Thursday, December 15, 2011

Estate Planning For Women (And the Men Who Love Them)

A fellow attorney (and award-winning journalist) Deborah Jacobs authored the book, “Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide”.  In her recent Forbes article titled “Estate Planning for Women (And the Men who Love Them)” she indicated the below question is a question every financially savvy woman should be able to answer. 

Question #4

Who would raise your children?

Few prospects are more wrenching than the possibility that young children will be orphaned. Often, parents put off writing a will because this particular thought is unbearable or couples cannot agree on a potential guardian. Some assume--incorrectly--that it is enough just to ask a relative or trusted friend to step in if the need arises.

But not formalizing the arrangements and doing some estate planning along the way could leave your children in a vacuum. For example, let's say you are a single or surviving parent--in this group too, women predominate. If you do not have a written document outlining your wishes, a court usually decides who will fill your shoes. A custody battle might erupt or, awful as it sounds, no one may want your children. And without financial planning, there may not be enough money for your child's support.

When choosing a guardian, people typically look first to relatives, starting with their own siblings--the child's aunts and uncles. A second choice for some people is their own parents, if they are young enough. Even if certain family members seem like obvious candidates, take into account all the factors involved. Key questions to ask: Am I comfortable with the individual's lifestyle and values? Would my child have to relocate? Can the prospective guardian incorporate my children into his or her household? If I have more than one child, would the guardian be able to keep them together? Does my child already have a relationship and a good rapport with the person?

Here too, you can build in checks and balances--by putting a different person in charge of the money you leave for your child's support. You can name a guardian for the funds, or put them into a trust and designate a trustee to spend the money on your child's behalf. While financial guardianships are a matter of state law and require court supervision in some states, trusts are a private matter. A trust also gives you much more say over how the money is spent.

Questions like this one can often trigger even more questions in your mind.  Please accept my invitation to schedule a meeting where we can discuss this topic and others that might be relevant to your estate planning.  Give my office a call to set a meeting.


Wednesday, December 7, 2011

Government Cuts Affect Nursing Homes

One of my WealthCounsel colleagues posted a comment on the potential for concern about nursing home care levels.  Lizette Sundvick targets this concern that appeared in this article: Medicare Cuts Could Up Nursing Home Costs SmartMoney.

Nursing home residents may soon face higher costs and reduced services, as planned Medicare spending cuts take effect this fall. 

The last few months have been a wild ride on multiple levels, to include concerns over Medicare and the “debt crisis.” While many more challenges lie ahead in terms of budget cuts, some cuts already have been made under the radar screen. Several you should know about actually go into effect this fall, as reported in a recent SmartMoney article.

According to SmartMoney, nursing home residents could face higher costs or reduced care once these cuts kick in.


On July 29, The Centers for Medicare and Medicaid Services (CMS) decided and announced that they would be compensating for last year’s $4 billion shortfall by cutting reimbursement rates to nursing homes by 11.1%. In real terms, the shortfall is going to reduce government reimbursements to nursing homes. In 2010, nursing homes increased charges on residents by an average of 5%. Bad news: These reduced government reimbursements likely will trigger even higher nursing home costs for residents beginning this fall. Alternatively, it might trigger a reduction in services to nursing home residents. Either way, the forecast is not pleasant.

Perhaps I am wrong. Perhaps nursing home residents won’t see increases in costs or decreases in services. After all, the CMS actually justifies the 11.1% cut by pointing out that it is simply a more accurate reimbursement amount based on a government report indicating that Medicare has been overpaying. In fact, a spokesperson for the CMS maintains, “We do not believe that nursing homes will respond to the payment changes by decreasing the quality of care furnished to patients. However, we intend to carefully monitor changes in utilization and staffing patterns to ensure that patients continue to receive high quality care.”

Still, the nursing home industry appears to be monitoring the situation with caution. Bottom line: If you have a loved one in a nursing home, then you, too, should take notice.  Keeping abreast of current economic changes keeps you prepared for changes you may need to make on behalf of your loved one.  

The potential for drastic changes in long term care environment serve as reminders that our power of attorney and healthcare directives need to be up-to-date and relevant.  If you want assurance that your plans are up-to-date, then let’s get a meeting scheduled to review your plans.


Monday, November 14, 2011

Estate Planning For Women (And the Men Who Love Them)

A fellow attorney (and award-winning journalist) Deborah Jacobs authored the book, “Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide”.  In her recent Forbes article titled “Estate Planning for Women (And the Men who Love Them)” she indicated the below question is a question every financially savvy woman should be able to answer. 

Question #3

Whom can you trust?

Advancements in medical science and care may enable us to live fuller, longer lives. But that also means more women are likely to suffer from a diminished mental state--a harsh reality that's difficult to accept. In case that happens, you should have a durable power of attorney, appointing a family member, friend or adviser as an agent to act on your behalf in financial and legal matters. Also make sure you have a health-care proxy, a separate document that authorizes an agent to make medical decisions on your behalf.

Choose carefully: A power of attorney, though necessary for all of us, is unfortunately also a license to steal. The best person to put in charge is a close family member--preferably one who lives nearby. Most financial advisers do not want this responsibility, nor is it cost effective to pay their hourly fee to handle routine tasks like paying bills. Naming joint agents, which is allowed only in some states, is one way to provide checks and balances. Or you can appoint another person, like an attorney, an accountant or a family friend, to supervise the arrangement. Before selecting an agent, it is important to determine whether that person is willing to take on the duties.

If you're nervous about giving the signed document to your designated agent right away, you could leave it with your lawyer with instructions on when to turn it over. In that case, remember to tell your agent whom to contact.

Or, instead of making the power of attorney effective from the moment you sign it, you can specify that it be activated by a specific event, for instance, if you become incompetent. The problem with this approach, known as a springing power, is that someone must decide when you have reached that state. Traditionally, this has required a medical opinion.

