Five Questions Single Parents Should Ask About Their Estate Plans

In many respects, estate planning for single parents of minor children is similar to estate planning for families with two parents. Parents with minor children want to provide for their children’s care and financial needs. But when only one parent is involved, certain aspects of an estate plan demand special attention. If you’re a single parent, here are five questions you should ask:

1. Are my will and other estate planning documents up to date? If you haven’t reviewed your estate plan, including any wills or trusts recently, do so as soon as possible and regularly to ensure that it reflects your current circumstances. You want a court to have to decide how to allocate your assets or determine who should care for children who were not born at the time you initially created your estate plan.

2. Have I selected an appropriate guardian? If the other parent is unavailable to take custody of your children should you become incapacitated or die suddenly, does your estate plan designate a suitable, willing guardian to care for them? Will the guardian need financial assistance to raise and educate your children? If not, you might want to preserve your wealth in a trust until your children are adults.

3. Am I adequately insured? With only one income to depend on, you need to plan carefully to ensure that you can provide for your retirement as well as your children’s financial security. Life insurance can be an effective way to augment your estate. You should also consider disability insurance as an way to address your needs in case of incapacity.

4. What if I become incapacitated? It’s particularly important for you to include in your estate plan an appropriate directive to specify your preferences for the use of life-sustaining medical procedures and to designate someone to make medical decisions on your behalf. You should also have appropriate powers of attorney or other estate documents that provides for the management of your finances during any period when you are unable to do so.

5. Should I establish a trust for my children? Creating a trust can be one of the most effective ways to provide for children regardless of their age. Trust assets are managed by one or more qualified, trusted individuals or corporate trustees, and you specify when and under what circumstances funds should be distributed to your children. A trust can be particularly useful if you have minor children. Without one, your assets may come under the control of your former spouse, the child’s other parent or a court-appointed administrator.

If you’re a single parent, we can help answer your estate planning questions.

Are you leaving your IRA to someone other than your spouse?

An IRA can be a powerful wealth-building tool, offering tax-deferred growth (tax-free in the case of a Roth IRA), asset protection and other benefits. But if you leave an IRA to your children — or to someone else other than your spouse — these benefits can be lost without careful planning.

“Inherited IRA” stretches tax benefits
A surviving spouse who inherits an IRA is permitted to roll that IRA into his or her own IRA, allowing the funds to continue growing tax-deferred or tax-free until the funds are withdrawn in retirement or after age 70½. Beneficiaries who are not your spouse are treated differently.

To take advantage of an IRA’s tax benefits, nonspouse beneficiaries must transfer the funds directly into an “inherited IRA.” Even then the beneficiaries will have to begin taking distributions by the end of the following year, but they’ll be able to stretch those distributions over their life expectancies.

This option is only available to your children or other non-spouse beneficiaries if you name them as beneficiaries (or secondary beneficiaries) of your IRA. If you leave an IRA to your estate, your children or other heirs will still receive a share of the IRA as beneficiaries of your estate, but they’ll have to withdraw the funds within five years (or, if you die after age 70½, over what would otherwise be your actuarial life expectancy).

If you name multiple nonspousal beneficiaries (several children, for example), each beneficiary will have to establish a separate inherited IRA account by the end of the year after the year of your death in order to take distributions over their respective life expectancies. If any beneficiary misses the deadline, he or she can still roll the distribution into an inherited IRA but he or she will have to use the oldest beneficiary’s life expectancy as the time over which they must remove the monies.

Be aware that, unlike other IRAs, inherited IRAs aren’t protected from creditors in bankruptcy.

Inherited IRA rules
The following special rules apply to an inherited IRA:

  • The IRA must be a new IRA set up for the specific purpose of receiving the inherited account.
  • The IRA must be specially titled in the deceased account owner’s name.
  • No other contributions may be made to the IRA.
  • No other amounts may generally be rolled into or out of the IRA.
  • Required minimum distributions will need to be made over the beneficiary’s life expectancy starting the year after the IRA owner’s death.

Please contact us if you have questions about how to address your IRA in your estate plan.

