This isn’t all you can do to wrap up your 2011 tax package. This article in the New York Times explains that the next two years of tax policy are likely to be a bit rocky, and that “beyond the usual recommendations… you should use this year to get your affairs in order for what promises to be an uncertain two years of tax policy.”

If you’re not sure which deductions might apply to you, our office (along with the article mentioned above) has come up with a list of tax breaks to consider:

1. Charitable gifts to most non-profit organizations are tax deductible; and while you can’t deduct any time you spend volunteering, you can deduct any out-of-pocket expenses incurred while volunteering.

2. You can give monetary gifts of up to $13,000 to as many individuals as you would like without incurring the gift tax.

3. The 30% energy tax credits of 2010 expired at the end of last year, but new (albeit lower) credits were passed for 2011. Check the energy star website for information if you made any energy-efficient improvements to your home this year.

4. If you are over 70½ you are currently allowed “to directly donate the required minimum withdrawal from [your] retirement account to charity.” (This is something that may disappear with new tax laws in 2012.)

5. Teachers are allowed to deduct up to $250 spent on classroom expenses.

6. A significant tax loophole set to end this year is one that “allows people whose marginal tax bracket is under 15 percent to pay no capital gains tax when selling securities held for more than a year.”

These are only a few of the tax strategies you may want to consider before the end of the year. For more tax-saving strategies please talk to your financial advisor.

Before you roll your eyes at the idea, consider this: An estate plan is something every person needs, whether it’s your single younger nephew, your older sister with her two young children, or your retired, aging parents. Furthermore, although everyone needs an estate plan, many people (wrongly) consider it a luxury, and put off creating one—often until it’s too late.

You may be thinking, No, an estate plan is too personal (too expensive, too morbid) to give as a gift. But , consider this: If you feel an estate plan is too personal a gift, we recommend giving a gift certificate good for the cost of a basic plan, which the recipient can then design and add to according to his or her needs. If you feel an entire estate plan is too expensive, you may want to consider paying for a portion of the plan, or for the first consultation with an attorney, just to get your loved one started. And if it’s morbidity that you’re worried about, perhaps giving a gift certificate for a  “Loving Family Legacy Plan” sounds more appealing.

This year, don’t give a gift that will impress for a moment but be forgotten within a week; instead, give the gift that will protect your loved one—and their loved ones!—and will last for years to come. Give the gift of an estate plan. 

According to this article in CNN Money, “Social Security recipients will receive a cost of living adjustment of 3.6% starting in January.” This will be the first “raise” recipients have seen in three years, and most welcome the increase. “Many seniors have felt squeezed since banks are paying virtually no interest on savings accounts and stock market declines has eroded their retirement accounts.”

Unfortunately, many seniors may not see a useful increase in their social security income thanks to a hike in Medicare premiums expected to be announced next month. “For the past two years when Social Security benefits stayed the same, many seniors were shielded from the increase in Medicare premiums because of a “hold harmless” provision that protects more than 70% of beneficiaries… However, high-income beneficiaries and new enrollees did see their benefits reduced because they are not covered under the provision.”

Even with the expected increase to Medicare premiums, most seniors are simply glad to see the Cost-Of-Living increase in their social security.  Those receiving Supplemental Security Income (“SSI”) will also see an increase, and we expect that the Department of Veterans’ Affairs will shortly announce an increase in Veterans Pension Benefits, as well. Stay tuned.

For more complete information about the coming changes in Social Security please read the full article. 

The sad announcement of his death has many people now wondering “what next?” How will this change the company he started? What will happen with his family? As this article from ABC News relates, “The ever-private Steve Jobs was famously secretive when it came to Apple’s new products. As with his personal life, the future of Steve Jobs’ wealth [and family] will also stay under the radar.”

The article mentioned above states that “Given Jobs’ vast wealth and penchant for privacy, he likely set up private trusts for his family and charitable purposes.” Private trusts would certainly have been the logical thing to do, under the circumstances. Trusts are a much more flexible, powerful, and private tool than a simple will when it comes to estate planning. Trusts are useful under any circumstances, but they provide a much greater amount of control and protection of assets, especially when dealing with very large estates.

If Steve Jobs did choose to create trusts to protect his estate then it is possible that we may never truly know how he chose to distribute his wealth. It is probably safe to assume, however, that in addition to providing for his family and loved ones, he may have left a considerable amount to charitable or visionary endeavors. His words and actions during life provide a clue about how he thought about wealth: “Being the richest man in the cemetery doesn’t matter to me…Going to bed at night saying we’ve done something wonderful…that’s what matters to me.”

How expensive will long term care be? It turns out the answer to this question depends a great deal on where you live. The AARP, The Commonwealth Fund, and The SCAN Foundation recently released a report which they call “The Long Term Scorecard,” which compares states and ranks them according to categories.  The website Web MD has an article explaining how to use the scorecard and what it means.

The article in Web MD states that “Long-term care is unaffordable for middle income families, according to [The Long Term Scorecard report.] Even in states where nursing home care is most affordable, such care averages 171% of an older person’s household income. The national average is 241%.”