Questions like this one can often trigger even more questions in your mind.  Please accept my invitation to schedule a meeting where we can discuss this topic and others that might be relevant to your estate planning.  Give my office a call to set a meeting.


Monday, November 7, 2011

Don't fall prey to the 2011 "Dirty Dozen" tax scams

The IRS has identified the "Dirty Dozen" tax scams of 2011.  Participating in or falling victim to them can result in real harm to your pocketbook and your freedom.  My WealthCounsel colleague, Scott Makuakane, practices in Hawaii and he recently posted five of the Dirty Dozen.  He noted that he did not list them in any particular ranking of "dirtiness":

Hiding income offshore

People used to be able to get away with this because of the IRS' former inability to track offshore accounts.  Things have changed, and penalties have been increased.  Any tax strategy that requires secrecy as an element for success is highly suspect and probably should be avoided. 

Identity theft and "phishing"

It is absolutely critical to protect  your personal information.  All an identity thief needs are your name, birthdate, and social security number to make your life a living hell.  Watch out whenever anyone asks for those bits of information, and protect yourself by shredding documents that may contain sensitive information about you before you discard them.  Also beware that identity thieves are out there trying to gather your personal information any way they can--through email, by posing as government personnel, by spyware programs that can steal passwords from your computer, and a variety of other nefarious means.

Return preparer fraud

Be careful who you trust with preparing your returns.  If you have a fairly complicated return, it would behoove you to work with a CPA.  In any event, be sure to work with trustworthy professionals in whatever you do.

False or misleading forms

Some folks claim refunds to which they know they are not entitled.  Obvious no-no.  Don't file a return that does not pass the smell test.

Frivolous arguments

People sometimes make the darndest arguments.  Here is one that will land you in the pokey.  Premise 1:  there are ample declarations by the IRS in a variety of publications that our income tax system is "voluntary."  Premise 2:  I have the right to opt out of any "voluntary" income tax system.  Conclusion:  by golly, I will opt out of the U.S. income tax system and there is nothing anybody can do to me if I do. 

Please don't get caught up in any "strategy" that would seem to enable you to evade taxes.  Tax avoidance or minimization through recognized legitimate means (such as deductions for charitable contributions and mortgage interest) is good stewardship.  Tax evasion is a crime, and it will eventually catch up with you.

You can check out the rest of the "Dirty Dozen" on the IRS website.  For some information on legitimate approaches to estate planning, please contact me and we discuss the legal path offering confidence in your estate planning.

Wednesday, October 19, 2011

Estate Planning For Women (And the Men Who Love Them) Question #2

A fellow attorney (and award-winning journalist) Deborah Jacobs authored the book, “Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide”.  In her recent Forbes article titled “Estate Planning for Women (And the Men who Love Them)” she indicated the below question is a question every financially savvy woman should be able to answer. 


Question #2

Is there money in the bank?

In the process of dividing assets into "yours," "mine" and "ours," couples should make sure there is enough money to cover immediate expenses if one of them suddenly passes away. These reserve funds can be held in each of your separate accounts or in a joint one. Just be aware that when you die, your spouse or partner will probably not have access to your individual account right away, and you will each need the discipline to keep the fund flush. A better approach is to maintain a joint account designated for emergencies that can also be available for this purpose.

With bank and brokerage accounts, the most frequent form of joint ownership is joint tenancy with rights of survivorship. It is available to any two people who want to own assets together. Both owners have access to the assets during life, and when one joint tenant dies, the survivor immediately becomes the sole owner of the whole property, regardless of what the will says, or whether there is a will. These features make this type of ownership appealing both to spouses and other couples.

Despite these advantages, joint tenancy has a serious drawback: it exposes each owner to the other's potential liabilities. Unmarried couples also need to be aware that state laws on joint tenancy for non-spouses may vary. Consult a lawyer who is familiar with the rules of the state where you live.

Questions like this one can often trigger even more questions in your mind.  Please accept my invitation to schedule a meeting where we can discuss this topic and others that might be relevant to your estate planning.  Give my office a call to set a meeting.

Friday, September 30, 2011

Potential Portability Problems

Portability has become a popular topic among the estate planning set, and I found this recent post to be valuable.  The author of the commentary is Lizette Sundvick, who practices in the sate of Nevada.  And her comments are based on the article  Wealthy Take Estate-Tax Exemptions Beyond Grave Until 2013”  Bloomberg (8-6-11)

The Bloomberg article notes that:  Wealthy individuals in the U.S. will find it easier to cut their estate-tax bill as a result of a provision for using their deceased spouses’ exemption credit.

Much ado has been made about this new power in estate planning known as “portability,” and for good reason. Nevertheless, it’s also prudent never to put all your eggs in one basket. So it is with the matter of estate tax exemption portability.

As you may know, “portability” is the new ability for a deceased spouse to transfer their unused gift and estate tax exemption amount to their surviving spouse. Provided all the required paperwork is timely filed with the IRS, that effectively allows a married couple to exempt an astounding $10 million from federal taxes for their loved ones without the use of trusts or legal devices.

Bloomberg suggests that it is better to think of portability as a “safety valve” for married couples, especially those whose assets would be entirely covered by the doubled exemption, but not something to be relied upon. The biggest limitation, for one, is that portability exists at the whim of lawmakers. After the budget showdown last December, existence of portability is only guaranteed until the end of 2012 (if that, Congress being the politically fickle animal that it is).

But there is another important caveat Bloomberg touches upon that is worth mentioning. Portability is a power that exists between spouses, but in a world of shifting marriages, divorces, and remarriages that also creates strange limitations. Portability only applies to the last deceased spouse. Accordingly, if a widow remarries, then they could potentially lose that massive exemption (even after their own estate has doubled, creating an estate tax liability). Indeed, if portability isn’t lost and if the widow’s new spouse predeceases after using their own exemption by gifting, then the widow’s estate is in the same tricky situation.

