News and Current Events

Friday, August 13, 2010

Does Marriage Matter in Estate Planning?

How much does “marriage” matter when it comes to estate planning?  The recent California court ruling on gay marriage has thrown marriage and its meaning once again into the limelight, and has many people thinking about what marriage means on a legal level.  

Anyone who pays taxes knows that your marital status matters to the state and federal government.  Your marital status also impacts your rights when it comes to insurance, privacy, pensions, and even probate. For example, the property of a married person who dies without a will automatically passes to their spouse (and children)*—this is not necessarily the case for unmarried couples. Similarly, in an emergency medical situation a spouse will have access to information about his or her injured spouse, but unmarried couples do not always have this same privilege.  Although there is good reason behind these privacy laws, it can be particularly distressing when couples who have lived together for years may suddenly have trouble getting medical staff to recognize their partner when a medical decision needs to be made.

Luckily, your estate planning attorney can help circumvent some of the potential problems unmarried couples may face in case of incapacity or upon death.  Executing an Advanced Health Care Directive or Health Care Power of Attorney will ensure that medical personnel recognize the authority of a trusted partner to make medical decisions for you.  Similarly, by creating a Will or Trust you can nominate the person you want to act as executor of your estate upon your death, and who the beneficiaries of your property will be, regardless of whether you have a marriage license or not.

The issue of marriage is one that is obviously very close to the heart, but estate planners see it on a practical level as well.  In the legal world of estate planning our goal is to ensure that your wishes for end of life health care and final distribution of wealth are honored—regardless of your marital status.  

*Please note: Probate laws will vary from state to state—be sure to talk to your estate planning attorney about the laws specific to your state of residence.

Wednesday, August 11, 2010

Will Long-Term Care Living Arrangements Prevent You from Leaving an Inheritance?

In our last post we wrote about what matters most when choosing a long-term care living situation, suggesting that it’s not always the place that matters most, but the mind-set of the elderly person who will be living there, and how involved that person is in the decision-making process. However, this does not mean that the quality of each living place doesn’t matter at all.  In fact, according to the Wall Street Journal great care should still be taken when selecting a long-term care living situation... especially if you’re considering a Continuing Care Retirement Community (CCRC).

If you are considering a CCRC for yourself or an elderly loved one, you may want to read this article in the WSJ, which mentions that although more and more older Americans are drawn to the benefits offered by a Continuing Care Retirement Community, those benefits “often come at a steep price and ‘considerable risk.’"

The article goes on to mention that “So-called CCRCs—which typically offer fine dining, health clubs and on-site long-term care—have grown in popularity along with the aging of the population, particularly among the upper-middle class and affluent,” but that “the economic downturn is making it tougher for potential new residents to sell their existing homes and fill openings in new and expanded communities, which are generally regulated by state governments. As a result, low occupancy levels are challenging the industry's financial models.”

We mention this because many of our clients are at a time in their lives when they or their elderly parents are looking into long-term care living situations, and we see how difficult it is to sort through all the choices and find a place that fits.  Not only is quality of life an important factor (maybe the most important factor), but for many people the cost of the place they choose may mean the difference between leaving their children an inheritance and dying penniless.

We urge any of our readers who are in the market for long-term care living arrangements to look carefully at all their options; ask questions, do the research, and don’t be afraid to ask for help or a second opinion.

Wednesday, July 28, 2010

Not Just Estate Tax Anymore

Anyone who has been following our blog knows that the expiring Bush tax cuts (including the repeal of the estate tax this year and the tax’s reinstatement next year) have given lawmakers no end of trouble as they struggle and debate—and debate and struggle—to agree on new tax legislation moving forward. In fact, The Wall Street Journal calls the issue “a ticking time bomb,” while the New York Times warns that “an epic fight is brewing.” It seems that the only thing everyone does agree on is that something has to be done before December 31, 2010.

Unfortunately, according to both news sources, politics takes precedence over legislation.  “The tax fight will serve as a proxy for the bigger political clashes of the year, including the size of government and the best way of handling the tepid economic recovery,” warns David M. Herszenhorn of the NY Times, “’...this is code for the role of the federal government, the debate over the size of government and the priorities of the nation.’”

According to David Wessel of the WSJ party lines are clearly drawn.  “The Obama administration is pressing to extend the Bush tax cuts for everyone with an income under $250,000 a year and to raise taxes on those above. A recent Pew/National Journal poll found that only 11% of Democrats favor extending all the Bush tax cuts.” Meanwhile, “Republicans are happily staking out the no-new-taxes turf, playing to their traditional constituency. Pew says 52% of Republicans favor extending all the Bush tax cuts.”

