Monday, April 30, 2012

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

Question #7

A fellow attorney (and award-winning journalist) Deborah Jacobs authored the book, “Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide”.  In her 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. 

Should you give away assets now to save taxes?

Now that the estate tax exclusion has gone to $5 million per person ($10 million per couple), this issue concerns fewer people. Keep in mind, too, that most methods of saving estate taxes require you to totally give up ownership and control over assets, whether you are giving them to people directly or putting them in a trust. A threshold question for anyone contemplating this strategy: Can I afford it? Be sure you are leaving yourself enough, and to be on the safe side, you should assume you will live to an advanced age.

You can give anyone $13,000 a year (a couple can give $26,000) without eating into your $5 million exclusion. If you want to give away more than that, you can either count your gift against the $5 million exclusion amount or, if you have used up the tax-free amount, pay gift tax of 35%. Remember that each dollar of the exclusion used during life shaves a dollar off what is available for your estate to use after your death.

So before you dip into the lifetime exemption, consider some simple, tax-free ways to prune your estate. They include paying tuition and medical expenses for another person (such as a grandchild) directly, funding 529 college savings accounts and converting a traditional IRA to a Roth.

This concludes the "Estate Planning for Women (and the Men Who Love Them) series. I hope you have found these posts thought provoking and valuable. Questions like these can often trigger even more questions in your mind.  Please accept my invitation to schedule a meeting where we can discuss these topics and others that might be relevant to your estate planning.  Give my office a call to set a meeting.


Tuesday, April 17, 2012

6 Things To Do Before Your Spouse Dies

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.  It’s a staggering reality, and here is some pertinent information for coping with this reality.

Barbara Stanny recently contributed this article to Forbes.  The article gets right to the point in a practical and personal way. 

It's time to have "The Talk"

I heard from a woman whose husband had just been diagnosed with terminal cancer. She wanted to know what she should do before he dies.

Reading her words, I felt a mixture of heartbreak and admiration. Death is not easy to talk about, let alone prepare for. Sadly, most women will face a similar dilemma at some point. Instead of going into denial, like many do, this woman went into action.

Her question sent me back to when my father became seriously ill. I’ll never forget the day I went to my mother and asked: “Do you know what Dad has planned for you when he dies?”

“Oh yes,” she replied quickly, but when I pressed her for details, she couldn’t deliver any.

She also made it abundantly clear: this was not a conversation she wanted to have. I made it even clearer: avoidance was not an option. Here’s what we did:

1. We had “The Talk.” I made my Mom sit down with my Dad and we looked at all the financial documents: bank statements, investments, estate planning, etc. This was not, by any means, an easy conversation. Dealing with death is emotionally excruciating, at least it was for us. Nerves were frayed. My Mom glazed over. My Dad lost patience. I kept scratching my wrist (a nervous habit) until it bled. But by the end, my Mom knew where every penny was and what arrangements he had ( and hadn’t) made made.

2. We assembled “ The Team.” My Dad was very much a do-it-yourselfer. Mom needed her own team of professionals to support and guide her (during and after). First on our list was to hire an estate lawyer. Mom, my sisters and I met with him first, brought in my father, and together my parents created a very good, tax efficient estate plan… which my Mom not only understood, but had a big role in creating. The whole family helped her find an investment advisor (we interviewed 3). She also hired a CPA . It soon became clear he wasn’t a good fit, so she recently hired someone else. She meets with her “team” on a regular basis to this day.

3. We updated documents. We made sure the Will, Power of Attorney, EVERYTHING reflected their latest info and current wishes.

4. We envisioned a future without Dad. My mom started thinking about living single: how much money she’d need to live on (a lot… she wasn’t going to work nor did she have to, but she did like to spend); how she wanted her money invested (very conservatively);and who would assist her with this (her team).

5. We had regular family meetings. These meetings, though often emotional, were absolutely wonderful in getting everyone on the same page while Dad was still alive. Meetings included my sisters, spouses, and all the grandchildren (we eventually had great grandkids crawling around too). My Dad let everyone know what his wishes were, especially for philanthropy, and enrolled the whole family to the board of his foundation. These meetings drew us closer in many ways.

6. Mom talked to friends. She’d had several friends who lost their husbands, so she talked to them at length. They gave her great advice which really helped her see life goes on, happily so.

Having done these things, by the time my father died, all my mother had to do was grieve. Every detail was in order. There were no surprises. All papers signed. All major decisions made. Her team was in place. Practically speaking, his passing was seamless. Emotionally, it wasn’t easy. But being prepared, financially, made it a little easier.

If you would like to insure the stability in your financial life, please give me a call.  I work every day helping my clients “Be Prepared”.  I welcome your questions.  Let’s start early when the stress level is the lowest to work our way through this check list of 6 things to do before your spouse dies.   You are always invited to contact me by phone or leave a comment on this blog