Category: Estate

Have you ever had to deal with a “white elephant”? Not the actual pachyderm, but what Merriam-Webster calls “a property requiring much care and expense yielding little profit” or, more simply, “something of little or no value.” Of course, we’re not talking about the sort of “white elephants” you might get in a humorous gift exchange over the holidays, like a tacky t-shirt that isn’t even your size or an inexplicable kitchen gadget.

Not everyone has a rich uncle who will present them with a simple cash gift in his will. A “white elephant” is a gift that may cause more issues than it resolves, much as an elephant might eat an unwitting recipient out of house and home. It’s an asset that comes to you via gift or inheritance and needs to be quickly sold, liquidated, or transferred to avoid further expenses of time or money. In such cases, it is crucial to understand how to disclaim an inheritance properly and avoid holding the burden. The average American household stands to inherit $46,200. Not all those bequeathments are straight cash, and some might prove inconvenient or troublesome.¹

There are several reasons why someone might not want to accept an inheritance:

• Income: If the inheritance generates income, such as a business or rental property, it may push you into a higher income tax bracket. This might be good in many cases, but there are situations where this might prove inconvenient, such as—
• Litigation or Bankruptcy: If you face a lawsuit or anticipate bankruptcy, disclaiming the inheritance may be wise. However, it’s important to note that if you are currently undergoing bankruptcy proceedings, you may be unable to deny the inheritance.²
• Inability to Maintain: If the inheritance includes property or assets that require ongoing maintenance and you cannot fulfill those obligations, disclaiming may be the best choice. This could be real estate, a business, or perhaps even a literal white elephant.
• Honoring the Decedent’s Wishes: Circumstances may have changed since drafting the will, and accepting the inheritance may no longer align with the decedent’s original intentions.

Remember, this article is for informational purposes only and does not replace real-life advice, so consult a legal professional before deciding on an inheritance. The article provides high-level considerations, but a legal professional who is familiar with your situation may be able to provide more insights and guidance.

To officially disclaim an inheritance, you must meet the following requirements set forth by the Internal Revenue Service:

• Provide written notice to the executor or administrator of the estate, clearly stating that you are disclaiming the assets and that the decision is irrevocable.
• Submit the statement within nine months of the decedent’s death (minors have until they reach the age of majority).
• Ensure that you do not benefit from the disclaimed property, either directly or indirectly. Example: What if you were to live with the new recipient in a house you declaimed? The IRS might perceive this as you benefiting indirectly.

Notably, once you disclaim an inheritance, you have no say in who receives it. The estate will be treated as if you died before accepting it and will go to the contingent beneficiary named in the will. If there is no will, the distribution will resume according to the next person, in line with state law.³

However, disclaiming an inheritance may not be the best choice for individuals receiving Medicaid benefits. If you reject an inheritance while on Medicaid, it could be considered a transfer of assets, potentially making you ineligible for Medicaid for a certain period. It is crucial to seek guidance from a professional with information specific to your situation if you receive Medicaid benefits.

Again, you may not have the choice or inclination to refuse this inheritance. Let’s look at a few options open to you.

Donating Assets: Several tax strategies exist for charitable contributions. One method is to donate assets to charity. By doing this, you may be able to manage capital gains taxes and receive an income tax deduction for the full fair market value of the assets.

This is an overview and is not intended as tax or legal advice. Please consult legal or tax professionals for specific information if you want to donate the assets you received as part of an inheritance.

Real Estate: Unwanted land can become a financial burden. Selling land can be difficult if it has been on the market for months or years without any offers. The most common reason for this is that the price is too high. Determining the value of land can be challenging, so setting a realistic price is essential. Another reason for a property’s failure to sell is poor marketing. Undesirable features or location can also contribute to a property’s inability to sell, as can title issues such as liens or property boundary problems.

If you need help selling your inherited land, there are several strategies you can try. Listing the land for sale online on various platforms can provide maximum exposure. Contacting neighboring property owners may also be effective. Other options include donating the property to a charity. Several charities accept land donations, but they typically have a screening process and often sell land to raise funds for their organizations.

