Helping Your Loved Ones by Planning Your Own Funeral

When an individual passes away without a funeral plan, responsibility for arranging the funeral often falls on the deceased’s close family members, such as surviving spouses and children. Planning your own funeral arrangements can assist your loved ones in an emotionally challenging time, while also protecting them from incurring extraneous costs.

According to the National Funeral Directors Association, in 2021, the average cost of a full-service burial was $7,848, and the average cost of full-service cremation was $6,971. When an individual dies without having outlined a funeral plan, surviving family members may be unsure of their loved one’s wishes. As a result, they may choose more expensive funeral options or feel pressure to overspend to demonstrate their love. Yet you can shield your family from these costs by prearranging the funeral and, in some cases, prepaying for funeral arrangements. (Always do your research before prepaying.)

Without a plan in place, grieving family members often face time constraints in making decisions. For instance, they may not have time to visit multiple funeral homes and compare their values after their loved one’s death. Often, they choose the first funeral home they see rather than exploring various options to find the best fit and value.

When individuals prearrange their funerals, they have time to research funeral homes and carefully decide the details of their end-of-life arrangements, ensuring that the services will follow their wishes.

Beyond choosing the funeral home, planning such arrangements ahead of time can include:

-Deciding what happens to the remains, including burial or cremation
-Determining the burial location, such as next to a loved one
-Letting loved ones know where to spread or keep ashes
-Deciding whether to donate organs or remains to scientific research
-Selecting the type of funeral or memorial service (For instance, a traditional funeral ceremony may be held in a religious institution and include viewing and burial, whereas direct burials happen soon after death and do not include a viewing)

How to plan your funeral arrangements

Often, planning funeral arrangements entails writing down your wishes in detail. You may wish to give your family members copies of your written wishes. Additionally, people with a reasonable idea of where they will pass away can prepay a funeral home for services, ensuring family members do not need to take on the cost.

Advance directives can document your desires regarding end-of-life care and what happens to your remains after death. You can choose a person to act as your healthcare agent and help you with healthcare decisions. Although your agent’s authority often terminates upon your death, you may provide your agent with your funeral wishes, along with the power to oversee the arrangements.

Wills may contain sections describing desired funeral arrangements. However, wills are not the best place for funeral arrangements, as family members often read wills after the funeral. Instead, a separate document, such as a prepaid funeral or burial contract, can describe funeral arrangements and end-of-life wishes.

Deciding funeral arrangements in advance and providing instructions to your loved ones makes your wishes clear, avoiding arguments within your family and giving them more peace of mind after you pass away.

Considerations Before Scattering a Loved One’s Ashes

Saying goodbye to a loved one is heartbreaking. Making final arrangements can be overwhelming, and knowing what you are allowed to do to fulfill your loved one’s wishes is important, but it can also be confusing. If the person you lost wanted to be cremated and have their ashes spread, you should know where you can scatter their ashes to make sure that putting your loved one to rest is done appropriately.

Where Do You Want to Scatter the Ashes?

The place you choose to spread your loved one’s ashes is very important. The rules for spreading someone’s ashes are different depending on the type of location.

Is the Area Private or Public Property?

The biggest question about location is whether the property is public or private. If the location is public, you may be able to scatter your loved one’s ashes freely so long as you do not spread their remains in a place where others would use the space. For example, do not scatter your family member’s ashes in the sandbox at the park. Always be considerate of others in public places.

Also make sure you have the appropriate permission. During the 2022 NHL Playoffs, a hockey fan who lost his best friend, another big fan of the sport, spread some of his friend’s ashes on the ice rink. He quickly learned that he could not pay tribute to his friend that way after being banned from attending games for the rest of the season. If you get the property owner’s permission, you can scatter the ashes on their property. However, it is unlikely that you will get your favorite amusement park or stadium’s permission to spread your loved one’s ashes.

Note that if you are allowed to spread ashes on a piece private property, the specific location may have certain requirements you must follow.

Scattering Ashes at the Beach

You will need permission to spread your loved one’s ashes on the beach. Many states do not allow you to spread ashes along the shoreline, but in states like California, you can scatter ashes 500 yards or more from shore.