Divorce Necessitates an Estate Plan Review

There are few events that can completely upend a person’s life more than divorce. Of course, there’s the emotional toll on you and your family, but you also have to consider the divorce’s impact on your estate plan.

When you originally crafted your plan, you likely centered many of its strategies around your spouse. Thus, when divorce proceedings begin and when they conclude, it’s crucial to update your estate plan as soon as possible to avoid unintended outcomes. Don’t wait until the divorce is final.

Who’s next in line for your wealth?

Unless you wish to provide your soon-to-be former spouse with an inheritance, amend your will and any trusts to minimize or eliminate him or her as a beneficiary. In addition, unless you’re comfortable with him or her administering your estate or trust, you should designate someone else as executor or trustee. This is a good idea even if you live in one of the states where divorce automatically nullifies any gifts or bequests to an ex-spouse and automatically revokes an appointment of a former spouse as executor or trustee.

There are several reasons for this. First, if you die before the divorce is final even if you have lived separately for some time, your spouse will still inherit in accordance with your will or revocable trust, and his or her appointment as executor or trustee likely will stand.

Second, the laws in some states treat your estate plan as if your former spouse had predeceased you if you are living separately and are in the midst of divorce proceedings. If you’ve named contingent or residual beneficiaries, any property your estranged spouse would have received will go to them. If not, the property will pass according to the laws of intestate succession. But relying on these laws can be risky.

Finally, keep in mind that in many states, as long as you’re legally married, your spouse will retain elective share or other property rights to a portion of your estate. So while updating your plan soon after you decide to divorce can reduce the amount your spouse will receive if you die while you’re still married, it can be difficult to disinherit him or her completely before the divorce is final.

Seek peace of mind

If you’re going through divorce proceedings, contact us. We can help review and revise your estate plan to ensure that the proper heirs are provided for in the event of your death.

On Air: Dan Ruttenberg Shares Estate Planning Tips for the Elderly

Preparing in advance is vital if you want to protect your assets and have a say in how they are passed on. SmolenPlevy Principal Dan Ruttenberg, JD, CPA, LLM shares estate planning tips on local TV show, Senior Living in Alexandria.

“Legal documents are tools to address issues,” Ruttenberg tells Senior Living in Alexandria host Jim Roberts. It is important to have documents that keep you covered in case of death or disability. Particularly in the event of a disability, you want to have confidence in who is making decisions on your behalf.

What happens if you don’t have an estate plan in place? That will depend on the circumstances at the time — Ruttenberg explains important estate planning tips, including how to avoid probate in the complete segment above.

On Air: Daniel Ruttenberg Shares Why You Should Have a Will in Order on ABC 7

A court confirmed that music superstar Prince died without a will, which leaves complicated questions about who inherits his vast fortune. There are at least six siblings, including half siblings, who may inherit, and the confusion is just starting. In an interview on ABC 7, SmolenPlevy Principal Daniel Ruttenberg explained the problems that may occur when you die without a will, and why it’s vital to make sure that doesn’t happen to you.

Ruttenberg explained that without a will, Prince could not direct where his assets should go. “I think that’s a travesty,” said Ruttenberg. Often, people avoid estate planning because they don’t think they have enough assets. But Ruttenberg said you don’t need to own much to learn from Prince’s mistake — plan now and prevent the heartache and need for the court’s intervention after you’re gone.

A will can dictate to whom your money goes, protect your children’s interests in their inheritance and help avoid taxation. News reports predict Prince’s siblings will split the multi-million dollar estate, but Ruttenberg indicates that someone who claims to be Prince’s child could trump all of that.

Ruttenberg told ABC 7’s Kimberly Suiter that whoever does inherit Prince’s estate isn’t necessarily going to be better for it. Sudden wealth has its own set of problems, and many people who inherit a fortune overnight end up blowing it all quickly. They can end up broke, homeless, and in a worse position than they were before getting the money.

