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  • Archive for January, 2012

    How to Ensure Your Valuable Antiques Don’t End Up in Someone’s Yard Sale

    Monday, January 30th, 2012

    Have you seen Antiques Roadshow? It’s a PBS television show in which antique experts travel around the country to critique and appraise antiques brought in by local people. Quite often on the show someone will bring in an old knick-knack they found in grandma’s attic, only to find out it’s actually worth hundreds or thousands of dollars! Now imagine that for every person who makes this valuable discovery on television, there are at least three people who end up selling their own unrecognized treasure for a few bucks at a yard sale. It’s painful to consider.

    How can you ensure that your family recognizes the value of your treasures? The first step is to talk to your attorney about creating the right estate plan to protect ALL your assets, and provide for their distribution upon your death. Your next step is to make a list of assets and keep it with your estate planning documents, where it can be easily found. Your list of assets should include not only real estate property and financial accounts, but personal property as well—the artwork, historical artifacts, and antiques you value so highly. Your list should include a description of each item, an approximate value, and the name of the person you would like to inherit the item (if applicable.)

    This list is called a Personal Property Memorandum, and can be an essential component in your estate plan. Very often the person named as executor of an estate is the most responsible and organized member of the family; this is just what you need in an executor, but it’s not always the person who will look at a 200 year old, somewhat worn, antique bureau and recognize its value. Having a list of assets included in your estate plan will ensure that the valuable pieces are recognized and appreciated—regardless of who is named as the executor of the estate.

    For more information about personal property memorandums, or about creating the best estate plan to protect your family, please contact our office.

    The Joys and Sorrows of Gift-Giving During Your Lifetime

    Friday, January 27th, 2012

    “You can’t take it with you.”

    These are good words to keep in mind as we go through life, they remind us not to take ourselves too seriously, not to hold onto things we don’t need, and to be generous to those less fortunate than ourselves. Whether you’re thinking about estate planning or gift planning, however, there are a few other words to keep in mind: How much should I give away?

    Fortunately, this article in Smart Money—and the advice of an experienced estate planner—can help you answer the questions of how much to give away, when to give it away, and to whom.

    The article wisely counsels that two of the most important things to remember when considering your gift-giving questions are the estate tax exemption and the gift tax exemption. The estate tax exemption is the amount you can leave, tax free, to heirs upon your death. “For 2011 and 2012 you can leave bequests worth up to $5 million free of any federal estate tax ($5.12 million for 2012)… If you’re married, both you and your spouse are entitled to separate $5 million (or $5.12 million) exemptions.” This is something that should be planned for and taken advantage of in your estate plan.

    The gift tax exemption is the amount you can give away during your lifetime. “You can give away a cumulative total of up to $5 million to relatives, friends, whomever during your life without owing any federal gift tax or $5.12 million for 2012… If you’re married, both you and your spouse are entitled to separate $5 million (or $5.12 million) gift-tax exemptions.”

    There is also an annual gift tax exclusion amount of up to $13,000. “[Annual] gifts made under the so-called $13,000 tax-free-gift rule will not trigger any federal gift taxes, nor will they reduce your federal gift-tax or estate-tax exemptions.” However, as the article points out, any gifts made in excess of this $13,000 amount in any given year will begin to cut into your estate tax exemption or your gift tax exemption. So if you plan on making any large financial gifts this year you would be wise to contact your estate planning attorney first for advice.

    Republican Primary Inspires Discussion of Trusts

    Wednesday, January 25th, 2012

    If you follow current events at all it is impossible to ignore the fact that we are now in the thick of the Republican primary race—and that the Presidential election will not be far behind. With the political machine in full swing there have been quite a few news stories about the candidates’ financial backgrounds, and more than a little talk of “blind trusts.”

    Many of our readers will already know that a blind trust is a vehicle which holds the wealth of a candidate (or a politician serving in office) in an effort to avoid any conflicts of interest. We thought this might be a good opportunity, however, to discuss trusts in general: Which trusts are out there, what are the differences between them, and what purposes do they serve?

    Revocable Trust: A revocable trust is one of the most commonly used trusts because it is able to be revoked or changed so long as the grantor (the person who created the trust) is still living. There are many other trusts that fall under the category of “revocable trust”, including a pet trust (which addresses the physical and financial care of your pets), an education trust (which provides for your child’s educational expenses), and many more.

