Michigan Estate Planning Blog

Whitney Houston’s Estate and an Inheritance Dispute

The intention of giving an inheritance to your kids or loved ones is to help their future, not to hinder them. Unfortunately a large inheritance can sometimes hurt more than help, depending on how the distribution is set up. This is a common issue with the wealthy and successful celebrities, as is the case with Whitney Houston’s Estate. The inheritance left by Whitney Houston is chronicled by CNBC in an article titled “When $20 Million Is Too Much to Leave the Kids.” Without delving too much into the case, the passing of Whitney Houston has set her 19-year-old daughter, Bobbi Kristina Brown, up to receive a staggering $20 million. Recently, Houston’s mother and manager, who are the executors of the Houston estate, have filed a petition to restrict the inheritance payments on the basis that these were simply too large. According to the petition, such inheritance payments would make Bobbi too easy a target for predators, or worse, enable Bobbi to devolve into a bad lifestyle. Taking the petition at face value, this consequence would not have been Whitney’s intention. Regardless of Whitney’s intention, the article recommends an excellent alternative that she could have employed to protect the inheritance from Bobbi and Bobbi from the inheritance. This alternative is called a “discretionary trust.” Using this type of trust would have allowed for instructions on how the funds were to be managed and released. The article also provides some practical pointers, like teaching your children financial responsibility at an early age and reviewing (and revising) your estate plan from time to time.

For more information see www.jerryreiflawyer.com

Reference: CNBC (October 19, 2012) “When $20 Million Is Too Much to Leave the Kids”

 

Why Would I Want a “Defective” Trust? Saginaw Michigan

If you are not schooled in estate planning or up to speed on the latest estate law jokes, you may be scratching your head when it comes to so-called “defective” trust planning. Did you say “defective” trusts? Why yes, yes I did. And as a recent Forbes article says, “Don't Freak Out If You Hear Your Trust Is Defective.” The defective grantor trust, and more specifically the Intentionally Defective Grantor Trust (IDGT), is more often than not the source of confusion estate planning greenhorns face. That’s unfortunate. Why? Because so-called “defective” trusts usually work pretty well, and they work well precisely because they are defective. Here’s the rub: sometimes you want your trust to be a trust and sometimes you don’t, and a defective trust only fails when you want it to. The heart of the matter, defective or otherwise, is simply to say that there is a lot to learn about this weird intersection between your life, unique legal entities, and weird tax laws that we call estate planning. As with any sort of end-of-life planning, you should know your tools and how to use them. When a tool such as the “defective” trust leaves you scratching your head in confusion, seek competent counsel to examine your options.

For more information see www.jerryreiflawyer.com

Reference: Forbes (October 15, 2012) “Don't Freak Out If You Hear Your Trust Is Defective”

 

The Alarm Will Sound on the Estate Tax Clock Saginaw Michigan

If you have been following national politics and the impending fiscal (tax) cliff, now is the time to make your move! There are important estate planning opportunities expiring on December 31, 2012. Don’t hold your breath that the White House and Congress will come to the rescue in the nick of time. As a recent MarketWatch article sums it up, there’s “No playing chicken with estate tax deadline.” The present estate planning laws offer an unprecedented and generous gift tax exclusion. That is worth thinking about, too. The exclusion amount of the estate tax is tied to the gift tax amount and is therefore just as generous (but not many taxpayers are keen to qualify for that before year’s end). Gifts, on the other hand, are easy to make. This especially is true as the holiday season is nearly upon us. With the current exclusion set to $5.12 million, you can give that much in your lifetime over and above the annual exclusion amount of some $13,000. Better yet, you can give this entire amount before December 31 if you so choose to secure the full exclusion amount. Why? Because the exclusion is automatically set to drop to $1 million unless the White House and Congress take action. The article cautions if you wait too long to begin the process, you may miss out on the wealth transfer jackpot as it can be too difficult to complete these transfers in a matter of weeks. So make your move before the Estate Tax alarm sounds!

For more information, go to my website www.reiflawyer.com

Reference: MarketWatch
(October 2, 2012) “No playing chicken with estate tax deadline”

Wealth Transfer Ideas from Romney’s Estate Plan

All politics aside, one could learn a thing or two from Mitt Romney’s estate planning when it comes to transferring wealth. One particularly interesting instrument he made use of was the “Intentionally Defective Grantor Trust,” or IDGT. Romney and his use of the IDGT (accordingly pronounced, “I DiG IT,” if you aren’t into spelling out your acronyms) were the subject of a recent article in Bloomberg News titled “Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit.” A popular wealth transfer strategy among estate planning attorneys, the IDGT provides a “triple benefit” to taxpayers who employ it. The key, as with so many wealth transfers, is to place unappreciated assets in an IDGT and thereby shelter them as they grow. If the assets then appreciate in the IDGT, then the transfer will ultimately maximize the wealth transferred and minimize the attending taxation. Check out the original article to learn more about this popular IDGT strategy, and contact your estate planning attorney to see if the IDGT is right for you and your loved ones.

