system in place to keep separate records of income and principal, disbursements from the account, receipts, capital transactions, and more. The professional trustee has a duty to provide information to the trust’s beneficiaries, and current income or principal beneficiaries are entitled to a detailed accounting to enable them to have a full understanding of the trust’s transactions, accounts, and property. Your trust’s funds must only be used for your matters: the professional must not use one client’s funds for the benefit of another client or to cover expenses for another client. 

• Additional recordkeeping. The professional must be equipped to handle many other recordkeeping responsibilities as your trustee, including preparing tax returns (even if they are hiring someone else to do this), handling trust-related correspondence, and keeping records of steps performed to ensure that discretionary distributions from the trust were proper. This includes information provided as a justification for a distribution request.

• Adequate staff. A professional trustee may administer multiple trusts at the same time. As a result, it is important for their business to have enough trained and experienced staff members who are knowledgeable about trust administration to perform the necessary tasks.

Is the Trustee Accessible?

Does the trustee you are considering have enough time in their schedule to handle the responsibilities required by the trust? It is important for a trustee to be responsive and accessible, especially when the terms of the trust provide for thoughtfully evaluated distributions, such as for a beneficiary’s health, education, maintenance, and support. The beneficiary and trustee will need to communicate often if distributions are likely to be made on a regular basis. For example, if a beneficiary of the trust requests a distribution to help pay for a medical procedure, the trustee should be able to respond in a timely way, without requiring multiple phone messages or repeated requests. 

Administering a trust can be time-consuming, especially if a trust has a complex distribution scheme. For example, if a special needs trust is involved, significant attention and knowledge of the beneficiary’s needs will be necessary to ensure that distributions are properly made so that governmental benefits are not lost due to mistakes in the administration of the trust. In addition, if a trust is designed to care for a beneficiary who has an addiction and distributions are to be made to support recovery, the trustee must become familiar with the situation and be willing to spend the time needed to administer the trust in the beneficiary’s best interests. If trust administration is only a small part of the trustee’s business, they may not have the time needed to handle the tasks required, including communicating with beneficiaries and other relevant parties.

Does the Trustee Have a Succession Plan?

If the trust will continue for many years, it may not be prudent to hire someone who will retire soon, especially if your trust beneficiaries are minors. Regardless of the age of the trustee, it is important to ask if the trustee has a succession plan in place, because no one can work forever. Although the terms of your trust should address who will act as a successor trustee if the trustee you initially appoint is unable to continue in the role, if your trust gives the trustee the power to designate a successor, you should ask who will step into their shoes if something happens to them.

Is the Trustee Willing to Work with Other Advocates for Your Beneficiaries?

In some situations, for example, if a beneficiary is a minor or has special needs, the trustee will need to cooperate and communicate with other caregivers. In the case of a special needs trust, for example, the beneficiary may be incapable of safeguarding their own interests. In such a situation, it is essential that there be a caregiver or advocate who can effectively communicate the needs of the beneficiary to the trustee. The trustee must have the time and willingness to maintain regular contact with those advocates.

Once you choose a professional trustee you feel comfortable with, be sure to notify them that they have been named as trustee, even if they will not have to act until you are no longer able or have passed away. Your decision to name a particular professional as trustee does not mean they must accept that position. Because being a trustee is an important role with many responsibilities and demands, notifying your choice now will avoid problems later if the professional you have chosen does not want the job, particularly if you are no longer around to appoint someone else. If your initial choice declines after you notify them, you can appoint another trustee you have vetted rather than forcing your beneficiaries to go to court to resolve the matter, which may be expensive and time-consuming.

We understand how important it is to choose the right trustee. If you need help choosing a trustee or would like us to meet with your chosen trustee to explain their role in your trust, please give us a call.

Life is full of contingencies. While some outcomes are relatively certain, other events are more difficult to predict. This uncertainty can create estate planning challenges. Because life changes quickly and sometimes unexpectedly, your estate plan needs to be flexible. 

You can make changes to your estate plan when you are still alive, but when you pass away, your plan is effectively—but not entirely—set in stone. Incorporating milestones into your estate plan is one way to hedge against the unpredictable future. By creating incentives for particular events, you can continue to exercise your values and provide for your loved ones beyond your lifetime. 

Clarifying Your Wishes with If-Then Statements

If-then statements allow outcomes to be determined with conditions. They are found in deductive logic, computer programming, and legal documents, including estate planning documents. 

The premise of an if-then statement is simple: if a given criteria is met, then a certain action follows. For example, you might write in your will that, “If my spouse predeceases me, then I leave my house to my oldest son,” or, “If both my spouse and I pass away, then [Person X] will be nominated as guardian of our children.” 

