Estate Planning News

Never Mind

2012-02-24T05:42:00.003-08:00

The prior post about a possible law requiring that inherited IRAs must be distributed within 5 years of date of death is now moot because lobbyists have urged Senate Dems to remove the provision from a highway funding bill. Skipping the question of why an IRA payout provision is in a highway funding bill, apparently everything has a price, except integrity and strong leadership are priceless.

Accelerated IRA Distributions

2012-02-21T12:34:00.000-08:00

The Senate has proposed mandating that withdrawals from inherited IRAs be made within 5 years of the death of the IRA owner. The purpose of the legislation is to accelerate income tax revenues. I agree with this proposal. IRAs receive preferential income tax treatment because they are intended for retirement. They were not created to distribute wealth from generation to generation in an income tax advantageous manner.

Facebook and Virtual Data After Death

2012-02-15T06:46:00.000-08:00

In what is becoming a common story, questions arise as to what happens to an individual's virtual data after his death. Some states are passing laws to authorize executors to access the on-line data of a decedent. In the meantime, wills should authorize the executor to access data including passwords.

Pet Trusts

2012-02-13T08:44:00.000-08:00

Clients can overlook providing for their pets upon their deaths. Pet trusts are a viable means of ensuring the post-mortem care of pets. Ohio has a statute which provides for the creation of pet trusts. Kentucky does not have a specific statute but the objective of providing care for pets can be accomplished via other means.

Parents' Personal Belongings

2012-02-08T05:43:00.000-08:00

A few tips about dealing with the personal items of parents. Having seen families fight over furniture and jewelry, I agree with "go slow" and "be diplomatic." I would also add "remember it is just stuff" and "your relationship with your siblings is more important than any item."

Adopting a Girlfriend or Mistress?

2012-02-03T05:37:00.000-08:00

This is a bit tawdry. A man who is being sued in a wrongful death case previously created a trust to benefit his 2 minor children. He has now adopted his 42 year old girlfriend so she can be a beneficiary of 1/3 of the trust. Assuming they remain a couple, she may use the trust assets to support herself and him even if he is forced to pay a large damage award in the lawsuit. My trust documents are designed to prevent this because they provide that an adoptee must be younger than 18 to be considered a beneficiary.

Powers of Attorney

2012-01-30T05:53:00.000-08:00

Because powers of attorney are so powerful, and eyed suspiciously by financial institutions, it is better to have an attorney prepare one than use a standard off the shelf form.

Funeral Planning

2012-01-26T08:38:00.000-08:00

I typically see a funeral bill of $10,000 for my clients. Here are a few quick tips to reduce funeral costs - shop around, remember that the funeral home exists to make money, and that a reasonable casket can be purchased for $400 - $600.

Clawback for Gifts?

2012-01-25T11:45:00.000-08:00

If the gift tax exemption reverts to $1 million in 2013, as slated, some commentators opine that the IRS will attempt to collect gift taxes on gifts in excess of $1 million made when the exemption amount was $5 million. I do not see how the government can do this either legally or practically.

2012 - A Great Year to Plan

2012-01-25T11:41:00.000-08:00

2012 is a great year to incorporate gifting into an estate plan. The gift tax exemption amount is $5 million, interest rates are low, and asset values are depressed. In 2013, while interest rates are supposed to remain low, the gift tax exemption amount is supposed to revert to $1 million.

Mistress Loses Claim Against Billionaire's Estate

2012-01-16T11:55:00.000-08:00

The estate of Australia's 4th wealthiest man prevailed in a claim filed by his mistress, a former Penthouse Pet, for support and $5 million. The court found that the absence of a written agreement was one of the big factors against her claim.

Wealth Tax?

2012-01-12T05:34:00.000-08:00

The WSJ has an opinion piece favoring a wealth tax as a means of raising revenue. Responses which mostly debunk it are here. I agree with those who think a wealth tax is a stupid idea.

Merry Christmas

2011-12-20T05:19:00.000-08:00

I am done posting for the year and will resume posting in the new year. Until then, enjoy the best Christmas song ever by Darlene Love.

Gift Tax Non-Compliance?

2011-12-20T05:00:00.000-08:00

The IRS is requesting information from various states, including Ohio about real estate transfers between parents and children from 2005-10 for purposes of determining gift tax compliance. If you made or received such a gift, you should file a Form 709 immediately.

Treating Children Differently

2011-12-12T06:27:00.000-08:00

If someone wants to leave differing inheritance amounts to her children, she should explain the reasons for doing so. Also, she should make sure that her estate planning documents reflect her current wishes, not her wishes from several years ago when relationships and asset values might have been different.

