Most parents love their children unconditionally and want to do whatever they can to smooth life’s rough road for them.  But that unconditional love doesn’t necessarily mean that unconditional trust exists when it comes to leaving children with a hefty inheritance. 

A recent Forbes article looked at smart ways that parents can pass the love along while still protecting the wealth they have spent their lifetimes working hard to accumulate:

Annual exclusion gift test.  A parent can gift up to $14,000 every year to each child without incurring gift taxes; both parents together can give a total of $28,000 to each child.  You can use this annual exclusion gift to test the waters on how your children will handle a financial windfall.  Do they pay off debt, save it or place it on the ponies?  Their actions can give you insight into how they might handle their inheritance.

Incentive trust.  Parents that have worked hard to accumulate their wealth often worry that a large inheritance may harm a child’s ambition to succeed on their own.  If that is a worry for you, an incentive trust allows you to set goals or milestones for your children to achieve before distributions are made.

Staged distributions.  Parents can create a trust with the distributions tied to different age stages or events (graduating college, starting a business) so the inheritance is doled out over time.

Leave a legacy.  Creating a personal foundation to support the causes you believe in, and involving your children early on in that foundation, will help them learn about the responsibilities that come with wealth and create empathy for a world outside their own.

Hold the cash.  Instead of giving cash directly to your children, consider alternative giving strategies, like paying down their college or home loan mortgage debt.  This will make a big difference to their financial future without tempting them with large amounts of cash.

Wealth creation trust.  One of the best ways your unconditional love can be expressed to a child or grandchild is through the establishment of a wealth creation trust to commemorate a birth or a milestone birthday or event, and then directing monetary gifts to the trust over time.

When your child gets to be an age specified in the Trust, he or she can step into the role of Co-Trustee of the Trust, learning how to operate the trust and best utilize the funds in the Trust.  He or she will be trained on the best types of investment for the Trust, learn the purpose of the Trust (to encourage the creation of wealth from one generation to the next, rather than the squandering or wasting of assets); how to protect it (keep the investments in the name of the Trust, regardless of how funds are used, so always title investments properly and sign on behalf of the Trust); and how to create more wealth in the future using the Trust assets.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about a Family Wealth Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.

Did you know that the best-selling item at Walmart is bananas?  It’s true, and has been for several years.  So the next time you need a great price on your favorite yellow fruit, go ahead and head for Walmart.

But steer clear of the world’s largest retailer when you need a will or other estate planning documents.

While not available in the U.S. (yet), Walmart just started selling wills for $99 in several Canadian locations.  You can also get powers of attorney at the boutique law shop called Axess Law set up in Walmart.  And in our opinion, that’s not just bananas, it’s nuts too.

Creating an estate plan is something you do to leave a legacy of care and love for the people who matter to you the most.   Working with an attorney who understands your goals and wishes for your family, and can articulate those in a well-crafted estate plan, is a much better alternative than relying on a one-stop shopping experience, be it at Walmart or through online legal websites with standard forms that can’t begin to know what you truly want and deserve for your loved ones.

Having the caring and complete guidance of legal counsel will ensure that your estate plan takes advantage of the ever-changing state and federal laws as well as reduces the potential for family feuds.

If you’re the parent of minor children, your attorney will help you create a valid will as well as a comprehensive Kids Protection Plan that ensures the well-being and care of your children; without one, a judge will make that decision for you (or your kids could even be taken from your home temporarily). 

Even if you don’t have minor or dependent children, you have stuff that will have to be handled after you are gone and a $99 will is likely only going to make it worse for the people left to clean up the mess.

Estate laws vary by state, which is another good reason to have a local lawyer guide you.  The probate process can be lengthy and arduous; your attorney can help you and your family stay out of Court, saving time, money and stress.

Finally, many life circumstances – remarriage, divorce, new children – impact your estate plan, so be sure you review it annually and keep it updated when things change.  Having a legal counselor who knows you and your family makes it much easier to keep your plan on track, so it will always be just what your family needs, when they need it.

If you would like more information about creating or updating your estate plan, call our office today to schedule a time for us to sit down and talk.  I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

Many people fail to create an estate plan because they don’t truly understand what is involved and therefore believe it is too complicated. But the real truth is that creating an estate plan during your lifetime is far less complicated than what your family will deal with after you are gone, if you don’t:

1.  Create a Trust.  When most people think of preparing for the end of life, they think of writing a Will, but having a Will without a Trust is fast track to put your family in the Courthouse after you are gone.  Instead, to keep your family out of Court, you’ll want to set up a Trust and title all of your assets to be owned by that Trust.  While it might feel like a lot of effort, it will save your family a LOT of trouble after you are gone. 

2.  Designate beneficiaries.  Designating beneficiaries for your retirement accounts and insurance policies is critical because these assets do not pass through your Will or Trust.  Filling out beneficiary designation forms for each of your accounts will ensure these assets pass to the people you want to have them and stay out of the Court system.  Be sure to review your beneficiary designations periodically to be sure they align with your current circumstances. Hot tip: never name minor children as beneficiaries of your retirement account or life insurance policies AND if you have more than $150,000 in a retirement account, you should strongly consider a Retirement Trust to ensure that your loved ones receive the most benefit from your remaining retirement funds.

3.  Avoid estate taxes.  Most of us will not have to worry about estate taxes since the federal estate and gift tax exemption is $5.34 million ($10.68 million for married couples) in 2014 and indexed every year for inflation.  However, if you are married and wish to take advantage of portability – where spouses are entitled to each other’s unused exemption – the surviving spouse must file the required paperwork to claim the exemption. 

Plus, 15 states and the District of Columbia have state estate taxes, so you could still owe even if your estate is too small to owe federal tax. The big key here is to not just leave a set of documents that your family will have to figure out after you are gone, but give them the gift of a trusted advisor to turn to; call us if you’d like to consider having us be that trusted advisor for your loved ones.

