Earth Day and The Gentle Art of Swedish Death Cleaning

Earth Day and The Gentle Art of Swedish Death Cleaning

By Melinda Gustafson Gervasi

April 22, 2024

Regular readers of my blog and recipients of my office newsletter (click here to check out past editions) know of my interest in The Gentle Art of Swedish Death Cleaning.  Fueled in part by nearly twenty years as an estate planning and probate attorney with its visibility to how hard it is to clear out a deceased loved one's possessions as well as my general interest in all things Swedish (I attribute that to my Nordic genetics), today's post melds purging our possessions with taking care of Mother Earth. In honor of Earth Day, here are three suggestions for those looking to prune back possessions:

1. Donate an item to a museum, historical society, or local theatre production company.  My great-grandfather's wedding suit was donated to the Swedish American Museum in Chicago.  There it aids research and can be used in displays.  
2. Turn it into art!  Recently my 13 year old daughter called out to me, "Mama, why do we have a framed needlepoint above the mantle that is in Swedish?"  It's been hanging since she was about 3 years old, but only recently did she realize it was unique.  I explained that it had been created by her great, great-grandmother.  I found it crumpled in the back of the linen closet at my parents' house when I was preparing the property to be sold after both of them had died.  It was lovely, and once matted and framed, makes for a highly sentimental piece of art for our home;
3. Give it away to someone who will love it!  I did that with an old wall clock that also belonged to my Swedish grandparents.  After sitting in my basement for years, not wanted by any of my other relatives, I posted it for free on my neighborhood web site.  A neighbor and friend was thrilled to give it new life. She had grown up with a father who repaired clocks, and lovingly accepted it into her home.  I smile thinking that it was enjoyed, cared for, and not destined for the landfill.

These are just three ideas on how to purge with a purpose.  What did I miss?  Please leave a comment and share your suggestions on how to care for our Earth and keep our possessions manageable.

Remember a blog is not a lawyer, it is meant to spark thought and reflection.  Please consult with an attorney in your home state for advice specific to your situation.  Thank you for reading, and be well. 

Taxes Due!

Taxes Due!

By Melinda Gustafson Gervasi

April 15, 2024

It's Tax Day; specifically, today is the day your federal and state income tax returns are due along with any payments you owe.  I recognize that not everyone finds the tax code to be as interesting as I do, so I will take this opportunity to highlight two areas in estate planning where an income tax may be due that can be a surprise:

1. People who inherit from a Traditional IRA, 401K or other "qualified plan".  Distributions made from these types of inherited assets are likely subject to income tax by the new owner; and
2. Fees paid to a Personal Representative (also called an Executor in other states) for administering an estate through probate.

The tax code is a massive piece of law that is always changing, so it is best to seek the advice of a CPA in your home state for advice.  But do keep in mind when creating or updating your estate plan, that those you leave assets to and those you give a responsibility may owe an income tax.  Knowing this may cause you to adjust what you given and who you empower.

Image by M. Gustafson Gervasi -- power lines in Panama, a visual representation of the US Tax Code

Remember that a blog is not legal advice; it is meant to spark thought and reflection.  Please consult with an attorney in your home state for advice specific to your situation.  Thank you for reading and be well!

Don't Let the Cart Get Before the Horse in Estate Planning

Don't Let the Cart Get Before the Horse in Estate Planning

By Melinda Gustafson Gervasi

April 8, 2024

The expression "don't let the cart get before the horse" comes to my mind most weeks at the office; clients approach estate planning in the wrong order. All too often a new client will say "I need a trust", usually because someone without a legal degree has told them they need one.  Gently I re-direct the clients to talk about their goals and wishes in estate planning.  Establish the wants first, then figure out which tool to use.  Sometimes it may be a trust, other times it may be a completely different estate planning device, such as a will or a transfer on death deed.

For example:

What is your goal of estate planning?

• To organize my affairs and keep things as simple as possible for my loved ones when I die, OR
• To shelter my assets for my minor children to ensure they have funds to get them to adulthood, OR
• To minimize any tax liability I may have upon my death, OR
• To control my assets after death so that a second spouse can enjoy them until s/he dies and then they pass to my children from my first marriage

Note the use of "or", having one or two goals is manageable and helps you steer the course while creating or updating an estate plan. Too many goals can cause a log jam.  

What financial situations might develop?