Such clauses can help you retain some power over outcomes that would otherwise be out of your control. They can also help you to plan for future contingencies in a way that is not possible with simple declarative statements (e.g., “I leave my house to my spouse.”). 

If-then clauses can be combined to account for numerous future possibilities. So, in addition to “If my spouse predeceases me, then I leave my house to my oldest son,” you could specify that “If my son is not employed, then I put my home in a trust to be managed by [Trustee Y].”

Common Beneficiary Milestones Used in Estate Plans

Conditional provisions that offer enhanced flexibility to your estate plan can take many forms. These provisions do not always have to be if-then statements. They can also include gifts or distributions that are triggered at specific times or milestones. 

The following are some events that you might consider incorporating into your estate plan: 

• A child turning eighteen or twenty-one. A child celebrating a milestone birthday could trigger an action in your estate plan, such as the child receiving distributions from a trust to which they are a beneficiary. 
• Completing a degree or certificate. A gift in your will might be conditioned upon the beneficiary graduating from college or earning a professional certificate. 
• Purchasing a first home. You could give some or all of a bequest to a beneficiary when they purchase their first home. 
• Financing a first wedding. Parents typically pay for most wedding expenses.¹ A clause in an estate plan can direct wedding money to a child the first time they tie the knot. 
• Employment. You might hesitate to leave money to a beneficiary who is bad with money or has a poor employment record. As a compromise, you can base their inheritance on being fully employed for at least a year. 
• Sobriety. Like an employment clause in your estate plan, there can be a clause that releases an inheritance only if the beneficiary has stayed sober for a certain length of time such as a year or has successfully completed a rehab program.  
• Having children. Having a child is expensive. To help with the expenses of childbirth and childrearing, include an estate planning provision that kicks in extra money to a family member when they give birth, adopt, or require assistance with reproductive technology, such as in vitro fertilization. 
• Retiring. Approximately two-thirds of Americans are not financially prepared for retirement. If you want to ensure that a beneficiary continues to work but can retire comfortably at an appropriate age, reward them with a lump sum inheritance to be used once they reach retirement age. 

Keep in mind that these estate planning milestones can be combined and modified as you wish. For example, you might give wedding money to a child, but keep the rest of their inheritance in a trust so that if your child gets divorced, the money and property you pass on will not end up in the hands of their ex-spouse. 

Another option is to set up your estate plan to direct more money to someone if the value of a certain account or property rises. Or, if the account overperforms, the increase in value could be donated to a charity of your choice. You could also use an if-then statement to provide that a beneficiary receives an extra gift only if they meet a certain milestone. The options are nearly endless. 

Now Is the Time to Plan for the Future

Populating your estate documents with numerous if-then clauses and milestones can make things more complicated. But it might give you greater peace of mind knowing that numerous potentialities have been anticipated. 

It is crucial to make sure that everything is in writing. Your estate planning attorney can create a diagram or flowchart that helps you keep track of all the moving pieces. Having a chart—rather than a jargon-filled legal document—can make it easier to review and update your estate plan if there is a major life event, such as a death, birth, marriage, or illness). 

Whatever you decide to do, do not put it off. Act now to create a plan that provides for your loved ones while honoring your wishes. Schedule an appointment with our estate planning attorneys to get started.

Footnote

1. Kim Forrest, Who Pays for the Wedding? Here’s the Official Answer, WeddingWire (May 21, 2021), https://www.weddingwire.com/wedding-ideas/who-pays-for-what-in-a-wedding.

One of the more uncomfortable aspects of estate planning is deciding what will happen to your child if both you and the child’s other legal parent were to die unexpectedly. While the odds of this happening are low, the consequences of not naming a legal guardian in your will or a separate document can be significant, since a court would have to choose somebody to care for your child without your input. 

In our globalized and mobile world, it is not uncommon to have close friends and family members who live in a different country. Some of these individuals may be a good choice as a guardian for your minor child, but it raises the question of whether a non-US citizen may legally qualify for guardianship. The short answer is that your child’s guardian does not necessarily have to be a US citizen or a permanent resident. However, it is ultimately up to the court to approve a guardian. 

When deciding whether to approve the individual you nominate for guardianship, the court looks at several factors, including the individual’s residency or citizenship status. A person who is not legally permitted to live in the United States may not be automatically dismissed by the court if they are otherwise a strong guardian candidate, but if that person is also named as your child’s trustee, there could be tax complications. 

How Guardianship Works

As a parent, you are legally responsible for supporting your child until they reach the age of eighteen. This means ensuring that they receive medical care, education, food, housing, and clothing. If you were to unexpectedly die or become incapacitated, somebody needs to step in and fulfill your parental duties. 

