Planning can help prevent estate tax issues

Many families, planning for a transfer of wealth is something they may think about, but never take the time to act upon. Unfortunately, this failure to establish a proper estate plan can significantly affect a family's long term financial stability and can lead to the payment of substantial estate taxes. Although this can be difficult for many families to understand - indeed, it can be a challenge to set plans for events that may not occur for many years. The following article written by Law Offices of Connie Yi, PC (an estate planning law firm in Alameda county)  -illustrates with the example of the recent death of a celebrity - just how important it is to work with a professional to craft an estate plan.

When actor James Gandolfini, best known for his role as Tony Soprano in The Sopranos, died in Italy earlier this year, it took many people by surprise. While his family and his fans mourned, reports arose indicating that nearly half of Gandolfini's estate, worth approximately $70 million, was set to be paid in estate taxes. Unfortunately, it appeared that Gandolfini, who was survived by his wife and two young children, had not taken steps to draft an estate plan that would have ensured the maximum transfer of his wealth to his family.

As further reports surfaced, experts determined that their initial assessment of Gandolfini's estate had been based on incomplete information. In fact, many people had estimated the actor's estate tax bill based solely on assets listed in his will. Fortunately, Gandolfini had taken the time to work with professionals to set up other estate planning vehicles. Although specifics have not been made public, many believe that Gandolfini had made arrangements for members of his family to have access to funds held in irrevocable trusts, life insurance policies and other accounts. At the end of 2012, Gandolfini had even drafted a new will designed to take advantage of the federal gift tax exemption, worth $5.12 million, that expired at the end of that year. It appears that early estimates that the actor owed approximately $30 million in estate taxes were significantly overstated.

Gandolfini's estate was larger than most families in the U.S., but case illustrates an important point for everyone. It is not enough to hope that everything turns out for the best when it comes to transfers of wealth. No matter the size of the estate, planning is essential. This may involve not only drafting a will, but also trusts, retirement accounts and other vehicles, as well.

For more information, contact an attorney like myself who specializes in estate planning, who can explain your options and help you achieve your goals.

Talking To Your Parents About Estate Planning

There are many ways to broach "the talk" with your aging parents about estate planning and the sooner you start the better, for all concerned.
A recent article in Huffington Post’s Business Canada suggests that getting a plan together when your parents are still in good health will prevent any stress or confusion that could result should their health falter later in life.

1.            Don't shun the talk. Discussing personal finances is often considered a taboo, but many barriers can be knocked down if you approach the conversation openly, lay out your goals, and check them off.

2.            Don't wait for a health crisis -- or any other crisis -- to talk to your parents about their estate plans. If you feel disingenuous using some ice-breaking strategy then just be upfront about acknowledging how uncomfortable the topic makes you feel. That in itself is an ice breaker.

3.            Don't be a bull in a china shop. Ensure your parents feel loved and in control of the situation. Don't forget the discussion is about them and how they want you to fit in. Listen to their ideas to get a strong understanding of what they want. If you have suggestions then offer them, but don't expect that they'll immediately accept them, if at all. It's about people skills and open communication. If you know that will be a hurdle from the start, then perhaps a visit to a third party such as an estate lawyer or financial planner can help take the edge off.

4.            What to talk about. Assets, wills, and how your parents want to share their legacy; be prepared with specific questions about all those topics. Beyond that, you'll need to talk to your parents about plans about their income, retirement investment plans, and health care. Some professionals suggest commonly cited questions including: should your parents have a living will? Does the Power of Attorney cover off what your parents want addressed? Does your parents' will and estate plan clearly lay out the transfer process to beneficiaries or deal with tax issues?

5.            Discuss where the documents will be kept. After figuring out exactly what your parents want in their estate plan there must be clear guidance on where those plans will be kept. Experts in the industry stress the importance of knowing where to easily find phone numbers and contact names, details, and documents including wills, investments, and personal information such as birth certificates.

"What do you mean I don't get it all? We were married".

Spouses are often shocked when they realize they aren't entitled to the entire estate just because they are married. People mistakenly think that because they are married, they receive the entire estate when a spouse passes away.
Unfortunately, a spouse can find themselves having to share a deceased spouse's estate in unanticipated ways.First, it is important to understand the difference between probate and non-probate assets. Non-probate assets are assets that are jointly owned, have a beneficiary designation or are owned by an entity such as a trust. Bank accounts that are in joint names or that have a payable on death beneficiary listed are examples of non-probate assets.
Probate assets are those that are title solely in the decedent's name and don't have a beneficiary designation. Since these assets don't have an obvious designated post-mortem owner, their ownership needs to be determined.

Read more in NWI Times article by Christopher Yugo

Should you give your kids their inheritance before you die?

