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Gig Harbor Estate Planning And Probate Blog

What to do with spendthrift kids

Do you have an heir who just does not know how to handle their money? They always seem to spend everything that they have. They make purchases that you think are unneeded and unwise. You have tried to teach them how to budget and save, but it never seems to click.

As such, you're worried about creating an estate plan that leaves money to your child. You think they'll just blow their entire inheritance in the first year and have nothing left. You worked far too hard for that money to let that happen.

Be skeptical of debt relief/consolidation scams promising freedom

Most American households are only a few bad weeks away from financial insolvency. Many households don't have adequate emergency funds to cover their mortgage for several months, to say nothing of the other debts and expenses that families incur through daily life.

When you need to use credit cards to pay your utilities or buy your groceries, you could quickly get trapped in the dangerous pattern of borrowing more than you can repay every month. If you owe backdue taxes, you could face the garnishment of your wages or even prison. When an ad comes on the television advertising debt relief or consolidation services, the idea of getting your finances back under control can seem very tempting.

4 things that go wrong when people make their own estate plan

The internet is full of "do-it-yourself" forms for estate planning and last wills. From cookie-cutter power of attorney documents to questionable last wills, these documents can lead some people into a false sense of security. In addition to potentially not standing up in court, homemade estate plans with boilerplate documents can also leave people vulnerable to common estate planning mistakes.

Working with an attorney to create a comprehensive estate plan can help you avoid potential pitfalls and protect your wishes for your legacy. The following four mistakes are common issues that could be avoided with experienced legal help.

Parents: Your estate plan can provide for your children

Brining a new baby into the world is a joy for parents, but it also brings up new responsibilities. A primary one is that you have to know that your child will be taken care of if something happens to you. Setting up your estate plan, and keeping your child in mind while doing this, can ensure that you have a say in their rearing if you pass away.

Your estate plan includes more than just a will. In fact, it can cover some aspects of your life before you even pass away. Having all of this in place might give you peace of mind as you go through your life.

Was your tax return selected for an audit?

When you file a tax return with the IRS, you do so with the idea of providing accurate and complete information. However, no matter how much time you put into your tax return, the IRS still has the ability to choose it for an audit.

There is no surefire way to prevent a tax audit, as the IRS uses several methods to choose returns. These include:

  • Computer scoring: The IRS has a complex computer scoring system to analyze tax returns for errors and calculate a Discriminant Function System (DIF) score and Unreported Income DIF (UIDIF) score. The higher the score, the greater chance there is that the return will be chosen for a tax audit.
  • Abusive transactions: The IRS selects returns by pinpointing those associated with abusive transactions, typically with the idea of tax avoidance.
  • Information matching: For example, if you report income that is less than your employer, it's a red flag that something is wrong. That's why it's important to double check your numbers before filing your final return.
  • Corporations: The IRS chooses to audit tax returns from corporations every year. So, if you're a business owner, this could happen at random.

Know when to update your estate plan

Your estate plan is what your loved ones will follow to distribute your assets when you pass away, but there are other points that you must include in it. All adults, regardless of age or wealth status, should have a plan in place.

Thinking about what you want to happen when you aren't here any longer might not be a pleasant experience, but you can take away a lot of stress from your family members if you have everything in order.

End-of-life plans can help your loved ones

Wills and trusts are two vital components of an estate plan, but there is more to think about when you're getting everything in order. You need to think about your final days so that you can determine how you will protect your interests.

Setting up plans for your finances and your health care can help to ensure that people follow your wishes. These components are also important because they minimize the chance that neglect will occur if you can't speak up for yourself.

5 steps to starting your first business

Starting a business is the American dream. As your own boss, you get to call all the shots. Not to mention the fact that you have more control of your personal growth, professional growth and income.

It's critical to take these five steps when starting your first business:

  • Do your research: From your local market to the industry as a whole, make sure you understand what you're getting into if you start a business. For example, you may find that your local market is saturated with similar businesses, which may cause you to shift gears.
  • Review your finances: Regardless of the type of business you're starting, it's going to cost you money. Review your finances to better understand how you'll pay for startup costs, as well as the expenses you may run into in the future. Also, consider if you'll need to take out a loan or raise money in a different manner.
  • Create a business plan: It doesn't sound exciting, but many entrepreneurs find themselves enjoying the process. This gives you the opportunity to plan out the finer details of your business, ranging from your responsibilities to who you need to hire to how you'll spend your money.
  • Choose a business structure: Will you incorporate? Is an LLC the right structure? How about a partnership? Will you remain a sole proprietor for the time being? There are pros and cons of each type of business structure, so compare all the necessary details.
  • Choose a location: Depending on the type of business, you may decide to work from home. If that doesn't suit you, it's time to work with a local real estate agent or broker to find office space in your desired area.

How to fund a trust as part of your estate plan in Washington

The creation of a trust is usually the first step toward structuring your legacy or protecting your loved ones from estate taxes after you die. A trust can offer tax benefits, as well as more control over how people in your family use the assets that you leave for them.

However, simply creating the legal structure of a trust is only the first step. You will also need to put assets in the trust, a process known as funding the trust. You have many options available for the exact form of your trust and for the way that you fund it.

Should you write your neighbor a letter about a disputed fence?

You always hoped you could be a "good" neighbor and get along with the people who lived near you. For a while, it worked. You loved your neighborhood and you seemed to click with everyone. It made your life fairly stress-free, which you enjoyed.

Then a family next door moved out and you got new neighbors. They hadn't been there a month before you had a serious problem on your hands: They built a fence on your property.

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