The Tax-Lady Cometh
February 24, 2011
It’s that time of year again; the time of year when everyone starts gathering receipts, assessing income and expenses, and making appointments with tax advisors. Tax time can be a very stressful time for many families, but—with the help of this article from MSN Money—perhaps tax season can be made a little bit easier. The article lists 13 tax breaks from 2010 that can help save you money, including:
- The tax credit for first time homebuyers (if you’re not a first time homebuyer don’t give up, there’s a credit for existing homeowners too.)
- The parking and transit credit
- The college tuition tax credit
- The credit for energy-saving home improvements
And then of course there are the two we’ve been mentioning here on our blog for the past few months:
- The estate tax exemption, and
- The annual gift tax exemption
Of course, not every item on the list is going to apply to every reader, but if even one or two credits apply to you or your family it can be a huge help.
Don’t rely only on this article to ease your 2010 tax burden, your own advisors and tax planners—who know more about your family’s personal and business finances—will be able to give you much more in-depth advice on how best to address your own tax situation. In addition, talking to a professional advisor right now provides the perfect opportunity to tackle any issues in 2011, hopefully making this time next year a much happier and less stressful time for everybody.
A Will Reveals More About You Than Just Assets and Distribution
February 20, 2011
We tell our readers quite often that a will can be one of the most important documents in your estate plan, but sometimes we like to remind our readers that wills are interesting family and historical documents as well.
In an earlier era where “Living Trusts” were seldom used, genealogists will often use an ancestor’s last will and testament to determine important details about family members: names and birthdates of siblings or children, extent of property, last known address, etc. Additionally, these are often the documents in which we make our final wishes known. This is often where our true selves come out; who we liked best and what we valued most.
A last will and testament can be very revealing indeed. In honor of President’s Day we offer these interesting tidbits relating to the wills of the leaders of our nation:
- George Washington was concerned with the future of our young nation to the very end, and gave some of his estate toward establishing the first American Institutions of higher education, an attempt to prevent young Americans from being “sent to foreign Countries for the purpose of Education, often before their minds were formed, or they had imbibed any adequate ideas of the happiness of their own; contracting, too frequently, not only habits of dissipation and extravagance, but principles unfriendly to Republican Government & to the true and genuine liberties of mankind.”
- Interestingly, President Abraham Lincoln left no will—and he was a prominent lawyer who should have known better!
- President Harry S. Truman included careful tax planning in his last will and testament.
- President Warren G. Harding must have had some kind of premonition when he conveniently decided to write his will 6 weeks before his sudden death.
- The will of President Calvin Coolidge was just 23 words long: “Not unmindful of my son John, I give all my estate, both real and personal, to my wife, Grace Coolidge, in fee simple.”
- President John F. Kennedy was a bit poetical in his will, and included this haunting phrase, “being of sound and disposing mind and memory, and mindful of the uncertainty of life…”
Estate Tax Laws Aren’t the Only Things That Change: A 7 Point Checklist
February 19, 2011
We’ve written before about the importance of reviewing and updating your estate plan, but it’s a topic worth mentioning again—especially in light of the many recent changes to estate tax law. The plain truth is that no matter how perfect your estate plan is when you create it, change is inevitable, and when your life (or the tax law) changes, it’s important that your estate plan change with it.
Reviewing your estate plan every 2-5 years is essential to keeping it up to date and working the way you intended it to work. Luckily, reviewing your estate plan can be quick and easy if you know what you’re looking for. Here are 7 key components you’ll want to review:
- Fiduciaries-How have the people in your life moved or changed?
- Assets-Are your finances different than they were a few years ago?
- Distribution and Beneficiaries-Are there any new members of your family?
- Health Care-What changes have you experienced in your health recently?
- Long Term Care: Are long term care issues on the horizon?
- Capacity: Do you see needing assistance to manage finances in the near future?
- Legal Updates-Have the laws changed?
If we’re lucky, our lives are constantly changing—our families evolve, our finances improve or decline, we meet and form strong relationships with knowledgeable friends and professionals. It only makes sense that your estate plan should change too. What seemed best for your family 4 years ago might not be the ideal situation now. By reviewing and updating these 7 components on a regular basis, and touching base with your attorney for guidance, you will insure that your estate plan will continue to protect yourself and your family the way you intended it to when you first created it.