Normally, this would be your child’s other legal parent. But maybe the other parent is not able to step up because they are deceased or unable to care for themselves. There is also the possibility—no matter how remote—that you and your child’s other legal parent will both die or suffer disability at the same time or within a short period of time. What happens to your child then? Who will provide the care that you are no longer able to provide?

The adult who steps into your shoes in this situation is known as your child’s guardian. Somebody like a grandparent, sibling, or close friend might be a good choice to fulfill this role. Ideally, it should be somebody you trust to raise your child the way you want them to be raised and who is willing and able to do the job. 

Parents should name a guardian—or ideally, a list of several potential guardians in case your first choice does not work out—in their estate plan. Surprisingly, around 60 percent of Americans do not have a basic will, let alone a detailed estate plan. Without written instructions about who should care for your child in your place, the matter is left up to the state. The court could choose a guardian for your child. If nobody from your family is willing or available, your child might even end up in the foster care system. 

But it is important to note that, even if you have a will and name a guardian, it is still ultimately up to the court to decide if that person is qualified to serve in that role. In other words, the guardian named in your will is just a candidate. A family member could challenge your nomination in court and attempt to install an alternative, or the court may decide on its own that a guardian is unqualified. 

Non-US Citizens Not Necessarily Disqualified from Guardianship

When evaluating a guardian candidate, the court assesses whether they meet guardianship qualifications under state law. These qualifications typically include a person’s age, criminal record, lifestyle, physical and mental capabilities, and financial situation, but they can vary by state. 

For example, Illinois requires guardians to be at least eighteen years old, be of sound mind, not be legally disabled, not have a felony conviction involving harm or threat to a child, and be a resident of the United States. But being a US resident is not the same as being a US citizen. A resident could be somebody who obtained a green card (i.e., a Permanent Resident Card). According to Illinois Legal Aid, some state courts will also appoint undocumented immigrants as guardians. 

The court will consider the best interests of the child when appointing a guardian. Nominating somebody who does not have a lawful US status, or who lives outside of the country, could raise the following questions with the court: 

• Does the appointment of the guardian mean taking the child outside of the country to live?
  • If so, is that country a safe and suitable location for the child?
  • What will the legal status of the child be in the new country and how will that impact them?
  • Does the child have ties with the proposed country? Do they speak the language? Have they visited before?
• Can the non-US citizen guardian travel to the United States and remain in this country for the guardianship legal process? Are there any legal issues that prevent them from obtaining a visa for this purpose?
• Could the guardian move permanently to the United States and gain lawful status to remain here and raise the child?

Context is everything in these cases. For example, if you were born and raised in the United States and most of the child’s family lives here—but you nominate a guardian that lives outside of the country—the court might decide that it would be in the best interest of the child to remain stateside. If, on the other hand, you were born and raised outside the United States and all of your family lives outside the United States, a guardian from your home country could make sense. 

If you plan on choosing a non-US resident or noncitizen for your child’s guardian, you should provide detailed reasons for doing so in your will or separate nomination of guardian document. On the surface, your choice might not make sense to a court. But compelling arguments—like strong personal ties and a desire for your child to grow up with certain values—could help make your case. 

Legal Guardian versus Guardian of the Estate

The person in charge of raising your child is known as a guardian of the person in some states. The person in charge of administering the finances you have set aside for your child is known as a guardian of the estate in some states. 

Sometimes, the same person serves as both a legal guardian and a guardian of the estate. The role can also be divided. A legal guardian may be a great caregiver but bad with finances, in which case it would make sense to take a team approach to childcare, with someone else appointed to handle the child’s financial matters. 

Another situation in which you might be hesitant to unify the role of legal guardian and the person managing the child’s financial matters is if the individual is not a US citizen and a trust has been set up for your child’s benefit. Having a foreign trustee could cause the trust to be classified as a foreign trust under US tax law. Being classified as a foreign trust triggers some problematic tax consequences, including potentially higher taxes, meaning less money for your child. Foreign trusts have additional reporting requirements as well. 

Making an Informed Guardianship Decision

As a parent, appointing a guardian is among the most important decisions you will ever make. Before making that decision, you should talk with an experienced estate planning attorney who can help you understand options and issues that may not have occurred to you. 

If you decide to choose a non-US citizen as your child’s guardian, our lawyers can advise you about factors to consider and help you identify at least one US-based alternate in case your first choice does not work out. We recommend reviewing your guardianship wishes, and your estate plan in general, every few years, especially after a major family event. 

To start planning for the future now, please contact us to schedule an appointment.

When planning your next great travel adventure, you may decide that you can do it yourself. You know what you and your travel companions want to see and do, how much you are willing to pay, and the most convenient times to travel. While making travel arrangements may be okay to do yourself, you need to consider calling in a special planning team to make sure that you and your loved ones are protected during your travels and afterward. The following are some individuals you should schedule appointments with before you leave on your next adventure.

