REPOST: Step Up in Basis at Death: Essential Guide for Inherited Assets

The step up in basis at death is an important provision within the tax code that can benefit those inheriting assets. It resets the value of inherited assets to their fair market value at the decedent’s death, reducing future taxes on capital gains. In this article, we’ll explain how this rule works, its benefits, and what types of assets qualify. We are pleased to share an insightful article, written by our friend, Gary Massey from Massey and Company, CPA.

Key Takeaways

• The step-up in basis at death resets the value of inherited assets to their fair market price at the time of the decedent’s death, reducing potential capital gains taxes for heirs.

• Various capital assets, including real estate and stocks, qualify for the step-up in basis, while exceptions exist for certain retirement accounts and gifted property.

• Proper valuation of inherited assets is essential for establishing the new basis.

Understanding Step Up in Basis at Death

The step-up in basis is a tax code rule that resets the value of an inherited asset to its fair market price at the time of the decedent’s death.  The Internal Revenue Service (IRS) plays a crucial role in determining this fair market value, facilitating the calculation of taxes on estates and gifts.  This change creates a new basis for tax purposes. Usually, this adjustment increases the asset’s cost basis, under the assumption that fair market values typically increase over time.

This provision can be especially advantageous for a person inheriting high-value assets, as it significantly mitigates the capital gains taxes owed upon sale.

Example of Stepped Up Basis

If a property bought for $100,000 is worth $500,000 at the time of the owner’s death, the heir’s new basis becomes $500,000. If the property is sold for $550,000 later, the heir’s capital gains taxes would be owed only on the $50,000 increase, not the $450,000 increase from the original purchase price.

While not common, if the value of an asset decreases after the owner’s death, its basis steps down rather than up for the heirs. This will probably increase, rather than decrease, the tax on the sale of the inherited asset.

Assets That Qualify for Step Up in Basis

The tax code allows a wide range of assets to qualify for a step-up in basis. Eligible assets include:

• real estate

• stocks

• artwork

• bank accounts

• business interests

• investment accounts

• personal property

Exceptions to the Step Up in Basis Rule

Retirement Accounts and Basis Step Up

Retirement accounts, such as 401(k) plans and traditional IRAs, are notable exceptions to the step-up in basis rules. As a result, these accounts may trigger a significant tax burden for the beneficiaries, especially if the account holds substantial assets.

Additionally, the SECURE Act of 2019 introduced new rules for taxation of inherited retirement accounts, requiring most non-spouse beneficiaries to withdraw the entire account balance within ten years of the original owner’s death. This accelerated distribution schedule can further increase the taxation of the heirs, as they may be pushed into higher income tax brackets due to the large distributions.

Trusts and Basis Step Up

Certain trusts, including irrevocable trusts and intentionally defective grantor trusts, also do not qualify for a stepped-up basis. This is because the assets held within these types of trusts are not considered part of the decedent’s estate for tax purposes. As a result, the beneficiaries of these trusts cannot benefit from the step-up in basis rule and may face higher capital gains taxes when selling the inherited assets.

Gifts and Basis Step Up

Another key exception to the basis provision is when property is gifted during the giver’s lifetime. In such cases, the recipient retains the original owner’s cost basis, known as the carryover basis, instead of receiving a stepped-up basis at the donor’s death. This can significantly impact the capital gains taxes the recipient must pay if they sell the gifted property in the future.

Example:

Jane gifts her vacation home to her daughter, Sarah, while Jane is still alive. Jane originally bought the home for $200,000, and at the time of the gift, its market value is $500,000. Since the property is gifted, Sarah inherits Jane’s original basis of $200,000.

If Sarah decides to sell the vacation home later for $600,000, she will owe capital gain taxes on the $400,000 increase from the original purchase price ($600,000 – $200,000), not the $100,000 increase from the value at the time of the gift ($600,000 – $500,000). This can result in a higher tax burden for Sarah compared to if she had inherited the property and received a stepped-up basis.

Special Use Valuation for Farms and Closely Held Businesses

“Special use valuation” may apply to certain farms or closely held businesses, affecting the step-up basis calculation. This tax code provision allows the farm or business to be valued based on its “current use” rather than its “highest and best use.”

Special use valuation can significantly reduce the estate’s value for tax purposes, making it easier for heirs to continue operating the farm or closely held business without being burdened by high taxes.

An example of special use valuation is to value a farm based on its current agricultural use, rather than the future value of the redeveloped land.  This provision helps preserve family farms and businesses, ensuring they can be passed down to future generations without the need to sell off assets to pay taxes.

Valuations After Death

Proving the new basis after the original owner’s death is important for determining the tax implications of inherited assets. The fair market value of appreciated property at the time of death should be carefully documented. This is important for tax calculations and in the event of an IRS audit.

Valuation of Real Estate

Accurate valuation of inherited real estate is important for establishing the step-up basis for tax purposes.  The valuation process involves a detailed inspection of the property, analysis of comparable sales, and consideration of current market conditions. Appraisers may also take into account any unique features of the property, such as historical significance or special zoning regulations, which could affect its value.

Obtaining a thorough appraisal report can provide a solid foundation in case of any disputes with the Internal Revenue Service regarding the property’s value.

Valuation of Publicly Traded Stocks and Funds

The fair market value for publicly traded stocks and funds is determined by their market prices on the date of the benefactor’s death. Check the stock prices on that specific date to establish this value.

Valuation of Private Companies and Other Assets

Valuing private companies for a new basis typically requires certified business appraisers. These professionals ensure compliance with valuation standards and accurately determine the fair market value of the inherited business interests.

The valuation process for private companies can be more complex than for publicly traded assets due to the lack of readily available market prices. Business appraisers will consider various factors, such as the company’s financial statements, market conditions, industry trends, and the overall economic environment. They may also analyze comparable sales of similar businesses and apply different valuation methods, such as the income approach, market approach, or asset-based approach, to arrive at a fair market value.

In addition to private companies, other assets such as intellectual property, collectibles, and unique personal property may also require specialized appraisals to establish their new basis. Intellectual property, including patents, trademarks, and copyrights, can have significant value and require expert evaluation to determine their worth accurately. Collectibles, such as rare coins, stamps, vintage cars, or fine art, often necessitate appraisal by specialists familiar with the specific market for these items.

Basis Step Up and Married Couples

The step-up in basis rule is particularly beneficial for married couples living in community property states. In these states, when one spouse dies, the entire property owned jointly by the couple receives a step-up in basis to its fair market value at the time of the deceased spouse’s death. This means that the surviving spouse can sell the property with minimal capital gains tax liability, as the new basis is often close to the current market value.

Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Additionally, Alaska allows couples to opt into community property arrangements.

In non-community property states, only the deceased spouse’s share of jointly owned property receives a step-up in basis. The surviving spouse retains the original basis for their share, which can result in higher capital gains taxes if the property is sold. Understanding these differences is crucial for estate planning and tax strategies for married couples.

Estate Planning and Basis Step Up

Estate planning is the process of organizing your affairs to ensure your assets are managed and distributed according to your wishes after your death or during incapacity. It is not just about writing a will—it’s about creating a comprehensive plan to preserve wealth, minimize taxes, and reduce burdens on your loved ones. At its core, estate planning is about protecting your legacy.

A key component of estate is the step-up in basis rule, which can significantly impact the tax implications for your beneficiaries. The step-up basis can be integrated into comprehensive strategies tailored to estate planning clients’ unique goals, ensuring wealth transfers are not only efficient but also aligned with their long-term wishes.

Equalizing Inheritances

One of the challenges in estate planning is ensuring fairness among heirs, especially when different types of assets are involved. For example, one child may inherit appreciating assets, like real estate or stock portfolios, while another receives liquid assets, such as cash or bonds. In the absence of careful planning, the child inheriting appreciating assets could face a significant tax burden when selling those assets, potentially making the inheritance inequitable.

By leveraging the step-up in basis, we can eliminate this disparity. When the basis of appreciating assets is adjusted to their fair market value at the time of inheritance, it minimizes or eliminates capital gains tax on prior appreciation. This ensures that heirs receiving property are not unfairly burdened, enabling estate planning lawyers to craft an estate plan that promotes fairness across the family.

Flexible Tool in Estate Planning

The step-up basis is a versatile element of estate planning, offering flexibility in deciding how and when to transfer assets. For instance, it is vital to determine asset retention strategies. For highly appreciated assets, it may be more advantageous to retain these assets during a client’s lifetime so that they receive a step-up in basis upon death, reducing future tax burdens for heirs.

On the other hand, selling or gifting assets during a client’s lifetime may make more sense based on the client’s goals. By evaluating the impact of a step-up in basis and optimizing these lifetime transactions, it is possible to guide clients in making informed decisions about which assets to hold, sell, or gift.

This flexibility allows estate planners to adapt plans as circumstances change, ensuring that the strategy continues to align with the client’s wealth preservation and distribution goals.

Avoiding Unnecessary Burdens

Another significant benefit of incorporating the step-up basis into estate planning is how it simplifies the process for heirs. Assets that receive a step-up in basis often pass outside of probate, especially when transferred through trusts or other estate planning instruments. This approach minimizes delays, avoids unnecessary expenses, and reduces stress for grieving family members. Streamlining the process preserves more wealth for beneficiaries and ensures a smoother transition of assets.

Summary

In summary, understanding the step-up in basis at death is crucial for effective estate planning and minimizing tax liabilities. This provision offers significant tax relief for heirs by resetting the cost basis of inherited assets to their fair market value at the time of the decedent’s death. Staying informed about potential changes to these rules and their implications is essential for making informed financial decisions.

Frequently Asked Questions

What is the step-up in basis at death?

The step-up in basis at death recalibrates the value of an inherited asset to its fair market value at the time of the decedent’s passing, thereby resetting the cost basis for tax implications. This adjustment can significantly reduce capital gains taxes for the heir upon selling the asset.

How does the step-up in basis affect capital gains taxes?

The step-up in basis effectively reduces capital gains taxes by adjusting the asset’s cost basis to its fair market value at inheritance, which lowers the taxable gain upon sale. This provision can significantly benefit heirs by minimizing their tax liabilities.

Which assets qualify for a step-up in basis?

Assets that qualify for a step-up in basis include real estate, stocks, artwork, bank accounts, business interests, investment accounts, and personal property. Understanding this can significantly impact the tax implications of inherited assets.

Are there any exceptions to the step-up in basis rule?

Yes, exceptions to the step-up in basis rule include inherited traditional IRAs, 401(k) plans, certain trusts, and gifted property, which do not receive this adjustment.

What are the potential changes to the step-up in basis rules?

