Book Review: Guide to Wills and Estates

This week I've read The American Bar Association's Guide to Wills and Estates: Everything you need to know about wills, estates, trusts, and taxes. (3rd edition).

After reading the book I was not certain if it was meant to be a "do-it-yourself" book or simply an educational read. Sadly, it does neither particularly well. For example, it launches into a discussion of non-probate property before giving the reader a sound explanation of what non-probate property it. Overall I felt the presentation of material was disjointed and far to encompassing. Some chapters, such as Estate Planning for Business Owners, could be book in itself.

The book does offer some great web sources on page 10 as well as a check-list at the end. I also enjoyed the hypothetical situations, designed to urge the reader to take action. Lawyers are trained to foresee the worse case scenario, and the authors really out did themselves.

Overall, it is a mildly useful read if you want to gather information on estate planning. It is not a solid resource for do-it-yourselfers. And it is in now way a substitute for quality legal advice.

Living Wills: A Parody and a Necessity

Recently I came across a 2005 New Yorker parody piece "Living Will" by Paul Rudnick. A great dose of humor to an otherwise difficult and sad topic. What is a living will? In Wisconsin they are also called a Declaration to Physician, which I feel is a much clearer title. Essentially it is a document that tells your medical team what you want to happen if you are in an "end of life" state. Without it your loved ones are left to guess, and those guesses may or may not be followed. Take care, put your wishes on paper, and it is a true gift to your loved ones.

If you still find it a hard topic to address, read Rudnick's piece, and then dive into yours. I personally love number 1 and 12.

Remember, a blog post is no substitute for an attorney. Please seek advice from a licensed attorney in your home state.

States With Transfer on Death Deeds

Transfer on death deeds are a great alternative to living revocable trusts in that they allow you to leave real estate outside of probate. One draw back is that you must name specific people, not a class, and there is no contingency planning. Either way, they are worth a closer examination if they are an option in your state. According to Nolo.com, the following currently offer Transfer on Death Deeds:

• Arizona;
• Arkansas;
• Colorado;
• Indiana;
• Kansas;
• Minnesota;
• Missouri;
• Montana;
• Nevada;
• New Mexico;
• Ohio;
• Oklahoma; and
• Wisconsin

Remember, blog post is not legal advice. Please consult with an attorney licensed in your state for advice specific to your situation.

Free Estate Planning Seminar, Sun Prairie, Wisconsin

Looking for some free information on issues related to estate planning and probate? If so, you are welcome to attend a free seminar, open to the public, which will cover wills, trusts, and other important documents. I will be giving the presentation, and details are on the web site for Gustafson Law Office.

Thursday, December 1st

6pm -8pm

Hosted by WWBIC at the Sun Prairie Public Library

Get a head start on your new years resolution to get your affairs in order!

Happy Thanksgiving

I am taking the day off from law and blogging to enjoy the holiday with my family. I am sharing a favorite photo, one I took a few years ago. As we prepare to say good-bye to Fall and hello to Winter, may be pause and give thanks.

Book Review: Alive and Kicking

Today I am posting a review that I wrote for the Wisconsin Lawyer Magazine in December 2008 of the book Alive and Kicking: Legal Advice for Boomers by Kenney F. Hegland and Robert B. Fleming. Enjoy.

Short, concise chapters on a wide variety of issues, Alive and Kicking is a useful book for any lawyer who works with today’s Boomers. Chapters address issues ranging from estate planning to identity theft to Social Security as well as divorce and remarriage. Written for the Boomer, as opposed to attorneys, the book offers straightforward insight into the issues faced as people age.

The primary strength of the book is its ability to serve as a quick and handy reference guide to the common issues older clients might raise in the course of representation. While it is not wise to practice outside of your given emphasis, estate planning for example, no lawyer wants to answer a client’s inquiry with “I have no idea”. Alive and Kicking can serve as a quick reference to address a client’s question while you develop a more detailed referral if needed.

As with many books related to these timely topics, the book is limited in that each State may have a different procedure – the book is not Wisconsin specific. Moreover, the book will be dated because it does not take into account increasing levels and limits. For example, when addressing the exempt gifts for the gift tax it references $10,000 when the current limit is $12,000 [note the current limit in 2011 in $13,000].

However, those limitations come with most print media these days, and I would recommend the book to anyone whose practice involves serving the Boomer population. At just over 250 pages, it is a quick and often humorous read. One piece of new information I gained was related to the 1983 Congressional action to prohibit federally assisted housing, designated for the elderly or disabled, from discriminating against owners of cats, dogs, and fish.

Scattering of Ashes in Wisconsin

As an estate planning and probate attorney in Wisconsin, I am a member of a list serve for fellow attorneys across the state. The other day I saw a rather amusing response to a post about the logistics of scattering ashes in Wisconsin:

"I learned the hard way how NOT to scatter ashes....into the wind." -anonymous.