Scattering Ashes at Sea

It may have been your loved one’s last wish to have their ashes scattered at sea. The Environmental Protection Agency regulates how surviving loved ones can scatter the ashes of the person they lost. Usually, the EPA requires that anything you put into the ocean decomposes easily. So, flowers are OK, but you probably can’t place the urn into the sea.

Knowing what’s allowed as you lay your loved one to rest will make a hard situation just a little easier. Any way that you choose to honor your loved one is valuable. Spreading their ashes will help you heal and keep their memory alive.

The Ins and Outs of Estate Sales

Following the death of a family member, you may find yourself needing to sort through many possessions accumulated over the deceased’s lifetime. An estate sale is one way to distribute those items that you do not want or need quickly and efficiently.

While selling someone’s furniture, jewelry, artwork, antiques, and other belongings yourself can mean a great deal of time and effort on your part, there are companies that help families sell items. An estate sale company will do all the work in exchange for a percentage of the proceeds — typically anywhere between 25 percent and 50 percent. The company usually handles organizing the inventory, staging the house, appraising the value of items and setting prices, promoting the sale to the public, and hiring workers to run the sale. You may need to pay a separate fee to the liquidator for cleaning up following the sale, including donating or disposing of any goods that do not sell.

Keep the following in mind when getting ready for an estate sale:

-First ensure that you have the legal right to sell the property. There cannot be any unresolved estate issues. Companies may request legal documentation showing that you have the right to dispose of the property.
-Remove from the house anything you want to keep before calling in the liquidators, but avoid throwing too much away – one person’s idea of trash might be another person’s treasure.
-There is no regulatory body that oversees the estimated 15,000 estate sale companies in the United States, so before hiring one of them, rely on a referral from a trusted friend or family member and do some research. You can search the website of the American Society of Estate Liquidators, a trade association that requires its members to meet certain requirements and abide by an ethics code.
-Check your local Better Business Bureau and Yelp for complaints about companies you are considering, or attend a sale run by the company.
-Make sure your liquidator carries insurance in case there are any accidents while buyers are at the estate sale.
-Ensure the company offers a written contract.
-Ask any prospective liquidating company how it handles security, what happens to goods that do not sell, and what type of clean-up is included.
-Note that many companies discourage families from being present during the actual sale.

Dynasty Trusts: A Tax-Efficient Way to Pass Wealth Down Through the Generations

If you want to pass money to future generations without having it subject to gift and estate taxes, then a dynasty trust may be right for you. A dynasty trust allows trust assets to be used for the benefit of multiple generations while keeping the assets out of the grantor’s and the beneficiaries’ taxable estates.

The main benefit of a dynasty trust is the avoidance of estate and gift taxes over many generations. In 2022, federal estate tax exemption is $12.06 million ($24.12 million for couples). Estates valued at more than the exemption amount will pay federal estate taxes, at a rate of between 18 percent and 40 percent. The lifetime gift tax exclusion – the amount you can give away without incurring a tax – is also $12.06 million in 2022. Note that you can give any number of people up to $16,000 each per year (in 2022) without the gifts counting against the lifetime limit. In addition, the generation skipping transfer (GST) tax affects assets passed to grandchildren. The tax is imposed even when property is left in trust for a grandchild. The GST exemption is the same as the estate and gift tax exemptions. If you transfer more than the GST exemption, the tax rate is 40 percent.

Assets transferred to a dynasty trust are subject to estate, gift ,and GST taxes only when initially transferred and only if they exceed federal exemption thresholds. While estate and gift tax exemptions are currently very high, in 2026 the exemption is set to drop to the previous exemption amount of $5.49 million (adjusted for inflation).

Another benefit of a dynasty trust is that the assets in the trust are protected from the beneficiaries’ creditors or in the event a beneficiary divorces. If the trust is properly structured, creditors cannot go after trust assets to pay the beneficiaries’ debts.

How a dynasty trust works
A dynasty trust is an irrevocable trust, which means once it is created it cannot be changed. Funds transferred into the trust will be taxed if they exceed the lifetime gift tax exclusion. However, once funds are transferred to the trust, beneficiaries of the trust can pass assets to the next generation without those assets being subject to estate, GST, or gift taxes. In addition, the assets placed in the trust are removed from your estate and can grow outside of it.

