The Answers You Need for the Questions You’re Forced to Ask
One of the worst aspects of pursuing a case—whether you’re fighting for injury compensation or trying to settle a divorce—is not knowing what to expect. Before you get yourself knee deep in the details of your case allow us to answer some of your questions first. We’ll help you be more fully prepared and more confident as you move forward.
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What documents should I create when I begin the estate planning process?
Many people begin the estate planning process to ensure that loved ones will be provided for and to designate beneficiaries of the estate. Proper estate planning can also accomplish many other goals, including the division of your assets to your spouse, children, and beneficiaries, a way to help avoid family conflicts, and a way to designate who will care for minor or special needs children. However, these goals can only be enacted if the plan includes the necessary legal documents.
Vital Documents to Include in Your Rhode Island Estate Plan
An estate plan is not simply a will; it is a collection of legal documents that each have important functions. A robust estate plan will include:
- Will. Your last will and testament distributes your property according to your wishes. If you do not have a will, your property will be distributed according to state law. Your will also names the executor who is responsible for the management and closing of your estate, including paying final debts and disbursing personal assets. Your will may also name the legal guardian for any dependents you leave behind.
- Financial power of attorney. When you designate a financial power of attorney, you give someone the right to make financial decisions on your behalf if you become physically or mentally incompetent. The person with power of attorney is limited to performing financial matters only such as paying bills, controlling investments, and filing taxes.
- Advanced medical directives. Advanced medical directives can include multiple documents, including a living will and a durable power of attorney for healthcare. A healthcare power of attorney gives someone of your choosing the legal authority to make healthcare decisions on your behalf if you become incapacitated. While many people outline the actions they want taken such as dementia care or continuation of life support, the person chosen as representative will have the ability to make decisions on things that have not been planned for (such as which medical treatments you will or will not receive).
- Trusts. The creation of a trust can allow your assets to pass to your beneficiaries without the need for probate, potentially saving your family thousands of dollars in court fees and taxes paid by your estate.
The Rhode Island probate attorneys at Kirshenbaum & Kirshenbaum can help guide you through estate planning matters. Simply fill out our online contact form to schedule your initial consultation in our offices.
Do I have to pay taxes on the assets that I inherit?
While there is no inheritance tax in Rhode Island, a deceased person’s estate may be subject to state and federal estate taxes. Unlike inheritance tax, estate taxes are paid by the estate of the person who died, not by the heirs and beneficiaries. The maximum state estate tax rate is 16%, and the maximum federal estate tax rate is 40%, both of which are paid out of the total cash and assets of the deceased before the rest is left to the beneficiaries. However, in many cases, all but the wealthiest Rhode Island families will be exempt from state and federal estate taxes.
Paying Taxes on Your Inheritance
A decedent will only owe estate taxes if the amount of his assets has a gross value of more than the exemption limit. The gross value of an estate is the total combined amount of assets, including cash, real estate, vehicles, certificates of deposit, investment accounts, life insurance proceeds, retirement accounts, and personal property. These limits are adjusted every year but stand at $1,515,156 for Rhode Island tax and $5.49 million for federal tax in 2017. If the gross value is under the limit, the estate will likely not owe any taxes.
The following factors may result in lower estate taxes (or no tax liability at all):
- Deductions. Depending on the number of exemptions claimed on the final tax return, the taxable portion of the estate may be reduced so low that no taxes are owed.
- Spousal inheritance. Assets left to a legally-married surviving spouse, whether an opposite-sex or same-sex partner, pass on to the spouse free of federal and Rhode Island estate tax.
- Assets held in trust. In most cases, assets in irrevocable trusts are exempt from estate taxes.
- Small cash gifts. Cash gifts or donations over $14,000 per year may be taxable unless the gifts are given to a spouse or an eligible charity.
Help With Rhode Island Esate Tax
Not only do heirs and beneficiaries inherit most assets free of tax, they also will not have to pay income tax on inheritances other than inherited retirement accounts. To ensure that you and your family receive the amount of assets intended by your loved one, speak with our experienced legal team. Call us today at 401-946-3200 or fill out our online contact form for more information.
How can I choose the right estate planning attorney for my family?
Many people will hit roadblocks during their estate planning simply because they are unsure which options would benefit them most. Estate plans are often left unfinished, leading to guardianship issues, unnecessary probate proceedings, disinheritance, high taxes, and other sources of contention and confusion within the family. With so much at stake, asking an attorney to evaluate your estate plan is a relatively easy way to prevent devastation down the road—but it’s important to choose the right attorney for your family.
3 Tips for Choosing Your Ideal Estate Planning Attorney
The choices you make throughout the estate planning process can affect your family for decades, so it is important to think critically as you make these decisions. Because estate plans often involve complex financial, legal, and tax implications, it is vital that you have all the information you need before making your final decisions.