The response was amusing, but it is a question that pops up all the time. Can I scatter ashes at x,y,z? According to the book, Final Rights: Reclaiming the American Way of Death by Slocum and Carlson, there are no specific laws restricting the scattering or depositing of ashes in Wisconsin beyond the fact that if it is on a cemetery's grounds, you need cemetery approval.

I assume this would extend to other organizations that may have concerns for being a final resting spot. If there was a question on Family Feud about the top 5 locations for scattering location in Wisconsin I would wager a bet number one would be Lambeau Field. What is your guess?

Remember, a blog post is not a legal opinion. Please seek advice from your attorney, in your state, for your situation. Blogs are no substitute for legal representation.

Pet Trusts in the News

I do a lot of seminars, and towards the end I always mention a few reasons to have a trust:

1. if you have minor children;
2. if you need to do tax planning;
3. if you have adult children who are not good with money; and
4. if you have pets.

Yes, pets raise the question of creating a trust. Sure most family pets do not need a trust. But some do. When might this be an option? If you have a caregiver in mind that would have a hard time financially taking care of a pet, especially one that is older or has extensive medical needs. But there are also animal companions that simply have a long life span. Parrots for example. Or a tortoise.

A trust allows you to create a legal entity, either during life or at your death, that will hold both the animal(s) and funds you set aside, appoint a caretaker as well as a trustee to manage the funds. Regulations vary from state-to-state, so be certain to consult with an attorney for exact laws on pet trusts.

Curious about planning for your 4 legged or winged loved ones? Here is a great article from the Chicago Tribune.

Thanks to my good friend, Larua D. of Fitchburg, Wis. for bringing this article to my attention.

Rising Costs of Long-Term Care

The 2011 Met Life Survey of Long-Term costs reveals......surprise, surprise, costs have increased in the past year. According to the survey:

• the national average daily rate for a private room in a nursing home was $239 in 2011;
• the national average monthly rate for assisted living care was $3,477 in 2011; and
• the national average hourly rate for an in-home health aide was $21 in 2011.

As the baby boomers continue to age and the average life expectancy of Americans goes higher, long-term care will become an issue for more and more families. Whether it is the person needing the care or the family member who gives or coordinates care, this issue will grow and grow. As a result, people are increasingly turning to long-term care insurance. Before doing so, educate yourself. If you live in Wisconsin, I recommend reading materials created by the Office of the Commissioner of Insurance. Not all policies are created equally.

Remember, a blog is not an attorney. I encourage all readers to seek legal and or tax advice from a licensed professional in his or her state.

Tangible Personal Property -- What's Included

As I counsel personal representatives in the completion of an inventory form for an informal probate, they often ask "what is included in personal tangible property?" Beyond the obvious items of clothing, furnishings, appliances, etc., I point them to the IRS Instruction for Form 8939 for guidance. According to the IRS,

Tangible personal property includes, but is not limited to: works of art, jewelry, furs, silverware, books, statuary, vases, oriental rugs, and coin or stamp collection.

Should a federal estate tax form be required, it will be important to obtain the date of acquisition of the item as well as fair market value (FMV) at the date of death.

Thanks to R. Chistian Davis, Vice President, Private Client Group, US Bank, Madison, Wisconsin, for discussing this information at the 45th Annual CLEW Tax Workshop, presented by the University of Wisconsin Law School.

Remember, a blog is for discussion, and is not a substitute for legal or tax advice. Please consult your attorney and or tax person for advice specific to your situation.

Book Review: Nolo's 8 Ways To Avoid Probate

Nolo's 2010 edition of its book 8 Ways To Avoid Probate is an excellent illustration of why a book is a not a good substitute for legal advice. At first glance it appears to be very user friendly with interesting chapters. I especially liked the fact it included a chapter on small estates avoiding probate.

However, in more than one chapter the book mentions leaving funds to minor children via UTMA (Uniform Transfer to Minors Act). There was no discussion of testamentary trusts. The options were to leave it a child with the child's parent as custodian (under UTMA) or a living trust. Overlooking testamentary trusts is a huge gap in legal options. I prefer testamentary trusts because they allow a parent to establish a trust fund, created only when both parents are gone, for children until the youngest reaches an age they set. It is commonly higher than age 21 associated with UTMAs.

Another short coming of the book is it does not guide the reader through a cost benefit analysis of whether the costs of a trust (establishment and on-going costs) would exceed the costs of probate. Here in Wisconsin the probate fee is 0.2 percent of the net probate assets. That means you multiply assets minus liabilities by 0.002 and get the fee owed to the court. Compare that to a living trust, and it may be less.

