Michigan Estate Planning Blog

Expected Increase in Annual Gift Exclusion Saginaw, Michigan

In a time of political change and laws that may be shifting, the word is out on the annual gift tax exclusion. It has been projected to rise for the first time since 2009. The Wall Street Journal broke the good news as early as it could, in a Q&A entitled “Expect Gift Limit to Rise Next Year.” First, a caveat: it’s not the present lifetime exclusion of $5.12 million you can expect to see increase, as the jury is still very much out on that one. Rather, it’s the annual gift tax exemption presently set at $13,000. Currently, you can exclude $13,000 per person per year, before ever reducing your lifetime exemption amount. Good news: that amount is set to adjust up to $14,000. We await official numbers, but they should arrive later in the year. If and when the annual gift exclusion increases, this will bring a welcome bump in your wealth transfer opportunities. If nothing else, the attention given to this uptick in the annual gift exclusion also may offer a wake-up call to the power of annual giving. Just think of what you can do for each of your loved ones with an annual gift of $14,000.

Reference: The Wall Street
Journal (September 29, 2012) “Expect Gift Limit to Rise Next Year”

For more information, see www.jerryreiflawyer.com

 

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'”

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreiflawyer.com

 

Creditors Foiled by Revocable Trust Saginaw, Michigan

Have you heard the notion that revocable trusts do not provide asset protection? Well, this isn’t entirely true. Consider the case of Frank and Geryl Pearl, as reported in a recent Forbes article titled “Pearl -- Transfers to Revocable Trusts Were Not Fraudulent Transfers As To Creditors Of The Settlor.” Essentially, the Pearl case illustrates the magic of a revocable trust. Frank, upon a cancer diagnosis, moved his business assets under a revocable trust, which meant that he was still effectively accountable for everything because the “revocable” trust was still under his control for all intents and purposes. Frank arranged for the bank to name him personally as guarantor to the business loans. Geryl was named beneficiary to the trust. When Frank died, the assets in the trust that were otherwise entirely accessible to the bank and other creditors passed over to Geryl and were completely inaccessible to the creditors. Poof! How did this happen? As summarized by Forbes: “It should not be overlooked that a revocable trust can provide near-absolute asset protection to the beneficiaries of the trust after the settlor dies, so long as the trust is well-drafted, has only discretionary distribution, and a solid spendthrift clause. What is no protection for the settlor almost magically turns into fantastic protection for beneficiaries after the settlor’s death. A beneficiary’s interest is simply not acceptable by creditors except in the most extreme cases, such as unpaid child support or if the beneficiary commits a violent crime, etc.” To learn more you can consult the Forbes article on the Pearl case, but you should also consult with competent legal counsel before relying on this case in your own planning.

Reference: Forbes (September
30, 2012) “Pearl -- Transfers to Revocable Trusts Were
Not Fraudulent Transfers As To Creditors Of The Settlor”

For more information, see www.jerryreiflawyer.com

 

Charitable Giving Options Saginaw, Michigan

Sometimes the act of giving can be complicated, especially when it comes to setting up foundations in the style of Bill Gates and the upper 1%. A recent Forbes article provides some alternatives you may want to consider. The article is titled “Five Ways To Be Charitable Even If You Aren't Bill Gates.” Luckily, the “five ways” do not require the complexities of family foundations. Here are the Forbes tips for your charitable consideration: 1. Give the gift of education. Have you thought about giving to your own children or grandchildren and in the form of a 529 college savings plan or a direct gift to the college? 2. Give your IRS distribution to charity. Since you have to take your required minimum distribution anyhow, send it directly to a charity instead. This option is available for the remainder of 2012, but its future is uncertain. 3. Name your charity as your beneficiary on your retirement account. This option is appropriate if you’ve decided that any retirement funds left over should eventually pass to charity instead of loved ones. Be sure to designate your charitable beneficiaries accordingly! Note: The full amount of your retirement account given to charity is income tax free. If left to a non-charity, then the full amount is taxable as ordinary income. 4. Donor-advised funds. By giving to a donor advised fund, you can give today, take the charitable deduction in this year’s taxes, but decide which charities to benefit next year or beyond. They are easy to establish too. 5. Charitable gift annuity. Are you keen on the idea of receiving a guaranteed lifetime monthly income, especially as an assurance in old age? If you also want to benefit charity in the process, then consider hitting two birds with one stone by opting for a charitable gift annuity. Be sure to consult with your financial, tax and legal advisors regarding these giving options in order to choose the best plan for your donations.

