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  • Archive for May, 2010

    Planning for the High Cost of Raising Your Child AND Your Family

    Friday, May 28th, 2010

    How much does it cost to raise a child from birth to age 18? Online calculators now estimate the cost at about $250,000 (varying depending on where you live around the country), but any parent will tell you that it costs much more than that to raise a family. This is because children don’t grow up in a vacuum. Raising a child includes the cost of food, clothing, diapers, child care, and other necessities… Raising a family includes all of the above plus college education, insurance, retirement savings for mom and dad, and let’s not forget a little bit of estate planning.

    Does estate planning really rank up there with college savings and retirement? If you have a growing family the answer is an absolute yes. Financial experts such as the one quoted in this article in the Boston Globe will agree; your estate plan is a kind of family insurance, and is just as important as your homeowners or life insurance policy.

    Raising a family and creating your estate plan both require the kind of split thinking that allows you to look at the long-term future while still keeping yourself firmly grounded in the necessities of the here and now. Just as parents must consider both onesies and universities, roller skates and retirement—so must your estate planning take into consideration what your family would need if you were to disappear today, as well as planning for the possibility that you could be alive and well and spending your money long past the age of 85 or 90.

    If you have a growing family—or are a young couple about to jump into the joys of parenthood—don’t let the demands of the here and now blind you to the needs of the future. Schedule time every few months or so to sit down with your partner and re-evaluate your current financial situation as well as your future financial portfolio and your estate plan. Make sure they continue to reflect your long-term needs and desires.

    Stay Current and You’ll Stay Protected

    Wednesday, May 26th, 2010

    In many of our previous posts we’ve stressed the importance of keeping your estate planning documents up-to-date. Changes to the law, as well as changes to your own personal, medical and financial status can wreak havoc on a well-crafted estate plan if these changes aren’t addressed. A good rule of thumb is to have your attorney review your estate planning documents every 2-5 years, but are there other changes or life events that might necessitate a more immediate review or update? The answer to that question is YES!

    Andrew Chan has written a short article for the Boston Globe in which he lists 13 significant life events that should have you reaching for the phone to call your attorney. To go to the article and read his list click here. To Mr. Chan’s list we would add just a few more life events that could have an effect on your estate plan:

    • A change in residence—especially if you move to a new state.
    • Children or grandchildren turning 18 or graduating from college—this may or may not change your estate plan, but at the very least your young adults will now need their own health care directives and privacy forms.
    • If you anticipate one of your relatives or heirs disagreeing with your wishes and challenging your will.

    There are of course a great number of things which could impact your estate plan, not all of which can be named in one article or blog post; but if you stay aware—and stay in touch with your estate planner—you can rest easy that your plan will continue to function exactly as you intend.

    Back to Basics: Forethought and Planning Prevent a World of Hurt

    Monday, May 24th, 2010

    Wills and estate plans are always touchy subjects among family simply because they can have so much hidden meaning… at least that’s what heirs often think:

    I got mom’s jewelry but my sister got a cash gift—does that mean mom loves her more than me?

    What’s wrong with me that Dad didn’t choose me as executor?

    I never really liked the vacation home, but is my brother trying to cheat me by buying me out?

    If I ask my parents about their estate plan now will they think I’m eager for them to die?

    Wouldn’t things be so much easier if we could just lay all the estate planning issues on the table and discuss them openly and without judgment? Well, that is exactly what this article on abc.com suggests we do.

    The article includes 3 “Estate Planning 101 Inheritance Lessons” to help your family become better prepared for the inevitable: 1. practice honesty and transparency, 2. plan ahead and update often, and 3. think through your own wishes and the wishes of your heirs. Three simple suggestions that can save you and your heirs a world of fighting, hurt feelings, and high legal fees later on.

    But it’s not always easy to start such a sensitive conversation with family—that’s where our firm comes in. We can help you with the tough questions and decisions, and when the time comes we can help you discuss those questions and decisions with the rest of your family. Although it’s tempting to simply bury your head in the sand, the longer you put it off the more difficult it becomes. Let us help your family find a peaceful solution today.