Designating A Guardian

2011-12-12T06:25:00.000-08:00

Some people refrain from implementing an estate plan because they can not agree on a guardian. However, an imperfect choice is better than no choice which will put the guardian decision before a probate judge.

Protecting an Inheritance

2011-12-08T05:28:00.000-08:00

Trusts offer uniquely tailored ways to protect children from blowing their inheritance.

Survivors Not Responsible for Debts of Decedent

2011-12-06T05:48:00.000-08:00

In Ohio, creditors have six months after death to file a claim against the estate to secure payment for the debt of a decedent. After that time, the claim is forever barred. However, some creditors/collection agencies still attempt to collect from surviving spouses and family members by appealing to their guilt.

Ohio - Next of Kin Notification

2011-11-30T11:11:00.000-08:00

Recent legislation allows Ohio residents to submit 2 names to the Ohio BMV to be used by law enforcement in the event of a serious automobile accident.

Proposed Estate Tax Legislation

2011-11-28T08:19:00.000-08:00

A Democratic Congressman introduced legislation to return the estate tax exemption and credit to 2001 levels - $1 million exemption (indexed for inflation) and a top rate of 55% - effective 1/1/2012. The chances of it passing the Republican controlled House are zero.

Heiress Leaves Fortune to Non-Relatives

2011-11-23T07:00:00.000-08:00

Interesting story about an extremely wealthy, reclusive, childless woman who left her fortune to her nurse and others. Her relatives, who she had not presumably seen in 20 years because she lived in an NY hospital under a fake name, are now suing the estate.

Are Domestic Asset Protection Trusts Effective?

2011-11-16T06:31:00.000-08:00

I have long doubted their effectiveness in shielding the assets of non-residents of the states purporting to protect them. In light of a recent court decision, there is a chart which summarizes their effectiveness. In short, a trust created by a resident of the protecting state prior to any potential claim and not used for bankruptcy purposes, is effective.

Mistakes Made By Surviving Spouses

2011-11-15T05:39:00.001-08:00

Common mistakes made by a widow or widower include:

1. Improperly executing the IRA roll over,

2. Retaining investments for sentimental reasons,

3. Collecting social security benefits too soon, and

4. Not filing a federal estate tax return to preserve the deceased spouse's unified credit (for deaths in 2011 and 2012).

$5 million gift exemption to end November 23?

2011-11-10T09:09:00.000-08:00

Rumors are circulating that the $5 million lifetime gift exemption will end on November 23 when the Congressional Super Committee makes it recommendations. If you are contemplating making a large gift, I advise doing it now rather than taking a chance by waiting later.

2 Estate Planning Points

2011-11-04T05:49:00.000-07:00

In an interview with an estate planning author, the key points are to have flexible documents and that attorneys add value over the low cost of do it yourself will packages.

Return of Large Inherited Fortunes

2011-11-03T06:51:00.000-07:00

Half of the top 10 richest individuals in the US inherited their wealth. The US could be returning to a period where large fortunes were the result of trust funds or energy production.

Perils of Estate Plan Not Staying Current

2011-11-02T14:44:00.000-07:00

Five years after his death, the estate of James Brown remains embroiled in litigation. One of the lessons to be learned is to update estate planning documents after a re-marriage or birth of a child. His failure to do so has led to some of the litigation.

Side note: Is it really 5 years since he died? Seems like 2 or 3 years ago.

Trusts Are Good for Maintaining Privacy

2011-10-28T06:15:00.000-07:00

Steve Jobs apparently used trusts to shield his post-mortem financial affairs from the public. I have always viewed privacy as an ancillary benefit of trust planning (behind estate tax reduction, delaying distributions to children, and avoiding the probate process), but in the case of Steve Jobs, who reveled in secrecy, the privacy provided by trusts is paramount.

Estate Planning for Women

2011-10-25T11:18:00.000-07:00

A simple slideshow that addresses estate planning issues faced by women.

Personal Property Disputes

2011-10-25T08:25:00.000-07:00

Another article that reflects that estate disputes are most often about personal property, not money. I recommend that clients prepare a memorandum to distribute specific items that are of sentimental value. Also, giving an item away during life is a good strategy.

National Estate Planning Awareness Week?

2011-10-20T10:47:00.000-07:00

Yes, there really is such a week. Anyone who is over 18 - whether single, married, young, old, wealthy, healthy, sick or poor - should implement estate planning documents that meet their needs and goals. This is also a good time to review current plans to make sure that it meets your current goals.