Potential changes to the step-up in basis rules may be proposed to eliminate or modify them, reflecting criticism that they disproportionately benefit wealthy families. Such alterations could greatly affect estate planning and asset transfer to heirs.

What is the estate tax exemption?

Understanding the federal estate tax exemption is crucial in estate planning, as it determines the threshold above which estates must file Form 706 and potentially face tax liabilities

To schedule a free consultation with a Bequest attorney you can submit an inquiry form on the main page of our website (https://www.bequest.law),  call at 404.500.7531, or email hello@bequest.law. 

REPOST: The Complete Guide to Filing Taxes for a Deceased Person, By Gary Massey and Rachel Donnelly

Navigating the complexities of taxes after losing a loved one can feel overwhelming, but it is an essential part of the estate administration process. We are pleased to share an insightful article, “The Complete Guide to Filing Taxes for a Deceased Person”, written by our friends, Gary Massey from Massey and Company, CPA and Rachel Donnelly from Afterlight. This comprehensive guide provides valuable information that can help you better understand the steps and responsibilities involved in handling tax matters on behalf of a deceased individual. 

As estate planners, we recognize the importance of accurate and timely tax filing to ensure your loved one's estate is managed smoothly and efficiently. We are grateful for Gary and Rachel’s expertise and are confident their article will serve as a helpful resource for our clients and community. Please find the article below or click this link to see the original version. 

The Complete Guide to Filing Taxes for a Deceased Person

Filing taxes for a deceased person can be complex. This article explains how to file their final tax return, report income, and claim deductions. It also covers the responsibilities of the personal representative, the importance of selecting the correct filing status, and the potential consequences of failing to file a final return. Additionally, the article delves into handling inherited property, including retirement accounts, and understanding state-specific tax obligations.

With this comprehensive guide, you’ll be equipped to understand the intricate process of settling a deceased person’s tax affairs, ensuring compliance and potentially saving on taxes.

Key Takeaways

• The final tax return for a deceased person must report all income earned until the date of death and settle any tax obligations, typically filed by an executor or surviving spouse.

• Selecting the correct filing status, such as ‘married filing jointly’ or ‘Qualifying Widow(er)’, is essential for maximizing tax benefits and ensuring compliance following a spouse’s death.

• Failure to file a final tax return can result in penalties and legal consequences; thus, a personal representative must manage the tax affairs and meet established deadlines.

Understanding Final Tax Returns

A final tax return reports the deceased taxpayer’s income and settles any remaining tax obligations for the year of death, concluding their tax affairs and ensuring any owed taxes are paid. Filing this return involves reporting all income and expenses up to the date of death on the decedent’s individual income tax return.

Typically, the executor or administrator of the estate files the final tax return. If no executor is named, a surviving spouse or other survivor can assume this responsibility. The personal representative, which could be the executor or surviving spouse, must sign the final tax return to authenticate it.

Most deceased persons’ tax returns use Form 1040, with Form 1040-SR available for seniors. Indicating the decedent’s death on the deceased person’s tax return avoids processing issues.

It is advisable to keep deceased tax returns for up to seven years and consult professionals on sensitive financial matters related to deceased tax filings.

Filing Status Options

Selecting the correct filing status is vital when preparing a final tax return. If a surviving spouse does not remarry within the year of their spouse’s death, they can file as ‘married filing jointly’ or ‘married filing separately’. The IRS considers the couple married for the entire year, allowing some flexibility in filing status.

Additionally, a surviving spouse with dependent children can file as a Qualifying Widow(er) for up to two years following their spouse’s death. This status provides the benefit of joint return tax rates, potentially offering tax savings for surviving spouses.

Selecting the correct filing status can maximize tax benefits and ensure compliance, so evaluating all available options carefully is important.

Reporting Income for a Deceased Person

Income earned from the start of the year until the date of death, including wages, interest, and other earnings, must be reported in deceased person’s final return.

To file the final return, use Form 1040 or 1040-SR, marking ‘Deceased’ along with the decedent’s name and date of death to ensure proper processing and avoid complications.

Deductions and Credits on the Final Income Tax Return

Tax-deductible expenses paid before death, including medical expenses incurred within a year of the deceased’s death, can be claimed on the final return, potentially reducing taxable income.

Tax credits and deductions applicable before death can still be claimed on the decedent’s final return, ensuring the deceased taxpayer receives all entitled benefits and potentially reducing overall tax liability.

What if the Deceased Person Owned a Business?

If the deceased person owned a business, specific bookkeeping and accounting requirements must be addressed, ensuring that all business-related income and expenses are accurately reported on the appropriate tax returns.

The required tax returns for the business depend on its structure and operations. Understanding these requirements ensures compliance and proper closure of the business’s tax affairs.

For businesses structured as sole proprietorships, the income and expenses are reported on the deceased’s final personal tax return. Partnerships, corporations, and LLCs may require separate tax filings, and the executor must determine the appropriate forms and deadlines.

Any outstanding debts or liabilities of the business need to be settled, and the executor should work closely with CPAs and legal advisors to manage the complexities of business taxation after the owner’s death. Proper documentation and careful record-keeping are important throughout this process to ensure transparency for the heirs of the estate, as well as compliance with tax laws.

Valuation of the Business

It is important to assess the value of the business at the time of the owner’s death, which may involve obtaining a professional appraisal. This valuation can affect estate taxes and the distribution of assets to beneficiaries. If the business continues to operate after the owner’s death, the executor must manage ongoing operations, including payroll, inventory and accounts receivable, while ensuring all tax obligations are met.

Claiming Refunds for a Deceased Person: Death Certificate Needed

To claim a refund for a deceased taxpayer, Form 1310 must be used and attached to the final return if a refund is expected for an unmarried deceased taxpayer. Proper documentation, such as a death certificate, is required to process the refund for a person claiming refund.

If a personal representative isn’t court-appointed, they must include Form 1310 to claim any refunds owed to the deceased. This form is not required if the personal representative is a surviving spouse filing jointly.

Consequences of Not Filing Taxes

Failing to file a deceased person’s final tax return can result in penalties and interest from the IRS, which can accumulate over time and significantly increase the amount owed.

Addressing any unfiled tax returns from previous years is crucial to avoid further complications and penalties.

The court appointed personal representative should sign the final tax return. Form 56 informs the IRS of the fiduciary relationship involving the personal representative.

In addition to the immediate financial repercussions, failing to file can create long-term legal and administrative challenges. The IRS has the authority to place liens on the estate, which can delay the distribution of assets to beneficiaries and complicate the settlement process. Executors and personal representatives may also find themselves personally liable for any unpaid taxes if they distribute estate assets before settling tax obligations.

Moreover, unfiled tax returns can attract closer scrutiny from the IRS, potentially leading to audits and more intensive investigations. This increased scrutiny can further complicate the estate administration process, requiring additional time and resources to resolve.

To mitigate these risks, it is advisable to seek the assistance of a tax professional or estate attorney who specializes in post-mortem tax matters. These experts can provide guidance on the proper filing procedures, help identify all sources of income and deductions, and ensure that all necessary forms and documentation are accurately completed and submitted.

Handling Inherited Property and Assets

Inherited assets are not classified as income for federal income tax purposes, but any income generated from these assets, such as interest or dividends, is taxable to the beneficiaries of the estate.

This means that while the initial transfer of assets like real estate, stocks, or savings accounts does not trigger an immediate tax liability, any subsequent earnings derived from these assets must be reported and taxed accordingly.

Example of Inherited Property

For example, if a beneficiary inherits a rental property, the rental income generated from that property will be subject to income tax. Similarly, if the inherited assets include stocks or bonds, the dividends or interest earned from these investments will also be taxable.

It is important for beneficiaries to keep accurate records of all income generated from inherited assets to ensure proper reporting and compliance with tax laws.

While the federal government does not impose an inheritance tax, some states do have their own inheritance taxes.

Tax Basis of Inherited Assets

Beneficiaries should be aware of the potential for capital gains tax if they decide to sell inherited assets. In general, capital gains are the excess of the selling price of the inherited assets over their tax basis.

The tax basis of inherited property is typically stepped up to its fair market value at the date of the decedent’s death. This step-up in basis can significantly reduce the capital gains tax liability when the asset is eventually sold. However, any appreciation in value from the date of inheritance to the date of sale will be subject to capital gains tax.

The executor of an estate can opt for an alternate valuation date, six months post-death, if it reduces both the gross estate amount and estate tax liability.

Income in Respect of a Decedent

Income in respect of a decedent (IRD) refers to income that was earned by the deceased but not received before their death. This income is taxable to the recipient, which could be the estate or the beneficiary who inherits it. Examples of IRD include unpaid salary, bonuses, dividends, interest, and distributions from retirement accounts.

When managing IRD, it is important to keep detailed records of all income earned and received, as well as any related expenses. This documentation will help in accurately reporting the income and claiming any applicable deductions or credits.

Special Considerations for Retirement Accounts

Beneficiaries of inherited IRAs generally must take distributions by the end of the year following the account holder’s death. The 10% early withdrawal penalty does not apply to these distributions, making it easier for beneficiaries to access the funds.

For Traditional IRAs, distributions are taxed as ordinary income. Beneficiaries of Roth IRAs can take distributions tax-free if the account was established for at least five years. Spousal beneficiaries can roll over the inherited IRA into their own retirement account, benefiting from tax deferral.

Additionally, it’s important to understand the specific rules and timelines associated with inherited IRAs. Non-spousal beneficiaries must adhere to the SECURE Act regulations, which generally require that the entire account be distributed within ten years of the original account holder’s death. This rule aims to ensure that the tax advantages of IRAs are not extended indefinitely.

For beneficiaries who are minors, disabled, chronically ill, or not more than ten years younger than the deceased, different distribution rules may apply, allowing for a life expectancy payout method. This can provide a more extended period for tax-deferred growth, potentially resulting in significant financial benefits over time.

Moreover, it’s crucial to consider the impact of required minimum distributions (RMDs) on overall financial planning. Failing to take RMDs can result in substantial penalties, so beneficiaries should work closely with financial advisors to ensure compliance and optimize their tax strategies.

Tax Return for Income Earned by the Estate or Trust

Income earned by the estate or trust after the deceased’s death must be reported on a separate tax return, ensuring that all income is properly accounted for and taxed accordingly.

An employer identification number (EIN) may be required for the estate or trust.

Accurate accounting and bookkeeping are essential for managing the estate’s finances and ensuring tax compliance. This includes meticulously tracking all sources of income, such as rental income from properties, dividends from investments, and any other earnings. Additionally, expenses incurred by the estate, like maintenance costs for properties, professional fees, and other administrative expenses, must be documented and reported accurately.