The trustee of the trust can be a beneficiary, but because the trust is designed to last for generations, it may make sense to have a professional fiduciary, such as a bank or other financial institution, serve as trustee. The trustee manages and distributes the assets in the way you set forth in the trust agreement. Usually, the trust provides for the beneficiaries’ support during their lifetimes. For example, it could direct the trustee to pay out income regularly, make periodic principal distributions, or make distributions contingent on the beneficiary’s need.

The length of time the dynasty trust can continue to exist depends on state law. Some states allow trusts to run for hundreds of years or indefinitely, while others place limits on how long the trust can operate. Traditionally, the rule against perpetuities states that a trust can last 21 years past the death of the last beneficiary. However, many states have opted out of the rule, allowing trusts to continue for many generations.

The downside of dynasty trusts is that they are inflexible. Once the trust is created, you lose access to the assets. Because dynasty trusts last for generations, they require guesswork about what will be best for your descendants.

Dynasty trusts are complicated instruments that must be designed correctly in order to provide benefits. Contact your attorney to determine if a dynasty trust is right for you.

How to Deal with an Estranged Child in Your Estate Plan

Unfortunately, not all families get along. If you are having problems with one of your children, you may not want them to benefit from your estate. There are several strategies for dealing with an estranged child in your estate plan.

Depending on the level of estrangement and the reasons for the estrangement, the following are the main approaches for treating a child differently in your estate plan:

-Outright disinheritance. If you really do not want your child to receive anything from you, you can fully disinherit the child. To be safe, even if you are leaving a child nothing, you should specifically mention the child in the will and state that you are disinheriting him or her; failing to do so could make it easier for him or her to challenge the will. (You also need to specify whether you are disinheriting that child’s children, too.)

Disinheriting a child comes with a risk: He or she may contest the will in court, which can cost your estate time and money. There are steps you can take to try preventing a will contest, including making sure your will is properly executed, writing a letter to the estranged child to explain your reasoning, and removing any appearance of undue influence. Keep in mind, however, that nothing is foolproof.

-Smaller inheritance. If you don’t want to disinherit your child entirely or wish to make it less likely the estranged child will contest the will, you may want to leave them an inheritance that is smaller than the amount you leave to other beneficiaries. Leaving a child a reduced inheritance may prevent him or her from contesting the will, especially if you include a no-contest clause (also called an “in terrorem clause”) in the will. A no-contest clause provides that if an heir challenges the will and loses, then he or she will get nothing. You must leave the heir enough so that a challenge is not worth the risk of losing the inheritance.

-Put the inheritance in a trust. If the reason you do not want to leave your child an inheritance is because you are worried about how they will use the money, you can leave the child’s inheritance in a testamentary trust. You can provide instructions to the trustee on when and how the trustee should disburse the funds in the trust. For example, you can instruct the trustee to disburse the money in small increments or only if the child meets certain conditions, like staying drug- or alcohol-free or working a full-time job.

Figuring out how to treat an estranged child in your estate plan is complicated and emotional. As Leo Tolstoy wrote in Anna Karenina, “Happy families are all alike; every unhappy family is unhappy in its own way.” Talk to your attorney to determine the best strategy for you.

Three Estate Planning Options for Your Art Collection

Title: Three Estate Planning Options for Your Art Collection

Collecting art or other valuable items can be a passion for many people. Often such a pastime is more about enjoying the art or the medium itself than about ensuring financial gain. However, once you have accumulated a sizable collection, what do you want to happen to it after you pass away?

It is important that your estate plan address your art separately from your other assets.

The first step in estate planning for your collection is to document it. You should not only have the collection appraised, but also take photographs of each item and assemble any paperwork relating to the authenticity and origin of the pieces in your collection, including artist notes, bills of sale, or insurance policies.

When considering what to do with an art collection, you have three main options:

–Sell the collection. If your family is not interested in maintaining your collection after you are gone, then you may want to sell it.

If you sell the collection while you are alive, you will have to pay capital gains taxes on the collection’s increase in value since you purchased it. The capital gains tax rate on artwork is 28 percent, compared with the top rate of 20 percent for other assets.

If the collection is sold after you die, it will be included in your estate, possibly increasing the value of your estate for estate tax purposes, but it will be “stepped up” in value. This means that if your heirs sell the collection, they will have to pay capital gains tax only on the amount by which the pieces have increased in value since your death.