A financial advisor can help ensure your finances are in order and accessible. When traveling, you must make sure that you have access to your money and can reach your financial advisor if necessary. If an emergency arises, access to your funds is crucial. Additionally, while traveling, you may want to make a large purchase. But what happens if the item you want to buy exceeds the amount you brought with you? You may need a financial advisor’s assistance to gain access to your money to buy your once-in-a-lifetime memento. 

An insurance agent can help you review or obtain necessary insurance policies. First, if you have existing life insurance policies, it is important that you periodically review your policies and beneficiary designations. Preparing for a vacation is a great time to conduct this review. As you are reviewing your policy, consider the following questions:

• Who is listed as the primary and contingent beneficiaries? 
• Do you want to make any changes? 
• Does your beneficiary designation match your existing estate plan (especially if you have a trust and intend the trust to be the primary beneficiary of the life insurance policy and to govern how the policy proceeds are handled)? 

It is also important to know if participation in high-risk activities (skydiving, bungee jumping, rock climbing, etc.) will void your coverage under the life insurance policy. If this is a concern, you may want to reconsider your participation in such activities.

Second, travel insurance is an important level of protection that you may want to investigate. Because international travel can be more complicated than domestic travel and have more variables out of your control, travel insurance can help prevent additional costs that you could incur in the event of an unforeseen circumstance.

Lastly, you should check with your health insurance carrier to see if your health insurance plan covers your care in a foreign country. If not, it may be advisable, depending on the duration of your trip, to buy a temporary form of health insurance that will be valid in the country or countries you will be visiting.

A tax professional can help educate you on potential tax liability. When traveling abroad, you will be subject to the taxes of that country. If you are considering making any large purchases, it is especially important that you understand the potential impact. For example, countries that are part of the European Union may add a Value Added Tax on purchased items. However, you may be able to get a refund of this tax from the country you are visiting by completing the necessary paperwork and providing receipts. 

In addition, when returning to the United States, it is important to understand whether you will have to pay duties on your purchased items and how much that might cost. These rates could vary depending on the purchase price, where you made the purchase, and the type of item that was purchased.

An estate planning attorney can make sure that your wishes are properly documented. When people think about estate planning, they think about death. While a large part of estate planning does deal with death, proper planning can also benefit you while you are alive. By working with an experienced estate planning attorney to create a financial power of attorney, we can make sure that you have a trusted decision maker in the United States that can manage your financial affairs without court involvement. The world does not stop just because you are on vacation. Should you need something while you are away (e.g., a check deposited, legal documents signed, etc.), your chosen person can step in for you.

We can also ensure that you give the maximum authority to the person you have chosen to care for your minor children while you are away by preparing the appropriate state-specific documentation. This document will temporarily allow your chosen caregiver to make medical and other important decisions for your child. Should your child need to go to the hospital or have a field trip permission form signed, the chosen caretaker will be able to step in and keep your child safe, happy, and healthy.

Traveling the world can be an exciting adventure. By assembling a planning team, you can help make sure that you and your loved ones are fully protected while you are having the time of your life. We are here to assist you and any members of your planning team to ensure that your next great adventure is a success. Get in touch with us today.

Getting ready to embark on your next great adventure? Before you zip up the last suitcase, here are five issues you need to address to protect yourself and your loved ones.

Do you have a foundational estate plan? Has it been reviewed?

An estate plan is a set of instructions memorialized in legal documents that explains to your trusted decision makers and loved ones your wishes about your care, the care of any dependents, and how your money and property should be handled.

Last will and testament

Depending on your unique situation and needs, you may have a last will and testament (also known as a will) as the foundation of your estate plan. This document allows you to name someone to wind up your affairs (i.e., gather your belongings for safekeeping, create a list of everything you own, pay your outstanding bills and taxes, and give the remainder to the individuals and charities you have chosen). You can also name a guardian for your minor children if you have any. Because a will takes effect only at your death, using a will to outline your wishes will likely still require your loved ones to go through the probate process (a court process that can be expensive, time-consuming, and public) to carry them out.

Revocable living trust

On the other hand, you might have a revocable living trust as the basis of your estate plan. A revocable living trust is an entity that owns your accounts and property. In order for your trust to own your accounts and property, they will either be retitled in the name of your trust (instead of in your sole name) or the trust will be named as the beneficiary that will receive money and property at your death. Your trust instrument provides your chosen decision maker (trustee) with instructions for how to operate the trust. In the beginning, you can serve as the trustee of your own trust, which means that you are still able to control what happens to the accounts and property owned by the trust. Additionally, you can continue to benefit from the accounts and property because you are also a trust beneficiary. In the event you are unable to manage the trust (i.e., are incapacitated) or you die, someone you have chosen ahead of time can step in as trustee and continue managing the trust for your benefit (if you are still living) or for your chosen beneficiaries (at your death), without court involvement. Because the trust will be the owner or beneficiary of almost everything, for probate purposes, you will die owning nothing. If you own nothing in your sole name, there is nothing that has to be transferred through the probate process. A trust becomes effective as soon as you sign the trust agreement. 