Long-Term Care; Be Prepared in an Area of Uncertain Options
February 17, 2011
It’s flu season again, and the strain going around this year has been a difficult one, mainly because of how long it keeps its victims out of commission. So the article we recently found on Time.com about Long-Term Care seems particularly timely and relevant, if only because this year’s flu could be seen as an omen of what’s to come as Baby Boomers age into their golden years.
According to the article, “A huge wave of baby boomers may need long-term care in their golden years — and yet fewer than half have taken steps to prepare for it… two-thirds of Americans believe it’s important to plan for long-term care, but only 44% have taken steps to protect themselves.” Part of the reason for this lack of preparedness is that Baby Boomers underestimate the likelihood that they’ll need long-term care, or they overestimate the likelihood that their children or families will be able (or willing) to provide that care.
But there’s another reason why Baby Boomers are statistically unprepared for the crisis of old age; to put it simply, there aren’t any clear avenues to solid and reliable financial preparedness. “While it’s clear that not enough people are thinking about preparing for their long-term-care needs, it’s not at all clear what, if any, the best solutions are.”
Some think that extra savings in the bank will cover the cost of long-term care; others believe that government programs such as Medi-Cal or Medicare will take care of them. Unfortunately, both of these beliefs are mistaken. “The average cost of a nursing home ranges from $85,000 to $120,000 a year, while hiring an aide to spend six hours a day on average in the home starts around $40,000 a year… Medicare, meanwhile, only covers up to 100 days of long-term care and often involves co-payments. Medicaid [Medi-Cal in California]will cover long-term nursing-home care but only after the person has drained his or her savings account.”
Another solution is long-term care insurance; but even with long-term care insurance, nothing is clear cut, and too many people have found themselves paying into a policy and ending up with no return on their investment. You also need to be healthy enough to qualify for the policy. Long-term care insurance is still one of the best options out there, but “There have been horror stories of people paying premiums on long-term-care insurance policies for years, only to find the benefits won’t cover their needs 20 or 30 years down the road when health care and long-term-care costs are significantly higher.”
Another option may be Medi-Cal for those who need nursing level care. Our firm has been a leader in assisting clients with qualification, and with helping them plan their estates to enable qualification when need later arises. There are many myths associated with Medi-Cal. For more information, we invite you to download a free copy of our “Consumer’s Guide To Medi-Cal Planning“.
The best advice we can give is to do your research and ask for the help of an advisor with experience in elder law, elder care, and senior financial planning. Be prepared.
Estate Tax Lessons from 2010 and Things to Watch Out for in 2011
February 14, 2011
We all know from the many news stories of last year that estate tax laws are not set in stone, they can fluctuate and change both at the state and the federal level; and as this article in Forbes points out, keeping up with those fluctuations can be of the utmost importance to you and your loved ones.
The many celebrity news stories we saw last year provide all the examples we need of what can happen when you plan well (as was the case with Brittany Murphy’s estate plan) or when you neglect your estate plan—or even worse, when you fail to plan at all. Here are some celebrity examples of common estate planning pitfalls and mistakes:
Failing to update your estate plan. We tell all of our clients how important it is to review and update your estate plan every 2 to 5 years; Gary Coleman provides a prime example of what can happen if you neglect to follow through on those updates and reviews. “[Coleman] created a handwritten codicil to his will in 2007 leaving much of his estate to his wife, Shannon Price. After they divorced, however, Coleman never updated his will or created a new one. That led to a court fight after he died about whether Coleman was still married to Price. Even though they never officially tied the knot for a second time, Price claimed they had a ‘common-law marriage,’ which would mean that the handwritten will would be valid.”
Failing to fund your estate plan. A revocable living trust is a wonderful tool, but it’s just an empty vessel until you fund it by re-titling your assets in the name of your trust. Michael Jackson created what is most likely a wonderful living trust, but his failure to fund it properly means that 2010 saw “The estate of Michael Jackson… dragged on with no end in sight.”