Death and Taxes: Gifting Money Lowers Taxes but Might Raise Anxieties

There’s a saying that death is hardest on those left behind. This is especially true if those left behind receive an unexpected and hefty estate tax bill. Estate taxes—or “death taxes,” as they’re often called— can be burdensome. Perhaps the most challenging thing about estate taxes is that they’re always changing and we generally don’t know if we’re going to die in a year when estate taxes favor our heirs.

Jason D. Smolen

Jason Smolen

For example when George Steinbrenner died in 2010, there was no estate tax. Mr. Steinbrenner’s heirs did not have to pay federal taxes on his $1.15 billion estate. Needless to say, 2010 was an anomaly— the residual effect of President Bush’s phased-out tax cuts. When the estate tax expired at the end of 2009, most people expected Congress would reinstate it. They didn’t. As a result, the heirs of those who died that year did not have to pay any estate taxes.

In the years that immediately followed, there was a lot of uncertainty as individuals and their attorneys waited to see if Congress would act. If Congress chose not to act, the estate tax law would have reverted to what it was in 2001 and any estate valued at more than $1 million would have been taxed at a rate of 55 percent. Note that the valuation of a $1 million estate includes real estate, and many homes in high-dollar real estate markets can easily be valued at more than $1 million. This leaves heirs with little after the sale of the house.

With this uncertainty, it was hard to plan. The possibility that the law would revert to the $1 million tax exemption level at the end of every year worried people. So, anticipating the worst, people acted. Starting in 2011, an individual could give away to others up to $5 million tax free—and many did just that. In an effort to protect their estate from taxation, many people increased their gifts to their loved ones. The idea being that if they died during a year when Congressional inaction resulted in a punitive estate tax, their heirs would have already received some of their legacy tax-free.

Now, four years later, the $5 million unified estate and gift taxes exemption has held steady. (Because it’s indexed for inflation, this year an individual can give away $5.43 million without it being taxed. Note that there is an unlimited charitable deduction and there is an unlimited marital deduction provided that your spouse is a US citizen.) But some people are beginning to wonder if they gave away too much, too soon.

For example, a number of people started aggressively gifting money when they were still working. Now that they’re retiring, they are beginning to wonder if their estate is sufficient to see them through their retirement years. It’s a very different feeling to be living on resources instead of earning resources. It’s not uncommon to be concerned about spending down principal and outliving it.

Daniel H. Ruttenberg

Daniel Ruttenberg

When planning your estate, you should give serious consideration to the “what ifs” that loom down the road and structure your estate accordingly. While giving money tax-free to your loved ones is nice, make sure you can take care of yourself. It is important to be prepared. You don’t want any surprises when it comes to your finances. Below are things to consider to make sure you keep what you need while still giving away what you want:

1. Be realistic about your expenses. Most people underestimate what they spend. They focus on the mortgage payment, a car payment, insurance, and the groceries but discount the monies spent on clothes, travel, hobbies and pets, home repairs, and utilities? The truth is, we all spend more money than we think we do. When planning your gifting, look at what your estate’s worth and carve out a realistic amount of money for what you’ll need to live comfortably and do the things you love over the course of many years. Even if you have long-term care insurance, you may still need to pay for nursing care or help if your health fails – this is something else you should consider. Work with your attorney to project future expenses and plan accordingly.

2. Don’t be afraid to reevaluate. If you’re someone who gave away a lot of money in recent years and are now beginning to worry it might have been too much, don’t panic. Sit down with your estate attorney and look at how much you gave, how much you have left and how much you need to live on. If you need to scale back for a few years and not gift to others for a while, that’s okay. Don’t let the fear of possibly punitive estate tax laws dictate your actions to the detriment of your own financial security.

3. Live the plan. Once you have a plan, live it. It’s hard to transition from making your assets grow to living on them. It leads to a lot of second guessing. But chances are, if you created an estate plan with your attorney, you’re on the right path. If you have questions or are worried that you need to modify your estate plan, then certainly sit down with him or her again and talk it over.

Again, the trouble with the future is that it’s uncertain. We don’t know what Congress will do and we don’t know when we’re going to die. But despite this uncertainty, it is possible to plan so you’re able to live the life you want to live.

Read more articles from the Summer 2015 Report from Counsel here.

