Delivering News and Updates on Wills, Trusts, and Estate Administration Matters |
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In this edition of our newsletter, discover how advancements in reproductive science impact the rights of the unborn, learn how conducting a legal audit of your existing estate plan can be beneficial, make sure you are properly computing income tax deductions for business miles, and have a little Fall fun with us! |
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With the use of Assisted Reproductive Technology (ART),
it is possible for a child to be born years after a parent's
death. What does that mean for the child's inheritance?
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We live in an incredible age of medical advancements designed to help us achieve better health outcomes in a variety of areas. And now, couples struggling with infertility have more hope than ever in achieving a successful pregnancy. Through Assisted Reproductive Technology (ART), the dream of having a family is within their reach. Many of these technologies, like in-vitro fertilization (IVF), involve cryopreserving genetic material, including eggs and embryos, for future use, which creates several legal issues that anyone contemplating using these technologies to have a family should consider.
FACT: Under current NC law, in order for a child to inherit after a parent's death, the child must either be alive at the time of the parent's death or born within 10 months of the parent's death.
PLANNING ISSUE: Yet, with ART, a child could actually be conceived and born well outside that 10-month window. With a willing surrogate, it is scientifically possible for a child to be born years after the biological parents' deaths. What does that mean for the child's inheritance? How does that affect the definition of "descendants" or "family" that are typically used in estate planning documents?
FACT: One of the biggest questions facing those who pursue IVF is what to do with unused frozen embryos. Options include saving them to use for another child later, donating them to someone else, or disposing of them.
PLANNING ISSUE: Suppose a couple chooses Option 1 (saving embryos for later) but dies before having a chance to use them. What should happen to the embryos at that point? The same question could be asked of any cryopreserved genetic material after the original donor's death. Is the material to be destroyed? Is someone (a spouse, perhaps?) to "inherit" the material? How are any storage fees to be paid?
FACT: It is medically possible to acquire reproductive and genetic material from people on life support. This was proven in 2019 when the parents of a West Point Cadet sued to be able to harvest their dead son's sperm. They asked the Court to order that their son remain on life support until collection. A New York judge agreed to their request.
PLANNING ISSUE: Whether you applaud the parents' efforts to continue their family lineage or you look on their actions in horror, the point here is that these technologies exist. And if a child were to be born from the West Point Cadet's sperm, then the legal questions and inheritance issues are significant. When the Health Care Power of Attorney includes the ability to "donate all or any of my tissue or organs for transplantation or therapy," could that be interpreted to include the 'harvest' of genetic material such as in the West Point case? Should additional language be incorporated into the power of attorney to allow or prevent such removal?
Remember, the law often lags behind science. So, the best course of action for a client with cryopreserved genetic material or an interest in Assisted Reproductive Technology is to talk through the various legal issues with a knowledgeable estate planning attorney.
You must be proactive to make sure your estate plan covers all of the potential legal ramifications so that you and your family are protected!
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Our Plan Audit service is geared toward those who already have an estate plan in place, but Privette Legacy Planning did not prepare it.
So, what exactly is this service? Essentially, it’s a legal audit. Amy, our attorney, reviews every component of the client's existing estate plan to identify areas of exposure and risk, highlight sections that might need improvement, and pinpoint major planning flaws.
The people who can benefit from our Plan Audit service typically fall into one of three categories:
- Their existing estate plan was drafted by an attorney in a different state.
- Their North Carolina-based estate plan has some age on it.
- They have a D-I-Y plan and are concerned about the coverage and efficacy.
Documents prepared based on the laws of a different state may have provisions that would not work well or make sense based on the laws of North Carolina. This is often the issue when clients move to North Carolina from a community property state, yet North Carolina is a common law property state. Some states, such as Florida, have substantial homestead exemptions that reduce the benefits of putting a home in a trust, but such is not the case in North Carolina. Every state has its own laws that need to be considered when planning.
With an older estate plan, it’s possible that a document in the plan has become obsolete. It’s also possible that the planning strategies used at origination are no longer appropriate or even allowed under today’s laws. Here are three examples:
- North Carolina implemented a completely new law for Durable Powers of Attorney in January 2018. An older document would not be covered under the new provisions of the law.