Nolo has created some very useful books, this one however is not in my top 10.

Death Certificates, Privacy, and Wisconsin

One of the first things to do when a loved one dies is to request copies of the death certificate. This is usually done by the funeral home, but if you are doing things on your own, you can make the request to the Wisconsin Department of Health Services. Death certificates will commonly be requested for:

• filing a claim for life insurance;
• transferring non-probate assets (IRAs, 401ks, etc.);
• closing cell phone and other utilities; and
• closing social media accounts.

Keep in mind that each entity will likely want an issued certificate for its file. You'll need to order more than one.

On a personal note, I find it troubling that the death certificate calls out the specific cause of a person's death. It strikes me as odd that in our current culture of privacy and data sophistication that these causes are not coded. Why does the cashier and US Cellular need to know the cause of death? There are some things loved ones might wish to keep private.

Remember, a blog is not a legal opinion. Please seek advice from an attorney in your state, specific to your situation.

Common Myths: Parents and Selecting a Child's Guardian

When I tell people that I am an estate planning attorney they often, wrongly, assume that my entire clientele consists of baby boomers or members of the "greatest generation". In fact, half of my clientele are parents with minor children -- and that is a good thing because they are one population where a will is imperative. Why? A will is the only way to legally declare a guardian for minor children. With Boomers or octogenarians, not having a will is not a huge crisis if their wishes do not deviate from statutorily prescribed distributions of estate. But with parents, there is no assumption about who will raise minor children.

Last month I read a nice article addressing why more parents of minor children do not take action. The author cites 4 myths:

1. There is a perfect match. I'd call this analysis paralysis....you search and search, but take no action;
2. Someone will step up;
3. A letter or email is sufficient;
4. You don't need to ask the guardian before making the nomination.

Thanks to Prof. Gerry Breyer for posting this article on his blog.

If you have children, take charge now. The last thing your child(ren) need is to loose both parents and then have a dispute over who will raise them.

Remember, a blog is not a substitute for an attorney. Please seek legal advice from an attorney licensed in your home state.

IRA Charitable Rollover

Under current law, the IRA charitable rollover exception is slated to end on January 21, 2012. Under the law a person aged 70 1/2 may make distributions of up to $100,000 from an IRA directly to a charitable organization and NOT have it count as a distribution of income.

I learned at the 45th Annual CLEW Tax workshop that on March 10, 2011, Senator Charles Schumer (D-NY) introduced the Public Good IRA Rollover Act of 2011 (Senate Bill 557 or H.R. 2502). Under the proposal the income tax exemption would become permanent, apply to people 59 1/2 years of age (instead of 70 1/2), remove the $100,000 cap, and allow rollovers to donor-advised funds, supporting organizations, and private foundations.

Currently the legislation is stuck in committee and is not moving forward. Please check back in the future for updates.

What Types of Transfers Are NOT Subject to the Federal Gift Tax?

As the temperatures drop and the calendar pushes towards the end year, the giving season is near. Remember, the person who makes a gift may be subject to a gift tax unless it is below the annual exclusion amount (currently $13,000/person/year in 2011) or its is not subject to the tax. Here are three types of transfers (a.k.a gifts) that are not subject to the federal gift tax:

1. Transfers to political organizations, as defined under Section 527(3)(1);
2. Transfers to qualifying educational organizations in the form of tuition for education or training. Not included are transfers for books, supplies, room / board, or deposits into 529 college savings plans; and
3. Transfers for medical treatment so long as that treatment would qualify as a deduction for income tax purposes.

Thanks to R. Chistian Davis, Vice President, Private Client Group, US Bank, Madison, Wisconsin, for discussing this information at the 45th Annual CLEW Tax Workshop, presented by the University of Wisconsin Law School.

Remember, a blog is for discussion, and is not a substitute for legal or tax advice. Please consult your attorney and or tax person for advice specific to your situation.

Book Review: How to Be A Perfect Stranger

This past September we learned that one of my mother's neighbors had lost his battle with cancer. Attending the funeral was important to my mom and me because this man had been our neighbor since my parents had moved into the home in 1975. However, we had one challenge. He was Jewish and we had never taken part in a Jewish funeral. Not wanting to offend anyone I reached out to the ministers at my church, The First Unitarian Society of Madison. To my delight Rev. Karen Gustafson (no relation) recommended the book How to Be A Perfect Stranger: The Essential Religious Etiquette Handbook by Matlins and Magida. What a resource it is; one that merits a spot on my bookshelf.

Organized into 29 chapters (by religion), it contains information related to:

• history and beliefs;
• the basic service;
• holy days and festivals;
• life cycle events (birth, initiation, marriage, funerals); and
• home celebrations.

