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  • Archive for December, 2009

    No Estate Tax in 2010!… But Don’t Break Out the Champagne Just Yet

    Monday, December 28th, 2009

    The question on everybody’s minds the past few months has been “what legislative action will be taken regarding the expiration of the estate tax in 2010?” Well, Congress has adjourned for the year and the answer to the question is… Nothing.

    With Congress home for the holidays and no action taken, the estate tax is still slated to disappear on January 1st, reverting in 2011 to the old rate of 55 percent for estates worth more than $1 million. But before you get too excited, take a moment to read what this article in the New York Times has to say:

    “Jere Doyle, wealth strategist at Bank of New York Mellon, said the wealthy should not get their hopes up for an end to the estate tax. He pointed out that an estate did not have to submit its first tax bill until nine months after a person’s death. The Senate could wait, then, until the summer to decide on the estate tax and make it retroactive to the beginning of the year. This would wreak havoc on estate planning. Even if the Senate acted early in the coming year, it could still lead to a flurry of legal challenges on the constitutionality of reinstating a tax that had disappeared.”

    It turns out the Congress’s failure to act has not made it easier for you to pass your wealth onto your children, it has only made things more uncertain than ever. The best action you can take during this “in-between time” is to have your estate plan reviewed by a professional to ensure that you’ve taken the right steps to prepare for whatever the future may bring; and most importantly, do not submit the first tax bill for a deceased’s estate in 2010 without talking to your estate planning attorney first!

    Celebrity Gossip Can Save Your Estate!

    Wednesday, December 23rd, 2009
    • Did you know that Jimi Hendrix’s estate took twenty years to finalize because he didn’t have a will?
    • Have you heard about Heath Ledger’s two year old daughter who got nothing when he died because Ledger neglected to update his will after she was born?
    • Can you imagine how difficult it would be to sit down and try to talk about your estate plan with twelve of your children from nine different mothers? That’s what Ray Charles (brave man) did.

    We make no secret on our blog of how important we think it is to talk about estate planning to friends and family; we also admit that we know how difficult a subject it is to broach, and we’ve tried in the past to offer advice on how to make the discussion a little easier. Now we can recommend a book that can help you not only come to a better understanding of the ins and outs of estate planning, but also provide fun and interesting topics to serve as conversation starters with your family over the holidays.

    The book, Trial and Heirs, by Andrew and Danielle Mayoras, “uses real celebrity stories to help you avoid estate ‘errors’ as you plan for your ‘heirs’… and gives you a front row seat in the courtroom while the authors replay the scenarios and point out what went wrong, the winners and losers, and what you can learn from it.”

    Probate, estate planning, and trusts may seem like something for the rich and famous—something removed from the lives of the average Joe; but the truth is that there is nothing more universal than death and the process of dealing with the aftermath. Rich or poor, famous or unknown… we all have to plan for the inevitable.

    How to Pick the Perfect Health Care Agent

    Monday, December 21st, 2009

    Cicero said “In nothing do men more nearly approach the gods than in giving health to men,” a quote which underlines the important role of anyone involved in your health care, whether it be a doctor or an agent. A health care agent is the person who makes medical decisions for you if you are unable to make them for yourself, decisions which often pertain to life and death, and can include the very difficult decision of whether or not to continue your life with artificial means. You certainly want to have someone in this role who is close to you, someone you can trust, but that is not the only criteria you may want to think about. You’ll want to make sure your agent is also someone who will ask smart questions, work thoughtfully with your doctor, and take an active role in making sure that your wishes are followed. The role of health care agent can be very “close to the gods” indeed, and should be taken seriously as such.

    If you have a vague idea of what a health care agent is and does, but aren’t quite confident in the fact, the California Office of the Attorney General has provided this very informative article on the subject, which addresses not only the definition of health care agent, but also includes helpful tips on how to choose the best person for the job, as well as important things to keep in mind if you are the person who is acting as agent for someone else.

