Category Archives: Estate Planning

Digital Assets and Your Estate

July 28, 2016

Defining Digital Assets

Digital assets can be loosely defined as any online or electronic records, art, images, emails, creations, files, accounts or subscriptions that are owned by an individual. These assets may be stored on a computer or other electronic device such as a smart phone, a thumb drive or in a cloud.

Considering Your Digital Estate

If you have any kind of online footprint or own any offline digital content, you have a digital estate. It’s just as important to create a legacy and/or estate plan for these digital assets as it is for your tangible assets. It is important that your estate planning documents, such as your Will and Power of Attorney document, specifically include digital assets to determine:

• What happens to your social media accounts upon death. Will they be maintained by a specific person, or would you prefer them to be deleted and closed? We’ve heard stories of parents wanting to access the photos stored on their deceased child’s Facebook or Instagram accounts but not being allowed to retrieve them. Or of spouses wanting to leave up the page of their deceased spouse as a memorial to that person.

• Who can access and manage your online accounts and subscriptions. Many people are now doing more and more banking online, including paperless statements. Imagine if your spouse passes away and you don’t have access to the login information for your bank and online bills. A digital estate plan will allow you to give an executor or heir access to online accounts that make estate management easier.

• Who will gain access to your purchased digital assets. Many people spend thousands of dollars a year on movies, programs and games that they download. While not all of these assets come with licenses that permit transfer, some do.

• Who will gain possession of your emails and other digital files. Every day a tremendous amount of personal information is shared via email and recorded on digital text files. It’s possible that you don’t want just anyone to have access to this information, which makes it vital to set up a digital estate plan spelling out who has control of its oversight.

Don’t assume that your Agent named in your Power of Attorney or the Executor of your Will automatically has access to your digital assets. Talk with an attorney about updating your documents to include digital assets or developing a digital estate plan to include a list of accounts, passwords, assets and other information.

Charitable Giving through Estate Planning

November 25, 2014

Everyone has his or her own idea of what creates the ideal legacy. For some, it’s all about providing handsomely for heirs but for others, it’s also about leaving a piece of their wealth to a charitable cause or organization.

Giving to Charities through Your Will

When you allocate your assets to various friends and family members through your will, you can also leave some to your chosen charitable organization(s). If your estate is potentially facing estate taxes, this may even reduce some of those liabilities.

Make the Organization a Beneficiary

Another easy way to facilitate charitable giving is to make the chosen organization(s) a beneficiary of your life insurance policy and/or retirement plan accounts. Be sure to let the organization know that you’ve made them your beneficiary and the name of the insurer or plan sponsor/custodian.

It is important to note that, since life insurance proceeds are not subject to estate taxes when left to individuals, it could be advantageous to make your heirs the beneficiary of your policy and leave taxable estate assets to the charity. One of our advisors can help you determine which is the best decision for your situation.

Charitable Trusts

Another popular choice for charitable giving is called the charitable remainder trust (CRT). A CRT allows donors to place assets intended for a charitable organization into the trust while continuing to take an income from the assets for a set number of years (20 years or less). In addition to receiving this income, the donor can also enjoy a partial tax deduction each year for the donated amount.

A charitable lead trust (CLT) offers yet another option. A CLT works by allowing a fixed percentage of total trust assets to be paid to the charity for a certain number of years. After that time, your heirs receive the remainder of the assets. With this type of trust, it’s important to remember that gift taxes may be due upon transferring assets in, however it can reduce your overall income tax and allow for charitable deductions.

As you can see, there are a number of ways you can get your assets to the people and the organizations you care about. Contact Kramer Wealth Managers today to discover all the ways an estate plan can be designed so that your legacy impacts everyone you want it to, while possibly reducing some of the taxes you pay today.

What to Do When a Loved One Dies

November 13, 2014

Dealing with the death of a friend or loved one is never easy, but when you add in the complications of dealing with their property and accounts, it becomes even more difficult. Below are some of the steps you’ll need to take should you find yourself in the position of being the closest relative or executor for someone who passes away.

• Notify others: You must let people know that the individual has passed away. This includes employers, friends, family members, clients, business partners, agents, accountants and other relevant parties. While it may seem easier to do this via social media, that might not be the best idea as it gives valuable information to potential identity thieves.

