The first private pension plan in the United States was established in the late 1800s. Through 1980, nearly 40 percent of Americans were covered by a traditional employer-funded pension. But employer-provided retirement plans have now largely shifted to retirement savings vehicles like 401(k) plans and Individual Retirement Accounts (IRAs) that place most of the savings onus on the employee.

Pension and retirement accounts often form a large portion of an individual’s wealth and should be accounted for in an estate plan. If a retirement account holder completes a proper beneficiary designation, their account assets will bypass probate. Account holders often designate a surviving spouse or children as beneficiary, but they could also name a trust or a charity.

The benefit and beneficiary rules applicable to different types of retirement accounts vary and should be discussed with an estate planning attorney, especially with the recent passage of the SECURE Act.

How Pensions Have Changed: Defined Benefit versus Defined Contribution Plans

The American Express Company provided the original private pension plan to its workers in 1875. Soon after, banks, manufacturing companies, and utilities also began offering pension plans.^[1]

These early pensions were defined benefit (DB) plans. Funded entirely by employers, DB plans pay workers a specific monthly benefit for life once they retire. Typically, DB plans calculate a benefit based on factors like a worker’s salary and service length and make regular payments (annuity payments) over the employee’s life after retirement (or the joint lives of the employee and their spouse). The employer that provides a DB pension controls and owns the plan.

Traditional DB pension plans have mostly given way to defined contribution (DC) plans, such as 401(k)s. DC plans are owned and controlled by employees but are often subsidized by employers. Other types of DC plans are 403(b), 457, and 529 plans. IRAs are not employer-sponsored but can also be considered a DC plan since they involve defined contributions by the IRA owner into tax-advantaged accounts.^[2] DC plans generally pay retirement benefits as a lump sum or installments.

From 1980 to 2008, the proportion of private industry workers participating in DB plans decreased from 38 percent to 20 percent.^[3] In 2020, 85.3 million Americans had a DC plan compared to just 12 million workers with a DB plan.^[4]

In 2020, 18.2 percent of Americans were covered by an IRA-style retirement account, 34.6 percent had a 401(k)-style account, and 13.5 percent had a DB plan, reports the U.S. Census Bureau. The median value of a retirement account in 2020 was about $30,000.^[5]

Congress passed the Employee Retirement Income Security Act (ERISA) in 1974 to guarantee workers’ benefits in private pension plans. Before then, pensions had little or no protection, and there were incidents of workers losing their earned retirement benefits. ERISA covers most employer-sponsored DB plans and DC plans, but not government employee plans or IRAs.

DB Plans, DC Plans, and Beneficiaries

The only estate planning tool applicable to retirement accounts is the beneficiary designation.  Retirement accounts must be owned by an individual, so they cannot be transferred into a revocable living trust during the participant’s lifetime like most other financial accounts or property.  Further, they cannot be jointly owned. Thus, the only way to control how these accounts transfer at the time of the participant’s death is through the use of properly designated beneficiaries.

In general, participants in an ERISA-covered plan can select anyone to be the plan’s beneficiary when they die.^[6]

• Most plans regulated by ERISA name a person’s spouse to automatically receive the benefit if the account holder dies first.
• If the account holder wishes to select a different beneficiary, their spouse must consent by signing a waiver. Otherwise, the spouse is entitled to 50 percent of the plan’s benefits, even if somebody else is named as the plan beneficiary.
• An ERISA plan holder who divorces and remarries should update the beneficiary designation to their current spouse or else the former spouse may be in line to inherit the plan benefits.
• An account holder who does not have a spouse can name an alternate beneficiary. This may be a person such as a child, parent, or sibling, but it can also be a charity or a trust.
• The named beneficiary of an ERISA retirement plan takes precedence over somebody designated in a will as the plan’s beneficiary when there is a conflict between the two.
• When an ERISA retirement plan does not designate a beneficiary, the benefit passes to the participant’s probate estate and is distributed along with other probate assets according to the will (if the participant has created one) or according to state intestacy law (if the participant has not created one).

IRAs are not covered by ERISA. An IRA account holder can name a beneficiary (or multiple beneficiaries) to receive the account assets. They can also name their probate estate to be the beneficiary of the IRA, in which case the account proceeds will be distributed according to their will (if they have created one) or according to state intestacy law (if they have not created one). A trust or charity can be designated to receive IRA funds as well. An IRA with no beneficiary designation is distributed pursuant to the IRA’s governing document.

Employees with a DB plan may be able to name a beneficiary, but this right is not guaranteed because the employer owns the plan and sets the terms. For a DB plan, a current spouse may be entitled to a qualified joint and survivor annuity (QJSA) death benefit paid out over their lifetime. The plan may provide the annuity payout percentage, which could be at least 50 percent but no more than 100 percent of the annuity paid to the participant. It may be possible, with spousal consent, for a participant to waive the QJSA and select a different payment option. QJSA rules may also apply to nondefined benefit plans, but only through an election.^[7]

The SECURE Act and Inherited Retirement Accounts

Passed in 2019 and effective in 2020, the Setting Every Community Up for Retirement Enhancement (SECURE) Act affects DC plans like 401(k)s and IRAs and has implications for estate planning.

Under the SECURE Act, the age at which retirees must make annual withdrawals, called minimum required distributions (RMDs), increased from 70.5 to 72. In 2023, that age was raised to 73.

A retiree who lives a long life might deplete a large portion of their retirement account due to RMDs and have little left in the account to give to heirs. But the SECURE Act also affects those who inherit an IRA or 401(k) in a more direct way.

While beneficiaries of these accounts always had to pay taxes on all withdrawals from them, prior to the SECURE Act, they could stretch out withdrawals over their life expectancy to minimize their tax bill. Beginning in 2020, however, most nonspouse retirement account beneficiaries must completely withdraw the balance of their inherited portion within 10 years of the original account holder’s death. For minors, the 10-year rule starts when they turn 21. These new rules do not apply to a surviving spouse named as an account beneficiary. Spouses that inherit retirement accounts still receive preferential tax treatment in the SECURE Act. A popular option is for the inheriting spouse to roll over the account into their own IRA and name their own beneficiaries for the account. The spouse is then treated as the original IRA owner for income tax purposes.^[8]

Another option for an account holder when designating a beneficiary is to designate the account owner’s trust rather than naming individual beneficiaries. When the accounts transfer into the trust upon the account owner’s death, the language in the trust agreement will direct how and when the retirement proceeds are to be distributed to trust beneficiaries. The retirement account owner might prefer this option if they are concerned that the beneficiary might immediately deplete money or fail to set aside enough funds to cover taxes that might be due on withdrawals. Also, trusts can provide asset protection from creditors and help centralize asset management.

