Wyler's Wellness-Elder and Estate Planning

Why Estate Planning is Essential

Having a comprehensive estate plan in place can help you feel more confident about the future and that your loved ones will be taken care of. It can help you achieve a variety of goals and objectives, including:

• Providing support and financial stability for your spouse.
• Preserving assets for future generations.
• Supporting a favorite charity or other worthy cause.
• Ensuring all of your assets, including those that pass by beneficiary designation (e.g., retirement accounts and life insurance policies), will be distributed according to your wishes.
• Minimizing taxes and expenses.
• Ensuring that individuals you choose can make decisions on your behalf in the event of your incapacity.
• Estate Planning should not be a result of the Covid-19 pandemic. It should be something that is visited, evaluated and updated on a regularly basis.
• The rule of thumb is you want to build a better life than the one that you inherited.
• Home care is not limited to providing household services. It’s about identifying the family foundation, building on the financial infrastructure and the monetary legacy.
A Living Trust vs A Will

• A Living Trust is valid while you are alive. A Will is executed and distributes your assets when you are dead.
• No probate (Court proceedings) is required with a Living Trust. It’s also more affordable than a will.
• A Living Trust becomes valid immediately after you execute documents. (Transfer and title property in Trust’s name).
• A Living Trust is not public records. It is confidential and it is not filed anywhere.
• Advantages are Federal and State tax benefits. There is a better chance that it will not be contested or challenged in court.
• It determines when a minor, special needs dependent or grandchildren will have access to the trust. A Living Trust is more specific than a power of attorney.
• Make sure that all the assets are titled in the Trust’s name.
• A living trust avoids potential vulnerabilities, namely court proceedings.


Duties of an Estate Administrator

The administrator of an estate with no will has the same duties as an executor of an estate with a will. Those duties include the following:

• Collect assets
• File an inventory of assets
• Open an estate bank account
• File tax returns
• Pay estate debts
• Distribute assets
• Close the estate
For the average person, these tasks can be overwhelming. When mistakes are made, they can be costly to the administrator as well as to other heirs and beneficiaries.



Court Proceeding Fees

All federal, state and local taxes must be paid.

Court filing fees, Executor or Administrators fees.

Attorney fees, accountants, appraisers, tax returns required.

Executor or Administrator compensation. Must pay bills of the estate including maintenance costs and property taxes. 6-month publication for creditors responses.

Proceedings can last on average from 2-4 years with carrying costs.


Essential items regarding Estate Planning
Last Will and Testament (Will)
Revocable Living Trust
Beneficiary designations
Letter of Intent
Healthcare proxy
Power of Attorney
Guardian Designations
Furthermore, identify who will manage your estate-Designate an Executor, preferably a Trustee.
These documents are worthless if nobody knows where they are or how to get them. Make sure that your “trusted few” know where your incapacity and estate planning documents are now and how to get them. If an instance arises when any of them become necessary, you’ll want your loved ones to have access to them.
If there is no will, the courts will appoint an Administrator. (Who can appoint an appraiser, an accountant, other court attorneys and personnel which will be very expensive. The costs and their bills come right out of your estate when it is settled.)
Designate a trustworthy person to where your bank accounts, wills and trust documents are, safe deposit box and keys too. Keep these documents and beneficiaries updated and current and to protect your children inheritance from their spouses.
Prepare for Incapacity- Healthcare proxy, Power of Attorney, long term care policy. These documents are worthless if nobody knows where they are.

Due-on-Sale Clause
A due-on-sale clause allows a lender to demand full payment of a loan if the borrower sells the collateral that is used to secure the loan. This type of clause is used in home mortgages and prevents the homeowner from selling their homes before paying off their debt. In 1982, Congress passed the Garn- St. Germain Depository Institution Act, a section of which made due-on-sale clauses federally enforceable. The due-on-sale is unenforceable if the title is transferred to an heir, if the property is transferred in the event of a divorce, or if the property is transferred to a living trust. You cannot put a home with an outstanding mortgage into an LLC. This will trigger the due on sale clause.

Transferring Real Estate Held in a Trust
If a trust holds real estate, the trustee will need to sign a new deed, transferring the property to the new owner - the trust beneficiary. When you're ready to transfer trust real estate to the beneficiary who is named in the trust document to receive it, you'll need to prepare, sign, and record a deed. That's the document that transfers title to the property from you, the trustee, to the new owner. You need one that is called a "quitclaim" or "grant" deed. Don't use a "trust deed," even though that probably sounds like just the form you need—it's used when someone is mortgaging property, not transferring it to a new owner.
Transferring Property Ownership to Family, Charity, and More
As you think about and prepare for estate planning, you may be asking yourself, “Is it possible to transfer ownership of my house without selling?” After all, your home is an incredibly valuable asset that can provide significant value to a loved one or charity. If you can donate it without selling it first, you’re sure to save money, right? That may be true.
But where do you begin, who needs to be involved, and at what point should the transfer of property happen? Here’s what you need to know.
How to transfer property ownership
Before you can transfer property ownership to someone else, you’ll need to complete the following:
Identify the beneficiary or recipient
Discuss terms and conditions with that person
Complete a change of ownership form
Change the title on the deed
Hire a real estate attorney to prepare the deed
Notarize and file the deed