• Talk to a lawyer: A lawyer is going to be your most important guide through the process of dealing with the legal and financial ramifications of the death, so getting one immediately is important.

• Look for instructions: Many people leave behind information about how they want their funeral and burial to be conducted, whether they want to donate organs, who they want their property to go to and so on. Take some time initially to look for this information so you can make sure that the individual’s final wishes are carried out.

• Look for life insurance: The sooner you (or other beneficiaries) submit a life insurance claim, the sooner you’ll receive the payout which can be used to help pay estate expenses as well as funeral and burial costs.

• Pay certain bills: Debt and other financial obligations don’t necessarily disappear after someone dies, and businesses don’t always put bills on hold until probate is completed. Pay the bills due now for necessities such as utilities and rent or mortgage. Talk to the attorney about what other financial obligations should be paid right away and which should wait for the estate to settle.

• Close accounts: You will need to close or cancel the individual’s driver’s license, credit cards, memberships, and insurance policies (note that you will still need property insurance until assets are distributed). You’ll also need to notify relevant government agencies, such as Social Security. Your attorney will help you get any documentation you need to do this. Be sure to have multiple copies of the death certificate available, as you’ll need to send them in order to get accounts closed out. Be cautious when calling creditors because some creditors will try to get you to change the accounts into your name when you notify them of the death of the account owner. Be sure you do not assume any financial responsibility for any of the decedent’s bills, even if they are for a spouse, without consulting with an attorney first.

• Think about thieves: You need to not only secure the individual’s personal belongings and property but also their online presence- like social media and online accounts. It is important not to post a lot of personal information online about the deceased person because would-be thieves can use that information to steal identity. You can also consider requesting account restrictions from the credit reporting agencies.

At Kramer Wealth Managers, we can help you make sure that your financial affairs are in order, making it easier on your survivors. Contact us today to get started.

Beneficiary mistake #6: Gifting away tax benefits


August 21, 2014

Many assets allow you to name a beneficiary, that is, whom you would like to receive the asset in the event of your death. Life insurance policies and retirement accounts are common examples but some other account types such as bank accounts and non-retirement investment brokerage accounts also may allow you to name beneficiaries through a Pay on Death (POD) or Transfer on Death (TOD) form. While these forms are generally straight forward, they often lead people to make inadvertent errors. We have identified six common mistakes people make when preparing for the distribution of their assets after death. This is PART SIX OF SIX.


Gifting vs. inheriting. Many people prefer to give assets to their children while they are still alive instead of waiting for them to inherit it. This is common for people who are aging and find they don’t need some of the assets they have or they want to remove assets from their name to reduce estate taxes or for Medicaid planning purposes. However, there are often tax consequences associated with gifting assets while you are alive.


• Gift tax. Gifts in excess of the $14,000 annual gift tax exclusion may be subject to gift tax. Even if it isn’t subject to the tax, you will still need to report it on an IRS form 709, a Gift Tax Return. While many people are aware of this as it relates to cash gifts, they do not realize that it also applies to changing the registration on assets. For example, if you change the title on the deed to your home to your children, and the house is worth $500,000, the IRS considers this a $500,000 gift. Consult with a tax advisor before making any registration or title changes.


• Loss in stepped-up cost basis. One expensive mistake is gifting (or re-titling) highly appreciated assets such as real estate or stocks to someone else’s name. When an asset is gifted to someone while the donor is alive, the recipient takes on the original cost basis of that asset as well. Conversely, when an asset is inherited by someone after the death of the original owner, the beneficiary receives a “step-up” in cost basis to the value as of the owner’s date of death. This tax benefit can be huge.


Example: John Doe purchased his home in 1950 for $25,000. Today, the home is worth $400,000. If John changes the title on the home to his daughter, Jill, and then Jill sells it, she will have to pay tax on the capital gain of $375,000 ($400,000 sale – $25,000 cost basis= $375,000 capital gain). She would owe $56,250 in Federal taxes alone, not to mention State taxes, where applicable. However, if John were to leave it to Jill after his death as part of his estate, Jill would receive a step up in cost basis to $400,000. If she then sold it immediately for $400,000, she would not owe any taxes at all ($400,000 sale – $400,000 cost basis= $0 capital gain).


