Happy Winter Solstice, 2012

Dear Reader,

Today I pause and wish you a happy Winter Solstice.  December 21st marks the longest night, and shortest day of the year.  Starting tomorrow we will begin the journey towards summer, with ever increasing daylight and shortened evenings.

Today also marks the day my husband proposed, asking me to marry him on the Summer Solstice.  It is a warm and tender day in my heart, and marks the beginning of a break from my legal work.  I will be back on January 2nd with more thoughts on illness, death and taxes for the middle class.

And now I am off to enjoy winter bonfires, slow cooked family dinners, warm beverages, nature walks with my kids, and gatherings with friends and family.

I appreciate your interest in my posts, and wish you a relaxing and joyous end to 2012.

Best wishes,
Melinda

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FTC Charity Checklist

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Regular readers of my blog will know that charitable giving is a strong interest of mine.  In the coming year watch for my book on how the middle class can be philanthropic, leaving a legacy without having millions.  In the meantime, I offer these tips, borrowed from the Federal Trade Commission, as you consider making charitable contributions.  Crooks do not take the holidays off, so make sure you are making informed donations.

• Ask who wants your money and how it will be used;
• Be careful of similarly sounding names of organizations;
• Do not send cash donations; and
• Use caution if promised gifts are being offered.

See the FTC's complete charity checklist here.

He's Making a List, Checking It Twice....

As the winter holidays approach we are bombarded with songs and cheer.  And if you are an estate planning attorney some of those lyrics may jump out at you.  Take Santa Claus Is Coming To Town:

You better watch out
You better not cry
Better not pout
I'm telling you why
Santa Claus is coming to town
He's making a list
And checking it twice; 

Checking it twice....that is what catches my ear!  I cannot believe how many times I see a look of surprise come over someone's face when the learn the true name of who is listed on a beneficiary form.  A relative has died.  The family knows a life insurance or retirement account exists.  They assume the listed beneficiary is so-and-so.  But it turns out to be.....an ex-spouse.  This happened last week.  Thankfully the ex-spouse is the parent of those who thought they were inheriting.  And they were able to say "yes" when I asked "are you on good terms with your other parent?"

If you have beneficiary forms, when was the last time you checked to make sure they say what you think they say.  Clean them up now, while you can.  Life is short, and you may be leaving a pleasant or unpleasant surprise for the loved ones you leave behind.

Thanks for reading, and remember - a blog is not a lawyer.  Please consult with an attorney in your State for advice specific to your situation.

Myth Buster -- Powers of Attorney Aren't In Charge When you Die

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During the frequent seminars I give on this ins and outs of estate planning and probate, one common myth bust is that of a power of attorney having the ability to "take care of things" after someone dies.

Again and again clients and seminar attendees will say something to the effect of "so, I named my daughter as my power of attorney for finance.  So when I die, she'll handle things.  Right?"  To which I say, "no that is not right.  Remember, a power of attorney gives someone the power to makes decisions while you are alive but too sick to act.  Once you die, that power ends.  Upon death, the person nominated in a will or trust then has the power to administer an estate.  Those can be the same people, but it is up to you to nominate them in your papers."

As an attorney I find that a very high percentage of my work relates to education.  Many times I am translating legal terms into everyday English, and other times I am slaying those cultural myths that hover around the topic of estate planning and probate.

Thanks for reading, and remember, a blog is not an attorney. Please seek counsel from an attorney in your State for advice.

Sluggish EIN Process at IRS

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Until today I have always had positive things to say about my interaction with the Internal Revenue Service from my role as an estate planning attorney.  Unfortunately, its reputation with me was tarnished a bit today when I attempted to kick start a probate and trust administration for a recently deceased client.

The client had nearly all of his assets in a trust, of which a child will serve as trustee.  Now that the grantor has passed, the trust needs an EIN number.  However, the decedent also had numerous savings bonds outside of the trust, which requires us to open a probate and an estate of checking account.  And for that checking account, we need an EIN.

So on-line I went.  I had tried to do this Sunday when I was working at home, but the IRS apparently gives its computers that day off.  No EIN applications allowed on Sunday!  So first thing Monday morning I go on to the web site.  All is going well.  Number for the probate is issued.  I hit print, hear the print whirl and move on to getting one for the trust.  And that is when I hit brick wall number one, and then brick wall number two.

First, the EIN printed but so small it was not legible.  I tried backing up on the system. No use.  So I called the IRS and after a rather long wait was put through to an agent.  As a third party requester I cannot get the EIN, it has to be mailed to the responsible party.  Estimated mail time....2 weeks.