It would certainly give taxpayers some comfort if legislation could be passed quickly and decisively, but Herszenhorn warns that it’s not likely to happen, “Given the partisan gridlock of recent months, there is a chance that the battle could go down to the last minute, or even — in the face of a stalemate — that the tax cuts could be allowed to expire completely, a development that... lawmakers in both parties say could be the worst outcome.”

Either way, the best advice we can give our readers is to be prepared.  Just because lawmakers keep putting off a decision doesn’t mean you should.  Talk to your attorney about the best way for your family to weather the coming storm.  Be aware of changes to tax laws and update your estate plan accordingly.

Wednesday, July 14, 2010

Will Billionaire Steinbrenner’s Death Inspire Congress to Reinstate the Estate Tax?

Common superstition says that famous deaths come in threes, but the death of New York Yankees owner George Steinbrenner on July 13 makes four billionaire deaths in 2010.  It’s hard to deny the significance of such events in a year when there is no estate tax.

According to the Associated Press Steinbrenner’s family is set to receive a tax break of “about $328 million” because of the estate tax repeal this year.  This number, along with the millions of dollars saved (that would otherwise have gone to pay estate taxes) by the families of Dan L. Duncan, Walter Shorenstein, and Mary Janet Morse Cargill may inspire Congress to take action on the issue of the estate tax before the year is over. The Washington Post quotes Senator Bernard Sanders of R.I. as saying, “In the midst of this terrible recession, the idea of giving billionaires a massive tax break is obscene... Already we have four billionaire families who are not paying taxes -- Steinbrenner's being the last one. Many billions are being lost. We have to address that reality right now.”

Although there is still some talk of the possibility of the estate tax being reinstated retroactively, most lawmakers and attorneys agree that the further into 2010 we get the less likely this becomes. But missing out on the estate taxes of four billionaires has to hurt, and the members of Congress are not likely to drag their feet much longer.  One way or another, we can soon expect to see the issue of the estate tax become a hot topic of debate in Washington.  Our firm will keep you abreast of any changes to the law that could affect you, your loved ones, or your estate.

Monday, June 28, 2010

How to Plan for the Future While Estate Tax Debate Continues in the Senate

With all the estate tax proposals currently floating around the Senate the future of the estate tax is anybody’s guess... but that doesn’t mean we’ll stop trying to figure it out. A recent article in the Wall Street Journal touches on some of the more recent (and more controversial) proposals floating around Washington.

The proposal that is currently getting the most attention comes from Vermont independent Sen. Bernie Sanders and three Senate Democrats who say that "It's time for multi-millionaires and billionaires to pay their fair share."  And pay they would!  According to Sanders’ proposal “the [estate tax] exemption would be $3.5 million for an individual or as much as $7 million for a couple, with a tax rate of 45%. But estates with taxable assets between $10 million and $50 million would pay a 50% rate, and estates valued above $50 million would pay 55%. A further 10% surtax would apply to assets above $500 million.”

Of course, it’s too early to get worked up just yet, Sanders’ proposal is just one of many right now, and the debate still rages in the Senate with no clear winner in sight.  Of course, if no action is taken the estate tax will come back in 2011 with a 55% tax rate on estates above a mere $1 million. 

Either way, you’ll want to be prepared, and the only way to do that is to keep in contact with your estate planner and make sure that your plan is designed to handle anything.  Although it may be tempting to wait to update your estate plan until a clear decision is made, all that really does is leave your family unprepared if something should happen to you while the tax is in flux.  Contact our office to find out what adjustments should be made to your estate plan to keep your family protected while lawmakers continue to debate the future of the estate tax.

Friday, June 18, 2010

It’s a Dog’s Life

There seems to be some confusion nowadays about whether “a dog’s life” refers to a life of ease or toil, but for these wealthy canine heirs life is definitely the former!  Whether it’s a wealthy eccentric leaving millions to a dear canine companion or whether it’s a lover of animals leaving a portion of their estate to charity, more and more dogs (and other animals) are being included in wills and trusts.

Naming your pet in your will or trust may be odd, but it’s perfectly legitimate.  Unfortunately, disinherited family members may not always agree.  When Leona Helmsley passed away in 2007 she left $12 million to her dog Trouble, but that amount was reduced by Judge Renee Roth of the Manhattan Surrogate Court to a mere $2 million.  The current canine court battle is over the will of Miami heiress Gail Posner, which leaves $3 million to her dog Conchita, as well as $26 million split between seven of her bodyguards, housekeepers and other personal aides.

Naming your pet in your will may be perfectly legitimate, but the truth is that there is nothing to stop disgruntled family members from contesting your wishes.  If you choose to do something “unusual” in your will or trust, or if you know of family members who are likely to make trouble, it may be necessary to take extra precautions to ensure your wishes are followed.  Inform your estate planning attorney of the potential conflict and discuss what steps can be taken to prevent it.  In some cases “no contest clauses” can be added to a will or trust to discourage court battles.  In other cases a simple meeting of all family members with your attorney to explain your wishes and reasoning will do the trick.  Talk to your attorney or call our office to find out what can be done to keep the peace in your family—canine or human.