The income tax return of an estate or trust is Form 1041, U.S. Income Tax Return for Estates and Trusts. This form reports the income, deductions, gains, and losses of the estate or trust.

Trusts After the Death of the Grantor

Trusts, depending on their structure, may have different requirements. For instance, a simple trust must distribute all its income to beneficiaries annually, and the beneficiaries are then responsible for reporting this income on their personal tax returns. Complex trusts, on the other hand, may retain some income, allowing for more intricate tax planning strategies.

Estate Tax

The estate tax, often referred to as the “death tax,” is a tax on the transfer of the estate of a deceased person. The federal estate tax only applies if the value of the estate exceeds a certain threshold, known as the estate tax exclusion amount, which is adjusted annually for inflation. As of 2024, the exclusion amount is $13.61 million per individual.

If the estate’s value surpasses this exclusion amount, the excess is taxed at rates that can be as high as 40%. It is crucial for the executor or personal representative to obtain a precise valuation of all the estate’s assets, including real estate, investments, personal property, and business interests. This valuation process may require professional appraisals to ensure accuracy and compliance with IRS regulations.

Estates exceeding the federal estate tax exclusion amount must file Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return. This form has its own deadlines and requirements, and timely filing is essential to avoid penalties and interest.

In addition to the federal estate tax, some states impose their own estate taxes with different exclusion amounts and tax rates. Executors must be aware of these state-specific requirements and ensure that any state estate taxes are also addressed.

It’s important to note that the estate tax is separate from the inheritance tax, which is levied on the beneficiaries who receive the estate’s assets. While the federal government does not impose an inheritance tax, several states do, and the rates can vary depending on the beneficiary’s relationship to the deceased.

State-Specific Tax Obligations

Certain states impose estate taxes that can apply even if the estate does not meet the federal tax threshold of $13.61 million. Maryland uniquely levies both estate and inheritance taxes. State estate taxes are generally assessed based on the deceased’s state residency at the time of death.

Inheritance taxes, charged at the state level, are paid by beneficiaries rather than the estate itself. Estate and inheritance tax rates can vary significantly by state, often depending on the relationship between the deceased and the beneficiary.

Failure to file a deceased person’s final tax return can lead to the IRS placing a lien against the estate, prioritizing tax payments over all other debts.

Filing Deadlines and Extensions

The final tax return for a deceased person is due on the same schedule as if they were alive, typically by April 15 of the following year. E-filers must follow specific instructions for signing and indicating the decedent’s status, while paper filers should write ‘deceased’ along with the name and date of death on the return.

An automatic extension can be requested using IRS Form 4868 if more time is needed.

State-Specific Deadlines and Extensions

In addition to federal requirements, state tax authorities may have their own deadlines and extension procedures. It’s important to be aware of these state-specific obligations and ensure compliance with both federal and state tax laws.

By understanding the deadlines and extension options, personal representatives can effectively manage the filing process, ensuring that all tax obligations are met and potential penalties are avoided.

Attorney Files Petition of Discharge

Attorneys file a petition of discharge to show that all expenses and liabilities, including taxes, debts, and funeral and burial expenses, have been paid.

This petition is a critical court document in the probate process, confirming that the estate has been properly administered and that the personal representative has fulfilled their duties. It involves a detailed accounting of all transactions related to the estate, including the payment of creditors, distribution of assets to beneficiaries, and settlement of any outstanding obligations.

Once the petition is filed, the court reviews the documentation to ensure everything is in order. If approved, the court issues an order of discharge, officially releasing the personal representative from their responsibilities and closing the estate.

The petition of discharge not only provides legal closure but also offers peace of mind to the beneficiaries, knowing that all financial matters have been appropriately handled.

International Tax Issues After the Death of a Loved One

Tax issues can arise when a US person inherits from someone outside the US. Conversely, non-US persons inheriting from a US person also face tax implications.

When a US person inherits from someone outside the US, they may be subject to foreign inheritance taxes, depending on the laws of the country where the decedent resided. Additionally, the US requires the reporting of foreign inheritances over a certain threshold (e.g., Form 3520). Failure to report can result in significant penalties.

Non-US persons inheriting from a US person may be subject to US estate taxes on the portion of the estate that exceeds the exemption amount. The US estate tax system can be complex, and the tax rates can be substantial.

Furthermore, international tax treaties between the US and other countries can influence the tax obligations of both US and non-US heirs. These treaties may provide relief from double taxation or offer other benefits, but they require careful navigation and understanding.

Key Takeaways About Taxes When A Loved One Passes Away

A final tax return reports the income earned by the deceased until the date of death and settles their tax obligations. Filing status options, such as surviving spouse filing or qualified widow status, affect tax rates and deductions. Reporting all wages, interest, and dividends accumulated until the date of death is essential.

Deductions on the final return may include medical expenses paid within one year of death and the standard deduction applicable to the deceased. Handling inherited property affects tax obligations, particularly regarding the basis of inherited property for capital gains. Specific rules apply to inherited retirement assets, including potential tax liabilities on Traditional IRAs and exceptions for Roth IRAs.

Failing to file a final tax return can result in significant penalties and legal repercussions, making compliance imperative. A court-appointed personal representative or legal representative manages the deceased individual’s tax affairs and files the necessary returns.

State-specific tax obligations may include additional inheritance and estate taxes, differing from federal tax requirements. Meeting established deadlines for filing the final tax return is crucial, and extensions can be requested if more time is needed.

General Guidance for the Executor or the Surviving Family

Settling the affairs of a loved one, including filing taxes, can be an overwhelming task for the executor or surviving family members. To aid in this intricate process, Rachel Donnelly from AfterLight, who provides 1:1 guidance to overwhelmed executors, offers the following advice.

These steps not only streamline the tax filing but also ensure that all financial and legal responsibilities are met with due diligence and care.

1. Locate Important Documents: Gather all crucial paperwork, including past tax returns, medical bills, wills, trusts, and insurance policies. These documents will provide essential information needed for filing taxes and managing other aspects of the estate.

2. Secure Property: Immediately ensure that all physical property, including the house, cars, boats, and other significant assets, are secured. This may involve changing locks, storing vehicles in secure locations, and ensuring that all insurance policies are up to date to protect these assets from loss or damage.

3. Forward the Mail: If necessary, arrange to have mail forwarded to your address or the address of the executor. This step is crucial to capture any statements, bills, or tax documents that may arrive posthumously, ensuring they are included in the estate’s final tax filing

4. Get Organized: Create a comprehensive spreadsheet to list all assets and liabilities. This should include bank accounts, property, stocks, and personal items of significant value. Keep track of all expenses related to the estate, as well as important deadlines, especially for tax filings. This will help in making informed decisions and ensure that nothing is overlooked.

5. Build Your Team: Engage professionals who specialize in estate and trust issues. Hiring an experienced  trust and estate attorney and a CPA who understands the intricacies of estate taxes can provide invaluable guidance and help avoid costly mistakes. These professionals will ensure that all legal and financial steps are handled according to state and federal laws.

6. Secure Appraisals As Needed: Obtain appraisals for high-value items such as real estate, art, jewelry, and other tangible personal property. Accurate valuations are critical for both tax purposes and equitable distribution among heirs.

7. Maintain Communication with Beneficiaries: If you are the appointed executor, it’s essential to keep open lines of communication with all beneficiaries. They need to be kept informed about the estate’s progress and any decisions that may affect their inheritance.

8. Ask for Help: Consider hiring an after loss professional to help keep you organized and on top of tasks and deadlines. An after loss professional can provide crucial support and guidance, helping you navigate the complex process of estate management with greater ease and efficiency.

By following these steps, executors can manage their duties more effectively, ensuring that all financial and legal aspects of the estate are addressed. This not only aids in the smooth execution of the estate but also helps in minimizing potential stress during an already challenging time.

Integrating these strategies within the broader context of estate settlement and tax compliance is crucial. They not only facilitate a smoother process but also help in preserving the estate’s value by minimizing liabilities and ensuring that all obligations are met in a timely manner.

Frequently Asked Questions

Who is responsible for filing a deceased person’s final tax return?

The responsibility for filing a deceased person’s final tax return falls to the executor or administrator of the estate, or to the surviving spouse if there is no appointed executor. It is crucial to ensure this task is completed accurately and promptly.

What forms are needed to file a deceased person’s final tax return?

To file a deceased person’s final tax return, you typically need Form 1040 or Form 1040-SR, and you may also require Form 1310 to claim any refunds. Ensure all necessary documentation is complete to facilitate the filing process.

Are inherited assets considered taxable income?

Inherited assets are not considered taxable income; however, any income generated from these assets, like interest or dividends, is subject to taxation.

Can a surviving spouse file jointly after the death of their spouse?

Yes, a surviving spouse can file as ‘married filing jointly’ or ‘married filing separately’ for the year of their spouse’s death, provided they do not remarry within that year.

What are the consequences of not filing a deceased person’s final tax return?

Failure to file a deceased person’s final tax return can lead to penalties, interest from the IRS, and potential legal repercussions, including liens on the estate. It is essential to meet this obligation to avoid these severe consequences.

What if the Executor does not know which tax returns the deceased filed in the past?  Or, what should the Executor do if tax documents are missing, like Form 1099 or W-2?

In our experience, this issue comes up all the time.  Your CPA will be able to get this missing information from the IRS.  Ask your CPA to prepare a Power of Attorney and request account transcripts and wage and income transcripts for the person who passed away.

New IRS Rules for Inherited Retirement Accounts: What Heirs Need to Know

The IRS has finally provided much-needed clarity on the rules surrounding inherited retirement accounts, a topic that Bequest law has followed closely since the 2019 SECURE Act. This new guidance is crucial for heirs trying to navigate the complex web of regulations governing withdrawals from these accounts.

A Shift in Withdrawal Rules

Before 2019, heirs had the flexibility to stretch out withdrawals from inherited retirement accounts, such as IRAs and 401(k)s, over their lifetimes. This allowed for smaller, more manageable payouts, minimized income taxes, and maximized the growth potential of the accounts. However, the 2019 SECURE Act legislation changed to rules to require most non-spouse heirs to withdraw the full amount of an inherited retirement account within 10 years, a significant shift that left many questions unanswered.

On July 18, 2024, the IRS finalized rules that clarify how heirs must approach these withdrawals. For most beneficiaries, the new rules require that they take a minimum withdrawal every year over the 10-year period. This contrasts with the previous assumption that heirs could wait until the final year to withdraw all the funds, potentially enjoying tax-deferred growth in the meantime.

Who it Effects

These new IRS rules primarily affect non-spousal heirs—children, grandchildren, siblings, and friends—who now need to adjust their financial strategies. If the original account holder was required to take minimum distributions (“RMDs”) before their death, the heir must start taking annual withdrawals the year after the account holder’s death.

