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After Having A Kid Do I Need To Update My Will?

While it may not be a priority when you are young and single, having a will becomes a necessity as you grow older. Furthermore, there are a number of reasons why you would update your will. For instance, if you get married, if your net worth and investments change, if a beneficiary needs to be changed, or if you have a child. Having a child adds a whole new dimension to your will. And, without direction from you through your will, things can happen that you did not want to happen. The following are some important reasons why you need to update your will after having a child.

Beneficiary

Before you had a child, your beneficiary on your will may have been your parents or a significant other. However, after you have a child, you may need to rethink this designation. If you do not have a significant other, you may want to leave your estate to your child. Whether you leave it to your child or to an adult, it is important to make sure this portion of your will is up to date. It would be terrible if you forgot to update your beneficiary and someone you did not want ends up with your estate. These are issues you can discuss with your attorney to figure out the best way to choose a beneficiary, with your child in mind.

Guardianship

This is probably the most important reason to change your will. You need to decide and add to your will who will take care of your child, should you pass away. This is not a decision that is made lightly. You want to decide ahead of time, who is going to raise your child and discuss the plan with that person. Without this direction, your child may be impacted, and issues may arise. For instance, guardianship would be determined by a court, not by you. Furthermore, the court may give guardianship to someone that you did not want to take care of your child. It would be terrible if guardianship of your child was handed over to someone you did not want taking care of them.

Schooling

Preferences for how you want your child to be schooled are important to add to your will. This way, if you die, there is no questions about it. You may want your child to go to private school, perhaps using money from an insurance policy. If you do not add this information to your will, whoever is the guardian of your child will have sole discretion about your child’s school.

Disbursement

After you die, your estate will be settled and any directives from your will can be adhered to. By keeping up with your will and identifying how your assets will be distributed, you can dictate what you want your child to keep and how you want any funds disbursed to your child. For instance, if you have a life insurance policy, you may not want your child to have full access to it until they graduate from college.

Expenses

There will surely be expenses and costs that your child will have as they are growing up. If your child is the beneficiary of your estate or even just of the monetary portion, and you decided they would not have access to the funds until they reach a certain age, you can earmark funds for specific reasons. For instance, you may want to give the guardian a stipend for taking care of your child. Or, you may want to allow the use of the money for things your child needs and for school. You can delineate what kinds of expenses can be paid out of the estate. This gives you a bit of control, even after you are gone.

As you can see, updating your will after you have a child is paramount. Without guidance from an updated will, your child(ren) may suffer and your estate may take much longer to settle. Staying on top of your will is important because as you get older, things change, and you need to make sure your will changes with it. This will help ease the transition for your loved ones by making sure your wishes are honored.

None of the content in this article is legal advice. Please contact our attorneys to discuss your legal needs.

source https://gudemanlaw.com/after-having-a-kid-do-i-need-to-update-my-will/

Why Having A Will Saves You Time And Money By Avoiding Probate Court

A legal document which outlines the manner through which your property will be devolved in the event of your demise is referred to as a will. By having a valid will, you ensure that your property ends up where you want it to be. Therefore, it is important that you make a will if you have a family.

Probate can be defined as the process of proving and registering the will of the deceased. The person you appoint as the executor of your will handles your estate when you pass on. This is referred to as administration of the deceased estate. The executor ensures that your estate is settled properly and to the advantage of your beneficiaries.

The Executor’s Duties

For an executor to properly dispense his or her duties, the executor is required by law to obtain a grant of probate.
A grant of probate confirms that: the author of the will is dead, that the will is authentic and the identity of the executor. An executor of a will can be a natural person or a juridical person such as a Trustee Company. Once the court grants probate, the assets of the deceased are entrusted on the executor. In order for you to save your loved ones from wasting time and money in probate court, you must ensure that you leave behind a valid will. Below is a detailed explanation of how a valid will saves your family from a probate court.

Cost of probate

The cost of probate can be quite high. The high cost of probate can eat into your estate significantly. Large amounts of money can easily be lost paying for: appraiser’s fees, court filing fees, and lawyers’ fees. Probate lawyers’ fees are calculated either on a percentage of the total value of the probate assets or on an hourly basis. The fees payable to a probate lawyer can also be a combination of the two. Fees payable to a lawyer can be significant regardless of the remuneration method.

Personal representatives are, by law, entitled to be paid for the services they render. Some states have in place a fee schedule for such representatives. Similarly, the fees paid to personal representatives is a percentage of the value of your estate. An executor may also be compensated for his or her services. This happens when the executor sells some of the assets of the estate or collects income generated by the estate.

