Estate Planning Blog

Wealth Transfer Strategies to Take Before Congress Reduces the Estate Tax Exemption Amount

Democrats want to return federal estate taxes to their historic norms, which means taxpayers need to act now before Congress passes legislation that could adversely impact their estates. Currently, the federal estate and gift tax exemption is set at $11.58 million per taxpayer. Assets included in a decedent’s estate that exceed the decedent’s remaining exemption available at death are taxed at a federal rate of 40 percent (with some states adding an additional state estate tax). However, each asset included in the decedent’s estate receives an income tax basis adjustment so that the asset’s basis equals its fair market value on the date of the decedent’s death. Thus, beneficiaries realize capital gain upon the subsequent sale of an asset only to the extent of the asset’s appreciation since the decedent’s death.

If the Democrats get control of the Senate it could mean not only lower estate and gift tax exemption amounts, but also the end of the longtime taxpayer benefit of stepped-up basis at death. To avoid the negative impact of these potential changes, there are a few wealth transfer strategies it would be prudent to consider before the year-end.

Spousal Lifetime Access Trust

With the threat of a lowered estate and gift tax exemption amount, a spousal lifetime access trust (SLAT) allows donors to lock in the current, historic high exemption amounts to avoid adverse estate tax consequences at death. The donor transfers an amount up to the donor’s available gift tax exemption into the SLAT. Because the gift tax exemption is used, the value of the SLAT’s assets is excluded from the gross estates of both the donor and the donor’s spouse. An independent trustee administers the SLAT for the […]

By On the Net|2020-11-22T06:59:01-08:00November 22nd, 2020|

What is Estate Planning?

James Royal’s MSN Money article gives the following definition of estate planning:

Estate planning is the process of arranging who will receive your assets when you die. One goal of estate planning is to make sure your wealth and other assets go to those you intend (and not to others), with a particular emphasis on minimizing taxes so that your beneficiaries can keep more of your wealth. But good estate planning also can reduce family strife, and provide clear end-of-life directives should an individual become incapacitated before ultimately passing away.

By Rachel LeBeau|2020-11-05T04:04:58-08:00November 6th, 2020|

Do Domestic Asset Protection Trusts Work?

A domestic asset protection trust (DAPT) is an irrevocable trust established under the laws of a state that adopted a DAPT statute. Currently 17 states have passed DAPT statutes. These states are Alaska, Delaware, Hawaii, Michigan, Mississippi, Missouri, Nevada, New Hampshire, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Virginia, West Virginia and Wyoming. Unfortunately Arizona does not yet have a DAPT statute.

A DAPT is an irrevocable trust that allows the trust maker to be a discretionary beneficiary and the trust’s assets are protected against claims made by the trust maker’s creditors. The trustmaker retains access to the trust’s assets, but the assets are protected against many types of creditor claims.

A lawyer on a list serve I follow wrote:

“Why do people still push DAPTs? There are so many cases defeating them. And they are part of the bankruptcy estate unless they’ve been in existence for 10 years. I feel like it’s the 1970s again, and everyone is telling each other how stupid seat belts are and that cigarettes are healthy and help with weight loss. Talking about Wyoming vs. South Dakota vs. Alaska vs. Nevada is like discussing which brand cigarette is healthier. None of them are good. And there are much better options that have tons of case law backing them … like special power of appointment trusts.”

The following text was written by Nevada DAPT attorney Steve Oshins in response to the above comment. Steve is a friend and my choice as the best domestic asset protection trust lawyer in the United States.

“I substantially agree with your comments about regular DAPTs for residents of non-DAPT states. However, not for residents […]

By On the Net|2020-11-05T04:01:52-08:00November 5th, 2020|

How to Set Up a Trust Fund if You’re Not Rich

Tim Parker’s article says:

If you’ve heard of trust funds but don’t know what they are or how they work, you’re not alone. Many people know just one key fact about trust funds: they’re set up by the ultra-wealthy as a way to protect passing on significant sums of money to family, friends, or entities (charities, for example) after they pass away.

However, only part of the conventional wisdom is true. Trust funds are designed to allow a person’s money to continue to be useful well after they pass away, but trusts aren’t only useful for ultra-high-net-worth individuals. Middle-class people can use trust funds as well, and setting one up isn’t entirely out of financial reach.