For those who inherited accounts between 2020 and 2023, this guidance is especially crucial. The IRS has granted leniency by not penalizing heirs who failed to take required payouts from 2021 to 2024, but starting in 2025, these heirs must comply with the annual withdrawal requirements.

Avoiding a Tax Balloon

One of the significant concerns for heirs of an inherited IRA is the potential for a "tax balloon" in the final year if they follow the minimum withdrawal schedule each year. For instance, if an heir inherits a $100,000 IRA in 2020 and only takes out the minimum amount each year, they could face a substantial tax bill in the final year, 2030, due to a large remaining balance.

This could push the heir into a higher tax bracket, significantly increasing their tax burden. To mitigate this risk, heirs should consider withdrawing more than the minimum required each year, particularly if they expect their income to remain steady or increase in the future.

Best Accounts to Inherit: Roth IRAs

While the new rules apply broadly, one bright spot remains for heirs of Roth IRAs. Unlike traditional retirement accounts, Roth IRAs do not require annual withdrawals, allowing heirs to take advantage of tax-free growth until the 10th year when the entire account must be depleted.

Navigating Multiple IRAs and Complex Rules

The final rules do not entirely eliminate the confusion surrounding inherited IRAs. Heirs with multiple accounts may find themselves juggling different sets of rules, especially if they have inherited accounts under both the old and new laws. This complexity underscores the importance of careful planning and of seeking professional guidance.

The Importance of Estate Planning

These IRS rules highlight the need for comprehensive estate planning, particularly as Congress and the IRS continue to adjust and interpret laws governing retirement accounts. Heirs and those planning their estates should stay informed and consider how these changes might affect their financial strategies. The new guidance, while offering some clarity, also adds layers of complexity that necessitate careful consideration and expert advice.

For those managing inherited retirement accounts, the time to act is now—before the 2025 deadline looms large. Contact Bequest Law for specialized advice on how to structure your retirement account beneficiaries and to build a comprehensive estate plan. To schedule a free consultation with a Bequest attorney you can submit an inquiry form on the main page of our website (https://www.bequest.law),  call at 404.500.7531, or email hello@bequest.law. 

Did You Know There is a NEW Estate Planning Tool in Georgia?: Transfer on Death (TOD) Deed

The Transfer on Death (TOD) Deed is a new tool in estate planning in Georgia, designed to simplify the transfer of real estate upon the death of the owner. At first glance, it might seem like an easy way to avoid probate and ensure that your property goes directly to your chosen beneficiary. However, while the TOD deed offers certain conveniences, it comes with significant pitfalls that likely create more problems than it solves for most Bequest clients.

What is a Transfer on Death Deed?

A Transfer on Death Deed allows property owners to designate a beneficiary, who will automatically inherit the property upon the owner's death, without the need for probate. To be valid, the deed must be signed, notarized, and recorded with the county where the property is located while the owner is still alive. Most importantly, the transfer is complete only after the designated beneficiary files the death certificate and an affidavit within 9 months of the deceased property owner’s passing. 

A TOD deed does not give the beneficiary any rights to the property during the owner's lifetime. The owner retains full control and can sell, mortgage, or revoke the deed without the beneficiary's consent.

Conveniences of a TOD Deed

Avoiding Probate: 

One of the most significant benefits of a TOD deed is the ability to avoid probate where real estate is the only estate asset. By using a TOD deed, the property transfers automatically to the beneficiary upon death (and complying with further requirements) without the delays associated with probate court. 

Limited Creditor Avoidance:

Similar to jointly held property, transfers via a TOD deed may pass to the beneficiary even if the estate has creditors. Without a TOD deed, creditors may force the sale of a house before it is transferred to the beneficiary in order to get paid. However, the property still passes subject to the mortgage and is not shielded by Medicaid recovery efforts. This means that even if all requirements are met and the property successfully passes outside of probate, it still may not be shielded from all obligations.

Disclaimers & Dangers of TOD Deeds

While the TOD deed might appear to be a straightforward solution, there are several reasons why Bequest Law believes it could be a bad idea for many of our clients.

The Affidavit Requirement:

The TOD affidavit must be filed with the court within 9 months of the property owner’s death. If the beneficiary fails to file within 9 months, the property reverts back to the estate thereby triggering probate and undermining the goals of the estate plan. If your goal is to avoid probate, a revocable living trust is likely the better approach for most clients. 

Revocability and Potential for Conflict:

The TOD deed is revocable at any time by the property owner. If the real property is owned by two people, i.e., a couple, either party can revoke or change the deed without the other's consent. This also means that if one spouse dies, the surviving spouse can entirely revoke the TOD deed. 

Therefore, for couples especially, this revocability component of the TOD deed has the potential to create significant uncertainty and legal battles over the true intentions of the deceased. 

Should You Consider a TOD Deed in Your Estate Plan?

While the Transfer on Death Deed in Georgia appears to offer a simple way to pass on real estate without probate, it rather carries significant risks that can complicate your estate, leading to unintended and costly consequences. Given these risks, a TOD deed may not be the best choice for your Georgia estate plan. Especially for those with complex family dynamics, significant assets, or concerns about timing and revocability, other estate planning tools such as revocable trusts or more comprehensive wills can provide better protection and clarity. 

Before opting for a TOD deed, it is crucial to understand the implications and to consult with your attorney to determine the best fit for your estate. To schedule a free consultation with a Bequest attorney you can submit an inquiry form on the main page of our website (https://www.bequest.law),  give us a call at 404.500.7531, or email hello@bequest.law.

A Letter to your Executor

Dear Executor,

As the executor, you play a crucial role carrying out the wishes outlined in your loved one's will. Knowing that this can feel overwhelming, the Bequest Law team would like to offer our guidance in navigating the responsibilities you now hold. We have outlined some of the key responsibilities and steps that you will need to take as executor: 

Step 1: Locating the Will

The first step is to locate the original copy of your loved one's will. Typically, this document is kept in a safe or secure location, such as a personal safe or filing cabinet. If you are unsure of where the will is located, please reach out to us, and we can assist you in locating it.

Step 2: Understanding the Will

Once you have the original will in your possession, it is essential to read through its contents. The will outlines your loved one's wishes regarding the distribution of their assets, appointment of guardians for minor children, and any other specific instructions. If you have questions, Bequest Law is here to help.

Step 3: Probate Process

Depending on the nature and complexity of the estate, you may need to initiate the probate process. This involves filing the will with the probate court, validating its authenticity, and obtaining legal authority to distribute your loved one’s assets. Bequest Law can assist you in understanding this process, determine if probate is necessary, and if so, guide you every step of the way.

Step 4: Asset Management

As the executor, you will be responsible for managing your loved one's assets until they can be distributed to the beneficiaries named in the will. This includes taking inventory of all assets, safeguarding them, and ensuring they are appropriately managed throughout the probate process.

Step 5: Debts and Taxes

You will also need to settle any outstanding debts and taxes owed by the estate. To effectively do this you may have to work with creditors, file tax returns, and ensure all financial obligations are met before distributing assets to beneficiaries.

Important Note: Record-Keeping

Throughout this process it is essential to implement a reliable record-keeping system that works best for you to track all administration-related activities, for example financial transactions and beneficiary communications. 

The Bequest Law team is here to provide you with the guidance, support, and expertise you need to fulfill your duties as executor, and to ensure the utmost care and respect in honoring your loved one’s wishes. 

A Letter To Your Trustee

Dear trustee, 

As a trustee, you have been entrusted with managing the assets of your loved one’s trust in accordance with its terms. With this title, you now have a fiduciary duty to act in the best interest of the beneficiaries by exercising care, skill, and prudence in managing and distributing the trust assets. We understand that this can feel overwhelming, so the Bequest Law team would like to offer our guidance in navigating your responsibilities. 

This letter aims to outline the necessary steps to be taken in order to fulfill your duties as trustee. To effectively manage the trust, please refer to the following steps:

Step 1: Review the trust Documents

First, locate and read through the original trust agreement and any related documents in order to best understand its terms, conditions, and your responsibilities. 

Remember to pay special attention to the provisions concerning trustee powers, distribution guidelines, and any specific instructions. 

Step 2: Understanding the Trust

Second, talk to an advisor. These documents are full of legalese and are surely lengthy. Consulting with legal, financial, or tax professionals can assist you in managing the trust's assets, ensuring compliance with legal requirements, and optimizing financial performance. For example, their expertise can ensure timely filing of all required tax returns as well as payment of any taxes due. Even an hour of an advisor’s time can point you in the right direction.

Steps 3&4: Asset Management

Third, identify and take a comprehensive inventory of the assets in the trust. This may include bank accounts, real estate, investments, personal property, life insurance, etc. 

Fourth, open a bank account in the name of the trust if one does not already exist. You may do this by first obtaining an EIN with the IRS. It is helpful to establish a separate bank account in the name of the trust to handle all related financial transactions. This will ensure clear and separate accounting for the trust's funds. 

NOTE: There may already be a bank account set up in the name of the trust. In this scenario, you should take the certification of trust document and/or the full trust to the relevant bank to gain access to the account. The bank will use these documents to confirm your role as trustee and grant you access. 

Step 5: Communicate with Beneficiaries

Once you have a grasp of the Trust’s assets, you should then inform all beneficiaries of your appointment as trustee, and provide them with your contact information, an overview of what distributions they can expect, and the process for management and distribution. It is best to maintain open and transparent communication with the beneficiaries, providing regular reports to the beneficiaries detailing the trust’s financial status, distributions made, etc. 

Important Note: Record-Keeping

Throughout this process it is essential to implement a reliable record-keeping system that works best for you to track all trust-related activities, for example financial transactions and beneficiary communications. 

Being a trustee is a significant responsibility that requires diligence, transparency, and a commitment to acting in the best interests of the beneficiaries. By following the steps outlined above, you can more effectively manage the trust and fulfill your role with assurance. The Bequest Law team is here to provide you with the guidance, support, and expertise you need to fulfill your duties as trustee and to ensure the utmost care and respect in honoring your loved one’s wishes.

College Prep To-Do

College Care Package

CONGRATULATIONS graduates! 🎉 As you and your family prepare for your graduate’s next adventures away from home, you should consider adding the College Care Package  to your summer to-do list.

Bequest’s College Care Package includes a power of attorney and advance directive for health care for college age students. Why are these documents important to have in place before going off to college? Read more to find out! 

While turning 18 and moving off college brings independence and freedom, it's important for parents to maintain the legal authority to make decisions for their child in certain situations. This is where a power of attorney and advance directive for health care can be crucial.

What is a Power of Attorney and Why is it Important? 