The stepped-up cost basis also applies to other capital assets such as stocks, bonds, and many other investment vehicles.


Before adding your child’s name to any of your assets, be sure to consult with a tax advisor or estate planning attorney.


Being aware of this type of common mistake can help you better prepare to ensure your wishes are followed in the event of your death. At Kramer Wealth Managers, we can help you coordinate with an estate planning attorney to make sure your estate goals and financial planning goals are in line with your personal WealthPath.

While the tax or legal guidance provided is based on our understanding of current laws, the information is not intended as tax or legal advice and should not be relied upon as tax or legal advice. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Beneficiary mistake #5: The empty estate

August 14, 2014


Many assets allow you to name a beneficiary, that is, whom you would like to receive the asset in the event of your death. Life insurance policies and retirement accounts are common examples but some other account types such as bank accounts and non-retirement investment brokerage accounts also may allow you to name beneficiaries through a Pay on Death (POD) or Transfer on Death (TOD) form. While these forms are generally straight forward, they often lead people to make inadvertent errors. We have identified six common mistakes people make when preparing for the distribution of their assets after death. This is PART FIVE OF SIX.


Leaving nothing in the estate to cover expenses. In an effort to avoid probate, many people fail to consider expenses that may need to be paid after their death. For example, if you own a home, there are expenses needed to maintain the home until it can be sold, which can often take a few months. By leaving all of the funds directly to beneficiaries and leaving nothing in the estate, the beneficiaries will have to use their own money to pay for utilities, repairs, and maintenance on the home until it is sold. They may also have to pay for final expenses such as burial or cremation. Sure, they will have the assets you have left to them to cover the cost but it could cause arguments between multiple beneficiaries over who will be responsible for paying for what. When some funds are left in the estate, the estate will pay for all expenses until everything is paid and then the remaining funds will be divided among the beneficiaries.


When determining whether or not you should leave some assets in the estate and as part of probate, you will want to consider the amount of assets, the type of expenses anticipated after death, who will be handling these expenses, and the cost of probate, among other factors. An estate planning attorney can help walk you through this.


Being aware of this type of common mistake can help you better prepare to ensure your wishes are followed in the event of your death. At Kramer Wealth Managers, we can help you coordinate with an estate planning attorney to make sure your estate goals and financial planning goals are in line with your personal WealthPath.

While the tax or legal guidance provided is based on our understanding of current laws, the information is not intended as tax or legal advice and should not be relied upon as tax or legal advice. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Beneficiary mistake #4: Backup Beneficiaries

August 8, 2014


Many assets allow you to name a beneficiary, that is, whom you would like to receive the asset in the event of your death. Life insurance policies and retirement accounts are common examples but some other account types such as bank accounts and non-retirement investment brokerage accounts also may allow you to name beneficiaries through a Pay on Death (POD) or Transfer on Death (TOD) form. While these forms are generally straight forward, they often lead people to make inadvertent errors. We have identified six common mistakes people make when preparing for the distribution of their assets after death. This is PART FOUR OF SIX.


Misunderstanding contingent beneficiaries. Most companies allow you to name a contingent (backup) beneficiary should your primary beneficiary pre-decease you. It is important to understand that contingent beneficiaries will only receive a benefit if ALL of the primary beneficiaries pre-decease you. For example, if you name your four children as primary beneficiaries equally and your eight grandchildren as contingent beneficiaries, and one of your children dies before you, his/her share will NOT go to his/her children. Instead, it will go to the remaining three surviving children.


Example: John Doe has two children, Jack and Jill. Jack has two children, Hansel and Gretel. Jill has two children, Jacob and Wilhelm. John has named his two children, Jack and Jill, as primary beneficiaries- 50% each. Then he has named his four grandchildren, Hansel, Gretel, Jacob, and Wilhelm as contingent beneficiaries- 25% each. Jack passes away before John, leaving behind his wife and Hansel and Gretel. Later, John dies.


In this example, Jill would receive 100% of John’s life insurance policy as the only surviving primary beneficiary. Jack’s two sons, Jacob and Wilhelm, would not receive any of Jack’s share of their grandfather’s life insurance policy. After Jill dies, the money will go to her own beneficiaries.