Review your documents

Because life circumstances often change, it is important that you periodically review your existing estate planning documents. Do they still reflect your wishes? Have there been any major changes in your life that might necessitate another look at your documents? Also, if you have a revocable living trust as part of your estate plan, it is crucial that any accounts or property that are supposed to be owned by the trust have been properly retitled and, if there are any accounts or property that should name the trust as a beneficiary, the appropriate paperwork has been completed.

Can someone manage your financial affairs when you cannot?

If you are out of the country, it will likely be more difficult to handle your personal financial matters (e.g., writing a check for rent, following up on an insurance claim, etc.). However, just because you are unable to do these things does not mean that no one else can do them for you. 

A durable financial power of attorney enables you to name a trusted decision maker to handle your financial matters. When crafting a financial power of attorney, your estate planning attorney will discuss when you want the document to be effective. In some states, you can choose to give your trusted decision maker the authority to act on your behalf immediately or only upon the occurrence of an event (which is usually a determination that you are no longer able to manage your own affairs). In the case of international travel, you may want to consider giving the power immediately so that your chosen decision maker can respond as soon as there is an issue, regardless of whether you are capable of making a decision for yourself. In addition, you can tailor how much authority you give your chosen decision maker in the financial power of attorney. You may want to limit the person’s authority to actions related to a specific transaction, such as a real estate closing, or you may want to allow that person to carry out almost anything you could do for yourself. This is a personal decision based on your unique circumstances.

How will you manage your health while you are away?

Even the healthiest person can develop a health issue while traveling. This is why it is important for you to choose a trusted decision maker to make medical decisions for you. A standard estate plan typically includes a medical power of attorney that appoints a person to make medical decisions, a living will or advance directive document that gives instructions for your end-of-life wishes, and a HIPAA authorization form that grants named individuals the right to obtain your private healthcare information. These forms can be state-specific and may not be accepted in another country, so if you are traveling internationally and will be staying in a particular country for a long period of time, it may be beneficial to look into how to name a medical decision maker under your vacationing country’s laws.

Another thing to consider is whether your health insurance will be accepted overseas. In some cases, your health insurance may be valid only in the United States. It is important that you research this and, if necessary, look for a short-term policy that will cover you while traveling.

Speaking of insurance, do you have adequate insurance?

In addition to health insurance, there are two other types of insurance that may be important for protecting yourself while you are traveling. First is travel insurance. International travel can be more complicated than domestic travel, and having additional insurance can help you navigate the curve balls life can sometimes throw at you. Depending on the cost of your trip and the items you are taking, getting travel insurance may save you money in an emergency.

Life insurance is also important to have and review. It is essential to fill out your beneficiary designations correctly so your loved ones will receive what you want in the way you want. It is also important to review the policy terms to see whether any of the activities you want to engage in while on vacation will void your coverage. Sometimes insurance companies will not pay out if the insured has engaged in extreme activities like bungee jumping, skydiving, and scuba diving. This means that if you are in an unfortunate accident while engaged in one of these activities, your loved ones may receive nothing.

What arrangements have you made for your minor children?

If you have minor children, taking care of them does not stop when you go on vacation. If your minor children will be traveling with you, they will likely require a passport. It is important to remember that a passport for a child needs to be renewed more frequently than a passport for an adult. Also, some countries may require proof that you are the children’s parent or legal guardian. With the threat of international kidnappings and human trafficking, customs officers want to ensure that children remain safe when traveling internationally.

If your minor children will be staying with someone while you are traveling, it is important that you have the proper documentation in place so the chosen adult can fully care for your children. Many states have a document that will allow you to designate someone to make medical and other decisions on your minor children’s behalf on a temporary basis. The document’s name and effective duration can vary by state, but having this document can ensure that whomever you leave your child with will be able to fully care for your children in your absence. 

Additionally, whether you are traveling or not, it is important that you have a last will and testament that designates someone to care for your minor children in the event you and their other legal parent die or are unable to care for them. Some states allow you to name someone to care for your minor children in the event you die or are otherwise unable to care for them in a document other than a last will and testament, such as a durable power of attorney or nomination of guardian. Although these documents will not avoid court involvement, they will help ensure that your wishes are honored.

We know that preparing for international travel has a lot of moving parts. We want to offer our assistance to ensure that you are properly protecting yourself and those you love during your amazing journey. Give us a call to schedule an appointment before you go.