Before your estate is distributed to your beneficiaries, your creditors, lawyers, personal representatives, and executors have to be paid. In order to raise money for this costly endeavor, your assets may be liquidated. If the assets are sold at a profit, an income tax is levied. This continues to decrease the amount that your beneficiaries will receive. At times, assets may be sold at a price that is less than their market value; to raise money to pay creditors and lawyers’ fees. The cost of probate is higher if you die without having executed a valid will.

The process of probate is time-consuming & Financially Draining

The minimum time required to fully complete probate is six months. Some probate processes take up to two years to end. This can greatly inconvenience your beneficiaries financially. Household expenses and other financial matters may be interrupted until the probate process is closed. However, on application, the court can release some assets before the end of the process. This will require your beneficiaries to spend more money on attorney fees. It is important to note that this happens regardless of whether you have a will or otherwise. The time taken to close probate proceedings takes a long time if you die without a valid will. By having a will, you minimize the time taken for probate: since you have already outlined how you want your estate to be distributed.

You personally decide how your estate will be devolved

A person who dies without a will is said to have died intestate. A will allows its author to decide how his or her property will be distributed upon death; it comes into force when its author dies. If you die intestate, the probate court decides how your property will be distributed. You will have no say on how your assets are shared.

You choose who winds up your estate

The executor you appoint in your will has the duty of winding up your estate. Executors are required to pay the deceased debts and, at times, manage the estate of the deceased for the benefit of the deceased beneficiaries.

None of the content in this article is considered legal advice. Call our attorneys to discuss a plan for your legal situation.

source https://gudemanlaw.com/why-having-a-will-saves-you-time-and-money-by-avoiding-probate-court/

What Are The Tax Benefits of Forming A Living Trust?

A living trust allows you to place your assets in it while designating someone you trust to administer the proceeds upon your death. The designee is bound by the wishes stated in the trust agreement. While you are still fully capable, you have the benefit of adding to, subtracting from, or making any changes that you deem necessary or prudent.

Will Vs Living Trust:The Differences

Several benefits are derived from this legal document. The most notable is that it avoids probate, which is the bane of a will. One of the major differences between a will and a living trust is that everything in the will is stalled until your death. The living trust allows more flexibility while you are still alive, and the length of time it takes for heirs to take possession of the assets is considerably shorter. With a will, it can take months or even years, whereas a living trust could conceivably take weeks. After the trustee has taken care of any obligations on your behalf, the estate can be dispersed according to your wishes.

A living trust gives you the power to designate someone you trust to take over your financial affairs in the event of incapacitation. This is a valuable consideration, which is unique to a living trust because it does not require any court involvement. With a will, the court will appoint a conservator if you do not have a durable power of attorney. He or she will have to receive court approval of any property sale or other expenses related to the will. Of course, you can eliminate that possibility by drawing up a durable power of attorney before the need arises.

While a living trust may provide tax savings for married partners, it generally does not offer any more tax benefit than a will. The costs to settle the estate will be less because it is not subject to the probate process. Beneficiaries can almost immediately receive any revenue from income-producing investments without too much disruption.

Protecting Assets From Creditors. Revocable & Irrevocable Trusts

A properly structured trust may shield assets from creditors, but the net tax effect depends primarily on the structure of the trust – that is, whether it is a revocable or an irrevocable trust. The government charges an estate tax to convey property to another person after someone’s death. It is based on the assessed value of any property left by the decedent. A revocable trust gives the grantor the freedom to make changes in trustees or beneficiaries and add or remove assets at will. He or she can even eliminate the trust altogether. When the owner of a revocable trust expires, the assets are placed in the decedent’s estate and are taxed. Because the trust, rather than the grantor, owns the assets in an irrevocable trust, it does not owe taxes.

While the grantor is alive, he or she must pay taxes on any income generated from assets in a revocable trust, while income from an irrevocable trust must be included on the tax returns of the beneficiaries. In either a revocable or irrevocable trust, any capital gains taxes may be less because the capital gain is computed on the property at the time of the grantor’s death, which could be quite sometime before the property is actually sold. Since the amount of the gain may be less, the amount of tax owed on the gain will be less.

Grantor Trust

Another approach to possibly reducing taxes in a living trust is the grantor trust, whereby the grantor can use personal exemptions from the sale of a trust asset, like the $250,000 exemption from the sale of a primary residence. Both revocable and irrevocable trusts are grantor trusts, but the grantor of the irrevocable trust must maintain some control over assets in order to qualify. This can be accomplished by becoming a beneficiary of the trust.