A power of attorney is a legal document that grants someone else the financial authority to act on your behalf. In the case of a college student, a power of attorney can allow parents to act quickly and effectively to manage their child's financial affairs if they become incapacitated or unable to make decisions on their own. For example: 

• If your child becomes seriously ill or injured, you may need to access their bank accounts or sign important documents on their behalf. Without a power of attorney, you may not be able to do so.

• If your child is studying abroad and needs help managing their finances, a power of attorney can allow you to do so without having to navigate complex legal systems in a foreign country. 

What is an Advance Directive for Health Care and Why is it Important? 

An advance directive for health care is another legal document that can outline your child’s wishes for medical treatment in the event that they cannot make the decision for themselves. This is particularly important for college students:

• Who may be living far away from home and without immediate family nearby.

• Whose wishes should be followed to avoid potential conflicts or misunderstandings between family members during stressful and emotional times.

While it can be difficult to think about these scenarios, it's important to be prepared. Creating a power of attorney and advance directive for health care ensures that your child’s well-being is protected in the event of an emergency and provides you with the legal authority to act on their behalf when necessary.

Don't wait until it's too late – call Bequest today and take the necessary steps to ensure that your family is prepared for any situation.

I Have a Revocable Living Trust…Now What?

1. What is the difference between a revocable living trust and a will?

• A revocable living trust is an estate planning document that manages your assets. You do not have to die for your revocable living trust to be useful. You must fund your trust by titling assets in the name of the trust. Funding your trust is essential to avoiding probate.  A perk to having a revocable living trust is that by doing more work on the front-end, the probate process can be avoided upon your death. 

• A will is an estate planning document that indicates your wishes and desires upon your death.  When you die, your executor may probate your will to open your estate. A perk to having a will is that there is less work and costs on the front-end.

2. What is a pour-over will?

• A pour-over will is a fail-safe if any asset is not titled in the name of your trust. If your trust is properly funded, then your pour-over will will not have to be probated. Probate is the legal process that must occur when a person dies, and an estate must be opened on decedent’s behalf. Probate must occur in the probate court in the county where the decedent was a resident. 

3. What is a trustee?

• A trustee is the personal representative who has the authority act on behalf of the trust. For example, the trustee will have access to accounts titled in the name of the trust and make distributions to beneficiaries upon your death. 

4. Who do people generally choose as their trustee?

• The trustee should be responsible, organized, and trustworthy. Additionally, when choosing someone to serve in this role, consider whether being the trustee would be too much of an emotional, mental, and/or financial strain. 

5. What should my trustee or successor trustee do once I die?

• Once you die, your trustee should determine whether estate administration is necessary. Your executor should contact Bequest Law or another estate planning firm to make this determination. 

6. Should I share my trust with someone?

• One of the benefits to having a trust is that its contents will never be made public. You can choose to share copies of your trust with others or keep the contents of your trust private.

7. Do I need to file my trust with the court?

• No, you do not have to file your trust with the court.

8. When should I update my trust and other documents?

• You should update your trust when you have major life changes or when you want to change the representatives or beneficiaries within your trust. It is a good practice to allow an estate planning attorney to review your estate planning documents every seven years.

9. What if I move out of state?

• If you move out of state, you should have an estate planning attorney within that new state review your trust to ensure that your document is legally valid.

10. What if the address of an agent who is listed in my estate plan changes?

• If an agent has an address change, this is not a significant reason to update your estate plan. Your agent can still be contacted, for example by phone or email, if necessary.

11. Where should I keep my trust?

• You can keep your trust in a fireproof safe. If you would like, you can inform your trustee or successor trustee exactly where to find the original copy of your trust in the event of your death. 

• We do not recommend placing your trust in a safe deposit box because once you die, only a co-signer would be able to access its contents. If there is no co-signor, your trustee or successor trustee would have to obtain a court order to access the safe deposit box.

12. What if I need to make a change or amendment to my trust?

• A change or amendment to a trust is known as a restatement of trust.  Please reach out to Bequest if you would like to execute a restatement of trust.

13. Should I inform someone that I listed them as a trustee or successor trustee, executor, guardian?

• It is a great idea to have a conversation with someone before you list them as having a role within your estate plan. You may incorrectly assume this person would agree to the role and subsequently have to amend your estate plan if they do not want the role. 

14. Do I need to retitle my cars in the name of the trust?

• No, your Assignment of Personal Property transfers your cars to your trust. 

15. Do I need to file a tax return for my revocable living trust?

• There is no need to file a tax return for a revocable living trust. Your personal tax return will be used to report trust income that is more than $600.

16. Can I name my minor child as a trustee or successor trustee, executor, or guardian?

• You should not name a minor as a trustee or successor trustee, executor, or guardian. The person you name should be able to serve in their role if you were to die tomorrow. Additionally, such roles are too much of a strain for a minor who is already navigating grief.

17. Can I just leave everything to one person and trust them to divide things?

• The purpose of an estate plan is to ensure that your assets are distributed according to you. While it can be hard to imagine, after your death your loved ones may behave in ways that you never expected. It is best that you make the division of your assets to avoid turmoil.

18. Can I name the same person as trustee or successor trustee, executor, and guardian?

• Yes. Naming the same person for these roles would allow him or her to smoothly carry out their duties. For example, if your guardian and successor trustee are the same person, your guardian would not have to request funds from the successor trustee. The guardian would automatically be able to access those funds.

19. What if I buy property down the road or start a business?

• If you buy property in the future, you must title that property in the name of the trust. Additionally, your interest in a future business should be titled in the name of the trust. It is very important that you title later acquired assets in the name of your trust to avoid probate.

To set up a free 15 minute consultation to discuss your current estate plan or to start the estate planning process, please call (404) 500-7531, email hello@bequest.law, or go to our website bequest.law to fill out the new client inquiry form.

I Have a Will…Now What?

1. What is the difference between a will and a revocable living trust?

• A will is an estate planning document that indicates your wishes and desires upon your death.  When you die, your executor may probate your will to open your estate. A perk to having a will is that there is less work and costs on the front-end.

• A revocable living trust is an estate planning document that manages your assets. You do not have to die for your revocable living trust to be useful. You must fund your trust by titling assets in the name of the trust. Funding your trust is essential to avoiding probate.  A perk to having a revocable living trust is that by doing more work on the front-end, the probate process can be avoided upon your death.

2. What is the probate?

• Probate is the legal process that must occur when a person dies, and an estate must be opened on decedent’s behalf. Probate must occur in the probate court in the county where the decedent was a resident. 

3. Can I avoid probate or make the process simple?

• This depends on how your assets are titled. To avoid probate or simplify the process, you can ensure that your accounts have beneficiaries or pay on death designations. Ensuring this allows your assets to automatically transfer and said accounts would not be part of your probate estate.

• If you have real property, titling such property with another person as “joint tenants with rights of survivorship” will allow it to fully transfer to the other joint tenant upon your death.

4. What is an executor?

• An executor is the personal representative you list in your will who has authority to act on behalf of the estate. For example, the executor will ensure that the will is probated, make distributions to beneficiaries, and pay creditor claims. The executor will also be held accountable by the court regarding the estate.

5. Who do people generally choose as their executor?

• The executor should be responsible, organized, and trustworthy. Additionally, when choosing someone to serve in this role, consider whether being the executor would be too much of an emotional, mental, and/or financial strain.

6. What should my executor do once I die?

• Once you die, your executor should determine whether he or she should probate your will. If all your assets transferred via beneficiary or pay on death designations, then probate will not be necessary. Your executor should contact Bequest Law or another estate planning firm to make this determination. 

7. What is a testamentary trust?

• A testamentary trust is a trust within your will that is only effective upon your death. If a beneficiary inherits through a testamentary trust, he or she will not inherit outright. Instead, you may decide to distribute your assets at a certain age or ages. You also choose a testamentary trustee who will distribute and manage the assets from the trust.

8. Should I share my will with someone?

• If you don’t want people to know the contents of your will until after your death—that is fine. It is also fine if you want to provide your children or beneficiaries with copies of the will. Sharing your will is completely optional.

9. Do I need to file my will with the court?

• No, you do not have to file your will with the court.

10. When should I update my will and other documents?

• You should update your will when you have major life changes or when you want to change the representatives or beneficiaries within your will. It is a good practice to allow an estate planning attorney to review your estate planning documents every seven years.

11. What if I move out of state?

• If you move out of state, you should have an estate planning attorney within that state review your will to ensure that your document is legally valid.

12. What if the address of an agent who is listed in my estate plan changes?

• If an agent has an address change, this is not a significant reason to update your estate plan. Your agent can still be contacted, for example by phone or email, if necessary.

13. Where should I keep my will?

• You can keep your will in a fireproof safe. If you would like, you can inform your executor exactly where to find the original copy of your will in the event of your death. 

• We do not recommend placing your will in a safe deposit box because once you die, only a co-signer would be able to access its contents. If there is no co-signor, your executor would have to obtain a court order to access the safe deposit box.

14. What if I need to make a change or amendment my will?

• A change or amendment to a will is known as a codicil. However, if you want to make substantial changes to your will, it may be better to execute an entirely new will. Please reach out to Bequest to determine the best course of action.

15. Should I inform someone that I listed them as an executor, guardian, or testamentary trustee?

• It is a great idea to have a conversation with someone before you list them as having a role within your estate plan. You may incorrectly assume this person would agree to the role and subsequently have to amend your estate plan if they do not want the role. 

16. Can I name my minor child as an executor, guardian, or testamentary trustee?

• You should not name a minor as an executor, guardian, or testamentary trustee. The person you name should be able to serve in their role if you were to die tomorrow. Additionally, such roles are too much of a strain for a minor who is already navigating grief.

17. Can I just leave everything to one person and trust them to divide things?

• The purpose of an estate plan is to ensure that your assets are distributed according to you. While it can be hard to imagine, after your death your loved ones may behave in ways that you never expected. It is best that you make the division of your assets to avoid turmoil.

18. Can I name the same person as executor, guardian, or testamentary trustee?

• Yes. Naming the same person for these roles would allow him or her to smoothly carry out their duties. For example, if your guardian and testamentary trustee are the same person, your guardian would not have to request funds from the testamentary trustee. The guardian would automatically be able to access those funds.

19. What if I buy property down the road or start a business?

• If you buy property in the future, that property would be contemplated by the will based upon the will’s language. However, if you buy multiple properties, you should contact Bequest to determine whether a will is still the best estate plan for you. 

• If you start a business in the future, you should also reach out to our firm to determine if your will already covers your business interest and whether a will is still the best estate plan for you.

To set up a free 15 minute consultation to discuss your current estate plan or to start the estate planning process, please call (404) 500-7531, email hello@bequest.law, or go to our website bequest.law to  fill out the new client inquiry form.

