Kent Larsson writes about the proper use of wills, advance directives, trusts, and other estate planning tools, and how how they play a vital role in you receiving proper medical care and helping you to preserve and pass on your assets to your loved ones.
As the cost for caring for the elderly increases, the amount of inheritance decreases.
In wealthy countries, the idea of leaving an inheritance is in jeopardy and may become a distant memory for middle class families, according to the Financial Times in "Opinion Today: The end of inheritance."
Receiving even a small inheritance from parents, allows families to build up some wealth. That wealth can, in turn, be left as inheritances for their children.
The article is about the situation in the U.K.. However, the issues in the U.S. are the same.
The overall population is aging. The elderly are living much longer than in previous years. This increases the cost of providing care for the elderly population. There are not enough younger people paying taxes to make up for the increasing costs.
When political leaders have proposed addressing the issue, they have been punished by voters, who do not want changes to the elder benefits they have been promised.
At some point, the issue does need to be addressed.
Reference: Financial Times (Dec. 23, 2017) "Opinion Today: The end of inheritance."
Male primogeniture is the rule in England.
There may be a way around the rule of male primogeniture in England, according to the Daily Mail in "New gender laws could let my girls inherit title, says Earl: Aristocrat suggests one of his daughters could identify as male after his death to claim his title."
The rules of male primogeniture were once the general rule. The closest male relative to the deceased inherited everything.
The titles of nobility in Britain still follow the old rule.
This does not please the Earl of Balfour, who has been an outspoken critic of male primogeniture. It is perhaps because he does not have any sons, but does have four daughters.
His daughters cannot inherit his title and it is set to pass to his younger brother, when the Earl passes away.
A proposed new law, which has the support of Prime Minister Theresa May, would allow British citizens to change their gender.
The Earl of Balfour suggests that one of his daughters could use the law to inherit his title.
It is not clear if he is actually suggesting that one of his daughters would go to that length to get around the strict rules of male primogeniture.
Reference: Daily Mail (Nov. 29, 2017) "New gender laws could let my girls inherit title, says Earl: Aristocrat suggests one of his daughters could identify as male after his death to claim his title."
If your children inherit your retirement accounts, they will have options about what to do with them.
The Wills, Trusts & Estates Prof Blog discusses some of the options that heirs have when inheriting retirement accounts in "What Your Kids Can Do When They Inherit Your Retirement Accounts."
Most people designate their spouses as the beneficiaries of their retirement accounts. However, people sometimes name non-spouse beneficiaries, such as their children.
What the children can do with the accounts is not as simple as it is for spouses. However, there are a few options.
The options include:
• The assets in the account can be taken out immediately as one lump sum.
• The assets in the account can be taken out whenever needed, as long as the account is empty within five years.
• The children can choose to stretch the account out over their own expected lifetimes. They will need to make annual required minimum distributions and must take the first one by a set time.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and advise you on your retirement accounts.
Reference: Wills, Trusts & Estates Prof Blog (Nov. 22, 2017) "What Your Kids Can Do When They Inherit Your Retirement Accounts."
If you inherit an IRA, you need to carefully consider your options and tax consequences.
Americans hold a staggering amount of wealth in individual retirement accounts. It is far more wealth than the current account holders could ever possibly spend in their own lifetimes.
That means that many people who have IRAs, will eventually pass them on to their beneficiaries.
While that can be great news for those who inherit the accounts, it can also turn to bad news, if the beneficiaries make the wrong decisions about what to do with those accounts.
Recently, Forbes discussed what some possibilities are for beneficiaries in "What To Do If You Inherit an IRA."
The single most important thing to keep in mind is that an inherited IRA can be the source of lifetime payments or it can be a source of a very large and immediate tax bill.
If you are smart, then you will want it to be the former, unless you absolutely need a large sum of money right away.
The general rule of thumb is that you should never take more out of an inherited IRA than you are absolutely required to take by law. It is recommended that you take no more than the required minimum distribution.
Exactly how much that is, will depend on several factors.
That is why you should never make a decision about what to do with an inherited IRA, without seeking the advice of attorneys and accountants.
Reference: Forbes (July 10, 2017) "What To Do If You Inherit an IRA."
Parents face a tough decision, when it comes to leaving an inheritance for their children.
There two schools of thought when it comes to leaving inheritances, according to Forbes in "Why Not To Leave Too Much To Your Grown Up Kids."
It is generally accepted that when parents pass away, everything they have left will be inherited by their children. However, there is another approach to inheritances that a few people have always taken.
The second approach comes from a belief that if children know they will receive large inheritances from wealthy parents, then they will have little incentive to make their own money. They will become entitled and lazy.
The thinking also goes that even if the children do not know ahead of time, they will become entitled once they do receive a large inheritance.
It is true that some people do become entitled when they know they will receive considerable wealth later.
Others do not.
The best solution for parents may be to take stock of the character of their own children and make a decision regarding what is best, given those characters.
An estate planning attorney can help guide you in creating an estate plan that fits your unique circumstances and works best for the entire family.
Reference: Forbes (June 7, 2017) "Why Not To Leave Too Much To Your Grown Up Kids."
When wealth is passed down through the family, it often is gone by the second generation. However, it doesn’t have to be.
Because wealth often dissipates by the second generation, it is important to make sure you are one of the exceptions that preserves the wealth, according to Financial Advisor in "These 5 Mistakes Destroy Generational Wealth."
Things to avoid if generational wealth comes your way include:
• Do not spend recklessly as soon as you get an inheritance. Buying all of your dream items, is not a good idea immediately after receiving an inheritance.
• Do not think you can handle the assets without receiving proper financial advice.
• Take your time to make a plan about what to do with the money. There is no need to act right away.
• Make sure that you are not paralyzed by all of your investment options. You should not act right away in a rush, but you do need to act eventually.
• Avoid giving to every friend or family member with a hand out, at your expense.
An estate planning attorney can guide you in creating an estate plan that fits your unique circumstances, including generational wealth.
Reference: Financial Advisor (May 23, 2017) "These 5 Mistakes Destroy Generational Wealth."