Deeds to consider when gifting property
Before you begin filling out a property transfer form, consider who you are gifting your property to. Will it go to a family member or loved one? A charity? Deed requirements not only differ based on the type of deed, but they also differ depending on which state you live in, so be sure you are using a deed form that is specific to your state.
Here are a few popular options to consider when transferring property ownership to a family member or charity.
Transfer on death deed- not permissible in New York State
The transfer on death or TOD deed, sometimes called a beneficiary deed, provides you with full control of your property while you’re alive, but transfers it to a selected individual when you die. This means you can avoid paying a gift tax because the transfer is revocable or not immediate. You can also change your mind at any time, in the event you want to change beneficiaries.
It’s also a very strategic option for your loved one because it keeps them from having to go through probate. Though it does have some cons tied to it, mainly if there is a mortgage on your home, the TOD beneficiary will inherit the responsibility of paying the mortgage. Secondly, it is not available in every state. You’ll need to speak with a real estate attorney to find out if a transfer of death deed is an option for you.
Gift deed
A gift deed voluntarily transfers title to real property from the owner (during his or her lifetime) to a family member or charity. It’s a preferred option for property owners who want to make a delayed gift.
Like TOD’s, gift deeds are revocable. Though they can be irrevocable, too — meaning it’s documented immediately, making the beneficiary or recipient the new legal owner upon receipt of the document.
To be considered a gift, the deed must contain language that explicitly states no compensation is expected or required. The donor is responsible for paying the Federal Gift Tax, as well as the State Gift Tax, if applicable. More on that below.
Tax consequences and implications
Even gifts and donations come at a cost when donating property. So, you need to understand the taxes associated with transferring property ownership.
Gift taxes for donors
The IRS implements a Gift Tax to the donor on any transfer of property from one individual to another. This tax essentially prevents taxpayers from gifting their money and items of value to others to avoid paying taxes. As gift tax regulations can be very complicated, it is best to check with your respective tax authorities if you have given anyone a gift valued at more than $15,000 — which is the 2019/2020 annual gift exclusion.

Capital gains tax for recipients
As far as tax implications for recipients go, when the time comes to sell the home, you could be looking at paying a capital gains tax. In other words, if you sell an asset that is worth more than you paid for it, you will have to pay taxes on the gain.
Here’s how it works. When you sell the property, you calculate your gain or loss by taking the sales proceeds and deducting the selling expenses. Once you have done that step, you then deduct your “basis.” The basis consists of the asset’s cost, though it also includes the cost of any major improvements.
But here is where it gets complicated — since a family member transferred the property to you, there is no cost to you. So, the tax is based on their cost, meaning you’ll need to find out what your family member paid for or how they acquired the property. Chances are — if it’s an older relative — they spent a lot less for the home than its current value. This means you could be facing a considerable capital gains tax. For 2020, the long-term capital gains tax can be as high as 20%.
Transferring title vs. inheriting property
What if instead of transferring the title, you leave your property as an inheritance for a loved one — is that easier for both parties? Possibly. The most important question you can ask to find the right answer is: “does my loved one need the property now, or can this person wait until I pass?”
If your recipient can wait, inheritance certainly makes understanding your capital gains tax easier, as the IRS will consider the property’s fair market value at the time of the donor’s death.
Consider this example, as explained by the experts at Symphony Financial Planning
You purchased land for $25,000. It is now worth $250,000. You donate the property to your child (and are not required to pay gift tax). This means your child will take on a tax basis of $25,000. If your child sells the land for $250,000, your child would have taxable gain of $225,000 ($250,000 sales proceeds minus $25,000 basis).
On the other hand, if you transfer the property to your child at your death (when the land is worth $250,000 — the fair market value), your child would have a tax basis of $250,000. If your child sells the land for $250,000, your child would have no taxable gain ($250,000 sales proceeds minus $250,000 basis).
In the example above, your child is not liable for paying a capital gains tax, which makes the property gift significantly more valuable.
The bottom line
Donating and receiving real estate is a kind gesture, but it can come at a cost to both the donor and recipient. It’s important to do your research on property transfers so you can plan ahead from a tax perspective. Be sure to talk to an attorney licensed in your state to understand which option is best for you.

Information on the Deed
You'll need to supply certain information on the deed:
The fact that the transfer is not a sale. This is to show that no transfer tax (based on the price paid when real estate is sold) will be due.
How the new owner(s) want to take title. If more than one person is inheriting the property, they'll have to decide how they want to hold title. The options depend on state law: joint tenancy, community property or tenancy by the entirety (for married couples only), and tenancy in common are the most common. Each has advantages and drawbacks.
You sign the deed, in your capacity as trustee: for example, "John C. Sutcliffe, trustee of the Anthony Ramirez Living Trust dated December 21, 2012."