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  • Archive for April, 2011

    How Successful CEOs Keep the Family Business in the Family

    Friday, April 29th, 2011

    How long will your family business stay in the family? One generation? Two generations? How about 4 generations down the line?

    The truth is that very few family business stay in the family beyond the first generation. Statistically, Only 40% of family owned businesses survive to the second generation, 12% to the third, and 3% to the fourth. There are many possible reasons for this, such as lack of interest by subsequent generations or the evolving market and economy, but one of the main reasons that family businesses don’t survive to the second and third generation is lack of planning.

    Which families have been successful with succession planning for their businesses? This article in Business Week profiles the famous families of business, and includes some interesting discussion of why certain families are successful where others aren’t. Parent-child relationships often become fraught with tension when the time comes to pass the baton, but history has shown that succession transitions are much smoother when the occur gradually, and according to a plan created and agreed upon by ALL interested parties.

    Business succession planning is a key element to owning your business at any step of the game, not just at retirement age. This is because it is not merely about exit strategy, but about making goals and planning for future success. Leaving the business to your children is not your only option. You may decide to sell your business, or leave it to a partner. The options are out there, if you only know where to find them.

    This is where an estate planning attorney can help.

    Whether your business is in its first generation or its fifth, whether you intend to pass it on to your children or sell it, planning is essential if you want your business to survive. Our firm can help you do just that. Whether through wills and trusts, or the succession planning described in this blog, it is our business to look to the future. Trust us to help you do the same.

    One Simple Step Now Can Save Time and Money Later

    Wednesday, April 27th, 2011

    Being named as the executor of the estate of a deceased loved one comes with many challenges, including dealing with the probate system, and refereeing unhappy family members; but one of the most difficult (and least discussed) challenges is sorting through the plethora of paper and information that people collect over the course of a lifetime.

    You can save your executor (and your family) time and money later by organizing your important documents and finances right now. If you’re not sure where to begin, or what information an executor would need to know, we’ve assembled a list of information and documents an executor might need quick and easy access to if anything were to happen to you:

    • Instructions and letter to trustee: Contact information for your EP attorney and trustees, instructions on how to begin the process.
    • Minor children: Information about your minor children, nearby guardians or relatives, medical and health insurance information.
    • Personal Information: Birth and marriage certificates, passports, family, friends and contact people.
    • Estate Planning Documents: Trust, wills, any amendments, personal property memorandum.
    • Employment/Business Information: Contact information for supervisors, client information if you are a small business owner.
    • Health Care: Advanced Health Care Directive, HIPAA, emergency contact information, phone numbers for doctors, health insurance particulars.
    • Financial Powers of Attorney
    • Real Estate and Tangible Property: Deed to your home, mortgage information, homeowners and fire insurance, vehicle records, artwork and antiques.
    • Bank Accounts and Investments: Account numbers and locations, contact information.
    • Monthly Expenses and Bills: A copy of one monthly statement for each.
    • Information about recent Taxes
    • Retirement Accounts/Government Benefits: Account numbers, beneficiary information.
    • Life Insurance: Account numbers, beneficiary information
    • Memorial and Burial/Cremation: Preferences, pre-paid arrangements, phone numbers.
    • Memberships/Secured Accounts/Passwords

    Once you are organized, keep your information in an accessible place and make your executor aware of the location. This simple act of organization will not only benefit you right now, it will save your family and your executor much time, money and frustration later on.

    Memories Make Your Legacy About More Than Property Alone

    Monday, April 25th, 2011

    Have you ever wished you could go back in time and know your mother or father as a young person? Have you researched your family history or genealogy and kicked yourself for not asking your grandparents about their knowledge and experiences when you had a chance?

    Technology has changed so much in the past century or half-century that never before has the world in which our grandparents grew up seemed so foreign to us. It’s hard for many people to imagine a world without cell phones or the internet, let alone a world without cars, Tupperware, or refrigerators. And it isn’t only technology that has undergone incredible changes: International politics and the great wars of the 20th century have changed the face of the world map many times over. Third world countries have become major world players.

    It is for these very reasons that writing memoirs, or a family history, has become very popular in recent years. In the midst of all these staggering world and technological changes, a family history provides a rich cultural education and perspective, and plays a huge part in how we define ourselves and identify with the world around us. Many young people are hungry to know where they come from, and are asking their parents or grandparents to put down their history and experiences in a personal memoir.

    Writing your memoirs or a family history may seem daunting, but it doesn’t have to be difficult. In fact, it has become so popular that there are quite a few books and tools out there to help guide you through either writing your own history or interviewing older relatives to record theirs.

    Everyone knows that you create an estate plan to provide for your descendents and pass on your estate: property, assets, and wealth. But this is only a part of what you want to pass on to your children and grandchildren. An Estate Plan can insure that your wealth is passed down, but your history and experience are just as important an inheritance. Your attorney can help you with the former, but only you can preserve the wisdom and experience that makes your history so unique.