    Senate Considers Option to Prepay Estate Taxes

    Friday, May 21st, 2010

    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.

    Harvard or Shady Oaks? How to Choose Your Financial Priorities

    Wednesday, May 19th, 2010

    There are any number of things for which you can be earning and saving money: investments, retirement, college, a home, a car, the current high-tech gadget… The thought of it all is enough to make a person dizzy! So how do you decide what are the most important things for your family’s financial happiness and security right now, and years down the road? Choosing your financial priorities requires taking stock of the present, a lot of thought about the future, and a little bit of help from trusted advisors.

    Robert Brokamp has written an article entitled “Should You Save For College Or Retirement”, which focuses on helping families and individuals organize their financial priorities. In spite of the title of his article, what Brokamp really stresses that there is more to good financial health than just college or retirement; a good financial future means taking care of your finances now by paying off credit cards, building an emergency fund, and having adequate insurance.

    Building a strong financial future includes more than just planning for college and for retirement, it should also include planning to ensure your family’s financial security should something happen to you. Brokamp alludes to this in his article when he mentions purchasing an adequate life insurance policy, but he neglects to mention how little that policy will actually provide if your assets are eaten up after your death by estate taxes, probate fees, or a young and spendthrift son or daughter.

    When it comes to your financial health, our firm may not be able to help you with the credit card fees, but we can help with the rest—especially ensuring that your efforts to save right now will not go to waste years down the line.

    Stuck In The Middle: Caring For Aging Relatives

    Monday, May 17th, 2010

    “Too rich for most government-funded social programs and not rich enough to pay for full-time, long-term care services.”

    Does this sound familiar? It is exactly the kind of financial situation most elderly find themselves in today, and one which requires many adult children who are still raising their own kids to also care for their parents. That is the situation in which Michelle Singletary, Washington Post staff writer, finds herself in today. In her W.P. article Prepare now for a future that might include caring for your elderly family, she describes the feelings of frustration, admiration, and obligation that come with caring for her elderly father-in-law.

    Singletary writes movingly about the realities of caring for an aging relative, but what she seems most determined to convey is that it is never too early to start thinking about what your own parents’ future holds. “If you have even an inkling that you may become the caregiver for an aging parent or relative, start planning for it now. Ask questions about the person’s finances. Collect information from community and nonprofit organizations. Get your own finances in order because you’ll probably have to pitch in financially.”

    Part of planning for your aging parent or relative is thinking about Medicaid, Long-Term Care Insurance, and the best way to save and protect your assets. Call our firm and let us help you—and help your aging parents.

    Prenups Help With Happily Ever After

    Friday, May 14th, 2010

    A lot of what we as estate planners do is help you protect your assets: We help you protect your assets for your children when you die, we help you protect your assets when you are elderly and need long term or nursing care, we help you protect your business or investment assets from frivolous law suits… but we can also help you protect your assets during marriage.

    “During marriage?” you may ask, “Why would I need to protect my assets during marriage? I would trust my spouse with my life.” This may be true (in fact, we very much hope it is true) but statistics show that more than 50% of marriages end in divorce, yet according to this article by Robin Epstein and Amy Epstein Feldman only 3% of marrying couples bother to create a prenuptial agreement. The low number may speak for the optimism of marrying couples, but not for their common sense.

    A prenuptial agreement is not an admission that you don’t really think your marriage is going to work. On the contrary, prenuptial agreements can be useful in many situations, not just in cases of divorce. If you are entering into a second marriage and have children from a previous marriage a prenuptial agreement is absolutely essential to ensure that your children are entitled to any assets you bring from your previous marriage. If you or your fiancé comes to the relationship with heavy debts a prenuptial agreement can ensure that your marriage doesn’t begin under the weight of all that debt. And a prenuptial agreement can be a precursor to your eventual estate planning.

    If you are planning a wedding in the near future, our firm can help answer any questions you may have about prenuptial agreements without any obligation. But really, knowing the many ways a prenup can protect you, your spouse, and your children—is there any reason not to have one?