4.  Leave a letter of instruction.  Not everything you may wish to pass on to your heirs – like instructions for your funeral – should be put in your will or Trust.  Leaving a letter of instruction with your family or attorney can ensure your final wishes are respected.  

5.  Sign a durable power of attorney.  Estate planning is not just about death, but also ensuring your family can handle things in the event you become incapacitated.  Signing a durable power of attorney that designates someone to handle your financial affairs will save time, money and hassle for your family that, without it, will have to go to court to have a guardian or conservator appointed to manage your financial affairs. This could cost tens of thousands of dollars and is easily handled with one simple document and a trusted advisor for your family to turn to in a time of need.

6.  Create an Advance Healthcare Directive.  This document designates a decision maker of your choosing to make sure your wishes are followed when it comes to the medical care you want – or do not want – to receive when you are incapacitated or near death.  You will also need to sign a HIPAA release form so your medical records can be released to your health care agent and medical professionals can discuss your medical care with that person.

7.  Organize your paperwork and digital files.  Since many of us live our lives online these days, make sure your executor has access to all your digital information, including website addresses and the log-in information for those sites.  Put all your important paperwork – deeds, insurance policies, bank and brokerage statements, etc. – in one file and let your executor know where it is.

Bonus tip: If you have minor children at home (or adult children with special needs), don’t rely on naming guardians in your Will alone. Create a comprehensive Kids Protection Plan to ensure your children’s care is covered not just for the long-term, but for the immediate term as well and no one you don’t want raising your kids ever has a chance to take control.

Contact us about scheduling a Family Wealth Planning Session so we can sit down and talk about designing a plan that fits the needs of you and your family.  Surprisingly, sometimes the less you have, the more important it is to plan.

The perfect gift for your child or grandchild on the occasion of their birth, Bar or Bat Mitzvah, Sweet 16 or Quinceañera cannot be found in any store.  Instead, the hopes and wishes you have for your child (or grandchild’s) future can best be expressed with a gift of security, resources and a foundation of love through the establishment of a wealth creation trust.

When a new child is welcomed into the family or a child turns 13 , 16, graduates from college or has another milestone event, it is not uncommon for grandparents or other family members to want to give that child a monetary gift. 

In most cases, that happens through a check written to the parents, or perhaps to the child and put into a custodial account at the bank.  The problems with this type of gifting are several:

1. Often, the parents cash the check, commingle the funds into the family accounts and the child never gets to see the benefit (you’d be surprised about how often this happens);

2. The money is put into a custodial account, the child accesses the account at 18 (or perhaps 21) and uses it to buy a car, fund a backpacking trip, or even buy a house; the decision about how to utilize the money is made without thought or foresight for the future, effectively squandered;

3. The money is used to pay for college, counting against the child for purposes of financial aid, and the college degree doesn’t end up amounting to much in the long run, also effectively squandering the money;

4.  The money is used by the child after he or she is married, commingled with the assets of a spouse and lost in a divorce, squandered.

But, there is a far better way, that is good for your family who want to make gifts, good for you as the parents of your child, good for your child, and great for the world.

Establish a Wealth Creation Trust for your child (or grandchild) as a birthday (or birth) gift and then let everyone in your family know that all gifts for the child should be made out to the Trustee of the [Name of Child] Wealth Creation Trust for here on out.

Then, when your child gets to be an age specified in the Trust, he or she can step into the role of Co-Trustee of the Trust, learning how to operate the trust and best utilize the funds in the Trust.  He or she will be trained on the best types of investment for the Trust (our recommendation is first and foremost self-care, well-being programs and entrepreneurial training for the child and then one or more entrepreneurial ventures that the child is involved in, which have the possibility of doing a lot of good in the world and earning a healthy return on investment in the form of appreciation and purposeful, aligned work by the child).

Your child will learn the purpose of the Trust (to encourage the creation of wealth from one generation to the next, rather than the squandering or wasting of assets); how to protect it (keep the investments in the name of the Trust, regardless of how funds are used, so always title investments properly and sign on behalf of the Trust); and how to create more wealth in the future using the Trust assets.

Now, the gift you created when your child was just born, or achieved a specific life milestone becomes not just a vehicle of financial security, but education and impact for a lifetime and beyond.

Gifts in the amount of $14,000 per year (in 2014) per person can be made into such a Trust for your child without the need to file a gift tax return.

If you would like to learn more about how to establish a wealth creation trust to secure the financial future of your children, grandchildren and beyond while encouraging and educating them to create more wealth in the world (rather than squandering what you’ve worked so hard to create), contact our office for a Family Wealth Planning Session.

If you are like most Americans, you will probably be spending at least some of your vacation time this summer with older family members. While there are few perfect times to talk with parents about their estate plan, the relaxed times you spend together on vacation can be one of them.

Here are some tips on how to conduct this critical conversation:

Find a good place to start.  One of the best ways to ease your parents into a financial discussion is to bring up your own.  Tell your parents that you were looking into your own estate plan and wondering if they had already executed their own.  Sometimes you can use scare tactics to good effect – there are lots of stories about celebrities or others who have neglected to plan and paid the price with dire consequences.

Take it easy.  If you feel that parents made need some help with organizing their financial lives, be reassuring rather than applying pressure.  Let them know that you want to make sure their financial independence is kept intact for as long as possible.  Take things one step at a time, such as extending an offer to help them use online bill pay or assist them with organizing their information at tax time.

Respect boundaries.  Many parents feel uncomfortable discussing their finances with their children.  If you face this obstacle, let your parents know that you at least need to know where to find their important documents when it becomes necessary, but that you aren’t attempting to control them in anyway. You simply want to help and make things as easy as possible for you and your siblings when something does happen.