    New Criteria for Alzheimer’s Can Lead to Early Diagnosis, Better Treatment and Planning

    Friday, April 22nd, 2011

    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.

    Protecting Your Children with a Nomination of Guardians

    Wednesday, April 20th, 2011

    Choosing a guardian for your minor child could be one of the most personal decisions you ever make—it’s also one of the most important, which is why many couples turn to an attorney they trust to not only help them draft their nomination document, but also help advise them in this crucial decision. With such a personal matter the decision-making criteria will stem primarily from the heart, but there are some legal factors and implications that may affect the decision, and this is where an attorney can be helpful.

    Forbes online recently published an article outlining the specific ways in which an attorney can be indispensable when choosing a guardian for a minor child; these include:

    Explaining relevant statutory framework regarding guardianship to parents. As the article mentions, guardianship laws vary significantly from state to state. The manner in which you choose to name your guardians will likely be different depending on which state in which you live. For example, will you name just one guardian for both person and property, or will you need to name specific guardians for each of those two areas?

    Discussing factors clients should consider when naming a guardian. There are so many criteria to consider when choosing a guardian that many parents get caught up in how to prioritize essential qualities of potential guardians. An attorney certainly can’t tell you which of your friends and family may be most fit to care for your child, but an attorney can help you asses the financial ability, emotional willingness, and compatibility of values of your candidates.

    Emphasizing economic implications of the client’s decision. Most parents, when considering guardians for their children, think primarily of emotional attachment, family dynamic, and parenting style; but an attorney will remind you that finances should also be a significant part of your decision-making process. Guardians are not necessarily legally obligated to use their own funds to support their wards, which means that parents will want to discuss with an attorney the best way to provide financial support for their children.

    Drafting provisions setting forth client wishes regarding the upbringing of their children. Parenting is an incredibly personal process; hundreds of small choices are made each day which shape the minds and values of our children. Some parents may want to express their wishes for how their child should be raised, even after their death. Guardians cannot be required to follow parenting guidelines when they accept guardianship; an attorney, however, can suggest a few ways that parents can encourage guardians to respect their wishes regarding upbringing.

    A nomination of guardians may very well be the most important estate planning document you draft, our firm can help ensure that every bit of information has been considered and addressed before you make your final decision.

    New Portability Provision Should be Considered with Caution

    Monday, April 18th, 2011

    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.

    When It Comes to Estate Plans, How Crazy is TOO Crazy?

    Friday, April 15th, 2011

    We often mention on our blog how important it is to create an estate plan regardless of the size of your estate. We also frequently remind our readers of how flexible estate plans can be to protect your family in all the varied and unique ways you require. Well, just in case our word isn’t enough for you, the San Francisco Chronicle helps us out with this article naming 10 of the strangest wills in recent history, including:

    Leona Helmsley, who left $12 million in trust to her dog.

    Harry Houdini, who directed in his will that a séance be held every year on the anniversary of his death.

    Gene Roddenberry, who requested that his ashes be scattered in space (outside of the earth’s atmosphere.)

    Mark Gruenwald, the Executive Editor of certain beloved Marvel comics, who instructed that his ashes be mixed with ink and used to print comic books.

    Charles Vance Miller, wealthy Toronto attorney, who bequeathed a large portion of his estate to whichever Toronto woman produced the most children in the decade following his death.

    And more

    Aside from the amusement these eccentric estate plans provide, they teach a valuable lesson as well: No estate is too large or too small, no request too strange, no question too crazy to bring to your estate planner. An estate plan (and estate planner) can help you achieve your goals no matter how mundane or unusual they may seem.

    5 Missteps That Can Sabotage Your Estate Plan

    Wednesday, April 13th, 2011

    When it comes to protecting your wealth and your family creating an estate plan is one of the most important things you can do. An estate plan is your key to ensuring that your hard-earned assets are distributed (or saved or invested) as you designate. An estate plan is your family’s safety net. Unfortunately, too many people attempt to take shortcuts with their plan, and find themselves with a safety net that is falling apart just when they need it most. Below are 5 of the most common missteps that can sabotage your estate plan, and how you can avoid them.

    1. Neglecting to fund your trust. A trust can be a wonderful tool for protecting your assets; flexible and customizable, a useful trust can be created for just about every situation. But a trust is like a strongbox—if you don’t fill it up it has nothing to protect. Accounts and assets must be put in the name of your trust for it to work as you’ve designed it to.

    2. Not enlisting the help of an estate planning attorney. There are a number of Do-It-Yourself will and estate planning programs out there that promise you a full estate plan for a cheaper price; but estate plans are complicated things, requirements change depending on your state of residence, the size of your estate, the age and situation of your beneficiaries, and much more. If you aren’t able to work with an attorney to create your plan, at the very least we urge you to have an attorney review your plan before you sign it.