• Is there a mortgage on your personal residence or family cabin that needs to be paid off at your death?
• How will funeral expenses be paid?
• What income or property tax liabilities might you have to pay at the end of your life?
• Who will pay the income taxes on qualified retirement plans (your typical IRA for example)?

These are just a few factors to consider when figuring out where and how to leave your assets.

What estate planning tool should you use?

• Wills are instruments that tell a probate court where your assets that do not have a named beneficiary or a co-owner should go at your death;
• Direct transfers, meaning they go directly to the named be person(s) without going through probate include: trusts, co-ownership, named beneficiary, and TOD deeds (among others).

Not all tools are the same -- some are more complex and expensive than others.  Keep in mind that an expensive tool is not always best, it can sometimes be unwieldly and cause more harm than good.

As you think about estate planning, remember not to put the cart before the horse.  Think about your goals, seek counsel from a lawyer in your state that focuses on estate planning and probate, and move towards your goals with the best tool available.

A blog is not a substitute for a lawyer, it is meant to spark thought and reflection and is not leave advice.  Thanks for reading, and be well!

Horse with Cart, image by M. Gustafson Gervasi, Inishmore, Aran Islands, west coast of Ireland

Play Ball! Estate Planning and the Movies

Play Ball! Estate Planning and the Movies

By Melinda Gustafson Gervasi

April 1, 2024

Play Ball!  This All-American cry was heard from coast to coast last week as a new season of major league baseball started.  In a nod to this American past-time, I decided to watch the 1994 movie Little Big League which tells the tale of a 10 year old boy who inherits the Minnesota Twins from his grandfather.  Combine that storyline with today being April Fool's Day, and I am here to share what is likely obvious -- estate planning is not a joking matter. 

Too often Hollywood uses estate planning and probate scenarios to spin an entertaining story. However, too many people believe what they see on the big (and little) screen.  What makes for a good movie is not necessarily how the real world of estate planning works.  In the film the grandfather is portrayed as a very wealth man.  At this death, via video he "supplements" his will with a video message giving his favorite possession, the Minnesota Twins, to his favorite person, his grandson Billy.  A bit of a savant at the sport, Billy fires the unlikable manager and takes on the role himself.  The film is enjoyable, but a few glaring points stuck out to me:

1. Assets left to a minor are normally transferred to a trust, which is a tool to hold an asset until the minor reaches an age where they are mature enough to manage it themselves.  During the time the asset is "inside" the trust, a trustee manages the asset on behalf of the minor;
2. Using a video or recorded message is not likely a sufficient tool to amend a will (amending a will is dictated by state statues, for example it may need to be in writing and witnessed by two people); and
3. The film implied that the grandfather's attorney was a solo practitioner, which is highly unlikely for a high net worth client.  Given the complexity of business holdings and the potential for federal estate taxes, a large firm with a team of lawyers would most likely be advised.

I love stories and am a huge fan of the movies.  I just know not to take what they say about the law as the truth.  When in doubt, seek advice from a licensed attorney in your home state.  Thank you for reading and be well.

Word of the Month: Issue

 Word of the Month: Issue

By Melinda Gustafson Gervasi

March 25, 2024

Conjure up an image of "lawyer" in your mind and chances are high that it will have a word bubble over the image's head that is filled with lengthy yet empty legal jargon.  While the legal profession is characterized as using far too many complex words, our legal education emphasizes concise writing.  For example, the word "issue" is only five letters long, but conveys a detailed concept.

Within the context of estate planning and probate, the word issue means your "children, grandchildren, great-grandchildren, and lineal descendants of more remote degrees, including those who occupy that relation by reason of adoption (as allowed under Wis. Statutes 854.20) and nonmarital children and their lineal descendants (as allowed under Wis. Statues 852.05).  That is a lot to say with just five little letters.

Wills are written to tell the court how to distribute your estate at your death; the intended reader is a judge or court commissioner, not your family or friends.  This is evident when clients of mine are reviewing their draft documents are are confused when they do not see their children or grandchildren listed.  Instead they will see something along the lines of:

If my spouses has predeceased, then to my issue by right of representation.   Which means, if my spouse died before me, then give an equal share to any of my children, grandchildren, etc.  

Keep this simple word in mind as you dive into the world of estate planning and probate and make sense of documents drafted for you by an attorney or those you are doing on your own.