Collectibles: Perhaps the most common of these white elephant inheritances include collectibles, esoteric items that future heirs have no wish to inherit, such as stamps, baseball cards, comic books, figurines, or dishware. The inheritance may also require more thought or consideration, such as an art collection that includes several large canvases or a cache of ephemera, such as old letters that may have historical value and require special preservation.

Most metropolitan areas have resources for liquidating collectibles or helping you get in touch with collectors who might purchase these items wholesale. Holding an estate sale is another common step for quick movement. If you believe you can earn more, you might list these items for sale online. However, in most cases, you may have to decide whether this is worth the effort or whether donating the items to a charity might be simpler.

In short, don’t let the elephant gobble up your time and money! Another step, when possible, is to speak to your relative in advance if you anticipate inheriting something you can’t handle or don’t want. Conversations with your relatives might go a long way toward averting more work later and give them the satisfaction of knowing they are caring for you in the present.

1. Finance.yahoo.com, September 15, 2023
2. NasonLawFirm.com, September 27, 2023
3. GreatAOakAdvisors.com, September 27, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.

How the Queen of Soul, the Lizard King, and Other Celebrities Determined Their Legacies   

Famous people are all too human. Tabloid newspapers and celebrity magazines and websites make bank chronicling their every moment, from going out for a coffee to attending glamorous premieres and glitzy concerts. And, yes, whenever they make a mistake, those same outlets bring it to your phones and tablets in real time. 

Sometimes these “oops” moments follow our celebrities long after they’ve taken their final bows, as their heirs and other interested parties battle over their estates. You might think that these stars, with their giant entourages, must have trusted financial professionals in their lives, assisting them in creating estate strategies–but in many cases, you would be wrong. Whether it’s because they have misconceptions about estate strategy or because they passed unexpectedly, these celebs have seen their legacies turn into games of tug-of-war. 

The Queen of Soul, Aretha Franklin, was one of the biggest recording artists in American history and a best-selling artist globally. From her early days singing gospel in her father’s Detroit church, Aretha found success with singles like “(You Make Me Feel Like) A Natural Woman,” “Chain of Fools,” and “Think.” With 112 singles on the Billboard charts, Franklin had #1 hits in the 1960s, 70s, 80s, 90s, and, finally, 2014. In the world of popular music, her legacy is assured. 

Less assured, though, were the many financial rewards Aretha reaped from her legendary career. After her death in 2018, multiple documents were found among her effects and papers, leading to a four-year legal dispute over the Queen of Soul’s estate. The trial proved emotional and dramatic for family members, with even voicemails from Aretha, a literal voice from beyond, used to determine the fate of not only her fortune but also her intellectual property (songs, recordings, and more). Ultimately, the court decided that four pages handwritten by Aretha and discovered in her couch represented her actual final will. ^1,2

While your estate strategy can change over time, it’s important to formalize your changes as soon as possible. Accidents will happen, but those handwritten pages might have done Aretha’s family more good in the hands of a professional than tucked away in a piece of furniture. It might have helped them avoid such a long legal process.

Most people in their twenties aren’t thinking much about their estates. Jim Morrison was too busy living the life of a rock star to give the matter his full attention. From 1965 to 1971, Morrison was the frontman for The Doors, the psychedelically inspired rock band who made hits with “Hello, I Love You,” “Light My Fire,” and “Love Her Madly.” Together, they went from the opening act at Los Angeles’s Whisky a Go Go nightclub to touring the world in support of their six albums. After recording L.A. Woman in 1971, Morrison (known as “The Lizard King” to fans) decided to take some time off and live in Paris with girlfriend Pamela Courson. A few months later, Morrison died of reported heart failure at age 27.