By On the Net|2020-08-19T10:16:45-07:00August 19th, 2020|

Interest in Estate Planning Picks up with Pandemic

This article in the Herald Mail Media states:

“the most important document people should be getting right now is the equivalent of a medical power-of-attorney. The document’s name depends on the state. . . . First, appoint an agent or decision-maker for healthcare decisions in case you are unable to make or communicate an informed choice yourself . . . . Second, the document should express your wishes in case you end up in a terminal condition or persistent vegetative state. Do you want interventions or not?”

By On the Net|2020-04-09T07:03:53-07:00April 9th, 2020|

Estate Planning Is More Important Than You Think

This article in Kiplinger starts with “Smart Insights from Professional Advisors” then says:

“An estate plan is a necessary tool that allows you to protect, maintain and manage your property if you become ill or pass away. But more than that, it can also help people make sure their minor children are protected in the event of an emergency or minimize taxes paid on assets by beneficiaries. . . . So, why do so many hardworking people fail to take the time and effort to build an estate plan and preserve their hard-earned assets? . . . a common misconception most people have is that estate planning is for those who are older or possess substantial wealth. Many people also assume that the process will be complex, time intensive and pricey. But some — if not all — of the problems mentioned aren’t true the majority of the time.”

By On the Net|2020-04-07T08:33:07-07:00April 7th, 2020|

Estate Planning: Do it Early and Avoid Grief

Ron Wynn writes in Culver City News:

“People often try to put certain things that are not so pleasant on the back burner and say, “I will get to it.” If that is you, you are no different than anyone else. One of the things that people often put aside is estate planning. We all think that we have plenty of time to do that, and that is not our biggest priority.

And then of course, when people get unfortunately ill, it becomes a scramble. Set everything up early in advance when it comes to how you want your estate handled. It’s not a pleasant thing, but it’s something that has to be done and the sooner you do it, the better off you are.

The first thing you want to do, assuming you have assets, is to contact an estate planning attorney and listen to his/her advice. The likelihood is if you own property and other sizable assets, they will suggest you create a family trust. They will explain the kind of family trusts there are, including a revocable trust and an irrevocable trust, and they will also explain to you what the benefits of each are and how they work.

By On the Net|2020-04-05T08:08:39-07:00April 5th, 2020|

Financial Planner People Make Same 4 Estate-planning Mistakes Over and Over

Very informative article in Business Insider says, “I’ve worked with more than 1,200 families as a Certified Financial Planner, and I see people make the same estate-planning mistakes over and over again. Not having a will is a major problem. After that, though, you also need guardianship documents for minor children, updated beneficiaries, and a properly funded trust.”

By On the Net|2020-03-30T16:50:59-07:00March 30th, 2020|

The One Document Americans Need Now: Power of Attorney

MSN‘s article states the message my son and I have been trying to convey for years, but even more so now. The article starts, “If you live in the United States and really want to be prepared for coronavirus, experts say you need a fully executed power of attorney, which designates a trusted person to take over your finances should you become incapacitated. . . . A financial power of attorney is the most useful document because of the possibility that you could be put out of commission for weeks if you fall ill and are unable to take care of your financial affairs. It is followed closely by healthcare directives, which express your wishes about medical care and who gets to make decisions for you, and a will, which distributes your assets after you die.

Arizona residents can get these important documents by purchasing our Peace of Mind bundle or our Gold estate plan.

By On the Net|2020-03-28T17:05:54-07:00March 28th, 2020|

Wills and Trusts Don’t Require a Trip to a Lawyer

Wall St. Journal’s article says “The search term ‘getting a will’ has risen sharply since March 8, according to Google Trends. . . . Many young families have nothing in place to protect their assets if they die. Approximately 60% of Americans don’t have a will, according to a study commissioned last year by Brookdale Senior Living . . . But for young parents and healthy people with simple estates, the ease of online estate planning can be beneficial.”

We offer online estate planning. See the contents of our three estate plans.

By On the Net|2020-03-27T06:43:00-07:00March 27th, 2020|

Coronavirus Causes Americans to Make Online Wills

CNBC’s article says, “Over the last two weeks, online will companies have seen an explosion in users. . . . you can go through the entire process at home . . . . as online wills grow in popularity, a chorus of lawyers increasingly caution against using them. A quick Google search will bring up articles on the dangers of do-it-yourself wills or stories of online wills that were thrown out in court. . . . However, as online wills grow in popularity, a chorus of lawyers increasingly caution against using them. A quick Google search will bring up articles on the dangers of do-it-yourself wills or stories of online wills that were thrown out in court.”