Please remember -- a blog is not a lawyer, but a platform to spark thought and reflection.  Do not take this as legal advice, rather you should hire an attorney in your home state for advice specific to your situation.  Thank you for reading and be well.

Mother/Daughter (hint, the author is the toddler here). 
Myself and my two children were my mother's only living issue at the time of her death in 2014.

The Philanthropist Inside Us All

The Philanthropist Inside Us All

By Melinda Gustafson Gervasi

March 18, 2024

Earlier this year a news headline caught my attention, Reflecting on your legacy could make you more philanthropic, new research finds. Specifically the statement that "...when people are prompted to consider how their lives will impact future generations, they allocate more of their wealth to collective causes like charities and less to family members." This rung true with me based on nearly twenty years of client meetings; here is a standard discussion with clients creating or updating a will:

Question: "When you die, where do you want your assets to go?"

Answer: "To my spouse or partner." stated quickly, with no need to think.

Question: "And if they predecease you, then where?" I ask with a gentle tone.

Answer: "Equally between my children?" Again, offered without much reflection by those clients with children.

Question: "And if you have no surviving children or grandchildren, then where?  Perhaps this seems extreme, but oftentimes families all board a plane to celebrate a significant birthday or anniversary in Hawaii.  What if you had a great time, but the plane did not make it back?"

And then the pause happens....

Answer: "Wow, I've NEVER thought of that scenario".  

It is not uncommon, after taking a few days to reflect on the question, the client returns with a list of nonprofits they value and respect.  This is not always the case, but it happens a good deal of the time. For those interested in reading more about how you can be philanthropic in your estate plan, you may want to check out a small book  I released in 2013 called Middle Class Philanthropist: How Anyone Can Leave a Legacy.

As a reminder, a blog is not legal advice.  It is meant to spark thought and reflection.  Please seek counsel from an attorney licensed in your home state.  Be well and thank you for reading. 

Book Review: The Last Lecture by Randy Pausch

Book Review: The Last Lecture by Randy Pausch

Melinda Gustafson Gevasi

March 11, 2024

Legacy Letters, also known as Ethical Wills, have grown in appeal in recent years.  Not a legally binding document, a Legacy Letter is just that, a letter you write with the intent it be read at the end of your life aimed at focus on your values, insights and life lessons.  Generally they are a few pages long, however, my recent re-reading of Randy Pauch's The Last Lecture reminded me that they can be more in depth.

A 2008 NY Times Bestseller, the book is an expansion on the last lecture Prof. Randy Pausch gave on September 18, 2007 at Carnegie Mellon University.  At the time he knew he was losing his battle with pancreatic cancer, and only had months to live. The father of three very young children, the lecture and subsequent book allowed him to leave a legacy for his children.  As described on the book cover, the book is not about dying, but rather a lesson on overcoming obstacles and going after your dreams. 

Just over 200 pages in length, this book is a wonderful read and may spark inspiration in you to leave a letter or other type of creative work for your loved ones, especially those that may be too young to remember you well. 

Thank you for reading.  If you have a book recommendation related to my area of focus, estate planning and probate, please leave a comment.  Be well!

 

Rain Man: A Lesson in Estate Planning

Rain Man: A Lesson in Estate Planning

By Melinda Gustafson Gervasi

March 4, 2024

It's March and the annual Academy Awards show is just around the corner.  Loving all types of storytelling, I make it a personal goal to watch as many of the nominated films as I can each year.  This year in addition to the nominated films, I revisited the movie Rain Man, which took home eight Oscars at the 1989 awards show, including Best Picture.  The film explores a week in the life of Charlie Babbit (played by Tom Cruise) who has just learned that his estranged father has died.  Charlie returns home to Ohio for the funeral, and to hear what his father's will states.  He is both expectant and annoyed to learn that his father, a wealthy man, has left him a prized car and rose bushes.  The rest of his $3 million estate is directed to a trust with an unnamed beneficiary.  Ever the son with a sense of entitlement and a growing personal finance troubles, Charlie sweet talks an employee at the trust office to learn the location of the mysterious beneficiary.  He quickly learns that he has a much older brother who is autistic, residing in a care facility.  Consistent with his spoiled ways, Charlie whisks his newfound brother, Raymond (played by Dustin Hoffman) away on a road trip to his home in California.  Charlie convinces himself that he can hold his brother as leverage and convince the trustee to "split" the estate between the two brothers.  A week on the road together allows Charlie to grow and mature in ways he never did before, leaving the viewer with a very "Hollywood" ending to a great film.  