Tips for Same Sex Couples

2011-10-14T05:32:00.000-07:00

A quick overview of estate planning issues faced by same sex couples.

Estate Planning Basics

2011-10-12T05:47:00.001-07:00

Money magazine provided a nice overview of estate planning last year.

Steve Jobs (1955 - 2011)

2011-10-06T05:54:00.000-07:00

Steve Jobs' 2005 commencement address at Stanford has some great ruminations on life and death.

Unrelated to anything else on this blog, but worth sharing because they are from the most innovative man of our lifetimes, a list of the best Steve Jobs quotes is here.

Overview of Charitable Gifts

2011-10-03T09:23:00.000-07:00

With changing estate tax laws and proposed caps on charitable deductions, charitable gift planning has become complicated. A brief review of the issues is here.

Rules on Portability of Unused Exemption of Deceased Spouse

2011-09-30T06:39:00.000-07:00

In addition to increasing the federal estate tax exemption to $5 million, the 2010 estate tax law changes also permit the surviving spouse to utilize the unused portion of the deceased spouse's federal exemption. To enable this process, the estate of the deceased spouse must file a federal estate tax return even if the return would normally be unnecessary due to the estate being less than $5 million.

Are Irrevocable Insurance Insurance Trusts Still Necessary?

2011-09-29T08:11:00.000-07:00

With a $5.0 million estate tax exemption, a trust to shelter insurance proceeds from estate taxes might not seem necessary. However, given the uncertainty about future estate taxes starting in 2013, owning insurance in an irrevocable Crummey trust makes sense for some people.

Should You Buy Long Term Care Insurance?

2011-09-28T05:39:00.000-07:00

This writer argues yes, unless you are very wealthy, and gives some tips on navigating the process.

How Difficult Is It To Serve as Executor of an Estate?

2011-09-23T06:08:00.000-07:00

A very negative portrayal of an executor's duties which make the task seem much more difficult than it usually is.

How Families Handle Inherited Wealth

2011-09-22T06:26:00.001-07:00

Fascinating article about how families deal with the benefits and pitfalls of large sums of inherited wealth. The story about the Norton family in Minnesota is a blueprint on how to handle it successfully and prepare children for their futures. The article also had the following tips which apply to all families:

The Stages of Wealth

Start educating your child early, and keep at it well into adulthood.

AGE 8: Each week put a small allowance -- $1 to $5 in dollar bills -- into an envelope and hand it to your child. Explain that it's up to him to decide whether to buy candy or save up for, say, a skateboard. (Don't undercut the lesson by buying the skateboard yourself.)

AGE 10-12: Invite your child to start attending regular family meetings. Discussion items: How lucky we are to be financially comfortable and what we as a family think is the purpose of our money. Should we take fancy vacations or give to charities? Make it clear your kid's opinion matters.

AGE 12-14: Make sure your kid knows how to manage a checkbook. And at the family meetings, start making it clear where the family money came from–somebody's hard work! Start setting future expectations: Tell your child, "You're going to have to make your own fortune," or "Someday this will all be yours to preserve."

AGE 14-16: Don't be afraid to invite your banker or financial advisor to attend family meetings. It can be easier to have a neutral third party broach delicate topics such as a prenup and how much money you plan to leave your kids.

AGE 15-20: If the message isn't getting through, initiate steps for a "beneficiary rescue." Shift assets from normal investment accounts and minors' trusts into entities that you firmly control, such as family limited partnerships.

AGE 20-25: Make it clear you'd welcome your kid into the family business -- as soon as he's ready. College is a first step, and training at someone else's company can offer perspective. Remind your child that you love him and have total confidence in his ability to make his own way into the world. He'll thank you for it when he's 40.

End of Life Planning

2011-09-20T06:14:00.001-07:00

Article from Sunday's Cincinnati Enquirer about end of life decisions.

Wills That Favor One Child Over Another

2011-09-12T14:14:00.001-07:00

Strategies for drafting a will that favors one child over another child(ren). I advise my clients to leave all children at least some amount (not the nominal $1), but provide that the bequest is conditioned on the child not contesting the will. If the child contests the will, he will lose his bequest.

Rules for Retirement Account Beneficiary Designations

2011-09-08T05:29:00.000-07:00

An overview of rules which apply to clients who re-marry but have children from a prior marriage. There is a distinction between 401(k) plans and IRAs because ERISA rules do not apply to IRAs which make them more flexible.

Planning for Disabled Children

2011-09-06T12:46:00.001-07:00

Some strategies for leaving assets to a disabled child.

Tips for 2nd Marriages

2011-08-30T07:25:00.001-07:00

Some quick advice for those getting re-married or whose parent is getting re-married.