Reference: Bloomberg (September 27, 2012) “Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit”

Surviving the Fiscal Cliff and Estate Taxes

As we approach the end of 2012, you may be wondering if the Bush-era tax laws will expire come 2013. Have you done everything to ensure your estate plan will be able to survive a tumble off the tax cliff? When it comes to the “default” 2013 estate tax, some 12.5% of U.S. households may come under the estate tax axe, according to new analysis by LIMRA. These numbers were picked up and reported by LifeHealthPRO and reported in its article titled, “LIMRA: More than 1 in 8 U.S. households may owe estate tax in 2013.” This change in the estate tax exemption limit scoops up a huge new group of taxpayers in its dragnet who otherwise might not have been subject to the estate tax axe. In fact, many in this new group of estate tax taxpayers have not previously found themselves at the top of the wealth pyramid. So, how is this possible? If (or when) we fall off the fiscal cliff, the IRS will be forced to apply 12-year-old laws, and with them a 12-year-old estate tax exemption and its estate tax rates. In other words, the estate tax exemption will revert to $1 million from the current $5.2 million, and a 55% maximum estate tax rate will replace the current 35% rate. Yes, that’s a quite a low blow. Remember, it’s not just your bank account that the IRS counts against your estate tax exemption, but all of your assets, to include your home and life insurance death benefits. Unfortunately, that’s just the tip of the tax iceberg. Not only is it absolutely vital to keep track of the law, but it is essential that you know the steps to take now to protect yourself and your loved ones in the event Congress and the White House fail to act.

Reference: LifeHealthPRO (September 27, 2012) “LIMRA: More than 1 in 8 U.S. households may owe estate tax in 2013”

Lowest Ever Social Security Increase

At a mere 1.7%, Social Security will see its lowest increase ever come 2013. What does this mean for seniors today? The COLA is the Cost Of Living Adjustment added to Social Security annually, based on inflation and increases in the Consumer Price Index (CPI.) For some seniors, planning for the new year means planning around the COLA and hoping for the best. Alternatively, a reduction or a weak increase in COLA may mean seniors will need to make up the difference out of savings. Nevertheless, the CPI is an imperfect indicator and a debated one as well. This matter was taken up recently by USA Today in an article titled “Social Security benefits to rise 1.7% in 2013.” In conjunction with the small Social Security increase and the uncertainty of taxes for next year, you may want to brush up on what could happen in 2013. A recent Forbes article titled “Social Security Benefits To Rise 1.7%; Workers Face Up To $2425 Payroll Tax Hike” may offer some knowledge on these very important changes. Seek appropriate counsel if you have further questions about your benefits.

References: USA Today (October 16, 2012) “Social Security benefits to rise 1.7% in 2013”

Forbes (October 16, 2012) “Social Security Benefits To Rise 1.7%; Workers Face Up To $2425 Payroll Tax Hike.”

Racing the Clock on 2012 Mega Gifts

When it comes to 2013 taxation, the future may be catastrophic for estate tax planning. As each day of 2012 passes us by, incredible wealth transfer opportunities are dwindling away. Can you beat the clock before time runs out? These last few months are either a time to seize the unprecedented gifting opportunity of a $5.12 million gift tax exemption, or a time to run out the clock on this opportunity perhaps for the rest of your lifetime. The gift tax exemption is scheduled to return to $1 million. If you are looking to seize the opportunity in 2012, then you will find encouragement in a recent Forbes article titled “Romney Wants No Estate Tax - Case For 2012 Mega Gift Remains Compelling.” In short, the article notes that there are ways to give now without spoiling future opportunities, if you think carefully about the right kinds of assets to give. The author of the article calls such strategic assets “legacy assets,” and offers this quote from an attorney comrade: Legacy assets are ideal for the “megagift” for several reasons: 1. art, real estate, family business interest and other Legacy Assets are secular investments, that is held for more than 10 years, and so the gifting of an asset does not substantially reduce the lifestyle or disposable financial wealth of the client, 2. The financial value of Legacy Assets is not correlated to the investment market, 3. The personal and social value of legacy assets is both real and significant, 4. Since there is both a financial and a social value to the ownership of legacy assets, they work well with charitable split interest trusts that can significantly leverage the Unified Credit, and 5. There are techniques that can be used with legacy assets that cannot be used for investment assets. In terms of a Mega Gift, legacy assets are definitely worth considering. Remember, the time is now to act on these amazing wealth transfer opportunities. Don’t wait until it’s too late and the ball is already dropping in Time’s Square.