Second wall, a responsible party can request one EIN a day.  That means I have to wait until Tuesday to request the EIN for the trust.  This time I'll know to write the number down before printing.  But the process is delayed one day because of this limitation, new as of May of this year.

And so I start my week with a bit of annoyance from the IRS.  It could be worse I know, but I understand a bit more clearly why some regard the agency as a bureaucratic nightmare.

A Very Sad Day... Reading How to Talk With Children About Violence

December 14th has been a happy day in my life since 1984, the day my oldest nephew was born.  Sadly that joy is clouded today by the horrific news from Connecticut.  My mind had been mulling what to post, prior to hearing this news.  Once heard I forgot about my legal work and focused on my day with my children.  Ages 4 and 2, they are the focal point of my world.  Off we went to the zoo for fresh air, animal friends, and living in the moment.  Once home I saw a post on Facebook that I wanted to share with my readers.  It offers tips on how to speak with children about violence.  Sadly this is required reading for parents these days.

And the discourse about gun control will likely dominate and polarize our society once again.  My wish is that along with it, we hear for a call for increased access to mental health services in our nation.  Behind this unimaginable act was a very sick person, I write that not knowing anything about the shooter, but I have confidence that we will learn about an individual with mental health needs.

My heart and thoughts go to the parents in Connecticut who sent their children off to school this morning, but were not greeted with hugs and stories at days end.  And now I will log off and return to being with my two, very precious children.

The Downside to Avoiding Probate

Probate, it is something so many people strive to avoid.  Whether it is dumping everything into a trust or placing beneficiary forms on all of their assets, some people become very diligent about making sure nothing passes through the probate court.

The downside....one still dies with debts.  And how will those be paid if there is no probate.  A properly drafted and funded trust would take care of this issue, but a do-it-yourself patch work quilt approach may leave gaps.  As it did for the family in my office today.

The recently deceased parent title property jointly with children.  The various life insurance policies had beneficiary forms.  But probate will likely occur to create a neat and clean manner to sell vehicles, pay funeral bills, medical bills, cell phone, bills.

In the end, organization saves more time and money than whether something is probate or not.  We just scratched the surface on the number of phone calls we have to make to track down all of the parents' assets.  This is going to take time, and cost money.

So, if you want to save your children hassle upon your death, organize and leave clear notes.  It will pay off in the end.

Remember, a blog is not an attorney.  Please consult a lawyer in your state for advice specific to your situation.

Aspirin the Wonder Drug?

The order of phone calls sadly seems to go from oncologist to patient, and then patient to me.  Why?  A terminal cancer diagnosis has been given, and the patient realizes that the will they have been thinking about on and off for years really needs to happen.  And happen soon.

As a result I spend a good deal of time working with cancer patients.  And when our meetings are over and the work complete, their stories bounce around in my mind.  Because of my work and their disease I may think about cancer more than your average 39 year old mother of two small children.  Thankfully my thoughts generally fall into the category of "what can I do to prevent this from happening to me anytime soon?"

Lovers of the book The Tao of Pooh by Benjamin Hoff, as I am, know that really there may be very little one can do.  Sometimes life simply happens.  But there are certainly some small steps one can take to decreases the chances of an oncologist visit.  And it appears daily aspirin may offer hope.

This morning I read a piece from the NY Times, without noting the authors name.  For the most part I was nodding my head in agreement; not so much for the call for government regulation of activities, but yes to the idea of spreading the word that the 2,000 year old drug aspirin appears to offset everything from heart disease to cancer.  When I got to the end I saw the writer's name and instantly remembered his book on my bookshelf.  Dr. David B. Agus' book The End of Illness was profiled in an alumni magazine of mine, and I read it earlier this year.  Readers of this blog will remember my review.

According to this op-ed piece, daily aspirin was shown to reduce the risk of lung, colon, and prostate cancer by 46 percent.  Possibly a surprising fact; most people have some awareness of aspirins role in preventing heart attacks, but the cancer link is new.

For those of you wondering why don't cardiac patients don't make up more of my clientele?  They do, on the probate side -- I serve them after they have died.  Cancer is often something one has time to plan for.  Heart attacks remain the number one killer of women in America, but often happen out of the blue, taking with them any chance for planning and organization.

And now I am off to get a bowl of oatmeal and then a short walk before launching into the rest of my day.  If you have a favorite way to promote healthy living in your life, please share.  And thanks for reading.