New Federal Reporting Requirements for LLCs and other Businesses: What You Should Know about the Corporate Transparency Act

The Corporate Transparency Act (CTA) took effect on January 01, 2024 as a federal effort to reduce unlawful business dealings and affects many Bequest clients, who own or control more than one-fourth of a company’s interest. The Act requires business owners to submit beneficial ownership information (BOI) reports to the Financial Crimes Enforcement Network.  Those impacted by the CTA should ensure they are in compliance to avoid potential fines or criminal charges. 

Who Is Impacted

The beneficial owner of an existing reporting company or a newly created or registered reporting company will have to file a BOI report to be in compliance with the CTA. A “beneficial owner” of a reporting company is someone who exercises substantial control over the company or someone who owns or controls one-fourth, or more, of the company’s ownership interests. 

The CTA applies to domestic reporting companies and foreign reporting companies, including corporations, limited liability companies (LLCs), and other business entities. Domestic reporting companies are formed and registered to conduct business in the United States while foreign reporting companies are formed in another country but registered to conduct business in the United States as a foreign entity. 

Information to Report

Within the BOI report, the beneficial owner of a reporting company will provide 

1) beneficial ownership information, 2) company information, and 3) company applicant information. 

1) Beneficial ownership information includes:

• Name, date of birth, address 

• Identification number from a valid form of identification and the issuer of said identification

• Image of above-used identification

This beneficial ownership information must be provided for each beneficial owner. There is no limit on the number of beneficial owners a reporting company can have.

2) Company information includes: 

• Company’s legal name

• Company’s trade name, if any

• Address of company’s principal place of business; if principal place of business not in United States, list address used to conduct business in United States

• Taxpayer identification number

A company applicant is the person who filed to create a domestic reporting company or register a foreign reporting company to operate in the United States. If multiple people were involved in creating or registering the reporting company, the company applicant is the person most responsible for fulfilling the filing. 

3) Company applicant information includes: 

• Address (use residential address for an individual and business address for person who files in the course of business)

• Identification number from a valid form of identification and the issuer of said identification

• Image of above-used identification

There can be no more than two company applicants. Additionally, the company applicant information is only required to be filed by a reporting company formed or registered on or after January 01, 2024. 

Filing Timeline

The timeline to file varies based on whether a reporting company is an existing company or a newly created or registered company. 

Existing Company’s Filing Deadline: 

• An existing company, created or registered prior to January 01, 2024: must file its initial BOI report by January 01, 2025. 

• Newly created or registered company, created or registered on or after January 01, 2024, but before January 01, 2025: must file its initial BOI report within 90 days of notification of its formation or registration. 

• Newly created or registered company, created or registered on or after January 01, 2025: must file its initial BOI report within 30 days of notification of its formation or registration.

Timeline for Updating BOI:

The CTA also provides guidance on updating the information included in a filing and correcting an error in a filing. A company has 30 days within a new development regarding the reporting company or a beneficial owner, to update its BOI report. If there is an error pertaining to beneficial owner information, company information, or company applicant information, a company has 30 days within discovering the error to update its BOI report. 

How Bequest Can Help

If you have questions or require filing help, please call or email Bequest today - 404-500-7531 or hello@bequest.law! Bequest will not take proactive steps on behalf of our current or former clients.

Safeguarding Digital Assets: A Professional Approach to Preventing Elder Fraud

Unfortunately, elder fraud hits close to home for me. After my mother's passing, I found myself stepping into a new role – becoming the primary caregiver for her older brother, my uncle, and taking charge of his finances and healthcare. What unfolded was a stark realization that he was falling victim to exploitation. Without delving into the grim details, I discovered a network of so-called 'friends' treating him as their personal financial reservoir. From supporting their dubious 'roofing business' to funding car repairs and even providing them free residence in his lake house—the list seemed endless.

Navigating the complex landscape of elder fraud can be daunting, especially when it comes to the digital realm. As someone who stepped into the role of managing an aging loved one's finances, I've witnessed firsthand the vulnerability that our aging loved ones can face. 

Elder Fraud Unveiled

Elder financial exploitation (EFE) is a pressing concern, encompassing both theft by trusted individuals and scams by strangers. Here’s a high-level overview of elder fraud in a glance:

Elder Theft: Schemes involving the theft of an older adult’s assets, funds, or income by a trusted person.

Elder Scams: Scams involving the transfer of money to a stranger or imposter for a promised benefit or good that the older adult did not receive.

A recent AARP report reveals staggering figures – an estimated $28.3 billion is stolen from U.S. adults over 60 each year, with a significant portion being perpetrated by known individuals like friends, family, or caregivers.

Following personal experiences in managing a relative's affairs, helping clients preemptively organize their own legacy affairs and serving as a quarterback for executors as the founder of AfterLight, I've come to understand the necessity of proactive measures in safeguarding against elder fraud and theft.

Digital Defenses Against Fraud:

To combat the rising tide of elder fraud, particularly in the digital landscape, a strategic approach is essential:

Family Communication:

• Initiate open conversations within the family. Discuss red flags, stay informed about current scams, and establish a system for regular check-ins. Encourage elders to report any suspicious calls or emails promptly.

Anti-Fraud Tools:

• Leverage credit freezes, call-blocking technologies, and adherence to the Do Not Call Registry. Implement strict privacy controls on social media platforms, install reliable antivirus software, and develop a scripted response to potential scams.

Ghosting: Deceased Identity Theft

I’m sorry to be the bearer of bad news, but fraud can not only take place while you're alive, but also after you’ve died. Ghosting, a form of identity theft where scammers exploit the personal information of deceased individuals, poses another significant challenge. Here's how to mitigate the risk:

Obituary Management:

• Limit sensitive details in obituaries, such as birthplace, addresses, and mother's maiden names. Consider excluding survivors' names to reduce the risk of being targeted.

Digital Defenses Redux:

• Utilize online planning tools offered by platforms like Facebook, Apple, and Google to manage digital assets and account access after death. 

Holistic Estate Planning:

• Encouraging estate planning exercises, including awareness of existing documents, establishing a financial power of attorney, and appointing trusted contacts, adds an additional layer of protection.

Wrangling Your Digital Assets:

One of the crucial steps in safeguarding against elder fraud is the audit and organization of digital assets:

• Implement two-factor authentication (2FA) to create strong and unique passwords, and consider using a password manager (Examples: Dashlane, Bitwarden, LastPass, etc). Educate loved ones (as well as yourselves!) on the importance of secure password practices.

• Categorize your digital assets, including online accounts, digital media, health records, subscriptions, cryptocurrency, and more. A comprehensive approach ensures nothing is overlooked.

In conclusion, safeguarding loved ones and yourself from elder fraud involves a comprehensive strategy that encompasses communication, technology, estate planning, and digital asset organization. 

By adopting a proactive and systematic approach, we can protect our elders from financial exploitation and the ever-present threat of identity theft, providing peace of mind for both them and their families.

Cheers to a more (digitally) organized and proactive approach to the new year!

Rachel Donnelly

Founder and CEO, AfterLight After Loss Professionals

P.S. Does this feel overwhelming? *Feel free to download AfterLight's freebie document "Ways to Protect Your Digital Estate" here. Additionally, if you're ready to explore our Legacy Planning Services, including digital asset organization, schedule a discovery call with us here.

SECURE 2.0 Act: How It Affects You and Your Retirement Account Beneficiaries

For most Americans, a retirement account is the largest asset they will own when they pass away. For that reason, you should be paying attention to the ever evolving SECURE ACT. On December 29, 2022, President Biden signed the Setting Every Community Up for Retirement Enhancement 2.0 Act (SECURE 2.0 Act). 

The previous 2020 SECURE Act made several changes to retirement planning including:

• increasing the required beginning date for required minimum distributions from your individual retirement accounts from 70 ½ to 72 years of age.

• eliminating the age restriction for contributions to qualified retirement accounts.

• requiring that most designated beneficiaries withdraw the entire balance of an inherited retirement account within 10 years of the account owner’s death. Those excluded from the 10 year rule include: Spouses, minor children,  beneficiaries 10 years younger than the account owner,and disabled and chronically ill individuals 

New Provisions in the SECURE 2.0 Act

The SECURE 2.0 Act made quite a few enhancements to clarify the original legislation. Several of the key enhancements are summarized below: 

• It raises the required beginning date age for required minimum distributions to 73 in 2023 and 75 by 2033.

• It decreases penalties for not taking required minimum distributions to 25% of the required amount and 10% of IRAs if corrected timely. With exceptions that include: Qualified births and adoption expenses, Terminally ill individuals, Federally declared disasters, Emergency personal expenses, and Domestic abuse victims

• Employees are automatically enrolled in 401(k)/403(b) plans (opt out within 90 days)

• Higher catch-up contributions are allowed for participants over 50 ($7,500 in 2023).

• Early distributions are permitted for long-term care contracts without penalty.

• Qualified charities can be named as remainder beneficiaries after the death of a disabled or chronically ill beneficiary without disqualifying the trust as a see-through trust.

• Plan sponsors may match contributions made on student loan repayments on the same vesting schedule as elective deferrals, effective 2024.

• 529 plans maintained for at least 15 years may be rolled over into a Roth IRA with a $35,000 lifetime limit, effective 2024.

Effect of SECURE 2.0

The new provisions and exceptions in the SECURE 2.0 Act may change the decisions you have made for your intended beneficiaries and alter the path to achieving your long-term goals. Under the old law, beneficiaries of inherited retirement accounts could take distributions over their individual life expectancy. Under the SECURE Act and SECURE 2.0 Act, the shorter 10-year time frame for taking distributions will accelerate income tax due, possibly bumping your beneficiaries into a higher income tax bracket and causing them to receive less of the funds in the retirement account than you may have originally anticipated. Eligible designated beneficiaries exempt from the 10-year rule may still have the opportunity to benefit from future retirement plan growth. Your estate planning goals likely include more than just tax considerations. You may also be concerned with protecting a beneficiary’s inheritance from their creditors, future lawsuits, and a divorcing spouse. In order to protect your hard-earned retirement account and the ones you love, it is critical to act now.

What to do in Light of the Changes: 

1. Review Your Revocable Living Trust or Standalone Retirement Trust

Your estate plan may already address the distribution of your retirement accounts. For example, your trust most likely includes a conduit provision requiring that retirement distributions be immediately distributed to or for the benefit of the beneficiaries. However,  with the SECURE Act’s passage, a conduit trust structure may not be the best choice any longer because the trustee will be required to distribute the entire retirement account balance to most types of beneficiary within 10 years of your death, causing an income tax headache for the beneficiary.

