Wednesday, May 16, 2012 Facebook Founders Use GRATs to Avoid Excessive Taxation; You Can Too
News sources recently revealed that Facebook founder Mark Zuckerberg—as well as other Facebook top brass—use Grantor Retained Annuity Trusts to protect their assets and investments from excessive taxation. Grantor Retained Annuity Trusts (more commonly called GRATs) are a perfectly legal—and very efficient—way to protect and pass significant assets from one person to another without incurring an exorbitantly high tax bill.
According to the article cited above, "GRATs offer a perfect vehicle for wealthy investors who put money in start-ups, while other trusts don't." But we don’t recommend GRATs only to wealthy startup investors. GRATs are "an excellent way to shift wealth to others at little or no tax cost and with minimal legal and economic risk." As such, they can be the perfect tool for business owners, professional investors, and many others.
Setting up a GRAT allows the investor/grantor to give assets over to the trust for a pre-determined number of years. During this time the assets appreciate and the grantor receives “annual payments adding up to the asset's original value plus a return based on a fixed interest rate determined by the Internal Revenue Service.” At the end of the trust term the assets (at their new value) are transferred to the beneficiary named in the trust with none of the usual gift or estate tax on the appreciation.
This makes GRATs sound like the perfect (and perfectly simple) tool, but nothing is perfectly simple. The pre-determined lifetime of your GRAT will depend on your individual circumstances, as well as the tax laws at the time, so you’ll want to make sure you have the help of an experienced and knowledgeable attorney helping you design your trust. Contact our office for more information.
Wednesday, January 25, 2012 Republican Primary Inspires Discussion of Trusts
If you follow current events at all it is impossible to ignore the fact that we are now in the thick of the Republican primary race—and that the Presidential election will not be far behind. With the political machine in full swing there have been quite a few news stories about the candidates’ financial backgrounds, and more than a little talk of “blind trusts.”
Many of our readers will already know that a blind trust is a vehicle which holds the wealth of a candidate (or a politician serving in office) in an effort to avoid any conflicts of interest. We thought this might be a good opportunity, however, to discuss trusts in general: Which trusts are out there, what are the differences between them, and what purposes do they serve?
Revocable Trust: A revocable trust is one of the most commonly used trusts because it is able to be revoked or changed so long as the grantor (the person who created the trust) is still living. There are many other trusts that fall under the category of “revocable trust”, including a pet trust (which addresses the physical and financial care of your pets), an education trust (which provides for your child’s educational expenses), and many more.
Irrevocable Trust: An irrevocable trust, logically, is one which cannot be revoked or changed after it has been signed. The irrevocability is what makes these trusts useful for tax planning and asset protection. Some types of trusts which fall under the category of “irrevocable trust” include life insurance trusts (which save the beneficiary on the policy from paying exorbitant estate taxes), spendthrift trusts (which reduce the beneficiaries' estate taxes and protect trust assets from creditors' claims), and more. It is important to note that any revocable trust becomes irrevocable upon the death of the grantor.
Charitable Trust: A charitable trust is one in which at least one of the beneficiaries is a charity or non-profit. These trusts allow the grantor to claim a portion of their contribution as a charitable deduction under income tax laws. A charitable trust can be either revocable or irrevocable to begin with, but if distributions will be made during the grantor’s lifetime the trust must be irrevocable.
Special Needs Trust: Sometimes also called a “Supplemental Needs Trust”, is a trust created for the benefit of a person receiving government benefits—this usually includes someone with a physical or mental handicap—and its purpose is to allow outside sources to provide the beneficiary with supplemental funds without endangering their right to receive government benefits. A special needs trust can be either revocable or irrevocable, but usually includes a clause instructing that the trust be dissolved if its existence disqualifies the beneficiary for government benefits.
We have only discussed some of the most commonly used trusts here, but there are many, many different kinds of trust which can be valuable for estate planning or asset protection. If you have any questions about trusts or estate planning, please contact our office.
Monday, January 23, 2012 The Bum Rap of Prenups: Why They Are More Romantic Than You Thought
Valentine’s Day is only a couple of weeks away, and love and marriage are in the air; but going hand in hand with love and marriage should be the wisdom to protect yourself and your beloved with a prenuptial agreement. We know that most people don’t consider prenuptial agreements a very romantic gesture, but here are 5 reasons why the bum rap of the prenup is undeserved.
1. Prenups encourage couples to think and talk about the future. The process of writing a prenup includes talking about what each party brings with them to the marriage, and how each partner envisions that contribution fitting into the whole as they create their lives together.
2. Agreeing to a prenup is often the very thing that makes marriage possible for two people who come from complicated backgrounds or disapproving families. This is not only true of young people from families with “old money,” but also of elderly couples whose grown children may disapprove of a blending of finances so late in life.
3. Having a prenup means that a couple has studied their finances separately, dealt with any lingering trouble spots before the wedding, and can now move forward in their marriage together, with clear minds and bright futures.
4. A prenuptial agreement bestows security because it requires the agreement of both partners. This mutual agreement ensures that both partners feel they will be provided for as they desire and deserve, no matter what happens.
5. A prenup is the perfect lead-in to an estate plan. The information-gathering and decision-making process for creating a prenup is very similar to the process of creating an estate plan. Couples who execute a prenup before they marry have a head start on creating the estate plan they will want to protect their family after they’re married.
The bottom line is that prenuptial agreements will help protect you, your beloved, your family, and your future... and there’s nothing more romantic than that. Our firm can help you decide if a prenup is right for you and your partner—contact us today.
Friday, January 13, 2012 What Will You Be Doing With This Year’s IRA Withdrawal?
Many of our clients who are 70 ½ or older have chosen in the past to give a certain portion of their required IRA withdrawal to charity each year; doing so has allowed them to take the required withdrawal, keep their taxable income down, and give to a cause they care about all at the same time. Unfortunately, the individual-retirement-account donation rule expired at the end of 2011 and has yet to be restored by Congress.
This recent article in the Wall Street Journal explains that “under current rules, the first dollars out of an IRA count as the required withdrawal. So if an IRA owner makes a withdrawal before Congress extends the law, he or she can't redeposit the funds and make a donation of IRA funds after lawmakers act.”
The expiration of this rule may not be a big deal for many of our readers who intend to make charitable donations as they always have, regardless of retirement-account donation benefits; but for some, not knowing what Congress may choose to do is making it hard to design a financial plan for the year, and causing increasing stress. “The problem arises for IRA owners [who are] over 70½ and must take an annual payout from the account. They want to withdraw as little as possible in order to let the assets expand but also want to donate some or all of the required payout directly to charity.”
Your best bet right now may be to consider your ultimate goal both for your IRA payout and for your charitable giving for the year, and then talk to a trusted advisor. One thing any estate or financial planner will tell you is that there is almost always more than one way to accomplish your goals. We cannot stress enough, however, how important it is to stay on top of any legal requirements or changes in the law when it comes to IRAs and retirement savings.
Monday, December 12, 2011 Friendly Reminder to Take Advantage of Tax Deductions Before Year’s End
As 2011 draws to a close just about everybody has their minds on vacation, travel, and gift-buying, so we just wanted to take a moment to remind all of our readers to take advantage of your tax deductions and allowances before the year is over. These may include sending a check to your favorite charity, giving a generous cash gift to children or grandchildren, or selling securities that have lost money this year.
This isn’t all you can do to wrap up your 2011 tax package. This article in the New York Times explains that the next two years of tax policy are likely to be a bit rocky, and that “beyond the usual recommendations... you should use this year to get your affairs in order for what promises to be an uncertain two years of tax policy.”
If you’re not sure which deductions might apply to you, our office (along with the article mentioned above) has come up with a list of tax breaks to consider:
1. Charitable gifts to most non-profit organizations are tax deductible; and while you can’t deduct any time you spend volunteering, you can deduct any out-of-pocket expenses incurred while volunteering.
2. You can give monetary gifts of up to $13,000 to as many individuals as you would like without incurring the gift tax.
3. The 30% energy tax credits of 2010 expired at the end of last year, but new (albeit lower) credits were passed for 2011. Check the energy star website for information if you made any energy-efficient improvements to your home this year.
4. If you are over 70½ you are currently allowed “to directly donate the required minimum withdrawal from [your] retirement account to charity.” (This is something that may disappear with new tax laws in 2012.)
5. Teachers are allowed to deduct up to $250 spent on classroom expenses.
6. A significant tax loophole set to end this year is one that “allows people whose marginal tax bracket is under 15 percent to pay no capital gains tax when selling securities held for more than a year.”
These are only a few of the tax strategies you may want to consider before the end of the year. For more tax-saving strategies please talk to your financial advisor.
Friday, December 02, 2011 Speculation About the Estate of Steve Jobs Continues
The public has been curious about the estate of Steve Jobs ever since he passed away in early October, but with his assets wisely protected with a trust, his family's privacy regarding the distribution of inheritance has remained intact. (Privacy is only one of the many benefits of using a trust as part of your estate plan.) However, what is not a secret is that Mr. Jobs’ significant investments in both Disney and Apple stock will pose some interesting questions for his advisors and heirs. Whatever the family chooses to do, it's clear that estate tax and capital gains tax laws will have to be taken into consideration.
This article in Investment News discusses what Jobs’ trustees or heirs might choose to do with his valuable investments. According to the article Jobs had billions of dollars invested in Apple and Disney stock. Now, “under the U.S. Tax Code, his heirs may sell shares of Apple and Disney, and avoid $867 million in capital gains taxes. If Apple's late co-founder left his estate to his wife, Laurene Powell Jobs, the family won't be liable for the 35% estate tax until she dies or gives money to others, according to estate planners.”
An executor or trustee has a responsibility not only to follow the wishes of the grantor of the trust, but also to look out for the best interests of the beneficiaries; which in this case may include selling or diversifying investments Jobs had chosen to hold onto for sentimental reasons.
Additionally, any executor or trustee will have tax laws to consider--not only the laws in place right now, but any changes to the estate or capital gains tax laws being considered by Congress for 2013. “The capital gains tax is set to rise to 20% in 2013, from 15%, and high-income Americans also will be subject to a 3.8% levy on unearned gains.” This means that advisors and heirs won’t want to wait too long before making any decisions.
The estate of Steve Jobs may be larger than most, but the same issues and questions will face the executors, trustees, and heirs of estates of all sizes. Whether you are a grantor, executor, heir or trustee, our office can help you through any questions or concerns you may be facing. Don’t be afraid to contact us.
Wednesday, November 23, 2011 This Holiday Season an Estate Plan is the Perfect Gift
The holiday season is upon us, and as others rush about the malls and the internet looking for gifts, we can recommend a unique, useful and memorable gift that will be perfect for any loved one: An Estate Plan!
Before you roll your eyes at the idea, consider this: An estate plan is something every person needs, whether it’s your single younger nephew, your older sister with her two young children, or your retired, aging parents. Furthermore, although everyone needs an estate plan, many people (wrongly) consider it a luxury, and put off creating one—often until it’s too late.
You may be thinking, No, an estate plan is too personal (too expensive, too morbid) to give as a gift. But we can safely say that not one of these excuses is true. If you feel an estate plan is too personal a gift, we recommend giving a gift certificate good for the cost of a basic plan, which the recipient can then design and add to according to his or her needs. If you feel an entire estate plan is too expensive a gift, you may want to consider paying for a portion of the plan, or for the first consultation with an attorney, just to get your loved one started. And if it’s morbidity that you’re worried about, perhaps giving a “Loving Family Legacy Plan” sounds more appealing.
This year, don’t give a gift that will impress for a moment but be forgotten within a week; instead, give the gift that will protect your loved one—and their loved ones!—and will last for years to come. Give the gift of an estate plan.