Waiting too long to create your plan. If you are a senior citizen, waiting too long to create your plan leaves you open to the exploitation or undue influence of acquaintances or family members who might try to take advantage of you. Even if nothing of the sort has taken place, just the suspicion of undue influence can land your estate in a lengthy court battle. “Does the Anna Nicole Smith case come to mind? The United States Supreme Court ruled in 2010 that it will hear her case for the second time. Did she wrongly take advantage of her 90-year old husband, or did his son use fraud and other improper means to stop the billionaire from leaving money to Anna Nicole?”
We can all benefit from the very public airings of these celebrity estates. We stand ready to help you avoid the mistakes listed here, plus many more. The new laws of 2011 provide the perfect opportunity to create a plan (or update your existing plan), and ensure that your family will be well protected now, and in the future.
Minnesota Health Care Dispute Raises Fears for Everyone
February 5, 2011
Planning to Make Your Life Extraordinary
February 4, 2011
One of the best parts about doing the work that our firm does is that we get to help people evaluate their priorities and define for themselves what is truly important. Sometimes it’s too easy to get caught up in the day-to-day stresses and activities and to lose sight of what your true focus is. In the concerns of the ordinary it’s easy to forget to pay attention to the extraordinary.
It may not sound appealing, but planning for your death makes you take a look at life from a very different point of view. Take the typical To-Do list, for example. Most people have a To-Do list filled with tasks such as “pay the bills” or “wash the car”, but don’t these lists evoke a feeling of heavy obligation rather than pleasant anticipation? If you were to take your list of Things to Do and add onto the end of it “Before I Die”, how would that change your list? Recall the recent movie, “The Bucket List” and the fun that Jack Nicholson and Morgan Freeman had together in what each thought was the last weeks of their lives.
This is a large part of what estate planning is all about. It’s about separating the wheat from the chaff, about evaluating your life, realizing what is truly important, and planning to accomplish and protect those things of value.
Of course, nobody can live every minute in this state of heightened awareness. The bills do need to be paid and the car does need to be washed. But as you make that list of ordinary To-Do’s each morning try to include one thing that brings you closer to your extraordinary goal. Keeping the big picture in mind can give you perspective, and keep you focused on what’s really important. Make your own “To Do” list one that will bring you a sense of pleasant anticipation at the dawn of each day, and of peace and contentment when you turn the final page.
It’s Never Too Early to Make Your First Will
February 3, 2011
We’d like to share with our readers a recent article in Forbes entitled How To Write Your First Estate Plan. This article supports something we’ve been saying in our blog all along: That everyone needs a will—whether you’re a young couple just starting out, an established family with valuable assets to protect, or an entrepreneurial business owner with succession on your mind. The article reminds us that a will “is the cornerstone of an [estate] plan,” and at whatever stage of life you may be is not too early to make your first will.
“There’s a lot more to an estate plan than just a will, even for folks who don’t need a more complicated estate-tax oriented version. You might have pieces of it already–a living will signed when you had elective surgery or a beneficiary form filled out for a 401(k) when you got your first job. You need to make sure the pieces fit together.”
Many couples or individuals are first motivated to create a will when they have young children, and the primary purpose of their will is to ensure that their minor children will be cared for and provided for should anything happen to the parents. This is certainly one of the best reasons to create your will or estate plan, but it is not the only reason, not by a long shot. If you drafted your will when your children were young and haven’t looked at it since—or if you never created a will because you don’t have kids and therefore didn’t think you needed one—it’s time to revisit the subject.
An estate plan not only ensures that minor children will be provided for, but also that:
- Older children have the means to continue their education if something happens to you
- Your spouse or children are the recipients of your life insurance or retirement proceeds, and not the tax man or (even worse) an ex-spouse or ex-boyfriend or girlfriend.
- You have someone trustworthy distributing your assets as you wish after you pass away.
- Your business will transfer smoothly if you aren’t able to run it anymore.
- And much more.
“Whatever motivates you, fine. The point is–whether you’re in estate tax territory or not, if you don’t have an estate plan, you need one. (And if you have a really old one, you probably need a whole new one.)” Any opportunity is the perfect opportunity to start planning to protect your loved ones. Call our office (or your own trusted attorney) to learn what steps you can take toward protecting your loved ones right now.
Jinies.com