West Virginia Recognizes Pet Trusts

West Virginia is the most recent state to recognize pet trusts. Going against legal tradition, pet trusts which do not benefit a human, can be given credibility when states adopt legislation as West Virginia has done; HB 2551, effective July 1, 2011.

Inheritance for Homeless Man in Utah

This news story has the makings of a Hollywood production. Man dies, names brother in his will, said brother has lost connection with the family, and is living on the streets, homeless. An investigator finds him, off a tip, in a public park. The homeless man is homeless no longer. An uplifting story is a pleasure to read, but this has an important lesson for those updating or creating an estate plan. Do the best you can to provide a location or contact method for the beneficiaries named in our will.

When drafting for clients, I have the document state the beneficiaries name and relation. For example, to Jane Smith, my sister. I then advise clients to leave a letter of instruction to the Personal Representative. On this letter one can list Jane's address, phone, email, etc. This letter if far easier to update than a will; no lawyer needed.

What To Mention On Your Tangible Personal Property List

Most wills refer to a "list of tangible personal property"; which allows a person to keep a listing of personal items he or she would like his or her personal representative to distribute upon death. The list can be updated as needed, without an attorney. In essence, it is the legal equivalent to putting a post-it note on items.

So what should you include? Here are some of my thoughts:

• photographs;
• family heirlooms;
• collectibles;
• jewelry;
• artwork;
• furniture;
• books;
• musical equipment;
• equipment for hobbies; and
• anything else that you can pick up and carry that you would like someone specific to have or someone has specifically requested.

This form allows you to take control, and also allows the personal representative to carry out your wishes rather than being perceived as "taking charge".

What other items come to mind for this type of list?

Estate Planning Seminars

Please visit Gustafson Law Office's web site for a list of upcoming seminars in late summer and into fall.

If you are in need of a speaker for your office, organization, or agency, I would be happy to put together a seminar.

Signing Estate Planning Documents

It was late on a Wednesday afternoon. My client, her daughter, son-in-law, two bank employees serving as witnesses, and myself all gathered around a desk. Pen in hand, the 90 year old women who had hired me to update her estate plan applied ink to paper. The room was quite except for the swish of flipping pages. As she signed the last line she sat back, and said with a chuckle, "I feel like I'm going off to jail". The room erupted into laughter -- no one had offered that comment before. But it certainly captured the importance of the signing meeting.

I never let my clients sign their papers without me. Most people are concerned with the wording in documents, which is of course important. But most don't give a second thought to whether the papers are signed properly. And from what I've read, most documents fail not because of poor wording, but because they were not signed properly.

So, if you are are doing your own estate planning documents, make sure that the signing complies with the laws or your state.

Marital Property, A Home, And Death in Wisconsin

When I work with married clients on developing an estate plan, I always make them pull a copy of the deed to their home and other real property (i.e. land) that they own. Why? In Wisconsin, if both names are on the deed and one party dies the other can file an HT-110 form with the register of deeds and have it transferred to their name, outside of probate. This saves costs and happens much faster. The filing fee is small, currently $30.

As always, this blog is for sharing information and is not legal advice. Please consult with your attorney before taking any action on an estate plan.

Summer Solstice 2011

"Summer's lease hath all to short a date." - William Shakespear

Enjoy the summer solstice everyone! I am enjoying some summer fun with my family today, celebrating 5 year of marriage, and taking a break from blogging about illness, death and taxes.

Quatable: Pericles and the Dalai Lama

"What you leave behind is not what is engraved in stone mountains, but what is woven into the lives of others." - Pericles

and

"Share your knowledge. It is a way to achieve immortality." -- Dalai Lama

These are two quotes from a book I am reading on ethical wills - stay tuned for an upcoming book review.

The Decline of the Estate Planning Attorney?

I found this recent article in Forbes Magazine to be puzzling; estate planning attorneys see a drop in business. Only after I read the article did I realize that it was addressing a sub-set of estate planning attorneys -- those that deal with high net worth clients. It almost ignores the fact that the every day person needs and benefits from an estate plan. Sure, they may not generate as many fees. But serving the average American can be a rewarding career -- I write from experience.

Portability And Traditional Estate Plans

Last December Congress passed a new law related to the federal estate tax. Not only did it raise the federal exemption to $5 million per person, it created something known as portability. Now, a surviving spouse may use his or her deceased spouse's exemption even if no planning had been in place (i.e. an AB Trust, Disclaimer Trust, or Bypass Trust). So, does this change negate the need to take traditional estate planning steps? The speaker in a recent seminar says no, and I agree. Why?