Reference: Forbes (October 14, 2012) “Romney Wants No Estate Tax - Case For 2012 Mega Gift Remains Compelling”

Forbes Presents Collection of Estate Planning Articles

Did you know we just passed National Estate Planning Awareness Week (Oct. 15-21)? Don’t worry if you missed it, estate planning is a continuous endeavor and one that is never out of season. While proper estate planning is no Do-It-Yourself project and competent legal counsel should be retained, there is plenty of literature available to help you learn the basics of estate planning and beyond. Leave it to Forbes to compile “The Forbes Guide To Estate Planning” from its storehouse of past estate planning articles. Of course, these 40 some articles give only the Forbes perspective, but it’s a quick glimpse at the panoply of topics and worth a read. If you still need information on estate planning topics and strategies, contact your legal and financial counselors in order to gain knowledge about protecting your family and your assets.

Reference: Forbes (October 14, 2012) “The Forbes Guide To Estate Planning”

Will Charitable IRA Donations Be Back This Year?

While taxes are uncertain for 2013, you may be thinking Congress and the White House may retroactively extend some “expired” taxpayer favorites. For example, one that expired in 2011 is the ability to give the “required minimum distribution” (RMD) from your IRA to charity. But do not count on retroactive resuscitation for this favorite in time for your 2012 taxes. Until the end of 2011, as you likely recall, it was possible for individuals over the age of 70 ½ to simply rollover their RMDs from their IRAs straight into the waiting hands of their favorite charity. As a result, this saved these taxpayers from any pesky taxable income. The Wall Street Journal took up this matter in a recent article titled “Should You Wait on IRA Donations?” According to the article, aside from benefiting charity, the benefit to seniors making this savvy move include: “By reducing your adjusted gross income, the tax provision may help you keep it below the thresholds at which you could lose some of your deductions and other tax benefits, or become subject to higher Medicare premiums and taxes on your Social Security benefits.” The verdict: it might not be worth risking the wait on Congress and the White House to find out the official ruling on charitable IRA distributions for 2012. The article notes, however, that even if you have to take the RMD and accept the taxable income, you can still give it away and claim a charitable deduction. Although that’s not as beneficial as the Charitable IRA rollover, it’s better than nothing and certainly far better than inaction. Why? There’s an excise tax on the failure to timely accept the full amount of your RMD.

Reference: The Wall Street Journal (September 22, 2012) “Should You Wait on IRA Donations?”

Importance of Special Needs Planning

In this election season and numerous others, there are many debates on which government programs should stay put and which ones should be cut. Oftentimes, the disabled population gets forgotten in these debates. If you have a family member with special needs, what are you to do if the aid they depend on gets thrown on the chopping block? Planning ahead is a must in this situation. Unfortunately, few parents of children with special needs fully appreciate what is at stake and how to protect it. To make matters worse, too few professional financial planners are versed on the need to provide a long-term solution for such children, especially with shrinking public assistance benefits. The New York Times recently provided a mini-primer of sorts on the subject titled “Assuring Care of a Family Member With Special Needs.” While proper planning will vary from one family to another, given different needs, there are many tools to employ ranging from special needs trusts to life insurance. The key is to know which ones to use. As funds available for public assistance programs such as Medicare, Medicaid, and Social Security become more restricted and unpredictable, planning for special needs is going to be more and more important each year. Seek appropriate counsel for your special needs family member to gain peace of mind for their future care.

Reference: The New York Times (October 5, 2012) “Assuring Care of a Family Member With Special Needs”

Estate Plans Outdated for Wealthy Families

While you are living, essentially your estate plan is living too. And just as your life is evolving, your estate plan should change accordingly. Unfortunately, Congress and the White House are constantly shifting. As a result, your estate plan must adapt, improvise and overcome. For wealthy families in particular, many of their estate plans are simply out of date, and that’s not something you can afford to let slide. According to a Private Wealth article titled, “Estate Plans Of Rich Families Out Of Date, Survey Says,” and a study conducted by Rothstein Krass, “More than three quarters of the estate plans of the ultra-wealthy clients studied were at least three years old despite the fact that nearly 95% of them have experienced significant life changes since the estate plans were drawn up.” However you spin that finding, it’s a sad state of affairs for many families, and your family need not become part of that sad statistic. Simply put, if your life (or the lives of your loved ones) changes, for better or worse, you need to adjust your estate planning accordingly. The past few years have been devastating to families building wealth between generations and to families working hard to build wealth in this generation. As a result, just about every family needs to make some adjustments in its estate planning. Maybe now is a good time to schedule a review with your estate planning attorney.

