Wednesday, December 31, 2008
And, if you have an idea of a seminar or your organization is looking for a speaker on estate planning, please let me know.
Happy New Year!
Friday, December 26, 2008
- First, the annual gift exclusion will increase from $12,000 to $13,000 per person per year. This means that an individual can give any one person a gift without triggering the gift tax if it is $13,000 or less in 2009. Of course, there are always exceptions to the rules. Ask a tax accountant or lawyer for advice on your specific situation.
- Second, the applicable exclusion amount will increase from $2 million to $3.5 million per estate. This means that if a person dies and his or her estate's net worth (assets minus liabilities) is BELOW the exemtion no FEDERAL estate tax is owed. It is essential that surviving family and friends seek counsel a probate attorney to determine if the tax is owed; often times families will overlook assets that should be included in the calculation, such as life insurance proceeds.
Tuesday, December 23, 2008
As I've blogged about before, if you have specific burial wishes it is recommended that you coordinate with friends and loved ones now. In Wisconsin you can complete an Authorization For Final Disposition form where you nominate someone to be in charge of your funeral and you can leave specific instructions.
My complete review of the book can be read in The Wisconsin Lawyer, a magazine published by the State Bar of Wisconsin.
Monday, December 22, 2008
Friday, December 19, 2008
As always, it is best to consult your tax or legal counsel before taking any action. This post is not intended to serve as legal advice, it is a commentary on news related to estate planning.
Tuesday, December 16, 2008
Sunday, December 14, 2008
What, if any, implications this may have for people with existing powers of attorney is unknown. I'll post updates as the legislation advances.
Tuesday, December 9, 2008
And it might be wise to take a look at the American Bar Association's web site, which has some nice tax tips to keep in mind. And as the site points out, it is also advisable to contact your tax professional when you have questions or are unclear on IRS rules.
Monday, December 1, 2008
Tuesday, November 25, 2008
Have a happy, healthy and safe holiday.
Monday, November 24, 2008
Friday, November 21, 2008
Wednesday, November 19, 2008
Friday, November 7, 2008
- complete a POD (pay on death) card for a checking or savings account, payable to the person making your arrangements;
- list the person making your arrangements on your life insurance;
- work with a funeral home that agrees to bill your estate;
- pre-pay for a funeral.
Tuesday, October 28, 2008
through the Valley of the Shadow by the Reverend Forrest Church offers readers a meditation on the end of life. As a member of Madison’s First Unitarian Society, this story caught my attention because Rev. Church is Minister of Public Theology for the Unitarian Church of All Souls in New York City. A link to the radio broadcast is available off of NPR’s web site.
Thursday, October 23, 2008
Tuesday, October 14, 2008
First, if they already have a will or a trust ownership of the home will transfer according to the terms of the will or trust. In both cases the client’s wills gave the property to the children.
Second, adding a child to a home’s deed equates to giving the child(ren) a gift. If the gift is worth $12,000 or more, then the parent will be responsible for a gift tax.
Third, in Wisconsin a transfer fee would be owed to the Department of Revenue at the time the child(ren) was added to the deed.
And forth, gifting property transfers the parent’s cost basis to the child. If the property were inherited by the child the child would receive a step-up in cost basis, most likely minimizing future capital gains taxes the child would own if the property were sold after they took ownership.
After considering these points, neither client opted to add their child to the deed to their home. Curious as to why this question was coming up (after the will had already been done), both indicated that the idea had been posed to them by a title company. My guess is that in the slowing real estate market some companies are looking to drum up business. And if they are trying to push you into something, they are likely selling something you don’t need. As always, seek counsel from a neutral party before taking action.
Sunday, October 5, 2008
Also, following a divorce it would be wise to update your powers of attorney for health care and or finance to reflect who should be making decisions if you are unable to.
Monday, September 22, 2008
Safe-deposit box: While safe from destruction (by a fire) or tampering, safe-deposit boxes do generate a yearly fee (generally $35 or more). Also, the will is not readily available for quick changes. Most banks should allow a family member to access the box to search for a will, however, this may not always go as smoothly as planned.