FYI: See the contents and prices of our three estate planning packages, including the Peace of Mind bundle. All three plans allow you to sign the documents in your home.

By On the Net|2020-03-25T08:44:23-07:00March 25th, 2020|

More Tax And Estate Planning Opportunities In The Market Sell-Off

Forbes says: “Instead of worrying, realize that there are opportunities in this crisis. You can make some moves now that will enhance your tax and estate planning. . . . Be sure your estate plan is updated to reflect the current situation. You need a medical care power of attorney that names an agent who can act for you in an emergency.

By On the Net|2020-03-24T14:11:39-07:00March 24th, 2020|

The Coronavirus Should Have You Thinking About These 4 Things

Interesting article in the Motley Fool that says the four things you need to have are:

a will or revocable trust
Beneficiary designations on financial accounts
Healthcare durable power of attorney
Financial durable power of attorney

Read the article for more about each of these important documents.

P.S. Items 1, 3 & 4 are included in our comprehensive estate plan with a trust and our Peach of Mind Bundle. See the contents of the two estate plan packages.

By On the Net|2020-03-22T13:57:43-07:00March 23rd, 2020|

Coronavirus Has Americans Scrambling to Set Their Estate Plans

In an article in Barrons on March 22, 2020 Daisy Maxey wrote:

“Here Are Some Key Things to Know. Financial advisors and estate attorneys say they are seeing a flurry of inquiries from people seeking to update or draft wills and take other estate-planning measures amid the coronavirus crisis.

‘Seeing in the news that so many people are passing away worldwide and here in the U.S., people are getting a little scared,’ says Alain Roman, an estate-planning attorney in Miami, who is now working with clients mostly over the telephone and online. ‘It’s getting them thinking about having a plan in place in case something happens to them.’ . . .

Jamison Taylor, managing attorney at RISM LLC, a law firm in Washington, D.C., recommends that everyone have at least these three basics: a will, a power of attorney, and a medical directive of some sort. These documents will allow for the distribution of assets according to one’s wishes, the ability to make financial decisions on one’s behalf, and guidance for medical professionals on treatment and care.

By On the Net|2020-03-22T13:42:48-07:00March 22nd, 2020|

Coronavirus: Living Wills And Health Proxies – What Steps Should You Take Now?

Martin Shenkman wrote an excellent article in Forbes dated March 19, 2020, that starts:

“It is important that every adult have in place a living will, health proxy and HIPAA release. What key steps should you take now? Why might your existing documents be dangerously wrong and how can you fix them? How has the current environment changed how these documents will be used? How might you update your documents to address these new conditions? What other practical steps can you easily take to protect yourself, and your loved ones?

Think of Others: If you have elderly parents or other loved ones, these may be vital steps for them to take. . . .

Be Sure Your Documents are Current: You should make sure that you, and elderly or ill loved ones, have current legal documents: living wills, healthcare proxies, HIPAA releases, powers of attorney and wills”

By On the Net|2020-03-22T14:08:57-07:00March 21st, 2020|

Coronavirus Legal Advice: Get Your Business and Estate in Order Now

Attorney H. Dennis Beaver’s timely article in the Kipliner magazine starts “Estate planning attorneys are getting mobbed with questions. So, here is some timely advice from three attorneys on what families and business owners should be doing to prepare in case the unimaginable happens.”

The article affirms what we as estate planning attorneys believe, which is that these uncertain times make it imperative that people sign estate plan documents that protect their most valuable assets, their loved ones.

By On the Net|2020-03-22T13:42:24-07:00March 21st, 2020|

Can I Give My Kids $15,000 a Year?

Chambliss: “If you have it to give, you certainly can, but there may be consequences should you apply for Medicaid long-term care coverage within five years after each gift. The $15,000 figure is the amount of the current gift tax exclusion (for 2018), meaning that any person who gives away $15,000 or less to any one individual in one particular year does not have to report the gift to the IRS, and you can give this amount to as many people as you like. If you give away more than $15,000 to any one person in a single year (other than your spouse), you will have to file a gift tax return. However, this does not necessarily mean you’ll pay a gift tax. You’ll have to pay a tax only if your reportable gifts total more than $11.18 million (2018 figure) during your lifetime.”