Wednesday, June 16, 2010

More News About the Repealed Estate Tax

Six months into 2010 and the estate tax repeal is still making news.  This time it’s a story about Texas billionaire Dan L. Duncan who died in March, leaving all of his billions to his spouse, family and various charitable organizations... and none to the government:

“Had his life ended three months earlier, Mr. Duncan’s riches — Forbes magazine estimated his worth at $9 billion, ranking him as the 74th wealthiest in the world — would have been subject to a federal tax of at least 45 percent. If he had lived past Jan. 1, 2011, the rate would be even higher... Instead, because Congress allowed the tax to lapse for one year and gave all estates a free pass in 2010, Mr. Duncan’s four children and four grandchildren stand to collect billions that in any other year would have gone to the Treasury.”

According to the NY Times article this news is meeting with mixed reactions.  Opponents of the estate tax (sometimes called the death tax) are hoping to make the repeal permanent.  Others, however, don’t agree:

“’The ultrawealthy in this country will still be able to pass on enormous wealth to the next generation,’ said Chuck Collins, who studies income inequality and has worked with billionaires like Warren E. Buffett and Bill Gates to promote an estate tax. Mr. Collins argues that the tax is a ‘recycling program for economic opportunity.’”

Whatever happens in future years, considering that this year is already half over it can only be hoped that heirs and executors won’t have to worry about the tax being reinstated and made effective retroactively; which leaves us free to look ahead and plan for 2011 when the estate tax comes back at a whopping 55%. If you’re wondering how all these changes will impact your estate plan today, tomorrow, or years in the future please call our office.

Friday, May 21, 2010

Senate Considers Option to Prepay Estate Taxes

2010 has been anything but ordinary as far as the estate tax is concerned.  First there was the unexpected repeal of the estate tax (unexpected not because the repeal was unplanned, but because nobody expected it to actually happen), then the idea that congress could reinstate the estate tax and make it effective retroactively, and now there are rumblings that certain  Senators are considering a prepaid estate tax!

According to this article in the Christian Science Monitor, “News reports suggest that the Senate may soon consider restoring the estate tax with an option allowing people to prepay their tax before they die. Details are apparently still in flux as senators negotiate. We—and maybe they—don’t know yet what they’ll propose for the basic estate tax but it’s unlikely to be harsher than the 2009 version.”

If something like this gets passed, a visit to your estate planning attorney will be more important than ever, especially if you have the wealth to protect and the means to spend some money now to save a lot of money later.

Of course, this is all just speculation right now, but even the idea of prepaid estate taxes tells us just how much the government is counting on that revenue—one way or another.  If you were under any illusions that the repeal of the estate tax might turn into a permanent thing this should be more than enough to convince you that the estate tax is here to stay.

Wednesday, May 05, 2010

Does the New Health Care Reform Affect Your Long Term Care Plan?

From a recent announcement on PR Newswire:

“Many Americans seem confused and immobilized by a key part of the recent Health Reform legislation, the CLASS Act, which will offer a form of long term care insurance for working people and others who may become disabled. ‘CLASS’ stands for Community Living Assistance Services and Supports, and the program, a legacy of the late Senator Edward Kennedy, is intended to offer new choice and security for millions now at risk. But, ‘we find that the public doesn't know how to react,’ says Denise Gott, Chairman of the Board of LTC Financial Partners LLC (LTCFP), one of the nation's most experienced long term care insurance agencies.”

The new Health Care Reform will almost surely affect your long term care plan, but is it too soon to know exactly how? You don’t want to be caught without coverage, but you also don’t want to make any decisions without having all the facts.

To help you discover how health care reform may affect your long term care plans, the link above provides access to a newly released 2010 Long Term Care Guide complete with healthcare reform update.  Don’t let your family be caught off-guard.

Monday, May 03, 2010

Recent Deaths Bring Home the Consequences of No Estate Tax in 2010

There was too much confusion to be much rejoicing when the estate tax was repealed for a year on January 1^st, 2010.  Although the words “no estate tax” may sound good, nobody really expected the state of affairs would last.  Most experts believed that Congress would never actually let it happen in the first place; then when ’09 became ’10 without any action on the estate tax repeal that the George W. Bush administration had put into place experts warned people not to get too comfortable, that a retroactive estate tax would likely be implemented.