Register in Probate: Wisconsin law allows a person to deposit a will with the register in probate in the county where he or she lives. Depending on county practice, there may be a service charge for the service. Drawbacks to this method are that the will is not readily available for changes, and the person may forget to take the will with them if he or she moves in the future.
Fiduciary’s safe: A trust company serving or nominated to serve under the will may offer its safe for storage. However, many people do not have a fiduciary entity named in the will, so this is not a common option.
Home Safe or Strongbox: Far more affordable and easy to access, home safes and strongboxes are a good option for most people. However, they do not guarantee safety from fire or tampering.
Retention by attorney: While a common practice in the past, the State Bar of Wisconsin does not promote drafting attorneys keeping client documents in the firm safe. Safe keeping by the attorney creates the impression that the attorney is seeking to preserve future representation for either updating the will or conducting the probate.
Wednesday, September 10, 2008
One question that has come up several times in the past few months is – do we have to keep paying the rent for someone who has passed away? The answer is yes. Under Wisconsin law, the lease remains in effect even though the tenant has died. If rent is not paid, the landlord can seek payment through the probate practice.
If you are presented with this situation because you are helping taking care of a loved one’s final affairs, keep in mind the following:
- Contact the landlord about the death immediately;
- Request a copy of the lease;
- Begin coordinating emptying and cleaning the premises;
- Discuss ways to find a new tenant for the unit, hopefully ending the lease.
Monday, September 1, 2008
If you already have a will in place but wish to make changes, it is possible to amend or change the will without having to draft an entirely new document. A codicil is a basically a supplement to an existing will. It states that the underlying will should remain intact except for certain changes.
If the proposed changes are complex or involve removing beneficiaries, a codicil may not be appropriate and a new will should be drafted. A codicil is useful in the following circumstances:
- Updating the name of a beneficiary, personal representative, guardian, and or trustee;
- Changing the person named as the personal representative, guardian, and or trustee;
- Adding a beneficiary; or
- Making other minor changes within the document.
Since a codicil is a supplement to an existing will, it must be executed in the same manner as the will. This means changes should not be scribbled on the will, but rather drafted, signed, dated, and witnessed in the same fashion as the will.
Monday, August 25, 2008
Once a child turns 18 he or she can vote, marry, or sign up for the army – and they also become a legal stranger in many ways. No longer may you as the parent be able to access their grades at school, and in some states, you will not be able to make health care and or financial decisions for them without a court order.
As you help your child pack and prepare for college, you should also take some time to learn about the requirements for powers of attorney in the state where your child will be a student. And encourage your child to take the time to complete some basic paperwork nominating who in the family should take charge if an unlikely accident or illness occurs.
Friday, August 15, 2008
One family profiled ended up with the daughter going to court, fighting for several years to prove her mother’s incapacity and seeking guardianship over her mother’s finances. While eventually granted, the older women lost approximately $1 million of her life savings due to risky investments. The article emphasizes that brokers, unlike financial advisors, are not held to a suitability standard when working with clients.
Never knowing when dementia may or may not strike (one person profiled had early onset Alzheimer’s disease at age 48), it may be wise for people to complete powers of attorney for finance. These forms allow for a loved one or trusted advisor to take over financial responsibility if the person becomes incapacitated. While incapacitation needs to be proved, the process is more efficient than a court room fight for guardianship. Since a power of attorney needs to be completed by a competent individual, it is best to take action while you are healthy….don’t wait until red flags begin to emerge.
Monday, August 11, 2008
Technically, the tax is assessed on an estate upon death if the estate’s value exceeds a certain threshold. As a result, the estate will pay the tax, reducing the amount your heirs inherit. However, not every estate pays the tax. If your estate is below a certain amount, it is considered “exempt”, and no tax is owed. In 2001 Congress passed a law causing the exemption amount to change over time: in 2003 the exemption amount was $1 million, it increased to $1.5 million in 2004 and 2005, and increased again in 2006 through 2008 to $2 million, in 2009 it will be $3.5 million, then in 2010 there will be no tax, and in 2011 the exemption limit will return at $1 million.
