When you are a busy person you have to set your priorities, and when you do some things are going to wind up being neglected as other "more pressing" matters arise. Estate planning is something that people often procrastinate about because let's face it, dying is something that you have etched onto the very bottom of your to-do list in almost permanent ink.
Aside from the the fact that people simply don't want to consider the unpleasant notion of passing away, there are actually some practical reasons for the procrastination. For one, even if you have no difficulty accepting the fact that you have to plan for the distribution of your assets after your death you may simply feel as though you will get to it when you have more time - maybe after retirement.
But once you retire, you may be occupied doing the things that you always wanted to do while you were busy working, and once again estate planning goes to the back burner. This is understandable, but it is risky all the same. And the fact is that that the people you are damaging when you do not plan your estate intelligently in advance are the ones that you love the most.
If you do not create an estate plan and record your wishes, should you pass away the state will decide who gets your assets, and the matter can be held up in the probate court for a significant period of time. There will be court costs and a number of additional fees, and of course many of your family members may be left out in the cold by the state when you would have remembered them had you taken the time to record your wishes.
How you use your time is a personal choice, but not all choices are good ones. To put it bluntly, when you move through life without having an estate plan in place you are neglecting one of the core responsibilities of adulthood and turning a blind eye to the needs of your loved ones. When I am asked who my competitors are, I always respond, "My biggest competitor is procrastination." Now is the time to act.

People are routinely living into their late eighties and nineties these days. Life is a gift and we all welcome each new day but there are certain perils looming when for those who reach an advanced age. Dementia is one of those risks and it is in fact alarmingly widespread. Statistics tell us that approximately 50% of people eighty-five years of age and older are suffering from some form of dementia. Though the severity of these cases can vary widely, those who suffer the effects of dementia generally are unable to make their own medical and financial decisions in a sound manner.
For this reason it is a good idea to include durable powers of attorney in your estate plan. You can execute a durable medical power of attorney and appoint someone that you trust to make health care decisions in your behalf. In addition, you can appoint an attorney-in-fact to handle your financial matters via the execution of a durable financial power of attorney.
Though you may well enjoy mental clarity throughout your final years, it is a good idea to be prepared for any eventuality. If you do need others to make decisions in your behalf at some point in time it is comforting to know that they will be people that you have personally selected rather than a guardian appointed by the court.

Nobody is especially anxious to part with any of their hard earned money and hand it over to the tax man. But in spite of the complaining, most people recognize the fact that some taxation is necessary and are perfectly willing to pay their fair share. What people don't want to do is pay taxes multiple times on the same earnings, and this is one of many reasons there is so much support in some quarters for a permanent repeal of the estate tax.
Consider this overly simplified example that demonstrates the logically indefensible nature of the estate tax. Let's say that Elizabeth was an avid saver throughout her life. She socked away a sizable portion of every paycheck that she ever earned in a savings account.
Since she was so frugal it always bothered her to see that she was left holding only about $60 out of every $100 she earned after paying payroll and income taxes, but she was heartened by the fact that she was doing her part as a good citizen.
After saving so diligently for so long she was able to accumulate quite a large sum of money. Every year she paid income taxes on the interest she had earned and then when she died, the estate tax kicked in and her children received just 65% of the savings that she worked so hard to accumulate after paying taxes. And then when her children died and left that money to their children, it was once again taxed at 35% and less than half of the taxable portion of Elizabeth's original bequest was left.
A viable response to this potential scenario is the creation of a legacy trust. With these vehicles you name your grandchildren as the beneficiaries, skipping a generation as it were. Your children can still receive benefits from the trust, but they don't own the assets so they can't be targeted by claimants or former spouses. When your children die, your grandchildren inherit the contents of the trust, and the estate tax is levied only once though two generation enjoyed benefits from the trust. And now, in Nevada, as well as a handful of other states, the tax can be avoided for multiple generations with a properly established trust.