Reference: Private Wealth (September 25, 2012) “Estate Plans Of Rich Families Out Of Date, Survey Says”

A Business “Break-Up” Between Co-Founders

Every beginning has an end, just as every business partnership will eventually expire. Whether the conclusion of the partnership is by choice, health problems, or death, one should have a plan in place to keep things amicable. As Stephen Covey noted so adroitly, one of the keys to effectiveness is to “begin with the end in mind.” Accordingly, the founders of a business should structure and run the business with a clear commitment to their shared ultimate goals for themselves and their business. In the vernacular of business planning, this oftentimes is called “exit planning.” If you fail to “begin with the end in mind” and make legal plans to memorialize the end game for your personal and business relationships, then you likely will only enrich lawyers. So, when it comes time to part ways down the road, what steps should you be taking now? The Wall Street Journal recently addressed this subject in an article titled “Breaking Up (With a Co-Founder) Is Hard to Do.” One key takeaway from the article is the “when and how” of exit planning. The best time to address the issue is when the business is founded. Consequently, the best way to memorialize the exit strategy in the event of the disability, retirement or death of a founder is through various legal documents created when the business is founded. For example, an Limited Liability Company (LLC) can use the LLC Operating Agreement, while a corporation may use its Bylaws or various Shareholder Agreements.

Reference: The Wall Street Journal (September 22, 2012) “Breaking Up (With a Co-Founder) Is Hard to Do”

Surviving the Fiscal Cliff and Estate Taxes

As we approach the end of 2012, you may be wondering if the Bush-era tax laws will expire come 2013. Have you done everything to ensure your estate plan will be able to survive a tumble off the tax cliff? When it comes to the “default” 2013 estate tax, some 12.5% of U.S. households may come under the estate tax axe, according to new analysis by LIMRA. These numbers were picked up and reported by LifeHealthPRO and reported in its article titled, “LIMRA: More than 1 in 8 U.S. households may owe estate tax in 2013.” This change in the estate tax exemption limit scoops up a huge new group of taxpayers in its dragnet who otherwise might not have been subject to the estate tax axe. In fact, many in this new group of estate tax taxpayers have not previously found themselves at the top of the wealth pyramid. So, how is this possible? If (or when) we fall off the fiscal cliff, the IRS will be forced to apply 12-year-old laws, and with them a 12-year-old estate tax exemption and its estate tax rates. In other words, the estate tax exemption will revert to $1 million from the current $5.2 million, and a 55% maximum estate tax rate will replace the current 35% rate. Yes, that’s a quite a low blow. Remember, it’s not just your bank account that the IRS counts against your estate tax exemption, but all of your assets, to include your home and life insurance death benefits. Unfortunately, that’s just the tip of the tax iceberg. Not only is it absolutely vital to keep track of the law, but it is essential that you know the steps to take now to protect yourself and your loved ones in the event Congress and the White House fail to act.

Reference: LifeHealthPRO (September 27, 2012) “LIMRA: More than 1 in 8 U.S. households may owe estate tax in 2013”

Wealth Transfer Ideas from Romney’s Estate Plan

All politics aside, one could learn a thing or two from Mitt Romney’s estate planning when it comes to transferring wealth. One particularly interesting instrument he made use of was the “Intentionally Defective Grantor Trust,” or IDGT. Romney and his use of the IDGT (accordingly pronounced, “I DiG IT,” if you aren’t into spelling out your acronyms) were the subject of a recent article in Bloomberg News titled “Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit.” A popular wealth transfer strategy among estate planning attorneys, the IDGT provides a “triple benefit” to taxpayers who employ it. The key, as with so many wealth transfers, is to place unappreciated assets in an IDGT and thereby shelter them as they grow. If the assets then appreciate in the IDGT, then the transfer will ultimately maximize the wealth transferred and minimize the attending taxation. Check out the original article to learn more about this popular IDGT strategy, and contact your estate planning attorney to see if the IDGT is right for you and your loved ones.

Reference: Bloomberg (September 27, 2012) “Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit”

Estate Plans Outdated for Wealthy Families

While you are living, essentially your estate plan is living too. And just as your life is evolving, your estate plan should change accordingly. Unfortunately, Congress and the White House are constantly shifting. As a result, your estate plan must adapt, improvise and overcome. For wealthy families in particular, many of their estate plans are simply out of date, and that’s not something you can afford to let slide. According to a Private Wealth article titled, “Estate Plans Of Rich Families Out Of Date, Survey Says,” and a study conducted by Rothstein Krass, “More than three quarters of the estate plans of the ultra-wealthy clients studied were at least three years old despite the fact that nearly 95% of them have experienced significant life changes since the estate plans were drawn up.” However you spin that finding, it’s a sad state of affairs for many families, and your family need not become part of that sad statistic. Simply put, if your life (or the lives of your loved ones) changes, for better or worse, you need to adjust your estate planning accordingly. The past few years have been devastating to families building wealth between generations and to families working hard to build wealth in this generation. As a result, just about every family needs to make some adjustments in its estate planning. Maybe now is a good time to schedule a review with your estate planning attorney.