Sometimes initiating a conversation with parents about estate planning can be easier with the help of a Personal Family Lawyer.  We can help with a Family Wealth Planning Session.  Call our office today to schedule a time for us to sit down and talk about designing an estate plan that fits the needs of you and your family. 

America is a nation of do-it-yourselfers, but building a deck and creating a legally valid estate plan are two entirely different things – and a less-than-perfect deck won’t devastate your family’s financial future or the relationships among the people you care about most.

The prevalence of online legal services has led many people to believe that they can create legal documents cheaply and those documents will be just as effective as if they had visited an estate planning attorney.  And this is why that is wrong:

No legal advice – these sites are little more than document mills that churn out the same generic forms over and over.  They are not attorneys and cannot advise or warn you if you make a mistake. Plus, who will be there for your family when something happens to you if you’ve used an online document drafting service?

Think your family doesn’t need an advisor to support them when you are gone?  Think again. 

Consider this: Erica’s father was killed in a motorcycle accident. Dad didn’t leave much behind, but he did leave an estate plan prepared by a trusted family attorney.  Had the family attorney not been there for Erica and her brother, they would have taken what dad did leave and drowned their sorrows in a European backpacking trip.  Thanks to this family attorney, though, Erica and her brother now have a healthy trust fund set up for them for life with the proceeds of a successful wrongful death case. 

Leaving it to your family to know what to do after you’re gone is a big mistake for the people you love.

One size doesn’t fit all – your family is different from everyone else’s family.  Just like every state has different inheritance laws, every family has different situations.  An online form will not help you protect a special needs child or relative, or protect a child’s inheritance from creditors or a nasty divorce.  An online form cannot tell you how to protect assets from taxes or help you achieve your goals.

And, an online form cannot keep your family out of conflict during a time of grief.  Even if you don’t have a lot of assets you are leaving behind, whatever you do have will be subject to distribution between the people you care most about.  Some of the biggest disagreements we’ve seen after death, aren’t about loads of money, but about the little things and those little things aren’t going to be dealt with well with form documents. 

Save now, pay later – you may think you are saving money by using an online service to create your will or trust, but it is impossible to make a fair comparison since the services provided are entirely different. 

An estate planning attorney creates an entire plan tailored to your individual needs in a legal document that will stand up in court, and advises you on ways to cut taxes and save for retirement and long-term care.  No online service does that. 

In addition, your trusted advisor is going to be there for your family when you cannot be. The people you love will need someone to turn to after you are gone.  Do you want them to be stuck with figuring out who that should be during their time of grief? Or do you want to leave behind the gift of having taken care of things well during your lifetime and a trusted advisor to hold their hand when you no longer can?

We invite you to take advantage of our specialized legal services for families with a Family Wealth Planning Session.  Call our office today to schedule a time for us to sit down and talk about designing an estate plan that fits the needs of you and your family.  

Jerry Orbach, who starred as Detective Lennie Briscoe in the popular “Law and Order” television series, died a decade ago, but a battle is brewing over his Chase bank account, according to a recent story in the New York Post.

The Chase bank account in dispute belongs to Orbach’s Mingoya Productions company, and is currently under the control of the actor’s former accountant, Patricia M. Black.  Orbach added Black as a signatory to the company’s account a year before he died in 2004.

Black also served as executor of the estate of Orbach’s wife Elaine, who inherited his entire estate and who died in 2009.  After Elaine died, her sister, Rita Hubbard, replaced Black as executor.  Hubbard contacted Chase to inform them of the change in executor and request that Black be cut off from access to the account.

Chase says that Black has not responded to its many phone calls and letters, and is unwilling to turn the account over to Hubbard because it is unsure who is the rightful owner of the account since it has no proof that Elaine was ever a co-owner of Mingoya Productions. 

Hubbard’s attorney says that Elaine’s estate is the sole owner of Mingoya Productions, and is therefore the rightful owner of the account.

A lawsuit has been filed in Manhattan to resolve the dispute.

This is the unfortunate effect of not having your estate planning set up properly.  Many, many years after your death, your loved ones could still be dealing with the fall out. 

Unlike many lawyers, we have specific procedures for ensuring your family doesn’t get stuck dealing with the Court when something happens to you.

If you would like more information about getting your affairs in order and handled well, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

A recent article in the New York Post about brothers battling over a painting from their uncle’s estate serves as a reminder of the importance of designating a destination for your personal property, either through a will or by gifting while you are still alive.

The brotherly brouhaha came about after noted Manhattan interior designer David Barrett died and left his two nephews – Richard and Alan Barrett -- “equal shares” in his $5.6 million estate.   The estate included a $45,000 piece of art that the brothers flipped a coin over to determine who would take home the painting. 

Richard lost the coin flip – and then flipped out, filing a lawsuit to get ownership of the painting, which held up payment to the two estate executors and his brother. 

The lesson here is obvious:  simply splitting an estate without detailed bequests can, and often does, lead to estate litigation. 

The better solution is also a simple one:  take a complete inventory of your personal property, and then designate a recipient for each asset. 

Make these designations via a valid will, or even give them away while you are still living so there is no question as to who you intend to inherit your prized possessions.  

You can also leave a written memo identifying which items should go to which recipients, just make sure your will makes reference to the memo to make sure it works.

Alternatively, consider taking pictures of each item of personal property and writing the name of designees to receive each item on the back of the image.  Again, reference the images in your will.

And remember, if you are a parent, your children may be what you value most. You can protect them by putting in place a comprehensive Kids Protection Plan to provide for their long-term and short-term care and by establishing a trust to fund their care if you are no longer available to provide for them.  While you don’t “own” your children, of course, you do owe them the duty of ensuring their care is handled well if anything happens to you.

