On January 17, 2008, Robert James Fischer, known as Bobby Fischer, died of renal failure. The eccentric national chess champion passed away in Iceland, the country in which he spent his last few remaining years. Known as a child prodigy, Bobby Fischer was a household name to many of us who were around in the 70s.

At the tender age of 14, he became the country’s youngest chess champion who went on to play Russian chess champion, Boris Spassky. Since the 70s, Bobby Fischer intermittently made national news headlines, but not for his chess skills. He gave up his chess career for the next two decades after the 1972 World Championship. Instead, he made national news headlines for his eccentricities and multiple run-ins with the law. He became reclusive, denounced Judaism and was involved in allegations of violating multiple trade embargos.

At the time of his death, experts valued his estate at $2 million. Several people, including a purported Japanese wife, a daughter and mother from the Philippines claiming to be family and a few of his U.S. descendants made claims against his estate for their inheritances. After multiple lawsuits involving the different parties, Icelandic officials decided to exhume his body for genetic testing to determine whether Bobby Fischer was the biological father of Jinky Young, his alleged Philippine daughter. Subsequent DNA tests conclusively ruled him out as her father, and she and her mother lost their legal claims against his estate. His Japanese wife inherited most of his estate.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

In America, we love insurance. We have insurance on everything from our lives to our pets to our jewelry. Although insurance can be a wonderful estate planning component, be sure that you understand what each type of insurance policy covers and be sure to consult with your estate planning attorney first to determine whether your plan will benefit from that type of insurance. Some of the more common types of insurance found in an estate plan include the following:

Business/Partner Insurance — If you own a small business, there are various reasons why you may want to include insurance coverage geared toward the business. One reason focuses on passing the business down to a family member. If the business assets are sufficient to trigger estate taxes, you may wish to purchase a policy that will cover the tax debt to ensure that none of the business assets must be sold to pay the taxes.

Disability Insurance — In the event that a disability prevents you from working for an extended period of time, a disability insurance policy will provide wage replacement. This is typically a good idea if you are young and do not have a substantial amount of money saved up for an emergency.

Long Term Care Insurance — As we age, the possibility of having to spend a considerable amount of time in a long term care facility looms. The cost can quickly deplete your life savings. A long term care policy will prevent that from happening.

Life Insurance — Whether or not your estate truly needs life insurance depends, to a great degree, on the other assets found in your estate. Be sure to consult with your estate planning attorney before you assume that you need life insurance.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

A blended family comes with special estate planning concerns. Once you remarry, you now need to consider how you will provide for your current spouse in the event of your death without depleting or losing estate assets that are intended to be passed on to your children.

While you may have all the faith in the world in your current spouse, the reality is that from a legal standpoint, once you pass assets to your spouse in your Last Will and Testament, he or she is under no legal obligation to preserve them for your children. In other words, once they are in the hands of your spouse, he or she may do with them as he or she wishes. This presents an estate planning dilemma that can be solved by creating a Qualified Terminable Interest in Property Trust, or QTIP trust.

A QTIP trust allows you to place assets into a trust prior to your death. When you die, the income derived from those assets will be used to provide for your spouse until he or she dies. The principal, however, will remain intact. When your spouse dies, the principal is then transferred to your children. Talk to your estate planning attorney to decide if a QTIP is right for your estate plan.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

One of the questions estate planning attorneys hear frequently is whether there is a reason for a single, childless individual to create an estate plan. The answer is a resounding “yes.” Many of the same reasons that married individuals and parents need an estate plan also apply to single individuals without children. In addition, there are some additional reasons that call for the need for an estate plan that are unique to singles.

If you have assets, you need an estate plan, whether you are married or not. Absent an estate plan, the state will decide who gets your assets when you die. This often means that friends, charities, even some relatives, will receive nothing. If you are close to any of these people or organizations, then you may want them to receive something when you die. Without an estate plan, this will not happen.

Often of more importance than the distribution of assets is the issue of incapacity. If something happens where you become incapacitated, someone must make medical decisions on your behalf and control your finances and assets. Again, if you do not take advantage of the opportunity to decide who that will be by creating an estate plan, the state will decide for you through court hearings. The court’s choice may not be your choice.

Take the time to create an estate plan now. If you later marry or have children, your plan can always be updated to reflect those changes.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

The idea of turning down an inheritance may seem strange; however, there are reasons why this could be your best option. Before you accept an inheritance, be sure to discuss all the possible consequences of accepting the money with your estate planning attorney first, as there may be reasons why disclaiming the inheritance makes sense.

Disclaiming an inheritance is often an after-the-fact method of estate planning when a comprehensive estate plan was not created prior to the decedent’s death. This typically applies in the case of a married couple. If your spouse has recently passed away and left you all of his or her estate assets, accepting those assets could over-fund your own estate. If your combined assets subject the estate to estate taxes when you die, you could lose a substantial amount of money to the tax obligation that follows.

When this is the case, disclaiming the inheritance is often the easiest way to solve the problem. If your assets will eventually be passed down to your children, then allowing your spouse’s share to pass now will resolve the issue of over-funding when you die.