The notion that your estate plan contains a defect would not normally be welcomed as good news. But despite the moniker, an intentionally defective grantor trust (IDGT) can be an advantageous tool for minimizing estate taxes and maximizing the money and property that are passed on to a spouse, descendants, or other beneficiaries. 

The defect in this case refers to trust provisions that make the grantor (the person creating the trust)—not the trust—the trust owner and therefore liable for trust income taxes. By not having annual income taxes come directly out of the trust’s money and property, more value remains for beneficiaries. Further, the appreciation of accounts and property is excluded from the trust owner’s taxable estate.

How an Intentionally Defective Grantor Trust Works

Typically used by wealthy families to preserve intergenerational wealth, IDGTs are a type of irrevocable trust best suited to holding appreciating assets, such as real estate and securities. 

These assets are held outside of the grantor’s estate for transfer tax purposes (gift and estate tax), but for federal income tax purposes, they are treated as though they are owned by the grantor. Thus, the grantor pays income tax on the appreciation of the assets placed in the trust, but the appreciation of those assets is excluded from the grantor’s estate, which amounts to a tax-free gift to the trust. In other words, once the assets are placed in the trust, their value is effectively frozen. Any appreciation that occurs does so outside of the grantor’s estate. 

The “defective” part of this arrangement is the intentional inclusion of a right of power that results in the grantor being treated as the trust owner from an income tax standpoint. These powers are found in §§ 671–679 of the Internal Revenue Code and include the right to take the following actions: 

• Reacquire assets already placed in the trust and substitute them for other assets 
• Take loans from the trust
• Change the beneficiary of the trust 

As an example, suppose the grantor wants to set up an IDGT to benefit the grantor’s children. The grantor funds the trust with $10 million in assets that earn 5 percent annually. Over thirty years, the $10 million initial investment would grow to $43 million.¹ If those same assets were held in a nongrantor trust, that $10 million would grow to only $24 million as a result of the trust paying income taxes on the assets. As a result, assets held in an IDGT would be worth almost $20 million more over the thirty-year period. 

At the time of transfer (i.e., when the grantor dies and the trust transfers to the beneficiaries), only the initial $10 million investment—not the current $43 million value—counts towards the federal unified gift and estate tax exemption ($12.06 million in 2022). Transfers that exceed this amount are taxed at 18–40 percent. 

Even better, as time passes and the value of the trust assets continues to grow, the tax-free benefit of this growth only increases. As an added benefit, the assets placed in the IDGT enjoy protection from creditors and other parties, such as the spouse of a divorcing beneficiary. Plus, since the trust is a grantor trust, the grantor has some ability to control the trust during their lifetime. This differs from most irrevocable trusts that do not contain grantor trust provisions and which force the grantor to give up all rights and powers over the trust and its assets. 

Two Ways to Fund an IDGT

IDGTs can be funded in one of two ways: with a completed gift or an installment sale. 

• Funding an IDGT with a gift is the most common and straightforward way to place assets in the trust. It simply entails deciding which assets will be held in the trust and then making an irrevocable gift to the trust. This method is most beneficial for appreciating assets because it allows the grantor to pay income taxes on the assets over the years, but additional transfer taxes are avoided if the assets appreciate. However, the grantor may have to pay gift taxes on the gifted trust assets if they exceed the annual exclusion amount ($16,000 in 2022).²  
• Funding an IDGT with an installment sale is also an option. In this scenario, the grantor makes a small seed gift to the trust. Absent a guarantee of the note, a seed gift is necessary to give the installment sale transaction economic substance. An installment sale involves selling appreciating assets to the trust in exchange for an interest-bearing promissory note payable by the trust. The IDGT is a grantor trust, which means that the installment sale amounts to the grantor selling assets to themselves. The benefit of this arrangement is that any gains from the sale are tax-free. The grantor may choose to earn income from the installments or make interest payments to the trust and grow its value for the benefit of heirs. 

Important IDGT Legal Considerations

An IDGT can be set up as a dynasty trust (a trust spanning multiple generations) to provide for long-term wealth preservation that is not subject to estate taxes when the beneficiary passes away. But dynasty trusts cannot be established in every state due to the rule against perpetuities that limits how long a trust may legally exist. Some states, including Delaware, Nevada, and South Dakota, have eliminated the rule against perpetuities, while others have modified it. If you want to set up an IDGT as a dynasty trust, be mindful of state laws where you live. 

To fully realize the benefits of an IDGT, the trust must be properly structured. The Tax Adviser, a publication of the American Institute of CPAs, notes that an improperly structured IDGT could result in the trust being included in the grantor’s estate, which might increase the amount of estate taxes owed. This could happen, for example, if the grantor keeps certain powers over the trust. Another possible outcome of an improperly structured IDGT is that the trust would no longer be considered a grantor trust, eliminating the added flexibility that this type of trust gives to the grantor. 