When you start to do some research into the topic of estate planning you will invariably see frequent mention of probate avoidance strategies. For people who deal with these matters professionally the term speaks for itself, but the layperson has no particular reason to know what probate is much less why you might want to avoid it.
Probate is the legal process that an estate must pass through before assets can be distributed according to the will of the deceased. If there is no will, the laws of your state determine how assets will be distributed. In the will you nominate an executor or personal representative. That person, or if there is no will, the person who desires to serve as personal representative, is required to present the court with a petition to be appointed. Once the court makes the appointment, this person is responsible for actually administering the estate, but he or she does so under the supervision of the probate or surrogate court.
The reasons that some people choose to implement strategies that enable probate avoidance are usually twofold. For one, there are a number of expenses that go along with probate. There are court costs, attorney fees, personal representative fees and bond fees. In addition, the final taxes of the deceased must be paid so an accountant is often necessary, and sometimes there are appraisers that must be paid as well as estate liquidators.
The other primary reason why probate avoidance strategies can be attractive is that probate can be time consuming. Depending on the complexity of the estate it can take anywhere from several months to several years for the estate to close. And of course, the heirs do not receive their inheritances until the probate process has been completed.
All of this having been said, probate serves a useful purpose. If anyone wants to contest the will or present an alternate will, they would do so in probate court. Consider a scenario when an octogenarian marries a twenty-something and then passes away three months later with a new will leaving everything to his new spouse. You can see how this person's children might be grateful for the opportunity to address the court.
Plus, even in uncontested cases, the supervision of the probate court ensures the transparency of transactions made on behalf of the estate by the executor. For some families, this additional protection is worth the extra expense and time of the probate process.

The process of estate planning has many aspects. One one level you may plan the transfer of your wealth to your loved ones free of creditor claims and tax liabilities. But on another level, estate planning also involves planning for a time when you are no longer around to provide guidance or support to your loved ones. For many it can be difficult to cope with the fact that you will no longer be able to fulfill your long held sense of responsibility to your loved ones.
An ethical will is an effective way to address this dilemma. The tradition actually dates back to early biblical times when ethical wills were passed down orally, but they are now composed in writing. The writing of ethical wills has been firmly embedded in the Judaic tradition for generations, but the practice is now widely accepted throughout the estate planning community.
In an ethical will you may share your moral and spiritual values. It is a method to convey the lessons you learned in life to your loved ones. An ethical will can be looked at as a heartfelt final letter to your family. You let your loved ones know how you feel about them, share personally acquired wisdom, and get things off your chest if you find that to be necessary. In short, it is a way to transmit to future generations what makes you and your family who they are. People usually find the composition of an ethical a defining time that is as beneficial to the author as the content is to the readers.

As estate and retirement planning attorneys, part of what we do is help our clients prepare for some of the challenges that go along with aging; things like possible incapacitation and addressing long term care costs. Preparing for these contingencies is necessary and prudent, but there is a lot of quality time left after your working years are behind you. Opportunities abound during your retirement years, and the fact is that seniors can use their free time to accomplish some truly amazing things.
One case in point involves a now 68-year-old fellow from Costa Mesa, California named Bill Burke. Bill is an adventurer, and as part of his goal to scale the world's highest peaks he tackled the grandest challenge of them all in 2007 when he attempted to climb Mount Everest in Nepal. He made it to within one hundred yards of the summit when he had to make a decision. He was concerned that he may not have the strength to make it back to the bottom safely if he pushed on those last grueling 300 feet, so he turned back.
Making it to within 100 yards of the top of Mount Everest as a 65-year-old is quite an accomplishment, but Bill was in it to win it. He returned the next year with the added experience under his belt, but he didn't make it as far. After suffering from pulmonary edema he had to be evacuated off the mountain by helicopter.
One might expect that this senior citizen would recognize the limitations of age at that point, but Bill Burke is not set up that way. He went back to Everest for the third consecutive year in 2009, and he reached the summit. It is believed that at 67 years of age he was the oldest American to do so.
The suggestion here is to consider all that is possible, aim high, tune out the naysayers and make the most out of your retirement.

