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The Cary Connection MARCH 2025
Cary • Raleigh • North Raleigh • Chapel Hill
The Disinheritance Dilemma Tough Choices and Careful Considerations
“Beware the Ides of March.”
That saying is associated with the betrayal and assassination of Roman dictator Julius Caesar, but it can also apply to the difficulties some people face when they create or update their estate plans. Not everything in life is rainbows and sunshine; sometimes, a person may need to disinherit someone from their will or trust. Estrangement, deteriorating relationships, concerns over a family member’s ability to handle their inheritance, and other serious conflicts may prompt you to reconsider who will receive your assets upon your passing. It can be an awkward and uncomfortable thought, but you may have no choice but to address it. Legally, you can disinherit your spouse, adult children, in-laws, and other family members from your estate plans. In addition to the reasons already mentioned, your desire to exclude someone may result from your desire to leave funds to charity instead. Whatever your motivations, there are several ways to disinherit someone before it’s too late. First and foremost, it is wise to review your existing plan routinely to ensure it’s still accurate and relevant per your wishes, especially as family members and interpersonal dynamics can change. If you need to revise your plan to exclude one or more people, contact us as soon as possible to get those awkward conversations out of the way before a change in your plan results in a dispute. We offer a safe space for clients to talk through their concerns. We also strive to lead these discussions empathetically, understanding they are rarely made lightly. Having regular conversations with us will help you feel more empowered and enable you to better demonstrate that the disinheritance was a well-considered option and not just a spur-of- the-moment response to temporary familial conflict. Actions of this nature carry tremendous consequences, so you should always allow yourself enough time to be sure this course of action is in the best interest of your estate and beneficiaries.
When you disinherit someone from your plan, you exclude someone who would normally be assumed to inherit something from you. Naturally, this can lead to interpersonal complexities that may result in legal consequences if left unaddressed. Your decision to disinherit that individual should be clearly stated in your documentation. Although you are not legally required to provide an explanation for your decision in your estate plan, we recommend that you do so — with a focus on avoiding statements that could be deemed libelous or inflammatory — to help prevent the excluded party from challenging the will. Although disinheritance may be unavoidable, other alternatives are sometimes worth considering. For example, let’s say you’re deeply concerned about a family member’s current lifestyle choices or history of making reckless financial decisions. Instead of removing them completely, you can establish a trust that sets conditions for how and when that potential heir will receive their assets. These are just some ways to ensure a smoother, less contentious process. Although Cary Estate does not handle estate planning disputes, we have referral partners with the expertise to assist you. We aim to help you keep your estate plan updated and organized and guide you through some of the most common — and often uncomfortable — aspects of ensuring
your legacy. Please contact us today for a thorough review of your plan and ways to add comfort and stability to a potentially fractious family situation. -Paul Yokabitus
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Crack the Code Benefits and Drawbacks of the Latest College Aid Forms
Applying for college financial aid has been a moving target recently amid changes in federal rules. One new loophole is good news for families, however. For the first time, grandparents can set aside money in tax-sheltered accounts to help pay a grandchild’s college expenses without jeopardizing the student’s eligibility for other financial aid. The benefits could be significant for families planning, saving, and working together toward college-funding goals. The primary tool to qualify for federal aid and other sources of help is the Free Application for Federal Student Aid (FAFSA). The latest version of FAFSA does not require students to report distributions from grandparent-owned 529 college savings plans. In the past, those distributions could reduce a student’s financial aid by half of a grandparent’s contribution. Family members, including grandparents, are playing a growing role in covering soaring college costs. Undergraduate students cannot borrow more than $5,500–$12,500 a year in federal subsidized and unsubsidized loans, depending on their school year and whether they rely on their families. This nearly always falls short of the average annual public university tuition of $11,000 for in-state students, $24,500 for out-of-state students, and $43,500 for private college students. Parents are shouldering an increasing share; 11% take out federal parent PLUS education loans, borrowing an average of $40,000 per parent as of 2020. Other changes in the FAFSA form have subtler implications for families. The government no longer considers the number of students one family has in college simultaneously to determine
eligibility. This is bad news for families with multiple children who want to attend college at the same time. In another change, the latest FAFSA substitutes a new measure, the Student Aid Index (SAI), for the Expected Family Contribution measure used in the past. The SAI ranges from -1500 to 999999, and the lower it is, the greater the likelihood a student will get need-based financial aid. States’ 529 plans, named for Section 529 of the Internal Revenue Code, function like a kind of 401(k) account for education by deferring taxes on investment gains on savings for designated educational purposes. States began to develop these plans in the 1980s to encourage families to save for college, and all states now sponsor some version of a 529 plan. Other changes include expanding the number and potential size of Pell Grants. The maximum Pell Grant will rise to $8,145 in the 2025–2026 academic year from $7,395 in 2024–2025. While the SAI is calculated based on a student’s family size, income, and assets, eligibility for Pell Grants also considers a family’s financial standing according to federal poverty guidelines. In other changes, the revised FAFSA relies on federal tax information provided by the IRS rather than answers provided by applicants. It also asks fewer than 50 questions, compared with 108 in the previous form. While many people labor over the form’s detailed questions, the most common mistake is not filling out the FAFSA at all. This omission excludes students from eligibility for numerous subsidized loans and grants, scholarships, and other aid from the college or university they attend. Many students wrongly assume they won’t be eligible for aid because they or their parents make too much money or their grades aren’t high enough. Plenty of circumstances can qualify applicants for grants and awards, from being the first in their family to attend college to being in the military, being unemployed, or planning to major in a specific in-demand subject. With numerous sources of financial aid in play, the potential rewards of completing the FAFSA are well worth the time invested!