    Awareness Can Help Prevent Senior Abuse

    Friday, December 18th, 2009

    In all humor there is a shred of truth, and Mark Twain was a master at using humor to cut straight to the truth of just about any situation. The following quote by Twain seems especially astute: “When I was younger, I could remember anything, whether it had happened or not; but my faculties are decaying now and soon I shall be so I cannot remember any but the things that never happened. It is sad to go to pieces like this but we all have to do it.”

    The frightening truth is that as we age we become vulnerable. As the body fails we have to set aside our pride and rely on others for help. But the truly frightening prospect is the possibility that our mind may fail as well. We begin to doubt our memories, and technological advances outstrip our abilities to keep up with them. With this vulnerability comes the opportunity for abuse.

    Unfortunately, elder abuse is becoming more and more common. Seniors are a growing class of individuals with money in savings or retirement, and there is no shortage of scam artists looking to take advantage of them financially. The truly sad fact is that most financial elder abuse is committed by someone close to the victim, a person in whom they have placed their trust. In such cases, the abuse may not be pre-meditated, but that in no way makes the abuse acceptable.

    The good news is that there are ways to guard against financial abuse. The California Bankers Association has published an excellent list of tips to help prevent elder financial abuse and significantly reduce your chances of becoming a victim, and your estate planning attorney can help you with many of them.

    If you think that someone you know may be the victim of elder abuse, either physically or financially, you can help. The National Center on Elder Abuse has a help hotline, as well as a list of warning signs, and community outreach opportunities.

    Talking About Elder Care

    Wednesday, December 16th, 2009

    Do you know who will take care of you when you are too elderly to take care of yourself? According to the statistics your caregiver is likely to be a woman, and most likely to be your daughter or daughter-in-law. What this means is that unless you have a plan for your future long term care, the financial burden of caring for you will fall to her and her family.

    “Financial burden” refers not just to the expense of paying for food and medical costs, but to loss of income incurred over years of care-giving. “Women take time away from their careers to care for family members,” writes George I. Connolly, “and… lose an average of $659,130 over a lifetime in reduced salary and retirement benefits.”

    Many people think that government programs will pick up what they can’t pay for themselves, but relying on government programs can leave your family footing just as much of the bill as they would without them. You may want to consider other alternatives as well, such as investing in long-term-care insurance. If you aren’t sure about your options, or how to start planning for the future, call our office for help.

    If you are a daughter of aging parents, now is the time to talk to your parents about the future. Studies show that you are the one who is likely to shoulder the responsibility of caring for them as they age. Doing so will affect your family, your career, your finances, and even your health.

    The subject of aging and elder care is a difficult one, but not one to be left to the last minute. Talk to your family about your wishes and plans for the future, then bring your estate planning attorney into the discussion. Once you have an idea of your wishes, an expert can help you feel better about your options, and put you on the right path for keeping your family healthy, happy, and financially secure in the years to come.

    Estate Planning Lessons Learned in the Holiday Bustle

    Monday, December 14th, 2009

    Most of us look forward to these winter holidays as a time to spend with family, enjoy the spirit of giving, and even relax a few days away from the stress of our jobs. Every year we hear about how stressful the holidays are, and yet we look forward to them anyway. Why is it that estate planning—another activity rife with benefits that admittedly comes with a little stress—is often avoided at all costs? In truth, the things we do to make our holiday planning more enjoyable and less stressful can be applied to estate planning as well:

    1. Don’t wait until the last minute. Not doing our shopping (or planning) ahead of time often means we won’t get what we want. The same can be true of estate planning. Some areas of planning (specifically planning for Medicaid, retirement, and long-term care) must begin at least a few years before you think you’ll need it.
    2. You can’t please everybody. Just as blended families have to come to terms with the fact that they won’t please every in-law every year, you have to accept that you may not be able to please all of your children or heirs in your estate plan. In the end, an estate plan is about your assets and your wishes.
    3. Planning ahead makes execution easier. Everyone knows that braving the stores at the height of the holiday season is much easier if you’ve thought ahead and already know what you’re getting. Estate planning also benefits from a little bit of forethought, and the whole process runs smoothly if you go into your attorney’s office already having made a list of assets, goals, and people you trust.
    4. Expect to get what you pay for. Paying $5 for the tree in the corner of the lot doesn’t mean you’ve gotten a deal; more often it means you’ve gotten a tree that will lose all its needles in the next 2 days. Don’t make the mistake of getting a “deal” on an estate plan that won’t withstand the test of time.
    5. Don’t forget the extras. That radio controlled car looks nice under the tree, but it’s not much fun if you’ve forgotten the batteries to make it go. Your estate plan may also require some “extras” to make it work: funding, memorandum of intent, letters of notification to fiduciaries, etc.