When you are in a position to leave behind inheritances that can have life changing consequences for your loves ones you have a pleasant problem. You may want to make life easier on your family than they were for you, but at the same time you don't want to adversely impact one's motivation and work ethic.
By the time you have reached your twilight years it is likely that your children have become established in their own right. Leaving an inheritance out right to those who have already made it can be done with confidence. But you may have children with creditor problems or you may have younger children or family members that have not yet established themselves. Also, there could be someone in the family with a substance abuse problem, or an individual with a gambling problem. These factors present special planning considerations as you plan your estate.
One way that these types of concerns can be addressed is through the creation of an incentive trust. These instruments involve the naming of a beneficiary and the appointment of a trustee like other trusts, but there is one key difference. You as the grantor of the trust attach stipulations that must be met before distributions from the trust will be made.
If you have a younger heir these may be educational. You could allow for regular monthly distributions as long as the beneficiary remained a student in good standing. Perhaps you could offer an additional lump sum distribution upon attainment of an advanced degree. There are those who take it a step further and stipulate that the trust will match every dollar that the beneficiary earns on the job once he or she enters the workforce to encourage a strong work ethic.
You can include many variations of conditions that you see fit. Incentive trusts can go a long way toward alleviating concerns that you may have about your beneficiaries. It is important however to keep in mind that too many "strings attached" to an inheritance can result in resentment. Compelled behavior may not always be psychologically beneficial. Still incentive trusts are powerful tools and can be effective motivators in many circumstances.

For those Americans who have been able to build some wealth throughout their lifetimes, estate planning has a lot to do with addressing the reality of the estate tax. Many people would suggest that there should be no estate tax at all. Their most convincing argument is that any assets that are left over after you have passed away represent a remainder that you managed to hang on to after paying any number of taxes throughout your life. And the more successful you have been, the more you have been taxed.
Love it or loathe it, however, we will likely always have an estate tax. For the past 10 years, one problem with the tax is uncertainty. If the estate tax was somewhat uniform and adjusted according to market conditions it could be planned for intelligently, but who must pay it and how much must be paid has been all over the place in recent years. In 2008 the exclusion amount was $2 million; in 2009 it was $3.5 million; in 2010 the estate tax was repealed; and in 2011 the estate tax exclusion was scheduled to be just $1 million. In addition to the reduced exclusion, the rate of the tax was scheduled to rise to as much as 55% in 2011 unless there was some 11th hour legislation to alter the law.
Lo and behold, that legislation has in fact been passed and the estate tax burden will be significantly lessened going forward. The bill that is going to extend the Bush era tax cuts and provide all Americans with continued tax savings also contains an estate tax provision. In light of the enactment of this legislation the estate tax exclusion will now be $5 million, and the top rate of taxation has been reduced to 35%.
Once again, however, these changes are only temporary and are scheduled to sunset in two years. What happens on January 1, 2013? You guessed it - back to a $1 million exemption and 55% tax. Uncertainty is still the order of the day.
These changes will impact many estate plans, so you may want to pay your estate planning attorney a visit to discuss how this legislation affects your existing strategy.

A large part of retirement planning involves trying to predict the costs that you will be facing in the future. This is very challenging because there are many variables at play that are totally out of the control of the individual. Things like potential changes in the tax laws, how Medicare will look in ten or twenty years, whether or not health care reform will be repealed or altered, and just how high long-term care costs will rise are all unknowns. All you can do about the things about which you have no control is to make intelligent estimates and be as prepared as you can possibly be financially.
What we want to highlight here is a major financial factor that many people don't see in the proper light, and it is something that is totally within your own control. When you are considering what your future medical expenses and long-term care costs may be, it is important to recognize the fact that for the most your health is by your personal choices. Of course we have all heard about the guy who never smoked a day in his life who got lung cancer, but this is certainly the exception rather than the rule.
As you get older it is statistically more likely that you will have health problems, but to a large extent this is due to an accumulation of damaging lifestyle choices. Too many people depend on their doctors to make them well and kind of pretend that their health problems are a matter of bad luck or an inevitable part of aging when in fact they are making themselves sick.
If you are obese, largely sedentary, eat without any type of plan in mind, and smoke and/or drink to excess you are essentially driving your future medical expenses up by the day. If you do all the right things it is very likely that you are saving yourself a lot of money while you enjoy a higher quality of life. The choice is yours, but the message here is that you do have a great deal of personal control over your future health care costs and it all depends on how well you take care of yourself along the way.