Reference: Private Wealth (September 25, 2012) “Estate Plans Of Rich Families Out Of Date, Survey Says”

Adult Children and Family “Freeloaders”

When you think of a family “freeloader”, generally what comes to mind is an adult child who makes no efforts to be on their own. The parents foot the bill and allow the adult child to remain in the home. But what happens when the parents’ health goes bad or when they become elderly? This scenario becomes particularly painful when the parents become elderly, especially when the adult child “freeloader” continues to mooch off of the aging parents and even begins to abuse the aging parents. The responsible adult children, who have lives of their own, may come to their wit’s end. Ultimately, everything comes to a head when the elderly parents need care and can no longer care for the adult child. What then? This is an increasingly common problem, given the recent economic unpleasantries and the expanding retirement bubble of aging baby-boomers. Fortunately, Forbes recently explored this conundrum in an article titled “What Siblings Need to Do About Aging Parents and The Family Freeloader.” So, what can you do? While it’s still hard to say for certain, since every family is different, you need to deal with it. In most instances an Elder Law Attorney should be consulted to ensure the protection of the elder parents, especially if financial elder abuse is suspected.

Reference: Forbes (September 16, 2012) “What Siblings Need to Do About Aging Parents and The Family Freeloader”

A Business “Break-Up” Between Co-Founders

Every beginning has an end, just as every business partnership will eventually expire. Whether the conclusion of the partnership is by choice, health problems, or death, one should have a plan in place to keep things amicable. As Stephen Covey noted so adroitly, one of the keys to effectiveness is to “begin with the end in mind.” Accordingly, the founders of a business should structure and run the business with a clear commitment to their shared ultimate goals for themselves and their business. In the vernacular of business planning, this oftentimes is called “exit planning.” If you fail to “begin with the end in mind” and make legal plans to memorialize the end game for your personal and business relationships, then you likely will only enrich lawyers. So, when it comes time to part ways down the road, what steps should you be taking now? The Wall Street Journal recently addressed this subject in an article titled “Breaking Up (With a Co-Founder) Is Hard to Do.” One key takeaway from the article is the “when and how” of exit planning. The best time to address the issue is when the business is founded. Consequently, the best way to memorialize the exit strategy in the event of the disability, retirement or death of a founder is through various legal documents created when the business is founded. For example, an Limited Liability Company (LLC) can use the LLC Operating Agreement, while a corporation may use its Bylaws or various Shareholder Agreements. Don’t delay this important aspect of planning, as every business with eventually need an “exit.”

Reference: The Wall Street Journal (September 22, 2012) “Breaking Up (With a Co-Founder) Is Hard to Do”

Asset Protection with Postnuptial Agreements

Move over ‘prenup’, there’s a new marriage document in town that can protect your assets even after you’ve said “I do.” That’s right, more and more married couples are opting to protect their assets with a postnuptial agreement. Although the idea of marriage is to be together forever, many couples recognize that things can go wrong in a relationship. The stuff that can throw a monkey wrench into a marriage are things like children from a prior marriage, separate assets and estate plans, and, yes, even inheritances. So, even if you did not work out agreements regarding such stuff before exchanging vows, there’s always a cure after the fact. Enter the postnuptial agreement. According to recent studies and an article in Private Wealth titled “Postnuptial Agreements On Rise, Lawyers Say,” you may never have considered a ‘postnup’, but an increasing number of people have and are. Across various incomes, married couples have found them to be valuable tools. There are many reasons to support this trend, even between spouses who otherwise would not ordinarily commit such agreements to paper. Whether or not a postnuptial agreement is right for you, make note that these agreements can provide a practical pre-condition for an heir and spouse to adopt as part of your estate planning.

Reference: Private Wealth (September 12, 2012) “Postnuptial Agreements On Rise, Lawyers Say”

Business Succession Rejections by Heirs

When it comes to the succession plans of a family business, there are many things to ponder when selecting an heir. Important attributes like responsibility, work ethic, and leadership are taken into consideration when deciding who choose for the business. One thing that you may have left out is what to do if your heir turns down the offer to take over the family business. Then what? If you are a family business owner, are you intending to keep the business in the family even as you step down from control? Have you considered the possibility of designating an heir who does not want the family business and do you have a “Plan B” to adjust your succession plans accordingly? The reasons why an heir may resist taking up the reins to the family business are many facetted, but that doesn’t necessarily mean they are making a final, informed decision. No, it may take time, talk, and some understanding, and there are lessons to be gleaned from a recent Forbes article on the subject titled “5 Ways Family Business Founders Can Change A "Made Up" Mind.” Deciding on a successor for your business can take patience, time and understanding. This aspect of estate planning isn’t just about your own wishes, but also about the hopes and dreams of your family members and heirs involved.