When choosing an estate plan attorney, you should consider:
- Areas of practice. Estate planning is very different from other areas of law, and your attorney should have a demonstrated track record helping clients in this domain. Experience in estate planning is a must, but he should also have experience in related fields such as probate law, family law, accounting, divorce, and business disputes.
- Attention to your needs. A comprehensive plan will typically include a last will and testament, financial and healthcare powers of attorney, guardianship designations, and a detailed list of assets and beneficiaries. However, each part of an estate plan can (and should) be customized to the specific needs of each client. If you desire a revocable or irrevocable trust, you attorney should help you create and fund each trust, so assets can pass to beneficiaries without probate. Your lawyer should have a clear understanding of what you want in order to create the best plan for you.
- Dedication to clients. It is not enough for your lawyer to understand how your estate plan works; he must also be able to explain the terms and limitations of your plan to you and your beneficiaries. Your attorney should take the time to walk you through complex matters, ensure that you fully understand each of the documents you sign, and offer a regular “check in” every few years to update your existing plan.
If you need help creating your estate plan, the attorneys at Kirshenbaum & Kirshenbaum can provide knowledgeable guidance. Call us today, or fill out our online contact form to get started.
What is a contested will?
A last will and testament—also simply called a will—communicates a person’s last wishes for the time after his death. However, Rhode Island law allows for certain parties to dispute the legality of the document with proper grounds, and this is called contesting a will. It’s important to understand what happens after a complaint is made and how an attorney can help you confirm your loved one’s will.
After the Complaint
The person contesting the will must have legal grounds by which to challenge it, as well as find, organize, and present evidence to support the claim. Many wills are verified quickly and easily (especially if they are self-proving wills), but it’s also possible that a lengthy and complicated dispute will follow a will contest. Common claims involve evidence questioning:
- The document’s compliance with state laws
- The mental state of the deceased at the time of signing
- The circumstances under which the deceased signed the document—that is, whether the signer was forced or tricked
After the challenger brings the complaint, your first step should be to call an attorney—to represent and preserve your loved one’s wishes, help you understand complex law, and prepare you to make decisions—but also to protect the truth.
Methods for Preserving the Will
Even if it seems that the will’s challenger has sufficient legal grounds and evidence, it’s still possible to preserve your loved one’s will as is. You, the will’s executor, and your estate planning attorney can:
- Find missing witnesses
- Hire a handwriting analyst (if the will was penned by hand)
- Request affidavits from witnesses
Guidance From a Skilled Lawyer
If someone is contesting the will of your loved one and you have more questions, it’s important to find an attorney whose opinion you can trust. Kirshenbaum & Kirshenbaum has been in practice for decades, and we want to put our experience to work for you. To begin a conversation with a knowledgeable team member, contact us today.
What is probate?
Probate is the court-supervised process for handling the affairs of a person who has died. It verifies the will, inventories the assets, pays final debts, and distributes remaining assets to the beneficiaries. Assets included in a living trust, life insurance paid to a named beneficiary, or assets held jointly with rights of survivorship are typically excluded from the probate process—other assets must go through probate.
The Purpose of Probate
The basic purpose of probate is to ensure that the deceased person’s assets are transferred to the beneficiaries in an orderly and controlled manner. Probate is also in place to:
- Settle debts. If the deceased still owed money to creditors, probate ensures that the estate’s executor settles those debts.
- Handle taxes. Depending on the size of the estate, the state of Rhode Island and the federal government may impose estate taxes. In addition, the estate may also owe state and federal income tax or property taxes.
- Distribute property. If a will exists, probate distributes the assets according to the terms of the will. However, if a person dies without a will, probate allocates property, money, and other assets according to Rhode Island intestacy laws.
Avoiding Probate Is Possible in Rhode Island
The probate process can take a year or more—primarily because there are waiting periods and delays built into the legal system. And probate can get expensive—especially when disputes over asset distribution arise or the executor isn’t well-informed. To avoid these issues, many people choose to avoid probate altogether—or at least reduce the number of assets subject to this process. Following are some tools that can be used to accomplish this goal:
- Will: Since a will works to detail a person’s wishes when they die, it gives the executor exact instructions for distribution of property and assets. By itself, a will does not necessarily mean that probate can be avoided, but it can help reduce costs by clarifying issues related to asset distribution.
- Living Trust: To prevent your property from going through probate, you can create a trust—which, upon your death, designates an immediate trustee for all your assets. During your lifetime, you are the trustee of your trust. However, upon your death, a person of your choosing becomes the successor trustee and distributes property for you. Virtually any asset you have can be put into a trust, including real estate, cars, and bank accounts.
- Joint Ownership: During your lifetime, you can enter into joint ownership of your assets with another person, such as your spouse. Upon your passing, the right of survivorship ensures that the property passes on smoothly to the other owner. Of course, some paperwork is involved to verify ownership, but it typically happens much more efficiently than the probate process.
If you need help with a probate dispute or if you are thinking about building your own estate plan, our experienced legal team can help. Contact us by phone or fill out our handy online contact form today!