Well, we’re 4 months into 2010 and there is still no retroactive estate tax—but there is also still no rejoicing.  This is because the lack of estate tax has actually created more problems than it has solved for the wealthy and affluent.  According to this article in Financial Advisor Magazine the recent deaths of Texas billionaire Dan Duncan and Taco Bell founder Glen W. Bell, Jr. have only made it clear to tax attorneys that “lawsuits of various kinds will blossom in the estate-tax vacuum. The more money left on the table when the wealthy die, the more likely heirs are to fight for years over who should inherit.”

And you don’t have to be a billionaire to feel the consequences of the lack of tax.  This article in Bloomberg Businessweek explains that those who think they’re catching a break on the estate tax could instead “...wind up paying stiff capital-gains taxes on inheritances. That's because of the disappearance of what's known as the "step-up" in basis, which allowed assets to be revalued for tax purposes at the time of death.”

But even this is preferable to finding yourself unintentionally disinherited by standard estate tax clauses included in older wills and trusts, a scenario that is more likely to happen than you may think if your spouse or parent hasn’t had their estate plan reviewed yet this year. 

What is the bottom line?  Every silver lining has a dark cloud, and you want to take every precaution possible to keep your heirs safe from the storm during this “gap year” in the estate tax.

Monday, April 12, 2010

Tax Tips to Benefit YOUR Family

Tax day is coming up quickly, are you ready to file?  And just as important—are you taking advantage of all the savings and deductions available to you? Most people who do their own taxes are unaware of some of the lesser-known deductions which can help you save money come tax-time. We have a couple of articles we’d like to share with our readers that may make it easier for your family come April 15^th.

A recent article on SmartMoney.com offers 3 often overlooked ways to save on your income taxes. Two of the three items have to do with parenthood and buying a home, but of particular interest to our readers is tip #2, Selling Grandma’s Stuff: “If you sold something last year that you inherited, understand that your tax basis for gain or loss purposes generally has nothing to do with what your benefactor paid for the asset. And that's probably going to save you a bundle in taxes.” If you sold an asset from an inheritance last year (or if you received an inheritance last year at all, regardless of whether you’ve sold the asset or not) contact our office before filing your taxes.

Another potentially useful resource for tax savings is the ABC News article Top Ten Commonly Missed Tax Deductions to Put Cash in Your Wallet. This article reminds us to include the little things—such charity volunteer related expenses, the new car deduction, old school books used for work, and more. There are a number of tax deductions your family may be able to take advantage of… if you just know where to look. 

Monday, March 22, 2010

What Does the New Healthcare Legislation Mean for YOU?

Everybody knows the latest big news: President Obama’s healthcare reform bill was finally approved by the senate—for better or worse—and although politicians may still be arguing the benefits and evils of the bill across party lines, most Americans are asking one simple question: What does this legislation mean for me?

CNN Health attempts to answer that question and more in a recent article entitled (appropriately) “Answers to your questions on healthcare law.” At a time when everyone either loves or hates the bill, it’s not always easy to get a straight and non-partisan answer to a question that really has nothing to do with politics; but this CNN article does a good job of providing straightforward answers to many of the frequently asked questions, and explaining exactly how this bill is likely to affect you and your family now and in the years to come.

We know that many of our clients will have questions about this bill that go beyond those answered in this article, and we invite you to contact our office with any concerns you may have; especially about how this may affect your decision-making rights, legal healthcare documents, or Medicaid qualification. Whether you are a parent of young children worried about your health insurance, or a retiree facing the need to tighten your purse strings in your “golden years,” this legislation may have an impact on you; contact our office to find out how.

Wednesday, March 17, 2010

Estate Tax to Again Become an Issue in the House

Could it be that some movement finally happening in the House of Representatives with regards to the estate tax? 

It looks like it may be, if we are to believe this recent article in Bloomberg Business Week. According to the article, the House Ways and Means Committee has plans to begin discussions in April (after the spring break) about former President George W. Bush’s tax cuts benefiting the middle class. 

Of special interest to our clients is the section about the estate tax, found at the bottom of the article:

“...The committee would begin work to retroactively reinstate a federal tax on multimillion-dollar estates that expired Dec. 31. The legislation would likely seek an extension of a 2009 law, which applied a 45 percent tax rate on the value of estates that exceeded $3.5 million per individual... One possibility being considered... would let heirs choose to pay the capital gains tax that replaced the estate levy if that is more beneficial.”

Just one more reason to be sure you see your estate planner as soon as possible in 2010.

Monday, March 15, 2010

Protecting Your Parents, Protecting Yourself

Do you need long-term care insurance?  You may think you’re too young to think about that quite yet, but what about your parents?  If you’re reading this blog it’s likely that your parents are at an age where they soon may need some sort of care, whether that will be in-home care, nursing care, or even need to stay in a nursing facility; if your parents haven’t planned ahead for this eventuality, the burden for their care—either financial or physical or both—may fall on you. 