Friday, October 28, 2011 Good News for Retirement Savings in 2012
The past few years have been very hard on retirement savings. As if the devastating impact of the economic crash on retirement assets wasn’t enough, many people weren’t able to sock away nearly as much as they’d like during the lean years that followed the crash. But a new article in U.S. News and World Report announces that things are looking up for retirement accounts in 2012!
According to the article, savers can look forward to 4 beneficial changes in the new year:
Higher income limits for contributions to your Roth IRA. “The income limits for making contributions to a Roth IRA will be between $110,000 and $125,000 for singles and heads of household in 2012, up $3,000 from 2011.” Married couples will reap the benefits as well, as their income limits will increase from $173,000 to $183,000 in 2012.
The ability to contribute more to your 401(k). “The contribution limit for 401(k), 403(b), and the federal government’s Thrift Savings Plan will increase to $17,000 in 2012, up from $16,500 in 2011.” This is great news for anyone who lost money when the economy crashed and is trying to slowly build up their savings again.
Tax breaks for more households who contribute to a traditional IRA. While IRA contribution limits will remain the same in 2012, and while there will be no change to the fact that “only workers who earn below certain income levels get a tax break for contributing to a traditional IRA.” The good news is that “those income limits will relax slightly next year.”
The tax-saver’s credit is expected to be expanded in 2012 as well, with “income limits [increased] by $1,000 to $57,500 for married couples filing jointly and by $750 to $43,125 for heads of households.”
While these may be baby steps as far as many savers and tax-payers are concerned, even small steps are good news for those trying to recoup their losses and get back on track for retirement. For more information about how these changes (or others) may benefit you or your loved ones please contact our office.
Friday, October 21, 2011 Senior Citizens to Receive a Raise
There is good news today for senior citizens! According to this article in CNN Money, “Social Security recipients will receive a cost of living adjustment of 3.6% starting in January.” This will be the first “raise” recipients have seen in three years, and most welcome the increase. “Many seniors have felt squeezed since banks are paying virtually no interest on savings accounts and stock market declines has eroded their retirement accounts.”
Unfortunately, many seniors may not see a useful increase in their social security income thanks to a hike in Medicare premiums expected to be announced next month. “For the past two years when Social Security benefits stayed the same, many seniors were shielded from the increase in Medicare premiums because of a "hold harmless" provision that protects more than 70% of beneficiaries... However, high-income beneficiaries and new enrollees did see their benefits reduced because they are not covered under the provision.”
Even with the expected increase to Medicare premiums, most seniors are simply glad to see evidence that The-Powers-That-Be recognize the rising cost of living. While most recipients of Social Security do have an alternate form of income, with their SS benefits representing “about 41% of the elderly's income”; there are some who “rely on the monthly checks for 90% of their income.”
For more complete information about the coming changes in Social Security please read the full article. For help understanding how this change may fit in with your other benefits, or may affect your estate planning, please contact our office.
Monday, October 10, 2011 Death of Steve Jobs Saddens the World
The recent death of creative visionary and Apple co-founder Steve Jobs saddened the world. News of his death traveled like wildfire, and had the online social networks humming with tributes, memorial posts, and sentiments of grief. Mr. Jobs was very private about his personal life, but through his public appearances and his support of various creative enterprises he touched and changed the lives of many individuals; just as his visionary ideas changed the face of technology.
The sad announcement of his death has many people now wondering “what next?” How will this change the company he started? What will happen with his family? As this article from ABC News relates, “The ever-private Steve Jobs was famously secretive when it came to Apple's new products. As with his personal life, the future of Steve Jobs' wealth [and family] will also stay under the radar.”
The article mentioned above states that “Given Jobs' vast wealth and penchant for privacy, he likely set up private trusts for his family and charitable purposes.” Private trusts would certainly have been the logical thing to do, under the circumstances. Trusts are a much more flexible, powerful, and private tool than a simple will when it comes to estate planning. Trusts are useful under any circumstances, but they provide a much greater amount of control and protection of assets, especially when dealing with very large estates.
If Steve Jobs did choose to create trusts to protect his estate then it is possible that we may never truly know how he chose to distribute his wealth. It is probably safe to assume, however, that in addition to providing for his family and loved ones, he may have left a considerable amount to charitable or visionary endeavors. His words and actions during life provide a clue about how he thought about wealth: “Being the richest man in the cemetery doesn't matter to me…Going to bed at night saying we've done something wonderful…that's what matters to me.”
Wednesday, September 14, 2011 IRS Announces Another Extension for Estate Tax Filing Deadline
Just a few weeks ago the IRS announced the November 15, 2011 estate tax filing deadline for large estates of decedents who passed away in 2010; but some executors might be relieved to know that the IRS recently extended the deadline to January 17, 2012.
This extension gives executors of large estates more time to determine whether or not its in the best interests of the heirs to take advantage of the 2010 estate tax repeal. The decision facing executors of the 2010 estates is this:
* Choose not to pay estate taxes, but subject the assets of the estate to carryover basis rules (meaning heirs will pay capital gains taxes based on the price of an asset when it was initially acquired by the decedent); or
* Pay estate taxes under the 2011 rules, with a $5 million per-person exemption and a 35 percent top rate, but with a stepped-up income tax basis (meaning heirs will pay capital gains taxes on the price of an asset when it was inherited.)
For any executors who haven’t already made the decision, they can now take more time to weigh the pros and cons, and maybe even enlist the advice of an estate planner, tax planner, or probate attorney to help walk them through any possible unexpected consequences. If you are an executor or an heir faced with this particular and time-sensetive issue, please don’t hesitate to contact our office for assistance. Friday, September 09, 2011 How Does Your State Rank on the Long-Term Care Scorecard?
One of the primary concerns of the aging population is long-term care. As the life expectancy of Americans goes up so does the expectation that they will someday need some form of long-term care. You may not know whether that care will happen in a hospital, a nursing home, or in your own home, but you can be sure that it will be expensive.
How expensive will long term care be? It turns out the answer to this question depends a great deal on where you live. The AARP, The Commonwealth Fund, and The SCAN Foundation recently released a report which they call “The Long Term Scorecard,” which compares states and ranks them according to categories. The website Web MD has an article explaining how to use the scorecard and what it means.
The article in Web MD states that “Long-term care is unaffordable for middle income families, according to [The Long Term Scorecard report.] Even in states where nursing home care is most affordable, such care averages 171% of an older person's household income. The national average is 241%.”
Some states, however, have been making the issue of long-term care a priority, and have been wrestling with questions such as how to make it more affordable to residents and how to provide support to family caregivers. According to the article in Web MD, they’ve broken down the information in “The Scorecard” to help readers understand which states provide the best support (either financial, social, emotional or legal) for the elderly and their caregivers.
The article “ranks states' performance according to four categories: 1. Affordability and access, 2. Patient choice of both provider and setting, 3. Quality of life and care, and 4. Support for family caregivers.” The states ranked highest overall were Minnesota, Washington, Oregon, Hawaii and Wisconsin; while the lowest ranking states turned out to be Mississippi, Alabama, West Virginia, Oklahoma and Indiana. (For more information on how the states were ranked and what each ranking means please read the article here.)
Perhaps the most important lesson to take from all this is that no matter where you live, or what your health is like right now, it is very likely that you will need some kind of long-term care in the future, and that that care will be expensive. Burying your head in the sand or choosing to “think about it when the time comes” will only make things worse for you and for your family. Call our office and let us help you prepare now for whatever the future may bring. Friday, August 26, 2011 Are You Hurting Your Own Chances At Retirement?
According to
a
recent article in the Wall Street Journal, many Baby Boomers are no longer
worried about when they will be able
to retire, but if they will be able to
retire at all. In many cases the reason for this worry stems not so much
from any kind of selfish inability to save, but from a tendency to be too generous.
In addition
to a growing trend (hinted at in the WSJ article above) of Baby Boomers tapping
their own retirement funds to help pay for the care of their elderly parents, this
article in USA Today warns of the all-too-common danger of Boomers shorting
their own retirements to pay for their children’s college educations.
“People are
willing to go to extreme measures because they value a college education so
highly... Among parents who are planning for their children's college, 24% say
that they tap their retirement accounts. And that doesn't reflect people who reduce
or halt retirement contributions [to make tuition payments.]”
One thing
that both of these articles agree on is that when it comes to saving money,
Boomers need to put their own needs first. While the immediate financial needs
of an elderly parent or college-bound child may feel more pressing, it’s a very bad idea to short your own
retirement account (and your future) to cover their costs. If you have an
elderly parent in need, before you dip into your own savings contact a good
elder law attorney who can help you review your (and your parent’s) options,
and help navigate the VA Benefits or Medicaid system if applicable.
As far as
college tuition goes, by neglecting your own retirement to pay for your
children’s college education you may simply be perpetuating a dangerous cycle,
putting your children in the position of having to pay for your expenses when your savings runs out in the future. Financial
advisors, college admissions counselors, and the school’s financial services
center may be able to help you explore your options for paying for tuition. Wednesday, August 24, 2011 Some Tax Saving Strategies from the Wall Street Journal
Income, estate,
and other federal tax levies have commonly been a bone of contention between
those with different political ideologies; but the current conflict has reached
unusual heights, with various million- and billionaires publicly expressing
their views (pro or against) about current tax laws. Of course, million- or
billionaires aren’t the only ones with strong opinions about taxes.
If you feel
that you pay too much in taxes, Brett Arends of the Wall Street Journal has some
tips to help you save on taxes in the future. Much of his article is
tongue-in-cheek, but the suggestions are valuable ones. Of special interest to
our firm and our clients are four of the tips nestled in the middle of the
article:
Give to your family. “Until the end of 2012 you can give
$5 million, tax-free... In addition you can give $13,000 a year to each
recipient -- each child or grandchild -- and a spouse can do the same. So a
married couple with, say, three children and eight grandchildren can give another
$286,000 a year, on top of that one-off $10 million. Over ten or twenty years
that really adds up.”
Put your grandkids—and great grandkids—through
college. “Money paid
directly to schools or colleges escapes estate taxes.” Furthermore, if you
contribute to a 529 educational savings account that money can be tucked away—and
eventually used by the student for whom it is intended—tax free (so long as it
is used for educational purposes.)
Buy life insurance. Proceeds from a life insurance
policy can go to your beneficiaries tax-free upon your death, although you may
have to make some arrangements ahead of time.
The article states that “Typically you put the policy in an Irrevocable
Life Insurance Trust... The premiums that you pay annually are gifts to the beneficiaries...
And when you die, the proceeds of the policy go to the trust, for the beneficiaries,
free of estate tax.”
Talk to an estate planner. “There are other moves that can cut
your estate tax, too. A Qualified Personal Residence Trust can slash the estate
taxes on a residence. A Grantor Retained Annuity Trust, or GRAT, can slash them
on an investment portfolio. So, too, can setting up a Family Limited
Partnership. Financial planners say this is a great time to put investments --
like stock -- into a GRAT.”
If you have
questions about these tax-saving strategies, or other strategies that can help
you preserve your estate for your heirs, please contact our office. We can help
you determine what your best options
are to help protect your assets—and your family—in the years to come. Friday, August 19, 2011 Executors of 2010 Estates Have Until Nov. 15 to Make Estate Tax Decisions
Everyone
will remember the “wonderful boon” that was the 2010 estate tax repeal, which
(in theory) allowed decedents to pass on their assets free of any estate taxes. However, the situation was complicated in
December of 2010 when, as
this article in Bloomberg puts it, “Congress extended the tax retroactively
[giving] executors of estates of people who died that year a choice. They could
decide to skip the estate tax or pay the tax with a $5 million per-person
exemption and a 35 percent top rate, the same as in 2011.”
