Dallas Estate Planning Law Blog

Billions of dollars in wealth may be in jeopardy if crypto-assets are not included in estate plans. Experts say that when it comes to estate planning, cryptocurrency will need to be documented with proof of ownership and how heirs can access it. In Texas and elsewhere, the rise in the value of cryptocurrency has created quite a stir recently.

In the past, if someone were to die without a comprehensive estate plan, heirs would wait for financial statements to be received in the mail. Today, tracking banking and brokerage accounts has become more complicated over time because of online banking and investing. Email addresses and passwords are now necessary to access accounts, and cryptocurrency assets can go undetected without proper documentation. There is no paper trail, no bank statements or reported income to the Internal Revenue Service, and without an encrypted passcode, any wealth created may go undetected.

Family members with considerable assets may be unaware of the best way to bestow their wealth upon future generations. There are several options available for gifting to loved ones and donating to charities as part of bequeathing one's estate. In Texas and other states, estate planning can ensure assets are divided among the right beneficiaries.

Donating to charity can set an example about the importance of giving and can help foster a sense of empathy for others in need. It could be the humane society or local churches or even a struggling family within the neighborhood. An estate plan can guarantee that a favorite charitable organization is remembered according to one's wishes.

Preparing and maintaining an updated will is one of the best things a person can do for his or her family. People who have assets and want to have them distributed in a specific manner after their death will need to layout their requests in a will. In Texas and elsewhere, over 30 percent of adults procrastinate about creating a will or any sort of estate plan.

When it comes down to financial matters, most Americans who fail to make retirement plan contributions lose out on the opportunity to grow their money. Studies show that 25 percent of workers fail to invest in retirement plans and are losing money because of it. Contributing $300 each month over 40 years would result in over $700,000 with an annual return of 7 percent. Those who delay contributing five years will only amass about $500,000 with the same return rate.

What happens when a person passes away and leaves an IRA to someone other than a spouse? A spouse who receives an IRA inheritance has the most flexibility and can treat the account as his or her own. Others will find that their options are limited, and making the wrong decision can have expensive financial consequences. In Texas and other states, four options are available for the beneficiaries of inherited IRA accounts.

Custodians or representatives often suggest cashing the account in. Some beneficiaries are unaware that options exist beyond full cash out of an IRA, but banks rarely offer other alternatives. Other options would be to spread the distributions out over five years. The money can be dispersed in installments or all at once at the end of the five-year term and are taxable upon withdrawal.