We have all been involved in situations at various points in our lives when we decided to try to fix something on our own. There are times when you can indeed get out your basic tool kit and get the job done, but there are other instances when you learn an important lesson. As you are engaged in the task you see what is necessary, and then you look in your kit and recognize that you don't have the right tool. Knowing the right tools for each job and having access to them is one of the differences between a professional and a dabbler.
Estate planning is one of those jobs that requires the utilization of the proper tools for each circumstance. The one that we would like to take a look at today is the GRAT or grantor retained annuity trust. These vehicles are useful for gaining estate tax efficiency and gifting appreciating assets free of taxation.
The strategy that is employed to make this happen is called the "zeroed out" GRAT. You fund the trust with appreciable assets like securities, real property, or business interests, appoint a trustee, and name a beneficiary. You also decide on the duration of the trust term and the amount of the annuity payments that you would like to receive out of the trust for the term period.
When you fund the GRAT you remove the assets transferred to the trust from your estate for tax purposes, but the IRS does consider the donation to be a taxable gift. However, the taxable value of the gift is calculated using 120% of the federal midterm rate as it stands during the month the trust is created. So, when you set your annuity payments you want them to equal the total taxable value of the trust according to the IRS' valuation methodology. Because your retained interest is 100% of the taxable value, you owe no gift tax on the contribution into the trust. But, any appreciation that exceeds that valuation passes to your beneficiary at the end of the trust term tax-free.
If you have any questions regarding GRATs or other advanced planning techniques, please do not hesitate to contact our firm at any time.

When you are working through your estate planning checklist you may have a lot of ground to cover depending on the size of your estate and the specificity of your wishes. And as we always remind our clients, estate planning is not something that you take care of in a day, a week, or a month. It is an ongoing process that is going to require adjustments because there are changes all around us. Our own lives change, tax laws are subject to revision, interest rates are always fluctuating, and the economy as a whole is largely unpredictable.

We mentioned a checklist in the opening because with so much to consider it would be easy to forget something, and your fine furry friend just might fall through the cracks. Just as your stocks, bonds, cash, real property, and prized possessions are going to need a new home when you pass away, your pet is going to need one too.
Our pets become members of the family and they can really provide senior citizens with a tremendous boost as companions, protectors, and in many cases, master entertainers. The good news is that you may not have to look too far to find a new owner for your pet. You may well have a family member or friend who lets you know that he or she would be more than glad to take care of your dog or cat when you pass away.If you have no volunteers, you can ask around, and when you find a caretaker it is a good idea to make sure that your pet and its future guardian get to know one another so that the transition won't be as hard on the animal. To cover the expenses you can leave a bequest to the new owner-to-be if you so choose.

Another option is to create a pet trust to provide for your dog or cat. You fund the trust, name a trustee to administer it, and select a caretaker for the pet. It is also sometimes possible to develop a relationship with a non-profit animal placement facility and arrange for the people there to find your pet a home while you make a donation in return to show your appreciation. For some valuable information on pet trusts and pet planning in general visit our page on page pet planning.

An integral part of your estate plan is creating documents that express your end of life decisions concerning healthcare. You never know exactly how the latter stages of your life will be spent so it is important to make sure that you are prepared for whatever fate may throw your way.

As medical science makes continual advances patients' lives can be extended through artificial means for long periods of time. The implications of this can be controversial. Some have strong opinions on the subject, which could be drastically different than your own opinions. To make sure that your personal preferences are honored in cases when you are unable to express yourself you can include advance health care directives in your estate plan. Two that are widely utilized are the living will and the durable medical power of attorney. In the living will you state your specific preferences. In the medical power of attorney you authorize your agent to make health care decisions in your behalf in the event you are incapacitated.

There are provisions contained in the Healthcare Insurance Portability and Accountability Act that make it illegal for health care professionals to divulge any personal patient information without the patient's express consent. It is not recommended that you wait until you are admitted in a facility to sign an authorization because you may be unconscious or incapacitated. For this reason your estate plan should also contain an authorization that complies with the requirements of HIPAA. If you have had your directives created over the last several years they may already contain a universal HIPAA authorization. But if your estate plan was drafted prior to 2004 or if it does not include any of the documents discussed it would be a good idea to schedule an appointment with a competent estate planning attorney to review your directives.