Executors
have had almost a year to consider their options, but now it is just about time
to make the decision, because “the Internal Revenue Service is giving executors
of estates of people who died in 2010 until Nov. 15 to opt out of the estate
tax.” According
to the IRS the forms and instructions for 2010 estate tax returns will be
made available early this fall.
But executors
don’t have to wait until the forms are available to consider which tax option
might be the most profitable one. Many financial planners and estate planning
attorneys have already done their research, and they’ve found that opting not to pay estate taxes may end up
costing you more in the long run. This
article in Forbes explains: “Opting out of the estate tax regime means
opting out of stepped-up basis (for income tax purposes)… and opting into the
modified carryover basis rule… One of
the main plusses about estate tax is that it is paired with a stepped-up income
tax basis. You should not be paying both
estate tax and income tax on the same assets.”
Of course,
each estate will be different depending on a number of factors, including the
size of the estate, the nature of the assets, the preferences of the beneficiaries,
and any previous planning the decedent may have done. Executors should consider
their options carefully, and consult with an experienced estate planning
attorney before deciding whether opting out of the estate tax is really in
their best interest. Monday, August 15, 2011 New York Becomes 29th State to Pass Alert System for Vulnerable Adults Legislation
Last month
saw some good news for seniors and their families in the state of New York. State
Governor Andrew Cuomo announced on his
website that he “signed a law to create a statewide alert system for
missing vulnerable adults, similar to the nationwide Amber Alert program, which
will help authorities locate cognitively impaired persons who go missing.” By
signing this law Governor Cuomo added New York to the growing list of states with
similar programs in place to help find and protect seniors with Alzheimer’s who
may wander away from their homes in confusion.
The first state-wide
public notification system for vulnerable adults, sometimes called “Silver Alert”
programs, was passed in Oklahoma in 2006. Since then 28 states have joined
Oklahoma in passing Silver Alert legislation (or something similar) and five
states have some kind of vulnerable adult alert legislation pending.
According to
Governor Cuomo’s announcement, New York’s new Amber Alert for Seniors program “provides
for the rapid public dissemination of information regarding adults with
dementia, Alzheimer's, or other cognitive impairments who go missing. Under the
new law, the same Amber Alert mechanisms used to find missing children will be
activated for missing vulnerable adults, including the printing and
distribution of photographs and posters, a toll-free twenty-four hour hotline,
a curriculum for training law enforcement personnel, and assistance for
returning missing vulnerable adults who are located out of state.”
New York’s
program—and the similar programs in all participating states—are a comfort to the
families of seniors afflicted with Alzheimer’s or dementia. Too often we read
news stories about seniors who have wandered away from their homes and are not
found until it’s too late. If you worry that your elderly relative may be at
risk for wandering, check the laws of your state to find out which programs are
available to you and how to enroll (if necessary).
If your
state does NOT have a program in place you may want to consider enrolling your
elderly loved one in the MedicAlert® + Alzheimer's Association Safe Return®
program. To learn more about this nation-wide emergency response service click
here. Wednesday, July 27, 2011 After A Tempestuous Life Amy Winehouse Leaves Clear and Certain Will
Following the death of British singer Amy Winehouse there have been a number of news stories and blog posts about her turbulent career and the last few years of her life. In the midst of all this scrutiny, perhaps the most surprising discovery is the fact that Winehouse’s affairs were in incredibly good order, with a carefully crafted will leaving all of her sizeable estate to her parents and brother instead of to her incarcerated ex-husband.
This timely article in U.S. News and World Report remarks that “celebrities and non-celebrities alike often leave their estates in disarray when they die. That lack of awareness and planning can make death more stressful and more costly for family members as they struggle to quickly plan a funeral and think about dividing up family property while grieving.”
All too often our office is contacted by family members who are overwhelmed with the task of probating or administering a poorly planned estate. Sometimes these bereaved relatives are dealing with overwhelming and confusing debt, or terrible family infighting, but more often than not they are simply trying to make their way through the long and arduous process of probating an estate without the benefit of a will or trust.
One of the many things we can learn from the life and death of Amy Winehouse is that even in the midst of troubled times it is possible to think clearly about the future. If you’d like to start planning for your family’s future, please contact our office today. Friday, July 15, 2011 The Best Laid (Estate) Plans...
A recent story in the Chicago Tribunewill be of interest to anybody who has created, or is considering creating, an estate plan—regardless of state of residence. The article tells of Heather Rooney, the widow of wealthy businessman Thomas McNamee, and her ongoing fight to get the inheritance she believes her deceased husband wanted her to have.
Approximately six months before his death Thomas McNamee found out he had a deadly form of brain cancer. After learning that his cancer treatments had failed McNamee took steps to get his affairs in order; these steps included marrying Rooney, his girlfriend of 15 years, and setting up a $3.5 million trust fund for the benefit of Rooney and other family members.
It seems like he took care of everything—prenuptial agreement signed before the wedding, trust created before he became too sick to manage his affairs—what could go wrong?
Unfortunately, according to Heather Rooney, the arrangements left after his death were not what her husband actually intended. “According to [Rooney’s] suit, [McNamee] intended to leave Rooney a $500,000 trust fund to maintain her at the 24-acre Dundee-area property where the couple lived. He also intended to leave her two parcels in East Dundee, including one with a beauty salon that Rooney operated.” Rooney also claims that she was coerced mere minutes before their wedding into signing a prenuptial agreement that did not accurately reflect her or Thomas McNamee’s true wishes.
At this point, we can’t know for certain what McNamee’s true wishes were. It certainly seems as if he created a thorough plan which would accurately reflect his wishes not only for his widow but also for other family members. But one would think a person as savvy as McNamee would have informed his spouse of his plans ahead of time, eliciting her grudging agreement, if not her wholehearted approval.
Unfortunately, even the best laid plans can be contested by unhappy relatives. But with the help of an experienced attorney you can make your plan as strong or as flexible as you believe is necessary to ensure that your wishes are followed and your loved ones are provided for. Wednesday, July 13, 2011 As Priorities Change, So Does Your Estate Plan
Estate plans have been changing quite a bit over the past few years, not only because of changing laws and new tools for protecting your assets and your heirs, but also because our priorities as a society are changing and growing. A recent article in the Wall Street Journalsums up the situation well:
“Even the simple question of who your heirs will be is getting more complicated. Nowadays more people are considering pets and even children posthumously conceived from genetic material in their estate-planning mix, say financial advisers. That often means setting up trusts that just a few years ago would have been unthinkable.”
Some of these “new” trust arrangements include:
Pet trusts: Money set aside in trust to be distributed to your pet’s caretaker as per your instructions. Some people choose to make the caretaker the trustee of the trust as well, others choose to have a separate trustee who can ensure the caretaker is caring for your pet according to the guidelines in the trust.
Trusts for posthumously conceived children: As fertility treatments get more and more advanced, “a growing number of states are passing laws defining the inheritance and Social Security rights of posthumously conceived children. Earlier this month, legislation took effect in Iowa granting posthumously conceived children the right to participate in trusts. Texas, Washington, Colorado and North Dakota confer similar rights.”
As technology advances, and as the legal system works to keep up with it, you have more and more options when it comes to protecting your family and passing on your estate as you choose. If you have questions about unique estate planning choices please don’t hesitate to contact our office. Friday, July 08, 2011 Estate Planning Challenges (and Benefits) for Same-Sex Couples
There are many changes going on nation-wide for same-sex couples as more and more states legalize gay marriage. But there are still a few areas of the law—estate planning being one of them—which present challenges no matter what your state of residence. This article in the Wall Street Journal points out just a few of the challenges same-sex couples still face, and one of the highest on their list is death and inheritance.
“The biggest problems [for same-sex couples] may not come until death do you part. Although same-sex spouses are legally entitled to inherit assets from each other whether there's a will or not, since inheritance is governed through state law, they don't have federal rights.”
In states which have legalized gay marriage (including Massachusetts, Vermont, New Hampshire, Connecticut, Iowa, and now New York) same-sex couples are still inhibited by federal law in the following ways:
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Same-sex partners aren’t able to inherit retirement plans with the same ease that opposite-sex partners have. “Unlike opposite-sex spouses, same-sex spouses would have to transfer [401(k) and other] accounts to inherited IRAs and start taking distributions each year, rather than allowing the tax-deferred assets to continue to potentially accumulate tax-free earnings.”
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Same-sex partners still won’t get the federal marital deduction—the ability to “leave each other unlimited assets without owing any estate tax”—regardless of their state of residence. These assets may be considered joint by the couple and by the state, but not by the federal government. This means assets will be taxed once upon the death of the first partner, and may be taxed again upon the death of the second partner.
But there may be one opportunity not available to traditional married couples which same-sex couples can take advantage of: gay couples are legally entitled to “set up a ‘grantor-retained income trust,’ a type of trust that family members aren't allowed to create for one another. You put an asset into a trust and retain the right to income from it.”
No matter where they live, same-sex couples are simply going to have more challenges creating estate plans that will hold water on both a state and federal level. The good news is that in spite of these challenges it is possible, with the right help, to plan to protect yourself, your partner, and your family now, and in the future. Wednesday, July 06, 2011 Do Not Go Gentle Into That Good Night
“Do not go gentle into that good night,
Old age should burn and rave at close of day;
Rage, rage against the dying of the light.”
-Dylan Thomas, Do Not Go Gentle Into That Good Night
The Dylan Thomas poem from which the above lines are taken fairly accurately expresses the American view of death. Even after a long and satisfying life we tend to think of death as something to be fought against with all of the tools at our disposal. We struggle to keep parents, grandparents, or patients alive for just one more week, one more day.
But the new film Consider the Conversation suggests that a natural death after a long life may not be a single event to struggle against, but rather a process to be faced with as much grace and comfort as possible. Created by Mike Bernhagen, a business development specialist turned hospice advocate after watching the slow physical and cognitive decline of his elderly mother; and Terry Kaldhusdal, a teacher and filmmaker; the documentary is a labor of love.
“Consider the Conversation does not seek to hand down answers. Rather, it provides something far more important - the questions all of us need to contemplate. That being said, the producers have three goals for this film: 1) to change the current American attitude from one that predominantly views end-of-life as a failed medical event to one that sees it as a normal process rich in opportunity for human development, 2) to inspire dialogue between patient and doctor, husband and wife, parent and child, minister and parishioner, and 3) to encourage medical professionals, healthcare organizations and clergy to take the lead in counseling others.”
The film brings up issues that every adult child should be talking about with their elderly parent, and that every elderly patient should be having with their doctor. These are also issues that you should be discussing with your estate planner as you create your Living Will or Advance Healthcare Directive.
The film Consider the Conversation is being shown on public television stations around the country. Check the website for an updated screening schedule, or to purchase the DVD. Friday, June 24, 2011 New Tax Breaks Could Have Huge Benefits for Grandchildren
Last year was a fairly big year for tax news; with the repeal of the estate tax, the increase in the GST tax exemption, changes to 401(k) and IRA rules, and eventually the agreement on the new estate tax laws, we never wanted for something to write about. But one of the biggest stories may be just hitting the news now. A recent article in the Washington Post reveals that with the right planning, your grandchildren may now have “the ability to receive a tax-free inheritance of $400 million or more.” This isn’t just big news, “this is by far the biggest estate-planning break on record… a tax break you could drive 10 Mack trucks through.”
With so much political huffing and puffing over the state of taxes one might well wonder how a tax break this big could come about. Washington Post writer Karen Hube explains: “This massive estate-tax break was created last year in two steps. First Congress lifted a $100,000 income restriction on who can convert a 401(k) or IRA to a Roth IRA, allowing even the wealthiest investors to convert. Then late in the year, it raised the generation-skipping transfer tax exemption (GST) to $5 million until 2013...Both of these provisions on their own create possibilities for significant tax savings. But used in combination, the results are exponentially greater.”