    With a little planning your holidays—and your estate—can be easy and stress free. Contact our office to get started on your estate plan before the year is over.

    Will Nursing Homes Bankrupt the Nation?

    Friday, December 11th, 2009

    Along with the rest of the nation, you are probably watching the progress of various versions of the health care legislation making their way (or not making their way) through Congress. Today’s New York Times points out that the current bill contains a “major new federal insurance program for long-term care” — although many are not aware of it.

    Should it become law, the program might have a significant effect on a problem that is already bad, and promises to get worse. That is, how are we to care for members of our society who can no longer care for themselves, but might live for years? To give just one prominent example, former President Ronald Reagan revealed his Alzheimer’s diagnosis in 1994, but did not pass away until ten years later.

    Nursing home costs have the potential to bankrupt families that are not prepared with legal planning. Drafted by the late Sen. Edward M. Kennedy several years ago, this federal insurance program might be an important tool in addressing the problem, but critics say it will be unsustainable. Instead of families going bankrupt paying for nursing home care, it will be the government, in their view. Read the entire article here.

    Portrait of A Caregiver

    Wednesday, December 9th, 2009

    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.

    New Developments in the Estate Tax Arena

    Monday, December 7th, 2009

    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.

    Test Your Knowledge: An Estate Planning Quiz

    Friday, December 4th, 2009

    How much do you know about estate plans? And how do you know when you need one?

    Many people have a vague feeling that they should execute some kind of estate plan eventually, but think (hope) that they really don’t need one right now. On our blog we spend a lot of time telling people that they do need an estate plan, and they probably need one right now—or yesterday!—and we hope we do a good job of explaining why you need one. But maybe it’s time for you to decide when the time is right. This quiz will help you determine just when (and if) you need to do some estate planning.

    1. Do you own a house?

    Owning your own home means you have at least one significant asset, which affects your need for planning in a number of ways: First, a piece of property cannot be split between people, it will have to be sold (which can take months or even years) and the proceeds divided among your heirs—often at a loss, especially if the house was undervalued to sell quickly. Second, many people who feel they have “small estates and won’t have to worry about Probate or the estate tax” are surprised when they find that the value of their home does indeed push their estate over the line. Third, if you are married you may need to make provisions for your spouse if you would like them to be able to continue to live in your home.

    2. Do you have minor children?

    If you have minor children and have not made provisions for them in case of your death or incapacity the government will be in charge of their futures. This could mean your children are put in the care of foster parents or become wards of the state. That is not a chance you want to take.

    3. Do you want your heirs to have to wait months (or years) before receiving an inheritance that is only a percentage of what you left them?

    Probate is a long and expensive process. Without a plan in place your assets will have to be probated before they can be distributed. Not only does this often take years, but the probate fees (which can be considerable) are taken out of your estate—leaving less for your heirs.

    4. Do you know how you want to spend your final moments?

    Most people don’t die quickly and quietly at the ripe old age of 98. Most people fall victim to accidents, illness or dementia—unable to make their own health care decisions. Without a healthcare directive or living will that specifically outlines your wishes and instructions for your health care and nominating an agent to carry out those wishes, you could end up in a Terri Schiavo situation—costing your loved ones both financially and emotionally.

    (NOTE: There is much that goes into your estate plan decision-making; this is only a partial quiz, and not a planning tool. Please contact our office for more information and an in depth interview to determine what kind of planning will be best for you and your family.)