It is for this very reason that a new trend in long-term care insurance seems to be emerging.  According to this article by Stacy Schultz, there is an upswing in the purchase of long-term care insurance by the Boomer Generation—except the insurance isn’t for the Boomers themselves, it’s for their parents. “Many of them have just had a relative go through being in a nursing home, and they see the devastation and the stress it causes,” quotes the article. “They’re concerned about mom and dad, and if their parents don’t have a lot of means they want to buy insurance for them.”

If you are considering buying long-term care insurance, either for yourself or your parents, you have a number of options, especially compared to even just a few years ago.  Forbes.com recently published an article outlining the improvements in long-term insurance, and what your options are if you’re buying it today.

Take an hour or two this month to talk to your parents (or your kids) and advisors about what the coming years have in store.  You may not need long-term care insurance, but you will certainly need a plan, and it’s never a bad idea to know your options, especially when it comes to protecting your future.  In the lives of many Boomers, protecting their own future also means protecting their parents’ futures.

Monday, February 08, 2010

Handing Over the Keys to the Kingdom

It goes without saying that nobody wants to give up control of their finances and put themselves at the mercy of someone else’s decisions; which is why most people spend hours and hours considering who to name as their agent when they sign a power of attorney.  But what happens if you pick the wrong person? This article about an elderly mother and the daughter who stole from her is a sad example of just how important it is not only to choose your agents wisely, but also to relinquish control wisely as well.

It is commonly believed that simply adding your “agent” as a joint owner on your bank accounts is the easiest (or cheapest) way to gradually “hand over the reins”; but giving someone else unfettered access to your bank accounts is a dangerous risk in the best of circumstances—all too often it leads to the tragic exploitation and abuse mentioned in the article above.

The good news is that there are safer ways to give your agents the powers and access they need without completely handing over the keys to your kingdom: 

A Durable Power of Attorney that goes into effect when two doctors have declared you incapacitated

Naming more than one person as your agent (This can lead to a slower decision-making process, but it does provide you with checks and balances and oversight.  If you’re worried about disagreements between agents, name a third party to serve as a mediator or tie-breaker.)

Naming a financial institution as your financial agent

Choose a professional advisor or overseer through whom all decisions must be approved. This has the added benefit of giving your agents someone to whom they can go for advice in a tough situation.

Any of these options may be safer than joint ownership of your bank accounts, but every family and financial situation is unique, so ask your trusted attorney about which options may be best for you.

Saturday, January 23, 2010

Your Will May Be a Ticking Time Bomb

The recent repeal of the estate tax is having unintended consequences for responsible husbands and wives who already had a will or trust in place to protect their spouse and family—instead of protecting them, that existing will could now end up leaving surviving spouses with nothing.  Jonnelle Marte at the Wall Street Journal has this to say:

“It's a common practice for people to use formulas in their wills designed to send the maximum amount of assets not subject to the estate tax into a trust, often for their children. The remaining assets are usually left to the surviving spouse. But this year, there's no limit on the assets people can pass to their heirs without being subject to federal estate tax. So all of the assets could go into a trust and the surviving spouse would get zero.”

Does this mean you’ll have to get your will or trust updated every year?  No. But it does mean that you’ll want to get your will or trust reviewed by an estate planning attorney this year. A review of your estate planning documents is a quick and easy process, especially if you don’t have any other significant changes to make.  One thing is for sure, the small amount of time you spend making sure your documents are current is well worth the protection and benefit your spouse and family will receive from it.

Tuesday, January 19, 2010

Another Kind of “Bucket List”

Among the many changes in tax law to go into effect in 2010 was the change in cost basis for inherited assets. Previously, all inherited assets were “stepped-up” from their original value at date of purchase to their fair market value at date of death. In this way, if inherited assets were sold shortly after death, no capital gains tax was owed. However, in 2010 inherited assets do not receive this automatic “step-up”; instead they will be valued at the lesser of the decedent’s basis or the fair market value as of date of death. The result is that for decedents dying in 2010, the decedent’s tax basis and the fair market value as of date of death will have to be determined for every asset. As you can imagine, this will cause paperwork nightmares for heirs.

What we suggest is making a list of your assets and their values and tax basis information now, while you are still alive and your memory is fresh. This is not a list that has to be shared with anybody until after your death, but the mere existence of your list of assets will save your family and heirs hours of headaches (and heartache) later on.

If the thought of taking the time and energy to sort through files and records to gather this information makes you want to run for the hills, imagine how your heirs will feel!  To ease the burden, try making your list one asset at a time, over the course of many days.  However you choose to create your list, you can be sure your heirs will thank you.

(Note: There is an exemption amount of $1.3 million of gains from this carry-over basis rule, and another $3 million exemption applying to assets inherited from a spouse.) 

