Thursday, December 16, 2010

The Tax "Deal" - the Forecast is Dark Clouds on the Horizon

My fellow member of WealthCounsel, Richard Wohltman of Alexandria, VA,  posted this relevant commentary on the Tax “Deal” currently being ushered through Congress. 

There has been a lot of talk this month about the "deal" to extend the Bush tax cuts. That "deal" also includes a substantial increase in the amount that can pass to your heirs without paying any federal estate tax. The 'exemption amount' will be increased to $5,000,000 per person.

The stated reason for that increased exemption amount is to help 'small' business owners and family farmers pass the business or farm to their heirs without having to pay estate taxes. It also means that all but a very limited number of multi-millionaires will have to file and pay federal estate tax.

Dark Clouds are Forecast.

There really are dark clouds on the horizon even if the "deal" is passed by Congress before the end of the month. The increase in the exemption is going to add billions of dollars to the federal deficit. The Treasury is going to have to borrow that money and we are all going to have to pay taxes or have benefits reduced just to pay the interest on those loans. And the day will come when the loan will have to be paid in full.

There is a more pressing problem, however, for estate planning. The "deal" only lasts two years! At the end of 2012 we will find ourselves right back where we are now -- facing a stupendous increase in the number of estate tax returns and tax payments when the exemption amount falls to just $1,000,000 starting January 1, 2013. The problems from the end of the Bush tax cuts (and the increased exemption amount from the "deal") return in 2o13. The uncertainty of how all of the estate and gift taxes will be interpreted once the large exemption disappears is the big grey cloud on the horizon for estate planners.

Estate planning attorneys have been hoping for some stability in estate tax policy so plans can be designed based on a clear expectation of how estate taxes will be calculated when death occurs. That stability disappeared with the Bush tax cuts. Estate planning attorneys all knew we were faced with the potential return to the 'old rules' with only a $1,000,000 exemption in 2011 and had to plan for the return of the middle class taxable estate. The same lack of stability continues since we can only look at what happens at the end of the next two years.

What does all this mean to you?

Don't think that the "deal" will make your estate planning easier just because you don't have Five or Ten Million Dollars. The vast majority of our clients require extra tax planning if the exemption returns to 1 Million Dollars.

Your estate planning lawyer must assume that the lower exemption will return and is forced to include options to address the substantial estate tax liability that will return in 2013. Your estate plan will continue to require more complication just to protect your family and your business with the automatic termination of the "deal" in 2013.

Where's the silver lining?

Just remember, if there is a silver lining in every grey cloud, that doesn't mean that the grey cloud is gone.  Don't let the proposed silver lining blind you to the limits inherent in any "deal" that lasts only two years!

Tuesday, December 7, 2010

The Federal Estate Tax Lapsed for 2010

The federal estate tax lapsed for 2010, and barring no action by Congress it was scheduled to return on Jan. 1 with an exemption of $1 million per person and a maximum rate of 55 percent. 

I have good news to share with you.  The long wait for action to address the unknown status of the federal estate tax may be approaching an end.  In a December 6, 2010 online posting by the New York Times, they reported that President Obama announced a tentative deal with Congressional Republicans on Monday.

An excerpt of the article appears below, and a link to the full article is included.  The accompanying photo by Joshua Roberts of Reuters appeared with the article.

Mr. Obama made substantial concessions to Republicans. In addition to dropping his opposition to any extension of the current income tax rates on income above $250,000 for couples and $200,000 for individuals, he agreed to a deal on the federal estate tax that infuriated many Democrats. The deal would ultimately set an exemption of $5 million per person and a maximum rate of 35 percent — a higher exemption and far lower rate than many Democrats wanted.


But the NY Times article also cautioned that the deal is not supported by all parties.  So resolution may be within sight, but it is not yet a finalized deal. 

“The House Democrats have not signed off on any deal,” Representative Chris Van Hollen of Maryland, who has been representing House Democrats in formal negotiations on the tax issue, said Monday night. “We will thoroughly review and discuss the proposed package in the caucus.”

Some senior Democrats said an agreement by Mr. Obama to accede to Republican demands on the estate tax could lead to a revolt among lawmakers.

With this positive news in the air, it may be time to schedule a meeting to adjust your estate plans to maximize the impact of this likely change in the federal estate tax law.  Call me for an appointment, or leave a comment with a question below.


Monday, November 29, 2010

NEWS FLASH: Yankees Beat the Miami Dolphins!