    Trade Like A Man, Save Like A Woman

    Wednesday, May 12th, 2010

    How will you be planning for your retirement? According to CNBC your gender could play a bigger role than you think in your retirement plan. While of course not everyone will adhere to gross generalizations, studies have shown that men and women do have a tendency to take a different approach to saving and investing for retirement. Which way is the right way? Well, as John Ameriks points out in the article, “It’s not a matter of one gender being right and the other wrong… You just need to be aware of the differences when you’re making investing decisions.”

    The differences may not be as surprising as you think. Here are some of the things CNBC had to say about how men and women invest and save:

    • Men tend to be overconfident about their investing and retirement planning skills.
    • Women generally prefer less risky investments.
    • Men don’t plan for a long retirement.
    • Women save more over time.

    Considering the fact that our society still tends to view the stock market as “a man’s game”, and one with which women aren’t quite as comfortable, it makes sense that a man would be more confident with frequent buying and selling, while a woman might tend to go for the safer investment requiring less action and attention over the long haul. But lack of attention doesn’t necessarily mean lack of awareness. Women tend to worry more than men about security in their Golden Years. The article posits that this is because many men don’t expect to live much past 80, but another possibility is that men have more confidence in their ability to earn a living at any time in their lives; whereas women (who are often the ones to leave the job market in order to care for family) are more afraid of having to depend on an outside source for their livelihood.

    Part of planning for your retirement is planning for your estate. Whether you are a man or a woman, adventurous or conservative, a trader or a saver—your retirement plan and your estate plan need to be in line with each other. Our office can help ensure that your retirement and estate plans are compatible… both right now and decades down the line.

    Robin Hood Lives On: Tax Breaks to Help Your Family

    Monday, May 10th, 2010

    It may seem like you just can’t catch a break when it comes to paying taxes, but according to this article in the Wall Street Journal there are a few little known tax breaks that could end up saving your family money. Some are new—so new, in fact, that it is still before the Senate—such as the tax exemption for employer provided cell phones and smart phones; and some—like the tax free income homeowners can earn if they rent out their home for 14 days or fewer during a year—have been around for a few years.

    Of particular interest to our clients is the gift tax exclusion (another lesser known tax break that has been around for a few years.) As stated in the article, “Anyone may give anyone else up to [$13,000] per year in cash or property, free of gift tax. One partner of a married couple can double the gift and the exemption. So a couple with three married children and six grandchildren could give away over $300,000 a year, tax-free.”

    We say that this gift tax exclusion may be of particular interest to our clients because if you are looking for a way to lower your estate tax, or anticipate applying for government medical services in the next few years, giving gifts to loved ones right now may help you achieve your goal—if you go about it the right way.

    Contact our office for more information on how any of these “Robin Hood” tax saving techniques may help your family this year.

    Take Action in the Face of Estate Tax Uncertainty

    Friday, May 7th, 2010

    If you’ve been reading our blog regularly then you know that the 2010 estate tax repeal has caused no end of confusion and uncertainty; not only for those who have been dealing with probate and trust administration since the tax was first repealed, but also for those who are trying to think ahead and do the right thing for their spouses and children. Many people have come to the erroneous conclusion that they have no choice but to stand by and wait until the Washington politicians make up their minds about whether or not to restore the estate tax retroactively—but we’re here to tell you that you don’t have to wait to protect your assets and your family.

    Forbes.com recently published an article entitled How to Protect Your Family From Estate Tax Uncertainty. This article suggests that there are a number of steps you can take right now to protect your heirs and your assets, even if you don’t know what changes lawmakers may enact tomorrow or 2 months from now. Their suggestions include everything from working with your estate planning attorney on contingency plans to account for anomalies such as no estate tax or minimum exemptions, to common sense action items such as taking the time now to track your cost basis for assets (to help your executor and heirs determine the change in value for tax purposes.) The Forbes article also suggests that some people may want to plan to save by giving—taking advantage of the gift tax exemption amounts.

    There are always steps you can take to ensure that your estate plan is up to date, our firm can be your compass and your guide; we can help your family prepare for whatever the future may have in store.