Friday, January 08, 2010

Keep Your Estate Safe in 2010

Now that it’s 2010 and congress has failed to take action regarding the repeal of the estate tax, we see a lot of articles discussing whether the lack of taxation for a year is a good or bad thing; sometimes these articles go even further, arguing whether estate tax in general is a good or bad thing.  These are all interesting discussions, but our firm is more concerned with how your estate plan will hold up this year when it was likely designed to weather very different circumstances.

To this end, we have found that CBS’s Money Watch.com has published a very useful article about what the lack of estate tax in 2010 could mean for you and your family.  The entire article is educational, but if you scroll about 1/3 of the way down the page you get to the crux of the article, a section titled “Steps to Take Now.” This section provides you with practical advice on what you can do, and what in your estate plan may need to change in order to keep up with the changing times and taxes:

• Keep good records
• Have an attorney review the “formula clauses” in your estate plan
• Be aware of the tax laws for your state of residence
• Give your estate plan a “check-up” as soon as possible!

As you and your attorney are reviewing your estate plan, keep in mind that the estate tax situation is likely to change again in 2011 (and may even change before 2011, effective retroactively), and try to plan accordingly.  As Money Watch author Deborah Jacobs writes, “Whatever might be happening in Washington, no one should postpone the necessary steps. Just because Congress is inefficient and disorganized doesn’t mean that you must follow suit.”

Monday, January 04, 2010

Making Your New Year’s Resolutions Stick

It’s the beginning of a New Year, a time of new beginnings when many people set goals for themselves and make their New Year’s resolutions; but according to Wikipedia, in spite of all this optimism and confidence, only 12% of people who make resolutions will actually achieve their goals!

Why is it that so many people let their goals fall to the wayside?  What happens to all that New Year’s exuberance and optimism? Well according to Jonah Lehrer of The Wall Street Journal it’s all about biology. Lehrer says that the area of the brain responsible for willpower—the prefrontal cortex—is like any other muscle: it must be worked and strengthened if you expect it to perform feats of strength.

If this is true, then it makes sense that the success of your New Year’s Resolutions would depend in large part in how you go about setting them. Just as you can’t become a bodybuilder by saying “this week I’m going to bench press 200 pounds,” you can’t become a model of health and beauty by saying “this month I’m going to lose 50 pounds.” Rather, large goals are achieved by setting smaller, measurable milestones: “This week I will have fruit as my afternoon snack instead of potato chips.”

So how does this apply to our blog? Achieving financial security, a strong retirement plan, or a successful estate plan is no different than losing weight or quitting your smoking habit: it comes easiest when you take it one step at a time—and when you have a little bit of help. Instead of making a vague goal such as “this is the year I’ll get all my legal issues taken care of;” take smaller, more measurable steps such as “this month I will call and make an appointment with the attorney.”

A smaller goal such as the one mentioned above not only means less pressure at the outset, it also gives you an ally, someone who can help you along the way; and that’s exactly what our firm hopes to be.

Happy 2010!

Wednesday, December 09, 2009

Portrait of A Caregiver

If you are a Caucasian woman, aged 35 or older, possibly married, definitely working at least part-time—then there is a good chance that you are now or will soon be serving as a caregiver for an aging parent or relative; at least, this is according to the new report released by the National Alliance for Caregiving, AARP, and MetLife.

The entire report, entitled “Caregiving in the U.S., A Focused Look at Those Caring for Someone Aged 50 or Older” is 73 pages long, but you needn’t read the entire thing to get an insider’s peek at the state of caregiving today.  And the report isn’t limited to caring for an aging relative; it includes statistics on those caring for special needs children, as well as family members of any age.

Some of the more interesting statistics listed in the report are:

• 40% of Caregivers are aged 50-64.
• 63% of those receiving care are over the age of 75.
• 67% of Caregivers are women.
• 76% of Caregivers are Caucasian.
• 89% are caring for a relative (36% of the time it is the caregiver’s mother.)
• Over half of caregivers are employed while caregiving; and...
• Caregivers provide an average of 19 hours of caregiving per week (in addition to their regular employment.)

It is worthwhile to note that according to this study most of these caregivers are unpaid for the care they give, which makes sense if they are caring for a family member and are doing it voluntarily—but a full 43% said that they felt they did not have a choice to take on the role.

Our office can’t prevent you from one day needing a caregiver (or one day having to serve as a caregiver) but we can help you plan for when that day may come.  Thinking and planning ahead can keep you—and your loved ones—from ending up in a situation where you feel you have no choice.