If you would like more information about a Kids Protection Plan, providing for your prized personal possessions or creating or updating your estate plan, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

Estate planning is not a “set it and forget it” kind of thing. Your life changes, your assets change, the laws change -- and if your plan doesn’t change, your family gets caught holding the bag. The people you love most end up bearing the brunt of your failure to act.

Conducting a proper review of your estate plan will help identify the potential need to update your plan because of:

Life transitions:  Have any babies been born, loved ones died, people gotten divorced or married?   If so, you need to revisit your plan.

Changes in the law:  Changes in federal and state tax laws may require updates to your healthcare and financial powers of attorney. State regulations can also be revised to open up new wealth planning strategies that should be a part of your estate plan.

Changes in assets:  Has your net worth gone up or down?  Have you invested in any new assets, such as businesses,  opened new bank accounts, retirement accounts, insurance policies, real estate or anything similar?  If so, your plan needs to be revisited.  And the spreadsheet of assets you have for your family (you DO have one, right?) needs updating.

Funding of assets and beneficiary designations:  One of the most common mistakes people make is not properly completing the transfer of assets into a trust within their estate plan.  Another common error is having beneficiary designations that are inconsistent with the distribution language in the estate plan.  We recommend a review of those matters at least annually.

If you do not review your plan and update it regularly, your family will have to deal with the consequences.

If you would like more information about creating or updating your estate plan, call our office today to schedule a time for us to sit down and talk. 

Oscar-winning actor Philip Seymour Hoffman’s will has been filed for probate and provides a cautionary tale when it comes to estate planning mistakes. 

Here are four things he could have done to correct them:

Create a Revocable Living Trust.  Hoffman was a public figure who valued his privacy.  Yet by creating a will instead of a revocable living trust, he let the world in on his private life.  We all know that his son will inherit everything at 30 and we’ll also know the total size of his estate when it’s inventoried and filed with the Court, as it must be.  A will is public record, so every detail is available to anyone interested enough to look it up.  A revocable living trust would have allowed him to keep his private wishes private.

Update your plan.  Hoffman created his will in 2004 and never updated it, so his two youngest daughters are not mentioned or provided for in the will.  His estate has been valued at $35 million, and his executor is his long-time companion who is also the mother of their three children.  After born children are provided for by law, but Hoffman lost out on the opportunity to specifically direct their interests.

Cover your assets.  While Hoffman did create a trust for his son Cooper, naming Cooper’s mother as sole trustee, that trust will dissolve once Cooper turns 30.  And all assets distribute to Cooper outright at that time. Instead, Hoffman could have created a Lifetime Asset Protection Trust that would have kept Cooper’s inheritance safe from divorce, creditors, lawsuits and bankruptcy forever PLUS provided incentive to Cooper to grow the assets of the trust rather than squander them. 

Use tax-saving strategies in your estate plan.  Since Hoffman was not married to his long-time companion, there will be a monster sized estate tax bill to pay, both state and federal.  The use of other tax-advantaged estate planning strategies like an Irrevocable Life Insurance Trust (ILIT) would have preserved assets and resulted in more money to Hoffman’s family and less to the US Government.

To put the proper protections in place for your family, contact our office to schedule a time for us to sit down and talk.  We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article. 

With just over 50,000 residents, La Crosse is a lot like other small American towns – but there is one thing that makes La Crosse stand out:  96% of La Crosse residents who have died have had an advance medical directive in place.  Nationally, the percentage of Americans with an advance directive stands at about 30%. 

Actually, there are two things that make La Crosse stand out:  the town also has lower healthcare costs than any other place in the U.S.  And these two things – a high incidence of residents with advance directives and low healthcare costs -- are inextricably linked.

According to a recent NPR story, all this came about because of one man:  Dr. Bud Hammes, Medical Humanities Director at Gundersen Hospital in La Crosse.  Dr.Hammes often found himself sitting with families of terminally ill patients, trying to figure out what to do next.  He said the conversations were excruciating: “Did mom ever say anything to you?” “Do you know what dad wants?”  He said that the moral distress of the families was tangible. 

Dr. Hammes knew that this could be avoided, since most patients were usually sick for years.  So he started training nurses to ask patients if they wanted to sign an advance directive and over the years planning for death has become a way of life in La Crosse.

And the lower healthcare costs?  Dr. Hammes said that the reduction in spending was an accident, a byproduct of letting people make their own choices.  He said that when you let patients choose and direct their care, they often make a much less expensive choice. 

You can listen to the entire NPR story here:

NPR: Living Wills are the Talk of The Town in La Crosse, Wis.

Making end of life plans is one of the most comforting things you can do for your loved ones.  To put the proper protections in place for your family, contact our office to schedule a time for us to sit down and talk.  We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article. 

Pediatrician Dr. Bill Sears is the author of more than 30 books on childcare, has appeared on dozens of national talk shows, provides medical and parenting guidance for Parenting and BabyTalk magazines, received his pediatric training at Harvard Medical School’s Children’s Hospital, is an associate clinical professor of pediatrics at University of California, Irvine School of Medicine and raised eight kids of his own – three of whom are also pediatricians.

He recently authored an article on 10 Reasons Not to Hit Your Child.  And I’ll be honest, I was surprised an article like this still needs to be written.  And, I imagine for my readers, it’s probably not because you understand that the legacy you are leaving happens in the now moment and it starts with how you are with your children. 

Creating a bond of secure attachment and unconditional love (without codependence or enabling) with your children is the greatest gift you could leave the world.  So, if you, or anyone you know, does think hitting a child is acceptable behavior under any circumstances, here’s the first 5 of 10 reasons to rethink that thought.

And, just for fun, add the word “yelling” or “yell” to each place it says “hitting” and “hit” -- hitting and yelling have the same effect in the nervous system of a child.