Of course, taking advantage of this opportunity may not be as easy as it is laid out in the article. With so much at stake, interested investors will definitely want to consult with their estate planners and financial advisors before jumping into anything. But an opportunity like this one won’t come along every year, and this particular opportunity won’t last forever—the $5 million GST tax exemption will only last until 2013. If you think this tax break may benefit your family don’t wait, contact your financial advisor immediately. Monday, June 20, 2011 “Trouble” Helmsley Makes Headlines One Last Time
The recent announcement of the death of “Trouble,” the famous canine heir of Leona Helmsley’s fortune, has made the issue of pet trusts once again headline news—something which is likely to bring positive results to pets all over the country. According to this article in MSN Today, “Pet estate planning has grown since Helmsley's will made headlines [in 2007]. Today there are retirement homes for pets all across the country, and at least 45 states allow for pet trusts.”
The growing awareness of pet trusts (or at least the need to make some arrangements for your pets in the event of your death) has benefitted not only pets of all shapes and sizes, but society in general. “A study from the late 1990s published in the Journal of Applied Animal Welfare Science found 1 percent of dogs and 1.5 percent of cats coming into 12 animal shelters had been surrendered because of owner death.”
These days, because of the media’s close attention to the controversy surrounding the inheritance of “Trouble” Helmsley, not only do more pet owners make provisions for their pets in their wills or trusts, but more charitable bequests are mad to animal shelters and other animal care/protection agencies in general. Additionally, some veterinary schools have taken it upon themselves to provide for pets who have lost their owners: “A few veterinary schools offer estate planning options like lifetime care for pets and placement in a home. The Stevenson Companion Animal Life-Care Center, established by the Texas A&M College of Veterinary Medicine, offers a place for pets to live in addition to veterinary care.”
The truth is that making arrangements for your pet in the event of your death isn’t all that difficult to do. While “some owners leave money to whomever they're entrusting their pet to as a way of making sure the animal does not become a financial burden;” this may not be necessary for ALL pet owners. Many owners simply write instructions for the care of their pets into their wills or trusts, somewhat similar to a nomination of guardians for minor children.
As with most estate planning issues, there are many options available when it comes to the care of your pets. The important thing is not what you choose to do, but that you choose to do something to ensure that your pet won’t be left out in the cold if something happens to you. Friday, June 03, 2011 New Service Makes It Possible to Speak from Beyond the Grave
Séances, hauntings, ghost stories—we’ve come up with a number of varied and questionable ways to keep in communication with our loved ones after we pass away, but now there may be a way to actually do it: a new service called “P.S. I Love You Letters.”
According to their website, P.S. I Love You Letters are “time preserved, hand-written letters that you compose on elegant stationary to share what you've always wanted to say to those close to you, but never did. Each of your letters are safeguarded and later delivered in accordance with your instructions.”
Writing letters to loved ones to be given to them posthumously is not a new idea; in fact, many estate planners suggest clients write letters, personal histories, or a more formal document called a “memorandum of intent”, and store the personal missives with their estate planning documents, to be found and delivered after their death. The difference that comes with using the “P.S. I Love You Letters” service is that you can specify at what time you would like your letters to be delivered—and rest assured that they will be safely stored until that time.
We don’t know anything about this service aside from what we’ve found on their website, but as estate planners we certainly agree with the need to consider your family, plan ahead, and make sure you’ve provided for your loved ones before it’s too late. As the “P.S. I Love You Letters” website states, “We are reminded daily of how life can end so suddenly and unexpectedly.” Taking time now to plan for the unexpected can prevent much pain and hardship later. Monday, May 16, 2011 Take Advantage of Tax Law Changes and Give Grandkids a Head Start
We’ve recently seen a number of news stories with disturbing figures about the rising cost of college education, and the growing inability of graduates to pay off the debt they incur from student loans. In fact, recent studies reveal that student loan debt now exceeds credit card debt in the U.S.!
All of this has motivated many grandparents to find a way to help pay for their grandchildren’s college education. According to this article in the Wall Street Journal “Recent tax-law changes are making it easier for families to help pay education bills for multiple grandchildren and even future generations. But grandparents have to make some tough decisions first.”
For grandparents whose grandchildren are already in school there may be fewer tough decisions to make, these grandparents will find it easy to “pay an unlimited amount of tuition directly to an accredited school for their grandchildren's education without incurring any gift tax or using their exemption.” Additionally, under the annual gift tax exclusion, anybody—including grandparents—can “give up to $13,000 to an unlimited number of people each year free of tax.”
Grandparents with younger grandchildren are finding that they also now have more options if they want to contribute to their grandchild’s future college education. “Under the Tax Relief Act of 2010, the federal gift-tax exemption increases to $5 million from $1 million for individuals, as does the exemption for the generation-skipping tax... The changes make it easier to pass along money for education to future generations free of taxes—at least through 2012, after which the exemption is scheduled to revert to $1 million.” The only question is how is the best way to set aside the money until the child reaches college age?
The most popular method right now is for the grandparent to set up or contribute to a 529 College Savings plan for their grandchild. “Assets you contribute to a 529 account are no longer part of your estate. If you are the account owner, you can withdraw the assets later without penalty.” However, care must be taken with 529 plans because “When the assets are withdrawn they will be counted [for tax purposes] as the student's income.”
Other options for savings include “setting up a ‘pot trust,’ or dynasty trust, which names all of the grandchildren, including any future babies, as beneficiaries. The length of such a trust varies by state but generally can serve at least a few generations of college students.” Of course setting up a trust with such a long intended duration means choosing a trustee who is likely to outlive you. Many grantors choose one of their own children (a parent, aunt or uncle of their grandchildren) or a trusted financial advisor, although corporate trustees (such as a bank) are also an option. Monday, May 09, 2011 The Importance of Estate Planning for New Parents
News sources such as the Washington Post entertainment sectionpromise that this summer will be flush with celebrity newborns and proud mamas and papas. Some of the stars expecting additions to their families include Natalie Portman, Kate Hudson, Jennifer Connelly and more. Here at our office we wonder how many of these new parents will remember to update their wills or estate plans after the birth of their child... and how many of our readers have remembered (or will remember, if they are currently expecting a new child or grandchild) to update their own estate plans after an addition to their families.
Every parent knows that the time after the birth of a new baby can be a tired, busy and chaotic transition, and updating their estate plan is probably the last thing on any new parent’s mind. But after the first few months, when things have calmed down and you’ve settled into a routine, updating your estate plan to include and provide for your new little one should take top priority.
Here are a few things new parents will want to consider as they prepare to update their estate plan:
· Guardians for your child. Who are the people who will raise your child if the unthinkable should happen to you and your spouse? Many people choose close family members, others choose trusted friends.
· Keep your child’s inheritance in trust. Settling your entire estate on a 5, 10 or 16 year old is never a good idea. Consider instead creating a trust for your child which will provide for him until he reaches maturity.
· Trustees of your child’s inheritance. Who do you trust to invest and distribute the estate for your child while she is still a minor? Some parents choose to have the guardians also serve as trustees; others prefer to nominate separate trustees and guardians who will work together, providing a natural system of checks and balances.
· Providing for your child’s special needs. If your child has special needs he will need special planning to ensure that his needs continue to be provided for. Ask us (or your own local estate planning attorney) about a special needs trust.
Guardians, trustees, trusts and special needs planning are the very basics of estate planning for families with minor children, and should serve as a jumping off point for further discussion with your estate planner. Friday, April 22, 2011 New Criteria for Alzheimer’s Can Lead to Early Diagnosis, Better Treatment and Planning
Alzheimer’s Disease is a devastating illness which affects families all over the country; from the adult child who fears that her father’s recent forgetfulness might be a harbinger of something more sinister, to the elderly gentleman who wonders how he will possible pay for the care his beloved wife requires.
Over the years, the treatment received by Alzheimer’s patients has depended in part on how the disease is diagnosed; and according to this article from a New York Times blog, “new criteria [for diagnosis], unveiled on Tuesday by the National Institute on Aging and the Alzheimer’s Association, will have consequences for family caregivers. Informed by research showing that changes in the brain may be under way a decade before any symptoms appear, the guidelines are likely to lead to increasingly early diagnoses.”
One of the most significant results of these new criteria is the establishment of three distinct stages of Alzheimer’s disease:
Pre-Clinical Dementia, wherein “There’s some biological or structural brain evidence that the Alzheimer’s process is under way, but the person’s not disabled and the family doesn’t notice any problem.”
Mild Cognitive Impairment, in which “someone has problems that don’t cause disability, but they’re evident enough that the patient and a family member or another observer agree, ‘Yes, it’s noticeable.’”
And finally, actual Dementia, which includes the signs and symptoms we all already associate with Alzheimer’s disease.
One of the most practical implications of these new criteria will be the early diagnosis—and thus the earlier treatment—of Alzheimer’s. The article mentions that these treatments are not yet curative, but there are medications that can help with the symptoms, and there is some evidence that “if you optimize the treatments for other diseases that make Alzheimer’s worse, like diabetes and heart disease, that increases the likelihood that Alzheimer’s will not accelerate.”
Perhaps of the most significance to elder law attorneys is the fact that early diagnosis can allow families to make the legal arrangements they need before the disease progresses to the point where it is too late. If the disease can be diagnosed in the Pre-Clinical stage, or even the stage of Mild Cognitive Impairment, the person receiving the diagnosis may have the time to consult with an attorney and put their affairs in order, helping to ensure that they—and their family—are provided for in the years ahead. Monday, April 18, 2011 New Portability Provision Should be Considered with Caution
A new “Portability Provision” in The Tax Relief, Unemployment Insurance Reauthorization, and Jobs Creation Act of 2010 has some couples excited about the financial possibilities. As explained in this article in the Wall Street Journal, the new portability provision “permits surviving spouses to elect to use the unused portion of the estate tax applicable exclusion amount of their predeceased spouses. This provides the surviving spouse with a larger exclusion amount and allows married couples to transfer a collective $10 million estate.”
The new provision may seem like a boon, but the author of the article advises caution for a few reasons: “First, portability may encourage procrastination rather than planning; second, complications emerge with GST taxes, remarriages, and state exclusions; and third, the temporary nature of the act and the unpredictability of Congress make for uncertainty in estate planning for the future.”
Our readers will know that there are a number of planning tools and opportunities that crop up over the years; this new portability provision is certainly one of them. Our readers will also know that none of these tools will necessarily be the “silver bullet” of estate planning. The fact is that estate planning is like anything else—to do it right and to do it effectively requires intelligence and research; a dedication of time and resources. Most families simply don’t have the time or the resources to devote to researching every new “perfect planning tool” that crops up promising to save your family money.
This is why our firm is here; it is our business to research the best planning tools for your family. We listen to your goals; we take into account your financial history and your current status. We help you create the plan that works best for you. If you think that this portability provision—or any other strategy you’ve heard about—might be your “silver bullet”, please call our office for an appointment. We can give you the resources and information you need to make an educated and effective plan for your family. Monday, April 04, 2011 Royal Couple Has Many Asking “How Effective Are Prenuptial Agreements?”
It’s all over the news lately that Prince William and his fiancé Kate Middleton will likely not sign a prenuptial agreement before the royal wedding on April 29th. Although many reasons have been given as to why the couple will forgo signing a prenup, one of the reasons is that “while prenuptial agreements are common in the United States, they are far less prevalent in the UK. Only in the last year have British courts agreed to recognize such deals.” This is a statement that has some Americans asking exactly how legally binding are prenuptial agreements here in the States?