Some states, however, have been making the issue of long-term care a priority, and have been wrestling with questions such as how to make it more affordable to residents and how to provide support to family caregivers. According to the article in Web MD, they’ve broken down the information in “The Scorecard” to help readers understand which states provide the best support (either financial, social, emotional or legal) for the elderly and their caregivers.

The article “ranks states’ performance according to four categories: 1. Affordability and access, 2. Patient choice of both provider and setting, 3. Quality of life and care, and 4. Support for family caregivers.” The states ranked highest overall were Minnesota, Washington, Oregon, Hawaii and Wisconsin; while the lowest ranking states turned out to be Mississippi, Alabama, West Virginia, Oklahoma and Indiana.  California ranked 15th.  (For more information on how the states were ranked and what each ranking means please read the article here.)

Perhaps the most important lesson to take from all this is that no matter where you live, or what your health is like right now, it is very likely that you will need some kind of long-term care in the future, and that that care will be expensive. Burying your head in the sand or choosing to “think about it when the time comes” will only make things worse for you and for your family. Take steps now to prepare now for whatever the future may bring. We would be happy to help you take those steps.

If you feel that you pay too much in taxes, Brett Arends of the Wall Street Journal has some tips to help you save on taxes in the future. Much of his article is tongue-in-cheek, but the suggestions are valuable ones. Of special interest to our firm and our clients are four of the tips nestled in the middle of the article:

Give to your family. “Until the end of 2012 you can give $5 million, tax-free… In addition you can give $13,000 a year to each recipient — each child or grandchild — and a spouse can do the same. So a married couple with, say, three children and eight grandchildren can give another $286,000 a year, on top of that one-off $10 million. Over ten or twenty years that really adds up.”

Put your grandkids—and great grandkids—through college. “Money paid directly to schools or colleges escapes estate taxes.” Furthermore, if you contribute to a 529 educational savings account that money can be tucked away—and eventually used by the student for whom it is intended—tax free (so long as it is used for educational purposes.)

Buy life insurance. Proceeds from a life insurance policy can go to your beneficiaries tax-free upon your death, although you may have to make some arrangements ahead of time. The article states that “Typically you put the policy in an Irrevocable Life Insurance Trust… The premiums that you pay annually are gifts to the beneficiaries… And when you die, the proceeds of the policy go to the trust, for the beneficiaries, free of estate tax.”

Talk to an estate planner. “There are other moves that can cut your estate tax, too. A Qualified Personal Residence Trust can slash the estate taxes on a residence. A Grantor Retained Annuity Trust, or GRAT, can slash them on an investment portfolio. So, too, can setting up a Family Limited Partnership. Financial planners say this is a great time to put investments — like stock — into a GRAT.”

If you have questions about these tax-saving strategies, or other strategies that can help you preserve your estate for your heirs, please contact our office. We can help you determine what your best options are to help protect your assets—and your family—in the years to come.

This timely article in U.S. News and World Report remarks that “celebrities and non-celebrities alike often leave their estates in disarray when they die. That lack of awareness and planning can make death more stressful and more costly for family members as they struggle to quickly plan a funeral and think about dividing up family property while grieving.”

All too often our office is contacted by family members who are overwhelmed with the task of probating or administering a poorly planned estate. Sometimes these bereaved relatives are dealing with overwhelming and confusing debt, or terrible family infighting, but more often than not they are simply trying to make their way through the long and arduous process of probating an estate without the benefit of a will or trust.

One of the many things we can learn from the life and death of Amy Winehouse is that even in the midst of troubled times it is possible to think clearly about the future. If you’d like to start planning for your family’s future, please contact our office today.

Every parent knows that the time after the birth of a new baby can be a tired, busy and chaotic transition, and updating their estate plan is probably the last thing on any new parent’s mind. But after the first few months, when things have calmed down and you’ve settled into a routine, updating your estate plan to include and provide for your new little one should take top priority.

Here are a few things new parents will want to consider as they prepare to update their estate plan:

• Guardians for your child. Who are the people who will raise your child if the unthinkable should happen to you and your spouse? Many people choose close family members, others choose trusted friends.
• Keep your child’s inheritance in trust. Settling your entire estate on a 5, 10 or 16 year old is never a good idea.  Consider instead creating a trust for your child which will provide for him until he reaches maturity.
• Trustees of your child’s inheritance. Who do you trust to invest and distribute the estate for your child while she is still a minor? Some parents choose to have the guardians also serve as trustees; others prefer to nominate separate trustees and guardians who will work together, providing a natural system of checks and balances.
• Providing for your child’s special needs. If your child has special needs he will need special planning to ensure that his needs continue to be provided for. Ask us (or your own local estate planning attorney) about a special needs trust.

Guardians, trustees, trusts and special needs planning are the very basics of estate planning for families with minor children, and should serve as a jumping off point for further discussion with your estate planner.

The new provision may seem like a boon, but the author of the article advises caution for a few reasons: “First, portability may encourage procrastination rather than planning; second, complications emerge with GST taxes, remarriages, and state exclusions; and third, the temporary nature of the act and the unpredictability of Congress make for uncertainty in estate planning for the future.”