Reference: Forbes (September 10, 2012) “5 Ways Family Business Founders Can Change A "Made Up" Mind”

Business Succession Rejections by Heirs

When it comes to the succession plans of a family business, there are many things to ponder when selecting an heir. Important attributes like responsibility, work ethic, and leadership are taken into consideration when deciding who choose for the business. One thing that you may have left out is what to do if your heir turns down the offer to take over the family business. Then what? If you are a family business owner, are you intending to keep the business in the family even as you step down from control? Have you considered the possibility of designating an heir who does not want the family business and do you have a “Plan B” to adjust your succession plans accordingly? The reasons why an heir may resist taking up the reins to the family business are many facetted, but that doesn’t necessarily mean they are making a final, informed decision. No, it may take time, talk, and some understanding, and there are lessons to be gleaned from a recent Forbes article on the subject titled “5 Ways Family Business Founders Can Change A "Made Up" Mind.” Deciding on a successor for your business can take patience, time and understanding. This aspect of estate planning isn’t just about your own wishes, but also about the hopes and dreams of your family members and heirs involved.

Reference: Forbes
(September 10, 2012) “5 Ways Family Business Founders Can Change A
"Made Up" Mind”

Anonymous Charitable Giving

The act of giving in itself is extremely rewarding, which is why many donors do not wish to be recognized for their gifts. These donors prefer to give anonymously to avoid uninvited attention for many reasons, ranging from religious convictions to protecting themselves from theft. Whatever your reason, consider taking steps to ensure your own anonymity even as you go out and try to ensure the wellbeing of your favorite charities. How do you give anonymously? In short, this is a common predicament and there are several established charitable vehicles for giving with solutions that promise some amount of anonymity. Some, as you may expect, are better than others. For a breakdown and analysis of these vehicles, take a look at a recent Forbes article titled “How To Stay Anonymous When You Give To Charity.” Some examples on how to give under the radar include setting up a private foundation, using advisors as intermediaries, and donating online. In the end, the best solutions tend to vary based on the nature of the assets you intend to give, the scope of your giving, and on the charitable recipients.

Reference:  Forbes (September 19, 2012) “How To Stay Anonymous When You Give To
Charity”

 

Elder Care and Money Managers

When we think of seniors and the care they need, we often think of medical problems and solutions for their health. But we also need to consider basic financial needs for our elderly loves ones, such as money management. For seniors money management challenges can be as basic as paying bills, let alone understanding their savings and investment decisions. As a recent article in The Wall Street Journal considers, one growing solution to this dilemma is hiring a money manager. The article, titled “A Little Help With the Bills,” explores the void a money manager may fill when the skills of a financial planner aren’t needed or when financial execution is as necessary as financial planning. The services of a money manager may give you some peace of mind when it comes to your elderly loved ones, while offering some same safe controls for their finances.

Reference: The Wall Street
Journal (July 27, 2012) “A Little Help With the Bills”

Key Charitable Donors Give Big

The key donors in the world of charitable giving think big when it comes to giving away their fortunes, and they have even bigger goals in mind for their charities. A recent Forbes article offers some insights into the thoughts and intentions of uber-wealthy philanthropists. The grist for this journalistic mill was recently a summit held in New York. The article bears the catchy title of “How to Give Away A Billion Dollars.” It’s worth reading the original article, if not only for a few reported mission statements. One thing to note is the tension between farsighted concerns and legacy in particular, against the desire to see immediate effect and business-like efficiency. This is a very real tension and just may affect how you go about your own charitable giving. To gain more insight on this topic, you can also research the future of charitable giving with Forbes’ companion piece titled “How The Next Generation Of Wealth Is Revolutionizing Philanthropy As We Know It.”

References: Forbes
(September 18, 2012) “How to Give Away A Billion Dollars”

Forbes (September 18, 2012) “How The Next Generation Of Wealth Is
Revolutionizing Philanthropy As We Know It.”