Reference: Forbes (September
20, 2012) “Five Ways To Be Charitable Even If You Aren't
Bill Gates”

For more information, see www.jerryreiflawyer.com

 

Medicare Premiums Rising, Shop Around! Saginaw, Michigan

With hunting season now open, there is a different “hunt” that you may want to explore. Medicare enrollment is underway, and premiums are expected to rise. So should you hunt down a better plan? You may need to draw on your survival skills for this hunt. All evidence points to some serious rate increases in Medicare prescription drug plans. As you likely are aware, October 15 marks the first day of the enrollment period that extends until December 7. Nevertheless, if you haven’t read about the prescription drug increases elsewhere, a recent article in Reuters has reported that the potential increases may affect as many as 80% of all beneficiaries and even generate double digit rate increases for as many as 5.9 million beneficiaries, or 29% of all beneficiaries. Check out the article titled “As Medicare drug premiums soar, it's time to shop around.” Don’t be afraid to hunt down the option that best fits your needs. Be sure to look beyond the standard big 10 plans, because eight of the top 10 are showing such increases. For instance, under the Humana Wal-Mart Preferred Rx increases will be somewhere between 10%-23% for various beneficiaries.

Reference: Reuters
(October 2, 2012) “As Medicare drug premiums soar, it's time to
shop around”

For more information, see www.jerryreiflawyer.com

 

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!

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

For more information, see www.jerryreiflawyer.com

 

Related articles

Don't Delay! Time Is Expiring for Tax Planning Options Saginaw, Michigan

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”

For more information, see www.jerryreiflawyer.com

 

 

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'”

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreiflawyer.com

 

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”

For free information, see www.jerryreiflawyer.com

 

 

A Business “Break-Up” Between Co-Founders Saginaw, Michigan

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”

For more infosrmation, see www.jerryreiflawyer.com

 

Wealth Transfer Ideas from Romney’s Estate Plan Saginaw, Michigan

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”

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreiflawyer.com

 

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'”

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreiflawyer.com

 

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.”

For more information, see www.jerryreiflawyer.com

 

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'”

For more information, see www.jerryreiflawyer.com

 

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”

For more information see www.jerryreiflawyer.com

 

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”

For information, see www.jerryreiflawyer.com

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”

For more information, see www.jerryreiflawyer.com

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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 the risk?

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

For more information, see www.jerryreiflawyer.com

 

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”

For more information, see www.jerryreifflawyer.com

 

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”

For more information see www.jerryreiflawyer.com

 

Is Your Business Starting to Resemble a Partnership? Saginaw Michigan

When it comes to structuring a business, you have many choices: LLCs, S Corps, C Corps, LPs, LLPs, etc. So how do you choose the best option? A golden rule for business is to do business the way your business is structured, and to structure your business entity in the way you need to be doing business! If you mix and match, it has an unfortunate tendency to create serious liabilities which often come with a fairly aggressive tax assessment. With liabilities and taxes in mind, consider reading a recent Forbes article titled “Beware Of Partnership Status Sneaking Up On Your Business Venture.” While this advice is nothing new, yet another tax court case has come down the pike to confirm this conventional wisdom. In the case a father and son operated a moderately large agricultural business. The father and son, however, each formed their own entities, worked together to do the work, split the income equally, but disproportionately split the expenses. The IRS determined that this juggling of the books didn’t compute, so the IRS slammed both father and son with the taxes that would have applied on a single “partnership.” You could say this was another case of “substance over form.” Teaching point: if there are two business entities, then they must act like two businesses in order to be separate businesses. Otherwise, there should be only one entity, if such is an accurate reflection of how the work is being done. So, if your business dynamic is changing from what you first structured it to be, you may need to restructure it in order to reflect the current business model it has become.

Reference: Forbes (October 21, 2012) “Beware Of Partnership Status Sneaking Up On Your Business Venture”

For more information see www.jerryreiflawyer.com

 

Asset Protection: A Myth or a Must? Saginaw, Michigan

Sometimes it’s not the thought of transferring our assets that first moves us toward proper planning, but the thought of preserving our assets long enough to be transferred. So does asset protection really work? And what exactly are you protecting your assets from? The topic of asset protection was picked up not too long ago over at the New York Times, specifically from the point of view of a lawsuit in the like-titled article “Safeguarding Your Assets Against the Hazards of a Lawsuit.” Up front it should be said that insurance can be your first line of defense, and there are as many types of insurance as there are risks. This is a product where one person literally buys piece of mind (assuming you trust your broker) and pays another to accept their uncommon liabilities and costs in exchange for common payments. But insurance only does so much since it simply transfers liabilities without eliminating them, and it doesn’t work proactively on its own; you need to structure your assets. This is precisely the activity that generally runs under the banner of “estate planning,” but it’s important not to pigeonhole one or the other. Proper planning is an ongoing activity in life to further your life goals. If you have particular concerns or you’re prone to specific risks, asset protection planning for your estate can help ease your worries. You can learn a bit more from the original article, but in the end your individual circumstances and consequent risks will determine a suitable asset protection plan for you.

Reference: The New York Times (November 2, 2012) “Safeguarding Your Assets Against the Hazards of a Lawsuit”

For more information see www.jerryreiflawyer.com