A  Will or Trust: Which is Best for You?When it comes to deciding whether a will or trust is best for you, it is important to understand your options and which one is most appropriate for your situation.WillA testamentary will (simply referred to as a will) is a legal document used to transfer an estate to beneficiaries after the death of the testator (a male person making the will) or testatrix (a female person making the will). Within the will, the testator or testatrix usually names a personal representative (same as an executor) for the estate. For a will to be valid in Idaho, it must meet specific requirements under Idaho law. Revocable Living TrustsA person, during his or her lifetime, may create a revocable living trust whereby the grantor (the person making the trust), trustee (the person who has legal authority to manage the trust assets) and beneficiary (the person who makes use of the trust assets) are all the same person.  After the grantor dies, depending on the trust instructions, the trust assets may be distributed outright or held within the trust and distributed over time or upon the happening of a designated event. Revocable living trusts may be appropriate for persons who own real property in more than one state or have a blended family where spouses have children from prior relationships.Testamentary Trusts A testamentary trust is a trust within a will. A testamentary trust is created upon the death of a person as specified in his or her will. The testamentary trust holds assets within the trust instead of outright distribution to a beneficiary. A common scenario is when parents create a testamentary trust to hold assets for the support of minor children or for college education for children until they reach a specified age. A testamentary trust can also hold assets for the special needs of a disabled child who receives government benefits. Does Having a Revocable Living Trust Eliminate Probate?To avoid the probate process, all assets must be transferred into the name of the revocable living trust. A common misconception is that a list of assets attached to the trust document accomplishes a transfer to the trust. However, the correct way to transfer assets requires an actual change to the title of assets including a home, certificate of deposits, bank accounts and brokerage accounts. Upon death, any assets titled in the name of an individual, not the trust, will be subject to the probate process. For this reason, when a person creates a revocable living trust, it is best to also create a will, called a pour-over-will, as a safety net to assure that upon death any assets titled in the name of an individual are transferred to the trust and distributed accordingly. In Idaho, generally speaking, the probate process can be quite simple and relatively inexpensive.A New or Updated Estate PlanWhether a will or trust is appropriate for you depends on your circumstances. If you already have a will or trust, it should be reviewed periodically to make sure it reflects your current wishes and needs or upon any significant change in your life such as divorce or death of a spouse or beneficiary. Other important estate planning documents include a general durable power of attorney, living will and durable power of attorney for health care. This article was written by Donna A. Schuyler, Attorney, who practices in the areas of estate planning, probate, trust administration, elder law, and guardianship. Donna Schuyler Law, PLLC; www.elderlawboise.com; Phone 208-344-1947

For nearly a decade, people with disabilities have had the option to accumulate savings in a special tax-free account without risking their means-tested public benefits. In 2024, the annual limit on how much money one can deposit into these savings vehicles, known as ABLE accounts, will rise, allowing individuals to add up to $18,000 per year.What Is an ABLE Account?Many people across the disability community rely on such government assistance as Medicaid, Supplemental Nutrition Assistance Program (SNAP) benefits, or Supplemental Security Income (SSI). Yet having too many assets to their name can disqualify them from receiving these often critical benefits. For example, in most states, the resource limit to qualify for Medicaid is just $2,000. In 2014, Congress signed the Achieving a Better Life Experience (ABLE) Act into law to help address this issue.Individuals with an ABLE account can save up to a total of $100,000, tax-free, while remaining eligible for public assistance programs. Family members, friends, and others can make contributions to the account, too. The disabled person can then use these funds to help maintain their independence by spending them on disability-related expenses, including assistive technologies, education, transportation needs, vacations, legal fees, and health care.Unlike a special needs trust (SNT), an ABLE account can be opened by the individual with the disability. This offers them considerably more control over the account funds compared with an SNT. Starting in 2024, the annual limit on contributions to ABLE accounts will be $18,000, up from $17,000 in 2023. Through the end of 2025, ABLE account owners who work can contribute their employment income to these savings vehicles even beyond the per-year deposit limit. (Learn more about these rules under the ABLE to Work Act.)The idea for these accounts derived from the concept of a 529 college savings plan. Similar to a 529 plan, funds in an ABLE account grow tax-deferred over time. In addition, each state administers its own ABLE account program.To qualify, you must meet the Social Security Administrations strict definition of disabled. You also must have incurred your disability before age 26. (Note that the age cutoff will shift to age 46 come 2026. According to estimates, this age adjustment will result in roughly 6 million more individuals becoming eligible to open these types of savings accounts.)Why Open an ABLE Account?People with disabilities are among those most at risk for financial disaster. According to research, just 10 percent of people of working age who are living with a disability are financially healthy.ABLE Accounts, or 529A accounts, can serve as a form of future financial support for these individuals. Yet the vast majority of those who could benefit from these accounts remain unaware of them. As of 2022, 8 million people were eligible for this type of account, yet a mere 120,000 had one in place.Get Support With ABLE Accounts To learn more about setting up this type of savings account, consult with Ashley Day Special Needs & Elderly Law at 251-277-3377.