The value of your estate is essentially all of your assets minus your liabilities. However, you must remember to include the value of life insurance you owned as a liability. For many young families, carrying significant life insurance can raise the need to plan for estate taxes. If you find yourself in the area where possible estate taxes may apply, it is wise to speak with an estate planning attorney about tax planning strategies, including: A-B spousal trusts, gifting, and charitable giving.
Friday, August 1, 2008
In Wisconsin, a person can complete a “living will” otherwise called a “declaration to physician” indicating his or her preferences about feeding tubes and other means of artificially prolonging life. Without such a document, the stage is set for disagreement and court fights.
Estate planning is about making sure your wishes are followed. By completing a “living will”, you can assume control of the situation, speaking through paperwork even when you are not able to verbally communicate. As this story, and too many others illustrate, no one is ever too young to ignore this important issue. Take control, and let your wishes be known.
Tuesday, July 29, 2008
Pay-on-Death (POD) or Transfer-on-Death (TOD) cards are types of a beneficiary forms, that when complete, make an asset non-probate. A POD is usually associated with banking accounts (savings, checking, money market), and a TOD generally accompanies a brokerage account. Upon the account holder’s death the asset will pass immediately to the person(s) listed on the card, avoiding probate. Advantages of PODs and TODs include an immediate transfer, whereas probate may take 12 to 18 months or longer. Also, by avoiding a probate transfer, the recipient is not responsible for the probate fee.
Two points of caution. First, a POD or TOD card may not provide ample room for contingent beneficiaries. And second, it is wise to have some assets remain under probate because money will be needed to pay final bills, taxes, and administrative fees. Funds left in your probate estate will be accessible by your personal representative to close out final expenses; otherwise your estate may be insolvent.
As always, it is wise to consult with an attorney or other trusted advisor prior to making estate planning decisions – including PODs and TODs.
Monday, July 28, 2008
Probate is one of those words that tends to strike a cord of fear in people, however, that does not have to be the case. Through some basic knowledge, the mystery and fear surround the probate process can fall aside, leaving people feeling knowledgeable and empowered.
Blacks Law Dictionary defines probate as the legal process by which the estate of a decedent is administered; generally it involves collecting assets, paying liabilities and taxes, and distributing the remaining property to the heirs. Key points to keep in mind when facing probate are:
- A will facilitates probate by telling the court how you want your assets and affairs handled upon your death – a will does not avoid probate;
- Probate applies only to your “probate property” – which is anything you own that does not have a clear designation on it about who should receive it upon your death. Common examples may include your savings account, home, and or car.
- Probate does not apply to your “non-probate” property – which is anything you own that does have a clear designation on it about who should receive it upon your death – called the beneficiary form or pay on death form or transfer on death form. Common examples include your life insurance and retirement accounts. These assets are passed according to the form, not your will.
- A fee is assessed by the probate court. In Wisconsin the fee is 0.02 percent of the value of your probate property. Other states fees vary greatly.
- The person in charge of ushering a decedent’s property through probate is called the Personal Representative.
While probate may take time, and requires a lot of attention to detail and paperwork, it is not unmanageable. And, if you feel it is beyond your comfort level or requires too much of your time, as a persoanl representative you can always hire an attorney to assist you in the process. Generally those fees would be paid with the decedent’s assets, not your own.
Monday, July 21, 2008
Recently I wrote a review of the book for the Wisconsin Lawyer Magazine. Aimed at the collector instead of the estate planning attorney, the book discusses many issues, including heirs removing items before probate is finished, benefits of donating pieces to a museum, and the importance of appraisal.
As a collector, you obviously have a passion for a certain genre. Through a little planning and effort, you can make sure that passion lives on beyond you.
Thursday, July 17, 2008
Wednesday, July 16, 2008
One, purchase a three-ring binder and subject dividers. Mark the dividers “will”, “powers of attorney”, “instructions”, “beneficiary forms”, “important people to contact”, etc. Behind each tab place the appropriate documentation.