1. portability is only in place through 2012;
2. it does not address States that have estate taxes; and
3. second marriages can throw a wrench into the situation.

An AB, Bypass or disclaimer trust could address all of these issues. As the speaker said, portability is the worst case scenario fix if no planning was done -- it should not be "plan A". For details on your specific situation, you should consult with a licensed, estate planning attorney in your state.

Limbo: The Time Between Your Last Breath And The Court Nominating A Personal Representative

The moment you die, the powers established in your power of attorney die with you. Instantly, with your last breath, they are gone. No authority is re-established until a probate is opened. This means either a will is filed or an intestate probate is open (meaning you died without a will). In either case, the court will issue a letter appointing a personal representative. Best case scenario, this will take 2-3 weeks. What happens in the interim? Usually a funeral or burial. But, the question arises - who is in charge? Of course there are state statutes to turn to, but the moment a person dies, things happen quickly. I write from experience.

My father entered the hospital in mid-August, 2009. By Labor Day weekend the medical team was urging us to transfer him to palliative care; nothing they could do would change the outcome. He was not leaving the hospital. It was a Friday evening when the move was made; we were told to expect him to live another 36-48 hours. My dad had other plans, he held on for 7 days, taking his final breath at 10pm the following Friday night. His last hospital stay lasted a month and felt like a year. But within 1 hour of his death, I was being asked "which funeral home are you using?" The speed surprised me, but then again, this was a bustling hospital, space was needed, it was time to move on.

As an estate planning and probate attorney I had encouraged both of my parents to complete a free form created by the Wisconsin Department of Health Services; Authorization for Final Disposition. It is a simple fill in the blank form, whereby you can appoint a first and second person to handle burial arrangements. There is space for noting cremation or burial, religious or non-religious, location, timing, funding, etc. But, no matter how many letters I had after my last name, my father still hesitated to take my advice. He never completed the form.

My older, half-brother, who had been estranged from the family for 10 years suddenly showed up that last week. The re-connection was nice, but tenuous. All of a sudden dad dies, and here is his "little sister" taking charge, cremating dad. My brother was not aware that in my dad's final 2 years he had decided that cremation and burial in a plot in the town my mother was from was ideal; she would be buried there as well. It was simple, and preserved more funds for my mom. He'd given up on the large Catholic funeral he'd always talked about....but just had not told my brother. Thankfully things smoothed out and all is well now. But having completed that form I could have simply shown my brother our father's wishes, and it would have likely been easier for him to accept.

A glimpse into my how my personal and professional lives merged during my father's last illness; from it goes useful, practical advice, or so I hope. Make your wishes known, take control, fill out the forms.

Include A Letter of Last Instruction

All of my clients receive a sample letter of "last instruction" when they complete an estate plan. This letter is a key element of an estate plan, and is drafted (usually) without the assistance of an attorney. When writing your letter, imagine yourself speaking to your personal representative, telling him or her the little tidbits they need to know in order to finalize your estate. Examples include:

• what bills you receive on-line;
• what bills are set up for auto-payment;
• who is willing to take in your pet as well as information about your pet (veterinarian, special diet or meds, etc.);
• the name and phone number for professional services (accountant, attorney, yard maintenance, etc.);
• who should be contacted about your passing (relatives, friends, co-workers, church members, classmates, etc.). I keep a list of my holiday card mailing list with my papers, with instructions for the PR to mail an order of service to those who were not able to attend.

To read more about letters of last instruction, review this article.

You Don't Have To Be A Millionaire To Make A Difference

Recently I read an article in the Wisconsin State Journal about a local women who started a math scholarship at McFarland High School; the fund will support young women who excel in math. Sue Kosmo started the fund with $10,000; based on an stock investment she made as a teen (bought stock in Pepsi). After hearing about the story, Pepsi kicked in an additional $10,000.

These are not the numbers one usually sees with stories about charitable giving. Not hundreds of millions, but an amount most people can wrap their mind around. An amount within range of many more people.

Are there any non-profits out there who can share similar stories? Small bequests (under$50,000) that made a difference? If so, please contact me....I'm working on a book about how everyone can be a philanthropist!

Family Asserts Lomardi's Grave Never Abandoned

Over the weekend I saw a small news report announcing that the family of legendary football coach Vince Lomardi claims his grave was never abandoned, as reported last week in national media (and noted on this blog). In a letter to the Green Bay Gazette, the family stated that the grave (located in New Jersey) was being tended by the Knights of Columbus.