Retirement Accounts and Estate Planning

You saved hard for your retirement. The money you set aside could benefit more than just you. Most retirement accounts can be transferred to your heirs when you die, enabling them to supplement their own savings goals.

Retirement assets can transfer directly to properly designated beneficiaries outside of probate. But these assets will be subject to federal and state income tax, and possibly even estate taxes. The SECURE Act could further impact your estate planning efforts. Your retirement accounts could be the single largest store of economic value that you leave behind. To maximize their value to loved ones after you are gone, be sure that you understand the different inheritance and tax rules that may apply, review beneficiary designations regularly, and speak to an estate planning attorney about how to best provide for your family’s future.

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1. History of PBGC, PBGC (Nov. 16, 2023), https://www.pbgc.gov/about/who-we-are/pg/history-of-pbgc.
2. Adam Hayes, What Are Defined Contribution Plans, and How Do They Work?, Investopedia (July 22, 2023), https://www.investopedia.com/terms/d/definedcontributionplan.asp.
3. Barbara A. Butrica et al.,The Disappearing Defined Benefit Pension and Its Potential Impact on the Retirement Incomes of Baby Boomers, 69 Soc. Sec. Bull. 1 (2009), https://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html.
4. Jeanne Sahadi, Traditional Pension Plans Are Pretty Rare. But Here’s Who Still Has Them and How They Work, CNN (Sept. 7, 2023), https://www.cnn.com/2023/09/07/success/pensions-retirement-savings-explained/index.html.
5. Maria G. Hoffman, Who Has Retirement Accounts? New Data Reveal Inequality in Retirement Account Ownership, U.S. Census Bureau (Aug. 31, 2022), https://www.census.gov/library/stories/2022/08/who-has-retirement-accounts.html.
6. U.S. Dep’t of Labor, FAQs about Retirement Plans and ERISA, https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/retirement-plans-and-erisa-for-workers.pdf (last visited Mar. 25, 2024).
7. Types of Retirement Plan Benefits, IRS.gov (Apr. 21, 2023), https://www.irs.gov/retirement-plans/types-of-retirement-plan-benefits.
8. Svetlana V. Bekman & Stacy E. Singer, IRAs and IRA Beneficiaries, ACTEC, https://www.actec.org/resource-center/video/iras-and-ira-beneficiaries (last visited Mar. 25, 2024).

An intrafamily loan is a financial arrangement between family members—one who is lending and another who is borrowing. An intrafamily loan may be used to help a family member who needs money for a number of reasons:

• buying a home
• funding or purchasing shares in a business
• adding accounts or property to investment portfolios
• paying down high-interest debt
• covering education expenses

Lending to a child or grandchild can be satisfying. Your loved ones can benefit from flexible repayment terms and interest rates while learning financial responsibility. This can be beneficial if the child or grandchild would otherwise have difficulty obtaining a loan through more traditional methods. It also gives you an opportunity to add to your investment income.

When You Should Consider an Intrafamily Loan

How you give or loan money to family members has potential tax implications. The right method depends on your family circumstances.

An intrafamily loan might be beneficial in estate planning for wealth transfers between generations while minimizing estate tax implications. Further, by using an intrafamily loan to provide money to a family member rather than making a gift, you can maintain control over the principal amount and how it is used.

Intrafamily loans are valuable tools for preserving wealth and offer the following advantages:

Estate Tax Planning

Under current tax law, gift and estate taxes are not imposed on gifts up to $13.61 million for individuals and $27.22 million for married couples in 2024. While many people’s net worth is not that high, intrafamily loans may be a great option for high-net-worth families.^[1]

If the family member receiving the loan invests the money and the investment returns on the borrowed funds exceed the interest rate charged, the excess growth is passed to your family member without being subject to gift or estate taxes. This strategy preserves your lifetime estate tax exemption amount as long as all of the formalities of issuing a loan are observed. However, the initial loan amount (the principal) and interest owed to you will still be included in your taxable estate because the principal and interest are legally required to be paid to you. However, as previously mentioned, the growth in the investment will not be included in your taxable estate.

You might also consider loaning the money to a trust for the benefit of your family member as part of your planning strategy. As opposed to the strategy of loaning funds directly to your family member, the loan would be made to the trust. If the rate of return from investing the loan proceeds exceeds the loan’s interest rate, the excess is considered a tax-free transfer to the trust.

Flexible Interest Rates

With intrafamily loans, you have the flexibility to set the interest rate at a level lower than commercial lenders, as long as the rate is not below the Applicable Federal Rate (AFR) (read below for further discussion on the AFR). The cost savings for the borrower can be significant. Further, if the AFR is high when you initially make the loan, it may be easier to reissue the note from you to take advantage of any future lower interest rates than it would be to refinance a note from a third-party lender.

Family Business Succession

Intrafamily loans can play a crucial role in transferring a family business from one generation to the next. By providing financing to family members who wish to take over the family business, for example, you can ensure a smoother transition and help sustain the family legacy.

Determining the US Interest Rate to Use with an Intrafamily Loan

Determining the interest rate for your intrafamily loan is crucial to avoid unnecessary tax consequences. The Internal Revenue Service (IRS) publishes AFRs^[2] monthly, broken down into three tiers for short-term, mid-term, and long-term rates.^[3] Rates can be fixed or variable and structured to the advantage of both parties. The minimum AFR rate must be charged for loans over $10,000 regardless of a loved one’s credit rating, and it is usually lower than most commercial lenders. If the interest rate for your intrafamily loan is below the AFR, the IRS may require you to pay income tax on the income you should have received under the applicable AFR even though the borrower did not pay you that amount (called imputed interest). Also, the amount of interest you did not collect but should have may also be considered a taxable gift to the borrower, potentially reducing the amount of gift and estate tax exemption available to you.

Documenting the Terms

Since the IRS generally assumes that wealth transfers between family members are gifts, it is essential to have the proper documents showing that the transfer is intended to be a loan. You and your family member must sign a promissory note that adheres to the state-specific rules to properly document the loan transaction.

Important Things to Remember When Using an Intrafamily Loan

A comprehensive written promissory note is crucial. It helps avoid unnecessary tax consequences and clearly communicates the terms of the loan between family members to avoid misunderstandings and conflicts.

Every financial decision has the power to strain family relationships. When trying to determine if an intrafamily loan is right for your situation, ask the following questions:

• Will lending to one child appear unfair to others?
• Should various loan types be considered for different children based on their personal situations?
• If the child is unable to pay off the loan, will a loan default cause family friction?
• Will the loan be forgiven at my death, or will it be considered a debt owed to my estate or trust? In either case, how would that affect the other children?

