INTERNATIONAL ESTATE PLANNING

INTERNATIONAL ESTATE PLANNING

By: Ethan R. Okura

The world today is increasingly interconnected. Global travel is commonplace these days, as is moving to another country for work or other opportunities. International marriages are also more commonplace.

So, what do these facts have to do with estate planning?

All of those factors can vastly complicate the estate planning process, as there are significantly different rules regarding income and gift and estate taxes, depending on your situation. read more

FRAUDULENT STUDENT LOANS AND IDENTITY THEFT

FRAUDULENT STUDENT LOANS AND IDENTITY THEFT

By: Ethan R. Okura

Sometimes you can do everything right, but have everything go horribly wrong. Sometimes you do nothing at all, and still have everything go very wrong. In the United States, you’re supposed to be innocent until proven guilty. Well, when it comes to fraudulent student loans taken out in your name, you’re required to prove your own innocence at your own expense or suffer the consequences. This is an area of the law that needs to be read more

AUTOMOBILES IN ESTATE PLANNING

AUTOMOBILES IN ESTATE PLANNING

By: Ethan R. Okura

Many of my past columns have focused on how to structure your estate plan to protect your home. I’ve discussed protecting your primary residence and other real property from probate through the use of revocable and irrevocable trusts, through joint ownership or tenants by the entirety ownership and through revocable transfer on death deeds. I’ve also discussed how to protect real property from the threat of nursing home costs by giving property read more

TENANTS BY THE ENTIRETY FOR PERSONAL PROPERTY

By: Ethan R. Okura

Back in December of 2009, my father, Sanford K. Okura, wrote an excellent article titled “Tenants by the Entirety.” It explained the pros and cons of holding property as “tenants by the entirety” as opposed to holding them in revocable trust(s). At the time, tenants by the entirety protection was only available for property owned directly by married couples or registered reciprocal beneficiaries.

The main benefit of owning property as tenants by the entirety is to protect read more

INCOME TAXES and IRAs

By: Ethan R. Okura

It’s that time of year again. No, not Valentine’s Day…and I’m not even talking about President’s Day. I’m talking about Taxes! Your personal income tax return isn’t due until April 15th, and if you’re like many people, you might file for an extension so that you have until October 15th to submit it. However, it’s usually right around this time of year that taxes are on the mind, and I start getting questions about how to save on taxes. read more

Estate Planning Update 2019

By: Ethan R. Okura

Hawai‘i Herald Columnist

Happy New Year! The following is a 2019 update on important numbers used in estate planning and Medicaid planning in Hawai‘i.

How much money and property can a person have at death without paying estate taxes? At the end of 2017, Congress passed a new tax bill which the president signed into law. It doubled the previous estate and gift tax exemption from $5 million to $10 million (adjusted for inflation). Taking into account inflation, read more

WRAPPING UP YOUR ESTATE PLAN

By: Ethan R. Okura

Happy Holidays!

This is the time of the year when we make an extra effort to be thankful for all that we have. We focus on the spirit of giving and we wrap up presents for our family and loved ones.

This thought made me chuckle a little at a recent meeting with a client at what our law firm calls the “Wrap-up Meeting.” This is usually the final meeting with our client after they have signed their estate planning documents, we’ve recorded their deed(s) and made copies of their read more

RETIREMENT SAVINGS AND NEW CONTRIBUTION LIMITS – An Overview to Help You Prepare for 2019

By: Ethan R. Okura

There’s no question about it: Saving for retirement is not easy.

There are quite a few types of retirement accounts. Each has its own rules and tax benefits, although, for the most part, they tend to be similar. The amounts you can contribute, however, vary from plan to plan. The Internal Revenue Service recently announced higher limits for allowed contributions to your retirement savings. These new limits are effective January 2019, which might help some of us to save more read more

The Role of the Successor Trustee: What Am I Supposed to Do Now?

The Role of the Successor Trustee: What Am I Supposed to Do Now?

By

Ethan R. Okura

 

We have often seen this scenario:  A parent, sibling, or dear friend has finally gotten around to doing their initial estate planning. You are so happy for them. And then you find out you’ve been named as their “successor trustee.” What does that even mean? What are your responsibilities? How will you know what to do when the time comes? When exactly does that time come? What exactly is a trust in the first place? Relax. There’s an orderly process you can follow to understand your responsibilities as a successor trustee and how you can play your part to make that loved one’s transitions in and through life go smoothly.