A well-considered estate plan can contain tools like IDGTs that help maximize the money and property that are passed on to the next generation and protect family wealth. An IDGT can provide benefits to both grantor and beneficiaries but must be appropriately drafted and funded to get the most out of it. Some in the tax and legal community feared that the Inflation Reduction Act would lower the estate and gift tax exemption. While these provisions were not included in the law, funding an IDGT now at the current historically high exemption amounts might be a smart move. 

A basic estate plan that includes a will, powers of attorney, and healthcare directives is just the start. High-net-worth individuals may require a more sophisticated plan that involves tools like an IDGT. To discuss this unique type of trust and your unique estate planning needs with our attorneys, please schedule an appointment and let us know how we can help.

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Footnotes

1. Andrew Seiken, Maximize Next Generation Assets with Intentionally Defective Grantor Trusts, BNY Mellon, https://www.bnymellonwealth.com/articles/strategy/maximize-next-generation-assets-with-intentionally-defective-grantor-trusts.jsp (last visited Oct. 25, 2022).
2. Frequently Asked Questions on Gift Taxes, IRS.gov, https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes (last visited Oct. 25, 2022).
3. Barbara Bryniarski, Helping a Client Benefit from an Intentionally Defective Grantor Trust, Tax Adviser (Nov. 11, 2021), https://www.thetaxadviser.com/newsletters/2021/nov/helping-client-benefit-intentionally-defective-grantor-trust.html.

Among the superheroes, Batman is unique because he has no superpowers. Although he is trained in the martial arts and possesses a range of high-tech gadgetry that allows him to fight crime, Batman is entirely human. He does not have genetic mutations, X-ray vision, overpowering physical strength, flying ability, genius-level intellect, or any other god-like powers. 

But Bruce Wayne does possess something that is key to his moonlighting as Batman: money. As the heir to an enormous fortune, Wayne is one of Gotham’s wealthiest citizens. He is also a major philanthropist who donates money to various causes. While his philanthropy is overshadowed by his masked vigilantism, neither would be possible without the money left to him by his parents. 

Carrying on the family legacy means different things to different families. You probably do not want your heirs to follow in the footsteps of Batman—at least when it comes to crime fighting. You might, however, want to inspire them to the philanthropy of Bruce Wayne. If so, your estate plan should be structured in such a way that it gives your loved ones the finances—and the flexibility—to do good on their terms. 

Batman’s Birthright

Most superheroes are fated to become who they are due to forces beyond their control. Spiderman and the Incredible Hulk were the unwitting victims of radiation. The X-Men were born with genetic mutations that made them societal outcasts. Captain America received an experimental “super-soldier serum.” And Superman hailed from the alien planet Krypton. 

Bruce Wayne developed the ability to overcome powerful foes, but he does so primarily through his personal drive and ingenuity, with an assist from his family fortune, which he inherited at age eight when his parents, Martha and Thomas, were killed. Also instrumental in his development was Alfred, the family butler who became his legal guardian. Alfred looked after Bruce at the family mansion, Wayne Manor, while he was growing up.  

The Batman universe is vast, and there are different versions of this hero’s journey. In the Christopher Nolan cinematic trilogy, Bruce blames himself for his parents’ death and abandons Wayne Enterprises, the multibillion-dollar company his late parents bequeathed to him. Bruce then travels to the Far East and trains with Ra’s al Ghul and the League of Shadows, leaving Alfred to tend to Wayne Manor. 

After nearly a decade away from Gotham, Bruce returns and accepts his place as the rightful head of Wayne Enterprises, a vast holding company for his inherited wealth. Wayne Enterprises has numerous branches,¹ including Wayne Technologies, which Batman uses to acquire new crime fighting technologies, like the Batmobile, grapple guns, an armored suit, and explosives. Forbes ranks Wayne Enterprises as the eleventh-largest fictional company, valued at more than $31 billion.² 

Bruce Wayne as Philanthropist

There is plenty to suggest that, in addition to fighting bad guys in his Batsuit, Bruce Wayne used his billions to improve Gotham in other ways. 

The Wayne Foundation, a holding company for the Thomas Wayne Foundation and the Martha Wayne Foundation, addresses social problems. The Thomas Wayne Foundation is focused on medicine, and it funds free clinics throughout Gotham. The Martha Wayne Foundation supports arts and education, including orphanages and free schools.³ 

There are multiple examples of Bruce directing Wayne Foundation resources to help needy Gotham residents. These include funding drug rehab clinics, rebuilding the city’s viaduct, and even sending money to an overseas refugee camp.⁴ Bruce Wayne has built hospitals, libraries, and orphanages, and every Wayne Enterprises employee has their college education paid for in full. 