Gifts versus Loans

You must carefully consider the decision to gift versus use intrafamily loans, including the income, estate, and gift tax implications. The tax rules regarding intrafamily loans are complex and may result in unintended consequences if the loan is not done correctly. If you are interested in learning more about this tool, give us a call. Additionally, if you already have an intrafamily loan in place, it is important to properly document it in your estate plan to ensure that everything will proceed smoothly if you pass away before the loan has been paid back. We are happy to meet with you and your tax advisor to make sure that this strategy is right for you and your family.

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1. Kelley R. Taylor, What Is the Gift Tax Exclusion for 2024?, Kiplinger (Jan. 19, 2024), https://www.kiplinger.com/taxes/gift-tax-exclusion.
2. Applicable Federal Rates (AFRs) Rulings, IRS.gov (Aug. 8, 2023), https://www.irs.gov/applicable-federal-rates.
3. Id. 

Death is a personal and private affair that affects the deceased’s close family and friends. However, there is at least one aspect of death that may require state oversight: probate.

Probate is the court-supervised process of either (a) carrying out the instructions laid out in the deceased’s will or (b) applying state law to distribute a deceased’s accounts and property to their family members if the deceased did not have a will. The main purpose of the probate process is to distribute the deceased’s money and property in accordance with the will or state law. Not all wills, and not all accounts and property, need to go through probate court. And just because a will is filed with the probate court does not mean a probate needs to be opened. But whether or not probate is necessary, most state laws require that a will be filed when the creator of the will (testator) passes away.

Understanding Probate, Wills, and Estates

Estates, wills, and probate are distinct, yet interrelated, estate planning concepts.

• An estate consists of everything that a person owns—including their personal possessions, real estate, financial accounts, and insurance policies. Virtually everyone leaves an estate when they die.
• A will is the legally valid written instructions that a person creates describing how they want their money and property distributed upon their death. Wills are highly recommended, but there is no legal requirement to have one. To make a will legally valid, it must be properly executed in accordance with state law. Executing a will involves signing the document in front of witnesses. Additionally, at the time of signing, the creator must have capacity (i.e., be of sound mind).
• Probate is the legal process that formally distributes the accounts and property that are in the decedent’s sole name, do not have a beneficiary designated, and have not been placed into a living trust prior to the decedent’s death (sometimes referred to as probate assets). During probate, a decedent’s probate assets are identified and gathered, their debts are paid, and the probate assets are distributed to beneficiaries named in the will or their heirs as determined by state statute if there was no will.

Probate with a Will

Assuming that a decedent does have a will, here is how probate typically proceeds:

• The person nominated in the will to act as executor (sometimes called the personal representative) files a copy of the death certificate, the original will, and any required documents or pleadings with the probate court. If the person nominated in the will does not file these documents with the court, state statute will determine who else has priority to make such filings (possibly another family member, an attorney, or even a creditor of the decedent).
• The court examines the will and other documents filed to confirm their validity and gives the named executor the legal authority to carry out the decedent’s wishes, as specified in their will. This legal authority is conferred in a court-issued document called letters of authority, letters testamentary, letters of administration, or another similar name.
• The individual appointed as executor inventories and values the decedent’s estate assets and identifies any outstanding debts of the estate, such as loans and credit card debt.
• Once estate debts are paid, the remaining accounts and property are distributed to named beneficiaries and the estate is closed, ending the probate process.

The length of a probate can vary depending on many factors, including the size of the estate, state laws, and whether the will is deemed invalid or contested.

Avoiding Probate

In some cases, avoiding probate altogether can cut down on the amount of time it takes to wind up a deceased person’s affairs. There are also other reasons to avoid probate, such as keeping probate filings out of the public record and saving money on court costs and filing fees.

Beneficiary designations, joint ownership, trusts, and affidavits are common ways to avoid probate. Here are some examples of these probate-avoidance tools in action:

• Pensions, retirement accounts like 401(k)s, and other accounts that allow for designated beneficiaries may not need to be probated. Transfer-on-death (TOD) and payable-on-death (POD) accounts are generally treated the same as accounts that have a beneficiary designation.
• Accounts and property that are jointly owned and have a right of survivorship can bypass probate.
• Accounts or property held in a trust may also bypass probate. But trusts are not without administrative and cost burdens. Also, if the deceased forgot to transfer ownership of an account or piece of property to the trust, a pour-over will may be needed to transfer those accounts and property to the trust through the probate process upon the trustmaker’s death.
• Some states have laws that allow probate to be skipped if the value of an estate is below a specified value and does not contain any real estate (often referred to as a small-estate exception). The threshold value for qualifying for this exception varies by state. For example, probate can be skipped in Arizona, Texas, and Florida for estates worth less than $75,000. In California, the threshold is $184,500; in New York, it is $30,000.

Filing a Will versus Opening Probate

Filing a will with the probate court and opening probate are separate actions. A will can be filed whether or not probate is needed. Remember that probate is needed only under certain circumstances, such as when the decedent passed away while owning probate assets. Further, not only cana will be filed with the court when a probate is not needed, some state laws actually requireit. Some state laws require the person who has possession of a decedent’s will to file it with the court within a reasonable time or a specified time after the date of the decedent’s death. The consequences for failing to file a will vary by state but may include being held in contempt of court or payment of fines. Additionally, the person in possession of a will might also be subject to litigation by heirs who stand to benefit from the estate under the terms of the will. The latter also applies if the will-holder files a will but does not file for probate. Failing to file for probate (when probate is necessary) prevents inheritances from being properly distributed.

These legal consequences are usually imposed only on a will-holder who willfully refuses to file a will. If someone you love has passed away and you have their will in your possession, we recommend that you work with an experienced probate attorney who can assist you in determining whether a probate must be opened and whether the will needs to be filed.

Avoid Probate Issues When Drafting a Will

Probate avoidance may be one of your goals when creating an estate plan. You should also consider implementing tools in your estate plan to minimize issues that may arise if your estate does require probate. 

Your will may have been written years ago and might not reflect current circumstances. You could have acquired significant new accounts or property, experienced a birth or death in the family, left instructions that are vague or generic, or chosen an executor who is no longer fit to serve. An outdated or unclear will can spell trouble when it is time to probate your estate, making it important to identify—and address—issues that could lead to problems, including will contests and disputes.

It is recommended that you update and review your estate plan every three to five years or whenever there is a significant life change or a change in federal or state law. You cannot be too careful when stating your final wishes. For help drafting an airtight will that avoids possible complications, please contact us.

Compared to residents of other wealthy nations, Americans are more likely to give their time and money to help others. In 2023, the United States ranked ninth in per capita gross domestic product (GDP) but fifth on the World Giving Index rankings.¹

Polling shows that Americans trust nonprofits more than government or business, but they generally know little about charitable giving and philanthropy, such as how these organizations distribute their funds and the rules that govern their activities.