We all know (or should know) that relying on fickle politics is addressing the temporary.  On the other hand, we encourage you to investigate every opportunity that arises for your use here and now.

Portability can be a worthwhile tool to consider.  On the other hand it can be a daunting issue to incorporate into your long-term estate tax plans.  As these new planning tools surface, it is advisable to make sure your estate plan is up-to-date and fully addresses your desires regardless of what "portability "may or may not offer.  Please call to schedule a meeting. 

Friday, September 16, 2011

Estate Planning For Women (And the Men Who Love Them)

While important to both sexes, estate planning often affects women more profoundly. Women live longer on average and tend to marry older spouses, making them three times as likely as men to be widowed at 65. So for women, estate planning is a crucial part of retirement planning. And since they usually survive their spouses, women more often have the last word about how much wealth goes to family, charity or the taxman.

A fellow attorney (and award winning journalist) Deborah Jacobs recently authored an article in Forbes titled “Estate Planning for Women (And the Men who Love Them)” she indicated the below question is one every financially savvy woman should be able to answer. 

Question #1  

What key deadlines apply when a spouse dies?

Starting in 2011, a surviving spouse can add any unused estate tax exclusion of the just deceased spouse to her own $5 million exclusion--this is called portability. So a widow can pass on as much as $10 million, untaxed, through either lifetime gifts or her will. But portability is not automatic. To get it, the executor of the estate of the first spouse to die must file an estate tax return, even if no tax is due. Surviving spouses should see to it that the form is filed even if they have nowhere near $5 million of their own, because who knows what the future holds?

Nine months is also the deadline if you plan to disclaim (turn down) any portion of what you inherited from a spouse so that it can go directly to your children or other family members or into a trust for their benefit. The new tax law makes it more likely that spouses will leave everything to each other outright. Other couples may want to give the survivor the right to disclaim at least some money and have it go into a family trust or bypass trust, as it is also called.  This allows the survivor to make an informed decision based on her own financial resources and federal and state estate laws at that time. If you want to use this postmortem tax planning strategy, you need to keep an eye on the calendar.

Questions like this one can often trigger even more questions in your mind.  Please accept my invitation to schedule a meeting where we can discuss this topic and others that might be relevant to your estate planning.  Give my office a call to set a meeting.


Thursday, September 8, 2011

Amy Winehouse got her will right

This commentary is taken from an article authored by Karen Datko in MSN Money on July 27, 2011.  It gets right to the core of a will and its potential importance for your estate. I wanted to share this with you.

The late soulstress reportedly wrote a will that excluded her ne'er-do-well ex-husband.

The late Amy Winehouse was many things to many folks -- fabulous talent, an inspiration to Lady Gaga, an addict who couldn't quite shed her demons all come to mind. Add to that list: wise estate planner.

Winehouse's revised will reportedly prevents any of her fortune, estimated at $16 million and most assuredly growing, from going to her ex-husband, Blake Fielder-Civil, widely regarded as the person who introduced her to hard drugs. Instead, her millions will be divided among her father, Mitch; mother, Janis; and older brother, Alex.

 "Let this be a lesson to both the famous and the obscure: A will is a good idea at any adult age," Ron Dicker wrote at DailyFinance.

Fielder-Civil, now serving a sentence for burglary and possession of an imitation firearm, might have inherited everything had Winehouse not put a new will in place. Tim Worstall wrote at Forbes:

However, the one thing, under English law, that divorce does not do is undo the presumption that the natural inheritor is the spouse. In the absence of a will the surviving spouse will inherit at least the bulk of any estate.
Even in the presence of a will written pre-marriage which states otherwise the surviving spouse, or ex-spouse, will again be the natural inheritor.

How would it work in the United States? It varies from state to state, but generally if you die intestate, your estate will go to spouse and kids, or parents or siblings if you are single and don't have children.

 Do you have a will? There's a good possibility you don't, even if you're well past 27. "According to an AARP survey, more than one third of Americans over 50 lack a will, living trust, or power of attorney," Kimberly Palmer wrote at U.S. News & World Report.

If you're a parent of minor children, consider yourself negligent if you don't have one. Liz Weston of MSN Money wrote: "No matter how icky you feel about planning for your own demise, you owe it to your kids to spare them the potentially ugly and drawn-out custody battle that could ensue if you don't make these decisions now."

Whether you are older than 27 or younger than 27, it may be worth meeting to discuss a will.  After all, it was a very smart move by Amy Winehouse and it could be equally beneficial to you. I’m available to schedule a meeting.


Friday, August 26, 2011

Uncovering Dementia and Alzheimer's Cover-ups

One of my estate planning colleagues, who practices in Nevada recently penned this comment on dementia cover-ups.  Her post occurred after reading this “The Danger of Your Aging Parent Covering Up Dementia” article in Forbes (August 11, 2011)

Here’s what’s important: it doesn’t matter if you have a diagnosis for your aging parent or not. It matters how your aging parent functions. It matters how you deal with what you see.

Dementia and Alzheimer’s are becoming increasingly common, but even if we are beginning to become more and more aware of how to spot them, it doesn’t make it any easier. Many a reader will be familiar with the terrible uncertainty and concern over their elderly parent’s thinking. Fortunately, Carolyn Rosenblatt of Forbes has more advice to give in her recent article.

Among the many dangers to keep in mind when an elderly loved one starts “slipping” is that they may begin “hiding” it. For one thing, it is not something with which any senior looks forward to acknowledging, even if they are aware of some telltale symptoms. It is human nature.