When I turned off my TV and let my attorney brain review the message and theme of the film, I found myself thinking about the character never shown on the screen -- Sanford Babbit.  Writing his will, the elder Babbit sensed that his youngest son was not mature and still needed to grow up.  He also likely new his son had an overgrown sense of entitlement.  At age 16 Charlie took his father's prized car for a joy ride, that not only landed him in jail but was the final straw in their relationship.  Once he was out of jail he left home, never to speak to his dad again.  Yet when he wrote his will he left his son two gifts that had little value, and instead directed this large estate into a trust.  As a parent I think it is easy to anticipate Charlie would go looking for the money, and that trouble would quickly follow.

So much of estate planning is seen from the vantage point of the person writing the will, with little to no consideration given to the people left here on Earth navigating grief, expenses, and the distribution of assets. A subtle message from this film may be to give a plenty of thought to what the terms of your estate plan will do to the dynamics of your family, especially if you are leaving children behind.  

Know of another great movie that touches on estate planning and or probate?  Send me a comment and I'll check it out!  Also, remember that a blog is not legal advice.  It is meant to spark thought and discussion only.  Please consult an attorney in your home state for advice specific to your situation.  Thanks for reading, and be well!

Word of the Month: Personal Representative

Word of the Month: Personal Representative

By Melinda Gustafson Gervasi

February 26, 2024

Personal Representative is the term used in Wisconsin to identify the person authorized to administer the estate of a deceased person.  In other states it is called an Executor. A will or a codicil (an amendment to a will) nominates a person for this role. The actual authority of a Personal Representative is expressed in a document called the Domiciliary Letter, issued by a probate court.   This explanation of the term, as offered in Wisconsin's Personal Representative's Handbook is academic. It helps understand the theory, but does little to help with real world application.  In my humble opinion, when thinking about who to nominate as the Personal Representative in your will, I say to aim for Switzerland.  Who is neutral, precise and efficient.

• Neutral -- who can you nominate that will be fair, reasonable, and not have a so-called dog in the fight as assets are liquidated, bills paid, and monies distributed.  You do have the option to nominate an institution, such as the wealth management division of a bank. For my fellow Credit Union supporters, I have yet to find a Wisconsin Credit Union that offers this service.
• Precise -- doing a probate is akin to going through a federal IRS audit while in bootcamp.  Minutia is the name of the game when gathering assets, paying liabilities and reporting the activity to the court.  In the end the Final Accounting needs to balance to the penny -- meaning all the assets gathered by the Personal Representative as well as those funds that were distributed must balance out to a zero balance. Not everyone has this skill-set.
• Efficient -- when a probate is opened in Wisconsin the court expects to have an inventory of all the estate assets within 6 months of the matter being opened, and for the entire process to be closed within 12 months. This means that assets are gathered, sold, bills and income taxes are paid and funds distributed to the heirs.  While extensions are possible, having the final affairs linger is not enjoyable for the heirs nor does it please the court.  A Personal Representative needs to take action efficiently. 

Chocolate on the shelf at Target -- author stocking up supplies for the office candy dish

Nominating a Personal Representative is an important job.  Take it seriously.  Who is appoint is likely a crucial decision in how well your final affairs will be administered.  

Thank you for reading, please share on social media if you think this might help others.  Remember, a blog is not legal advice.  It is meant to spark thought and reflection.  Please seek the legal counsel of an attorney licensed in your state of residence.  Be well!

Estate Planning Pro Tip: Always Have a Back-up

Estate Planning Pro Tip: Always Have a Back-up

By Melinda Gustafson Gervasi

February 19, 2024

The "back-up" lunch bags

Oftentimes what prompts a client to schedule an appointment with me is either a Stage 4 cancer diagnosis, the death of loved one that caused a chaotic mess they wish to avoid for themselves, international travel from which a fear of our own mortality rises up enough to make someone want a will, or it is simply a New Years Resolution.  Rounding out the Top 5 motivations I've noted to prompt a client to create an estate plan is the birth of a child.  These are some of my favorite meetings because the chances are good the couple will bring their newborn infant to the signing.  With two teenagers in my home, time with a newborn is a precious moment.