Giving money to charity can provide personal and financial benefits to donors and be a part of the legacy they leave behind. If you are thinking about making a charitable gift—either now or when you pass away—there are some things to be aware of so you can make the most of your donation.

Fewer Americans Donating to Charity

Total charitable giving in the United States dropped 10.5 percent from 2021 to 2022, according to the report conducted by Giving USA 2023. As a percentage of disposable personal income, giving declined to a 40-year low of 1.7 percent.² Overall, the number of US households that annually give to charity declined from 66 percent in 2000 to less than 50 percent in 2018.

Nearly half of Americans who stopped giving to charity in the last five years told the Better Business Bureau they did so because they believe the wealthy are not paying their fair share. Others said they just could not afford to contribute to charity.³

Some statistics paint a rosier picture of American generosity. Adjusting for inflation, charitable giving by Americans was seven times greater in 2016 than it was in 1954. US charitable giving as a proportion of GDP has also increased slightly over this period but has remained at around 2 percent for decades.⁴

Americans grew more generous during the pandemic, with 2020 and 2021 donations both topping 2019 giving levels.⁵ A recent Gallup poll reveals that 81 percent of Americans donated money to charity over the past year, with the percentage of those giving rising in proportion to household income.⁶ Around 90 percent of households making $100,000 or more give money to charity each year.

Where Americans are Donating

There are approximately 1.5 million charitable organizations in the United States. Generally, the Internal Revenue Service (IRS) defines public charity as any organization that receives a substantial portion of its income from public donations.

Many—but not all—charities qualify as tax-exempt under IRS rules. The 501(c)(3) tax exemption, known as the charitable tax exemption, allows qualified organizations to avoid paying federal corporate and income taxes for most revenue sources.⁷

Designated 501(c)(3) charities are also able to solicit tax-deductible contributions that allow donors to deduct money given to these organizations on their tax returns. A gift made to a qualified tax-exempt organization as part of an estate plan can help to reduce estate taxes as well.

To meet tax-exempt IRS requirements, an organization must exclusively exist for one of these purposes:

• Charitable
• Educational
• Fostering of national or international amateur sports
• Literary
• Prevention of cruelty to animals and children
• Religious
• Scientific
• Testing for public safety

Charities, foundations, and nonprofits can gain 501(c)(3) status if they satisfy IRS tax rules.⁸ These philanthropic entities can include private foundations, community foundations, corporate foundations, limited liability companies, donor-advised funds, and even crowdfunding campaigns.

The nation’s top 100 charities received more than $61 billion in private donations in 2023. They include Feeding America, United Way, St. Jude Children’s Hospital, Salvation Army, Habitat for Humanity, Goodwill, YMCA, and the Boys & Girls Clubs of America.⁹

Charities and Taxes

The decision to make a charitable donation can be motivated by altruism, financial considerations, or a little bit of both. These donations can take the form of accounts, tangible personal property, and real estate. A donor can even choose to leave all of their money and property to charity at their death.

A gift made during a donor’s lifetime can result in an income tax deduction, provided that the charity is an IRS tax-exempt organization. For cash contributions, eligible itemized deductions for charitable contributions can be made up to a certain percentage of the donor’s gross income. Limits also apply to gifts of appreciated securities or property in a single year.

There may be further limits on charitable gifts depending on how they are given (i.e., directly to a charity or a private foundation, or using other strategies, such as a donor-advised fund). Appreciated securities may additionally bypass the capital gains tax if they are given to a charity during a donor’s lifetime.

When charitable gifts are part of an estate plan and transferred to the charity upon the donor’s death, they can remove money and property from the donor’s taxable estate, thereby lowering the donor’s estate tax liability, if one exists. There is an unlimited charitable deduction for estate plan gifts to charities. Gifts of this type can take several forms, including charitable trusts, retirement accounts such as individual retirement accounts and 401(k)s, and gifts made via charitable foundations and donor-advised funds.¹⁰

What to Know Before You Give

While it may be better to give than to receive, donors who plan to make a large charitable gift during their lifetime or at their death should temper their generosity with caution. Here are some things to look out for:

• Make sure the organization you donate to is a reputable charity and not a scam. Charity fraud—schemes that seek donations for fake charities—can take many forms. Charity scams proliferate on the internet, particularly on social media. They can also involve emails, text messages, crowdfunding platforms, and phone calls. Be sure to thoroughly vet an organization before donating. Look for red flags such as time-urgent pitches and names and website addresses that closely mimic real charities.¹¹
• Check that the charity qualifies for a tax deduction. Charitable donation tax breaks provide an extra incentive to support a good cause. The IRS provides a search tool for groups that are eligible to receive tax-deductible charitable contributions.
• Can you afford it? Charitable giving is not solely an activity of the rich. Households earning $40,000 or less give money with lower frequency than those households with higher incomes, but only by about 20 percentage points. Tax breaks are just one consideration for charitable giving; many people donate to charity for primarily altruistic reasons. However, the gifts should not come at the expense of your financial security. Experts recommend starting with 1 percent of your income and, if you can afford more, working your way up from there.

Get Estate Planning and Tax Advice Before Giving

It is not too late to make philanthropy a part of your legacy, but whether you are new to charitable giving or want to step up your gifts, there are strategies to follow that can increase the value of your charitable efforts.

However you plan to give and whoever you plan to give to, the rules around charities can be complicated and options abound. For professional advice about giving to charities, choosing what and where to donate, and the different gifting strategies that are available, schedule a consultation with our estate planning attorneys.