    Irrevocable Trust: An irrevocable trust, logically, is one which cannot be revoked or changed after it has been signed. The irrevocability is what makes these trusts useful for tax planning and asset protection. Some types of trusts which fall under the category of “irrevocable trust” include life insurance trusts (which save the beneficiary on the policy from paying exorbitant estate taxes), spendthrift trusts (which reduce the beneficiaries’ estate taxes and protect trust assets from creditors’ claims), and more. It is important to note that any revocable trust becomes irrevocable upon the death of the grantor.

    Charitable Trust: A charitable trust is one in which at least one of the beneficiaries is a charity or non-profit. These trusts allow the grantor to claim a portion of their contribution as a charitable deduction under income tax laws. A charitable trust can be either revocable or irrevocable to begin with, but if distributions will be made during the grantor’s lifetime the trust must be irrevocable.

    Special Needs Trust: Sometimes also called a “Supplemental Needs Trust”, is a trust created for the benefit of a person receiving government benefits—this usually includes someone with a physical or mental handicap—and its purpose is to allow outside sources to provide the beneficiary with supplemental funds without endangering their right to receive government benefits. A special needs trust can be either revocable or irrevocable, but usually includes a clause instructing that the trust be dissolved if its existence disqualifies the beneficiary for government benefits.

    We have only discussed some of the most commonly used trusts here, but there are many, many different kinds of trust which can be valuable for estate planning or asset protection. If you have any questions about trusts or estate planning, please contact our office.

    The Bum Rap of Prenups: Why They Are More Romantic Than You Thought

    Monday, January 23rd, 2012

    Valentine’s Day is only a couple of weeks away, and love and marriage are in the air; but going hand in hand with love and marriage should be the wisdom to protect yourself and your beloved with a prenuptial agreement. We know that most people don’t consider prenuptial agreements a very romantic gesture, but here are 5 reasons why the bum rap of the prenup is undeserved.

    1. Prenups encourage couples to think and talk about the future. The process of writing a prenup includes talking about what each party brings with them to the marriage, and how each partner envisions that contribution fitting into the whole as they create their lives together.

    2. Agreeing to a prenup is often the very thing that makes marriage possible for two people who come from complicated backgrounds or disapproving families. This is not only true of young people from families with “old money,” but also of elderly couples whose grown children may disapprove of a blending of finances so late in life.

    3. Having a prenup means that a couple has studied their finances separately, dealt with any lingering trouble spots before the wedding, and can now move forward in their marriage together, with clear minds and bright futures.

    4. A prenuptial agreement bestows security because it requires the agreement of both partners. This mutual agreement ensures that both partners feel they will be provided for as they desire and deserve, no matter what happens.

    5. A prenup is the perfect lead-in to an estate plan. The information-gathering and decision-making process for creating a prenup is very similar to the process of creating an estate plan. Couples who execute a prenup before they marry have a head start on creating the estate plan they will want to protect their family after they’re married.

    The bottom line is that prenuptial agreements will help protect you, your beloved, your family, and your future… and there’s nothing more romantic than that. Our firm can help you decide if a prenup is right for you and your partner—contact us today.

    The Other Side of “Putting Your Affairs in Order”

    Friday, January 20th, 2012

    Everyone knows that because 2012 is the last year on the Mayan calendar it is thought by some to be “the end of the world as we know it.” Most of us don’t believe that the end of the world is nigh, but that doesn’t stop us from contemplating how we’ve lived our lives, what we might put on our “bucket lists,” and what words of wisdom we’d like to pass on to the next generation. For estate planning and elder law attorneys—as well as our clients and readers—this is most likely something we’ve already considered, and hopefully something we’ve planned for as well.

    Many people believe that “putting your affairs in order” simply means making your financial arrangements and updating your legal documents; and although these tasks certainly are of immense importance, putting your social, familial and emotional affairs in order is just as important. We’ve written often on our blog about how to put your financial and legal affairs in order, so today we’d like to talk about the other side of things. Some of the suggestions you’ll see below may strike you as small or obvious, but when dealing with the day-to-day tasks and challenges that life brings it’s sometimes all too easy to lose sight of the little things.

    1. Tell your family how you feel. If you’re close to your family you may think you do this all the time anyway; but even if you speak to your family often, writing a letter letting them know what they mean to you and how much you love them can make a different kind of impact. A letter is also something tangible your family can keep and treasure after you’re gone.