Despite his reputation for the fast life and excess, which undoubtedly contributed to his tragic early death, Morrison did leave a two-page will naming Pamela Courson as his primary heir. While his assets were relatively modest at the time of his death, between his quarter ownership of the Doors and the renewed interest in the band fostered by his passing, his estate blossomed into a financial juggernaut. Unfortunately, Courson passed three years after him, with no will of her own. This led to a dispute over Morrison’s legacy, with both his own parents and Courson’s heirs challenging the competence of his will. Ultimately, they elected to divide Morrison’s estate evenly, out of court.³

The case of Morrison’s will highlights two important factors: 1) Everyone needs a competent estate strategy, even those who may feel they are too young to worry about such things. 2) A clearly written and well-thought-out will may be able to lock down your final intentions. In Morrison’s case, he specifically excluded his estranged parents from his will without naming them, instead listing his brother and sister as alternate heirs after Courson. There were certainly other (or better) ways to favor his siblings over his parents, as well as avoid the courtroom drama after Courson’s passing.

While these are two famous examples, there are many other famous celebrity estates to consider, including the following:

• Frank Sinatra made sure his $100 million estate had no issues; he stipulated a provision disinheriting any individual who contested his will. Ultimately, they did it his way.³
• Comic and actor Robin Williams left his estate to his children and a house to his wife, with the provision that the house went to his children after her death. Unfortunately, he said nothing about his personal effects, including valuable movie memorabilia, that existed inside the house, which led to a dispute between the parties that was settled out of court in 2015.³
• Model and reality star Anna Nicole Smith, who famously married businessman J. Howard Marshall, was not mentioned in her elderly husband’s will when he died 14 months into their marriage. The existing will, predating the wedding, named Marshall’s son as his primary heir. This led to a very public legal dispute that continued for 20 years. By the time the court made its second and most recent ruling (the ruling can still be reopened), both Anna Nicole and Marshall’s son were deceased.³
• Prince, who once went to great lengths to force his record label and the media to refer to him by an unpronounceable symbol, never took the time to write a will, informally or otherwise. It took six years for Minnesota courts to determine the heirs of his $156 million, splitting it into two LLCs, each controlled by three of Prince’s six half-siblings.⁴

These stories may be fascinating and tragic but they all underline the importance of a clear and comprehensive estate strategy. Even those of us mere mortals who don’t have to deal with record executives, film producers, and the paparazzi have the potential to make mistakes that can be costly and troubling to our families and loved ones.

1. NY Times, July 11, 2023
2. Detroit Free Press, April 21, 2023
3. Cake, August 25, 2020
4. CNN, August 3, 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.

The federal estate tax threshold rose to $25.84 million in 2023 for married couples and $12.92 million for individuals, as part of the Tax Cuts and Jobs Act (TCJA). Like several TCJA provisions, the higher estate tax limit is due to sunset in 2025. Barring congressional action, the exemption amount will return to about $6.8 million, adjusted for inflation, in 2026. Similarly, the current 40% maximum gift and estate tax rate will increase to 45%.¹

For high-net worth individuals, this could influence wealth transfer strategies. Although this sunset is coming, the good news is that it’s still a few years away.

And there’s more good news: your financial professional can help you with your estate strategy, regardless of whether Congress decides to maintain the current threshold. Now may be an excellent time to get together and start thinking about your post-2025 strategy. I look forward to your call.

1. USBank.com, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.

Preparing your estate can be complicated, and if you’re a part of a blended family, estate decisions can be even more complex and nuanced. Blended families take on many forms but typically consist of couples with children from previous relationships. Here are a few case studies to help illustrate some of the challenges.

Case Study #1: Children From Previous Marriages

Simple wills often are structured to leave all assets to the surviving spouse. If your estate strategy relies on this type of will, you could risk overlooking children from previous marriages. Also, while it’s unsettling to consider, the surviving spouse can end up changing a will without proper measures put in place.¹

When new children join a blended family, estate strategies can get even more complicated. But with a well-structured approach, you can direct how to distribute your assets.