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1. Charities Aid Foundation, World Giving Index 2023, Int’l Charity Law Network, Univ. of Notre Dame (2023), https://charitylaw.nd.edu/research/2023-world-giving-index-2023/.
2. Amy Silver O’Leary & Tim Delaney, It’s Real: Charitable Giving Plummeted Last Year, Nat’l Council of Nonprofits (June 21, 2023), https://www.councilofnonprofits.org/articles/its-real-charitable-giving-plummeted-last-year.
3. Sara Herschander & the Associated Press, Overwhelming feeling that the wealthy aren’t paying their fair share behind massive pullback from charity, survey shows, Fortune (July 6, 2023), https://fortune.com/2023/07/06/why-is-charitable-giving-down-ultrawealthy-not-paying-fair-share-survey/
4. Statistics on U.S. Generosity, Philanthropy Roundtable, https://www.philanthropyroundtable.org/almanac/statistics-on-u-s-generosity/ (last visited Mar. 27, 2024).
5. Erica Pandey, The giving boom, Axios (Dec. 22, 2021), https://www.axios.com/2021/12/22/charitable-giving-boom-pandemic-racial-justice.
6. Jeffrey M. Jones, U.S. Charitable Donations Rebound; Volunteering Still Down, Gallup (Jan. 11, 2022), https://news.gallup.com/poll/388574/charitable-donations-rebound-volunteering-down.aspx.
7. Community Toolbox, Ch. 43, Managing Finances, Sec. 4. Understanding Nonprofit Status and Tax Exemption, https://ctb.ku.edu/en/table-of-contents/finances/managing-finances/nonprofit-status-tax-exemption/main (last visited Mar. 27, 2024).
8. Univ. of San Diego Professional and Continuing Education, Foundation vs. Charity vs. Nonprofit, https://pce.sandiego.edu/foundation-vs-nonprofit-vs-charity/ (last visited Mar. 27, 2023).
9. William P. Barrett, America’s Top 100 Charities, Forbes (Dec. 12, 2023), https://www.forbes.com/lists/top-charities/?sh=4ac45d7e5f50.
10. Charitable Contributions, Fidelity Charitable, https://www.fidelitycharitable.org/guidance/charitable-tax-strategies/charitable-contributions.html (last visited Mar. 27, 2024).
11. Fed. Trade Comm’n, Consumer Advice, Donating Safely and Avoiding Scams, https://consumer.ftc.gov/features/donating-safely-and-avoiding-scams (last visited Mar. 27, 2024).

As poet Robert Burns mused centuries ago, the best-laid plans of mice and men often go awry. Despite thoughtful effort and a concerted strategy, you cannot prepare for every emergency in life. A car accident, sudden illness, workplace injury, or chronic medical condition can force you to reevaluate the core assumptions you used to plan your future and set up your legacy.

According to the Centers for Disease Control and Prevention (CDC), approximately one in four US adults have some type of disability.^[1] Frustratingly, once you are no longer able to manage your own affairs (also known as being incapacitated), you will not be able to turn back the clock and make plans that will make your transition into a possible incapacity as smooth as possible for you and your loved ones. However, you can take meaningful actions prior to an incapacity to protect your money, property, and legacy in the wake of any newfound limitations. Here are some insights to that end:

Work with a qualified estate planning attorney to ensure that you have taken the following actions:

• Legally appointed a trusted person to manage your property, pay your bills, file your taxes, and handle similar financial and legal matters if you are unable to do these tasks
• Legally appointed a trusted person to make healthcare decisions for you if you become mentally or physically unable to make them yourself
• Communicated your wishes about healthcare decisions such as end-of-life care and do-not-resuscitate instructions in a clear and legally valid manner (if your state allows for this)

Work with a knowledgeable financial advisor to take the following additional actions:

• Ensure that you have appropriate life or disability insurance coverage
• Reassess your investment options and portfolio in light of the possibility of new limitations and constraints on your ability to generate income
• Ensure that you have a budget that would work if you become incapacitated so that all of your bills will get paid on time

Mind this important distinction:

Incapacity for legal or estate planning purposes is different from disability for other purposes, such as the determination of government benefits.

For example, disability for purposes of determining government benefits might mean that a person cannot work gainfully anymore because of cancer or a workplace injury. On the other hand, incapacity in an estate planning context typically means that a person is no longer capable of making sound decisions, often due to systemic illness or injury. In other words, you can be considered disabled without being considered incapacitated. 

Either way, it is important for us to work together with your financial advisor to ensure that you and your family are fully protected if you become incapacitated.

Here are some specific actions you can take now:

• Pay attention to where you want your money to go as well as to your long-term planning strategy. Your estate planning attorney can help you assess whether your current plans are still realistic and, if not, what alternative options you have.
• Maintain a healthy lifestyle. Visit your medical professionals on a regular basis and follow their instructions.
• Get the help you need from trusted professionals. Now is the time to tap your network of friends and family for assistance with the heavy lifting. No single advisor will have all of the answers. But your team can work in concert to reduce the anxiety and uncertainty that come with a potential incapacity and keep you focused on what really matters.

Please reach out to us to assess your long-term plans and documents so we can ensure that you are as secure as possible in the event of any new challenges.

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1. Disability Impacts All of Us, Ctrs. for Disease Control & Prevention: Disability and Health Promotion (May 15, 2023), https://www.cdc.gov/ncbddd/disabilityandhealth/infographic-disability-impacts-all.html.

Many people believe that estate planning is only about planning for their death. But planning for what happens after you die is only one piece of the estate-planning puzzle. It is just as important to plan for what happens if you become unable to manage your own financial or medical affairs while you are alive (in other words, if you become incapacitated).

What happens without an incapacity plan?      

Without a comprehensive incapacity plan, if you become incapacitated and unable to manage your own affairs, a judge will need to appoint someone to take control of your money and property (known as a conservator or guardian of the estate) and to make all personal and medical decisions for you (known as a guardian or guardian of the person) under court-supervised guardianship and conservatorship proceedings. The guardian and conservator may be the same person, or there may be two different people appointed to these roles. Depending on state requirements, the conservator may have to report all financial transactions to the court annually, or at least every few years. The conservator is also typically required to obtain court permission before entering into certain financial transactions (such as mortgaging or selling real estate). Similarly, the guardian may be required to obtain court permission before making life-sustaining or life-ending medical decisions. The court-supervised guardianship and conservatorship are effective until you either regain the ability to make your own decisions or you pass away. 

Who should you choose as your financial agent and healthcare agent?

Guardianship and conservatorship statutes are the state’s default plan for appointing the person or people who will make decisions for you if you cannot make them for yourself. This default plan, however, may not align with the plan you would have put into place on your own. Most importantly, state statutes may give priority to someone to act as your guardian or conservator who is not the person you would have selected had you engaged in proactive planning.

Rather than having a judge appoint these important decision-makers for you, your incapacity plan allows you to appoint the trusted individuals you want to carry out your wishes. There are two very important decisions you must make when putting together your incapacity plan:

1. Who will be in charge of managing your finances if you become incapacitated (your financial agent)?
2. Who will be in charge of making medical decisions on your behalf if you become incapacitated (your healthcare agent)?

The following factors should be considered when deciding who to name as your financial agent and healthcare agent:

• Where does the agent live? With modern technology, the distance between you and your agent may not matter. Nonetheless, someone who lives nearby may be a better choice than someone who lives in another state or country, especially for healthcare decisions.

• How organized is the agent? Your agent will need to be well-organized to manage your healthcare needs, keep track of your accounts and property, pay your bills, and balance your checkbook, all on top of managing their own finances and family obligations. While you may trust many of your loved ones to act on your behalf, not all of them will have the capabilities and organizational skills desired for this position.

• How busy is the agent? If the agent has a demanding job or travels frequently for work, then the agent may not have the time required to take care of your finances and medical needs.