You may find yourself with a lot on your plate and when you do, you have to set your priorities. There are some matters that must be revisited every year, or every five or ten years, and there are others that are in your lap every day. When you are managing your investments things are changing by the second, and you are well aware of the need to constantly react to these changing market conditions. If you run your own business, the changes come in rapid-fire fashion as well and priorities can shift radically overnight.

This having been established, estate planning and the long terms plans that you have made for your twilight years are also impacted by the constant ebb and flow of change. When you originally construct your estate plan you have no choice but to work with the various relevant factors as they existed at that time. But things are always in flux, and what made sense in 1990, 2000, or even 2009 may no longer be appropriate in 2011.

This can be due to things that are out of your control like fluctuations in the estate tax rate and exclusion amount, the yield on your retirement investments, property values, and long-term care costs. And the need to review and potentially revise your estate plan can also arise as a result of changing circumstances that are specific to you and your family.

Depending on your age, health, and personal proclivities you may realize that the estate plan that you worked up ten or twenty years ago, or even the one you did last year is indeed outdated, but feel as though you still have plenty of time left to adjust it when you really need to do so. However, it is your loved ones who are in essence being asked to take that risk. Perhaps, it is best to stop procrastinating and have your plan reviewed right away.

There is an old saying that goes something like "Give a man a fish, he eats for a day; teach him to fish, he eats for a lifetime." This is some profound food for thought when you are planning your estate. Passing along the assets that you have accumulated during your lifetime is certainly going to be helpful to your heirs, but if you could impart your knowledge to them you may be able to plant a seed that leads to a pattern of success can continue across the generations.

Any time a high profile, successful person writes his or her autobiography it is usually on the non-fiction best sellers list. Why do you suppose this is? Do you think that most people necessarily find the details of the personal lives of these businesspeople to be all that interesting? The primary reason why people want to read the autobiographies of people who were able to generate wealth is because they want to find out how it was done so that they can implement these strategies themselves.

The fact is that you don't have to be famous to write your autobiography and share the secrets of your success. You too can sit down and write your memoirs and pass them along to your family as part of your legacy, and this is a gift that may be more valuable than anything else you can provide for them. Aside from the pathway to financial success, you can also honestly and earnestly share stories from your youth and give your loved ones, and even future generations, some insight into the family tree.

As much as your family will benefit from having the opportunity to read your life story, it can be cathartic for you as well. And it's a satisfying feeling to look at your finished manuscript and recognize that you did indeed have that book in you after all.

When you start to look into the subject of estate planning you see a lot written about employing strategies that are intended to help you avoid probate. Unless you are in the field you may not know exactly what probate is and why you might want to avoid it, an explanation may be in order.

Probate is the legal process that the typical estate has to pass through, and it is supervised by the probate court. The court must determine the validity of the will, and it is the venue within which any claims against the estate are heard. So if you wanted to contest a will or attempt to collect a debt owed to you by the deceased, you would do so in probate court.

There are two primary reasons why some people would prefer to avoid the process of probate. One of them is that it is expensive and it can reduce the value of your estate by anywhere from 2-7% depending on the specifics of your situation. There is a fee that must be paid to the court itself, and the personal representative of the estate is going to have to retain a probate lawyer, who will of course charge a fee. In fact, the personal representative is entitled to a fee as well, and he or she may have to bring in an accountant to assist with tax matters and an appraiser of assets as well as an estate liquidation company. All of this adds up.

Aside from the expense involved in the probate process, it is also time consuming. Depending on the size and scope of your estate and whether or not any aspect of the will is contested, it can take anywhere from six months to multiple years for the process of probate to run its course.

As you can see, there are some significant pitfalls that go along with the probate process, and this is why so many people are interested in doing whatever may be possible to avoid it.

Due to provisions contained the Economic Growth and Tax Relief Reconciliation Act of 2001, the estate tax was repealed for 2010. However, the estate tax is scheduled to return to its pre-2001 existence on January 1, 2011. For this reason it really has not had much impact on long term estate planning unless you were somehow certain that you were going to pass away in 2010.