People often ask our law firm about taxes, and we understand their concern. We appreciate they dont want to pay any more money in taxes, and we certainly dont want to give the government any more money. We are sure many people feel they would prefer to give the money to their kids. That is why its important for you to know more about the four death taxes that apply to Pennsylvania residents. Only three of the taxes apply in other states, but Pennsylvania also has inheritance tax. The four taxes I want you to know about, with regard to your estate plan, are the Federal Estate tax, the Pennsylvania Inheritance tax, the Capital Gains tax and the Secure Act. The Federal Estate TaxThe Federal Estate Tax does not apply to middle-class Americans. The current exemption allows for you to die with up to $12.9 million each. That would be $26 million for a married couple. Everybody asks about federal estate tax  because in the 1990s, the lifetime exemption was below 1 $million. As a result, many people were affected in the 90s. Fortunately since then the exemption allowance has been increased.The Pennsylvania Inheritance TaxThe Pennsylvania death tax is an inheritance tax, owed by the people inheriting the money. Your relationship to the person who passed away, determines the amount of tax you pay. When you leave money to your descendants, including your kids and grandkids, they will pay 4.5% tax. Leaving money to your ascendants such as your parents or grandparents is also 4.5% tax.If you dont have kids, and you leave money to your siblings, they will pay 12% tax. Leaving money to anyone else, including nieces, nephews, friends or neighbors, requires they pay 15% inheritance tax. This is substantial amount of tax to pay. However, to avoid your heirs paying any tax, you have to give up control of your money, which I advise my clients not to do. Pennsylvania inheritance tax rates for siblings or nieces and nephews, is discriminatory. Essentially, we are also discriminating against couples who cant have children. This is particularly relevant in families where a couple without children, who wants to leave money to their nieces or nephews. It doesnt seem fair that the inheritance tax rate is 15%.Rather Pay Inheritance Tax Than Capital Gains TaxThere is this idea among seniors, who think that putting their house in their kids name to save their kid paying 4.5% inheritance tax, is a good idea. What they dont realize is that it is preferable to pay the Pennsylvania inheritance tax, compared to paying capital gains tax. I believe that if your child is going to inherit $100,000, he can afford to pay the 4.5% inheritance tax. You should not have to be concerned about saving him 4.5%.Capital Gains TaxA capital gains tax is due upon the sale of an asset that has grown in value. If dad bought his primary residence for $100,000 and he sells it for $300,000, the gain of $200,000 is largely exempt from capital gains tax. If dad gives the house to his son, his kid owns it for $100,000. Assuming that dad has to go to the care home a few years later, his son sells the house to pay for dads care. Since the house is not the sons primary residence, he has to recognize a $200,000 capital gain. The same principle applies to rental properties if they are not the primary residence of the person selling the property. Essentially, this family made a $54,000 tax mistake, given that the rate of capital gains tax is 18%.If you leave assets in your estate until you pass away, and it is held in a trust, your kid inherits the assets at date of death. While your child will pay Pennsylvanias inheritance tax which will be $13,500, the stepped up basis is applied. This means that the house that Dad bought for $100,000, is now worth $300,000. His son has inherited the house for the date of death value, which is $300,000. He is allowed to sell it for $300,000 without having to pay the capital gains tax. The Secure ActAnother tax you need to know about is the Secure Act, which passed in October of 2019 and became law in January of 2020. This is the biggest tax hike against the middle class.Most middle class Americans have all of their money in home equity and retirement accounts. If you have a retirement account, an IRA, or a 401k, this Secure Act will affect you.Before the Secure Act was implemented, if my dad passes away, leaving me his retirement account, it becomes my retirement account, known as the inherited IRA. This meant that money could stay in the stock market with tax deferred growth for several decades. I would need to take distributions at regular intervals, but most of the money would stay in the fund. Since the Secure Act, the rules have changed significantly. Now, when you pass away and you leave your retirement account to your kid, he has to pull all the money out of the account, within 10 years. This means that one loses out on many decades of tax deferred growth. In addition, if you inherit the money when you are 55, you are likely still working and paying high income tax. Now you have to add your dads 401k which means youll be paying even more income tax.Let Us Help YouIf you want to learn more about how to protect yourself and your legacy, come to one of our Three Secrets Workshops. Call 724-564-6615 to register.