Yes I know, that's impossible. But the heirs of George Steinbrenner, who died recently at the age of 80, certainly came out ahead of the heirs of Joe Robbie, the former owner of the Miami Dolphins who died in 1990.

Steinbrenner's timing couldn't have been better. His heirs will inherit the team without having to pay any estate taxes on a $1.1 billion estate. See “How Steinbrenner Saved His Heirs a $600 Million Tax Bill” from the Wall Street Journal here.

Contrast this with Joe Robbie. When he died in 1990 the heirs had to sell the football team and the stadium at fire-sale prices in order to pay a whopping $47 million estate tax bill.

Unlike most owners Joe Robbie built his own stadium entirely with private capital. The stadium had to be sold along with the team and it no longer bears Joe Robbie’s name. For more details see “
Yankees vs. Dolphins: Steinbrenner’s Final Victory

You could say, "Yeah, but his heirs are still wealthy." True. But it really isn’t just about money. Robbie's intentions were defeated; his family was removed from the success he worked so hard to build from his very modest depression-era beginnings. Estate planning affects the heart as well as the pocket book.

(What happens to the ultra-wealthy can happen to any small business owner…often with more devastating results. I’m always available to share my experience and knowledge to create a better estate plan.)


My thanks to my associate Greg Turza who practices in the state of Illinois for this clever commentary on estate planning. 


Monday, November 8, 2010

Benjamin Franklin does estate Planning

Benjamin Franklin is largely known today for his key roles in the American Revolution, the formation of the United States, and his diplomacy with France.  But Franklin was also a very successful businessman.  Starting with absolutely nothing, he built a substantial fortune.  And he capped it off by demonstrating keen skills developing his estate plan.  His approach to estate planning is addressed in a posting by my WealthCounsel colleague, Suzann Beckett who practices in Connecticut.  I hope you enjoy this quasi history experience while admiring Ben Franklin’s adroit estate planning skills.

Estate planning, the Franklin way

The subject of Ben Franklin came up the other day in conversation. More specifically, the subject of Ben Franklin's visionary approach to estate planning, came up during a discussion of how the average person can make the most of their wealth for posterity.

Benjamin Franklin was many things. Born into humble circumstances, Mr. Franklin very literally ran away from home, then followed up his running away by working, innovating, persevering, and struggling to ultimately become one of young America's wealthiest and most respected citizens. He knew a thing or two about math and the compounding of interest, too.

For those who are truly curious, a version of Benjamin Franklin's Last Will and Testament is available online, from the Franklin Institute. Included is a codicil to the original Will, that should give anyone pause. Franklin's significant wealth is apparent, as is evidenced by the extraordinary number of homes, land, and valuables he details in his Will. But the relatively minor sum of one-thousand pounds sterling mentioned in the codicil, which would be equivalent to roughly $4,000 at the time – is particularly impressive for those of us who would like to make an impact on the generations to follow, even if we do not have the financial capacity to astound the neighbors at the moment.

Franklin specified that the money should be held in trust. Two trusts, actually. One-thousand pounds sterling was provided to the city of Boston, where Franklin was born, and one-thousand pounds sterling was given to Philadelphia, the city that is most commonly associated with Franklin as his home. Both funds were specified to be held and invested, in a specific manner, and maintained for two-hundred years. A significant amount of time, certainly. But Franklin wasn't looking for returns that could be looked down on as small potatoes. He was looking to shake the world. And he did. He has. He continues to, and will for years to come.

You see, Franklin's $4,000 investment has grown to millions of dollars in the interim. The funds he put away for posterity have done exactly what he hoped they would do. And through careful management, they have continued to grow, and expand in value through good times and bad.

Now admittedly, most of us don't think two-hundred years into the future – and most of us don't have massive estates like Mr. Franklin had. But almost all of us can find a way over the course of our working lives to put away a few dollars in the hopes that we can make the lives of our children and grandchildren more comfortable and satisfying than ours may have been.

If Franklin's Will proves anything, it is a tangible demonstration of how a well intentioned gift, well managed, well planned, and well executed, can change the lives of generations to follow.

It's something to think about, isn't it?


Benjamin Franklin exercised far more farsightedness in his estate plan than most of us feel the need for.  But Franklin did reveal the powerful benefits to be gained from well thought out plans.  His clever employment of the principal of compounding into his estate plan is admired to this day.  Bravo to Benjamin Franklin – for executing an estate plan that has spanned several centuries.  I am available to assist you with an estate plan to span a decade or two, and I would enjoy the challenge of assisting you with an estate plan for several centuries……if you wished to follow the lead of Benjamin Franklin.