Asset Protection with Postnuptial Agreements

Move over ‘prenup’, there’s a new marriage document in town that can protect your assets even after you’ve said “I do.” That’s right, more and more married couples are opting to protect their assets with a postnuptial agreement. Although the idea of marriage is to be together forever, many couples recognize that things can go wrong in a relationship. The stuff that can throw a monkey wrench into a marriage are things like children from a prior marriage, separate assets and estate plans, and, yes, even inheritances. So, even if you did not work out agreements regarding such stuff before exchanging vows, there’s always a cure after the fact. Enter the postnuptial agreement. According to recent studies and an article in Private Wealth titled “Postnuptial Agreements On Rise, Lawyers Say,” you may never have considered a ‘postnup’, but an increasing number of people have and are. Across various incomes, married couples have found them to be valuable tools. There are many reasons to support this trend, even between spouses who otherwise would not ordinarily commit such agreements to paper. Whether or not a postnuptial agreement is right for you, make note that these agreements can provide a practical pre-condition for an heir and spou

Reference: Private Wealth
(September 12, 2012) “Postnuptial Agreements On Rise, Lawyers Say”

se to adopt as part of your estate planning.

 

Death Tax Tips to Consider Now

The phrase “it’s never too late” applies to many areas of life, such as changing your habits, your relationships, and your goals. So keep this phrase in mind in regards to protecting your assets and inheritances with proper planning for end-of-life taxes. Forbes recently addressed this matter in an article titled “Deathbed Tax Dodges: Take These Steps Now To Save Later,” identifying certain fundamental tax moves to make even at life’s end. The article highlights three basic steps: (1) ensure that your spouse has been granted your power of attorney, (2) create separate investment accounts for you and your spouse, and (3) remember the annually-renewing power of gifts to beneficiaries other than your spouse. The article describes how these steps work together to maximize your estate tax savings, as well as reduce the size of your estate subject to such taxes. To take full advantage of these steps, the advice and assistance of competent legal counsel should be retained. So remember, it’s never too late to start planning for the future!

Reference: Forbes (August 27, 2012) “Deathbed Tax Dodges: Take These Steps Now To Save Later”

 

Nothing is Certain but Death and Taxes

The notion of planning for death and taxes at your passing is not an easy subject to tackle. And although it may be a hard topic to think about, delaying your planning can cause many issues for your family when you are gone. Anyone who has stuck by their family during the passing of a loved one knows just how powerful the ensuing emotional (and financial) tsunami can be. There are many decisions that must be made during a time of grief. This fact of life was recently addressed in a Forbes article titled “Are You Ready For Both Death And Taxes?” Death taxes aside, death itself presents choices that must be made. You, and you alone, are in the best position to make proper estate plans to preserve and protect your assets and your family at your passing. The original article presents a good, better, and best approach. However, what is the best approach? In the end, you know your assets and loved ones better than anyone else.

Reference: Forbes (August 21, 2012) “Are You Ready For Both Death And Taxes?”

 

Consider a Pet Trust

Planning for your estate or “things”– check. Planning for your loved ones or “persons”– check. But wait, what about your pet? A pet is neither quite a person, nor is a pet quite a thing. Don’t fret! There are options to protect your beloved pet’s future. Trusts are fairly powerful legal devices, amendable to many situations, and when they primarily benefit a friend with feathers, fins or fur, then they are appropriately termed “pet-trusts.” This special form of trust was the recent topic of an article in The Wall Street Journal titled “Pondering a Trust for Your Pet.” The American Society for the Prevention of Cruelty to Animals (ASPCA) is taking unprecedented steps to address the practical and legal considerations of ownerless but bequeathed pets. If you are an animal-lover planning your estate, then this ought to be an interesting development. When considering if a “pet trust” is the right option for your animal friend, assess your pet’s needs and your family’s ability to fulfill those needs. This type of planning is another way to have peace of mind knowing that your pet will be cared for in the future.

Reference: The Wall Street
Journal (September 7, 2012) “Pondering a Trust for Your Pet”

The DIY Trust, a Project to Reconsider

In today’s times of “Recessionistas” and “repurposing”, there are many people out there trying their hand at DIY projects to save some dough. Some have even dappled in DIY estate plans. Is this new self-made practice a good idea when it comes to your assets and loved ones? Forbes addressed this matter last month in an article titled “What Could Happen If You Write Your Own Living Trust?” As the title suggests, estate planning is not a DIY project to take lightly and the article recounts several “horror” stories of layman-driven estate planning gone awry. I recommend reading the article, if this is a project you are considering. Admittedly, whenever an estate planning attorney sounds the alarm against DIY estate planning, he or she runs the real risk of coming across as self-serving. I get that. Nevertheless, your estate plan is not your deck. No, your estate plan is the legally binding roadmap to protect everyone you love and everything you have when you cannot. Period. If you botch the deck project, there usually is a fix. In a worst case scenario, you re-sand and re-stain (perhaps with a darker stain). If you botch your estate plan, on the other hand, your minor children may not be reared by the guardians (backup parents) of your choosing, may squander or lose their inheritance, and your spouse’s next spouse may take it all anyway. The list goes on. Additionally, if you botch the estate plan, to whom will your loved ones turn for relief when you are gone? Unless you carry “errors and omissions” insurance, no one. I’m all for DIY projects to save a dollar here and there, but when it comes to your estate plan, is it really worth

Reference: Forbes (August 16, 2012) “What Could Happen If You Write Your Own
Living Trust?”

the risk?

