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  • Archive for January, 2011

    Planning to Make Your Life Extraordinary

    Monday, January 31st, 2011

    One of the best parts about doing the work that our firm does is that we get to help people evaluate their priorities and define for themselves what is truly important. Sometimes it’s too easy to get caught up in the day-to-day stresses and activities and to lose sight of what your true focus is. In the concerns of the ordinary it’s easy to forget to pay attention to the extraordinary.

    It may not sound appealing, but planning for your death makes you take a look at life from a very different point of view. Take the typical To-Do list, for example. Most people have a To-Do list filled with tasks such as “pay the bills” or “wash the car”, but don’t these lists evoke a feeling of heavy obligation rather than pleasant anticipation? If you were to take your list of Things to Do and add onto the end of it “Before I Die”, how would that change your list?

    This is a large part of what estate planning is all about. It’s about separating the wheat from the chaff, about evaluating your life, realizing what is truly important, and planning to accomplish and protect those things of value.

    Of course, nobody can live every minute in this state of heightened awareness. The bills do need to be paid and the car does need to be washed. But as you make that list of ordinary To-Do’s each morning try to include one thing that brings you closer to your extraordinary goal. Keeping the big picture in mind can give you perspective, and keep you focused on what’s really important. Make your own “To Do” list one that will bring you a sense of pleasant anticipation at the dawn of each day, and of happy contentment when you turn the final page.

    It’s Never Too Early to Make Your First Will

    Friday, January 28th, 2011

    We’d like to share with our readers a recent article in Forbes entitled How To Write Your First Estate Plan. This article supports something we’ve been saying in our blog all along: That everyone needs a will—whether you’re a young couple just starting out, an established family with valuable assets to protect, or an entrepreneurial business owner with succession on your mind. The article reminds us that a will “is the cornerstone of an [estate] plan,” and at whatever stage of life you may be is not too early to make your first will.

    “There’s a lot more to an estate plan than just a will, even for folks who don’t need a more complicated estate-tax oriented version. You might have pieces of it already–a living will signed when you had elective surgery or a beneficiary form filled out for a 401(k) when you got your first job. You need to make sure the pieces fit together.”

    Many couples or individuals are first motivated to create a will when they have young children, and the primary purpose of their will is to ensure that their minor children will be cared for and provided for should anything happen to the parents. This is certainly one of the best reasons to create your will or estate plan, but it is not the only reason, not by a long shot. If you drafted your will when your children were young and haven’t looked at it since—or if you never created a will because you don’t have kids and therefore didn’t think you needed one—it’s time to revisit the subject.

    An estate plan not only ensures that minor children will be provided for, but also that:

    • Older children have the means to continue their education if something happens to you
    • Your spouse or children are the recipients of your life insurance or retirement proceeds, and not the tax man or (even worse) an ex-spouse or ex-boyfriend or girlfriend.
    • You have someone trustworthy distributing your assets as you wish after you pass away.
    • Your business will transfer smoothly if you aren’t able to run it anymore.
    • And much more.

    “Whatever motivates you, fine. The point is–whether you’re in estate tax territory or not, if you don’t have an estate plan, you need one. (And if you have a really old one, you probably need a whole new one.)” Any opportunity is the perfect opportunity to start planning to protect your loved ones. Call our office (or your own trusted attorney) to learn what steps you can take toward protecting your loved ones right now.

    Knowledge and Communication is Key to Avoiding Family Fights

    Wednesday, January 26th, 2011

    Do your adult children know which of them will be your power of attorney if something happens to you? Most people don’t want to think about Alzheimer’s, dementia, or getting old; and those who have thought about it often choose to keep their wishes secret, their documents held under lock and key until the time comes when they are needed. But according to a recent article in Reuters, one of the most critical steps a parent can take toward preventing sibling fights is to state early and openly which adult child is their choice for power of attorney.

    “In order to avoid conflict, parents [should] sit down with their children and spell out who has been appointed and why… It’s something that really has to be thought out in advance, hopefully before a crisis has arisen and while the parent is still able to express their goals.”

    Open communication can go a long way toward smoothing relationships between family members, but if that by itself isn’t enough to keep the fights to a minimum, the advice of a trusted advisor can often dispel suspicions that may be brewing just beneath the surface. But don’t wait until arguments have already exploded, the best course of action is to consult with your advisor before intervention is necessary. Asking your advisor to sit down with yourself and your family members gives each child a chance to ask questions and voice their concerns; it also gives them a chance to hear from your own lips what you’re planning and why you’re planning it.

    5 Essential Tips for Executors or Trustees

    Monday, January 24th, 2011

    Serving as executor or trustee of a will or a trust is an honor… but it’s also a job—a BIG job—and not one to be taken lightly. The role of executor or trustee can be one of great financial power, but it carries with it a heavy fiduciary obligation. Fiduciary obligation means that an executor or trustee must act in the best interests of the beneficiaries; it means that although the executor or trustee may be doing all the work, he or she may see very little return on that work, which is all for the benefit of the named beneficiaries.

    If you have been nominated (or are currently serving) as an executor or trustee there are a few things you’ll want to remember as you go about your duties:

    1. The will or trust is your guide, the mission statement by which you should operate; read and understand the document completely, and have an attorney help you, if necessary.

    2. You need to be pro-active—to an extent. If you are managing a large amount of money or assets over a period of time it is probably not in the best interests of the beneficiary to let those funds sit in a savings account. Create (with an advisor, if necessary) a financial plan for the trust assets.

    3. Although you may be handling the estate assets, you should not have any personal financial dealings with the trust. You should under no circumstances borrow from or lend money to the trust. Keep your finances separate!