LearnVest’s Libby Kane explains that while the word "inheritance" typically conjures up images of a will being read after a loved one's passing, many people don't want to wait that long to give money to their children.

A recent study from U.S. Trust shows that the majority of wealthy individuals feel it's important to leave an inheritance of some kind. In fact, 64 percent of those ages 49 to 67, and 72 percent of those 68 and older say they want to leave the next generation money. And at the same time,  more than half say they have provided or are providing significant financial support to adult children.
Leaving money to family earlier than expected isn't uncommon. But is it for you? 

Why you should give early…

1. There may be tax benefits

2. You get to see the fruits of your labor

… and why you shouldn't

1.       You could come up short later

2.       Early giving can spur family drama
Read the full article
The bottom line: Like most financial choices, giving an early inheritance isn't always the right move. If it's on your mind, contact me to help you decide which option can best help you provide for your loved ones without compromising your own financial health.

Basic Estate Planning

Robert D. Schwartz, an estate planning attorney in Florida outlined some essential documents in any estate plan in a recent article for TCPalm.

Last Will and Testament - the most basic estate planning document.  A will is a legal document which allows you to direct exactly where your assets are to be distributed when you die. An issue to consider with a will is that when you die your assets must go through probate before they are passed on to your named beneficiaries. Most people want to avoid probate and the most common way to accomplish this is with a revocable trust, also referred to as a living trust. The trust acts similarly to a will. It allows you to direct or put conditions on who gets your assets and when they get them. The biggest advantage of a trust is that it avoids probate. This means that you avoid expensive court proceedings, you preserve the privacy of your estate, and you minimize the emotional stress on your heirs. The key to a revocable trust is that it must be funded prior to your death. That means your assets must be re-titled into the name of the trust. If they are not re-titled, then they must be probated.

The Durable Power of Attorney is another extremely important estate-planning tool. This legal document allows you to select someone to handle your finances in the event that you cannot. No one can predict the crises that can occur in life. If something happens that leaves you unable to handle the business side of your life, this document can allow someone you trust to step in. That person can pay your bills, keep up your investments, or make key financial decisions in your best interests. If you become incapacitated without naming a Durable Power of Attorney, then the court will have to step in and through an expensive and time consuming proceeding, name a guardian to act on your behalf.

A health care surrogate is a legal document which allows someone to make medical and health-related decisions on your behalf if you are not able to. It is sometimes known as a Medical Power of Attorney, commonly called the “Living Will.” It is a statement of your wishes for what kind of life-prolonging treatment you want, or don’t want, in the event that you become terminally ill and unable to communicate. It applies to all instances in which you are incapacitated.

Having a solid estate plan can set your mind at ease. It is not only for your benefit, but for the benefit of your loved ones. Give me a call to set up a meeting to discuss your estate plan.

Do I need a trust?

Julie Landry Laviolette in the Miami Herald tackles the age old question: “Do I need a trust?

”It’s not only heiresses and socialites who can benefit from a trust. Used in the right circumstances, a trust can be a helpful estate planning tool to pass assets to your children, take care of your affairs if you are incapacitated, or dole out your wealth — whatever its size — in a certain way.

Trusts can be part of a simple estate plan that includes a will, power of attorney and living will.

Deciding whether you need a trust or not can be confusing. What is a trust? It is a legal entity that allows you to put conditions on how your assets are distributed after you die. It can help minimize estate taxes and avoid probate. It can also be used to protect an heir’s assets from creditors.
Read the entire article to learn more about trusts can benefit the following people: 

A COUPLE WITH YOUNG CHILDREN

A SINGLE PERSON

A COUPLE WITH GROWN CHILDREN

FAMILIES WITH SECOND MARRIAGES

Make sure your estate plan is doing things for you (not TO you)

Estate planning is more than just having documents. It needs to be tied to long-term intent and aligned with your goals. What works for one person may not work well for the next, and what worked 10 years ago may not work now.

Geoffrey M. Zimmerman, CFP® practitioner, senior client advisor at Mosaic Financial Partners Inc., says many treat their estate plan like a transaction, even though the moving parts may have changed.

“They may have a document that is doing things to them and to their beneficiaries, and not really working well for them,” he says. “That’s why it’s important to review the plan periodically. It might take a visit to your attorney and the cost of several hours of time to update it. But in terms of relieving the headache on a surviving spouse or beneficiaries, those can be dollars well spent.”
Smart Business spoke with Zimmerman about why your estate plan should be continually adjusted. Read the article…

If I can assist you in any way, please call me or contact me by email.  I’ve spent years developing my expertise in these areas of estate management, and I would enjoy applying my expertise to assisting you.