We all compensate or distract when there is something to hide, both from ourselves and from others. But when something like Alzheimer’s is at stake, it can be all the more difficult to get past, and it is harmful to hide. Indeed, since there is no actual test for dementia or Alzheimer’s, it is possible that a doctor will be unable to diagnose those conditions.

It is important, therefore, to observe how your loved one functions. Keep a keen eye on them and know what you are seeing, for their own sake. The original article has more advice and anecdotes to offer, but Ms. Rosenblatt sums up the steps in four points. As soon as you begin to worry you must, first, persuade your loved one to visit a doctor, and a specialist if possible, to detect it early. Second, you must secure their estate planning documents while they have legal capacity to know and understand what they are doing. Third, you must secure proper care for them. Fourth and last, you have to discuss the circumstances openly with all family members, so all may be aware of the circumstances and can work together to protect your loved one.

Good estate planning should take into consideration the healthcare and power of attorney documents needed to insure a smoother transition for proper care in this type of situation.  As articles, like this one in Forbes, raise our awareness of the growing painfulness of dementia and Alzheimer’s, you or your loved one may want to update your existing plan or design a new plan.  We can help.  Our office is available to take your call to schedule an appointment. 


Friday, August 5, 2011

Back to Basics with Estate Planning

Fundamental Estate Planning

The fundamentals are the same across all sizes of estates.  A recent post by my estate planning colleague, Scott Makuakane, who practices in Hawaii reminded me once again that it is important to review the basics.  Below is Scott’s blog posting on the fundamentals.  I think you will find them a brief, but worthwhile, read.

 No one enjoys a conversation about death.  And, with the estate tax exemption now set at $5 million for an individual and $10 million for a couple, many people may believe they have no reason to consult an attorney about their estate planning.  But avoiding the topic of estate planning can mean unnecessary expense, confusion and conflict.

SmartBusiness recently highlighted the fundamentals of a “well-thought-out estate plan,” with topics that everyone should consider – whether prince or pauper.

  • Why do you need an estate plan?  A comprehensive estate plan ensures that your estate will distributed according to your wishes, provides protection for yourself in the event of your own disability, and allows you to plan for minor children, pets, and charitable causes.  You can also make sure that the assets you leave behind will be there for your intended beneficiaries - and not their creditors or ex-spouses.
  • Can I write my own will?  You certainly can, and there are many online sites to help you do so! However, remember that you get what you pay for.  Improperly drafted or last-minute, hand-written wills frequently are contested and invalidated in court.  If you don’t know what you’re doing, the outcome could be much different than what you expect.
  • What should every estate plan have?  SmartBusiness recommends two powers of attorney and a living will.  That's not a bad start, but I would expand the list to include a will, powers of attorney for financial affairs and for health care, and an authorization to your physician to share your health-care information with your health-care agent.
  • What about trusts?  Many people choose to create trusts, not only to reduce estate taxes, but also to help their heirs avoid probate.  Trusts also can help shield assets from loss to due to unforeseen circumstances, such as the bankruptcy, divorce, or lawsuits of your heirs.
  • What mistakes do people tend to make in estate planning?  The writer points out two common mistakes: failure to plan for their personal effects, and failure to review and update their plans over time.  Reviewing and updating your estate plan is particularly important in light of the frequent changes that have characterized our estate tax law of late.  Although the estate tax "coupon" (the amount you can pass estate tax-free) is $5 million for the next two years, the coupon is set to go down to $1 million in 2013, and the estate tax rates are set to go from 35% to 55% at that time.  Another mistake that we see is failure to implement an estate plan by making sure all assets are properly titled.  Many people create trusts but then do not make sure that title to their assets is transferred into their trusts. 

If you have questions, let’s get together and get them answered.  My goal is to provide you with helpful information for creating, implementing, and updating your estate plan to serve your wishes.  And our mutual goal will be creating an estate plan that will succeed when it is called upon to take you and your loved ones through life’s inevitable transitions.



Monday, July 11, 2011

Top 10 Icebreakers offer guide for blogging

Another subject that I wanted to bring to your attention is a recently published book recommended by one of my colleagues.  It helps with the starting points for getting and keeping good relationships.  My goal as a legal counsel is to connect as well as to deliver good legal counsel.  I thought you would find these “icebreakers” to be helpful suggestions.

Debra Fine, author of The Fine Art of Small Talk  offers a lot of helpful advice on networking and connecting with people while networking.  In her book she includes a list of her top 10 icebreakers. She suggests using them at any occasion where you have few established relationships.  We’ve all been at those types of events – school meetings, business events, fundraisers, cocktail parties, dinners, and conferences/conventions where you need to start a conversation with people you don’t know well or those “strangers” you would like to meet.

Top Ten Icebreakers

1.            What is your connection to this event?

2.            What keeps you busy outside of work?

3.            Tell me about the organizations you are involved with.

4.            How did you come up with this idea?

5.            What got you interested in  … ?

6.            What do you attribute your success to?

7.            Describe some of the challenges of your profession.

8.            Describe your most important work experience ….

9.            Bring me up to date.

10.         Tell me about your family.

According to Fine, the theme to these ten icebreakers is that they are personal, but not too personal. “Your goal is to build a business relationship,” she says, “while still getting to know more about a customer or potential customer. If you are talking to an existing customer, they probably already know you are good at what you do, so you just want them to see you on a more human level.” Thinking about this –when you establish that comfortable connection on the human level, they are more likely to refer you to a friend or associate. 

The other thing to note about these icebreaker guidelines is that they give the new person control to decide just how much information they are willing to share and where they want to set the parameters of the conversation.  On your part,  your job is to help the other person feel comfortable with you as a person.  You never want to overwhelm them with complex topics.  You never want to slip into insider jargon.  And you never want to put your audience on the spot regarding religion or politics.