    2. Make family history a priority. How much do you know about the lives of your grandparents and great-grandparents? How much do you wish you knew? Most of us don’t think that our lives or our stories are all that important in the grand scheme of things, but your grandchildren and great-grandchildren may feel differently. Take a shot at writing your memoirs for the benefit of curious future generations. If you think you’re not a writer, or have trouble knowing where to start, there are plenty of books and resources to help you get going.

    3. Do something just for you. Whether it’s written it down or not, everybody has a bucket list, a catalogue of things they dream of doing before they die. Well, there’s no time like the present. Nobody lives forever, and the time to do the things you love and see the places you dream about is always right now. Whether you’re taking big leaps or baby steps, don’t let another year go by without making one of those dreams on your bucket list a reality.

    As Elder Population Grows, So Does Need for Awareness of Elder Abuse

    Wednesday, January 18th, 2012

    Elder abuse is a disturbing (and often underreported) issue that will eventually impact all of us—if not on a personal level then most likely by touching the life of someone we know and love. Elder abuse is something that is difficult for most people to consider, not only because the idea is such a disturbing one, but also because it is so insidious.

    Elder abuse can be either physical or financial; it can happen to seniors suffering from Alzheimer’s or dementia as well as seniors who still have all their mental faculties; and the perpetrators can be strangers, nursing staff, or even family members. Once you begin to learn about it, it seems that the opportunity for elder abuse can be lurking around every corner.

    This recent and disturbing article from PBS Frontline brings to light some of the ways that the medical community itself has managed to overlook or ignore elder abuse whose evidence is right under their noses. “Autopsies of seniors have become increasingly rare even as the population age 65 or older has grown. Between 1972 and 2007, a government analysis found, the share of U.S. autopsies performed on seniors dropped from 37 percent to 17 percent.” What this means is that “coroner and medical examiner offices, which are responsible for probing sudden and unusual fatalities… — hampered by chronic underfunding, a shortage of trained doctors and a lack of national standards — have sometimes helped to send innocent people to prison and allowed killers to walk free.” This may be especially true in cases of elder abuse. It’s clear that something needs to be done.

    USA Today reports that not everyone has their heads in the sand. “There is a genuine recognition by those who are concerned by the abuse of elders that there need to be appropriate safe houses for them to get them out of immediate harm’s way… Nationally, we’ve been aware of the need for elder abuse shelters, but they’ve been slow in coming into fruition.” Furthermore, public figures (such as Mickey Rooney) coming forward with their own stories and experiences has helped raise awareness of elder abuse.

    For more information about elder abuse and what you can do to prevent it, you can go to the National Center on Elder Abuse website, or contact our office.


    The Family Vacation Home: A Place to Make Memories or Enemies?

    Monday, January 16th, 2012

    A family vacation home—whether it’s a summer house on the beach or a winter skiing bungalow in the mountains—can be just the thing that brings a family together. Unfortunately, it can also be just the thing that tears a family apart when parents pass away and the time comes to decide what to do with this wonderful family treasure. This article in the Wall Street Journal mentions that “Tensions often mount when a family figures out what to do with a property that could be a lightning rod for sibling rivalries—not to mention a sizable chunk of an estate.”

    There are a number of issues that can be brought to the surface when adult children or grandchildren try to share a family property. “One big friction point in such an arrangement is how to pay the costs involved in maintaining a home—including taxes, insurance, utility bills.” But that’s only the beginning. “Other factors to consider: How the family gets along, where they live, what happens when the children who inherit a home get married and who is going to use the property.”

    Fortunately, this is one family fight that can be prevented (or at least softened) by a little bit of forethought and planning. One of the first suggestions in the WSJ article is to leave family property to the next generation in a trust funded by life insurance. “That way, a professional trustee can manage the property, and the insurance proceeds can cover expenses.” A Qualified Personal Residence Trust (QPRT) or a Dynasty Trust can both be useful for this purpose.

    Another beneficial safeguard is to form a Limited Liability Company (LLC) for the property. An LLC can help establish an operating agreement to “cover rights of use and property management,” as well as shield heirs from estate taxes.

    Having a good plan in place for your family vacation home can be the determining factor which allows the property to continue to serve as a place where your entire family can come together, to create happy memories that will last a lifetime.


    What Will You Be Doing With This Year’s IRA Withdrawal?