2. Consider Additional Trusts

It also may be beneficial to create a separate trust to handle your retirement accounts. While many accounts offer simple beneficiary designation forms that allow you to name an individual or charity to receive funds when you pass away, this form alone does not take into consideration your estate planning goals and the unique circumstances of your beneficiary. A trust is a great tool to address the mandatory 10-year withdrawal rule under the SECURE Act, providing continued protection of a beneficiary’s inheritance.

3. Review Intended Beneficiaries

Whichever estate planning strategy is appropriate for you, it is important that your beneficiary designation is filled out correctly. Whether your intention is for the retirement account to go into a trust for a beneficiary or you want the primary beneficiary to be an individual, you must properly name and list the beneficiary on a beneficiary designation form. You should ensure that you have listed contingent beneficiaries as well. If you have recently divorced or married, you will need to ensure that the appropriate changes are made to your current beneficiary designations. At your death, in many cases, the plan administrator will distribute the account funds to the beneficiary listed, regardless of your relationship with the beneficiary or what your ultimate wishes might have been. If you are charitably inclined, now may be the perfect time to review your planning and possibly use your retirement account to fulfill your charitable desires. By giving retirement to charity, you avoid SECURE act tax consequences and may benefit from the tax charitable deduction.

Although these new laws may be changing the way we think about retirement accounts, we are here and are prepared to help you properly plan for your family and protect your hard-earned retirement accounts. We can explore different strategies with your financial and tax advisors to infuse your estate with additional cash upon your death. Give us a call today to schedule an appointment to discuss how your estate plan and retirement accounts might be impacted by the SECURE Act and how to best adjust your plan.

An Eco-friendly Alternative: Should you Consider A Green Burial?

A green or natural burial is an affordable and environmentally friendly alternative to traditional burials that is becoming increasingly popular with Bequest’s clients. To prepare for a green burial, a body is wrapped in a shroud or interred in a pine box without embalming fluids, chemicals, vaults, and cement containers that often harm the surrounding environment. Utilizing biodegradable and environmentally friendly materials, the body is then buried about three feet below ground. Our clients also sometimes opt to be used as organic material to grow a tree. Similarly, cremated remains can be buried in a biodegradable container or spread across the land.

While in recent years there has been a growing desire for green burials, the concept is an age-old practice. Believing that a person’s body should return the universe as it came, Native American cultures practiced no other forms of burying their dead.  In fact, green burials were the norm among Americans until embalming became necessary to return the bodies of Civil War soldiers to their homes. 

Until recently, the state of Georgia required embalming even if a person chose to be cremated. Perhaps the popular trend towards environmental consciousness pushed lawmakers to reconsider arcane practices. Today, most states, including Georgia, agree that embalming should not be required. With less stringent laws, more and more ecological burial sites are popping up around Georgia. As of 2023, there are three cemeteries dedicated to green burials in Georgia including: Honey Creek Woodlands, Milton Fields Natural Burial Ground, and Whispering Hills Natural Green Cemetery and Memorial Nature Preserve.

Honey Creek Woodlands

Located in Conyers, Georgia, Honey Creek Woodlands is a part of the Monastery of the Holy Spirit, opened in 2008, and has over 100 acres of land reserved for burial. Honey Creek views green burial as a way “to conserve nature by expanding the wildlife habitat, providing an environment for native plants to thrive, and providing clean air, and a cleaner watershed.” Honey Creek allows for the burial of bodies and of interred cremated remains. However, it does not permit families to spread their loved one’s ashes on its grounds. 

Over the years, family members of those buried at Honey Creek have formed meaningful connections to the cemetery. One particular connection surrounds a bridge at the cemetery known as the “Bridge to Grace,” which was built by the family of a young child, Grace, who is interned at Honey Creek. Occasionally when her parents visited her gravesite, there was flooding on the bridge over Honey Creek, which complicated their trip. Seeing this problem encouraged the parents to raise money and help build the Bridge to Grace, which allows clear access to gravesites within the cemetery.

Milton Fields Natural Burial Ground 

Milton Fields Natural Burial Grounds in Milton, Georgia is dedicated to “promot[ing] environmental preservation and land conservation.” They have seventeen acres reserved for burial, which is enough land to bury more than four thousand remains. Milton Fields allows for the burial of bodies and cremated remains. Unlike Honey Creek, it allows for the scattering of cremated remains.

Whispering Hills Natural Green Cemetery and Memorial Nature Preserve

In 2021 Whispering Hills Natural Green Cemetery and Memorial Nature Preserve in LaGrange, Georgia opened its gates to green burials. It similarly “aims to conserve the woodland that the [founding family] owns.” Whispering Hills permit bodies and cremated remains to be buried within their grounds, as well as the scattering of ashes within the cemetery. However, scattered remains must be “mixed with a specially formulated soil that will encourage plant growth.” Additionally, families must bring the remains to the Whispering Hills office four months prior to scattering to start “the composting process.”

Anyone interested in a green burial can contact these cemeteries for more information. If you are interested in an ecological burial or cremation or if you have specific desires for your remains it is important you note it in your estate plan. To set up a free 15 minute consultation to discuss amending your current estate plan or to start the estate planning process, please call (404) 500-7531, email hello@bequest.law, or go to our website bequest.law to  fill out the new client inquiry form.

CHECK YOUR DEED: Why is “Survivorship” Language Important

Whether you are looking to buy or already own a house with another person, it is important that your deed includes specific language so title may seamlessly transfer after you or that person pass away.  

 Here are the two most common ways to own property in Georgia: 

1. Tenants in Common: If one person passes away, their share goes to their family as stated in their will or by intestate laws. The other person’s ownership stays the same.

2. Joint Tenants with Right of Survivorship: If one person passes away, their share automatically goes to the other (meaning the survivor owns the whole house). 

To be Joint Tenants with Right of Survivorship your deed must state your names and include “as joint tenants with the right of survivorship” or other similar survivorship language. 

Owning property as joint tenants with the right of survivorship is important for married couples and essential for unmarried couples who want the surviving spouse/partner to seamlessly inherit. Here’s why:

Clarity of Ownership: Joint tenancy eliminates any ambiguity about who owns the property after one spouse's passing. The surviving spouse becomes the sole owner, and this ownership change is straightforward and clear.

Seamless Transfer: In this ownership form, the transfer of ownership is automatic and immediate. Upon the death of one spouse, the property ownership is simply transferred to the surviving spouse without the need for legal procedures or delays.

Avoid Probate for the First to Pass: Probate is the legal process that occurs after someone passes away to distribute their assets according to their will or state law. When a property is owned as joint tenants with the right of survivorship, it automatically passes to the surviving spouse without going through probate. This can save time, money, and stress for the surviving spouse and their family. 

Emotional Comfort: Losing a spouse is a difficult time emotionally, and having the property automatically pass to the surviving spouse can alleviate additional legal and financial burdens during an already challenging period.

Depending on your specific goals, circumstances, and preferences, forming a trust might be a better way to accomplish the same outcome, especially if you wish to pass your real estate seamlessly to the next generation.  Read more in our blog about revocable trust planning.

If you’re not sure what your deed says or if you have any questions about how to structure your property ownership, reach out to Bequest for a consultation today!

Changes To Georgia’s Probate Laws: How does this Affect your Estate Plan?

Effective July 1, 2023, O.C.G.A. §53-5-8 complicates the process of probating a will in Georgia. The new law adds additional requirements that an executor must follow within a short period of time after receiving their Letters Testamentary.

Previously, in order to open an estate in Georgia, an executor was only required to notify the deceased’s closest surviving relatives (i.e., “heirs at law”), whether or not that relative was named in the will as a beneficiary. 

Under the new code section, once the Court issues Letters Testamentary, which give the Executor the power to act on behalf of the Estate, the Executor has 30 days to send notice and a copy of the Letters to all beneficiaries named in the will with an immediate interest to inherit, unless the beneficiary waives notice in writing and within 60 days of receiving Letters and the Executor files the waiver with the Court. If a beneficiary’s location is unknown, an affidavit of diligent search is required. If the Executor does not provide notification to the Court, an Executor may be required to appear before the Court for a hearing and risk having their title revoked.

To comply with the fast-paced deadlines and filing requirements, the Executor faces a significant increase in time, burden, and costs associated with administering a loved one’s will. While an experienced probate attorney may ease the process along, those considering drafting an estate can be proactive and avoid this headache for their family by drafting a trust. Specifically, a revocable living trust (RLT) is an easy way for one’s assets to pass on without involving the Court.

For a detailed discussion of revocable trusts, please read our blog post, and, as always, call or email Bequest if we can help!

Knowing When to Update Your Estate Plan

One of our most common client questions at Bequest is: how often do I need to update my estate plan? While we aim to draft a flexible estate plan that doesn’t require constant updates, an estate plan isn’t a one-and-done affair for most clients. Life is constantly evolving, and as certain circumstances change, so should your estate plan. This article will explore key situations that indicate it’s time to amend your estate plan.

Major Life Events: Life is full of significant milestones that can impact your estate plan. Certain events, such as marriage, divorce, the birth of a child or grandchild, or the death of a beneficiary, may necessitate amending your plan. When any of these events occur, it’s crucial to review your documents and adjust your plan to accommodate the changes in your life circumstances and relationships.

Relocation or Changes in Jurisdiction: Moving to a different state or country can trigger the need for amendments to your estate plan. Each jurisdiction has its own set of laws and regulations governing estates and inheritance. Updating your plan to reflect the laws of your new residence avoids complications and unintended consequences. Consult with an attorney familiar with the laws of your new jurisdiction to ensure your estate plan remains valid and effective.

Changes in Financial Situation: Your financial situation directly impacts your estate plan. Suppose you experience substantial changes in your wealth, such as receiving a large inheritance, selling or purchasing valuable assets, starting a new business, or retiring. In those situations, it is advisable to review your estate plan. Consider whether your current plan adequately addresses your unique financial situation and adjust it accordingly to optimize your asset distribution and minimize tax implications.

Need for a Different Guardian, Trustee, or Executor: If you appointed guardians for your minor children or designated trustees or executors to manage your assets, it is important to review these choices periodically. Over time, relationships may change, people get older, and the people you once trusted to fulfill these roles may no longer be the best fit. By amending your estate plan, you can ensure that the individuals responsible for the well-being of your loved ones and the management of your assets are still suitable and willing to fulfill their duties.

Changes in the Law: Changes in the federal, state, or local tax laws necessitate a review of your plan. Tax laws are always subject to change, and tax legislation modifications can significantly impact your estate plan. Stay informed about any alterations in estate tax thresholds, exemptions, or deductions that may affect your estate planning strategies. Regularly reviewing your estate documents with a knowledgeable estate planning professional will help ensure that your plan is structured in a tax-efficient manner.