No matter your profession, this is an excellent resource to be an informed and caring community member. It will not be a purchase you regret.

There is No Such Thing as a Simple Trust

Trusts -- many people think they are a must. Why? To avoid probate, to keep things simple. Ahhh, what people don't know can hurt them. There is no such thing as a simple trust. Oh sure, the language used to construct the structure of a trust can be simple.

Husband and wife create a living revocable trust, fund it, husband dies and it becomes irrevocable on when the first spouse dies, requiring distributions to survivor.

This is common language associated with the so called simple trust. However, things become much more complicated when the administration of a trust is reviewed. Here is a true story I heard while attending the 45th Annual CLEW Tax workshop.

Same scenario as listed above, however, the surviving spouse never took the annual distribution out of the trust....over 20 years. Upon the second spouse's death serious tax issues emerged. The unclaimed income created income tax issues (it was never reported), and leaving it in the trust was viewed as contributing to the principal of an irrevocable trust. Plus, probate was required to received the 20 years of distributions out of the trust that were never taken.

Folks, this is why there is no such thing as a simple trust. They serve a purpose, but should not be embraced lightly. Seek legal and tax help upon creation as well as each year after to make sure appropriate administration is followed. The IRS is not known to be forgiving.

Is It Time To Update Your Estate Planning Documents?

Is it time to update your estate planning documents? My personal recommendation is that powers of attorneys be updated every 5 to 7 years. Wills and trusts should last generations, however small amendments may be need to reflect relationship changes (marriages, births, deaths, conflicts between parties, and acquisition of new property). Don’t put off changes until it is too late.

Top Earning Dead Celebrities

According to Forbes, in the past 12 months the following were the top 5 top earning dead celebrities:

1. Michael Jackson, $170 million;
2. Elvis Presley, $55 million;
3. Marilyn Monroe, $27 million;
4. Charles Schulz, $25 million; and
5. John Lennon, $12 million.

The entire list goes out to the top 15. Read more here. In some cases, dead celebrities earn more after death than they did during life. The boon for Michael Jackson's estate has been attributed to a partnership with Cirque Du Soliel, which has launched Michael Jackson: The Immortal World Tour.

The 2010 Tax Relief Act

At the end of 2010 Congress and the President passed and signed into law the 2010 Tax Relief Act. The law brought many changes to America's tax code, including the federal estate tax. Specifically, the federal exemption level was changed.

The federal exemption level is that amount at which a decedent's estate is subject to filing a federal estate tax return and possibly paying a federal tax. In 2010 there was no federal estate tax. However, until the 2010 Tax Relief Act was signed, the federal estate tax would have returned January 1, 2011, at a level of $1 million. Under this new law the exemption level was raised, to $5 million with an upper tax rate of 35%.

One limitation of the 2010 Tax Relief Act is that it pertains to the years 2011 and 2012; it is set to expire 12-31-12 unless Congress takes action. If the law expires, the federal exemption will be $1 million, with a top tax rate of 55%.

Thanks to R. Chistian Davis, Vice President, Private Client Group, US Bank, Madison, Wisconsin, for discussing this information at the 45th Annual CLEW Tax Workshop, presented by the University of Wisconsin Law School.

Remember, a blog is for discussion, and is not a substitute for legal or tax advice. Please consult your attorney and or tax person for advice specific to your situation.

Book Recommendation: Final Rights: Reclaiming the American Way of Death

Do you have questions about whether scattering cremains is allowed in Wisconsin? Are you wondering what about pre-paid funerals in Nebraska? Or regulation of casket sales in Oklahoma? The answers can all be found in a wonderful book I recently discovered, Final Rights: Reclaiming the American Way of Death by Joshua Slocum and Lisa Carlson.

The first half of the book addresses consumer rights issues ranging from green burials to embalming to caskets. The second half of the book answers common questions and concerns related to burial in all 50 states.

Easy to use, intriguing information, and internet resources make this a very usable resource. The current cover price is $19.95 -- I'm certain an afternoon reading this book will allow you to save costs on a funeral far beyond the initial expense.

November 1st - Day of the Dead

It is November 1st, and in large parts of Latin America that means it is the Day of the Dead. A major holiday used to honor departed loved ones, it is becoming more common in the US as immigrants bring this 3,000 tradition to the United States. Traditions vary from wearing masks and dancing to visiting grave sites to playing the deceased's favorite music or eating their favorite food. What a lovely way share the loves of those gone with those that have just arrived.

My father left us in the fall of 2009. My son was only 13 months old and my daughter was just a twinkle in my eye, not arriving until late summer of 2010. The Day of the Dead is a lovely way, even though we are not Latino, to share with them the loves of their Grandfather. Dinner tonight will feature one of his favorites - Swedish Meatballs.

How might you honor your departed loved ones?