The answer to that question depends on a number of factors: your state of residence, the terms of your prenuptial agreement, how long you stay married, and more. Fortunately, the longer prenuptial agreements are around, and the more common they become, the more respect they get from the courts. But if you’re worried that your prenuptial agreement won’t hold up in court, here are few tips to help ensure the validity of your agreement.
Neither party must be signing under duress. The more time each party has to review the agreement before the wedding the better. Any prenuptial agreement signed the day of or the day before the wedding could be looked upon as being signed under duress.
The agreement should include full disclosure of income and assets. If you live in a state where it is possible to waive full disclosure of assets then BOTH parties should specify that they do so knowingly.
Each party should have their own legal representation.In order to be sure that neither party is being taken advantage of, each party should have their own independent attorney review the document before it is signed.
Details regarding children or child support in a prenuptial agreement may not be enforced by most courts.Partners my want to include details about possible custody or child support arrangements in a prenuptial agreement, but keep in mind that any court will always give the best interests of a child the highest priority, even if it means disregarding those sections of the agreement between spouses.
Of course, every couple hopes that a prenuptial agreement will never come into play, but these tips can help ensure that your agreement will be considered valid by a court if the worst should happen. Contact our office if you have any questions about prenuptial or marital agreements, we’d like to help. Monday, March 28, 2011 Icon, Businesswoman, Philanthropist—What Happens Now to Elizabeth Taylor’s Fortune?
The recent passing of Elizabeth Taylor has many wondering what will now happen with Ms. Taylor’s sizeable fortune? According to this article in Forbes Ms. Taylor’s fortune includes not only the millions she made in the Hollywood movie industry, but the even greater amount made she made with her fragrance line.
“In her most savvy business move, Taylor licensed her name to Elizabeth Arden and came out with several perfumes, including Passion, White Diamonds, and Black Pearls. Her fragrances have reaped a reported $200 million in sales over the years. Perfumes are one of the highest margin products out there, which is why celebrities love them. Taylor was doing it before anyone.”
Furthermore, a recent article in ABC News reports that Elizabeth Arden has no plans to discontinue the Taylor brand anytime soon. "White Diamonds remains a best seller almost 20 years after its 1991 introduction, a testimony to her transcendent and enduring appeal... Our best tribute to Elizabeth Taylor will be to continue the legacy of the brands she created and loved so much."
The question now is, what will happen to this sizeable (and growing) fortune now that Ms. Taylor has passed away? ABC News has some guesses: “On the question of what could happen to her estate now that she has passed away, many speculate it will be distributed to her four children and 10 grandchildren [with whom she is reported to have been on good terms]... And Taylor most likely bequeathed a substantial amount of money to her charitable work. Taylor was a devoted AIDS activist, helping form the American Foundation for AIDS Research in 1985 and the Elizabeth Taylor AIDS Foundation in 1991.”
Thus far no last will and testament has been released, which suggests that Ms. Taylor may have had a trust, an extensive document which protects your family and assets while remaining private. But given what we do know about Ms. Taylor, it is not unreasonable to believe that her estate will be split between her family and her charitable endeavors, especially the AIDS Foundations to which she gave so much in life. Monday, March 21, 2011 New POLST Program Raises Awareness About End-Of-Life Decisions
A recent article in the Wall Street Journalshines the light on a new program being instituted by a growing number of states called “Physician-Orders for Life Sustaining Treatment,” or POLST. “A POLST, which is signed by both the patient and the doctor, spells out such choices as whether a patient wants to be on a mechanical breathing machine or feeding tube and receive antibiotics.”
Creating a POLST is an important step toward getting the care and medical treatment you want at a time when you may no longer be able to communicate those wishes to your family or medical staff. As estate planners we know just how important it is to communicate these preferences for health care; in fact, creating an estate plan with our office includes drafting a document called an advance directive, in which you specify which medical treatments or interventions you would or would not like, and more importantly, it is the document in which you nominate a health care agent to serve as your proxy if and when you are unable to speak for yourself.
Keep in mind that although the POLST is an important step in making your wishes known, the POLST is not intended to replace an advance directive. The POLST programs “are meant to complement advance directives, sometimes known as living wills, in which people state in broad terms how much medical intervention they will want when their condition no longer allows them to communicate.”
The WSJ article states that “A study supported by the National Institutes of Health last year found that patients with POLST forms were more likely to have treatment preferences documented than patients who used traditional documents such as living wills and do-not-resuscitate orders.“ This comes as no surprise, considering that executing a POLST includes getting the document signed by your doctor, thus ensuring that you doctor is not only aware that you’ve expressed your wishes for end-of-life care, but has also likely had a part in helping you understand exactly what your options are.
Our office recommends that our clients go one step further—in addition to having your doctor sign your POLST, give your doctor a copy of your advance directive as well. Once you have things squared away with your doctor we also recommend sending a copy of your POLST and your advance directive to the person you’ve named as your healthcare agent.
The more informed you doctors and family are about your wishes for end-of-life care, the more likely it is that you will receive the treatment you prefer. Wednesday, March 16, 2011 Tragedy in Japan Inspires Reflection: Are You Prepared for Disaster?
Only a few days ago the world was shocked by the terrible earthquake and tsunami in Japan. Our hearts and prayers go out the people affected by the tragedy, and many people are asking what they can do to help.
The sudden violence of nature has many of us looking at our own situations as well, wondering if we are prepared—as a country and as individuals—should an equally devastating natural disaster strike our own shores. Of course the first thought most of us have in this regard is whether or not we have a well-stocked supply of emergency rations, but as this article from CBS MoneyWatch.com points out, there is much more to surviving a natural disaster than the first 24 hours. “Most people never think about the items to take that help protect your financial assets.”
Author Steve Vernon includes in his article a list of things you can do to prepare for what comes after the first 24 hours of a natural disaster, including:
· A stash of cash in case ATMs are shut down for a long period of time.
· Contact information for family members, close friends, and work contacts.
· A cell phone and charger, plus batteries and chargers for other necessary electronic equipment.
· A list of account numbers and contact information for all your regular bills and payment obligations.
· Your insurance company contact information.
These are only a few of the things you’ll want to have ready (or at least have thought about) if disaster strikes here at home.
Some natural disasters are so big in scope they are almost impossible to comprehend, let alone try to prepare for; but preparation is the best way to keep fear and panic at bay. It doesn’t help anybody to dwell too much on what “might happen,” but having a basic emergency plan in place gives you the freedom to go on with your everyday life, knowing that you’ve done what you can to be ready if disaster does strike.
For more information about disaster preparedness please visit the FEMA website here: FEMA Emergency Planning Checklists.
For more information about how you can help the disaster victims in Japan please check the Crisis Response Page on Google. Friday, March 04, 2011 Tough Decisions Await Executors of 2010 Estates
If you are the executor of the estate of a decedent who died in 2010 you may think you’re in the clear. After all, there was no estate tax in 2010 right? Making distributions should be a piece of cake. Wrong. Because of the estate tax election available on the estates of 2010 decedents, administering those estates will actually be more work than you may think.
The repeal of the estate tax in 2010 also brought with it a repeal of the “step up in basis,” meaning that heirs selling inherited assets were taxed based on the original acquisition cost of the assets, not on their value as of the date of the taxpayer’s death. This generally resulted in a higher tax paid on assets than the normal estate tax rate—not good for taxpayers. But 2010 estates don’t have to go by these rules. The legislation passed in December of 2010 gave 2010 estates the opportunity to elect whether they wanted to use the 2010 estate tax laws, or the new laws for 2011. This article in Forbes explains what this means:
“The 2010 Tax Relief Act restored the estate tax for individuals dying in 2010 with a $5 million per person exemption and a maximum rate of 35%. It also repealed the modified carryover basis rules for property acquired from a decedent who died in 2010. However, estates of individuals dying in 2010 can elect zero estate tax and the modified carryover basis rules that would have applied before they were repealed. That means the basis of assets acquired from the decedent would be the lesser of the decedent’s adjusted basis (carryover basis) or the fair market value of the property on the date of the decedent’s death.”
In general this tax election is a good thing, it allows executors to choose which tax formula will cost the beneficiaries the least in taxes; but it does mean a lot more paperwork and a lot more attention to detail. If you are the executor of an estate of a decedent who died in 2010, don’t hesitate to call us. We can answer your questions and help you explore your options. Wednesday, March 02, 2011 Coming in 2012: Change for Retirees
Last month the Obama administration released their budget for the 2012 fiscal year, and included in that budget were a few things that retirees (or those close to retiring) will want to be aware of. If you own a business you may want to keep reading as well, as some of the proposals within the budget would affect not only retirees, but also small business owners. This article in the US News and World Report describes some of the proposals included in the budget, including:
Automatic workplace pensions.This would require employers (with the exception of very small businesses) that do not currently offer a retirement plan to enroll their employees in a direct-deposit IRA account. Employees would have the ability to opt-out if desired.
Tax incentives to create retirement plans.This proposal would increase the value of the tax credit to small businesses that start new retirement plans. The current maximum credit is $500/year for up to 3 years, the new proposal would increase that to $1000/year.
More Social-Security funding.Obama’s budget would allocate $12.5 billion to the Social Security Administration, up $1 billion since 2010. The primary aim of this increase would be to “reduce the backlog of disability claims and decrease Social Security fraud.”
But not all of the proposals included in the budget are beneficial to retirees. Here are a few things you may want to watch out for:
Pension insurance premium increases.“The budget proposes giving the Pension Benefit Guaranty Corporation... the authority to adjust premiums and take into account a company’s financial condition when setting premiums.” Although this is certain to result in premium increases, the increases would be gradually phased in.
Senior Community Service Employment Program funding cut.The proposed budget would reduce funding for the Senior Community Service Employment Program by 45 percent, and would transfer the program from the Department of Labor to the Department of Health and Human Services. Seniors who hope to retrain for new jobs in their retirement years may find this more difficult to do than they expected. Monday, February 28, 2011 Where Should You Live to Escape the Estate Tax?
Do you live in a state that has a friendly attitude toward the estate tax or inheritance tax? You may think you do, but according to this article in Forbessome states made changes to their estate or inheritance tax policies in 2010 as a response to the lengthy uncertainty over the federal estate tax: “Congress took so long to agree on what to do about the federal estate tax, allowing it to lapse in 2010, and many states take their lead from the federal system.”
The federal estate tax is set (for now) but you may still expect some states to continue making changes to their own estate tax. The fact is that state governments are caught between a rock and a hard place; “The changing state landscape... reflects a lot of ambivalence by state officials themselves. They want the estate tax revenue, but worry about chasing wealthy seniors across state borders.”
If you’re looking for an estate-tax-friendly state to which to retire you can check out the link to the map in the Forbes article; but before you move be sure to do your research. Just because a state has no estate tax (or a high exemption amount) one year doesn’t mean it won’t change the next. The best strategy is to be familiar with the state’s history. How long has their estate tax been in place? Has there been any legislation proposed recently regarding the tax? How likely is it that their tax policies will remain the same as they are when you move?
Illinois recently made changes to the state laws regarding estate tax, and other states that are most likely to make changes in the future include Hawaii, Ohio, Connecticut and Vermont. “But don’t count on these efforts... even if you get relief one year, the levy can go up again the next.”
As always, the best strategy is to plan ahead, review your plan often, and have a knowledgeable estate planning attorney on your side. Wednesday, February 23, 2011 The Tax-Man Cometh
It’s that time of year again; the time of year when everyone starts gathering receipts, assessing income and expenses, and making appointments with tax advisors. Tax time can be a very stressful time for many families, but—with the help of this article from MSN Money—perhaps tax season can be made a little bit easier. The article lists 13 tax breaks from 2010 that can help save you money, including:
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The tax credit for first time homebuyers (if you’re not a first time homebuyer don’t give up, there’s a credit for existing homeowners too.)
