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  • Archive for June, 2010

    Should A Bank Help You Care for Your Elderly Parents?

    Wednesday, June 30th, 2010

    The influential Baby Boomer generation is aging, which means more and more of them are taking on the responsibility of caring for their elderly parents, and the Boomers are beginning to face up to the fact that they will need caregiving themselves in the not-so-distant future.

    Large banks are not immune to this trend—and the potential to increase their client base by offering financial elder-care services. The question is, how effective can a bank be at helping you care for your elderly relatives?

    According to this article in the Wall Street Journal banks can be helpful with certain financial issues such as helping to “sort out medical bills, hire in-home care or even manage the sale of a home.” Some of the larger banks are even beginning to offer more in-depth services such as “estate planning and setting up powers of attorney… crisis management (triggered, say, by a broken hip or a car accident); health and home assessments; Medicare-coverage selection and claims management; and evaluating retirement communities and long-term-care facilities.”

    All of this sounds great, but before you get too excited our firm would like to caution you to be as careful about hiring a bank to do your estate or elder care planning as you would be with any other attorney or professional advisor. After all, as the WSJ article says, “banks and trust companies aren’t doing this solely out of the goodness of their hearts. Providing extra services targeted at the elderly and their family caregivers can bump up the asset-management fees that clients pay each year. . . [or] persuade a few clients to move assets to an institution to meet its minimum deposit requirements.”

    So we urge you, before you jump into anything—whether it be with a bank, an attorney, a CPA or other important advisor—do the research and ask all the questions you need to ask in order to find out whether this advisor truly knows their stuff; knows the ins and outs of the law and the care-giving industry; and most important of all, make sure the person or institution you hire will be working for you, will be your advocate and your ally during difficult and confusing times.

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

    Monday, June 28th, 2010

    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.

    “For Richer or For Poorer, Till Death Do Us Part” Includes Retirement

    Friday, June 25th, 2010

    “I take you to be my lawfully wedded spouse, to have and to hold from this day forward, for better or for worse, for richer, for poorer, in sickness and in health, to love and to cherish; from this day forward until death do us part.”

    These aren’t just sweet words designed to bring a tear to your parents’ eyes on your wedding day, these words mean something—they mean that you intend to take care of your spouse all of your (or their) life. This includes retirement, and it even includes the months or years following your death.

    You might think that caring for your spouse during retirement isn’t any different than caring for your spouse the rest of the time, but that isn’t necessarily true. In many ways retirement requires us to look at familiar things with new eyes. So how can you go about the familiar job of loving and caring for your spouse during a new and unfamiliar time? U.S. News and World Report has some suggestions in this article entitled 5 Ways to Protect a Surviving Spouse in Retirement.

    When you choose to retire your financial resources suddenly become finite. You may still have an income in the form of a pension, social security, or withdrawals from savings accounts; but you can no longer count on regular pay raises or bonuses. According to author Mark Patterson, the key to protecting your surviving spouse (or even yourself!) during retirement is with maximization, preservation and planning. People often say they want to enjoy their retirement and spend their last penny on the day they die; but not at the expense of their spouse’s livelihood should he or she live 5, 10, or even 15 years after the first spouse is gone.

    The good news is that you can enjoy your retirement and protect your surviving spouse. All it takes is a little bit of forethought and a lot of planning. The forethought you have to do yourself, but we can help you with the planning. Call our office and let us help you show your spouse once again how much they mean to you.

    Can You Really Afford Long-Term Care Insurance?

    Wednesday, June 23rd, 2010

    The American Association for Long-Term Care Insurance recently released a report on the costs of long-term care insurance, and the results were surprising. Most people mistakenly believe that long-term care insurance is going to be expensive and difficult; but in fact, according to the report, “over one-fourth [of buyers under the age of 61] paid less than $999-per-year.” And in fact, “fewer than one in 10 (9.3%) pay $3,500 or more.”

    This is great news! This means that long-term care insurance could cost you less than $100 per month! The trick is that you have to think about it early. “Age at the time of application plays an important role in determining the cost for long-term care insurance the Association study reports. While 41.5 percent of buyers under age 61 pay between $500 and $1,499-per-year, only 20.8 percent of buyers who are ages 61-to-75 pay within this range.”

    This is not to imply that if you’re over the age of 75 you’re out of luck. You’re not likely to get the same great rates as someone in their 50’s, but you still may not have to pay an arm and a leg for long-term care insurance. According to the report, of applicants aged 76 and older only 28.2% end up paying an annual premium of $4,000 a year or higher. Actually, almost half of applicants in this age range still end up paying less than $2,500 a year. This may not be the attractive $500/year you could have gotten in your 50’s, but it also isn’t the thousands of dollars a month most people seem to be afraid long-term care insurance is going to cost them. In fact, it’s only a little over $200/month.

    If you’ve been thinking about long-term care insurance, don’t wait any longer. This is one situation where time is not on your side; the quicker you act the better it will be.

    The Estate Planning Needs of Women

    Monday, June 21st, 2010

    We’re all about equality, but the fact is that women have different estate planning needs than men. Whether they’re single or married, have children or no children, women have different things to think about when it comes to estate planning. This means that women need to be involved in the planning process: Express their own wishes, voice their own concerns, and ask their own questions. Here are three of the ways that women are different from men—and how it affects their estate planning.