Some have argued that Bruce could have better served Gothan by using his fortune to do more philanthropic work. Yet a pivotal part of the Batman mythology is Bruce’s conclusion that giving money away to charity did not get to the root of the corruption plaguing Gotham. Crime bosses like Carmine Falcone and the Joker cannot be bought. They rely on intimidation and operate outside of the law. As Bruce told Ra’s al Ghul in Batman Begins, Bruce’s desire is “to fight injustice. To turn fear against those who prey on the fearful.”⁵

Thus Batman was born. Throughout the Batman storyline, it is made clear that his philanthropy complements his crime fighting. Batman does what Bruce Wayne the philanthropist cannot do, and Bruce Wayne the businessman uses his money to fund legitimate causes that help Gotham citizens in ways beyond beating up bad guys. 

Inspiring the Bruce Wayne in Your Life

One of the top deathbed regrets revealed by a longtime hospice care social worker is that people wish they had done more for others.⁶ The social worker reveals how many patients made the dying decision to donate money to a charitable cause so they could make a difference before it was too late. 

The good you do in the here and now can not only make a difference in the lives of those you support, but it can also inspire the next generation to follow in your charitable footsteps, just as Bruce Wayne was inspired by his parents’ efforts to make Gotham a better place.

Martha Wayne, for example, worked at a free medical clinic and organized fundraisers. Thomas Wayne instructed Bruce to “honor the Wayne Family legacy, and commit yourself to the improvement of Gotham City, its institutions, and its citizens. Invest in Gotham, treat its people like family. Watch over them and use this money to safeguard them from forces beyond their control.”⁷

Thomas Wayne implored his son and heir to take care of Gotham but did not give a specific prescription for doing so. If he had, there is no doubt that this plan would not have included his son becoming Batman. Nevertheless, if Bruce had been duty bound to sit behind a desk at the Wayne Foundation and follow his late father’s dictates, rather than having the freedom to use his wealth as he saw fit, Gotham may well have been worse off. 

This does not mean you cannot nudge people in the right direction. Incentives in your estate plan can reward a loved one for doing charitable work, without telling them exactly what work to do. You could, for example, add a provision directing additional money and property to a child or grandchild who dedicates a certain number of hours per week, month, or year to a charitable cause. You could guarantee their material needs will be provided for if they take up full-time charity work in lieu of a career. Or, like the Wayne Foundation, you could pay for their college education in exchange for service. 

With Great Wealth Comes Great Responsibility 

Those fortunate enough to have money to spare may feel a sense of responsibility to the wider community beyond their own family. The example you set in this life can resonate far into the future as your loved ones continue to give time and money to charities. You can also structure your estate plan in such a way that makes giving back a family tradition, even when you are no longer around. 

If philanthropy is near and dear to your heart and you want your loved ones to carry on the spirit of giving, your estate plan should reflect your charitable goals. While inspiring a real-life Batman is probably  not on the agenda, our attorneys are here to ensure that your legacy of generosity is reflected in your estate plan. We can identify planning tools that maximize tax savings and leave more money for charitable giving. To start planning today, please contact us.

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Footnotes

1. Wayne Enterprises, Branches, Batman Fandom, https://batman.fandom.com/wiki/Wayne_Enterprises#Branches (last visited Oct. 17, 2022).
2. Michael Noer, The 25 Largest Fictional Companies, Forbes (Mar. 11, 2011), https://www.forbes.com/sites/michaelnoer/2011/03/11/the-25-largest-fictional-companies/?sh=4c2cb6725d81.
3. Wayne Foundation, New Earth, DC Database, https://dc.fandom.com/wiki/Wayne_Foundation#New_Earth (last visited Oct. 24, 2022).
4. Dashiel Reaves, Gotham’s True Hero Was Always Bruce Wayne, Not Batman, Screen Rant (Sept. 24, 2022), https://screenrant.com/bruce-wayne-gotham-charity-money-billions-philanthropy-batman/.
5. Caroline Fox, Batman Begins: How Long Bruce Wayne Trained to Become the Dark Knight, Screen Rant (Dec. 14, 2020), https://screenrant.com/batman-begins-bruce-wayne-training-how-long/.
6. Grace Bluerock, The 9 Most Common Regrets People Have at the End of Life, mgbmindfulness (Feb. 24, 2020),  https://www.mindbodygreen.com/articles/the-most-common-regrets-people-have-at-the-end-of-life.
7. Thomas and Martha Wayne, Batman Arkham Wiki, https://arkhamcity.fandom.com/wiki/Thomas_and_Martha_Wayne (last visited Oct. 24, 2022).