–Leave the collection to your heirs. You can give your artwork to individual family members, but a better approach may be to put the artwork in a trust or a Limited Liability Company (LLC). The trustee of the trust or manager of the LLC whom you appoint will be responsible for sustaining the collection, including maintaining insurance on the artwork, arranging storage, and making decisions about selling and buying pieces. You can leave instructions for care and handling of the collection. Any profits from the sale of items would be split among the beneficiaries of the trust or members of the LLC.

–Donate the collection. You can donate your artwork while you are still alive and receive an income tax deduction based on the value of the items. This can be a good way to pass on your collection while avoiding capital gains taxes. Should you choose to donate through your estate plan, your estate will receive a tax deduction based on the collection’s value.

Deciding which option to take will depend on your circumstances and your family’s interest in the collection. Talk to your attorney to figure out the best option for you.

The Tax Consequences of Selling a House After the Death of a Spouse

If your spouse dies, you may have to decide whether or when to sell your house. There are some tax considerations that go into that decision.

The biggest concern when selling property is capital gains taxes. A capital gain is the difference between the “basis” in property and its selling price. The basis is usually the purchase price of property. So, if you purchased a house for $250,000 and sold it for $450,000 you would have $200,000 of gain ($450,000 – $250,000 = $200,000).

Couples who are married and file taxes jointly can sell their main residence and exclude up to $500,000 of the gain from the sale from their gross income. Single individuals can exclude only $250,000. Surviving spouses get the full $500,000 exclusion if they sell their house within two years of the date of the spouse’s death, and if other ownership and use requirements have been met. The result is that widows or widowers who sell within two years may not have to pay any capital gains tax on the sale of the home.

If it has been more than two years after the spouse’s death, the surviving spouse can exclude only $250,000 of capital gains. However, the surviving spouse does not automatically owe taxes on the rest of any gain.

When a property owner dies, the cost basis of the property is “stepped up.” This means the current value of the property becomes the basis. When a joint owner dies, half of the value of the property is stepped up. For example, suppose a husband and wife buy property for $200,000, and then the husband dies when the property has a fair market value of $300,000. The new cost basis of the property for the wife will be $250,000 ($100,000 for the wife’s original 50 percent interest and $150,000 for the other half passed to her at the husband’s death).

To understand the tax consequences of selling property after the death of a spouse, contact your attorney.

Why Small Business Owners Need an Estate Plan

Running a small business can keep you busy, but it should not keep you from creating an estate plan. Not having a plan in place can cause problems for your business and your family after you are gone.

While an estate plan is important for everyone, it is especially important for small business owners. Planning allows you to dictate what will happen with your business after you die or are no longer able to manage it. It can help you avoid excess taxes and debts and facilitate your business’s continued success.

Before sitting down to start the estate planning process, you should think about your goals for the business. What do you want to have happen if you die or become incapacitated? Should the business continue with current partners or be sold to new owners? Should your family take over? Should the business be shut down? Consider your family dynamics when thinking about these questions. Once you have come up with your goals, you can create a plan to meet them.

The basic building blocks of any estate plan include a will, power of attorney, and medical directives. The will allows you to direct who will receive your property at your death while the power of attorney and medical directives dictate who can act in your place for financial and health care purposes.

Following are some additional things a small business owner should consider as part of an estate plan:

-Tax Planning. If your business is not a separate entity, you may want to consider ways to minimize estate taxes. The current estate tax exemption ($12.06 million in 2022) is so high that most estates do not pay any estate tax. However, a small business could put an estate over the limit. Also, the fact that the estate tax exemption is set to be cut in half in 2026 and that states have their own estate taxes means that tax planning is important. You may want to put your business assets into a trust or a separate business entity like a limited liability company to lower your estate tax burden.

-Trust. A trust can be useful not only to reduce estate taxes, but also to ensure the continued running of your business if you die or become incapacitated. Because a trust passes outside of probate, the assets in the trust can be transferred immediately to the person you want to run the business without waiting for the whole estate to go through probate. In addition, if you become incapacitated, the trustee can continue to run your business without court involvement.