On WUSA 9: Safeguarding Online Accounts After Death

In today’s digital and “paperless” age, it is hard staying on top of all our online accounts. However, it is important to keep record of “digital assets” as a part of your estate planning. On WUSA 9SmolenPlevy Principal Jason Smolen joins anchor Mike Hydeck to discuss tips for safeguarding the location and access information of your online accounts and social media.

Smolen suggests making a list documenting the login information for every online account you have and ensuring that there is a current paper copy of that list. After death, that paper list will inform your loved ones of what accounts exist. However, having the login information and passwords may not entitle beneficiaries to use your online accounts on behalf of your estate. Many service agreements and some federal laws prohibit others from using your accounts in your absence.

Preparing a list of online accounts is an important first step in protecting access to your digital assets. Smolen further suggests providing instructions on what to do with each account in the event of death.

Watch Smolen on WUSA 9 above.

NewsChannel 8: Jason Smolen’s Tips for Protecting Digital Assets

Traditionally, estate planning addresses one’s property and finances. Today, more and more people are looking to include their intangible assets like social media accounts, and online photos and videos in their wills. SmolenPlevy Co-Founding Principal Jason Smolen visits NewsChannel 8 to discuss the growing trend of protecting digital assets through estate planning on Let’s Talk Live.

Although laws regarding digital assets are evolving, Smolen says there are ways to ensure your online accounts and media are taken of upon your death. Some websites like Facebook have a feature that allows you to elect someone you’re “friends” with as your “legacy contact”.

For websites and services that haven’t caught on this feature, Smolen suggests going “old school” by designating who takes over each digital asset, and including a comprehensive list of all online accounts and login information in your will.

Digital information like downloaded music, video and books may not be considered assets after all, according to Smolen. Sometimes, purchasing art only means you’re only licensed to use the it while you’re alive.

Watch Smolen on Let’s Talk Live above.

On WNEW Radio: Jason Smolen Explains Why Digital Assets Should Be Apart of Your Estate Plan

Typically, one’s estate plan would account for his or her property and finances. What about online property such as e-mail accounts and social media profiles? SmolenPlevy Co-founding Principal Jason Smolen tells WNEW Radio why taking “digital assets” into consideration when planning an estate is important.

With so many lives revolving around technology, digital assets like Facebook accounts, Flickr photos, YouTube videos and iTunes collections should be properly disposed when one dies. “It’s so much a part of the fabric of what we do everyday, they don’t realize that it lives beyond them,” says Smolen.

While planning one’s estate, Smolen suggests designating who will take over online accounts and keeping login information attached to your paper will. This information lets heirs know what accounts exist and how to access them.

Smolen anticipates seeing states make more laws on how to deal with digital assets.

Listen to Smolen on WNEW Radio below:

Jason Smolen Shares Ways to Keep Inheritances from Unnecessary Taxation on


When estate planning, consider whether taxes will turn an inheritance into a burden for your beneficiaries. In a just-published article on MainStreet.comSmolenPlevy Co-founding Principal Jason Smolen discusses various tools used to transfer wealth while limiting the impact of estate taxes.

The federal estate tax exempts $5.43 million for individuals and $10.86 million for couples. However, 16 states and the District of Columbia impose state estate taxes of up to 20% on estates valued at more than a specified amount. For example, in Maryland, heirs may face an additional tax of 10% to 26% upon receiving their inheritance.

While Roth IRAs (which are exempt from income taxes) and trusts are ways to safeguard inheritance from taxes, Smolen suggests three other tools to consider:

  1. Gifting: Gifts to heirs before death reduce the size of an estate and can help it avoid additional estate or inheritance taxes. A person can gift up to $14,000 to an individual (or $28,000 with a spouse) each year without incurring a gift tax.
  2. Real Estate Transfers: Because real estate often represents a significant portion of the estate, a limited partnership to transfer property may be effective. Beneficiaries can be given shares in the limited partnership directly or in a trust.
  3. Life Insurance in a trust: If a policy is held by a trust that is set up outside of an estate, insurance proceeds are generally tax free.

Read the full article on MainStreet here.