• Does the agent have expertise in managing finances or the healthcare field? An agent with work experience in finance or medicine may be a better choice than an agent without it. Keep in mind that you can appoint different people for these different roles.

What should you do?

If you do not proactively plan for incapacity before you become incapacitated, your loved ones will likely have to go to probate court to have a guardian and conservator appointed. This would be a hassle, taking time and costing money during what is already likely to be a very stressful and emotional time.

Part of creating an effective incapacity plan means carefully considering who you want as your financial and medical agents. You should also discuss your choice with the person you select to confirm that they are willing and able to serve. This would also be a great opportunity to discuss with them your wishes as to the medical and financial issues that are most important to you.

Our firm is ready to answer your questions about incapacity planning and assist you with choosing the right agents for your plan. 

Comprehensive estate planning involves more than just planning for your legacy after your death, avoiding probate, and reducing taxes. Good estate planning also appoints people to make legal, financial, and medical decisions for you if you are alive but unable to make those decisions for yourself (in other words, if you are incapacitated).

What happens without a plan for incapacity?

Without a comprehensive plan for your incapacity, your family will have to go to court to have a judge appoint a guardian and conservator to make healthcare decisions for you and manage your money and property. A guardian will make all personal and medical decisions on your behalf as part of a court-supervised guardianship. A conservator will make all financial and legal decisions on your behalf as part of a court-supervised conservatorship. These roles may be filled by the same person or by two different people, depending on the circumstances. Keep in mind that the court may not appoint the person or people for these roles that you would have chosen. Until you regain capacity or pass away, you and your loved ones will have to endure expensive, public, and time-consuming court proceedings, which may include filing annual reports and obtaining prior judicial approval for certain actions.

Overall, there are two aspects of incapacity planning that must be considered: financial and healthcare.

• Finances during incapacity. If you are incapacitated, you are legally unable to make financial, investment, or tax decisions for yourself, but your bills still need to be paid, tax returns still need to be filed, and investments still need to be managed.

• Healthcare during incapacity. If you are unable to communicate (for example, if you are in a coma or under anesthesia), you will not be able to make healthcare decisions for yourself. Without a plan, your loved ones may even be denied access to your medical information during a medical emergency. They may also end up in court, fighting over what medical treatment you should or should not receive (like in the case of Terri Schiavo, whose husband and parents did for 15 years).

To avoid these problems, you should have these five essential legal documents in place before becoming incapacitated so that your loved ones are empowered to make decisions for you:

1. Financial power of attorney. A financial power of attorney is a legal document that gives your trusted decision-maker (the agent) the authority to pay bills, make financial decisions, manage investments, file tax returns, mortgage and sell real estate, and address other financial matters for you that are described in the document. Financial powers of attorney come in two forms: immediate and springing. An immediate durable power of attorney allows your agent to act for you as soon as you sign the document. A springing power of attorney, on the other hand, is legally valid when you sign it, but your agent can only act for you after you have been determined to be mentally incapacitated. It is important to note that some states, such as Florida, do not recognize springing financial powers of attorney. There are advantages and disadvantages to each type, and we can help you decide which is best for your situation.
2. Revocable living trust. A revocable living trust is a legal document that has three parties to it: the person who creates the trust (also known as the trustmaker); the person who legally owns and manages the accounts and property transferred into the trust (the trustee); and the person who benefits from the accounts and property transferred into the trust (the beneficiary). In the typical situation, you will be the trustmaker, the trustee, and the beneficiary of your revocable living trust while you are alive. If you ever become incapacitated, your designated backup trustee will step in to manage the trust’s accounts and property for your benefit. The terms of the trust that you create will specify how the trust’s accounts and property are to be used (for example, you can authorize the trustee to continue to make gifts to charities or pay tuition for your grandchildren).
3. Medical power of attorney. A medical power of attorney, also called a medical proxy, healthcare proxy, designation of healthcare surrogate, or a patient advocate designation, allows you to name a person (your agent) to make medical decisions on your behalf when you cannot communicate them yourself.
4. Advanced directive or living will. An advance directive or living will shares your wishes regarding end-of-life care if you become incapacitated. Although a living will is not necessarily enforceable in all states, it can provide meaningful information about your desires—even if it is not strictly enforceable.
5. HIPAA authorization. A Health Insurance Portability and Accountability Act authorization gives your doctor authority to disclose medical information to the people you name in the document. This is important because health privacy laws may make it very difficult for family members or loved ones to learn about your condition without this release. While this document does not give a person authority to make medical decisions, it can help alleviate tensions by keeping everyone on the same page concerning your condition.

Is your incapacity plan up to date?

Once you create all of these legal documents for your incapacity plan, you cannot simply stick them in a drawer and forget about them. Instead, you must update and review your incapacity plan periodically and when major life events occur, such as moving to a new state or getting divorced. If you keep your incapacity plan up-to-date and make the documents available to your loved ones and trusted helpers, it should work the way you expect it to if needed. If you need to create or update your incapacity plan, please give us a call.

As a parent, you are responsible for the care of your minor child. In most circumstances, this means getting them up for school, making sure they are fed, and providing for other basic needs. However, what would happen if you and your child’s other parent were unable to care for them?

It is important to note that if something were to happen to you, your child’s other parent is most likely going to have full authority and custody of your child, unless there is some other reason why they would not have this authority. So in most cases, estate planning is going to help develop a plan for protecting your child in the event that neither parent is able to care for them.

What If You Die?

When it comes to planning for the unexpected, many parents are familiar with the concept of naming a guardian to take care of their minor children in the event both parents die. This is an important step toward ensuring that your child’s future is secure.

Without an Estate Plan

If you and your child’s other parent die without officially nominating a guardian to care for your child, a judge will have to make a guardianship decision. The judge will refer to state law, which will provide a list of people in order of priority who can be named as the child’s guardian—usually family members. The judge will then have a short period of time to gather information and determine who will be entrusted to raise your child. Due to the time constraints and limited information, it is impossible for the judge to understand all of the nuances of your family circumstances. However, the judge will have to choose someone based on their best judgment. In the end, the judge may end up choosing someone you would never have wanted to raise your child to act as your child’s guardian until they are 18 years old.

With an Estate Plan

By proactively planning, you can take back control and nominate the person you want to raise your child in the event you and the child’s other parent are unable to care for them. Although you are only able to make a nomination, your choice can hold a great deal of weight when the judge has to decide on an appropriate guardian. The most common place for parents to make this nomination is in their last will and testament. This document becomes effective at your death and also explains your wishes about what will happen to your accounts and property. Depending on your state law, there may be another way to nominate a guardian. Some states recognize a separate document in which you can nominate a guardian, and that document is then referenced in your will. Some people prefer this approach because it is easier to change the separate document as opposed to changing your will if you want to choose a different guardian or backup guardians.