 

Right to Appeal Medicare Decisions for Hospice Patients

It is always disappointing when Medicare fails patients due to bureaucratic impasses. What’s worse is when the patient is already in hospice care and doesn’t know their rights. Much can be learned through the unfortunate case of Howard and Emily Back. Emily, now deceased, was a California hospice patient covered by Medicare. Howard appealed his wife’s lack of treatment through the court process. However, the court was quick to point out that there is an administrative appeals process through Medicare regarding its hospice care decisions. The entire case is detailed in a recent post in The New Old Age a blog through the New York Times, titled “Court: You Can Appeal Medicare Decisions About Hospice Services.” As this blog post notes, Emily was denied coverage for a pain medication while in hospice and in the last stages of life. Consequently, Howard paid for them out of pocket and later (after Emily’s passing) appealed to Medicare to cover the expenses for doctor-ordered medication. While initially told there was no such Medicare appeals process and was turned away, Howard learned otherwise. As Howard sought to set a precedent so future couples would not face the same roadblocks, the court has finally found and verified that a Medicare appeals process exists. In fact, one can appeal a Medicare decision regarding hospice services with a form labeled “CMS-1490S,” if the beneficiary believes they have been inappropriately denied services. Many Medicare beneficiaries may have experienced this same short fall when entering hospice care, but hopefully this case can shed light on the solutions that are available to patients and their families.

Reference: The New Old Age
blog of The New York Times
(September 7, 2012) “Court: You Can Appeal Medicare Decisions
About Hospice Services”

Tough Retirement Decisions for Small Business Owners

Talk about being kicked when you’re already down. That’s the feeling many small business owners have as they ponder retirement in these tough financial times. Surviving the recession is one thing, but retiring in one seems next to impossible. The Wall Street Journal considered this topic in a recent article aptly titled “'The Economy Stole My Retirement.'” If you are a small business owner on the one hand – a role that requires flexibility and ingenuity – and a baby-boomer on the other, then this recession has been more than a case of terrible timing. No, it’s thrust you into “business purgatory.” Do you find yourself with one foot in management and the other foot (or maybe just that big toe) in the golden sands of retirement? A baby boomer who is a small business owner faces a very tough call right now. Should he or she sell for the best offer today, which is generally the low-ball offer, or hold out for some future value which more accurately reflects what the business is truly worth? A tough call, indeed. For the owners of small businesses and the heads of family businesses, make no mistake about the difficulty of your position. It’s impossible to foretell the future, but since you already know what is most valuable to you (your family and your business), take the time to carefully weigh your options and seek appropriate professional counsel.

Reference: The Wall Street
Journal (September 12, 2012) “'The Economy Stole My Retirement'”

The Importance of Recurrent Estate Plan Updates

It is apparent that 2012 is a unique year for planning with the current estate tax and gifting laws. But as the years go by and laws change, are you paying attention to your estate plans and how they could be affected? Such was the case back in 2010 when there was no estate tax, a very unique situation that some did not plan for. It just goes to show that changing laws matter, and that your estate plans must change accordingly. For fresh evidence of the necessity for annual visitation of the estate plan, and for the oddities of 2010, Financial Planner magazine recently published an article titled “Family Feud: Review Estate Plans Annually.” It’s the case of the family behind Magnolia Audio Visual, and the couple that sold its retail rights to Best Buy and accumulated a cool $100 million estate in the process. Unfortunately, the parents weren’t as savvy with their estate planning. The estate plan provided that the maximum amount allowable under the federal estate tax threshold would be passed down to the children, with the rest to pass to the surviving spouse to thereby avoid immediate estate taxation. Unfortunately, the plan didn’t account for the fact that 2010 didn’t have an estate tax (thanks to expiring Bush-era laws and a gridlocked Congress). The wife died. When the husband nevertheless claimed the estate that was to pass to the children under the estate tax planning, the children were noticeably irked. It seems they had been passed over and were in danger of losing a fortune afforded under the once-in-a-lifetime and quite unintended tax loophole. Accordingly, the children filed suit against their father on the grounds of “non-compliance, forgery and the use of undue influence.” This case serves as a lesson to all that we should frequently update our estate plans to ensure our wishes are carried through to our loved ones.

Reference: Financial
Planning (September 1, 2012) “Family Feud: Review Estate Plans Annually”