Finally, a revocable trust does not have to pay gift taxes, but the irrevocable trust requires that gift taxes are to be paid when assets are moved into it. This does not preclude the estate taxes that will have to be paid in either case. To receive the most benefit in the reduction or avoidance of income and estate taxes, it is wise to seek the advice of a qualified attorney.

Contact us now to speak to one of our attorneys.

No content from this article constitutes or takes the place of legal advice. Please contact one of our attorneys before making any decisions.

source https://gudemanlaw.com/living-trust-tax-benefits/

Can You Buy A Home After Filing Bankruptcy?

The decision to declare bankruptcy is one that many people do not undertake lightly. They may need to do after falling in debt from medical bills or because of other causes beyond their control. In the aftermath of this declaration, many people wonder about the state of their finances.

One of the questions many filers have concerns home ownership. Owning a home has many benefits. It’s a great way to build equity and avoid paying too much for rent. Homeowners also benefit from tax breaks that are not available to renters, allowing them to deduct interest on the home loan as well as a certain amount of property taxes.

After filing bankruptcy, many people wonder if it’s possible to enjoy such benefits again. They may even have a home in mind. Those who have such a history can take heart. It is possible to buy a home even after a bankruptcy. However, it’s important for people to do their homework before they begin.

It May Take Time

One thing to keep in mind is that may take some time to buy a home after bankruptcy. A lender may ask people to show they have what it takes to avoid a foreclosure and pay the mortgage on time each month. Most people will file Chapter 7 or Chapter 13 bankruptcy. In general, lenders are looking for evidence that the home buyer has the means to manage their finances, afford the home they want and keep the home well maintained. To that end, they expect any prospective mortgage applicants to provide evidence that will depend on the type of bankruptcy they declared. Chapter 7 and Chapter 13 applicants will need to meet different requirements that can also vary depending on the loan company.

Chapter 7 Bankruptcy

This is a faster form of bankruptcy that lets people keep at least some of their assets and then use the remains to discharge their existing debts. However, it will remain on the creditor’s record for many years. People who have a Chapter 7 bankruptcy as part of their credit history have essentially a clock that begins when they file bankruptcy. Buyers who want to qualify for a government-subsidized mortgage such as an FHA loan or one through the Veterans’ Administration may only be required to wait two years from that first filing before they can apply for the loan. A convention mortgage may require up to four years before the buyer can qualify for a mortgage.

Chapter 13 Bankruptcy

Chapter 13 bankruptcies typically require the filer to agree to pay back any debt over a period of time. During this time, the filer must adhere to a certain budget. In general, they can qualify for a standard conventional loan through many lenders in as little as two years after filing this kind of bankruptcy. Qualifying for a loan from government organizations can be even quicker. The mortgage seeker may be able to get a loan in roughly twelve months from the time they file. Applicants should keep in mind that they might need to get permission from the people supervising their bankruptcy in order to take on additional debt.

Foreclosure

A foreclosure is when the homeowner walks away from a mortgage because they can’t pay it. The foreclosure is a different form of bankruptcy and has different rules that govern other types of bankruptcies. Like other forms of bankruptcy, the person will face a seasoning period in which they may not be able to qualify for a mortgage at all.

What Must be Done

For the foreclosure, the buyer will usually face at least a seven year wait before qualifying for a mortgage again. Under certain circumstances such as foreclosure for medical reasons, they may qualify in as little as three years for another mortgage. People who choose a short sale may qualify for a conventional loan in about four years while qualifying for an FHA loan in only three. Those who apply for any kind of mortgage after the foreclosure may face more stringent requirements. In general, they’ll need to have at least ten percent of the home value saved first.

None of the content on this article consitutes legal advice. Please contact our office to speak with an attorney on such matters.

source https://gudemanlaw.com/buying-home-after-bankruptcy/

Updates

from Gudeman & Associates, P.C. - Law Firm in Royal Oak. Specializing in business planning, estate planning, tax law, real es... https://gudeman-associates-pc.business.site/posts/7415172238591267248?hl=en
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Updates

from Gudeman & Associates, P.C. - Law Firm in Royal Oak. Specializing in business planning, estate planning, tax law, real es... https://gudeman-associates-pc.business.site/posts/1453344539761740202?hl=en
via Gudeman & Associates, P.C.