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The parking and transit credit
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The college tuition tax credit
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The credit for energy-saving home improvements
And then of course there are the two we’ve been mentioning here on our blog for the past few months:
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The estate tax exemption, and
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The annual gift tax exemption
Of course, not every item on the list is going to apply to every reader, but if even one or two credits apply to you or your family it can be a huge help.
Don’t rely only on this article to ease your 2010 tax burden, your own advisors and tax planners—who know more about your family’s personal and business finances—will be able to give you much more in-depth advice on how best to address your own tax situation. In addition, talking to a professional advisor right now provides the perfect opportunity to tackle any issues in 2011, hopefully making this time next year a much happier and less stressful time for everybody. Friday, February 18, 2011 A Will Reveals More About You Than Just Assets and Distribution
We tell our readers quite often that a will is one of the most important documents in your estate plan—an essential document, to be quite honest—but sometimes we like to remind our readers that wills are interesting family and historical documents as well.
Genealogists will often use an ancestor’s last will and testament to determine important details about family members: names and birthdates of siblings or children, extent of property, last known address, etc. Additionally, these are the documents in which we make our final wishes known. This is often where our true selves come out; who we liked best and what we valued most.
A last will and testament can be very revealing indeed. In honor of President’s Day we offer these interesting tidbits relating to the wills of the leaders of our nation:
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George Washington was concerned with the future of our young nation to the very end, and gave some of his estate toward establishing the first American Institutions of higher education, an attempt to prevent young Americans from being “sent to foreign Countries for the purpose of Education, often before their minds were formed, or they had imbibed any adequate ideas of the happiness of their own; contracting, too frequently, not only habits of dissipation and extravagance, but principles unfriendly to Republican Government & to the true and genuine liberties of mankind.”
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Interestingly, President Abraham Lincoln left no will—and he was a prominent lawyer who should have known better!
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President Harry S. Truman included careful tax planning in his last will and testament.
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President Warren G. Harding must have had some kind of premonition when he conveniently decided to write his will 6 weeks before his sudden death.
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The will of President Calvin Coolidge was just 23 words long: "Not unmindful of my son John, I give all my estate, both real and personal, to my wife, Grace Coolidge, in fee simple."
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President John F. Kennedy was a bit poetical in his will, and included this haunting phrase, “being of sound and disposing mind and memory, and mindful of the uncertainty of life…”
Wednesday, February 09, 2011 Estate Tax Lessons from 2010 and Things to Watch Out for in 2011
We all know from the many news stories of last year that estate tax laws are not set in stone, they can fluctuate and change both at the state and the federal level; and as this article in Forbes points out, keeping up with those fluctuations can be of the utmost importance to you and your loved ones.
The many celebrity news stories we saw last year provide all the examples we need of what can happen when you plan well (as was the case with Brittany Murphy’s estate plan) or when you neglect your estate plan—or even worse, when you fail to plan at all. Here are some celebrity examples of common estate planning pitfalls and mistakes:
Failing to update your estate plan.We tell all of our clients how important it is to review and update your estate plan every 2 to 5 years; Gary Coleman provides a prime example of what can happen if you neglect to follow through on those updates and reviews. “[Coleman] created a handwritten codicil to his will in 2007 leaving much of his estate to his wife, Shannon Price. After they divorced, however, Coleman never updated his will or created a new one. That led to a court fight after he died about whether Coleman was still married to Price. Even though they never officially tied the knot for a second time, Price claimed they had a ‘common-law marriage,’ which would mean that the handwritten will would be valid.”
Failing to fund your estate plan.A revocable living trust is a wonderful tool, but it’s just an empty vessel until you fund it by re-titling your assets in the name of your trust. Michael Jackson created what is most likely a wonderful living trust, but his failure to fund it properly means that 2010 saw “The estate of Michael Jackson... dragged on with no end in sight.”
Waiting too long to create your plan.If you are a senior citizen, waiting too long to create your plan leaves you open to the exploitation or undue influence of acquaintances or family members who might try to take advantage of you. Even if nothing of the sort has taken place, just the suspicion of undue influence can land your estate in a lengthy court battle. “Does the Anna Nicole Smith case come to mind? The United States Supreme Court ruled in 2010 that it will hear her case for the second time. Did she wrongly take advantage of her 90-year old husband, or did his son use fraud and other improper means to stop the billionaire from leaving money to Anna Nicole?”
We can all benefit from the very public airings of these celebrity estates. Our office can help you avoid the mistakes listed here, plus many more. The new laws of 2011 provide the perfect opportunity to create a plan (or update your existing plan), and ensure that your family will be well protected now, and in the future. Wednesday, February 02, 2011 Minnesota Health Care Dispute Raises Fears for Everyone
As estate planning attorneys we help our clients plan ahead. We help them create the documents and take the legal action they need to protect themselves and those they love. We help them talk through painful possibilities, and support them as they make difficult decisions. We work to ensure that our clients and their families will be prepared for any eventuality—but deep down we hope that they will never really need to make use of some of these documents and plans.
One of the situations that estate planners (or any compassionate advisor) dreads is one that is happening right now in Minnesota. According to the Minneapolis Star Tribune the family and friends of 85 year old Al Barnes are struggling to make a difficult decision about his end-of-life care—a decision made no easier by the fact that not all family members (or Mr. Barnes doctors and health care providers) can agree on the next course of action.
“Numerous doctors have assessed Barnes in the past year, and agree on his prognosis. According to court records, Barnes suffers from a level of dementia so profound that doctors believe it is pointless to treat his kidney failure and respiratory failure.” But this isn’t the whole story. Al Barnes’ wife Lana Barnes believes that “her husband suffers from chronic Lyme disease, and that antibiotic treatment of the tick-borne bacterial infection would reverse his dementia -- and necessitate treatment for his other conditions as well.”
Mr. Barnes does have a Health Care Directive which lists his wife Lana as his agent, but it apparently goes no further than that, giving no specific instructions or information about what his wishes for end-of-life care would be. And herein lies the dispute. “A Methodist Hospital doctor wants to take decisionmaking rights from [Mrs. Barnes] because he believes she is demanding hopeless and painful treatments. The 56-year-old wife is accusing the doctor and others of misdiagnosis that has left Barnes substantially -- but not irreversibly -- incapacitated.”
The Minneapolis Probate Courts temporarily took away Mrs. Barnes’ authority over her husband’s care earlier this month after the disagreements between wife and doctors came to a head. “Lana and doctors from Methodist Hospital [are] due to resume arguments over his medical care Wednesday in Hennepin County Probate Court... After Wednesday's hearing, a judge will decide whether Lana Barnes remains in charge.”
This is exactly the kind of situation we hope to help our clients avoid by encouraging a little bit of forethought, conversations between family members and loved ones, and by preparing a thorough, decisive, and well-thought-out health care directive. Friday, January 21, 2011 Non-Traditional Couples Face Estate Planning Challenges
The new estate tax laws (with their friendly bent toward the taxpayer) have been cause for celebration for many wealthy and affluent Americans, but there is at least one group which has not had cause to celebrate—gay and unmarried couples. Under current federal law, a married person could transfer an unlimited amount of their estate to their spouse upon death, free of taxes; but this generous marital deduction does not apply to same-sex couples—even if they live in one of the five U.S. states which recognize gay marriage.
A recent article in Reuters explains that “there is no [recognition of same-sex marriage] on a federal level, which means same-sex couples do not get the marital deductions on U.S. taxes. They also cannot make large gifts or pass on assets to each other without paying taxes.”
The new laws may help some same-sex or unmarried couples; for the next two years unmarried individuals may transfer up to $5 million upon their death tax-free. But this isn’t permanent (the law will likely change again at the end of 2012) and anyone with an estate over $5 million will end up leaving their heirs with a hefty estate tax bill.
Luckily, some of these estate tax challenges can be overcome with some good estate planning and by thinking ahead. “If one partner has more assets, he can transfer some assets to his partner each year... Each year, individuals can make gifts up to $13,000 to any number of people. That can even up the two partners' estates and hopefully avoid a big estate tax bill when the richer partner dies.” If it’s clear that estate taxes simply cannot be avoided, the wealthier partner may want to consider setting up an Irrevocable Life Insurance Trust to cover the cost of estate taxes.
Beyond the issue of estate taxes, the article brings up the good point that “same-sex couples are more likely to face challenges to their wills, usually from family members who do not approve of their lifestyle.” This provides more incentive than ever to have a well-thought-out estate plan, which can be drafted with just such a possibility in mind.
Regardless of state of residence, same-sex or unmarried couples simply do not have the same benefits as traditionally married couples, which means that same-sex or unmarried couples have to plan carefully to achieve their estate planning goals. It may require more forethought and effort, but the good news is that with the right kind of planning it is possible for non-traditional couples to protect and provide for the people they love. Friday, January 14, 2011 Government Rescinds Medicare Coverage of End-Of-Life Planning
Apparently the suspicion surrounding end-of-life planning is not as far in the past as we might have hoped. The recent Medicare regulation which would have allowed the government to pay doctors who advise patients on options for end-of-life care was rescinded only days after it was enacted.
Why such an abrupt turnaround? The reason is probably not too difficult to guess. Most people know that Medicare-covered end-of-life planning has a tempestuous history both in politics and in the media. This article in the New York Times stated that “while administration officials cited procedural reasons for changing the rule, it was clear that political concerns were also a factor.”
The alteration of the rule may be disappointing, but it shouldn’t stop you from thinking—or talking to your doctor—about your choices for your own end-of-life care. After all, this administrative change of heart does not alter the fact that having these discussions with your doctor (as well as with your health care agent and loved ones) preserve patient autonomy at a time when events may seem to spiral out of control. As National Public Radio pointed out in their article, “it remains perfectly legal for physicians to talk with patients during annual visits paid for by Medicare about how much or little care they want when facing a terminal illness.”
Media firestorms and political debate notwithstanding, your decisions about your end-of-life care are important. When you have these discussions with your doctor and loved ones, and when you have a living will or healthcare directive in place, you are far more likely to get the care you want at the end of your life, regardless of how invasive or restrained you want that care to be.
If you have reservations about what a health care directive might mean to your future medical care, or if you have any questions about this issue, please don’t hesitate to call our office. Your peace of mind is our first priority. Wednesday, January 12, 2011 No More Excuses, It’s Time To Plan Your Estate
The dust surrounding all the estate tax law “remodeling” is finally settling, and it’s time now for families to give their old (or future) estate plans some serious scrutiny. For all of you who were waiting until Congress made some firm decisions on the estate tax laws—there are no more excuses. Forbes writers Janet Novack and Ashlea Ebeling explain in their recent article why—now that the estate tax is no longer in flux—it is so important to move quickly on your estate plan.
Many first time planners will be ready to take advantage of the new laws, now that the “hefty $5 million exemption, combined with a new portability provision, should allow many affluent couples to simplify their planning.” Couples with estate plans already in place will be able to take advantage of the new laws as well, but the motivation to update their existing plans may have more to do with the need to undo outdated formulas in wills and trusts that, with the new laws in place, may now do more harm than good.
“Many couples have old wills designed mainly to preserve the estate tax exemption of the first spouse to die, something the law now does. Under these old "formula" wills, when the first spouse dies assets equal to his or her federal estate exemption go into a "bypass trust" for their kids. The surviving spouse has access to the trust's earnings and, if need be, principal, but what's in the trust "bypasses" the survivor's estate. Problem is, with the exemption jumping to $5 million (it was only $2 million in 2008) the survivor could be left with nothing outside the trust.”