Many of our friends and acquaintances could be more effective using these 10 icebreakers, so I encourage you to forward this link to them.  Let’s all communicate more effectively.  And you are invited to contact me, so we can get better acquainted.

Tuesday, June 21, 2011

ESTATE PLANNING: Planning for your children's education

Recently a fellow attorney in Indiana penned a thought provoking post on planning for your children’s education.  I enjoyed it, and I share it below with you.  The author is Chris Yugo writing a column for The Times in northwestern Indiana.

I just finished reading a book by Michael Schumacher called the "Mighty Fitz: The Sinking of the Edmund Fitzgerald."

As the title implies, the book chronicles the story of the Edmund Fitzgerald, a huge ore caring vessel that sank in Lake Superior in 1975. Except for what I learned from the Gordon Lightfoot song, "The Wreck of the Edmund Fitzgerald," I really knew very little about the ship and its sinking.

Although you might imagine that book about a shipwreck would end with the ship's sinking, the book actually picked up from there to discuss the investigation and how the families of the men who were lost came to terms with the tragedy.

One thing that caught my attention was a section dealing with the children of the sailors. In particular, it discussed how Eugene "Red" O'Brien, a wheelsman, encouraged his son to attend college and get an education by establishing a trust for his education. According to his son John, "It made me stay in college because it was my job. I was getting paid. Here was my dad, a guy with limited education, working on the lakes. Yet he had the insight to do these things"

The book didn't go into too much detail about the terms but according to John, he received a monthly stipend as long as he remained in school.

The great thing is each of you can do the same thing to encourage your children and grandchildren to attend school. Now some of you might be saying, "I'm having trouble just keeping the mortgage current. There is no way for me to establish a trust fund."

In today's economic environment, I certainly understand that. However, you can still plan now without actually setting anything aside. You can set up a trust for your loved one's education within your will. A trust established within a will is a testamentary trust.

By using a testamentary trust, you don't have to fund it until your death. At that time, it can be funded with the savings account or the proceeds from the sale of the home or from life insurance or retirement accounts. If the funds are available at your death, the trust will fund. If the funds aren't available at your death, then the trust won't fund and you haven't lost anything.

Since you create the trust, you can choose the terms. For example, you can restrict the funds to only be used to pay for tuition, fees and books or it can pay any legitimate educational expense including room and board and perhaps a living allowance. You can make the terms as restrictive or unrestrictive as you please. So be creative.

I'm pretty sure Red didn't plan on being lost at sea. However, he did have the foresight to plan, which enabled his son to get an education. Even if you don't work the ore carriers on the Great Lakes, you should still have a plan.

Please note:   Opinions are solely the columnist's, and his information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant or estate-planning specialist.

Remember, I am the attorney who is available to address specific issues related to planning for your children’s education and other estate planning matters.  Please call me or post a request to meet in the COMMENT section of this blog post. 


Tuesday, June 7, 2011

It doesn't have to have monetary value to be important to your estate

SmartBusiness recently highlighted the fundamentals of a “well-thought-out estate plan,” with topics that everyone should consider – whether prince or pauper.

One of their interesting points was that if you are working with an estate planning attorney, most likely the important areas are going to be properly addressed, including the impact of pending changes in estate taxes. However, I’ve found that many people overlook making arrangements for their personal effects, including jewelry, art work and collectibles. They simply assume that their loved ones will be able to agree on how to divide it all up. In my experience, these things are what people argue over the most.

Not long ago, there was a case involving two brothers who litigated for three years over the ‘stuff’ left in their mom’s house. They ended up spending over $50,000 on attorney’s fees fighting over items that were appraised for only $5,000. To avoid this happening in your family, draft a Memorandum of Understanding and attach it to your will. The Memorandum can be very simple, but it should also be very specific in detailing your wishes. Hold a family meeting to identify what your children want, and incorporate that into the memo.

As your circumstances change and evolve over the years, your plans need to be kept current. Don’t forget about external factors such as tax law changes and fluctuations in the value of real estate.

Few people sit down, annually, and take stock of their estates. But if you do, millions of dollars can be saved and much heartache can be avoided.

If you have questions, let’s meet and talk.  My goal is to provide you with helpful information for creating, implementing, and updating your estate plan to serve your wishes.  And our mutual goal will be creating an estate plan that will succeed when it is called upon to take you and your loved ones through life’s inevitable transitions.




Wednesday, May 25, 2011

Hiring a caregiver is trickier than you think

Recently my estate planning colleague in Hawaii, Scott Makuakane, posted these helpful comments on engaging caregiver(s) for those needing such services.  As with so many things in today’s world, it is not as simple as it seems.  I share this information with you as a “heads up” for when such a need may arise within your family. 

If you are hiring a caregiver for yourself or another loved one, you may be tempted to try to make the process as simple as possible by treating the caregiver as a "private contractor."  You tell the person "I will pay you so much an hour, and you deal with the IRS and the State when it comes time to pay taxes."  After all, taking on the responsibilities of withholding taxes (and then paying the taxing authorities), buying Worker's Compensation insurance, paying Social Security and Medicare tax, and all the rest, may seem daunting if you have never done it before.  Be aware, however, that the IRS and the State when it comes time to pay taxes."  After all, taking on the responsibilities of withholding taxes (and then paying the taxing authorities), buying Worker's Compensation insurance, paying Social Security and Medicare tax, and all the rest, may seem daunting if you have never done it before.  Be aware, however, that the IRS and the State will probably take the position that the caregiver is an employee, that you are an employer, and that all of the legal obligations that attach to those labels are applicable to your situation.

IRS Publication 926 gives very helpful guidance to those hiring household employees, including caregivers.  You would do well to go through that publication and consider all of the questions it poses, several of which might never occur to you.  For example, can your prospective caregiver legally work in the U.S.?  How do you verify that, and what records must you keep to prove that you satisfied your obligation to verify the caregiver's status?  On that subject, you can find all of the information and forms you will need at the U.S. Citizenship and Immigration Services website.