1.  Hitting models hitting.  Children love to imitate so when you hit a child, you are teaching them it is OK to hit someone when they are angry or frustrated.  This is not behavior we want to see more of in the world, right?

2.  Hitting devalues a child.  A child’s self-image is formed first by his or her parents; hitting your child tells them you think they – and not their behavior – are bad.  Instead, consider focusing on the activity that you do not want to see repeated and discussing why that activity does not get them more of what they want.

3.  Hitting devalues a parent.  Parents who hit their children harm themselves because deep down they know it isn’t right.  Anytime you are engaging in any activity that you know inside isn’t right, you will feel insecure about yourself as a person. And that’s one of the biggest barriers to success.  The good news is that you can so easily turn it around by doing only things you know deep down are right.

4.  Hitting can lead to abuse.  Hitting can escalate into other abusive behavior. The worst part is that you may even convince yourself that the abusive behavior is justified. It never is. Criticizing, hitting and otherwise shaming our children is abusive. Just don’t do it.

5.  Hitting doesn’t improve the behavior.  Spanking actually makes a child’s behavior worse since they believe the punishment is unjust.  When someone believes a punishment is unjust, they don’t change their behavior, they just do it more.

You don’t need to hit to get your point across. If you are hitting out of anger, seek help.  There’s no shame in asking for support.

Next week, I’ll be back with 5 more reasons not to hit (or yell at) children. In the meantime, if you need support with leaving a legacy of love to the people you love most, schedule a Family Wealth Planning Session.

Baby boomers are set to inherit up to $8.4 trillion over the next 15 years, according to The Center for Retirement Research at Boston College.  A recent New York Times article explored the complicated issues that these inheritances can bring, including transferring the emotional attachment you had to your parents to what they have left you.

The Times article found that some boomers tend to get “stuck” when deciding what to do with their inheritance, letting large sums languish in low interest accounts for years.  Others use the windfall to open their lives up to new possibilities, like starting a business or even retiring.

Here are some tips on how boomers should plan for an inheritance:

Create your own estate plan first.  You may be expecting an inheritance, but no one knows what the future will bring so create your own estate plan first.  Part of your estate planning should also include a prospective plan for your future inheritance.

Do some tax planning.  Inheritances can include cash, property, a valuable collection, investments or real estate, so the assets contained within your inheritance need to be examined for potential tax liability. 

Look to the future.  Many boomers feel an obligation to protect the inheritance for their own children, while others may have charities or other plans for what remains after they are gone.  Your own estate plan should address ways to protect and pass on your assets in the most tax-advantaged way possible.

Financial experts advise that boomers should not just sit on an inheritance, but instead explore ways they and their loved ones can best benefit from it.  Inherited money should not be treated as a memorial; instead, use it as your parents no doubt intended it – as a way to make a better life for yourself and your family.

To learn more about putting the proper legal and financial protections in place for your family, contact our office to schedule a time for us to sit down and talk.  We normally charge $750 for a Family Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article. 

Paul Walker, who starred in the Fast & Furious movie franchise, died tragically in a high speed car accident in Los Angeles last November at the age of 40.  His estate was opened at the end of January in the Superior Court of California, County of Santa Barbara probate court, revealing that he left assets of approximately $25 million.  His survivors include his 15-year-old daughter Meadow and his parents.

A recent Forbes.com article listed five estate planning lessons to be learned from Paul Walker’s Estate:

Leave assets in a trust.   Paul Walker created a pour-over will that left his assets in a revocable living trust, intending to avoid the Court process, called probate, that (when handled properly during life) makes everything totally private and keeps it all out of Court.  Unfortunately, while Paul Walker had a Trust, it wasn’t properly funded … and this is an all too common estate planning failure, even when working with a lawyer.

Most lawyers simply do not handle funding of assets, the single most important part of estate planning, because they’ve been trained to be document drafters, not consigliere.  

Fully fund your trust.  The contents of Walker’s estate, who will inherit it and when  are public knowledge because Walker’s lawyer didn’t take the necessary steps to make sure his Trust was properly funded.  Sadly, this isn’t even a case of malpractice (though it should be) because it’s common practice in the world of estate planning lawyers.

When you do estate planning (or if you already have), the most important thing you can do is ensure your assets are transferred properly.

Name guardians for minor children.  Walker’s daughter is still a minor, and he did name his own mother as the guardian for his daughter Meadow in his will.  Meadow’s mother is still alive, so the grandmother will likely not assume guardianship unless Meadow’s mother is found to be unfit.

Don’t wait to do estate planning.  Walker was 28 when he created his will in 2001, the year the first Fast & Furious movie debuted.  While we will never know what prompted him to create an estate plan so early – perhaps it was his young daughter or a feeling that his star was on the rise – he did the right thing in planning early, especially considering his untimely death.

Keep estate plans updated.  Not only did Walker’s attorney not ensure his assets were titled properly, but he never updated Walker’s estate plan from the original version created 12 years before he died. 

Walker’s net worth changed significantly during that time, and so did his estate tax status.  If his estate is $25,000,000,  as we’ve read, his family will pay over $5,000,000 in estate taxes.  We think that’s unconscionable because with proper planning that could have all been structured to pass on to his family instead of the Government.

If you would prefer your family to receive what you are passing on, instead of it ending up in Court, conflict or the hands of the Government, you must update your estate plan at least every three years, and ideally you will review your assets and important changes every year.

To learn more about putting the right legal and financial protections in place for your family, contact our office to schedule a time for us to sit down and talk.  We normally charge $750 for a Family Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article. 

If you have been responsible enough to purchase a life insurance policy as added protection for your loved ones, then you will want to carry that responsible action a little further by protecting that important payout from taxation.