“The latest version of FAFSA does not require
students to report distributions from
grandparent-owned 529 college savings plans.”
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When a disaster strikes, it’s not just your home and immediate family you need to protect; your furry family members also need you to keep them safe. By preparing for the unexpected and ensuring you have the right supplies, lines of communication, and arrangements, you can help reduce the stress and uncertainty for you and your furry companions. Get ready to be all paws on deck with these tips to keep your pets safe during emergencies. Be Purr-pared With a Plan Make sure you include your pet in your household’s overall emergency plan. You will avoid stressful scrambling at the last minute when a disaster occurs. If you need to evacuate, account for all pets so they don’t get hurt or lost in the chaos. Not all public shelters and hotels allow animals to stay, so determine a safe place to take them. It’s also important to assign a friend, neighbor, or family member to care for your pets if you cannot. If you have not microchipped your pet, now is a great time. Shelters can scan microchips to determine a lost animal’s home and owner’s contact information. Pack for Your Pets Create an emergency kit for your pets that includes supplies they need to survive a disaster. You should have a few days’ supply of food, water, and any medications your pet needs. Ensure you have a backup leash and collar and copies of your pet’s registration. Include grooming items and sanitation tools like pet litter and paper towels. Items like favorite toys or your pet’s blanket can comfort them in stressful situations like an evacuation. Travel-Ready Tails Make sure you are ready to transport your pet in a travel carrier quickly. Place their carrier open in an area your pet is comfortable with, like a favorite napping spot. You can add a familiar blanket and toy inside to reduce their stress and use treats to encourage them to go inside. Make a mental note of your pet’s behavior during stressful times so you know where their go-to hiding spots are. Keeping Pets Safe in Emergencies All Paws on Deck
TAKE A BREAK
AQUAMARINE BASKETBALL BLUEBIRD CLOVER GREEN IDES LEPRECHAUN MADNESS
PISCES SPRING TANGERINE TULIP
Not Your Mom’s Corned Beef and Cabbage
Inspired by AllRecipes.com
Ingredients
• 1 (4 lb) corned beef brisket with spice packet • 3 qts water • 1 onion, quartered • 3 carrots, cut into large chunks
• 3 celery stalks,
cut into 2-inch pieces
• 1 tsp salt • 2 lbs red potatoes, halved • 1 small head of cabbage, cut into eighths
Directions 1. In a large pot or Dutch oven over medium-high heat, combine corned beef, spice packet contents, water, onions, carrots, celery, and salt. Bring to a simmer (skimming off any foam on top). 2. Cover pot, reduce to low heat, and let simmer for 3 hours until meat is fork tender. 3. Add potatoes to the pot and let simmer uncovered for 30 minutes or until potatoes are al dente. 4. Add cabbage along the edges of the meat and on top. Cover and let simmer until cabbage is tender, 20–30 minutes. 5. Place meat on a cutting board and let rest for 10–15 minutes. After meat has cooled, slice against the grain. 6. Add to a large serving bowl, ladle vegetables and broth over top, and serve.
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Cary • Raleigh • North Raleigh • Chapel Hill 1255 Crescent Green, Suite 200, Cary, NC 27518 919-726-0896 • www.caryestateplanning.com
Inside This Issue
1
Cut Ties the Right Way
2
Loopholes and Pitfalls in College Financial Aid Rules
Not Your Mom’s Corned Beef and Cabbage
3
Prep Your Pets for Disasters
4
How the DOL’s Final Rule Protects Retirement Investors
A NEW ERA FOR ERISA The Final Rule Transforms What It Means to Be a Fiduciary
For more than 14 years, the U.S. Department of Labor has been trying to determine a new definition of a “fiduciary” under the Employee Retirement Income Security Act (ERISA). A fiduciary provides investment advice for a fee to employee benefit plans. Under ERISA, someone is a fiduciary if they have control over managing
or using a plan’s assets, provide investment advice for a fee, and have responsibility for managing the plan. Since 1975, these discussions were only considered “investment advice” if they adhered to a five-part test. However, this past September, the Department of Labor released new regulations called the Final Rule that redefines what it means to be an investment advice fiduciary. With this recent change, the five-part test goes out the window. The Final Rule expands the definition of who can be considered a fiduciary. Someone is a fiduciary if they regularly provide investment recommendations and advice to retirement investors for a fee. That advice must be based on the investor’s needs and reflect expert judgment that serves the investor’s best interests. They must also state that they are acting as a fiduciary when giving advice;
however, if you’ve previously received one- time advice, that could now be considered fiduciary advice. That’s a lot of information to swallow, and by now, you’re probably wondering how this will affect the average person. In most cases, these changes will only affect those acting as fiduciary advisors and retirement investors, including participants, beneficiaries, IR owners (Ingersoll Rand Inc.), and anyone else involved with an ERISA plan. Through the Final Rule, you should receive better advice that puts your interests first, providing more transparency about recommendations and any fees involved. It should also create greater accountability for advisers, brokers, insurance agents, and anyone else acting as a fiduciary. All in all, this is a great change for those who interact with fiduciaries. You can rest assured knowing the advice you receive will benefit you and your investments.
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