What If You Are Alive but Cannot Manage Your Own Affairs?

Although most of the emphasis is on naming a guardian for when both parents are dead, there may be instances in which you need someone to have the authority to make decisions for your child while you are alive but unable to make them yourself.

Without an Estate Plan

Not having an incapacity plan in place that includes guardianship nominations means that a judge will have to make this judgment call on their own with no input from you (similar to the determination of a guardian if you die without a plan in place).

With an Estate Plan

A comprehensive estate plan can also include a nomination of a guardian in the event you and the child’s other parent are incapacitated (unable to manage your own affairs). Although you are technically alive, if you cannot manage your own affairs, there is no way that you will be able to care for your minor child. This is another reason why having a separate document for nominating a guardian (as described above) may be preferable to nominating guardians directly in a last will and testament. Because a last will and testament is only effective at your death, a nomination for a guardian in your will may not be effective when you are still living. However, a nomination in a separate document that anticipates the possibility that you may be alive and unable to care for your child can provide great assistance to the judge when evaluating a guardian. Depending on the nature of your incapacity, this guardian may only be needed temporarily, with you assuming full responsibility for your child upon regaining the ability to make decisions for yourself.

What If You Are Just Out of Town?

Sometimes, you travel without your child and will have to leave them in the care of someone temporarily. While you of course hope that nothing will go wrong while you are away, it is better to be safe than sorry.

Without an Estate Plan

Without the proper documentation, there may be delays in caring for your child if your child were to get hurt or need permission for a school event while you are out of town. The hospital or school may try to reach you by phone in order to get your permission to treat them or allow them to attend a school event. Depending on the nature of your trip, getting a hold of you may not be easy (e.g., if you are on a cruise ship with little access to phone or email). Ultimately, your child will likely be treated medically, but the chosen caregiver may encounter additional roadblocks  trying to obtain medical services for your child, and they may not be able to make critical medical decisions when needed.

With an Estate Plan

Most states recognize a document that allows you to delegate your authority to make decisions on behalf of your child to another person during your lifetime. You still maintain the ability to make decisions for your child, but you empower another person to have this authority in the event you are out of town or cannot get to the hospital immediately. This document allows your chosen caregiver to make most decisions on behalf of your child, except for consenting to the adoption or marriage of your child. The name of this document will vary depending on your state and is usually effective for six months to a year, subject to state law. Because this document is only effective for a certain period of time, it is important that you touch base with us to have new documents prepared so that your child is always protected.

We Are Here to Protect You and Your Children

Being a parent is a full-time job. We want to make sure that regardless of what life throws at you, you and your child are cared for. Give us a call to learn more about how we can ensure that the right people are making decisions for your child when you cannot.

Sitting down to create or update your estate plan can be overwhelming. Crucial to a successful plan is your ability to address two major questions: Who will get your stuff when you die, and how do you want those individuals or charities to receive that stuff?

Ways to Give Away Your Money and Property

Outright

One way you can give away your money and property at your death is to give it outright. In other words, once you have passed away and the administration process has been completed, your beneficiary will receive their inheritance (e.g., a bank or investment account, real property, etc.) outright with no strings attached. The inheritance immediately becomes theirs to do with as they please. This provides your beneficiary with the maximum amount of freedom and flexibility. They can keep the account or property, or they could spend or liquidate it. Additionally, this type of distribution is easy to include in your estate plan and easy to administer after your passing. All you need to do when preparing your estate plan is name the beneficiaries you want to receive your stuff in your trust or will. You do not have to plan out or have your attorney draft long and customized distribution provisions.

When it is time to distribute your money and property after your death, your accounts or properties will be turned over to your chosen beneficiaries after your debts have been settled, any applicable taxes have been paid, and your affairs have been wound down. However, please know that this freedom and ease come at a cost. If your beneficiary has creditor issues, is in the middle of a divorce, or is not good at managing their money at the time the distributions are to be made, that inheritance could be gone quickly. Further, you will almost never want minor children or beneficiaries with special needs to receive their inheritance outright.

In Trust

Regardless of whether you chose a will or revocable living trust as the tool for distributing your money and property at your death, that document can include a provision holding your beneficiary’s inheritance in a separate trust for their benefit. Having a beneficiary’s inheritance held in a trust means that your beneficiary will not receive their inheritance outright but will instead receive their inheritance when the terms and conditions that you create are satisfied. Here are some examples of terms and conditions for an inheritance that you may choose to establish for your beneficiaries:

• As a specified sum or percentage of the trust share when the beneficiary has reached certain ages (for example, one-third of the trust at age 30, one-half of the remaining trust at 35, and the remainder at 40). Under this scenario, your beneficiary will slowly have access to their inheritance. If the beneficiary makes bad choices with their inheritance in the beginning, they have time to learn from those experiences before being given additional distributions.
• As a specified sum or percentage upon reaching certain milestones (for example, one-third of the trust upon earning a postsecondary degree, trade school certificate, or honorable discharge from the military; one-half of the remaining trust upon successfully acquiring and maintaining employment for five years; and the remaining amount in the trust upon retirement). This option allows you to include certain milestones that you want your beneficiary to achieve before they receive their inheritance. If your beneficiary does not achieve the first one, they will have an opportunity to get access to their inheritance by completing other milestones. This option allows you to share your values with your loved ones. However, it may also cause difficulties if your beneficiaries do not meet one or more milestones or if the beneficiaries need access to the inheritance for reasonable purposes before hitting the milestones.
• For specific events or purchases (for example, an amount equal to the average cost of a wedding in your geographic area, the average cost of a three-bedroom home in your geographic area, or 50 percent of the start-up capital necessary to form a business once a business plan has been submitted and approved by the trustee). These provisions allow you to tailor the inheritance to fund those events or experiences that you believe are important and that you want to support. You can implement these distribution terms alongside many of the other scenarios described here.
• At the trustee’s discretion. Creating a fully discretionary trust means that your beneficiary will receive money from their trust share only if the trustee believes it is in the best interest of the beneficiary to receive funds. While this distribution scheme may seem very restrictive, it allows a trustee to evaluate the beneficiary’s situation at the time a request is made and adapt to changing needs. Also, by not entitling beneficiaries to inheritance distributions, any money or property held in the beneficiary’s trust has a greater chance of being unreachable by creditors or divorcing spouses. Once the money or property is given to the beneficiary, it can be taken. This allows the trustee to protect the legacy you are leaving behind.
• In a special or supplemental needs trust. For individuals who receive or may receive  government benefits due to a disability, the structure of their inheritance is very important. It may be necessary to leave an inheritance to these individuals in a special type of trust that does not disqualify them from receiving the government benefits while also allowing them to receive some benefit from the inheritance. Failing to properly structure the trust could cost your loved one their government benefits.