    4. Communication and transparency is key! Keep detailed records of all of your actions and transactions regarding the will or trust, and send regular reports to the beneficiaries. Regular communication prevents unhappy surprises or angry lawsuits in the future.

    5. You don’t have to do it alone. If you were picked as a trustee because of your financial knowledge and experience—great! But if you were picked because you are the oldest, or the most responsible, or the favorite you may feel overwhelmed by the job ahead of you. Don’t try to muddle through alone, get the help and support of an experienced attorney or advisor.

    Non-Traditional Couples Face Estate Planning Challenges

    Friday, January 21st, 2011

    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.

    Making Plans for Aging at Home

    Wednesday, January 19th, 2011

    There used to be very few options for seniors who began to have trouble living on their own. In many cases the only options available were to move in with family or move into a nursing home. Now, however, that doesn’t have to be the case. With new advancements in technology, the help of family and local aging services, and with some planning and forethought, many seniors will be able to live at home and on their own for many years. Here are a few things to consider right now if you want to age at home in the future:

    Support System- Do you have family or friends nearby who can check on you regularly and help when home maintenance issues crop up? Having someone close to you who can provide you with transportation is helpful as well, although many cities have public transportation services that may be an option.

    Home Renovations- Is your home senior or handicap friendly? Are doorways and hallways wide enough to accommodate a wheelchair? Could you easily add ramps or lifts in place of stairs, if necessary? Do your kitchen and bathrooms facilitate easy maneuverability with as little reaching or bending over as possible?

    Security or Medical Alert System- Having a security or medical alert system in place can provide immeasurable comfort to an elderly homeowner and his or her family. The technology for this is improving by leaps and bounds, and there are a number of different options available.

    In-Home Care Services- The length of time you can remain in your home can be greatly increased if you have the financial means for (and access to) quality in-home care services. Someone to do basic cleaning and cooking, and help with daily activities, can prolong your time spent at home… but you have to plan for it.

    Getting older shouldn’t mean you have to give up your home, your friends and neighbors, or your independence. For more information about what you may need to stay in your home as you age check out the website for the National Aging In Place Council.

    Excuses, Excuses… Why You Don’t Have a Healthcare Directive

    Monday, January 17th, 2011

    What is keeping you from signing a healthcare directive?

    A recent article in Reuters mentions that only 2 out of 5 U.S. citizens have some kind of healthcare directive, and that our own U.S. laws might be the cause. A study done by Rebecca Sudore of the University of California, San Francisco found that “Most states had practical restrictions that could make it difficult for many people to complete an advanced directive… In addition, many of the documents used in end-of-life planning were written in complicated legal language that the average person would have trouble understanding.”

    Some portions of an advance directive might be written in complicated legal language out of necessity, but we don’t think that’s any excuse not to have one, especially not if you have a knowledgeable and trusted attorney who is willing to go through the legal language with you to ensure you are comfortable with it. As for the other obstacles, the fact that “many states do not allow oral advance directives, and usually require that written documents have witnesses’ signatures, be notarized, or both…” and that currently “40 states do not automatically allow domestic partners and same-sex partners to become the default healthcare proxy;” well, these seem to us to be all the more reason to make sure you DO contact your attorney and get your healthcare directive in place.

    A healthcare directive, along with a will and a durable power of attorney, are the three foundational documents of any estate plan. Whether you choose to move on to more advanced planning techniques or not, every person should have these three documents at the very least. These simple documents can end up saving you and your family a world of heartache and expense.

    Of course, according to Reuters there is one other possibility about why you might be putting off your healthcare directive, “The biggest issue is that people do not want to do advance directives… There is a fear of planning for how we die.” Don’t let superstition keep you from protecting yourself or your loved ones.

    Government Rescinds Medicare Coverage of End-Of-Life Planning

    Friday, January 14th, 2011

    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.

    No More Excuses, It’s Time To Plan Your Estate

    Wednesday, January 12th, 2011

    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.

    A Low-Pressure (And Fun) Way to Discuss Legacy and Estate Planning

    Monday, January 10th, 2011

    The hardest part of legacy planning or estate planning isn’t necessarily choosing the right fiduciaries, or deciding how to distribute your wealth fairly among your loved ones… the hardest part of legacy planning or estate planning is often simply talking about it with family. In fact, having “The Discussion” can be such a daunting task that many families simply don’t do it, choosing instead to take their chances when the family patriarch or matriarch passes away and the succession plan is revealed.

    But avoiding the subject isn’t going to do you or your family any favors. More family infighting takes place after a death than at any other time. After all, this is when loved ones are grieving and emotions are high, when the central family figure or peacemaker may no longer be with you, and seemingly unequal inheritance distributions can no longer be explained.

    What if there was a way to have “The Discussion” before it was forced upon you? What if there was a way to make that legacy and estate planning discussion low-pressure and even fun? That is exactly what husband and wife psychologist team Carolyn Friend and James Weiner have done with their book and accompanying card game, The Legacy Conversation: the missing gem in wealth planning.

    A review of the Conversation Starters card game in Forbes gives a more detailed description of the game, including 7 or so sample questions to get the juices flowing; obvious questions such as “What cherished possession might your family fight over?” to the not-so-obvious questions such as “Have you ever found wisdom in a song’s lyrics? Name that tune.” The point of the Conversation Starters is not merely to discuss the family legacy, but to get to know your family members better, enjoy each other, and perhaps even grow closer in the process.

    If your family has been putting off the necessary discussion of succession and legacy planning, this might be just the game you need. Don’t be afraid to tackle the difficult subjects, you might find you enjoy them more than you expect. And when you’re ready, call our office. We can help your family with the practical details and legal legwork.