Depending on your budget and the number of caregivers you will need, it may make sense to look into local employment or caregiver agencies.  This simplifies your job, because you can contract with the agency, and the agency will be the caregiver's employer and will deal with all of the details of being an employer.  You will pay a premium for this kind of service (in other words, you will have to pay significantly more per hour for the caregiver's services if you deal with an agency than if you dealt directly with the caregiver), but the agency's experience and employment expertise may make the extra cost seem like a bargain.

Another set of issues arises if you opt to be the employer of a caregiver, and then your employee is injured on the job.  If you have made sure to carry the right kinds of insurance, you will be fine.  However, the consequences of failing to do so can be financially disastrous.  An agency will probably carry Worker's Compensation insurance, but you should be sure to talk with your personal insurance professional to find out if there is anything else you should do to protect yourself through your homeowner's and umbrella policies.

The bottom line is that you should not hire a caregiver without carefully considering your legal responsibilities and potential liabilities, and making sure they are addressed.  Ask your trusted advisors--your CPA, your lawyer, and your insurance professional--for guidance, and check out the resources cited above.  You will be glad you did.

I would hope you would give me a call prior to your engaging a caregiver.  A few precautions can be very beneficial for the longer run…..and likely protect your estate.  Please call me, or email me, or post a request to meet in the COMMENT portion of this blog. 

Tuesday, May 10, 2011


Recently one of my estate planning colleagues, addressed the importance of "Final Instructions".  This type of information is similar to an instruction manual that steps us through arrangements that we should address in advance of the inevitability of our passing.  We rarely get an instruction manual at birth, but we surely can leave one before our departure from life.  My thanks for this post goes to Ellen Gay Moser who practices estate planning in the state of Illinois.

Your “instruction manual” for your children or survivors should begin with the basics.  First, do you have a Trust and Will?  If so, have you written instructions for your kids (survivors) to follow at your death or disability? 

In regards to your estate, are you concerned about probate and taxes? If so, you have done a good job to provide for your heirs and save unnecessary costs, fees, and taxes. If not, you  may be leaving your kids  with no clues as to what to do and no instructions  for them to follow.  It's a well known habit that when all else fails, we read the instructions. But if we are left with no clues or instructions, what do we do? We waste a lot of time and money that tends to diminish your estate.

If you have a Trust,  then you  likely already have an instruction manual  stating your goals as to who gets what and when they get it. The duties of your Successor Trustee are set forth in your  Trust document and it is his/her fiduciary responsibility to abide by the law and the Trust. The Trustee must collect and manage assets, pay your debts and taxes and seek advice of counsel. Your goals to protect your loved ones can be carried out, if you state your goals loud and clear in your Trust.

Your “Final Instructions” may include specific distributions of special stuff /memorabilia/heirlooms/investments/etc  to go to certain people. Instructions will  often  include tax planning for married couples, disability planning when you become unable to manage your financial affairs prior to death, and who you want to be in charge of your property when you die or are disabled. Provisions may be made in your trust for protecting your children from predators and special instructions will protect your disabled children.

Do you have a plan to protect your children in the event your surviving spouse remarries? Do you care if a child is disinherited? Do you want to protect a spendthrift? If you plan your Will and Trust with lots of “baby sitter” instructions, your children may be protected for life, and your grandchildren too.    At the minimum,  Final Instructions are important to avoid the consequences of doing nothing.  I encourage you to take the time now to meet with an estate planning attorney such as myself to create or review your Final instructions. 

Give me a call, send me an email, or leave a comment on this posting, so I can respond in a helpful manner with information or to set a meeting discuss your  manual for “Final Instructions.”

Wednesday, April 20, 2011

Three Classic Estate Planning Blunders

As we push our way through Tax Month, we are reminded of the importance of the basics of estate planning.  My estate planning colleague in Hawaii, Scott Makuakane, recently posted the following article to revisit three areas we should avoid in estate planning. His article reflects the practical experience that comes his practicing estate planning and trust law in Hawaii since 1983.


Three Classic Estate Planning Blunders

Too often, estate plans fail.  Here are the three most common reasons.

1.   FAILURE TO PLAN.  You have heard that failing to plan is planning to fail, and it is true.  People procrastinate with their estate plans for a variety of reasons, one of them being the refusal of some of us to accept our own mortality.  Not to rub it in, but passing into the Great Beyond is not an “if,” but a “when.”  It will make a tremendous difference to your loved ones, your pets, and your favorite charities, if you have made a plan for what happens to your stuff (everything you own) when you assume room temperature. 

Your estate plan should also take into the account the possibility of your becoming incapacitated someday.  This is an issue that has become more and more important as advances in medical science have made it possible for us to live longer lives.  Unfortunately, medical science is still working hard to find the causes, and come up with solutions, to the various forms of dementia.  Although we live longer today than in years past, a growing number of us ends up needing long-term care.  It is absolutely critical to plan for how you and your loved ones will deal with the issues of long-term care, not the least of those issues being how you will pay for it.

2.   FAILURE TO IMPLEMENT.  Having a plan is great, but failing to implement your plan renders it all but worthless.  One of the primary ways people fail to implement their plans is to neglect to transfer their assets into the right “buckets.”  If you have a revocable living trust, it should probably hold most, if not all, of your assets.  Yet many people die with assets in their own names, which, in turn, results in costly and time-consuming probate proceedings that could easily have been avoided with some simple asset transfers. 

3.   FAILURE TO UPDATE.  Once you have set your course with your estate plan, you have to remember that even the best of plans will require course corrections.  Your health will change.  Your stuff will change.  The law will change.  The list of people you like and trust will change.  It is important for your estate plan to change so you can be sure that it will work as intended.  The best way to do this is through a regular discipline of reviewing your estate plan and updating it when necessary.