If you are married and have named your spouse as the beneficiary of your life insurance policy, those proceeds will pass free of both income taxes and estate taxes.  However, if your children are named as beneficiaries, the proceeds are free of income tax, but they do become part of your taxable estate.  Estate taxes have ranged from 35% up to 55% in recent years, so that’s a big bite.

An Irrevocable Life Insurance Trust (ILIT) is a great asset protection tool that protects your life insurance from estate taxes, and when drafted properly, can also be used to protect proceeds from creditors, bankruptcy and divorce. 

The best way to use an ILIT is to have the Trustee of the life insurance trust purchase the life insurance directly and pay all premiums. If you already own the life insurance, your ILIT Trustee can either buy the policy for you, or you can transfer it in, by following certain rules we can help you with.

So why is this a good idea? The proceeds from the life insurance are not part of your estate if the ILIT owns the life insurance.  Therefore, they are not subject to estate tax upon your death. 

If you have not yet purchased life insurance, you should create your ILIT first.  Have your ILIT purchase the life insurance.  This will circumvent the transfer of life insurance from you to another party, thus avoiding any difficulties if you do unexpectedly pass away since the proceeds of your life insurance policy would revert to your estate if you died within three years of the transfer.

The ILIT is a phenomenal tool for protecting your life insurance from taxation, leaving behind more for your loved ones.

To put the proper legal and financial protections in place for your family, contact our office to schedule a time for us to sit down and talk.  We normally charge $750 for a Family Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article. 

Everyone agreed on one thing:  Marlise Munoz was dead.  The 33-year-old Texas wife, mother and paramedic got up in the night on Nov. 26, 2013, to tend to her toddler son and suffered a pulmonary embolism.  Her husband Erick, also a paramedic, was able to briefly get her breathing again and she was transported to John Peter Smith Hospital in Fort Worth, where she was placed on life support.

But everyone knew and two days later medical tests confirmed it: no brain activity.  In every sense of the word, Marlise was dead. 

Unfortunately, Marlise was also 14 weeks pregnant and what was a tragedy was turned into a travesty that was only cut short by a Texas court late last week.  JPS Hospital refused to remove Marlise from life support because of The Texas Advance Directives Act, which states that, “A person may not withdraw or withhold life-sustaining treatment...from a pregnant patient.”

Erick and Marlise’s parents had asked JPS Hospital to remove her from life support after her death was confirmed, stating that she had expressed to them many times that she did not want to be artificially kept alive.  As a paramedic, she knew what that could have meant for her loved ones. 

However, Marlise had not executed an advance medical directive or a living will clearly stating her wishes.  This is why all of our advanced health care directives specifically address pregnancy for every plan we draft for a woman who can bear children (which many forms don't do). 

But Marlise didn’t have that handled and her family had no choice: they had to go to court.  They also had to endure the worldwide media frenzy surrounding their personal tragedy, and were buffeted by activists on all sides of the issue.

On January 24, a Texas District Court Judge ordered the hospital to declare Marlise dead and release her body to the family.  Her attorneys argued successfully that she was no longer a “patient” since she met every benchmark for death.  She was removed from life support on January 26 to be buried in a private family ceremony.

This sad case is an extreme example of what can happen when legal protections are not put in place prior to a tragedy that can happen to anyone.  To put the proper protections in place for your family, contact our office to schedule a time for us to sit down and talk.  We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article. 

If you have minor children and have not yet selected a guardian, you are not unlike many parents who put off this critically important task while waiting for the perfect solution to present itself. 

Or perhaps you and your spouse/partner cannot agree on who would be the ideal guardian for your kids.

Here is your solution:  Done is better than perfect. Especially here.

If you do nothing, the decision about who would raise your children (if something were to happen to you) would be left up to a judge to decide.  A judge who doesn’t know you, doesn’t know what’s important to you, and doesn’t know your children will make all the decisions about who cares for the people who are most important to you in the world.

I know that’s not what you want.

And, truth is …  there may never be a perfect solution for you, but there is definitely a solution that is better than your children being raised by someone you didn’t choose. 

Perhaps you think the way so many parents do, “if we don’t anticipate it, it will never happen, right?” 

Then I guess that means you don’t need things like insurance or any other type of protection since bad things never happen to good people, right?  And wouldn’t it be great if that were true.

Responsible parents protect their children, and that means you must think about the unthinkable. 

Fortunately, there is a sensible approach to the selection of a guardian for your children that makes it a lot easier.

First, sit down with your spouse or significant other and draw up a list of all potential people you would be willing to have raise your children. 

Don’t judge anyone on the list or even consider whether they would be willing. Just make as long a list as you can of all the people you know who you know, like, and trust that your children know, like, and trust.  It can be helpful if each parent makes a list separately and then compare notes later.

Then,  put your list(s) aside.

Now, make a list of your most important values when it comes to raising your children.  Things like, prior relationship with your children, education level, discipline philosophy or parenting style.

(A complete listing of this process and the values to consider are available on the website www.nckidsplan.com where you can name legal guardians for your children at no charge and be taken through this process of choosing the right guardians, step by step.)

Under no circumstances would you want to consider the financial resources of the people you are considering because it’s up to you to provide enough financial resources for your children and the people you’ve named as their guardians.

Finally, rank your values and compare those values to your list of potential guardians and put each of those people (or couples) in order first, second and third.

Once you have your list, check it against these practical considerations:

• Does your child know them?  Ideally, your guardian selection will be someone your child already knows and trusts.  
• Do they live nearby?  It is probably not ideal to uproot your children from their local community if you can help it.
• Do they share your values?  You will want to choose someone who can raise your children with the same values and beliefs that you would.
• How old are they?  Choosing an elderly person as guardian could mean that your children could lose them too at a tender age.
• Do they already have a family?  If your choice as guardian already has children of their own, would your children blend in well with their family?
• Are they willing to take on the responsibility?  Hopefully the person(s) you choose as guardian would welcome the responsibility, but not everyone does.  Be sure you have a candid conversation with them before you name them as guardian.
  