Easing the Burden When You Are Gone

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Creating an estate plan is a step that less than half of adult Americans have taken.  It is estimated that around 55% of Americans do not have a will.  However, even if you are in the minority of people who have created an estate plan, there are always more things you can do to make your departure less difficult for loved ones left behind.   For example:

• organize your papers in one central folder or binder that is clearly marked Estate Planning Documents;
• inform your personal representative / executor / trustee about the location of said binder;
• include copies of all beneficiary forms for your life insurance, retirement accounts, brokerage accounts, and other financial service instruments;
• provide contact information for those you would like notified of your passing.  I for example include an up-to-date holiday card address list so people could receive a letter or copy of an obituary;
• list on-line assets, such auto debit for your mortgage;
• include names and contact information for your tax accountant and the location of your latest tax return; and
• list phone numbers for guardians of children, pets, or trustees of testamentary trusts.

Having a will in place is a great step towards easing the pain of your passing, but adding a few little items like this can make a huge difference in the time and effort put forth by the person you leave in charge.

Thanks for reading, and remember that a blog is not an attorney.  Please consult a lawyer in your state for advice specific to your situation.

Is A Reverse Mortgage A Good Thing?

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Due to my line of work -- illness,death and taxes for the middle class -- I often am posed the question is a reverse mortgage a good thing for me?  And of course being an attorney, my answer is it depends. Nothing of quality in the world of estate planning and probate is a one-size fits all program.   It might be a good idea, and it might not.  More information is needed before reaching a conclusion.

If you are wondering if a reverse mortgage is right for you, or for your aging parents, the first step is to gather information and learn exactly what a reverse mortgage is.  Second, you need to apply that information to your specific situation and goals.

A great place to get started is the Consumer Financial Protection Bureau's web site.  I learned about it in the financial column in Sunday's paper.  It is full of great basic definitions on all things financial, including reverse mortgages.  It then provides links to "important questions to ask" and a consumer guide.

Do not, I repeat, do not rely on the person selling you a financial service to provide this information.  Get it from a neutral third-party.  You need information from an entity that will not profit off the sale of this device.  During the housing boom around 2006 I could not believe how many people I heard say "my realtor" or "my banker" said this was a good idea.  Yes, and so would the sales person at the Mercedes dealership trying to sell you a car -- hey, you look great in the red one! They are in sales, they make money be convincing you to part with yours, whether that is a good or a bad idea.

Once you understand what the financial instrument is as well as its advantages and disadvantages, you can then layer it over your situation.  For example, a reverse mortgage works for people 62 and older.  If a couple is married and one is 63 and the other 60, this is probably not a wise option.  Even if the older party took out the reverse mortgage in his/her name only, if s/he dies it is payable immediately.  Not a good thing for the younger spouse.

Proceed slowly, gather information, listen to your gut, and recognize when you are talking with someone who will profit for a sale of an item.  From what I've read, it appears that reverse mortgages work well in limited situations.  And as a naturally frugal person, I would be turned off by the fees, interest, etc.  If it were me asking this question about my own situation, I would examine other options to a reverse mortgage, the easiest being selling the home and putting my assets in liquid form.  But that is just me, I like things simple because it is often less expensive that way.

Please remember that a blog is not legal advice.  Please consult an attorney in your state for advice specific to your situation.  Thanks for reading, and have a great week!

A Tough Parenting Question: Who To Name as Guardian?

The news this week has been energized by baby talk, Royal baby talk.  There is the speculation of whether her intense morning sickness is a sign of twins, to whether king or queen to be will arrive in 2013, to maternity fashion.  But me being me wondered, hmmmm, who would they name as a guardian to the child -- Harry, Pippa, someone else?

Yes, as an estate planning and probate attorney as well as the mother of young children (currently 4.5 and 2.5 years old), I know the importance of answering that tough parenting question -- who will raise the child(ren) if both parents die?  Whenever I voice these types of questions to my husband he gives me a puzzled look and says, have you considered a new area of law, something happier?  To which I respond, there is none -- lawyers come into the picture when life happens, the unpleasant aspects of life happening.

And so I find myself writing to you dear reader.  If you have children 18 and younger, have you nominated a guardian?  If so, did you do so legally?  In Wisconsin it must be done via a will, no other means allows you to control the nomination process.  Most likely you have not, mainly because you and your partner cannot come to agreement on this role.  If that is the case, consider the following:
· 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 (if age appropriate)?

No, these are not pleasant questions. But the last thing a child(ren) needs, in my opinion, is a dispute over who will raise them if both parents just died in a car crash.  Agree with me?  Then answer these questions, and do the adult thing and create a will.  Whether you are the Duke and Duchess of Cambridge or ordinary American parents, it is a question you really should answer.

Might one of these members of the Royal Family be a guardian for the Royal baby?