I’m here to help you avoid all three of these “blunder” traps.  If I can help, please contact me or leave a “comment” on this blog post.  As a trained estate planning professional, my goal is to guide and support you through the estate planning process. 



Tuesday, March 29, 2011

Financial Parenting Tips

Every parent is challenged to prepare their children for living meaningful lives and managing their affairs responsibly.  Here are a few parental tips to help set the tone for your children and their approach to handling the money you provide.

My thanks to my WealthCounsel colleague, Wayne Ball, for turning my attention to these financial planning tips first shared by his legal colleague in Little Rock, Arkansas -  Dee Davenport of Delta Trust.

·       Make money meaningful:  Good financial parenting could begin with an allowance that is tied to the completion of specific chores.  It’s important to teach children that money is the result of performance or effort.  It must be earned.

·       A sense of sharing: Give young children holiday gifts in three pieces: one piece to spend, one piece to save, and one piece to give to someone who is in need. Families report great results with this simple plan, and heirs remember the lessons learned and speak of them gratefully for a lifetime.

·       Give just enough:   The sage of Omaha, Warren Buffet says “Give your children enough so they can do anything, but not enough so they do nothing”. At the same time, mature children whose values are intact could do so much good in the world, not only for themselves and their families, but also for their communities.

·       Think long range:  Some of the most successful families have constructed “100 year plans” (four generations) to pass on both the family values and the family financial assets. Increasingly, families are engaging community members in their legacy development processes to assure the effectiveness of the gifts made.

These are just a few guidance tips for instilling many of the basic tenets of financial planning.  I hope you find one or more that you can incorporate into your parenting activities. 

For more formal estate planning strategies, I would enjoy meeting with you and sharing my experience and knowledge.  We can meet – just give me a call, or you can leave a comment on this post.


Monday, March 7, 2011

Estate planning for the rest of us

My WealthCounsel colleague, Suzann Beckett, offers an answer to one of the most often-asked questions I encounter in social gatherings. 

An acquaintance asked me about estate planning, not long ago. They weren't asking for professional advice, they were literally asking if I could explain what estate planning is, and how it might affect them. It's a good question, one that I wish more people knew the answer to.

First, it's worth knowing that estate planning is not limited to the DuPont's and Carnegie's among us. Admittedly, Bill Gates and Warren Buffet have amassed fortunes so large as to suggest that significant thought needs to go into the planning of their estates. But estate planning isn't just about money. It's also about security, philanthropy, and control of our own interests.

One aspect of estate planning includes our health care plans. Not only can estate planning help determine our eligibility for Medicaid benefits, it can also allow each of us to issue specific directives about our own future health care. Even if a health crisis leaves us unable to speak for ourselves at some point, our prior planning can provide documentation of our wishes, which enables us to maintain control of our own destiny, even if we are temporarily or permanently incapacitated.

In fact, our estate planning can extend to the appointment of a specific person to act as our health care representative, as well as our desire to donate organs upon your death. It isn't just about our money and holdings. It is in a very real sense about us, as people.

Yes, estate planning allows us to make decisions while  in our prime that will come into play even after we are gone (see my previous post about Ben Franklin). And more importantly your decisions are legally binding on those who may, or may not agree with our wishes. Remember, this is your own estate and your own life you are planning to protect.

Beyond health care, estate planning allows us to designate who speaks on our behalf should the need arise. Entering into a power of attorney allows us to appoint the person we trust most to oversee our personal business if we are unable to conduct our affairs ourselves. Many people assume that we must appoint our lawyer when we issue a power of attorney. And you certainly can do that if you wish to. But you can also give that authority to your spouse, or a child, or a close personal friend, or anyone else you wish. A power of attorney is yours to give, or revoke, at your discretion. Estate planning can help you enter into, or terminate a power of attorney, on your terms.

Perhaps the most commonly known aspect of estate planning is the drawing up of a will. But even that can be more far-reaching than most people realize. You have the opportunity to not only decide what happens to your holdings after your death, you also have the chance to establish a trust if you wish to, so that you can provide for the care of a family member, or another charitable cause that is important to you. Trusts can also be used to minimize a tax burden, in some cases. Estate planning can even allow an individual to develop a strategy to avoid probate on some holdings. A practice that allows a well planned execution of our wealth, no matter how big or small, that keeps it all in the family, for lack of a better term – rather than running the entire contents of our lives through the court system before it is distributed to our heirs, or whomever we wish it to go to.

The assumption that only the very wealthy have any need, or the even the option of engaging in estate planning, is incorrect. Almost anyone who has something of value to leave behind can benefit from estate planning. And even those who do not have significant wealth can benefit in terms of health care planning.

Each and every one of us has a unique situation to deal with as we walk through life. There is no blanket answer or master plan that will work for everyone under every possible circumstance. Perhaps the practice of estate planning would be more readily understood of we called it Individualized Planning, instead?

It's worth thinking about, at least.


Tuesday, February 15, 2011

Compensating Caregivers

One in Seven Americans are Caregivers

There are some serious issues looming on the horizon for baby boomers.  Almost one in seven Americans looks after a disabled person age 50 or older.  Many compensated and many not compensated, but it is a rapidly growing number (the number has jumped 28% since 2004). It’s an emerging situation that needs the compensation element to be formalized for many.

In the recent November issue of Financial Advisor the article “Compensating Caregivers” quoted a  2009 survey found that 14.5% of the U.S. population – about one of every seven of us – is responsible for the care of a disabled person age 50 or over, up 28% since 2004.  Increasingly, the elderly disabled are paying family members to care for them in family home. This raises a number of issues.