As any seasoned parent would, I will offer the new parents a tip or two.  I avoid the rote advice of "sleep while you can" for those meeting with me prior to the birth or "sleep when the baby sleeps" for those with a bundle in their arms.  Instead I offer the idea of "always have a back-up".  Whether it be winter boots, a lunch box, or the industrial sized peanut butter jar, my kids will tell you "mom always has a back-up".  I attribute this to my slightly over-the-top Type A personality and a strong disdain for the last minute scramble.  The word planner is literally in my job description.  At home I plan for the day the child leaves their winter boots at after school camp or the lunch box will be overnighting the school lost-and-found.  It will happen, it is a question of when.  And when it does, I pull out the back-up.  Now my back-ups are likely to be utilitarian, often a handy-me-down from a neighbor or a thrift store find. My frugality is about as strong as my planner behavior.  But, my mornings tend to be less chaotic and more calm with backups.  The back-up may not be perfect, but it gets the job done. This same approach works at the office.

A client will tell me, I want my daughter to be my agent on my healthcare power of attorney.  "Great" I respond, "and if she cannot act, then who do you wish to name?"  On and on I will ask this question for the various roles you appoint people to when creating an estate plan. If you are taking the time to create an estate plan, go the extra mile and make sure you have your backups in place.  You'll likely sleep better at night and avoid a scramble.

Thank you for reading, please share this post on social media if you found it helpful.  Remember that a blog is not legal advice, but a means to spark thought and reflection. Always seek the counsel of an attorney licensed in your home state for advice.  Be well!

Lesson from Grey's Anatomy: Revolutions Don't Schedule Appointments

Lesson from Grey's Anatomy: Revolutions Don't Schedule Appointments

By Melinda Gustafson Gervasi

February 12, 2024

Author's Hoodie -- a Christmas gift, with a touch of cat fur from Law Cat

Confession time, I am one of the fifteen to twenty million loyal viewers of ABC's hit, Grey's Anatomy.  I find the characters' intensity and devotion to a career that must keep learning after the graduation hats are tossed to be similar to my field, the practice of law.  Rarely does an episode cause me to slip into thinking about work; it has proven to be a wonderful way to relax on a night or weekend.  However, recently while watching an episode in Season 17, I found myself nodding when Dr. Richard Webber made a statement to Dr. Jackson Avery -- "Son, revolutions do not make appointments".  The character was commenting on the Black Lives Matter movement that was a part of the show's storyline.

I nodded because I thought to myself "nor does a medical crisis make an appointment".  In my field of estate planning and probate administration I can tell you that the scenarios in which your powers of attorney or will are needed rarely feel planned.  Even for those with a chronic or terminal condition, health events evolve quickly and often erratically.  The lesson I offer from this show is to make an appointment now, during the calm period of life, to create or update your estate plan, which consists of: powers of attorney, a will, and in some cases a form of a trust, as well as documents stating who can make your burial and funeral arrangements. 

While you may be able to complete this task on your own, hiring an attorney to help you cross the finish line may be a smart move.  For many people hiring an attorney is an unpleasant an daunting task.  Rather than leave it up to a Google search, consider these options to help you find someone you trust to help ease the burden:

1. Ask family and friends who live in your area if they had an attorney they worked with.  If they did and it was a positive experience, they'll be happy to share the contact information. And if they had an experience they hated, they will say so as well;
2. Get a referral from your CPA, financial planner or banker.  Likely this professional in your life will have the name of an attorney who operates in a similar fashion, increasing your chances you will enjoy working with the lawyer; and
3. Research the attorney to see if they will be easy to talk with.   See if you can get a feel for how they communicate and what they value.  When it comes to estate planning you will need to speak freely about your family dynamic, health situation and financial position in order to get the most sound advice.

Thank you for reading.  Remember that a blog is not leave advice.  Please consult with an attorney licensed in your home state for advice specific to your situation.  If you have found this helpful, please share it on your preferred social media.  You can also enter your email address above (upper right corner) to receive future posts. Be well!