Finally, document your choices, legally and clearly.  We have a proven process for creating a comprehensive Kids Protection Plan for your children that covers not just the long-term care of your children, but the immediate term as well. Gives instructions to your guardians and caregivers. And puts an ID card in your wallet so your children would never be left in the care of strangers.

Keep in mind that your choice for guardian today could change, and you will likely want to update your guardianship designation as your life and circumstances dictate. 

Make 2014 the year you put the proper protections in place for your family by calling our office to schedule a time for us to sit down and talk.  We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article. 

Asset protection is not something most people think too deeply about.  Most of us are too busy trying to accumulate assets to give to consider the importance of protecting what we have.  A recent article on The Motley Fool investment website notes that there are a number of things that can harm an investor more than a great return on an investment can help, and recommends that we take these four steps to protect our assets:

Get the right insurance coverage.  Life insurance, disability insurance, auto insurance, homeowners insurance, health insurance and long-term care insurance are all ways you can protect your financial security by shifting most of the risk of an accident or unplanned event to someone else – your insurance company. 

Delay Social Security benefits.  One of the major benefits of Social Security is that it is one of the few sources of revenue that can withstand inflation and downturns in the stock market.   Delaying benefits for at least until you are at full retirement age -- and up to age 70 if possible – will maximize your payout and that of a surviving spouse. 

Have an estate plan.   Creating an estate plan helps you provide for your family after you are gone in the most tax-advantaged way.  Use tools like trusts to minimize taxes and avoid probate so your assets will pass automatically to your heirs without getting tied up in court.  Another important aspect of estate planning is assigning powers of attorney and drawing up an advance medical directive so your wishes are respected when it comes to your own health care.

If you are a business owner, choose the right structure.  If you own a business, choosing the right business structure for personal liability protection and taxation can dramatically affect your financial circumstances. 

If you would like some guidance on protecting your wealth, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

Many of the homes in Mooresville, Cornelius and around Lake Norman are second homes or vacation homes for families living primarily in Charlotte or other areas of North Carolina.  These homes are used during warmer months to enjoy beautiful Lake Norman and the many activities it offers.

If you are fortunate enough to have a family vacation home, you know the emotional value it holds for every member of your family.  Many cherished family memories are rooted in a special place, which makes it important for current and future generations to preserve it properly.

A recent Wall Street Journal article explored the use of trusts to preserve a family vacation home.  A trust is often a good choice when the current owners – parents or grandparents – are concerned that joint ownership could lead to disagreements or that maintenance costs may prove too great for the next generation to manage. 

Instead of dividing ownership, you can establish a trust to hold title of the property and fund an endowment to handle maintenance expenses.  In addition, to avoid paying custodial fees to the trust, you can set up a limited liability company to hold the endowment within the trust.

Once the LLC is registered with the North Carolina Secretary of State and the trust is created, the next step is to draw up a legal operating agreement that specifies when the property title and endowment would pass into the trust, usually upon the current owner’s death. 

The operating agreement would also detail how the property is to be used, and grant each member of the next generation the right to equal access to the property.  This is usually preferable to granting equal shares in a property since it prevents any one shareholder from cashing out his or her share and jeopardizing the use of the property by future generations.

As the WSJ article noted, it is usually preferable to have succeeding generations designate a property manager from within the family to make the key administrative decisions and coordinate the use of the property so it is shared equitably.

Using a trust can help guarantee that a beloved vacation home is preserved for generations to come, as well as preserve the family harmony that the home has played such a key role in developing.

If you would like some guidance on establishing a trust, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

Your estate is made up of everything you own, which includes your personal possessions as well as your home, a car, bank accounts, insurance, furniture and more.

But your wealth is much more than just your financial assets. It includes your purposes, passions, family values, memories and stories that make up your personal legacy. 

The purpose of estate planning is to give you the control over how your estate is distributed to the people or organizations you care about, and to preserve your legacy for the next generation and beyond.

Estate planning is also used for a number of other important things, including:

●     Providing instructions for your care in case you are unable to do so;

●     Naming someone to manage your financial affairs if you are unable to do so;

●     Naming a guardian for your children;

●     Providing for children or other family members who have special needs in a way that won’t affect government benefits, and protecting loved ones from the “incidents of life” – creditors, predators, and unnecessary taxes;

●     Providing protection for your assets, both during your lifetime and after;

●     Minimizing taxes and probate fees;

●     Planning for retirement and long-term care costs.

If you don’t already have an estate plan – or have one that needs to be reviewed and updated – make 2014 the year you get this done.  We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

When you look around your holiday table this year, you will probably not be thinking about the beneficiary designations on your 401(k), IRAs or life insurance policies.  But perhaps you should.

Having the wrong beneficiary designated on these and other things like bank accounts, annuities and 529 college savings plans is probably one of the biggest estate planning goofs people make.  This is because most of us name those beneficiaries when we initiate a plan or open an account and then forget about them. 

However, life changes and this is why you need to review and update your beneficiary designations at least once a year.  For example, here are six scenarios that could cause a change in beneficiary designation:

●     You got married, divorced or remarried

●     You changed jobs and moved your retirement account

●     One of your beneficiaries died

●     The birth of a child or grandchild

●     You moved your account to another financial institution

●     One of your beneficiaries became disabled

Not having the correct beneficiary designated (or designating a minor) can wreak havoc on your family when something happens to you as well as create tax issues for your heirs.  You could unintentionally disinherit the very people you care the most about and potentially tie up your estate in probate or, worse, litigation.

Enjoy your holiday with family, and after the holidays are over, make it a point to review your beneficiary designations and update, if necessary. 