By paying attention to major life events, changes in your financial situation, relocation, people nominated to play key roles, and changes in the law, you can take proactive steps to keep your estate plan up to date and aligned with your current intentions. Remember, consulting with an experienced estate planning attorney can provide invaluable guidance during the amendment process and ensure your estate plan remains valid and effective.

Will vs. Revocable Living Trust: What’s the Difference?

Planning for the future is an essential step in ensuring your assets and loved ones are well taken care of when you're no longer able to do so. We at Bequest commonly use two estate planning tools to plan for our clients: wills and revocable living trusts. While both serve the purpose of distributing your assets upon your passing, they have distinct differences. In this blog post, we'll explore the dissimilarities between a will and a revocable living trust and shed light on the reasons why someone might choose a revocable living trust over a will.

Wills: A Traditional Approach

A will, also known as a "last will and testament," is a legal document that outlines your wishes regarding the distribution of your assets after your death. It can also include guardianship for your kids as well as burial or cremation preferences. Here are some key features and characteristics of a will:

1. Simplicity: Creating a will is often a straightforward process that allows you to designate beneficiaries and allocate specific assets to them.

2. Probate: Wills generally go through probate, a legal process that validates the document and ensures its authenticity. This process can be time-consuming and costly.

3. Privacy: Wills become publicly accessible documents during probate, which means the details of your assets and beneficiaries become part of the public record.

4. Flexibility: Wills can be modified or revoked at any time during your lifetime, as long as you have the testamentary capacity to do so.

5. Contingent Trusts: Clients often create “testamentary trusts” for their minor children within their wills, but those trusts are only created after death and through the probate process.

Revocable Living Trusts: A Versatile Estate Planning Tool

A revocable living trust, also referred to as a "living trust" or "inter vivos trust," is an estate planning instrument that holds your assets during your lifetime and allows for seamless transfer of these assets after your death. Here's a closer look at revocable living trusts:

1. Avoidance of Probate: One significant advantage of a revocable living trust is that it bypasses the probate process entirely, saving time and costs (especially when there is out-of-state property involved). Assets held within the trust are transferred directly to the designated beneficiaries upon the grantor's death.

2. Privacy and Confidentiality: Unlike wills, revocable living trusts remain private documents, providing a level of confidentiality as the details of your assets and beneficiaries are not accessible to the public.

3. Incapacity Planning: A revocable living trust can also provide for the management of your assets in the event of your incapacity. A successor trustee, named by you, can step in to manage your affairs without the need for court intervention.

4. Flexibility and Control: While you're alive and of sound mind, you have the power to modify or revoke the terms of your trust at any time, giving you greater flexibility and control over your assets.

5. Tax Planning: For clients with a taxable estate, a revocable living trust can create tax savings or deferrals.

Why Choose a Revocable Living Trust?

While wills have been the traditional choice for estate planning, revocable living trusts have gained popularity for several reasons:

1. Avoiding Probate: By utilizing a revocable living trust, you can bypass the probate process, which can be lengthy, expensive, and open to public scrutiny.  This is especially important when clients have out-of-state property.

2. Privacy and Confidentiality: Revocable living trusts offer privacy, ensuring that the details of your assets and beneficiaries remain confidential.

3. Incapacity Planning: The inclusion of provisions for incapacity planning within a revocable living trust ensures that your assets are effectively managed if you become unable to do so yourself.

4. Asset Protection: A living trust can provide asset protection for your beneficiaries. It allows you to place certain restrictions on the distribution of assets, protecting them from potential creditors, lawsuits, or divorces.

5. Tax Planning: A living trust can reduce or delay estate taxes.

While wills and revocable living trusts serve the common purpose of distributing your assets after your passing, they differ significantly in terms of probate, privacy, flexibility, and control. Call Bequest today to decide which planning technique is best for your family!

College Care Package

May is an exciting time for many of Bequest’s clients, as their children graduate and move on to the next phase of their lives! Graduation season is especially exciting for anyone sending a child to college as a freshman. We at Bequest love supporting our clients at every phase of life and sending a new adult child to college is no exception. That’s why we’re offering a new College Care Package, which includes a power of attorney and advance directive for health care for college age students. Why would your young adult need a power of attorney and advance directive for health care? Read on to find out! 

As your child enters college, they become an independent adult with newfound freedoms and responsibilities. While this is an exciting time, it's important for parents to recognize that they may no longer have the legal authority to make decisions for their child in certain situations. This is where a power of attorney and advance directive for health care can be crucial.

A power of attorney is a legal document that grants someone else the financial authority to act on your behalf. In the case of a college student, a power of attorney can allow parents to manage their child's financial affairs if they become incapacitated or unable to make decisions on their own. For example, if your child becomes seriously ill or injured, you may need to access their bank accounts or sign important documents on their behalf. Without a power of attorney, you may not be able to do so.

A power of attorney may also be important even if your child is not incapacitated. While your child may be able to make decisions for themselves, there may be situations where it would be helpful for a parent to act on their behalf. For example, if your child is studying abroad and needs help managing their finances, a power of attorney can allow you to do so without having to navigate complex legal systems in a foreign country. Additionally, a power of attorney can be helpful in situations where your child may be unavailable or unable (or unwilling) to make decisions on their own. By having a power of attorney in place, you can ensure that you are able to act quickly and effectively in your child's best interests, regardless of their legal capacity.

An advance directive for health care is another legal document that can outline your child’s wishes for medical treatment in the event that they cannot make the decision for themselves. This can be particularly important for college students who may be living far from home and without immediate family nearby. Creating an advance directive ensures that your child’s wishes are followed and can help avoid potential conflicts or misunderstandings between family members during stressful and emotional times.

While it can be difficult to think about these types of scenarios, it's important to be prepared. Creating a power of attorney and advance directive for health care can give both you and your child peace of mind and help ensure that their well-being is protected. It can help protect your child's interests and well-being in the event of an emergency, and it can provide you with the legal authority to act on their behalf when necessary. Don't wait until it's too late – take the necessary steps to ensure that your family is prepared for any situation.

Did you know that Only 1 in 3 Americans Have an Advance Directive for Health Care?

No matter your age, it’s essential to plan for the future, and one aspect of that planning is deciding how you want to be treated in case of a medical emergency. Georgia’s Advance Directive for Health Care (ADHC), sometimes called a living will, is a legal document that allows you to do just that.

In simple terms, an ADHC is a document that makes your medical treatment wishes known to your doctors and loved ones so they can follow them when you’re not able to speak for yourself.

The document both designates a trusted person to make medical decisions on your behalf if you’re unable to do so and describes your preferences for end-of-life care, such as whether you want to be kept alive by artificial means and if you are comfortable with donating your organs. 

An ADHC is necessary and can improve your family’s life for several reasons. Firstly, it ensures that your wishes for medical treatment are respected, giving you a peace of mind that your doctors and family will act as you would have if you were able.   

Secondly, this document helps ease the burden of making health care decisions in a vacuum by informing your family members who may be struggling to make decisions on your behalf. On top of the heart ache and uncertainty during a difficult time, the extra weight of making your medical decision may make the process unbearable. Knowing your wishes and having a clear plan in place can give them a sense of direction and make decision-making less overwhelming.

Similarly, having an ADHC can prevent family conflicts. In the absence of a clear plan, family members may have different ideas about what’s best for you, which can lead to disagreements and hurt feelings. Having a legal document that clearly outlines your wishes can avoid arguments by providing an impartial guide for your loved ones to follow.

Lastly, this planning tool can improve your family’s communication and understanding of each other’s values and beliefs. It can be an opportunity to have important conversations about end-of-life care and what matters most to each family member. This can foster a greater sense of connection and support within the family.

In conclusion, an ADHC is an essential part of planning for your future. It can ensure that your medical wishes are respected, reduce stress and uncertainty for your loved ones, and prevent family conflicts. By taking the time to create this document, you can have peace of mind knowing that your end-of-life care will be handled according to your wishes.

Disclaimer: This content is for informational purposes only, and does not constitute legal advice nor create an attorney-client relationship with Bequest Law.

You Created a Trust — Now Don’t Forget to Fund It!

Many individuals and families set up trusts as part of their estate planning, and they are fantastic tools that can make it easier to administer or execute an estate in the future.

However, often people neglect to follow through on one of the most important aspects of trusts: funding it.

The stakes are high: an unfunded or partially funded trust doesn’t avoid probate, which is one of the primary benefits of creating a trust in the first place.

To fund a trust, you must do two key things:

• Make ownership changes to the title of assets such as your house, vacation home, boat, bank accounts, businesses you own, etc. by switching it from your personal name as an individual to your name as Trustee of your trust

• For other assets such as life insurance and retirement accounts, you will make beneficiary changes so that those assets are properly distributed upon your death

Accomplishing these two important tasks often requires signing, notarizing, and filing new deeds for real estate or property, signature cards or pay-on-death-beneficiary documents with your bank, or survivor ownership documents. You will also likely need to file new beneficiary forms for individual retirement accounts, pension plans, and life insurance.

When you create a trust, the portfolio of paperwork related to that trust will include a Certification of Trust that documents you are the Trustee of your trust and have the authority to make these changes, however most institutions have their own forms that they will require you to complete (and some may require notarization). 

In addition to help from an estate planning attorney, you may also need guidance from your financial advisor, accountant, broker, or life insurance agent to make ownership or beneficiary changes. If you have trouble making ownership or beneficiary changes to any accounts, it can be helpful to include your estate planning attorney on a call with the institution to help explain the matter and request proper documentation.

Once you have completed the ownership and beneficiary changes for every account and asset, you should place a copy of that paperwork into a folder along with your estate planning documents and keep them in a safe place so that your family or loved ones know where to find your assets and how each asset or account is owned.

While it may seem overwhelming, funding a trust is not that hard. It takes patience, organization, research skills to find the right forms you’ll need to submit, and some time spent on hold with customer service representatives at the institutions you do business with to get your questions answered. Create a checklist of all the accounts you need to make changes on, keep track of the status of your request, and keep copies of the final confirmation or proof that the changes were made.

When you open new accounts in the future, buy another home, start another business or create a new asset, you should also consult with your estate planning attorney on putting the ownership or beneficiary designations in the name of your trust.

As with all estate planning matters, it’s also important to periodically revisit and update your will, trust, and other documents, especially as major life events occur such as marriage or domestic partnership, divorce, the birth of additional children or adoption, or children turning 18 and becoming legally recognized adults. 

Disclaimer: This content is for informational purposes only, and does not constitute legal advice nor create an attorney-client relationship with Bequest Law.