This article takes stock of the situation and urges caution and awareness. It may seem odd, unnecessary, or even heartless, but they advise that the arrangement with caregivers be legally formalized, reported, and in some cases even treated as employment. The reason is two-fold.

Firstly, by formalizing and documenting the arrangement, you make it legally acknowledged and transparent for both the care-giver and care-recipient. As the recipient of care, you may be able to claim an income tax deduction all or part of the payments as qualified medical expenses. Additionally, your payments will be well-documented, should Medicaid eligibility ever become an issue. Without this documentation, the unidentified transfer of funds to family members could be seen as an attempt to cheat the system.

Secondly, simply establishing a legal process for payment of care can help open up family dialogue, and raise awareness – especially among non-care-giving family members. Arrangements of this nature are bound to put stress on all parties, but dialogue, contractual understanding, and compensation can help smooth over difficulties for the care-receiver, the care-giver, and other family members. The care-receiver has a vital say in the arrangement, can avoid feeling like a “burden,” and remain a vital part of the family. Family members can discuss who is to administer care or how exactly they can support one another in fairly supporting the care-receiver. For that matter, too, sibling squabbles can be lessened when it comes to inheritance and estate arrangements if the family care arrangement is legally recorded.

I thank my WealthCounsel colleague in Nevada, Lizette Sundvick, for authoring this commentary on “Compensating Caregivers”.

Foresight, solid financial planning, and an awareness of the extent of any care arrangements are vital. I am always available to assist you with long-term care and other legal issues commonly associated with aging. You are welcome to give me a call to schedule a consultation, or leave a comment below this post, and I’ll share the dialogue with all. 


Monday, January 24, 2011

Filing for Bankruptcy: What Can You Protect?

With 1.6 million Americans expected to file for Bankruptcy this year, we know that at least these 1.6 million and very likely many more researching the bankruptcy option have been asking the same basic questions.  “What can I protect?”   “What will be left?”

A recent article in the Wall Street Journal Digital Network addressed these very questions.  My colleague in Nevada, Lizette Sundvick, offers a summary commentary on this article.

Some may opine that we are climbing out of the recession, but the effects are still wearing on us. According to estimate by the American Bankruptcy Institute, more than 1.6 million Americans are expected to file for Bankruptcy this year, with 42% of filers citing “job loss” and another 65% citing “income reduction” as the determining factor. Against this backdrop, it’s unfortunate that bankruptcy hits responsible persons the hardest because they likely have the most to lose. If you are filing this year, then you may have a great deal you wish to protect. I thought I’d share some tips from a recent article on SmartMoney about what you can protect.

  • A Home: The protection afforded your home depends on your state of residency.  In addition, different states offer different acreage allowances for city and rural properties. Beyond that, the equity you have in your house also can be important to protect, because most states have an exemption allowing a certain amount of that equity to remain with the homeowner in the event that the home is sold by the bankruptcy trustee.
  • Tax-Exempt Retirement Funds: These are usually safe, and IRAs usually can be protected up to $1.17 million per person. Don’t, however, try to dump other assets (i.e., from investments that are not protected) into the retirement fund. This is a no-no.
  • A Car: Trying to retain the car is similar to retaining the house, since your level of protection depends on the laws of your state of residency. If the value of the car is below the exemption limit, and it is owned by the filer, then it can be kept. Otherwise, equity up to the exemption can go to the filer in the event of sale. Of course, in the 16 states that allow the federal “wild-card” exemption, the rest of the value of the car may be covered and the car itself retained, but this itself depends on state laws and exemptions.
  • Life Insurance Policy: If the policy is term-life insurance, then it is generally safe. Whole-life policies are generally regarded as investment vehicles, however, and in that case it will depend on state exemption levels.
  • College Savings: If college savings are held in a 529 plan or a Coverdell account, there are a couple of factors you need to know. If the account is only 2 years old, it is only protected up to $5,000. However, if the account is older than 2 years, it will be safe for so long as the beneficiary is not also the filer.

Generally speaking, the biggest factors are the state-specific exemption levels and allowances. Be sure you obtain competent professional advice to protect your interests (and stay out of hot water).

If you're worried about the future and how you can guard against economic fallout, we can give you some reassurance.  Give me a call to discuss your options.  If you have a question or two, please submit as a comment to this blog post, and I’ll respond in the comment thread or address in a fresh blog post.   


Thursday, January 6, 2011

"My Mother took care of me, so I'm going to take care of her."

I’m often asked the question, “What are the options for a baby boomer with aging parents?”  I was pleased to see this posting by my fellow Wealth Counsel member Suzann Beckett practicing in West Hartford, CToffers one answer for the many baby boomers facing aging parents wishing to remain in their homes but lacking the financial means. 

Medicare benefits without Life of Poverty

The New York Times recently ran an outstanding article, detailing the basics of Pooled Trusts. Most American's are not familiar with the term, or the tool – but thanks to the Times, a much larger audience had the opportunity to read about a means of caring for aging family members, while intelligently keeping the wolf away from the door.

The unfortunate reality for many of us is that a time may come when we can no longer manage to personally provide appropriate care for a loved one in our own home, or in their own home for that matter. But at the same time, we may not have the financial capacity to afford private care providers that would be able to fill the gap.

Pooled Trusts are designed to bridge that void.

Rather than reiterate the content of a well written and very informative piece, I will simply recommend that anyone with an elderly family member read this piece, if for no other reason than to gain some basic insight into an option that may be available and viable, in certain circumstances.

You can find the story on the Internet at:

As a woman who has faced these issues in my personal life, with my own family members, I am intimately aware of the emotional and financial drain that advancing age and health issues can impose on a family. In order to deal with these issues to the best of our ability, we need to be aware of our options, and informed regarding the pros and cons of each of those options. This story is a good step in the right direction on that count.

I am so pleased the New York Times published Tara Siegel Bernard's excellent article on this very important topic.