Forbes.com: The Girlfriend’s Guide to Estate Planning
January 29, 2009
Women in the United States have a unique set of estate planning needs, not the least of which has to do with the fact that they outlive their husbands by an average of 7 years, and are more likely than their male counterparts to become the family caregiver. So why is it that so few women have these much-needed estate plans in place?
Wynne Whitman knows how important it is that women get involved in their own estate planning, and addressed the issue in her book Smart Women Protect Their Assets. Whitman was recently interviewed by Forbes.com, and had a lot to say about why creating an estate plan is not just important but essential—and not just for women.
One of the key points in the interview comes when Whitman points out that many people think estate planning is only for those with large estates and a lot of assets—this is not the case! Aside from the fact that most families DO have a lot of assets (once you take into account the value of your home and any life insurance policies) estate planning is not just about protecting those assets from estate taxes, “it’s also about planning for your children and naming guardians,” says Whitman, not to mention planning for your own health care and end-of-life decisions.
If you’re reading this and thinking “But I’m unmarried and don’t have any children, I don’t need to create an estate plan—” Think again. You may want your estate to help your nieces and nephews pay for college, or you may want to give a portion of your estate to your favorite charitable cause. Or perhaps you’d like it to go to your partner or best friend. You can be sure that none of these things will happen unless you have a plan in place.
At one point during the interview, Whitman was asked to define what makes an effective estate plan. Her answer is deceptively simple, but goes straight to the heart of why every person—man or woman, married or single, wealthy or just getting by—should create an estate plan. It’s not just about taxes and it’s not just about children, it is about both of these and more: “It is dictating what you want to happen.”
Memorial Instructions in Literature and in Life
January 27, 2009
“The Geat people built a pyre for Beowulf, stacked and decked it until it stood four-square, hung with helmets, heavy war-shields and shining armour, just as he had ordered. Then his warriors laid him in the middle of it, mourning a lord far-famed and beloved.” (From Beowulf, translated by Seamus Heaney)
Funerals get great coverage in literature. Especially at the end of epic stories, a funeral is the perfect way to allow readers to mourn and say goodbye to the heroes with whom they have spent hundreds of pages and countless reading hours. In literature, a funeral is a transition, making it a little bit easier for the reader to re-enter the mundane world.
Funerals in reality are not so different. They are ceremonies to help us with the difficult act of saying goodbye to a loved one, and ensuring that we don’t have to do it alone and unsupported. As important as funerals and memorial services are, they deserve just as much thought and discussion as any other important ceremony.
In estate planning, discussion of memorial ceremonies often goes along with the discussion of end-of-life decisions. As lawyers, we often ask if you wish to include in your Advance Health Care Directive your instructions for the disposition of your remains. This sometimes comes as a shock to clients, many of whom may never have thought about the subject before. We are now beginning to go even further, and ask clients about their wishes for their funeral or memorial serivce. Giving your loved ones some kind of guidance for these important life cycle events can be a great gift, will help ease their burden in a time of sorrow, and will help bring peace and closure to the people who love you most.
Senior Issues on the Silver Screen
January 23, 2009
It’s that time again, and the news sources are all aglow with coverage… no, not the inauguration—the Oscars! This isn’t something we’d normally talk about on an estate planning blog, but one of the top contenders this year is ‘The Curious Case of Benjamin Button’ (receiving 13 nominations in all); a movie about a man who is born old and ages backwards. Although bringing attention to the treatment and concerns of the elderly may not be one of the direct purposes of the movie, it has at least been an indirect result.
Jane Gross of The New Old Age Blog was the first to suggest that ‘Benjamin Button’ might have a special significance for those of us with an interest in elder law and senior affairs. Her very moving review of the movie details it from a caretaker’s point of view; commenting on the familiar pattern of the hospital gown, the issue of euthanasia, and the quality of elder care and nursing homes. For one person, at least, the movie hit home in a very personal way and, judging from the comments on the post, Gross wasn’t the only one so touched.
If you’ve seen the movie, and were similarly affected, we’d love to hear your comments. Did ‘The Curious Case of Benjamin Button’ give you food for thought?
Family Milestones = Estate Planning Milestones
January 22, 2009
Any parent will tell you that the birth (or adoption) of a child shifts the nature of your thinking irrevocably. One day you look around and discover that your own wants and needs are no longer at the center of your life. We see evidence of this shift when planning for parents of young children, who come to us because they want to know how to protect and provide for their kids should anything happen to them (the parents).
It turns out; this instinctual drive to protect and provide for our offspring may be the easier part of parenting, according to this article in today’s New York Times. The hard part may be finding time to protect and provide for your own needs, and the needs of your marriage. The article, which is actually about empty-nesters, cites research that indicates that as much as we love our children, “marital satisfaction actually improves once the children make their exits,” whether it be to college, marriage, or employment and independence.
What is interesting about this article from an estate planning perspective is that these two milestones—having children and watching them leave the nest—are the most important times to update your estate plan. The needs of your children when they are 2, 6 or 10 won’t be the same as their needs at the age of 20 or 30. Not only that, but your priorities as a parent and a person will be different as well: As a parent of young children your top priorities are likely to be guardianship and providing for your child’s education and well-being; as an empty-nester you may be more concerned with protecting your retirement or beginning to plan for Long Term Care.
A good estate plan is one that reflects your priorities during each stage of your life. Our firm understands that, and we urge you to contact us when any of these milestones come along.
Caregiver Agreements Reduce the Burden of Caring for Elderly Family Members
January 21, 2009
Anyone serving as a caregiver for an aging relative knows that it’s hard work no matter how much you love the person to whom you are providing care and service, and in many cases it can be a severe financial hardship as well. Studies have shown that the child who serves as the primary caregiver for aging parents can lose over $500,000 over a lifetime in reduced salary and retirement benefits!