What to Tell Your Personal Representative: the 4 Ps

What to Tell Your Personal Representative: the 4 Ps

By Melinda Gustafson Gervasi

February 5, 2024

Image by M. Gustafson Geravsi, 2024

Weekly clients express a desire to make sure taking care of their final affairs is easy for the Personal Representative (known as an Executor in other states). Wishes are achieved by taking action.  Here are the 4 "P"s I recommend sharing with your Personal Representative to ease the process when you earthly time comes to an end:

1. Personal Data -- include the basics such as Date of Birth, Social Security Number, dates of marriages, divorces or spouse/partner deaths as well as your religious affiliation, educational achievements and family tree.
2. People -- who should be contacted upon your death?  With many people using cell phones the white pages of yesteryear are gone.  Provide up-to-date cell phones, addresses and email addresses.  Include the obvious close family and friends as well as those people you rely on: childcare provider, pet sitter, employer or employees, housekeeper, lawn care service, accountant, attorney, and financial planner.
3. Pets -- Approximately 66% of American households have a pet.  Leave information relating to the veterinarian, food needs, pet sitter, and who can care for the animal(s) for both the short and long-term care needs.
4. Professional Duties -- for those still in the workforce or with active professional credentials, leave information related to professional organizations you belong to, a list of professional insurances you carry, banking and financial information related to your work duties, and social media accounts used for work purposes (such as LinkedIn).

Whether it is a yellow legal pad, a spreadsheet, or a new ap for your phone, taking the time to organize these key aspects of your life will make the process just a bit easier for the person(s) charged with handling your final affairs.

Thank you for reading.  Remember that a blog is not legal advice.  It is meant to spark thought and reflection.  Please consult with an attorney licensed in your home state for advice specific to your unique needs.  Be well, and please feel free to share this post on social media! 

Word of the Month: Ancillary Probate

Word of the Month: Ancillary Probate

By Melinda Gustafson Gervasi

January 29, 2024

Image by M. Gustafson Gervasi, 2024, Geranium on the Windowsill

The following is a hypothetical situation, it is not based on an actual client experience.  It is a story meant to illustrate an issue common to estate planning.

The death of a loved one is never easy.  Processing the affairs of a recently deceased loved one in January, specifically January in Wisconsin, is a very difficult task.  Recently the adult child of a former client of mine made their way through the snow and slush that mother nature dumped on my hometown of Madison, Wisconsin, and arrived at my office.  Once their winter parka, hat and gloves were nestled into the coat tree in my waiting area, we sat down at the conference table to discuss "next steps".

Papers were pulled from color coded files the child had gathered from their parent's home.  There was the title to the Toyota Prius, copies of recent IRA Statements, printouts from the bank where savings and checking accounts existed, the deed to the house.  The pile contained last year's income tax filings, a property tax bill due any day, and credit card statements.  And at the bottom of the stack of paperwork we found a deed for land in Michigan.  "Oh, that is the cabin -- my grandfather built it by hand, and left it to my mom when he died in 1973."

My conversation with the child now veered into the topic of "ancillary probate"; the cabin is over the border and in a different state. Oftentimes the Personal Representative (or called an Executor in other states) discovers the deceased person owned property held in another state.  For example, a lake home, cabin, recreational land, or a boat docked in warmer waters. In this specific situation, the child would need to open a Wisconsin probate, which would handle the transfer of nearly all the decedent's assets.  However, the cabin owned in Michigan would need to be transferred under Michigan law -- creating what we call an ancillary probate.  Procedures vary from state to state, and in some cases probate can be avoided if the state has a "small estate" method for avoiding probate on lower-value assets. The web of final affairs became a bit more layered with land owned outside of Wisconsin, but a path did appear.  And now the child as well as you the reader have expanded your vocabulary to include an understanding of "ancillary probate".

Remember that a blog is not legal advice; it is a means to spark thought and reflection.  Please consult with an attorney licensed in your state for advice specific to your situation.  Thank you for reading, be well!

Taxes Are In The Air

Taxes Are In The Air

By Melinda Gustafson Geravsi

January 22, 2024 

Garner Park, Madison, WI - Image by M. Gustafson Gervasi 2024

January has arrived, bringing with it artic air to my hometown of Madison, Wisconsin.  No matter where you live in America, the month of January also brings the flutter of envelopes into your mailbox, all stamped IMPORTANT: TAX INFORMATION.  Whether it be a W2 from your employer, a 1099-Misc from your investments, or a K-1 showing stock gains, many of us are gathering forms to complete our annual income tax filings.  