    1. Women live longer than men. Among the senior citizen population (65 and older) more than three times as many women as men are widowed. This longer life expectancy means two things; first of all it means that women are the ones who will likely have to deal with taxes. When a married person dies their assets can transfer to their spouse tax free. This doesn’t avoid taxes it merely delays them, and the surviving spouse (the woman) will have to be the one to minimize the tax burden on the children. Second of all, women have to worry more about their retirement savings lasting them to the end. Estate planning is partially about distribution of your remaining assets when you die—it takes careful planning to ensure that you’ll have remaining assets after a long and active life.
    2. Women are the caregivers. This includes taking care of young children and elderly parents. Statistically, women are the ones who will initiate the estate planning process—mainly because they are concerned about the guardianship of young children. Women are also the ones who will eventually have most need of a caregiver agreement or help navigating the Medicaid application process when they’re caring for their older relatives.
    3. Women need to be most concerned about loss of primary income. Because men are still generally the primary breadwinners in a family, women are the ones most often left out in the cold when their spouse passes away and they lose that income stream. Women need not only to make sure they and their partner both have adequate insurance policies, they need to plan to keep those insurance proceeds and to avoid heavy taxes upon death.

    All of these things can be discussed and planned for with your estate planning attorney—and it doesn’t take away from your spouse or children. In fact, having your own plan in order actually helps the important people in your life. So don’t wait any longer, plan to protect yourself today and in the future.

    It’s a Dog’s Life

    Friday, June 18th, 2010

    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.

    More News About the Repealed Estate Tax

    Wednesday, June 16th, 2010

    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.

    Options Abound With Out-of-State Trusts

    Monday, June 14th, 2010

    If you have a family trust—or are considering creating a family trust—to protect your assets you may want to ask your attorney about creating an out of state trust. It’s a grantor’s market (so to speak) and creating a trust these days doesn’t mean you have to simply accept the tax laws of your state of residence. Creating a trust in another state—with tax laws that are friendlier to trusts—is a perfectly legal option, “the only real requirement is that [you] choose an in-state trustee.”

    As we mention frequently on our blog, there are many reasons for families to create a trust: credit protection, keeping assets in the family, estate planning, educational savings, and many more. Furthermore, trusts are no longer an exclusive tool for the rich and famous; trusts are useful for just about everybody, and the states recognize this.

    “States such as Alaska, Delaware, Nevada, New Hampshire, South Dakota and Wyoming have modified their trust laws in recent years to make them more attractive to individuals and families, including nonresidents, looking to minimize taxes, shield assets from creditors and preserve family assets in the event of a divorce, among other things.”

    If you would like to explore your options for out-of-state trusts we recommend working with your local attorney, someone you trust who can meet with you when needed, who can draft the trust documents for you. Your local attorney can then have a licensed attorney from the state of your choice review the documents for state-specific issues.

    How To Choose Your Executor or Personal Representative

    Friday, June 11th, 2010

    Serving as someone’s executor or personal representative is a HUGE job, and not for the faint of heart. Although it is commonly considered an honor, there is a lot of work involved, and an executor must have a great capacity for organization, attention to detail, meeting deadlines, and more. You may be tempted to name your favorite sibling or eldest child just to keep from hurting any feelings, but your family and heirs will not be well served if you choose your executor based on emotion rather than ability.

    Keeping this in mind, here are 4 things to consider when choosing your executor or personal representative:

    1. Your executor should be trustworthy. Your executor will be privy to all of your financial secrets: reviewing estate assets, determining your liabilities and paying off creditors, settling outstanding debts, and making distributions to heirs. Chances are you don’t want all that information spread throughout the family or community.
    2. Your executor should be organized. The person you choose will be in charge of a number of detailed tasks, both large and small. He or she will be making lists of assets, meeting court deadlines, making timely distributions for estate taxes, and more. Missing or being late for one of these many steps can draw out the entire process, costing your heirs both time and money.
    3. Your executor should be financially savvy. One of the responsibilities of executor is to keep the estate viable (making sure the mortgage and fees continue to be paid) during the probate process. If you have investment accounts you’ll want to ensure they won’t languish and lose their value before they can be distributed to your heirs.
    4. Your executor should have heart. Although probate is a can be a difficult and detailed process, it is at its core about the people you love. Your executor should have the ability to be caring and compassionate during this emotional time.

    If you don’t know anybody you would trust with all of these responsibilities don’t lose faith, there are other options. You can choose a bank or financial institution as your executor, or you can ask your estate planning attorney to partner with the person you choose as executor—helping them with the difficult tasks and ensuring a smooth probate for all involved.

    World Elder Abuse Awareness Day is June 15

    Wednesday, June 9th, 2010

    As we age we become vulnerable. We begin to doubt our memories, our bodies are not as reliable as they used to be, 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, both physically and financially. 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 elder abuse; and one of the best ways to guard against it is to be aware of it. June 15th is World Elder Abuse Awareness Day, and we urge our readers to participate and find out how they can learn more about this issue.

    To learn more about the warning signs and risk factors, and what you can do to help prevent elder abuse, click here. 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.