    Friday, January 13th, 2012

    Many of our clients who are 70 ½ or older have chosen in the past to give a certain portion of their required IRA withdrawal to charity each year; doing so has allowed them to take the required withdrawal, keep their taxable income down, and give to a cause they care about all at the same time. Unfortunately, the individual-retirement-account donation rule expired at the end of 2011 and has yet to be restored by Congress.

    This recent article in the Wall Street Journal explains that “under current rules, the first dollars out of an IRA count as the required withdrawal. So if an IRA owner makes a withdrawal before Congress extends the law, he or she can’t redeposit the funds and make a donation of IRA funds after lawmakers act.”

    The expiration of this rule may not be a big deal for many of our readers who intend to make charitable donations as they always have, regardless of retirement-account donation benefits; but for some, not knowing what Congress may choose to do is making it hard to design a financial plan for the year, and causing increasing stress. “The problem arises for IRA owners [who are] over 70½ and must take an annual payout from the account. They want to withdraw as little as possible in order to let the assets expand but also want to donate some or all of the required payout directly to charity.”

    Your best bet right now may be to consider your ultimate goal both for your IRA payout and for your charitable giving for the year, and then talk to a trusted advisor. One thing any estate or financial planner will tell you is that there is almost always more than one way to accomplish your goals. We cannot stress enough, however, how important it is to stay on top of any legal requirements or changes in the law when it comes to IRAs and retirement savings.

    Beware of Mistakes in Your Old Estate Plan

    Wednesday, January 11th, 2012

    Do you already have an estate plan? Or perhaps you don’t have an estate plan per se, but over the years you’ve collected all of what you feel are the necessary documents to provide security and protection for your family and your assets after your death? Well, you may want to take a moment to review that existing estate play of yours. According to this recent article there are five common mistakes made in estate plans, and just one could end up derailing your goals for yourself or for your family.

    Some of the common mistakes listed in the article are things that are very easy to fix once you’re aware of them—listing the wrong beneficiary on an old retirement account or life insurance policy, for example. All too often people get a new job or new policy and list the right beneficiary at the time, then that policy goes in a drawer or filing cabinet for years. During those passing years you may get married or divorced, or you may have children. Any of these big life events require changing those beneficiaries. Luckily, making that change is generally a quick and easy fix.

    If you aren’t worried about your retirement or life insurance beneficiaries, consider what what will happen to your children in the event of an emergency. Many clients agonize over who to name as guardians of their minor children, but forget to review those decisions every few years. The energetic young couple you chose 7 years ago might now have children of their own, or have moved to another state, and may not be as ideal a choice as they once were. If you listed your parents 10 years ago you might decide in the intervening years that an aging couple is not quite as able as you thought to take on so much added responsibility.

    The fact of the matter is that our lives are not static or stagnant, they are constantly growing and changing, and estate planning documents will need to grow and change with them. If it has been more than 2 years since you last reviewed your plan, it’s time to get out the magnifying glass and give your documents another good look. Chances are you won’t have any big changes to make, but those little details can turn into glaring problems when left neglected for too long.

    Women and Finances: Looking at Money from a Different Angle

    Monday, January 9th, 2012

    We’ve all read the disquieting statistics about girls and math: That they’re less likely to participate in math and science in school, and that they’re less likely to choose one of these as a major in college. Happily, great strides have been made by girls in these subjects in the past few decades; but apparently there is still one subject in which women continue to trail behind men—talking about finances and retirement planning.

    According to a recent article in Business Insider, “when the Transamerica Center for Retirement Studies asked women in their 50s and 60s if they ever discussed saving, investing and financial retirement planning with friends or family, the answer they got was a big NO from 30 percent of respondents and a tepid ‘occasionally’ from 62 percent. Only 8 percent said ‘frequently.’” Clearly women need to find a way to become more comfortable discussing their financial futures—either with their friends and families or with trusted financial advisors.

    What is most interesting about this from an estate planning perspective is that in our line of work women are often the driving force behind a family or couple coming in for an initial consultation. Women may not feel comfortable talking about finances, but they are obviously very aware that—when coupled with future and well-being of their families—it is an important issue that needs to be addressed.

    The Business Insider article mentioned above closes with 5 questions that might help get the financial conversation started among women; we would only add to this that a discussion of family finances, as well as personal finances, may be a good way to get the ball rolling.

    We understand that not everybody has the same concerns when it comes to financial and estate planning. Contact our office today and let us know what your concerns and goals are for your future, and for the future of your family. We can help.