Monday, December 07, 2009

New Developments in the Estate Tax Arena

The question on every estate planning attorney’s mind (and on the minds of our clients) is what will happen to the estate tax next year?  There is less than a month left before the estate tax expires, and although nobody expects our representatives in Washington to actually let that happen, as of yet there are no firm resolutions regarding the matter.  We are, however, getting closer. 

The House recently voted not to let the estate tax expire, but instead to let it continue indefinitely at the current rate. Unfortunately the legislation has yet to make it through the Senate, and considering the gridlock that body is experiencing over health care reform, holding our breath for a decision on the estate tax before year’s end isn’t recommended.

The issue that estate planners are most concerned about at this time is not actually what the final decision will be (although that certainly is important), but how long it will take our government representatives to reach that decision. It is generally assumed that any decision reached in 2010 regarding the estate tax will be retroactive, which means that any estates opened next year before the decision is made might at some point have to pay estate taxes retroactively. The possibility of retroactive estate taxes means that holding off on your estate planning until after the legislation has passed is not as wise a decision as you may think.

We know our lawmakers have a lot to think about as 2010 approaches, but so do you—the taxpayers.  Let us help you start the New Year off on the right foot: Making your own decisions about your estate planning, and keeping one step ahead in the game.

Monday, October 26, 2009

Imagine No Estate Tax

The federal estate tax is scheduled to disappear next year (in 2010); and although most people expect lawmakers to pass legislation keeping the estate tax alive, they also vaguely hope that the estate tax (also sometimes called the “death tax”) does disappear—at least for a little while. But this article in the Wall Street Journal asserts that for all the noise that is sometimes made about the estate tax, we may actually be better off with the estate tax than without it.

This assertion is not based on what is best for the government, but what is best for the tax-payer, and has to do with something called the “step-up in cost basis”:

“Step-up means that the property heirs receive is valued as of the date of death. So if Grandma leaves a grandchild stock selling for $75 a share that was bought in 1970 for $2 per share, the heir's "cost basis" in the stock is $75. If the grandchild then sells the stock for $80, the taxable gain is $5 per share.”

If the estate tax disappears it is likely that the step-up in cost basis will as well. This means that the stock Grandma leaves you would be valued at the original $2 per share rather than the stepped up $75 per share, and when that same stock is sold for $80 per share the taxable gain would be $78 instead of $5!

The disappearance of the step-up in cost basis is just one of the concerns people have about the possible elimination of the estate tax and Congress’s failure to act.  Other concerns mentioned in the Wall Street Journal article include:

• A retroactive estate tax
• A prohibition (or scaling back) of techniques used to trim estate taxes (such as family limited partnerships, grantor retained annuity trusts, and qualified personal residence trusts)

With all of these possible changes on the horizon, the time to take advantage of tax saving techniques offered by your estate planning attorney is now, while they are still available.

Friday, October 23, 2009

What To Do If You Suspect Foul Play

The movies have given people certain expectations when it comes to a death in the family and probating a will; this Hollywood portrayal includes an attorney, a book-lined office, and the entire family assembled for a formal reading of the will which ends in shocked gasps as the entire fortune goes to an unknown and unlikely character. Inevitably, there is some intrigue surrounding a possible forgery of the will. 

This Hollywood portrayal may be completely off base, but the basic premise is based on the very real feelings that come with the death of a loved one: helplessness, confusion, familial bonds, and sometimes even betrayal. Forged or secret wills may not be as common as the movies may have us believe, but as recent events and this article in the Wall Street Journal reveal, they aren’t completely unheard of either. 

So what should you do if you suspect that the will of a loved one has been forged or tampered with? First of all, don’t try to deal with the situation alone. Dealing with the death of a loved one is stressful and emotional, and everyone—including you—is likely to be quicker than usual to react without thinking. Instead, seek the advice of a trusted third party, someone who can help you distance yourself and look at the situation objectively.

As mentioned in the article above, will forgeries are very rare, but incidents of testators (especially elderly testators) being unduly influenced are sadly not rare enough.  If you suspect foul play was involved in the creation of a loved one’s will, make an appointment with an estate or probate specialist.  We can help you work through your suspicions in a safe environment and explore your options should you feel the need to take action.  

Monday, October 19, 2009

The IRS Provides One More Reason to Consider Long-Term Care Insurance

In the estate planning business we help people plan for the future, not only for their children and heirs but for themselves as well; which is why we are pleased to share the news that it just got a little bit easier to plan for your own financial future, because according to this article on Emax Health the IRS has just approved higher tax deductions for long-term care insurance.

Advancements in health care and our standard of living mean that Americans are living longer than ever before, but that doesn’t mean they’re living better in their old age. Very few of us get to be healthy and hearty until our dying days; rather, most aging Americans will experience a slow decline in their mental and physical health, and require some kind of nursing care, either at home or in a nursing facility. Unfortunately, the cost of that care is prohibitively expensive, and once a patient’s own financial resources have been exhausted the burden then falls on their family, or they end up relying on government benefits.