-Buy-Sell Agreement. If you own your business with others, a buy-sell agreement can be very useful. Buy-sell agreements are used if one of the owners dies, leaves the company, or becomes incapacitated. It specifies who can buy an owner’s share of the business, under what conditions, and for what price.

-Life Insurance. When you own a business, life insurance takes on new importance. A life insurance policy can ensure that your family continues to receive an income in the event of your death. It can also provide funds to keep the business running and be used to fund a buy-sell agreement.

Your estate planning attorney can help you come up with a plan to meet the needs of your business.

Can My Family Inherit My Season Tickets?

Sports fans with season tickets may want their families to enjoy the tickets after they are gone, but passing on these tickets may not be simple.

Getting season tickets to your favorite sport is not always an easy task. Season tickets for some teams can cost a lot of money and require time on a waitlist. It makes sense that you may want family or friends to be able to take advantage of tickets that are still usable after you pass away. However, most teams place limits on how you can transfer the tickets both before and after death.

A season ticket is a contract between the purchaser and the team, so the team can put any restrictions it wishes in the contract. This includes setting limits on when and how the tickets can be transferred to someone else. Teams may explicitly state that the tickets cannot be transferred by will or trust, allow transfers only to a spouse or close family members, or require that ticket holders follow certain procedures in order to transfer the tickets.

For example, some teams have a form that you will need to fill out, designating a beneficiary to inherit your tickets. Other teams state that only a spouse can use a deceased fan’s season tickets. Still others allow transfers only to a parent, spouse, child, or sibling. If there is no surviving family member who can take over the tickets, the tickets go back to the team.

Note that some teams require fans to purchase a seat license before buying season tickets. This means the fan pays a large fee to buy a license for particular seats and then has the right to buy season tickets for those seats. A seat license, unlike season tickets, is transferable via a will or trust.

If you own season tickets, be sure to include them in your estate planning. Your attorney can determine the best way to transfer the tickets.

How Long Does an Executor’s Job Take?

Being the executor of an estate can be a time-consuming job, depending on the size and complexity of the estate. While a simple estate can take a few months and not require a huge time commitment, if there are problems, the job can drag on for years.

An executor is the person responsible for managing the administration of a deceased individual’s estate. Although the time and effort involved will vary with the size of the estate, even if you are the executor of a small estate you will have important duties that must be performed correctly or you may be liable to the estate or the beneficiaries.

The first thing an executor should do is to consult with an attorney to learn the deadlines in the state where the decedent lived. To start the probate process, the executor must file the will for probate. Some states have strict time limits on how long after a decedent dies the executor has to file the will with the court, while others have no time limits. In addition, there may be deadlines for the executor to prepare a list of all of the deceased’s assets and file this inventory with the court. It is important that the executor to understand what is required and when.

How much actual time an executor will have to devote to the job can range widely. Settling an estate takes an average of 16 months, according the software company EstateExec, and the settlement process requires an average of roughly 570 hours of work on the part of the executor. Average compensation for executors was $18,000.  While executors must adhere to deadlines set by the state, other factors can make the estate administration go faster or slower. The following are the issues that can add or subtract time:

Debts. The executor must notify potential creditors about the decedent’s death. Usually, the executor must inform all known creditors by letter and publish a notice in a local paper for unknown creditors. Each state gives creditors a certain amount of time, which can range from a few months to a year, to file claims against the estate. The executor must wait for the deadline to pass and then settle all the debts before distributing assets to the beneficiaries of the estate.

Location. The location of the executor and the beneficiaries can affect the time it takes to settle the estate. If the executor does not live in the same state as the decedent and the beneficiaries, it can take more time to send documents back and forth. 

Assets. The more complicated the assets, the longer it will take the executor to sort everything out. If the estate consists of just a house and bank account, things will go more quickly than if the estate consists of multiple bank accounts, stocks, brokerage accounts, valuables, and/or a family business. 

Contested Estate. If the beneficiaries are fighting amongst themselves or with the executor, the probate process is going to take longer. One way an unhappy family member can hold up probate is by contesting the will, based on mental incapacity, undue influence, fraud, or allegations that it wasn’t executed properly. A beneficiary can also prolong the process by challenging the executor’s actions.

Every family situation is unique, so there is no set time that an executor can expect to work. If you are named as an executor, check with an attorney in the decedent’s state to find out what to expect.