Case Study #2: When One Partner Has Significantly More Assets

While the divorce rate has been trending lower, the number of remarriages (2nd or more marriages) has increased. One person entering into a new marriage may have more assets than their spouse, given that 40% of all new marriages are remarriages for one or both spouses. An estate strategy can help ensure that your assets pass down according to your wishes.²

Case Study #3: Traditional Trusts May Not Be Enough

In blended families, a traditional trust is a good start, but it may not go far enough. One possible solution is to create three trusts (one for each spouse, in addition to a joint trust) to help address different scenarios.³

Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional familiar with the rules and regulations.

Starting the Process

Blended families are pretty common these days. If you’re in that position, it’s important to remember that you can create an estate strategy to address your specific situation. The first step may be an estate document review.

1. Investopedia.com, April 30, 2023
2. Forbes.com, August 8, 2023
3. Investopedia.com, March 31, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.

Inheriting wealth can be a burden and a blessing. Even if you have an inclination that a family member may remember you in their last will and testament, there are many facets to the process of inheritance that you may not have considered. Here are some things you may want to keep in mind if it comes to pass.

Keep in mind this article is for informational purposes only and is not a replacement for real-life advice, so consider speaking with a legal or tax professional before making any decisions with an inheritance.

Take your time. If someone cared about you enough to leave you an inheritance, then you may need time to grieve and cope with their loss. This is important, and many of the more major decisions about your inheritance can likely wait. You may be able to make more informed decisions once some time has passed.

Don’t go it alone. There are so many laws, choices, and potential pitfalls – the knowledge an experienced professional can provide on this subject may prove critical.

Think of your own family. When an inheritance is received, it may alter the course of your own financial strategy. Be sure to take that into consideration.

The taxman may visit. If you’ve inherited an IRA, it is important to consider the tax implications. Distributions to non-spouse beneficiaries are generally required to be distributed by the end of the 10th calendar year following the year of the account owner’s death. For the year of the account owner’s death, the RMD due is the amount the account owner would have been required to withdraw, if any, but did not withdraw. Beginning the year following the owner’s death, the RMD depends on certain characteristics of the designated beneficiary. A surviving spouse of the IRA owner, disabled or chronically ill individuals, individuals who are not more than 10 years younger than the IRA owner, and children of the IRA owner who have not reached the age of majority may have other minimum distribution requirements.

Stay informed. The estate laws have seen many changes over the years, so what you thought you knew about them may no longer be correct.

Remember to do what’s appropriate for your situation. While it’s natural for emotion to play a part and you may wish to leave your inheritance as it is out of respect for your relative, what happens if the inheritance isn’t appropriate for your financial situation? A financial professional can help determine if the inheritance fits with your overall goals, time horizon, and risk tolerance.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.

When you lose a spouse, partner, or parent, the grief can be overwhelming. In the midst of that grief, life goes on. There are arrangements to be made, things to be taken care of – and in recognition of this reality, here is a checklist that you may find useful at such a time.

First, gather documents. Ask for help from other family members if you need it. Start by gathering the following.

• A will, a trust, or other estate documents. If none of these exist, you could face a longer legal process when settling the person’s estate.
• A Social Security card/number. Generally, the person’s Social Security number will be retired shortly following the death. If you are uncertain, consider checking with the Social Security office.

Then, gather these additional highly important items.

• Any account statements
• Deeds/titles to real estate
• Car titles or lease agreements
• Storage space keys/account records
• Any bills due or records of credit card statements
• Any social media platform information, if applicable

Last, but not least, look for a computer file or printout with digital account passwords. Prior to their loved one’s passing, some family members may try to centralize all this information or state where it can be found.

In addition, see if the person left a letter of instructions. A letter of instructions is not a legal document; it’s a letter that provides additional and more-personal information regarding an estate. It can be addressed to whomever you choose, but typically, letters of instructions are directed to the executor, family members, or beneficiaries.

Next, take care of some immediate needs. One, contact a funeral home to arrange a viewing, cremation, or burial, in accordance with the wishes of the deceased.