This can be avoided by using a per stirpes designation. Per Stirpes is a latin word meaning, “per issue” and is a legal term that would allow the deceased beneficiary’s benefit to go to his/her children


Being aware of this type of common mistake can help you better prepare to ensure your wishes are followed in the event of your death. At Kramer Wealth Managers, we can help you coordinate with an estate planning attorney to make sure your estate goals and financial planning goals are in line with your personal WealthPath.

While the tax or legal guidance provided is based on our understanding of current laws, the information is not intended as tax or legal advice and should not be relied upon as tax or legal advice. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Beneficiary mistake #3: Trust or Estate as IRA beneficiary

July 31, 2014

Many assets allow you to name a beneficiary, that is, whom you would like to receive the asset in the event of your death. Life insurance policies and retirement accounts are common examples but some other account types such as bank accounts and non-retirement investment brokerage accounts also may allow you to name beneficiaries through a Pay on Death (POD) or Transfer on Death (TOD) form. While these forms are generally straight forward, they often lead people to make inadvertent errors. We have identified six common mistakes people make when preparing for the distribution of their assets after death. This is PART THREE OF SIX.

Leaving retirement assets to a trust or estate. While wills and trusts can be effective planning vehicles, unfortunately, they are not always the most tax-advantageous when it comes to retirement accounts. While individual beneficiaries can choose life expectancy distributions which allows them to spread the tax liability over their lifetime, most trusts and estates do not have that option and are forced to take distributions within five years. Moreover, trusts and estates are taxed differently than individuals and can often pay a higher rate. This can create a significant tax burden by having large distributions taxed a potentially much higher rate.

Note that some trusts can be set up to allow for inherited IRA distributions but they must have very specific language written into the trust document in advance. You would need to work with an estate planning attorney that specializes in this type of trust.

Being aware of this type of common mistake can help you better prepare to ensure your wishes are followed in the event of your death. At Kramer Wealth Managers, we can help you coordinate with an estate planning attorney to make sure your estate goals and financial planning goals are in line with your personal WealthPath.

While the tax or legal guidance provided is based on our understanding of current laws, the information is not intended as tax or legal advice and should not be relied upon as tax or legal advice. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Beneficiary mistake #2: Minor or Spendthrift Children

July 24, 2014


Many assets allow you to name a beneficiary, that is, whom you would like to receive the asset in the event of your death. Life insurance policies and retirement accounts are common examples but some other account types such as bank accounts and non-retirement investment brokerage accounts also may allow you to name beneficiaries through a Pay on Death (POD) or Transfer on Death (TOD) form. While these forms are generally straight forward, they often lead people to make inadvertent errors. We have identified six common mistakes people make when preparing for the distribution of their assets after death. This is PART TWO OF SIX.


Naming minor children. Most people who have children wish to leave their assets to their children after their death. It is important to consider the age and financial responsibility of the children before choosing to leave funds to them outright. In most states, the age of majority is between 18-21. That is the age when a child who is left assets as a minor can have claim money outright. Most parents find that 18- to 21-year-olds (and even some much older children!) do not have the maturity or financial savvy to handle large sums of money at such a young age. If you are concerned about your child spending your assets irresponsibly, you may want to consider establishing a trust to receive the assets for the benefit of the child until they reach an age at which you feel they may be more responsible. The trust can be established at the time of your death (called a testamentary trust) and would name a trustee to administer the funds until the child reaches whatever age you determine would be appropriate for them to receive the funds outright. Prior to that time, the trustee would have discretion to make distributions to the child(ren) prior to that pre-determined age for expenses related to their education, health, and maintenance. But the children would not have the legal right to receive funds outright until the age you have determined. This can also be used for older children who are spend thrifts or have problems with addiction where you may be concerned about how they will handle the funds.


Example: John and Jane Doe have an estate worth approximately $1 Million. In their wills, they direct that all of their assets be paid to a trust for the benefit of their son, Jake. They name John’s sister, Jill, as trustee. They stipulate that Jake is entitled to 1/3 of the trust at age 25, 1/3 at age 30, and 1/3 at age 35. John and Jane both die when Jake is age 20 and all of their assets go into a trust that is established. Jill can give Jake money each month to pay for rent on an apartment, money for a car, college expenses, medical bills, or whatever Jill feels is necessary for Jake’s well-being. At age 25, Jill will give Jake 1/3 of whatever funds remain in the trust at that time. The remaining 2/3 will remain under her control until age 30 when she gives him another 1/3, and so on.