The thing about the return of the estate tax in 2011 that is quite relevant is the fact that the exclusion amount will return to $1 million. It was $3.5 million when we last had to contend with the levy in 2009, so many estates that were previously protected are now going to be vulnerable to the estate tax. If you are in this position, or if the value of your estate has always exceeded the exclusion amount, a useful strategy that can be implemented to gain tax efficiency is that of gift giving.

The idea is that if you give gifts to your heirs while you are still alive you reduce the value of your estate to the point where it comes in under the $1 million exclusion amount. Of course, there is a gift tax to discourage this, but there are significant exemptions. The lifetime gift tax exclusion is $1 million, so you can give gifts at any time and in any increments throughout your life free of the gift tax as long as the value of these gifts does not exceed $1 million.
However, in addition to this lifetime exclusion, each taxpayer is entitled to give as much as $13,000 annually to an unlimited number of recipients, and these gifts don't count against your lifetime gift tax exclusion. You may also make unlimited educational and medical gifts, paying the tuition or medical expenses of as many people as you would like to equaling any sum of money free of the gift tax.

Contact our office today to schedule a complimentary consultation on how tax free gifts may reduce your estate's exposure to future estate taxes.

The estate tax is repealed for 2010, but when it was last in effect back in 2009, the exclusion was $3.5 million. The exclusion stood at $2 million from 2006 through 2008. In 2011 the estate tax exclusion is going to be just $1 million, so a lot of estates that had been under the exclusion for years are now going to be exposed to the estate tax.
Home ownership has long been the foundational wealth building vehicle in the United Estates, and many of the people who are now going to be exposed to the estate tax would say that the worth of their homes is what is causing the overall value of their estates to exceed the $1 million estate tax exclusion. For these individuals, an instrument known as a qualified personal residence trust, or QPRT, may provide the solution.
To implement this estate planning strategy you place your home into a special trust trust and you name your children, or whoever it is that you want to leave the property to, as the beneficiaries. When you are drawing up the trust agreement you state a term during which you will continue to live in the house rent free. Upon transfer to the trust, the value of the home is removed from your estate and your children will assume ownership of the property after the term expires, at which time you would begin paying rent to live in the home.
The funding of the trust with the house is subject to the gift tax, but the IRS does not use the fair market value of the home at that time to calculate its taxable value. They reduce the value of the home by the interest that you are retaining while you are still living in it rent free after you placed it in the trust. Assuming the value of your home appreciates at a reasonable rate moving forward (say, 3%), this techniques can provide a fair amount of gift and estate tax planning leverage.
Feel free to contact our office if you would like a consultation on how a QPRT may benefit you.

In this modern era it is not uncommon for women to accumulate significant assets of their own during their lifetime, and when they pass away they’ll want to leave those assets to their loved ones. In addition to the fact that women are accumulating more of their own assets, on average a woman’s life expectancy will be longer than a man’s. When you combine this with the fact that women usually marry men that are older, there is a good chance they will inherit assets, too.
Some additional considerations when it comes to women include that they often need to plan carefully for retirement, as well as disability. Many women will have less money with which to retire than men. For this reason a carefully structured estate plan is a necessity so that the assets that are available will stretch as far as possible. A woman’s spouse may want to think about leaving the estate to his wife through a trust so that if the woman should become disabled later in life, a guardianship of the estate can be avoided.
Though the estate plan has always been something with which women should be concerned, today it is even more important with more and more women dying and leaving behind significant assets.
A trust or will can ensure that your assets pass to those you want to have them, but proper distribution of assets is far from the only reason to have an estate plan. You should also include a Living Will, Medical Power of Attorney and a HIPAA release in your estate plan. If you should ever be in a position where you cannot make your own medical decisions, these documents are vital.
Another important document is a Durable Property or Financial Power of Attorney. With this document you will name someone to handle your estate matters if you are ill or in a position to where you cannot take care of these matters on your own. An example of why such a Durable Power of Attorney could be important would include if you were hospitalized and unable to pay your bills or access your funds, the agent you have appointed in your Power of Attorney could take care of these things for you.
Men and women both need an estate plan, and due to the fact that laws can be so complex it is important that you consult an experienced estate planning attorney to help you setup a solid plan that will protect you, as well as your loved ones.