Friday, October 15, 2010

Disabled and no Medicare to help!

There is a “gap” in Medicare coverage for those who are disabled and under 65.  Richard Wohltman describes his concern about this “gap” below.  Wohltman and I are both members of WealthCounsel – a nationwide Community of Estate Planning Practitioners.  He is located in Alexandria, VA and I find his views valuable, because he is frequent lecturer on Estate Planning and related issues.  And he is also a contributing author of Ways & Means - Maximize The Value of Your Retirement Savings. 


"More than 50 million people in the United States have disabilities, a number that is growing rapidly as the population ages. Experts say disability will soon affect the lives of most Americans." Patricia Bauer.


If you are unlucky enough to suffer a disability when you are under 65, you may find that Medicare is the only way your health care costs can be paid. If you or a loved one becomes disabled and are unable to work, you may be extremely frustrated to discover that there is a long delay before you are qualified to receive Medicare assistance. The general waiting period is two years after they start receiving Social Security Disability Income.


Andy Hook is a respected elder law attorney in Virginia who wrote about this dilemma in his article "Waiting for Medicare" in the September 17, 2010 edition of the Oast and Hook News.


"A recent Kaiser Health News article addresses the issue of Medicare and persons younger than 65 years of age who have disabilities. Under current federal rules, such persons are not eligible for Medicare until two years after they start receiving Social Security Disability Income. . . . Congress created the waiting period in 1972 when Medicare was expanded to cover persons with disabilities. The waiting period was designed to control costs and to ensure that only those with ongoing, severe disabilities received Medicare coverage. According to the Kaiser Family Foundation, approximately seventeen percent of Medicare’s 47 million beneficiaries receive disability benefits."


Andy notes that the waiting period is shorter for people with certain specified disabilities, many patients face extreme financial hardship during the extended waiting period. The new health care program may eventually remove barriers for patients to be eligible for private health insurance, the only answer to this unhappy situation is in Congress' hands.


"Edmund Haislmaier, a senior policy research fellow at the Heritage Foundation, said that eliminating the waiting period “is always going to be an issue in Congress. Some of it is money, some of it is politics, too. For members of Congress, irrespective of party or where they stand on the issue, it’s kind of all-or-nothing because if they did it for some diseases, they’re immediately going to be inundated with ‘Why didn’t you do it for us?’” Some groups, however, such as the Huntington’s Disease Society of America, are asking Congress for specific waivers from the waiting period for their diseases. They believe it may be more politically feasible to press for relief for specific diseases, because the cost of doing so would be less than the cost of across-the-board relief."


You can find Andy's complete article at "Waiting for Medicare"


I guess we all assume that health care is something we will be able to obtain if we are disabled. I know that I was upset after reading Andy's article. I think you will be too.


Your local elder law attorney may be able to help you find alternatives and opportunities if you or a loved one has to face this unfortunate situation.


The fact that my colleague, Richard Wohltman, finds this information upsetting surely means that you may be unaware of this “gap” in Medicare coverage.  Please contact me if you have questions….or please comment on this posting.

Wednesday, October 6, 2010

Can a DIY Will cost you a bundle?

In this age where all the information you ever wanted can be found on the internet, it is no surprise to encounter articles like the one in Forbes magazine raising concerns for those who save now on a Do-It-Yourself Will only to leave an expensive nightmare for their heirs.  I enjoyed this brief commentary by my WealthCounsel associate, Suzann Beckett.  I hope you also enjoy it.


Punctuation is important. For instance, consider the difference between a period and a comma. Sure you might think of one as a point of ink, as opposed to a point of ink with a tail. But if you misplace that comma and insert a period instead – that little error of grammar could just cost your heirs a legal tussle like you never dreamed was possible.

It's true. I swear.

Then again, filling in the blanks can be a nightmare in disguise, too. Imagine using a DIY Will package that innocently asks you to, “Insert Name Here.” No problem, right? Well, no problem unless you attach a dollar figure to that line, and fail to include a name. You might just inadvertently have directed a substantial sum of money to, “Insert Name Here,” whomever that might be. If nobody catches the error, your heirs just might be stuck with a battle royal over what you meant to write, as opposed to what your Will actually says.

Deborah L. Jacobs outlines these two disasters of DIY estate planning, as well as some notable others, in an intriguing column featured on You can find the full Forbes story here.