If you decide that disclaiming the inheritance is the best option after consulting with your estate planning attorney, there are specific procedures that must be followed in order to legally turn down the inheritance. Failure to follow the proper procedures, in the eyes of the IRS, will not alleviate the estate tax problem down the road.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Under the federal tax code, gifts can be subject to taxation. There are, however, exceptions and exclusions that apply to the general rule that gifts are taxable. Along with a yearly exemption and lifetime exclusion, medical and educational gifts are also tax-free.

One of the best ways to limit the value of your estate at the time of your death and thereby limit the exposure to estate taxes is to start gifting estate assets to intended beneficiaries early on in your lifetime. You must, however, be aware of the various rules related to gifting to ensure that your gifts do not also incur a tax.

Each taxpayer may make as many gifts of up to $13,000 a year to separate beneficiaries as he or she wishes without paying a gift tax. In addition, a lifetime exclusion to all gifts made during your lifetime applies. Along with these exceptions, you may make an unlimited amount of medical or educational gifts during your lifetime.

A medical gift must be paid directly to the provider of the medical services. Likewise, a gift for educational expenses must be paid directly to a qualified educational institution. Additional rules apply to the ability to make medical and educational gifts, such as educational gifts can only cover the expense of tuition. Things such as room and board cannot be included in the gift. Be sure to talk to your estate planning attorney about how you can incorporate medical and educational gifts in your estate plan.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Each year, millions of animals in America end up in shelters across the country. Many of these animals must be euthanized because there simply are not enough people willing to adopt them. Not all of these animals are strays. Some of them once had loving homes, but their owner died and didn’t think to make provisions for their pet before death. If you love your pet, don’t let this happen. Consider the benefits of a pet trust and talk to your estate planning attorney about including one in your estate plan.

• A pet trust can be as simple, or as complex, as you want to make it
• Your pet trust allows you to appoint a trustee who will administer the trust.
• Your trustee can be the animal’s caregiver or it can be a disinterested third party such as your attorney
• The trustee will ensure that the animal has a home, even if your intended caregiver cannot fulfill the role for any reason
• Funds transferred to the pet trust will provide for your pet long after your death
• You may include specific instructions such as what type of food your pet is to be fed and how often he or she is to be walked
• By taking the time now to work with your estate planning attorney on the creation of a pet trust, you will have peace of mind knowing that your beloved family pet will not end up homeless and unloved in the event of your death.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Your estate plan should be reviewed and updated on a regular basis as a matter of course. There are some life changes that also call for a review of your estate plan in between planned reviews. The birth of a child, divorce, the death of a beneficiary and marriage are some of those events. Exactly what changes in your estate plan when you get married will depend on your own circumstances and the specifics of your plan; however, there are a number of things in your estate plan that should be reviewed when you walk down the aisle.

If you have children from a previous marriage or your new spouse does, you need to make specific provisions for them in your plan. State intestate laws vary, but most call for the spouse and children to inherit in the absence of a valid Last Will and Testament. By updating your Will you can ensure that your existing children inherit in the amount or percentage that you intend instead of according to state law.

Access to funds is another big area of change in the estate plan of a newly married individual. If you decide to co-mingle funds, you may want to create joint titles and accounts and/or convert accounts to a “pay on death” status to be certain that your new spouse will have access to funds shortly after your death instead of waiting for the probate process to terminate.

Additional documents that you may wish to discuss with your estate planning attorney include a living will, a durable power of attorney or a revocable trust. These documents give your new spouse control over medical and financial decisions in the event you become incapacitated.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Estate planning is intended to provide a mechanism to transfer wealth. The transfer of your wealth or assets can take place during your lifetime or at the time of your death. Most people think of estate planning as only taking place at the time of death, but sometimes the best way to transfer wealth is during the lifetime of the owner. Consider the advantages of both options.

Transferring assets during your lifetime allows you the chance to watch the beneficiary enjoy the asset. There can also be financial reasons to gift during your lifetime. If you wait until death and your estate is comprised of valuable assets, it may be subject to estate taxes. Estate taxes can diminish the value of the estate by as much as 50 percent. In addition, if you plan to give to charity, donating during your lifetime can give you a tax deduction in the year of the gift that can reduce your personal income tax obligation.

On the other hand, some assets do not lend themselves to gifting. An asset that has appreciated considerably, for example, could create a big capital gains tax burden for the recipient when the asset is sold. If, however, your intended recipients are young and still financially immature, gifting during your lifetime could be a bad idea.

Talk to your estate planning attorney to decide whether gifting now, inheriting later, or a combination of the two, works best for your estate plan.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

If you think the term “digital estate” sounds foreign, you are not alone. Until recently, most people did not even worry about how to include their digital estate in their estate plan because they did not have one. Today, however, even the average American owns digital property. As the world moves to computing in the clouds, we will all have more digital property in the years to come–all of which needs to be included in your estate plan.

In case you think you don’t have any digital property, think again. How do you communicate with friends, family and co-workers? How do you pay your bills and check your investments? Where are your wedding pictures stored? The answer to most of these questions is likely on a computer. All of that information makes up your digital estate.

If you died tomorrow, how would anyone access your financial information? What about your social media accounts like Facebook? Without the right to do so given to them in your estate plan, your representatives may not be able to access any of it. State laws are just now trying to catch up with the digital revolution by creating laws that deal with ownership of digital property after the death of a decedent. Stay ahead of the curve by talking to your estate planning attorney now about including your digital estate in your estate plan.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.