What many caregivers (and recipients) do not know is that you can care for the one you love AND avoid sacrificing your financial well-being by executing a caregiver agreement. Caregiver agreements are nothing new, but according to this article in the Wall Street Journal “we expect the deteriorating economy to lead to a spike in caregiver agreement work.” This is good news, because caregiver agreements come with a number of benefits, not the least of which is that money given to a son or daughter under a caregiver agreement is not considered by the government to be “a gift” when an elderly person is trying to qualify for Medi-Cal, Medicaid, or other public benefits. However, the agreement must be in writing. It may also reduce resentment among siblings where, for example, one is rendering “all of the care” for mom.
Executing a caregiver agreement can be a HUGE benefit to your family, but you must make sure it’s done correctly. These agreements are legal contracts, and should include details such as the cost of services, the duties the caregiver will be performing. There should also be in place a medical and/or financial power of attorney, if making decisions will be part of the caregiving duties.
And all contracts must, must, must be executed in advance of receiving compensation. “You can’t do the contract after the fact and say this $100,000 was for looking after mom.”
If you would like more information about caregiver agreements, please contact our office. Whether you are the care provider or recipient, we can help make the caregiving process a little bit easier on you and your family.
Caring For Your Parents; Presidential In-Laws Throughout History
January 17, 2009
After our recent posts about President-elect Obama and his plan to keep the estate tax, we thought it might be nice to follow up with a lighter story about the office of the President. When Barack Obama takes office on Tuesday and moves his family into the White House, his mother-in-law Marian Robinson will be moving with them. This is a situation with which many of our clients can identify, having their own elderly parents or in-laws under their care in one capacity or another.
The Obamas aren’t the only first family to have a parent live with them in the White House. According to CNN.com a number of Presidents have welcomed their own parents or their in-laws into the White House with them, and in this article by David Holzel four in particular have been highlighted: Ulysses S. Grant, Harry S. Truman, Dwight D. Eisenhower and Benjamin Harrison. And if you were under the impression that your own disapproving mother-in-law would appreciate you if you only did something great like become a CEO or the President, you should read about Harry Truman’s mother-in-law, who was heard to wonder “Why would Harry run against that nice Mr. Dewey?” during the 1948 presidential race.
Many of our clients are caregivers for elderly parents or relatives, and it is a role that can feel very isolating at times; having the President’s mother-in-law in the White House with the First Family—even if it’s not in a care-giving situation—may serve to bring more attention to a role that is too often pushed into the shadows.
How the Future of the Estate Tax Will Impact YOU
January 15, 2009
The inauguration of Barack Obama is only days away, and many people are curious (to say the least) about what his presidency has in store. We all know there are changes ahead; some you may be looking forward to, and others about which you may be apprehensive. If you’re looking right now with an interested eye to the future, you’re not the only one.
The Wall Street Journal, for example, followed Monday’s news story “Obama Plans To Keep Estate Tax” with a strong opinion piece entitled “Estates Of Pain.” As you may be able to guess from the title, the author has some critical points to make about the decision of Congress and the President-elect to keep the estate tax.
The points with which our firm is most concerned are the ones that will have an impact on our clients, and which seem to be the timeless effects of the estate tax in general:
The Journal points out that “the death tax strikes most heavily at small- and medium-sized family-owned businesses that generate the majority of new American jobs.”
The article also cites a 2006 Joint Economic Committee (JEC) study that says “family-run firms and farms particularly feel the pinch of the estate tax, because they are less likely to have the liquid resources needed to meet their estate tax liabilities.”
That same study concludes that estate tax “liabilities depend on the skill of the estate planner, rather than on capacity to pay.”
That last one bears repeating: The amount of estate tax your family pays is going to depend more on the skill of your estate planning attorney, than on how much money you have.
The fact is, regardless of whether you (or the current administration) are democrat or republican, it only benefits you to be prepared. The estate tax is not a simple matter, and the better prepared you are the better your family and your business will fare when the time comes.
The State of The Estate Tax Under President Obama
January 13, 2009
When President Bush was elected in 2000, one of his campaign pledges was to make the estate tax go away. And Congress did, in fact, pass legislation that would abolish the estate tax.
Kinda.
Sorta.
What they passed, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGGTRA), enacted a series of increases in the amount of money your estate could be worth without paying “death taxes” — increases in the estate tax exemption, leading eventually to abolition of the tax. There was a big catch, however. One of the most notable characteristics of EGTRRA is that its provisions are designed to sunset, or revert to the provisions that were in effect before it was passed. EGTRRA will sunset on January 1, 2011 unless further legislation is enacted to make its changes permanent.
But we may not have to wait even that long. According to today’s Wall Street Journal:
“The Senate Finance Committee will move within weeks on legislation to reverse that law, and Mr. Obama is expected to detail his estate-tax preservation proposal in his budget next month, congressional tax writers said.
“Under the Obama plan detailed during the campaign, the estate tax would be locked in permanently at the rate and exemption levels that took effect this year. That would exempt estates of $3.5 million — $7 million for couples — from any taxation. The value of estates above that would be taxed at 45%. If the tax were returned to Clinton-era levels, it would exclude $1 million from taxation with the rest taxed at 55%.”
Bottom line: if you were one of the few who expected the estate tax to actually go away, you were mistaken. As the laws change, it is important that you have your plan reviewed to make sure it is up to date. And if you haven’t yet created an estate plan, you should come and see us for a plan that takes all these new realities into account.
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