If you don’t already have an estate plan – or have one that needs to be reviewed and updated – make 2014 the year you get this done.  We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

A recent Wall Street Journal article noted that boomers and seniors are more interested in passing along family heirlooms and history, leaving a legacy for future generations that extends beyond money.

Citing a 2012 survey by Allianz Life Insurance that found 86% of boomers and 74% of Americans aged 72+ said keeping family history alive was the most important piece of their own legacies, the WSJ article also noted that family mementos and heirlooms are viewed by these groups as a key inheritance item. 

Unfortunately, family mementos are one of the most common causes of conflict among heirs.  Here are some tips for helping to keep your family out of conflict over the things you (and they) love:

1.  Talk to your family about who will get what when the time comes, and work out the details beforehand.  Then make sure all family members are aware of the choices you have made and why.

2.  Have a complete estate plan that includes a memorandum that explains the specific bequests or consider including that in a recorded audio you leave to your family so they not only hear your voice, but the stories behind the mementoes as well as your desire for who gets what and why. 

3.  Don’t play favorites, but do give thought to who you designate to receive what -- these are the things your family will most remember.

4.  To pass along family history and your values, consider creating an ethical will or Family Wealth Legacy Interview.  This can take any form – a letter, a book, a website – and is not legally binding, but instead helps you pass on the intangibles that make each family unique.

If you would like more information about passing on the things you love to the people you love, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

Everyone’s “to-do” lists seem to grow longer at this time of year, but yours is incomplete until you ask your Personal Family Lawyer to support you to get these six tax questions answered before the end of the year:

Should I defer or accelerate income?  If it looks like you’ll be in a higher tax bracket in 2014, ask if you should pull more income into this year.  Conversely, if you will be in a lower tax bracket next year, ask if you should defer income until January.  In addition, find out if you should accelerate deductions by paying any income or property taxes not due until 2014 this year.

Should I take any gains or losses this year?  If you are currently in a low tax bracket and have made gains on your investments this year, you may want to consider selling some investments to realize lower tax rates on those gains. 

Should I do a Roth conversion?  If you have a traditional IRA, you may want to convert all or some of the assets to a Roth IRA, especially if your retirement is years away.  While you will pay taxes on those assets now, your earnings will grow tax-free in a Roth IRA.

Should I make any changes to my FSA or HSA for 2014?  If you have a flexible spending account or health savings account through your employer and anticipate bigger medical expenses in the new year, you may want to increase those funds to allow yourself to use pretax money for out-of-pocket medical costs. 

Should I be making charitable contributions?  If you made more money this year, you may want to think about reducing your taxable income with charitable contributions.  Gifting appreciated securities will allow you to avoid the capital gains tax while still deducting the full amount of the donation.

Should I be making gifts to family?  In 2013, you can give up to $14,000 (or $28,000 if you are married and your spouse participates) to as many individuals as you want.  This allows you to assist family members while removing taxable assets from your estate.  It’s important that if you are going to be giving gifts, you call us because we can set it up so those gifts are protected from bankruptcy, divorce or other creditors forever.

If you would like more information about tax-saving strategies, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

If you have not revisited your estate plan this year following the changes made to the estate and gift tax laws by the American Taxpayer Relief Act of 2012 passed by Congress on Jan. 1, 2013, ask yourself these 10 questions then schedule a meeting with your Personal Family Lawyer:

1.  Should your estate plan be changed to reflect any new laws?  new assets? changes in your life?

2.  Are your assets being tracked so that if anything happens to you, your family knows exactly how to access everything you own right now?

3.  If you have a family LLC or limited partnership, has it been properly maintained to comply with tax laws?

4.  If you have made gifts to family or friends, have you exceeded your exemption limit for the year?

5.  Are you maximizing opportunities for income tax deductions in 2013?

6.  Are the people you have designated as executor, trustee or beneficiaries still the right ones?

7.  Are you employing the best strategies for year-end charitable gifting?

8.  If you donate cash to a charity from an IRA, are those being made properly?

9.  Is there an opportunity to use a trust to protect assets?

10.   What considerations should you be giving to managing capital gains and timing long-term losses?

If you would like more information about creating or updating your estate plan, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

Do you consider trusts to be instruments of the wealthy?  While it is true that many Americans of means have trusts to protect and pass their wealth, there are a number of reasons why trusts can also be useful for middle-class families.  Here are 7 of them:

1.  Control distribution of assets.  You wouldn’t hand over your car keys to a child who has had no proper preparation for driving, and chances are you would not want to hand over all your assets to a teenager either.  But if both parents die at the same time, the children would inherit all the assets upon their 18th birthdays.  A trust allows you to specify how and when you want your children to inherit.

2.  Protect assets from creditors.  Placing an inheritance in a trust ensures that those assets are protected from your heir’s  -- or their spouse’s – creditors. Consider a Lifetime Asset Protection or Wealth Creation Trust.

3.  Protect inheritance from spendthrift heirs.  Not everyone is good with money.  If your heirs fall into that category, you can use a trust to ensure the assets are not frittered away due to spendthrift behavior.

4.  Protect inheritance for children of prior marriage.  You can use a trust to both provide for your current spouse and any children from a previous marriage.

5.  Provide for a special needs heir.  Leaving assets outright to an heir with special needs could disqualify them from receiving important government benefits.  Leaving those assets in trust bypasses this potential risk.

6.  Avoid probate.  Assets can pass to heirs without going through probate by using a trust, saving beneficiaries the time and expense of the probate process. Probate is an expensive, public and unnecessary court process you can keep your family from having to deal with.

7. Protect privacy.  Once a will is entered into probate, it becomes public; a trust is a private document that will protect your family’s privacy.

If you would like more information about protecting your loved ones, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.