Two, if you put your will in a safe deposit box make sure you have a copy in your personal papers (that three-ring binder) that is clearly marked “COPY”, and indicates where the original is kept.
Three, make a list of all the bills you pay on-line. Should something happen to you, your personal representative likely will not have access to your email account, making it harder to track down those accounts, close them, and pay them off.
Four, make a list of your financial holdings. Include institution name, type of account, and a contact number. As your assets change over time make sure you update this list. Again, keep this in the binder listed above or in another obvious spot.
Five, tell people where they can find your documents. They do not need to know what they say, just where they can find them if something unexpected happens.
These simple steps can dramatically assist your friends and loved ones during what would be a very difficult time.
Monday, July 14, 2008
Saturday, July 20, 2008, Madison, Wisconsin will recognize Gay Pride Day. The agenda includes an address from Congresswomen Tammy Baldwin, followed by a picnic at Brittingham Park. Whether you yourself are in a same-sex relationship, or have a loved one who is, I encourage you learn more about how estate planning can enhance the relationship.
Since same-sex couple commitments are not legally recognized in the State of Wisconsin, partners live without basic rights and responsibilities. However, by taking action, you can bestow those rights and responsibilities on your partner. For example, you can name him or her as:
- Your power of attorney for health care (include a HIPPA waiver);
- Your power of attorney for finance;
- Your personal representative or trustee;
- Recipient of probate assets; and
- As beneficiary on your non-probate assets (life insurance, retirement, etc.).
Tuesday, July 8, 2008
Monday, July 7, 2008
Monday, June 30, 2008
Yahoo Finance featured a story today about the importance of reviewing and updating your beneficiary forms following a divorce – you would not want to unintentionally leave an ex-spouse, or ex-partner, named as a beneficiary! Regardless of what your will says the beneficiary form controls property held in retirement accounts and life insurance policies.
Upon divorce, one would hope that the attorney handling the case would either work with you to update your will or refer you to an attorney who specializes in estate planning. Competent attorneys should alert the client about the need to review and update beneficiary forms at the same time a will is created or updated.
And remember, not just your divorce could impact your estate plan. Have the people you named as guardian for your minor children gone through a divorce or is the marriage experiencing stress, creating a less than ideal home for your child to move to if needed? If so, then amending your will to select another person or family would be a good idea.
Sunday, June 29, 2008
Have you thought about who should have your wedding band, family photo albums, your grandfather's hunting rifle? People often overlook the importance of family momentos, which can mean a lot to younger generations as well as cause disagreements after a loved one is gone. There is also the question of who should have certain responsibilities, such as the personal representative (a.k.a. executor) or guardian of your minor children. Is a family member the right choice? If so, which one? Again, who you select for these roles is important, and can ignite family tensions.
Delving into the emotional side of estate planning is not an easy task, which probably lies at the heart of why so many people avoid it. There is a wonderful book written for the general population that walks a person through the emotional aspects of doing a will.
I routinely recommend Creating the Good Will: The Most Comprehensive Guide to Both the Financial and Emotional Sides of Passing on Your Legacy to clients and seminar attendees.
Thursday, June 26, 2008
Despite being around since 12th Century England, trusts are still very much talked about subjects. Yet, despite their popularity, trusts are not necessarily for everyone. Trust creation is not an easy undertaking. So why are trusts still so popular? A reason I commonly hear from seminar participants and clients is that it helps avoid estate taxes. However, that is not true – most trusts do not help you avoid estate taxes!
The following are key advantages of trusts:
-Avoid probate. A properly funded trust is a non-probate asset, meaning that property held in the trust does not fall under the jurisdiction of the probate court. This means that the assets can be transferred upon death to the beneficiaries, avoiding probate. This saves time and probate fees. When deciding if a trust is for you, always compare what it would cost to transfer your assets through probate versus the cost of creating and funding a trust. Probate is sometimes less expensive.
-Keep matters private. Matters filed with the probate court are public record, open to inspection. Trusts however, are private transactions.
-Control. A trust allows the grantor to write instructions on the use of funds – often limiting them for health, education, and maintenance. Also the role of trustee allows the grantor to assure that the management and spending of the trust is overseen by someone other than the beneficiaries, who often are too young or inexperienced to manage the assets.