Let’s start with, “What is a trust?” A trust is a legal agreement between the person setting up the trust, usually called the “Settlor” and the person assuming responsibility for managing the trust assets, called the “Trustee.” In the vast majority of estate plans, which involve a revocable trust—which can be cancelled or amended at any time—the person creating the trust also names herself as the initial trustee. The final group of people involved with each trust is the beneficiaries. Usually, the Settlor is also the only initial beneficiary of the trust. Then after the Settlor passes away, her spouse, children, other family members, and/or other friends and loved ones become the beneficiaries.

When the Trustee can no longer act as Trustee for himself or herself because of disability, incapacity, or death, then the Successor Trustee (or more than one “Co-Trustees”) named in the Trust document is called upon to take over.   Unfortunately, even though the Successor Trustee may be an individual in whom the Settlor had great trust and faith in being able to handle the affairs of the Trust, most Trustees have never done this before and really have no idea what to do or how to do it.   Many Settlors, as well as Trustees, may even think that the Revocable Trust will automatically take care of everything by itself, without any work involved by anyone!

The main objectives of a revocable trust based plan are:

  • Distribute the Settlor’s assets to the right people, in the right amounts, at the right times and in the right manner appropriate for each of them, without the delays and expenses of Probate Court involvement.
  • Manage the Settlor’s assets for him or her in the event of his or her disability or incapacity, and to manage those assets for the people who will later inherit them (until such time

read more

Aretha Franklin: Following in Prince’s Footsteps to Pay Millions in Death Taxes

Aretha Franklin: Following in Prince’s Footsteps to Pay Millions in Death Taxes

By

Ethan R. Okura

 

A little over two years ago I wrote about Prince, the music recording legend, and how he passed away without a will. I detailed some of the problems that his estate would face—and is still facing to this day—on account of not adequately preparing. As of April, 2018, Prince’s six heirs had not received one red cent, while the bank acting as executor of the estate and its team of lawyers had already collected $5.9 million in fees and expenses, and had requested at least an additional $2.9 million more be approved by the court. Considering that court documents estimate Prince’s estate may have been worth approximately $200 million, and about half of that will ultimately go to the IRS and the State of Minnesota for estate taxes, there may be very little left for each heir when all is said and done.

Well, history repeated itself last month as the Queen of Soul, Aretha Franklin, joined the ‘Chain of Fools’ and also passed away without a will or a trust. Aretha Franklin’s estate has an estimated value of $80 million. She had four sons who are named as potential beneficiaries of her estate in the documents filed in a Michigan probate court. They can ‘Say a Little Prayer’ that there won’t be any legal battles as there have been with Prince’s estate. Nevertheless, her estate will pay to the IRS taxes of about 40% of the amount over the $11.8 million in estate tax exemption available in 2018—an estimated $27.5 million in addition to court and legal fees. If I were her, I’d be ‘Rolling in the Deep’ having to pay such a large sum in taxes unnecessarily simply because of poor planning.

Aretha Franklin was very private about her financial affairs. I imagine that if she had known that she was about to pass away as a ‘Natural Woman’, and that her finances would all become a matter of public record in probate court, and in addition, that her estate would pay about $34 million in taxes, that there ‘Ain’t No Way’ she would have continued to ‘Rock Steady’ without doing appropriate estate planning. This is especially so because one of her heirs, Clarence, has special needs. One of her lawyers even tried to get her to create a will and a trust, but she never followed through.

Now that Prince’s and Aretha’s heirs and executors are trying to build a probate ‘Bridge Over Troubled Water’ to settle their estates, hopefully the heirs will still end up with a decent inheritance, and preserve the ‘R-E-S-P-E-C-T’ that these famed musicians rightfully earned during their esteemed careers.

If you also follow in their footsteps, it’s possible that your intended beneficiaries might not get the inheritance that you wanted to leave them; there can be long delays before your heirs receive anything; fights might break out among your family members; and even if you don’t have enough assets to incur an estate tax, your financial information will all become publicly available. If you have a child with special needs (or who develops disabilities later in life), she or he may end up losing government benefits she or he could otherwise qualify for when inheriting assets directly from your estate instead of protected in a special needs trust.

A 2017 study showed that 60% of adults don’t even have a will or a living trust. This figure includes 64% of Generation X, and 42% of Baby Boomers! When asked why they hadn’t even done the basics, the most common answer was, “I haven’t gotten around to it yet.” This data is on par with what we see among new clients coming to our law firm, Okura & Associates Estate Planning Attorneys. If you have been putting it off, don’t become one of these statistics. See an estate planning lawyer right away to get the process started.

 

© OKURA & ASSOCIATES, 2018