Two, call or email the county clerk or recorder to request 10 to 12 death certificates; a funeral home director can often help you with this matter. (Counties usually charge a small fee for each copy issued.) Ten to 12 copies may seem excessive, but you may need that many while working with insurance companies and various financial institutions.

Three, if the person was still working, contact the human resources officer at your loved one’s workplace to inform them what has happened. The HR officer might need you to fill out some paperwork pertaining to retirement plans, health benefits, and compensation for unused vacation time.

Four, consider speaking with an attorney – this can be the lawyer who helped your loved one create a will or estate plan. Should your loved one die without a will, you may want to contact a lawyer for an overview of how the probate process will work and see to what degree you might become liable if your loved one had any outstanding debt obligations.

Five, resolve to keep track of any recurring debts that your loved one had set to autopay. Consider placing the monthly bills for these debts in your name (or another family member or the executor).

Notify creditors and credit card companies that were part of your loved one’s credit history. Creditors may want to know when existing debts will be paid, either by you or your loved one’s estate. You can also notify the “big three” credit bureaus – Experian, Equifax, and TransUnion – of their passing, which can usually be done online, over the phone, or by letter.

Following these steps, address financial, insurance, and credit matters. Investment and retirement plan accounts and insurance policies should have beneficiaries, so reach out to the financial and insurance professionals who helped your loved one as well as the person overseeing their workplace retirement plan. Talk with these professionals to learn about the possible tax implications from inheriting these assets.

State and federal taxes for your loved one will also need to be paid, and possibly, other taxes for the year of their death.

Remember, this article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your any tax or estate strategy.

If your loved one owned a small business or professional practice, a discussion with business partners (and clients) may be necessary as well as a consultation with the attorney who advised that business.

Look after your future. Working through several of these issues may help bring closure to your loved one’s estate.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.

“What is your greatest retirement fear?” If you ask some pre-retirees this question, “outliving my money” may be one of the top answers. In fact, 45% of workers say they fear outliving their savings and investments.¹

Retirees face greater “longevity risk” today. The Census Bureau says that Americans typically retire around age 62 for women and 65 for men. Social Security projects that today’s 63-year-olds will live into their mid-eighties, on average. This is a mean life expectancy, so while some of these seniors may pass away earlier, others may live past 90 or 100.^2,3

If your retirement lasts 20, 30, or even 40 years, how well do you think your retirement savings will hold up? What financial steps could you take in your retirement to try and prevent those savings from eroding? As you think ahead, consider the following possibilities and realities.

How will Social Security work in the future? For decades, Social Security took in more dollars per year than it paid out. That ongoing surplus – also known as the Social Security Trust Fund – may face funding challenges as early as 2034. Congress may act to address this financing issue before then, but the worry is that future retirees could get slightly less back from Social Security than they put in. It’s critical that pre-retirees estimate the amount of Social Security benefits they are expected to generate in the future.⁴

Preparing for out-of-pocket health care costs. You can enroll in Medicare at age 65, but how do you handle the premiums for private health insurance if you retire before then? Striving to work until you are eligible for Medicare makes economic sense and so does setting aside money to pay for health care costs. A healthy couple retiring at age 65 can expect to pay nearly $315,000 to cover health care expenses in retirement.⁵

Luck is not a plan, and hope is not a strategy. Those who are retiring unaware of these factors may risk outliving their money. Creating a strategy may help you better prepare for retirement.

1. TransamericaCenter.org, 2023
2. Forbes.com, October 13, 2022
3. SSA.gov, 2023
4. AARP.org, March 31, 2023
5. Fidelity.com, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.

Passing your estate to an heir with credit problems or a gambling or alcohol addiction might not only lead to that wealth being squandered, but the inheritance could worsen the destructive behaviors.