Long-term care insurance is one way of planning ahead to pay for the nursing care that most of us will almost assuredly need.  The higher tax deductions approved by the IRS offer one more reason to consider long-term care insurance: by planning for your future you can save on your taxes right now. But do your research and consult with a professional before you jump in, because the deductions are available only on “qualified” policies, and there are limits to how large a premium can be deducted depending on the age of the taxpayer at the end of the year.

Friday, October 16, 2009

Trust Mill Con-Men Fined $6.4M for Illegal Practice of Law

The Ohio Supreme Court has recently taken strong action against two co-owners in a company participating in an illegal “trust mill” operation. According to this article from the Associated Press, the two owners, Jeffrey and Stanley Norman, have been permanently barred from marketing or selling their trust products in Ohio after they were found to have committed “more than 3,800 acts of unauthorized law practice.”

Unfortunately, Jeffrey and Stanley Norman are not the first unscrupulous characters to try to pull one over on the general public.  Trust mills exist in every state, and although seniors are often the main targets, anyone can fall victim if they aren’t careful.  These trust mills may offer inexpensive documents, but the cheap product is exactly that—cheap. At best these cheap documents are nothing but generic forms with your name slipped in, they do nothing to reflect your family’s needs or desires. At worst the documents delivered by trust mills won’t even adhere to the laws of your state.

So be wary of any will or trust that is offered at a price too good to be true.  Be wary of anybody who tries to sell you a trust or estate plan at a “great price” and at the same time tries to sell you other “related” products such as life insurance or annuities. Be wary of anybody who will come to your home or meet you at a restaurant, but has no local office or local phone number. And be wary of anybody who will have you fill out a form and sell you a trust online.

A good trust should be drafted by an experienced attorney who specializes in estate planning and who practices (and usually lives) in your state of residence.  A good trust is drafted after that attorney has met with you, interviewed you, and given you a chance to ask questions as well.

Don’t fall victim to con artists like Jeffrey and Stanley Norman.  Be wary, be aware, and be willing to pay for an estate plan that will legally protect your assets and your family.

Saturday, September 12, 2009

Changes to New York Powers of Attorney May Lead to Changes for All

An interesting article in this week’s Time Magazine online addresses some of the weaknesses in the Durable Power of Attorney (POA) document—especially as regards the elderly—and how New York State is addressing these weaknesses.  If New York’s experience with the beefed-up POA is favorable it is quite possible that other states will adopt similar changes.

Of all the changes made to the laws surrounding the POA, the most major change is the larger role the agent has in the signing of the document. ”Now both the principal and the agent must sign the POA, and each signature must be notarized. ‘This is a big change,’ [says Ronald Fatoullah, an elder-law and estate-planning attorney in New York]. ‘The document specifically states that when you accept the authority to act as agent, you create a special fiduciary relationship with the principal that imposes legal responsibilities until you resign or the power of attorney is terminated.’"

In addition, and of particular help to elderly clients, is a provision giving the principal the right to appoint a monitor to oversee the activities of the agent.  Requiring your agent to work under the advice of a trusted financial advisor or the like may add a slight delay to large financial transactions, but it will prevent crooked relatives or elderly aides from taking advantage of the principal.

As the article mentions, "financial abuse is one of the fastest growing areas of elder abuse", and most of the abuse is perpetrated by people the victims know and trust.  Hopefully these changes will help prevent this abuse.  If the new POA proves beneficial for New York residents those of us in other parts of the country may find our own Powers of Attorney changing as well.

Monday, August 10, 2009

In the News: What Does it Mean to Have a Health Care Directive?

There seems to be a lot of fear around President Obama’s proposed healthcare reforms, most of that fear centering on the end-of-life planning included in the proposal.  As a firm that deals with elder law issues, it is important to us that our clients be informed about their health care and choices.  As a firm that counsels people (elderly or not) about the wisdom of including end-of-life planning in their health care directive, we feel it’s in your (and our) best interest to clear up a few details about exactly what that planning entails.

One of the fears currently sweeping the nation is that the current administration’s healthcare reforms are about euthanasia; or denying someone lifesaving medical treatment simply because they are elderly.  Republican Senator Johnny Isakson explains in this article in the Washington Post that this is simply not true. Rather, Senator Isakson explains, thinking about your end-of-life healthcare options, talking about them with your doctor and family, and including them in your health care directive is responsible. It is about controlling your own destiny in your final days; whether that means you choose to forgo invasive procedures, or want every heroic measure taken—the decision is yours. But there is no way for your family or your doctor to know what your wishes are unless you’ve had the conversation and specified those wishes in your health care directive.