    3. Neglecting to mention previous estate planning documents, or making unofficial changes in the margins of documents that have already been signed. When creating a will or a trust or any other common estate planning document it is usually necessary to revoke any previous documents so there is no confusion about which document is current and valid. Neglecting to do this can end with your assets tied up in probate court for months or years—or even worse, invalidating both documents completely.

    4. Putting your plan somewhere safe—somewhere so “safe”, in fact, that nobody can find or access it! People recognize that estate planning documents are things of value, and as such should be protected in a locked filing cabinet or safe deposit box. Wherever you choose to store your documents, be sure one or two trusted individuals have not only the knowledge of where the documents are, but also the ability to access them. An estate plan does no good if it cannot be accessed when it’s needed.

    5. And finally, one of the most common missteps that can sabotage your estate plan is failing to update your plan regularly. Not only do federal and state laws change periodically (as we have recently experienced) but you will undoubtedly experience changes in your own life and fortune. Failing to update your plan to keep up with the law or with your own life can result in an estate plan that is as useful as a car you neglected to maintain—it may look fine on the outside, but it simply won’t run anymore.

    6 Things You Should Know About Your Healthcare Directive

    Monday, April 11th, 2011

    We have recently seen one or two stories in the news that have brought the issue of health care directives to forefront of people’s minds. Most people know that a healthcare directive is one of the primary documents of any complete estate plan, but not everybody knows exactly what should be included in the document itself. Do you have to specifically name your spouse if you want that person making decisions for you? Is the healthcare directive the place to include a DNR (Do Not Resuscitate) statement? What about funeral arrangements or organ donation—does a healthcare directive deal with things that happen after death?

    These are all good questions; here we attempt to answer these questions and more, as well as list some of the important things to know about—and include in—your healthcare directive:

    1. Healthcare directives can have many names depending on where you live and the exact nature of the document. Some common names are: Advanced healthcare directive, Advance directive, Healthcare power of attorney, or living will. (Note: These are not all the same document with different names, but they do all serve similar or related functions. Contact our office for more information)
    2. A healthcare directive should first and foremost name your healthcare agent: the person you want making decisions for you when you are unable.
    3. A healthcare directive should absolutely include your wishes and preferences for healthcare treatment, including a DNR statement, preferences for artificial nutrition and hydration, antibiotics, pain relief, and other medications.
    4. Your healthcare directive should include the name of your primary care physician, if you have one, as well as any pertinent medical history or conditions.
    5. Healthcare directives can be written to reflect your religious or spiritual beliefs, including religious beliefs relating to blood transfusions, end of life care, and pregnancy.
    6. A healthcare directive can and should make reference to post-mortem issues such as organ donation and funeral arrangements. Whether or not your wishes can be enforced may depend on your family and the state in which you live, but including your wishes may be of considerable help and comfort to your family.

    Understanding Your Last Will and Testament

    Friday, April 8th, 2011

    Although recent news surrounding the estate tax—both its repeal and its reinstatement—has died down, many people are still talking about their estate plans. Most people recognize that now is the time to create their estate plan, or to review and update their existing plan if they have one. This means that many people are asking questions about the primary document in just about any estate plan: the Last Will and Testament.

    What is a Will?

    A will is, for many people, the cornerstone of their estate plan. In fact, if you only create one estate planning document (which we don’t recommend) that document is probably a will. A will is the document which details your wishes about how and to whom your property will be distributed upon your death. A will can list your property in great detail, or it can make a statement about “all my legal property” in general. Your will names an executor, the person who will carry out your wishes as detailed in the document. And if you have minor children your will can name guardians, the adults you choose to care for your children in your absence.

    What is required to make a Will?

    At its heart a will is very simple.  Requirements will differ depending on your state of residence, but there are some basic requirements that will be the same across the board:

    • A will must be created by a testator who is of legal age, who is proven to be of sound mind and judgment, and who is under no duress.
    • A will should revoke all previous wills and codicils.
    • A will should be signed and dated.
    • A will generally needs the signatures of witnesses, and in some states must also be notarized.

    It is important to note that there is no requirement that a will must be created by or with an attorney; however, homemade wills have been frequently found to be invalid, or have been contested by disgruntled heirs or potential heirs, so having the help and advice of an attorney is highly recommended.

    What happens if you don’t have a Will?

    If you don’t have a will your property will be distributed according to the intestacy laws of your state. Property will generally be inherited by a spouse, or equally by a spouse and children. If there are no spouse or children then property will generally go to living parents or siblings, then to nieces, nephews, or other living relatives who can be found. The state will choose an executor for your estate, as well as guardians for any minor children you have. Unfortunately, the people chosen by the state to serve in these roles may not be the people you would have chosen. Additionally, the probate process is likely to be even longer than usual as the extent of your estate, as well as any outside claims to it, are investigated.

    Luckily, there is very little reason for anyone to die without a will. Although wills can be designed to be as comprehensive and intricate as you like, they are at heart very simple documents which can provide an incredible peace of mind for you and your family. Contact our office—or another attorney you trust—to help guide you through the process of creating your own last will and testament.