Trusts can be time consuming and expensive, but they can also accomplish significant goals. Certain circumstances call for a trust, either Living (created and funded during life) or Testamentary (created upon death via instructions in a will). Those include people who:
-own property in multiple states,
-own substantial real estate,
-would like assets controlled if both parents die; and
-those who have family members with special needs.
If you feel a trust is right for you, seek advice from legal counsel who can advise based on your specific life situation.
Wednesday, June 25, 2008
Form DPH 0086, Authorization for Disposition, is available on the Department’s web site. The document allows an individual to express special directions concerning religious observances and, making suggestions about arrangements for viewing, memorial services, graveside service, or other last rite rituals.
In a time of increased interest in all things green, and frugal, this law is a wonderful addition to Wisconsin statutes. A person can now secure his or her desire to be burried, or have other funeral wishes followed, in an easy and affordable manner.
Thursday, April 3, 2008
Some types of planned gifts reduce the size of your taxable estate or generate a charitable deduction if made during your lifetime. Beyond possible tax breaks, a planned gift is a way to leave a legacy by supporting and nurturing a cause that you value. There are numerous tools by which a planned gift can be made. Before taking any action, it is advisable for you to consult with your attorney, tax advisor, and/or accountant. Here are a few of the most common instruments:
A Bequest in a Will -- Allows you to name a charitable organization or cause in your will. Please note that it is possible to amend an existing will to include a charitable organization. Here are three examples of possible bequests:
· I leave $1,000 to Charity X.
· I leave 10% of the residue of my estate to Charity Y.
· I leave any automobile I own at the time of my death to Charity Z.
Life Insurance Policy -- You could name a charitable organization as either a primary, secondary, or final beneficiary of a current policy. Or, you could purchase a new policy naming a charity as the beneficiary.
Charitable Remainder Trusts – Allows you to transfer ownership of property you have to the trust. You can be a beneficiary now, and upon your death the remaining balance is paid to the charitable organization. These are commonly used by people who have held mutual funds, stocks, or real estate for a long period of time because of tax planning advantages.
Charitable Gift Annuity – Is a contract between you and a charitable organization. You agree to make a gift to the charity and in return, the charity agrees to make income payments to you for the rest of your life or a set period of time.
Beneficiary of a Retirement Plan – Gives you the option of listing a charitable organization as a beneficiary, either primary, secondary, or tertiary. For example, you may wish to leave 10% to Charity Y.
Many of us have a non-profit, educational institution, or religious community that is dear to our hearts. With a little thought and planning, you have the potential to leave a gift, promoting that organization even after you are gone. Ask yourself, “Can I amend my will to leave ten percent of your assets to your college? Would the library like to receive your books for its book sale fundraisers? Is there a family member whom you would like to create a scholarship in memory of?” Whatever it may be, you’ll discover that planned giving is for everyone, and that it is a gift that keeps on giving.
Saturday, March 22, 2008
A guardian is the person who would be the substitute parent if both you and the other parent die before the child reaches age 18. If you do not nominate a guardian, then the potential exists for various family and friends to seek guardianship over your child, a costly financial and emotional process decided by a judge.
Thinking of someone who will step into your shoes is almost an unbearable thought; many of my clients tear-up when discussing the issue with me. I find that it helps to have some concrete questions to answer:
· Who has a close bond with your child;
· Who is in good health to raise your child;
· Who shares your family’s values in terms of religion and education;
· Who could realistically take on the financial responsibility of raising your child;
· Who lives in an area where you would want your child raised; and
· Who does your child want to live with?
Before nominating a guardian in your will, first you should ask them if they would like to serve as a guardian. Second, I advise all of my clients to leave a letter to the guardian expressing his or her wishes for the child’s upbringing. For example, how much should be spent on holiday and birthday gifts.
Completing or updating your will is the only way to nominate a guardian in Wisconsin. To do this you can either work with an attorney or complete a basic Wisconsin will on your own; forms are available from the Wisconsin Law Library.