While the Lomardi family has an iconic name, they too struggle with the issues of many families. The perpetual care for family members graves. Normally a task handled by the cemetery, but when family is spread across the globe it is difficult to know that it is really being tended.

Nursing Home and Assisted Living Costs Rise

Out to dinner last night a group of friends started talking about the reality of college costs. The women who initially mentioned the costs has a son starting high school in the fall. When she discovered the current cost of college, all of a sudden four years until college did not seem like enough time to prepare. Reading the current cost of nursing home and assisted living care makes me think of the baby boomers....how many of them know what a year in a nursing facility or assisted living will cost? Here are the numbers, reported by Geneworth's Cost of Care Survey survey:

• $77,745 (in 2010) per year for nursing home care;
• $39,135 (in 2010) per year for assisted living care; and
• $49,777 (in 2010) median annual income for a household Americans (not defined by age range -- I wonder what it would be if you looked at those or at retirement).

Green Burials in Maryland

If you live in the Maryland area, here is an interesting option if you want a "green burial" -- have your ashes made into a "reef ball". They provide a fish habitat in the Chesapeake Bay.

I used to live in Maryland and loved the community; great connection to the water. I wonder if one day this will be an option for other bodies of water -- Lake Mendota in Madison, Wisconsin perhaps?

IRS Makes Corrections to Federal Gift Tax Form (Form 709)

If you printed out instructions for Federal tax form 709 (gift taxes), you may want to review the new form and make sure no errors were made. This article does a nice job of summarizing the changes; apparently charts contained information that could have cause erroneous calculations.

HR 1259 (2011-12). 112th Congress

Once again Washington, D.C. is tossing around the idea of repealing the federal estate tax. The latest news story I've seen of this effort came out last week. Rep. Diane Black (R-Tennessee) is co-sponsoring HR 1259.

HR 1259 would permanently repeal the Federal Estate Tax and Generation Skipping Tax. It also would maintain the current “step-up” treatment of capital gains, an issue of concern to many farmers.

It will be interesting to see if a bi-partisan effort will result in long-term decisions regarding the estate tax. The current law ends December 31, 2012; under the law the federal estate tax exemption level would return to $1 million on January 1, 2013.

No mater where you fall on whether to have an estate tax, operating without knowledge of future levels makes planning difficult for most clients.

Don't Have A Will? The State of Wisconsin Has Drafted One For You

When I do a seminar on estate planning, I always make a point of asking participants to raise their hand if they do NOT have a will. Usually half the room puts their hand in the air. At which time I say "guess what, you actually do have a will. If you have not taken the time to draft one, the State of Wisconsin [assuming you are a resident of Wisconsin] has done one for you. And, most likely you could make better decisions they the State".

So, what happens if you live and die in Wisconsin without a will? First, it is called intestate. Second, upon your death, state statutes will control the distribution of your probate property. I've put a link to Wisconsin's intestate succession chart on my pratice's web site.

What does this mean? If you are not legally married and have no children or grandchildren and you die? If your parent(s) survives you, they will inherit your probate estate. If not them, then equally between the next layer of relative. This means that any partner you may have would not receive a thing of probate property.

Estate planning isn't fun, but it is about taking control.

Lombardi Grave Site

I came across this article and was shocked that the grave site of such a famous coach, Vince Lomardi, was 1) neglected in the past, and 2) being tended by a Jets fan.

Gifts of Real Estate and the Tax Man

A routine element of my seminars on estate planning is a discussion of tax issues. Most people have heard of, and fear, the estate tax (a tax owed by an estate if the decedent's net worth exceeded the federal exemption, currently $5 million). However, most have not heard of or do not give much thought to the gift tax (owed by the gift maker if a gift exceeds $13,000/per/year). I always say that is a huge mistake. As I say, "the IRS is not forgiving".

From a Wisconsin paper:

The Internal Revenue Service has a low-profile but sweeping effort under way to use state land-transfer records for evidence of omissions in reporting gifts of real estate to family members.

States that have handed over information on gift-like transactions are Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin, according to the document. Ms. Bonaffini examined a sampling of data from these states and it showed "an extremely high failure-to-report rate," the document said.

One cause of unreported taxes may simply be lack of knowledge. People go and add children's names to property, thinking they are doing a good thing by trying to avoid probate, and have NO idea that they've just made a taxable gift. Sadly, they are about to get a letter from the IRS. It is far less expensive to hire a lawyer for advice BEFORE taking action than hiring one to clean up a mess.