Of course, you don’t want to disinherit your child simply because of their personal challenges. There are potential solutions that allow parents to control and incent behaviors long after they are gone, ensuring that a troubled child’s inheritance won’t be misused.¹

Some Common Approaches

A trust is one idea, since it can pass wealth to an heir while maintaining control over the how, when, where, and why the funds can be accessed.²

When establishing such a trust, you can appoint a trustee, who is typically an independent, third party (e.g., trust company) or family member. Appointing a family member, however, may be fraught with problems. Hypothetically speaking, who do you think may be better able to resist the pleadings of a desperate beneficiary? A close relative or a corporate entity?

Furthermore, the trust can specify the precise circumstances under which money will be paid to its beneficiary, or it can specify that the trustee will retain complete discretion in the disbursement of funds.

Structuring Ideas

Trusts can also include incentives, such as requiring drug or alcohol testing before the funds are paid out, or perhaps, that a lump-sum payment be made only upon graduation from college.

To ensure that an heir is committed to change, lump-sum amounts can be paid out after prescribed periods of time, e.g., five years of sobriety. To encourage your heir to seek gainful employment, the trust might pay out a dollar for every dollar in wages. Alternatively, the trust can be written whereby payments are made directly to service providers, like a landlord or utility company.

Trusts can be flexible in their design, but before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.

1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
2. Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.

Determining the value of an estate is a fundamental first step in estate management and a critical requirement for settling a decedent’s estate.¹

How to Assess the Value of an Estate

1. Select the date of calculation. Because values move up and down, you need to set a specific date for a valuation. For a living person, you are free to pick any date. If you’re assessing the value of a decedent’s estate, you may choose either the date of death or the date six months after their death (the “Alternate Valuation Date”). If you use the Alternate Valuation Date, any asset sold or distributed during the first six months following the death must be valued as of the date of sale or distribution.²
2. Determine the assets comprising the estate. This asset list should include everything an individual owns or has ownership interests in.
3. Gather all financial statements as of the date of calculation. If an account is owned individually, the entire value should be calculated in the estate. If owned jointly with a spouse who has rights of survivorship, then 50 percent of the value should be included.
   Remember to:
   -Deduct any outstanding mortgage balance.
   -Include life insurance when the policy owner is the deceased individual or the beneficiary is the decedent’s estate.³
4. Calculate deductions. Subtract any debts from the total value of assets. For the decedent, this may also include any regular bills that may be due (e.g., utilities, medical expenses, etc.), charitable gifts, and state tax obligations.

Assessing the precise value of an estate can be complicated, especially when settling an estate. Please consult a professional with estate expertise regarding your individual situation.

1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
2. Investopedia.com, January 10, 2023. The article assumes the deceased has a valid will and has named an executor who is responsible for carrying out the directions of the will. If a person dies intestate, it means that a valid will has not been executed. Without a valid will, a person’s property will be distributed to the heirs as defined by the state law.
3. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.

You’re young, have little in savings, and might not have anyone relying on you, financially. So, why do you need to think about estate management?¹

Here are four great reasons:

Estate Strategies: They’re Not Just for the Elderly

1. You need a will. You may ask yourself why a will is important if you don’t have much to pass on. A will is not just about transferring assets. It can be used to accomplish other tasks, such as naming who should manage your social media accounts once you’re gone or inherit items you’ve accumulated, like collectibles or your car.
2. Don’t burden others with burial expenses. Funerals can be expensive, and if you don’t have the savings to meet those costs, that burden gets shifted to others.
3. Consider a medical directive. This important document states your wishes for end-of-life care. In the case of an unfortunate accident, a medical directive provides instructions about the level of care you want, e.g., palliative care only.
4. Create a durable power of attorney for health care. In the event that you are unable to make medical decisions for yourself, this gives the individual of your choice the legal power to act as a health care proxy for you.

A medical directive and health care durable power of attorney can ensure that you are provided the level of care consistent with your wishes. They can also prevent family discord in the event of differing opinions.

Though the multiple financial goals of many young adults often require more resources than present earnings can meet, these important planning steps can be accomplished at a small cost.

1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.