By On the Net|2018-11-06T14:21:14-08:00November 9th, 2018|

How to make sure your estate plan won’t cause a family fight

Market Watch: “Creating an estate plan is a gift to the people you leave behind. By expressing your wishes, you’re trying to guide your loved ones at a difficult, emotional time. All too often, though, well-meaning people do things destined to create discord, rancor and resentment among their heirs. What looks good on paper may play out disastrously in real life, says estate and trust attorney Marve Ann Alaimo, partner at Porter Wright Morris & Arthur in Naples, Florida. “People want to think everybody will be nice and do right,” Alaimo says. “Human nature is not always that way.” You can reduce the chances of family discord by doing these four things:”

By On the Net|2018-11-06T10:51:10-08:00November 8th, 2018|

Disabled daughter of ‘Dandy Don’ Meredith at center of allegations of abuse, neglect since his death

FOX: “The daughter of the late legendary football star and sportscaster “Dandy Don” Meredith dealt with abuse and neglect after her stepmother took guardianship of her trust following Meredith’s death, relatives said. Meredith, a former Dallas Cowboys quarterback, “Monday Night Football” commentator and TV pitchman who often referred to himself as “Jeff and Hazel’s baby boy,” set up a trust to ensure lifetime care for his youngest child, Heather, now 49, who was born with physical and intellectual disabilities.”

By On the Net|2018-11-06T10:02:36-08:00November 6th, 2018|

Strategies for estate planning during a divorce

JDSUPRA: “Divorce is a fact of life in America. It should come as no surprise that it can be a difficult process and can cause other aspects of a person’s life to be ignored while it is happening. It is important, though, that a divorcing individual involve his or her estate planning attorney in the divorce process to make sure that any settlement agreement and estate plan comport with post-divorce reality. In many cases, a divorce will automatically eliminate a former spouse from receiving any benefits under the other spouse’s will or revocable trust. This may not be the case in all states, though. Moreover, the divorce may not affect assets that have beneficiary designations, such as life insurance and retirement benefits (and, more commonly now, bank and brokerage accounts). Thus, a careful review of all of an individual’s assets is essential.”

By On the Net|2018-10-29T16:15:51-07:00November 2nd, 2018|

You’ve won the Mega Millions jackpot! Time to hide.

The Washington Post: “First things first: Quadruple-check your ticket after Tuesday’s Mega Millions drawing. Then do it again. Do they match the winning numbers (5-28-62-65-70, with a Mega Ball number of 5)? No? Skip to here. Yes? Lock the deadbolt and read on. Congratulations! So, you’ve done it. Beaten the odds — one in 302,575,350 — and won the largest Mega Millions jackpot in history. And it’s yours alone, so you’re almost certainly about to enjoy an astronomical spike in wealth. Now what? Before you shout from the rooftops or broadcast your excitement on social media, take a deep breath and keep some practical advice in mind. To sign or not to sign the back of the lottery ticket? There are plenty of people who will advise you to sign the back of the lottery ticket right away — including lottery officials in South Carolina, where Tuesday’s winning ticket was sold. After all, what would happen if, heaven forbid, you lost the ticket? Or worse yet, if an unscrupulous person in your life took the unsigned ticket and claimed it as his or hers?”

By On the Net|2018-10-29T15:20:43-07:00November 1st, 2018|

Oligarch a Step Closer to Losing $585 Million Divorce Battle

Bloomberg: “A Russian billionaire fighting one of the largest divorce payouts in U.K. history lost a Moscow court case where he was trying to prove that his marriage had been dissolved 16 years earlier. Farkhad Akhmedov was ordered to pay his wife Tatiana Akhmedova more than 450 million pounds ($586 million) following a London trial that he refused to participate in on the grounds that he was already divorced in Russia. Now the Moscow City Court has rejected an appeal by the businessman seeking to prove the existence of that divorce.”

By On the Net|2018-10-29T12:39:19-07:00October 29th, 2018|

Six important tips for estate planning success

Moneyweb: “The increased Value-Added Tax (VAT) rate – announced in the 2018 National Budget – dominated headlines for weeks thereafter, but this is not the only tax change affecting consumers and investors. Many tax changes also affect estate planning and the cost of estate administration. I asked Brenthurst’s Fiduciary Services Expert, Rozanne Heystek-Potgieter, for her top tips to navigate this. We compiled a list of six important issues to consider when navigating the complex field of deceased estate administration. More importantly, we have included tips on how to prepare for the inevitable and re-evaluate your existing will, the liquidity of your estate and estate planning goals in general.”

By On the Net|2018-10-15T14:46:06-07:00October 18th, 2018|