How to Leave Frequent Flyer Miles to Heirs

2011-08-23T06:53:00.000-07:00

Among the suggestions: mention them in your will, give them away during life, or add a secondary user to a mileage generating credit card. I think that the risk of the third idea outweighs the benefits.

Asset Protection 101

2011-08-18T08:10:00.000-07:00

Basic asset protection tips.

Mistakes to Avoid with Your 401(k)

2011-08-12T10:42:00.001-07:00

Tips on how to avoid mistakes with your 401(k) distributions.

Of Pet Trusts and Frozen Embryos

2011-08-11T06:41:00.001-07:00

Do not forget to address in your estate plan arcane issues such as pet care and children born from frozen embryos.

Complete Your Beneficiary Designation Form!

2011-07-25T17:13:00.000-07:00

Article about the importance of completing your beneficiary designation forms when doing estate planning.

How to Avoid Will Contests

2011-07-21T13:53:00.001-07:00

Tips on avoiding will contests and disgruntled heirs.

Estate Planning Tips for 2011

2011-07-19T11:55:00.001-07:00

Tips for estate planning after 2010 estate tax legislation.

Retirement Planning Tips for Singles

2011-07-19T10:54:00.001-07:00

Retirement advice for single people.

No More Ohio Estate Tax

2011-07-05T06:13:00.000-07:00

Ohio repealed its estate tax effective January 1, 2013.

Documents to Have Before You Die

2011-07-03T14:55:00.000-07:00

Be sure that your family knows where your important documents, including estate planning and financial documents, are located.

Haggling Nursing Home Costs?

2011-06-29T07:28:00.000-07:00

Apparently nursing home costs can be negotiated.

Alternatives to Bank Financed Reverse Mortgages

2011-06-29T05:50:00.000-07:00

As banks exit the reverse mortgage business, children may enter into reverse mortgages with their parents who are home equity rich, but income poor.

Eat Your Broccoli and Take Your Required IRA Distributions

2011-06-22T07:42:00.000-07:00

If you turn 70 1/2 this year, be sure to take your required minimum distribution from your IRA. The failure to do so will result in a 50% penalty.

100% Estate Tax Rate?

2011-06-07T08:45:00.000-07:00

Megan McArdle makes an argument for a 100% estate tax rate. The first time I heard this argument was from my estate planning professor in 1986. I thought it was ludicrous then and I find it even more troublesome now.

Women Suffer Most When Couples Fail to Plan

2011-06-05T13:49:00.001-07:00

If couples do not have proper financial planning, the woman is most often hurt the most and her lifestyle will be reduced permanently.

Ohio Estate Tax Repeal?

2011-05-30T09:54:00.000-07:00

The Cincinnati Enquirer has a nice article about the Ohio Estate Tax. The tax applies only to taxpayers with assets valued at more than $338K. Proponents of the tax claim repeal would only benefit the "wealthy." How they consider a $338K net worth as wealthy is laughable. A house and a retirement plan should put most taxpayers over the threshold.

List of Tax Scams Published by IRS

2011-05-25T07:15:00.000-07:00

The IRS released its list of Dirty Dozen Tax Scams.

Hesistation to Use New Gift Tax Exemption?

2011-05-18T08:10:00.001-07:00

Some wealthy individuals are hesitant to use the new $5 million gift tax exemption because they fear damaging the initiative and ambition of their children.

Will Your Roth IRA Always Be Tax Free?

2011-05-17T05:26:00.000-07:00

Megan McCardle thinks not. Money quote: "So I think that ultimately retirees are going to end up consuming less than they currently expect to. And given the political economy of it all, I expect the burden to fall more heavily on those who have saved than on those who haven't."

Your Digital Life Post Death part 2

2011-05-13T10:29:00.000-07:00

Popular Mechanics discusses problems with passwords and other digital data post-death. Site and companies providing solutions are here and here.

Think Before You Buy?

2011-05-12T08:03:00.000-07:00

Boomers have acquired too many possessions they no longer want and are selling them for pennies on the dollar.

Digital Data - Post Death

2011-05-05T07:07:00.000-07:00

Nice article about the need for heirs to access passwords and digital data after death.

Problems With the US Tax Code

2011-04-29T18:52:00.000-07:00

Business Week had a recent article about how wealthy people can legally avoid/minimize taxes.

Welcome to the blog.

2011-04-29T18:49:00.000-07:00

Greetings. This is my blog dedicated to interesting articles about tax and estate planning articles that I encounter, or news related to my practice areas. Hope you find it worth your time.