The new estate tax laws are much friendlier to middle-income families, but don’t let that fool you into thinking you don’t need to plan at all. “Whatever your age, marital status or net worth, you need a will (saying who gets your stuff); a living will (stating your wishes about end-of-life care); a health care proxy (naming someone to make medical decisions for you if you can't); and a durable power of attorney (designating someone to act on your behalf in financial and legal matters if you can't).” Not to mention you still may have state taxes to contend with in your estate plan.
Now is the time to call your attorney and talk about estate planning in the New Year. There is no more reason to procrastinate, and it’s your family’s legacy that’s on the line. Monday, January 03, 2011 Resolutions to Last You Through the Year
What are your resolutions for 2011? A majority of New Year’s resolutions have to do with money and health—or more specifically, with saving money and losing weight. Unfortunately, most New Year’s resolutions don’t last through the first month of the year. But what if there were steps you could take in that first month, when you’re still feeling inspired and motivated, that would pay-off throughout the rest of the year when all your good intentions fall by the wayside?
Luckily, there are steps you can take right now that will help you save money throughout the rest of the year. This article in USA Today lists 5 steps you can take right now to help you save money in 2011:
1. Order your free credit report
2. Get a medical exam
3. Update your beneficiaries
4. Increase your 401(k) contributions
5. Rebalance your portfolio
All of these will help you keep your 2011 resolutions throughout the entire year, but the ones we’re most concerned with are #s 2 and 3. Too many people “take care of business” pertaining to beneficiaries and 401(k)s when they first get hired (or open a new account or life insurance policy) and then never think of it again. But lives change over the years, and the people you listed, or the amount you contributed 5 or 10 years ago is probably not what’s best for your family right now.
The New Year brings with it new beginnings... and new hopes. Why not take advantage of this feeling of optimistic euphoria by taking steps now that will carry you through the entire year? Monday, December 20, 2010 At Long Last: What to Expect from Estate Taxes in 2011
It has been a long and uncertain year for anybody interested in the future of the estate tax, filled with a few ups, a few downs, and a lot of speculation. But after the recent passage of the new bipartisan tax bill all of the confusion and speculation is finally at an end, and it’s very close to what we anticipated early last week. The bill is good news for most taxpayers; the Wall Street Journal says there are “many winners, a few losers,” and according to the New York Times “Almost no one will have to worry about paying the estate tax under the tax legislation just approved by Congress.”
Here is a brief overview of what you can expect in 2011:
New Estate Tax Exemptions and Rates:The new bill sets the estate tax exemption at $5 million per individual ($10 million per married couple), with amounts over the exemption taxed at a 35% rate. This is opposed to the $3.5 million exemption and 45% rate some lawmakers were hoping for.
Tax Election Option for 2010 Estates:As mentioned in a previous post, this is one of the biggest parts of the new bill. There may have been no estate tax in 2010, but there was also no “step up in basis,” meaning that heirs selling inherited assets were taxed based on the original acquisition cost of the assets, not on their value as of the date of the taxpayer’s death, as is usually the case. This led to a higher tax paid on the assets if and when they were sold, in spite of the lack of estate tax. Tax election gives 2010 estates the choice of whether to use 2010 or 2011 tax rules—a happy option for 2010 heirs.
Estate, Gift, and Generation-Skipping Taxes: In recent years these three levies have had varying exemption levels, making gift giving and succession planning and challenging exercise at best. The unification of all three makes tax planning and giving gifts to grandchildren much easier than it used to be.
Individual Income and Payroll Taxes: The new bill wasn’t just about estate taxes; it also extends the Bush-era income tax rates; this is good news as it prevents a rise for nearly all taxpayers.
How Long Will It Last? We’re all glad that the waiting is over and we finally know what to expect, but the new law is only effective through 2012, at which point the provisions will “sunset.” This new tax package sets our minds at ease now, but the estate tax issue is far from over. It looks as if we may have to revisit the issue in 2012-2013.
With the threat of high estate taxes out of the way does any reason remain to create (or update) your estate plan? Absolutely!
Estate planning is about more than just planning for taxes, it’s about taking control of your assets and choosing how your estate will be distributed. Divorce, second marriages, planning for college, charitable gifts—these are just a few of the reasons why estate planning is essential regardless of the state of the estate tax.
At the very least, the recent fluctuation of the law means that you’ll want to call our office and make an appointment to have your existing plan reviewed and updated to ensure you don’t have any outdated clauses that could negatively affect your heirs. Monday, December 13, 2010 Estate Tax Update: The End Is Near
It looks as if the long and weary road to estate tax clarity may soon be at an end. Especially if Washington lawmakers vote to approve the tax package negotiated between President Obama and Republican leaders without making too many changes.
Laura Saunders of the Wall Street Journal claims in her recent article that everything looks to be coming up roses, “it seems estate planners got everything they wanted and nothing they didn't.” Good news for estate planners translates into good news for our clients. We recommend you read the entire article for the full story, but here are some of the highlights of what estate taxes may have in store for us in 2011:
Tax Election for 2010 Estates:This is one of the biggest parts of the deal. “The bill gives 2010 estates the choice of whether to use 2010 or 2011 tax rules.” This is good news because “the tax on heirs who sell assets of those who died in 2010 is based on the original acquisition cost of the assets, not on their value as of the date of the taxpayer's death, as is usually the case,” meaning that “taxes were higher if they died in 2010 than 2009 or 2011.”
Unification of the Estate, Gift, and Generation-Skipping Taxes: “In recent years the exemptions for the three levies have been out of synch, complicating succession planning for family businesses and other matters.” With the new deal, however, there would be a simple $5 million per-individual exemption for all three.
And of course we can’t have a conversation about estate taxes without discussing Effective Date and Duration: The effective date of the new provisions is set to be January 1, 2011. As for duration, “The Senate's bill makes this regime effective only for 2011 and 2012, at that point the provisions ‘sunset.’” What this means is that the new tax package may be only a temporary reprieve, and we could be going through all of this again in 2012-2013. Monday, December 06, 2010 Make This Year Memorable: A 2010 Gift-Giving Guide
Fruit baskets, kitchen gadgets, and Kindles aren’t the only gifts you can give loved ones this year (although you’ll see below that video game systems still make the cut.) Instead, why not give something unique that will leave a lasting impression and help protect your loved one? Here are a few non-traditional ideas for friends and family of every age.
Young Adults: What do you get the kid who already has all the video games he could want? How about a meeting with a financial planner? It may not sound exciting, but young adults are leaving home with less financial experience than ever, making it difficult for them to know how to budget for their own household, plan to eventually buy a house, or even stick to a strategy to pay of credit debt or student loans.
Parents of Young Children:A nomination of guardians drafted by a qualified estate planning attorney is an excellent gift for young parents. So also are advanced healthcare directives and a last will and testament. All of these will help protect the young family as well as provide peace of mind.
Baby-Boomer Friends and Family:The big concern among Baby-Boomers right now is long-term care. After paying for their elderly parents to grow old Boomers are now turning a concerned eye to their own futures.
Elderly Parents and Grandparents:Forget your teenage nephew; your elderly grandparent is the person who could benefit from having a video game. According to this story in the New York Times game systems such as the Xbox Kinect and Nintendo Wii Fit help get the elderly up and moving and can significantly improve their balance.
This year, forget about the impersonal gift cards or scented candles; instead give a gift that will leave a legacy. Wednesday, December 01, 2010 A Good Year for Giving
The season of giving is upon us... and thanks to 2010’s unusual tax laws we may see some very large gifts before the year is out! If you are considering being particularly generous this year, this article from Reuters explains why the federal government is making 2010 an exceptionally good year for giving.
Most people know that for this year only there is no estate tax. But the year is almost over, and next year the estate tax is slated to go up to an astounding 55%. The more you can afford to give away now, the less that will eventually be subject to the estate tax. However, “the incentive to give stems not just from a looming increase in the estate tax, but also from the lowest tax rate on gifts in a generation -- a maximum of 35 percent. That top rate was 45 percent in 2009 and jumps to 55 percent next year unless Congress acts.”
Those last three words, “unless Congress acts,” carry a lot of weight. Congress could choose instate lower and more reasonable tax rates in 2011; but right now we just don’t know, and the clock is ticking to the end of this “golden year.” There is nothing wrong with waiting to see what happens, but you may want to at least have the conversation with your estate or financial planner, so you know your options and can act swiftly when the time comes.
Very few people really want to give away their hard-earned money; but as the saying goes, you can’t take it with you, and most people would rather leave their legacy to their family rather than the government. Monday, November 22, 2010 How to Avoid Being “Strangers Rather Than Spouses”
Over the past few years certain states have taken steps to legalize same-sex unions, with many same-sex couples joyously taking advantage of the new laws... but in spite of state approval, these newly married couples do not have the same rights as traditional married couples under federal law. This recent article from Elder Law Answers describes how one gay widow is suing the federal government for reimbursement of the estate tax bill she paid after her wife’s death.
“Edith Windsor and Thea Spyer became engaged in 1967 and were married in Canada in 2007, although they lived in New York City. Ordinarily, spouses can leave any amount of property to their spouses free of federal estate tax. But when Ms. Spyer died in 2009, Ms. Windsor, 81, had to pay Ms Spyer's estate tax bill because of the The Federal Defense of Marriage Act of 1996, which denies federal recognition of gay marriages. ‘While New York State considered us married, the federal government did not, so the government taxed Thea's estate as though we were strangers rather than spouses.’"
This story illustrates again how important it is for any non-traditionally married couple to take their estate planning seriously. A properly drafted will, trust, power of attorney and health care directive can help ensure that you and your partner are treated as spouses rather than strangers.
Contact an attorney in your state to find out how estate planning documents can help you achieve your goals. Wednesday, November 10, 2010 Preparing Boomers for the Finance Sandwich Squeeze
Baby-boomers are called the sandwich generation—and with good reason. They were expecting to pay for their own retirement and their children’s college education; but now recession upon recession has toppled their elderly parents’ savings, and Boomers find that they are faced with the prospect of shouldering the financial burden of their parents’ final years as well. The pressure of providing for so many people at once can quickly become overwhelming, and using one’s own savings or retirement fund can begin to look like an easy solution to immediate financial concerns.
Although it may seem like an easy fix to looming financial debt, don’t give in to the temptation to use your own savings. Before you give in to fear and drain your retirement, get some professional financial advice. This special edition recently released in the New York Times shows that it is possible to prepare for what’s coming—both for your parents and yourself.
Ourfirst recommendation is to discuss your situation with a trusted financial advisor. After that, one of the primary suggestions offered in the Times is to talk to your parents about their situation. It may not be easy; be prepared for your initial advances to be met with resistance. Aging parents often worry that they will lose control of their own finances, or that giving decision-making capacity to one child will lead to anger or hurt feelings among their other children. Instead of gearing up for a fight, the article mentions a few ways to gently lead into the conversation (including talking about family philanthropic projects.)
Another discussion you won’t want to skip is one about Long-Term Care Insurance. This article by Ron Leiber discusses different kinds of insurance, whether or not you’ll need it (you will), and how to pay for it.
The world of “old age” is changing. People are living longer, experiencing more long-term health issues, and without the same ability to rely on government “entitlement” programs as their predecessors. Serious discussion and serious planning are essential to surviving the challenges of the “new” old age. Friday, October 29, 2010 Just Say No? Medical Marijuana in Nursing Homes
The legalization of marijuana is on the ballot in California this November, but California isn’t the only part of the country where marijuana is making news. The use of marijuana for medical purposes is being debated around the nation—especially as concerns elderly patients in nursing homes which receive federal funding through Medicare or Medicaid.