Our readers will know that there are a number of planning tools and opportunities that crop up over the years; this new portability provision is certainly one of them. Our readers will also know that none of these tools will necessarily be the “silver bullet” of estate planning.  The fact is that estate planning is like anything else—to do it right and to do it effectively requires intelligence and research; a dedication of time and resources.  Most families simply don’t have the time or the resources to devote to researching every new “perfect planning tool” that crops up promising to save your family money.

This is why our firm is here; it is our business to research the best planning tools for your family.  We listen to your goals; we take into account your financial history and your current status.  We help you create the plan that works best for you.  If you think that this portability provision—or any other strategy you’ve heard about—might be your “silver bullet”, please call our office for an appointment.  We can then help you evaluate your situation in light of current law, and help you make an educated and effective plan for your family.

The answer to that question depends on a number of factors: your state of residence, the terms of your prenuptial agreement, how long you stay married, and more.  Fortunately, the longer prenuptial agreements are around, and the more common they become, the more respect they get from the courts.  But if you’re worried that your prenuptial agreement won’t hold up in court, here are few tips to help ensure the validity of your agreement.

Neither party must be signing under duress. The more time each party has to review the agreement before the wedding the better.  Any prenuptial agreement signed the day of or the day before the wedding could be looked upon as being signed under duress.

The agreement should include full disclosure of income and assets. If you live in a state where it is possible to waive full disclosure of assets then BOTH parties should specify that they do so knowingly.

Each party should have their own legal representation. In order to be sure that neither party is being taken advantage of, each party should have their own independent attorney review the document before it is signed.

Details regarding children or child support in a prenuptial agreement may not be enforced by most courts. Partners my want to include details about possible custody or child support arrangements in a prenuptial agreement, but keep in mind that any court will always give the best interests of a child the highest priority, even if it means disregarding those sections of the agreement between spouses.

Waivers of Spousal Support (alimony) Will Be Carefully Construed by California Courts. Any attempt to waive spousal support in the pre-nup will be carefully construed in the event of divorce, and may or may not later hold up, so just beware.

Seniors with children from prior relationshps, who remarry later in life,  often consider pre-nups as a way to ensure the inheritance of their own children.  So, its not just above divorce.   Hopefully, these tips can help ensure that your agreement will be considered valid by a court should the need for enforcement arise down the road.

“In her most savvy business move, Taylor licensed her name to Elizabeth Arden and came out with several perfumes, including Passion, White Diamonds, and Black Pearls. Her fragrances have reaped a reported $200 million in sales over the years. Perfumes are one of the highest margin products out there, which is why celebrities love them. Taylor was doing it before anyone.”

Furthermore, a recent article in ABC News reports that Elizabeth Arden has no plans to discontinue the Taylor brand anytime soon. “White Diamonds remains a best seller almost 20 years after its 1991 introduction, a testimony to her transcendent and enduring appeal… Our best tribute to Elizabeth Taylor will be to continue the legacy of the brands she created and loved so much.”

The question now is, what will happen to this sizeable (and growing) fortune now that Ms. Taylor has passed away?  ABC News has some guesses: “On the question of what could happen to her estate now that she has passed away, many speculate it will be distributed to her four children and 10 grandchildren [with whom she is reported to have been on good terms]… And Taylor most likely bequeathed a substantial amount of money to her charitable work. Taylor was a devoted AIDS activist, helping form the American Foundation for AIDS Research in 1985 and the Elizabeth Taylor AIDS Foundation in 1991.”

Thus far no last will and testament has been released, which suggests that Ms. Taylor may have had a trust, an document which typically ensures privacy.  While it is only our speculation at the moment,  given what we do know about Ms. Taylor, it is not unreasonable to believe that her estate will be split between her family and her charitable endeavors, especially the AIDS Foundations to which she gave so much in life.

It is different from an Advance Health Care Directive, in that the POLST is an actual medical order from your physician.

Creating a POLST is an important step toward getting the care and medical treatment you want at a time when you may no longer be able to communicate those wishes to your family or medical staff.

Keep in mind that although the POLST is an important step in making your wishes known, the POLST is not intended to replace an Advance Directive. The POLST programs “are meant to complement advance directives, sometimes known as living wills, in which people state in broad terms how much medical intervention they will want when their condition no longer allows them to communicate.”

The WSJ article states that “A study supported by the National Institutes of Health last year found that patients with POLST forms were more likely to have treatment preferences documented than patients who used traditional documents such as living wills and do-not-resuscitate orders.“  This comes as no surprise, considering that executing a POLST includes getting the document signed by your doctor, thus ensuring that you doctor is not only aware that you’ve expressed your wishes for end-of-life care, but has also likely had a part in helping you understand exactly what your options are.   A short audio recording is available in the WSJ site. 

Our office recommends that our clients go one step further—in addition to having your doctor sign your POLST, give your doctor a copy of your Advance Directive as well. Once you have things squared away with your doctor we also recommend giving a copy of your POLST and your Advance Directive to the person you’ve named as your healthcare agent.

The more informed you doctors and family are about your wishes for end-of-life care, the more likely it is that you will receive the treatment you prefer.