The important thing to remember is that you need to proactively make a legally valid plan if you have specific wishes about how your loved one will receive their inheritance. Without a plan put in place by you, your loved ones will be stuck with following the state law that determines who receives what, how much they receive, and how they receive it. For example, most state statutes will give an inheritance to an adult outright. So if you want more restrictions on your loved one’s inheritance, you need to have an estate plan that reflects your wishes. However, it is important to note that including a trust in your estate plan may lead to additional administrative tasks that may not otherwise arise, such as filing income tax returns for the trust, investing and managing trust assets, and preparing inventories and accountings. These tasks take time, and the person carrying out these tasks (the trustee) can charge the trust for their time.

Deciding Which Method to Use

Depending on who your beneficiary is, some options might be a better fit than others. It is important that you understand who your beneficiary is, what their needs are, and what your desired outcome is.

Charity

If you want to leave money or property to a charity, you may choose to give the money or property outright, especially if there is a particular goal or defined purpose that you have for the gift. You may also consider leaving the gift outright if you want it used for general charitable purposes, which in many cases, is what a charity would prefer when designating the use of the gift. However, you may choose to incorporate a charitable trust as part of your estate plan. This might be desirable if you have certain tax objectives that you want to accomplish.

Minor Child or Other Minor Loved One

It is usually advisable to leave an inheritance for minor children in trust for their benefit because, in most cases, a minor cannot legally own or manage their own accounts or property. With a trust, you can determine who will manage the inheritance instead of having a judge choose a guardian or conservator to manage the minor’s inheritance. If the money or property is left outright to the minor, it will likely be held for their benefit by a guardian, conservator, or custodian until the minor reaches the age of majority (18 or 21, depending on the state). This means that when the beneficiary becomes an adult, their inheritance will be distributed outright to them without any restrictions. For someone still so young, this could be risky.

Adult Child or Other Adult Loved One

Depending on the adult’s situation and the value of the inheritance you would like to leave them, all of the options described above could be available to you. However, when weighing the available options, there are some important considerations:

• Is your loved one likely to spend their inheritance as soon as they get it?
• Is there a likely possibility that your loved one may get divorced?
• Is your loved one engaged in a high-risk profession (e.g., law, medicine, etc.)?
• Is your loved one receiving or likely to receive government benefits?

If you answered yes to any of the above questions, you may not want to leave an inheritance to your loved one outright. A trust with specific terms, tailored to your beneficiary’s unique situation, may be the best way to ensure that the inheritance benefits your loved one instead of causing problems for them.

Surviving Spouse

If you are married, you may want everything you have to go outright to your surviving spouse upon your death. Maybe you consider everything you own to be owned jointly with your spouse, you want things to run as smoothly as possible, or you want your spouse properly provided for when you pass away. In addition to the considerations that we discussed for other adult loved ones, you need to consider the likelihood that your spouse may remarry or enter into another close relationship with someone and if that affects your decision in any way. If you leave everything outright to your surviving spouse, they will have the freedom to use the money and property in any way they want, including leaving it to a new spouse or buying expensive gifts for a new partner. If this is not what you want done with your money and property, it is important that you have a plan in place that puts more restrictions on your spouse’s inheritance.

We Are Here to Help

We know that there are a lot of different factors to consider when leaving an inheritance to your loved ones. We are here to walk you through the different options and help you solidify a plan that honors your wishes and protects your loved ones. If you need to begin the estate planning process or review your existing estate plan, please give our office a call.

When people think about creating an estate plan, they may think it just involves getting a set of forms that convey their wishes regarding their finances, health, and what will happen to their stuff when they die. Although the documents that comprise an estate plan may seem like simple forms, these important estate planning tools are the legally binding way for clients to manage their affairs during their incapacity (when they cannot manage their own affairs) or their death. Relying on nonlawyers to help with estate planning forms or provide legal advice can pose significant risks. Many professions should not provide legal advice, but it is not uncommon for some to cross into legal territory when they have related fields of expertise. Individuals in these professions must recognize the boundaries of their expertise and refer clients to qualified legal professionals when estate planning advice is needed. Additionally, consumers should be aware of these limitations and seek legal help.

Reasons to Be Cautious and Contact an Estate Planning Attorney

Many different types of professionals play important roles in the estate planning process. Some aspects of the process, however, should be handled only by lawyers. Nonlawyer professionals do not have the same legal training and expertise that a licensed and experienced estate planning attorney has. Estate planning requires an understanding of complex legal issues, including tax implications, property rights, and family law considerations. Relying on individuals who do not have the right qualifications may result in oversights or incorrect applications of law.

Other types of professionals can provide crucial information about your finances, insurance policies, property, and other relevant issues that contribute to a comprehensive estate plan. They can also offer expert advice regarding investment strategies, financial products that can enhance your estate plan, and important tax consequences.

Nonlawyers often provide generic estate planning solutions that are merely templates and do not address your specific needs and circumstances. Estate planning is highly individualized, and a one-size-fits-all approach may not adequately protect your money and property or meet your goals. Attorneys know which questions to ask to prevent or navigate specific legal problems and provide alternative strategies.

Estate planning laws and probate procedures also vary significantly from one jurisdiction to another. Nonlawyers may not be well-versed in the specific laws of your state, leading to incomplete or inappropriate legal documents that may not be legally valid or effective. Between improperly drafted documents and outdated documents that must be updated as your circumstances change, there is sure to be disappointment when you need your estate plan to work.

In addition, communication with attorneys is protected by attorney-client privilege, which ensures confidentiality. Most nonlawyers cannot offer the same level of privacy, potentially jeopardizing sensitive information and creating legal risks.

How to Find a Reputable Estate Planning Attorney

Finding a reliable and experienced estate planning attorney is crucial for ensuring that your wishes are properly documented, legally protected, and enforceable. Here are some general strategies to help you find a reputable estate planning attorney, regardless of your location:

• Referrals from friends, family, colleagues, or other professionals you trust for recommendations. After you have compiled a list of potential attorneys, search online for reviews and testimonials from previous clients to gain insight and find the right fit
• Online legal directories, such as the American Bar Association’s Lawyer Referral Directory, Avvo, Martindale-Hubbell, or WealthCounsel’s EstatePlanning.com. Find attorneys based on their practice area, location, and client reviews
• Professional organizations that focus on estate planning attorney memberships, such as the American Academy of Estate Planning Attorneys or the National Academy of Elder Law Attorneys
• Local legal aid organizations or pro bono services: some attorneys offer reduced fees or pro bono services for individuals with limited financial resources

Crafting the right plan for your unique situation requires working with a professional. If you have questions about the estate planning process or are ready to get started, give us a call.