- Federal tax laws governing the amount of money that can be passed from one generation to the next before incurring tax penalties have changed dramatically over the last 10 years or so. Older plans often include complicated multi-tiered trust structures designed to protect against inheritance taxes, but as the laws have developed, these intricate trust designs are no longer need for most families.
- Historically, conduit or see-through trusts were more widely used because it offers more favorable income tax treatment than an accumulation trust. However, in 2020, the SECURE Act changed the rules controlling the inheritance of IRAs and 401(k)s of heirs other than the spouse. The effect of the new law may mean that an accumulation trust offers better asset protection for families with younger heirs than conduit trusts.
The issues with D-I-Y documents are too numerous to mention here. Nevertheless, a typical problem is that the D-I-Y Will omits key language that can save family members money (such as a bond waiver) or leaves out a specific grant of authority that is required to allow an Executor to sell real estate. We have also reviewed powers of attorney that never named the person to whom power was given. It also bears mentioning that most D-I-Y Wills we have reviewed have contained inconsistencies where a clause on one page is contradicted by a clause on another page.
Without a Plan Audit, none of the above issues would be exposed until after someone has died or become incapacitated. When someone is at their most vulnerable point, that is not the time to learn the documents are flawed. When the family is relying on a straightforward transfer of assets to keep the household going, that is not the time to be told a document has been rejected by the court. When you call the funeral home to arrange your loved one's service, that's really not when you want to hear the funeral director tell you, "I'm sorry, but we can't talk to you" because language is missing from a power of attorney [true story, by the way]. The Plan Audit is like a bloodhound that sniffs out trouble and problem areas while there’s still time for the client to fix them!
The Plan Audit is not about reviewing the grammar and punctuation and formatting. It’s about making sure the plan adequately protects the client and the client’s family. That the plan does what the client expects and wants it to do. And if it doesn’t, that a strategy is presented to the client on how to remedy the situation.
If you have a friend or loved one who has expressed reservations about whether their estate plan is up to par—perhaps after hearing you rave about the comprehensive plan Privette Legacy Planning prepared for you—then keep our Plan Audit in mind. A little peace of mind goes a long way!
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It is the perfect time of the year to get outside and enjoy some fall family fun! To help you make the most of the season, we invite you to participate in our first-ever Autumn Bucket List! Simply share photos of you and your family completing bucket list items from the printable sheet linked below. Be sure and tag us on your photos! We know you'll have a ball doing these activities, and we'll have a ball seeing the photos!
We will be sharing our bucket list completions on Facebook and Instagram throughout the season. Let's see how many we can get done between all of us!
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IRS Increases Standard Mileage Rates for
Last Half of 2022
In recognition of recent gasoline price increases, the IRS took rare action and approved a mid-year adjustment to the mileage rate. In fact, the last time the IRS issued a mid-year rate adjustment to the mileage rate was back in 2011.
As of July 1, 2022, the standard mileage rate for the latter part of the year for business travel will be 62.5 cents per mile, a 4-cent increase. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, also up 4 cents. The rate used for charitable organizations is unchanged at 14 cents per mile.
Whether you use the IRS rate to reimburse employees for business travel or track your own mileage in order to claim a deduction on your taxes, be sure to apply 58.5 cents from January 1 - June 30 and 62.5 cents from July 1, 2022 through the end of the year.
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Don't Discount Our Discounts! |
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If you're running into situations that everyone else is running away from, then chances are this discount is for you!
This is our way of saying thank you to those who put our safety before their own. Thank you for your sacrifice & bravery.
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We recognize and appreciate the important role educators play in today's society.
This discount is our way of saying thank you to those who pour knowledge into our children on a daily basis and are so deeply invested in their future.
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We are grateful for the service and sacrifice of our brothers and sisters of the Armed Forces.
This discount is but a small token of our appreciation to our servicemembers on active duty, as well as Guard and Reserve members, retirees, and veterans
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Be sure to mention the applicable discount at your estate planning consultation! |
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