Remember, a blog is not a lawyer.  Always seek advice from an attorney licensed in your state.  Thanks for reading, and I'll be back next week with more thoughts on illness, death and taxes for the middle class.

Where Should I Keep My Will?

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When working with clients we have a series of three meetings, all covered by a flat-fee.  That means they can pay attention to what I am saying and not worry about my billable hour and the hands on the clock.  It also means they can asks questions, lots of questions, and one that always comes up at the last meeting (the day they sign) is -- where should I keep my will?

My response is to direct them to my letter in their folder, suggesting a fire-proof safe kept in the home.  You know, those small ones you can get at an office supply store for about $45.  Some clients are a bit surprised, why not my safe deposit box at the bank?

The answer is simple.  The document that gives someone the power to get into the box is in the box.  And there you have it - a huge mess.  In my opinion, keep your document safe but accessible.  And that is where the home box comes in to play.

If that is not a comfortable or viable option, put it on file at your county courthouse. Here in Wisconsin a person can file a will, in a sealed envelope, for safekeeping.  The fee is $10.   I blogged about it earlier in the year. This may or may not be an option where you live, but it is worth exploring.

Thanks for reading, and remember a blog is not legal advice.  Please consult an attorney licensed in your state for advice specific to your situation.

Pets, Wills and 5 Things to Know

M. Gustafson Gervasi, 2012, one of our 4-legged family members, Willa.

Without a doubt, four-legged family members are dear to peoples' hearts.  Whether you have a Fiddo the Dog, Fluffy the Cat, or Birdie the Bird, keep the following in mind when preparing a will.

1. Pets that have a high value, let's say over $1,000, should be mentioned in a will because they are technically property.  If you have pure-breed animals worth their weight in gold, they are an asset and should be addressed as so;
2. Pet trusts, created in a will, are useful for animals with a long life span (i.e. turtles, parrots) or large medical bills.  A trust allows you to place the animal(s) and a sum of money in a trust to care for the animal(s), and then distribute any remaining assets upon the animal(s) passing;
3. Use a letter of instruction to provide the name of the veterinarian you use as well as information on special food or medicine for your pet.  This does not belong in your will, but needs to be available immediately should something happen to you;
4. A primary reason animals end up in shelters is due to a sudden death or nursing home stay.  Life happens, what will happen to your pet(s).  Give it some thought now, and save a lot of grief down the road.  Put your wishes in the letter of instruction; and
5. Make sure someone can get into your home to provide food, water, medicine, etc. should you  have a sudden illness or death. Houseplants can survive a few weeks, but not your beloved animal(s).

Thanks for reading, and remember a blog is not an attorney.  Please seek legal advice from a lawyer in your State.

President Obama Offers Estate Tax Proposal -- Return to 2009 Levels

Last week President Obama offered his first go at the federal estate tax, which is tangled up in the whole fiscal cliff scenario playing out in Washington, D.C.  According to news reports, his proposal is to have the federal exemption return to 2009 levels; $3.5 million, with a 45 percent tax.  What does that mean?  Anyone dying with an estate over $3.5 million would have a federal estate tax due, in the amount of 45 percent on the amount above $3.5 million.

If no agreement is met, the federal exemption will fall to $1 million, and I'd have to look up the tax rate.  With no doubt, it would capture a lot more estates than the $3.5 million or the current $5 million.

As December ticks away my eyes will be on D.C., waiting and wondering what resolution, if any, will emerge.  And then I can offer a bit more concrete guidance for my clients.

Thanks for reading, and remember,  a blog is not a lawyer nor does it constitute legal advice.  Please consult with an attorney in your state.

Inaugural #GivingTuesday a Success!

Reports are in, and it appears that the inaugural #GivingTuesday was a success.  On-line giving to charities on the Tuesday after Thanksgiving was up 53% according to sources.  I love this idea.  It completes a trifecta of holiday spending: Black Friday, Cyber Monday and now #GivingTuesday.  Personally, I am happy to skip the first two options and reserve my spending for charities.  No trips to the mall, nothing to wrap, supporting causes that are in need.  What better way to celebrate the winter holiday season?

The former policy analyst in me wonders -- did people concentrate their giving on that one day?  If so, are donations to charities this holiday season up overall, or did they all fall on that one day?  Time will tell.  And the estate planning attorney in me sees this and thinks -- good, those donations were made early enough in the calendar year to appropriately qualify for a 2012 tax deduction (IRS sees them as a donation in the year they clear, not are pledged).

I'll be watching the news and wondering how America's non-profits will far this holiday season.  Thanks for reading, and check in tomorrow for my latest thoughts on illness, death and taxes for the middle class.