This article on the New York Times’ New Old Age Blog reports on this issue, and just how concerned and confused nursing home facility administrators are about what their options are and how to proceed. “Any patient using medical marijuana breaks federal law. Marijuana is listed as a Schedule 1 drug, which means the federal government considers it to have no medicinal value. Despite this, physicians in 14 states and the District of Columbia are allowed to recommend it. . . Many facility administrators wonder how they can comply with federal law and preserve their reimbursements and at the same time permit residents to medicate with marijuana.”
Federal funding isn’t the only conflict attached to the medical marijuana issue. Nursing homes in New Mexico (a state where marijuana was legalized for medicinal purposes in 2007) report that “the lack of dosing direction has caused problems. . . Pills in nursing homes are in what they call vacuum packs: you have to pop a pill out one at a time. They don’t do that with marijuana. It’s an amount of marijuana in a small plastic bag, so there is no way to track if someone took one or two pinches.”
Another issue to consider is the stigma attached to marijuana use, and complaints from other patients or residents.
Medical marijuana is generally prescribed to seniors to help them deal with chronic pain. Oregon’s long-term care ombudsman, Mary Jaeger, asks in the article above “Wouldn’t any one of us, in our own homes, feel that we have the right to live our lives by our own values and choices, to preserve our own dignity and, frankly, to live pain-free?” Will seniors moving to federally supported nursing homes have to find other ways to deal with chronic pain? And more importantly... will they be willing to do so? Monday, October 25, 2010 “Nothing Says Romance More Than A Prenuptial Contract.”
You may have your doubts about the sentiment above (which is also the opening line of a recent article in the Wall Street Journal) but many couples are beginning to see the truth of this statement. Younger couples, older couples embarking on second marriages, and couples with family businesses or assets to protect are coming to realize that prenuptial agreements can actually take the pressure off a relationship, making more room for romance rather than less.
A recent ruling in Britain’s Supreme Court has thrown prenuptial agreements back into the limelight, not only in the U.K. and Europe, but also here in the United States. The above-mentioned article in the Wall Street Journal offers a few basic guidelines for couples considering drawing up a pre-nup, the most important of which include: there must be no signs of duress, each party must have their own legal counsel, and nothing concerning children can be fixed in a pre-nup.
But if you’re on the fence about whether or not a prenuptial agreement is right for you and your spouse-to-be you may be most interested in the final paragraph of the article, which states that “Prenups are romantic... You’re making a provision for somebody. You’re saying, ‘I want you to know now that you’ll be alright’... this should be part of the process of falling in love and going forward with that commitment.” Friday, October 22, 2010 Take Care in Making Large Gifts to Heirs
Do you have a provision in your will or trust to pass your house on to your kids when you die? If so, you may want to consider giving the house to them now, before the end of the year. According to this article in the New York Times, doing so could be beneficial to both your heirs and yourself.
It’s easy to see how your heirs might benefit from receiving at least part of their inheritance now. The lapse in the estate taxes only last through the end of the year, “it is scheduled to come back next year with a vengeance. Unless Congress changes current law, the estate tax rate will be 55 percent (60 percent in some cases) on all but the first $1 million, except for what you bequeath to your spouse or charity.”
What may not be quite as obvious is how gifting a large asset right now can benefit you as the giver. “By shifting real estate now, you remove the asset and any subsequent increase in its value from your estate — an especially timely move if your property’s value is depressed and you expect it to bounce back at some point. What’s more, if you wind up owing tax on the gift, the rate now is less than it may be later. Barring Congressional action, the tax rate for 2010 is 35 percent, rising to 55 percent on Jan. 1.”
Making such a large gift is not necessarily without its “hurdles” as the article calls them. Amongst these hurdles include deciding whether you want to continue living in the house, whether to break up interest in the asset or keep it as a cohesive whole, and the potential awkwardness of having a business relationship with family. The article offers a number of thoughtful solutions to these issues, all well worth considering.
As beneficial as such a gift may be to both grantor and recipient, we strongly urge you to discuss the details of such a large gift with your estate or financial planner before you take any action. Wednesday, October 20, 2010 Plan Ahead to Avoid Financial Pitfalls in 2011
A recent article in U.S. News and World Report points out that although “the Great Recession may technically be over... Consumers [still] don't want to spend and are still slowly digging their way out of the mountain of mortgage and personal debt that helped fuel the downturn.” Among those groups who are still struggling the most are seniors and retirees, many of whom took a devastating hit to their retirement investments and savings, and are still struggling to recover.
Unfortunately, according to the article, 2011 may bring with it some new financial concerns for seniors. Some of the “major money issues” seniors will have to think about in the coming year include a zero cost of living adjustment from the Social Security Administration, changes to certain Medicare policies, a rise in income and capital gains tax rates, and the return of the estate tax, among others.
Although the article itself offers no particular solutions to these financial concerns—it merely gives a warning of what’s to come—there are steps you can take to avoid some of the worst financial pitfalls. Because each individual situation will be different there is a danger to blindly following (or offering) standard advice across the board. However, with consultation and careful planning there are a number of strategies estate planners can recommend that may help your family protect your assets now, and when the estate tax returns. Forewarned is forearmed, and taking the time to consult with your estate or financial advisor and plan ahead may be the best action you can take. Wednesday, October 13, 2010 Prepare Now for an Uncertain Future
There’s a useful saying that goes something like this: “Expect the best, but prepare for the worst.” Never has that saying been as useful as it is right now in regards to asset protection and estate planning. As Laura Lallos mentions in her article in the Morningstar Advisor, “Estate attorneys are trained to prepare for every contingency. But how do you plan for the unimaginable? Who would have predicted a U.S. tax system with no estate tax at all--and no certainty about what the estate tax will look like in 2011?”
Planning for the future when the future is so foggy is a challenge at best, but this unique year for taxes offers some once-in-a-lifetime opportunities for giving and saving as well. This seems to be a time of contradictions. As the article points out, “The best strategy that financial advisors and attorneys can pursue now is to prepare their clients for the worst. On the bright side, some clients can also seize opportunities created by the gaping holes in the tax law for 2010.”
The article suggests a number of strategies that you can implement now to prepare for an uncertain future. Some of these include:
Give monetary gifts now, when the gift tax rate is a low 35%, in order to lessen your taxable estate.
Take advantage of the one-year-only lapse in the Generation Skipping Transfer Tax.
Create a Grantor Retained Annuity Trustbefore the end of October to take advantage of the currently very low Section 7520 rate.
See your estate planner and make sure your estate and asset protection plans truly are “prepared for the worst.” We may not yet know what next year will bring, but that doesn’t mean we can‘t take steps to ensure our clients are prepared for whatever the future may hold. Friday, September 24, 2010 Lapse in Generation-Skipping Transfer Tax Makes Giving to Grandkids Easier Than Ever
Wealthy grandparents have a unique opportunity this year to give their grandchildren gifts of substantial value without incurring any gift tax. This is a huge savings opportunity!—so why aren’t more people taking advantage of it?
Part of the reason may be lack of awareness. Everyone knows about the Bush administration’s year-long repeal of the estate tax, but very few people seem to be aware that the Bush tax cuts included a year-long lapse of the generation-skipping transfer (GST) tax as well. According to this article in Reuters, “generous grandparents could give away $3.5 million without paying the [GST] tax” during 2010.
But before you call the grandkids with the good news, consider whether or not you feel comfortable giving them such a large sum outright. If your grandkids are still young (and not yet responsible about money and finances) you may not want them having such a large sum to play with; and unfortunately, giving the gift in trust is not an option in this case. “To take full advantage of the GST tax break, assets should be transferred directly to beneficiaries and not to a trust. Money placed into a trust may lead to taxes when distributions are made later on.”
If your grandchildren are responsible adults, and if you’ve been considering giving them a monetary gift anyway, this lapse in the generation-skipping transfer tax could be just the push you need. Talk to your attorney or financial advisor about your gift-giving options. Wednesday, September 15, 2010 State Of Washington Takes Action Against Retailers of DIY Legal Documents
There has been lot of hullabaloo in the news recently about Do-It-Yourself Wills and Estate Planning, most notably a debate on Forbes.com with articles presenting The Case For Do-It-Yourself Wills and The Case Against Do-It-Yourself Wills. Well, the state of Washington just weighed in on the subject with a settlement between the Washington Office of the Attorney General and Legal Zoom, a company that offers DIY legal documents online; and the ruling leaves no question as to where the Washington Attorney General stands in his opinion:
“’LegalZoom offers do-it-yourself legal documents online but can’t provide you with legal advice or tell you which forms to fill out,’ Attorney General Rob McKenna said.
Under a settlement with the Attorney General’s Office, LegalZoom can’t compare its costs to attorneys’ fees unless the company clearly discloses that its service isn’t a substitute for a law firm.
Simply selling legal forms doesn’t constitute the practice of law. LegalZoom can only provide an online form service that allows consumers to choose and complete their own legal documents, explained Consumer Protection Division Chief Doug Walsh.
The agreement filed today in Thurston County Superior Court also prohibits LegalZoom from engaging in the unauthorized practice of law, selling personal information obtained from Washington customers or misrepresenting the benefits of any estate distribution document.”
Regardless of your existing thoughts on the subject of DIY wills and estate planning, the comments and actions of the Washington Attorney General certainly provide food for thought. Monday, September 13, 2010 How to Prepare for Dismaying Changes to Estate Tax Law
This may seem like we’re listening to a broken record, but once again Congress’ inability to act is creating uncertainty in the estate-tax-planning world. We’re little over 3 months away from a major upheaval in the estate tax, and according to the New York Times the upcoming law is likely to cause a lot of grumbling unless Congress takes action. And it’s no wonder when the new law will mean that more families are taxed at a higher percentage:
“The amount of each estate that is exempt from estate tax is scheduled to become $1 million in 2011 (down from $3.5 million in 2009, when the tax was last in effect). The tax on the balance is to rise to 55 percent in most cases (up from the 2009 rate of 45 percent). So now is the time to consider the various tax strategies available.”
What this lower exemption rate really means, however, is that more families will be caught off-guard when a loved one passes away and the survivors are suddenly hit with a massive tax bill.
That is unless families start planning now.
The Times article mentioned above suggests that “the easiest way to reduce the tax bill is to give as much as $13,000 a year each to as many people as you like — which you can do without paying gift tax;” but when you consider how little $1 million really is (especially when the value of your home, retirement savings, etc. are all included when adding up your total assets) we’re guessing that there are a lot of people out there who are over the exemption amount, but don’t feel they can afford to go handing out $13,000 every year. Much more appealing are some of the other planning strategies suggested in the article, including:
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“Buy a one- or two-year [life insurance] term policy to cover the tax billif the exemption amount is only $1 million.” The policy will help your heirs cover what could be a hefty tax bill, but the policy “[could] be canceled if Congress eases your estate tax concerns;” and
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“Create a trust.”The article suggests a GRAT (Grantor Retained Annuity Trust), which is a great tool for high-value assets that are expected to appreciate during your lifetime; but for married couples simply looking for a way to protect their children from a hefty federal estate tax down the road a Credit Shelter Trust may be a better option.
There are a number of other ways you might be able to prepare for the coming estate tax upheaval—the best way to protect your own family is to contact an estate planning attorney and ask about your options. 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 1st, 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 15th.
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.
Our firm has no political leanings or agenda. We know that there is certainly much debate to be had about the pros and cons of the proposed health care reforms, but as regards end-of-life decisions and health care directives, we hope we have been able to clear up some confusion and ease your mind. If you still have questions about what it means to have a health care directive please don’t hesitate to call our office. |