Another consideration when it comes to minor beneficiaries is for those who are divorced and do not wish for their ex-spouse to have any access to their funds after their death. Account owners should be aware that in the event of the account owner’s death and he/she leaves assets to their minor child, the funds must go into a custodial account where a custodian is named. Often, this ends up being the guardian of the child, who is often the ex-spouse (the child’s surviving parent).


Anyone with minor children should meet with an estate planning attorney to review their options. If you do end up utilizing a trust, be sure you update any beneficiary designations to reflect the trust instead of the children directly. See “Mistake #1- Failing to Understand How Assets Pass On Your Death” to learn the importance of having beneficiary designations match the intentions of your will.


Being aware of this type of common mistakes can help you better prepare to ensure your wishes are followed in the event of your death. At Kramer Wealth Managers, we can help you coordinate with an estate planning attorney to make sure your estate goals and financial planning goals are in line with your personal WealthPath.

While the tax or legal guidance provided is based on our understanding of current laws, the information is not intended as tax or legal advice and should not be relied upon as tax or legal advice. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Beneficiary mistake #1: Misunderstanding Asset Distribution on Death

July 17, 2014

Many assets allow you to name a beneficiary, that is, whom you would like to receive the asset in the event of your death. Life insurance policies and retirement accounts are common examples but some other account types such as bank accounts and non-retirement investment brokerage accounts also may allow you to name beneficiaries through a Pay on Death (POD) or Transfer on Death (TOD) form. While these forms are generally straight forward, they often lead people to make inadvertent errors. We have identified six common mistakes people make when preparing for the distribution of their assets after death. This is PART ONE OF SIX.

Failure to understand how assets will pass on your death. The first step in ensuring your assets are distributed according to your wishes is to understand how things pass when you die. People tend to put a lot of thought into writing their wills, only to find out that their will doesn’t actually control any of their assets! Generally speaking, anything that is jointly owned with another person as Joint With Rights of Survivorship (JWROS) will go to that person directly. Anything that has a beneficiary named will be paid directly to the beneficiary(ies). In these two situations, the will is not even considered in the distribution. The Will is only used when an asset is owned SOLELY by the decedent and no beneficiary is named. So if a husband and wife own their house, cars, and bank accounts together and have beneficiaries named on their life insurance policies and retirement accounts, they have nothing to probate and the Will has no control over any of their assets.

Here is a common example: Jane Doe has four children- John, Jack, James, and Julie. Jane’s will leaves everything to all four of her children in equal shares (25% each). The will also states that if any of her children dies before her, that child’s share is to pass on to his/her children, Jane’s grandchildren. Jane has an IRA and life insurance policy where she named each of her four children as beneficiaries at 25% each. Jane is getting older and decides to add her daughter’s name to her bank checking and savings accounts to make it easier for her daughter to help her out with paying bills and other financial transactions. Unfortunately, Jane’s son, John, passes away before her, leaving behind a wife and four children of his own.

Upon Jane’s death, Julie will get 100% of the bank accounts, because she is the only surviving owner. And the life insurance policy and IRA will be divided equally between Jane’s surviving children, Jack, James and Julie. Let’s say all four accounts (checking, savings, IRA, and life insurance) had the same amount of money in each. Julie would end up getting 66% of Jane’s assets while Jack and James would each only get 17% and John’s children would get nothing.

Had Jane known that her will would not control any of her accounts due to the joint ownership and beneficiary designations, she could have planned differently to ensure all four children got equal shares of Jane’s assets.

Being aware of this type of common mistake can help you better prepare to ensure your wishes are followed in the event of your death. At Kramer Wealth Managers, we can help you coordinate with an estate planning attorney to make sure your estate goals and financial planning goals are in line with your personal WealthPath.

While the tax or legal guidance provided is based on our understanding of current laws, the information is not intended as tax or legal advice and should not be relied upon as tax or legal advice. Neither FSC Securities Corporation, nor its registered representatives, provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.