Taxes quickly become complicated and technical because the IRS tax code is anything but simple.  When in doubt, I also say it is less expensive to hire a CPA for advice beforehand than to hire one to clean up a mess after-the-fact.  In area of focus, estate planning and probate, there are three main taxes that come up in client meetings:

1. Income Taxes -- a tax owed on income that can be owed at both the federal and state level.  Also, when a person dies there might be income taxes owed on earnings from January 1st to the date of death, and then income taxes owed on earnings (think dividends, interest, etc) from the day after death to December 31st.
2. Gift Taxes -- a tax owed by the person making a gift IF the tax is not exempt and exceeds the limit set by the IRS for that year (in 2024 the limit is $18,000/person).  Quite often I see a child who was named as a co-owner of a parent's bank account.  The parent dies and the child becomes the owner of the entire bank account.  If that child wants to share the account with a sibling who was not named, and that share is over the gift tax limit, a gift tax return may need to be filed.  It is an unpleasant surprise.
3. Estate Taxes -- a federal (and sometimes a state tax depending on where you live) that is assessed on assets that exceed a level set by Congress.  In 2024 that limit is $13.6 million for an individual.  While this tax impacts less than 1 percent of Americans, many people harbor a fear of the "death tax".  In my everyday operations I see the gift tax surprise more people than the federal estate tax, however, I focus on working with middle class Americans.

A blog is meant to spark thought, reflection, and discussion.  It is not legal advice.  Please consult with an attorney (and often a CPA) who is licensed in your state of residence for input on your unique situation.  Be well and thank you for reading. 

Anyone Can Leave a Legacy

Anyone Can Leave a Legacy

By Melinda Gustafson Gervasi

January 15, 2024

Today our nation celebrates the legacy of Martin Luther King Jr.  Across this country parades are held, speeches are given, and banquets are held.  It seems an appropriate time to remind you that, in my opinion, anyone can leave a legacy. With a bit of reflection, strategic thinking and planning you can promote what you value.  

Image by M. Gustafson Gervasi 2024

Back in 2013 I released a small book, meant to be read in an afternoon, to teach this concept to Middle Class America.  Over a decade later key concepts remain true and the steps you can take are relatively easy.  Here are 3 easy steps you can take to leave a legacy:

1. Direct 10 percent (or any percentage) of your retirement funds to a nonprofit organization that is close to your heart;
2. Request that In Lieu of Flowers, mourners make a donation to a charity that was pivotal in your life, such as: a college, university or trade program; medical research; or mental health support.
3. Leave directions to have your tangible personal property (furniture, clothing, books, etc) donated to a thrift store that aligns with your interests (my personal favorite is the Dane County Humane Society Thrift Store).

A philanthropic life does not require you to have a seven-figure net worth.  Read more about how middle class Americans had a positive impact on the operation of a nonprofit by checking out Middle Class Philanthropist: How Anyone Can Leave a Legacy.  If you have a story to share, reach out with a comment or email me directly.

A blog is not legal advice, but a platform to promote thought and reflection.  Please seek legal advice from an attorney licensed in your home state.  Thank you for reading, stay warm (it is -2 F at Noon here in Madison, Wisconsin), and be safe.

Estate Planning: Take It One Bite At A Time

Estate Planning: Take It One Bite At A Time

By Melinda Gustafson Gervasi

January 8, 2024

There is an African saying, "What is the best way to eat an elephant?  One bite at a time".  If 2024 is the year hope to tackle estate planning but do not know where to start, I suggest you embrace the wisdom of this saying.  Creating an estate planning, or updating an out-of-date plan can be monumental and thus unattainable.  Do not be deterred.  Break it down into small steps and you will make progress.  Here are 5 small tasks to get you started:

• Create your powers of attorney to say who is in charged of your finances and or health care decisions if you are alive but too ill to act;
• Review the beneficiary forms on your life insurance and update them if needed;
• Review the beneficiary forms on your retirement accounts and update them if needed;
• Create a list of your assets and liabilities to create an easy to access map of your finances for your loved ones if you die; and  
• Write out the contact information for people that should be notified in case of your illness or death, everyone from your college roommate to your cat sitter to your accountant.

It is estimated that only 32 percent of Americans have a will or estate plan.  Go against the tide, break the work down into more simple tasks, and work towards putting together the peace of mind you will give loved ones if the unthinkable happens.

Thank you for reading.  A blog is not legal advice, but meant to spark thought and reflection.  Seek legal advice from an attorney licensed in your state of residence for advice specific to your situation.  Be well!