Jacobs makes some excellent points about the importance of taking estate planning seriously, whether you are wealthy or not, famous or anonymous, a DuPont or a Miller. We all suffer the same tendency to put off the inevitable – sometimes until the inevitable beats us to the punch.

Anyone who even dreams that estate planning doesn't matter should read Jacobs excellent article if for no other reason than to understand better how a rancher could have lost $3.5 million in estate taxes, as a result of an effort to economize on the cost of having a will drawn up. You may also be entertained, or horrified by the story of how a simple note from the late CBS reporter, Charles Kuralt, could have led to a legal battle that lasted 6 years.

It's a subjective question, to be sure. But it's one worth asking ourselves. Where is the real savings found, up front in the estate planning phase of life, or possibly later, assuming no legal wrangling results from using DIY legal forms and software packages?

The author of the Forbes article on DIY Wills is a lawyer who took a turn to writing and journalism.  The Forbes article is likely a precursor to her new book that is being released soon.  There are many horror stories of people who took a shortcut in their estate planning.  Rather than dwell on these wills gone bad, I’d rather talk about the wills done well where I assisted people to truly plan their estates in a way that met their objectives.  Call me if I can help you in pursuit of your estate planning objectives.

Friday, September 24, 2010

Do It Yourself Estate Planning

Forbes Magazine’s September 7 issue had a thought provoking article on “Do It Yourself Wills”.  My WealthCounsel colleague in Montana, Mark Josephson, took the conversation one step further with the commentary he shared.  I hope you find this informative.

Josephson begins,  “My Larsson estate commentary and a recent article on regarding the pitfalls of do-it-yourself estate planning,  The Case Against Do-It-Yourself Wills  got me thinking about some additional comments.  I could not agree more with the overall point made in the Forbes article.  I do disagree with some of the details. 

The Forbes article talks about the famous Montana court case involving Charles Kuralt (remember he was the famous CBS broadcaster who labeled Montana's Beartooth Highway as the most beautiful drive in America) and his handwritten love letter to his mistress.  In a case that went to the Montana Supreme Court FOUR times, his handwritten love letter was ruled to have given his valuable Montana property to his mistress and to add insult to injury Kuralt's family had to pay the estate taxes due on the Montana property because the handwritten letter did not coordinate with the tax clause of his professionally drafted Will.

The article reminded me of another Montana case,
The Estate of Dern, in which case Mary and Clifford Dern, who each had children from a different marriage, bought a trust package from a non-lawyer and also attempted to amend it themselves four times -- sometimes having proper signatures, sometimes not.  In the end, the children ended up suing Mary with the case ending up in the Montana Supreme Court.  I think Justice Nelson in that case summed up the whole do-it-yourself thing as best as I've ever read.   He said:

Given the facts of this case, it is appropriate to make a further observation. If nothing else, our decision here should serve as a warning of the pitfalls of the "canned," "fill in the blanks," "one size fits all" trust instruments that are increasingly being sold to unsuspecting members of the public, particularly senior citizens, by salesmen, many of whom have no professional qualifications whatsoever and some of whom are little better than scam artists. ... In truth, few areas of the law are more technical, complicated and prone to financial disaster than estate planning and trusts, nor more demanding of the sort of individually tailored advice and assistance that can best be obtained from a competent attorney and tax professional. This case, unfortunately, proves that point.  [my emphasis added]

From his position on the bench, Justice James C. Nelson of the Montana Supreme Court certainly offered a stern warning on the “DIY Wills”.  The Judge’s views seem to have been formed long before the Forbes 9/07/2010 article, but his sentiments seem to parallel the Forbes article.  I’d like to serve as the ounce of prevention by serving as your “competent attorney” that the Judge refers to in his above commentary.   

Wednesday, September 15, 2010

Estate Planning Traps

This is a helpful bit of information that my fellow estate planning colleague, Mark Josephson, posted from his law offices in Montana.  He’s relatively new to blogging, but I think he’s done well with this information in a summary format.  I am reposting his information to share with you. 

I seem to be on a roll this morning over the pitfalls of do-it-yourself estate planning.  Here is list of Common Pitfalls and Traps I've had in my basic estate planning handout for clients:

1.  “I’m too young to worry.”  Reality: If you die young with a spouse and/or children you need to protect your loved ones.  Also, by planning early you have the power of leverage/appreciation.

2.   “My estate is too small.”  Reality:  If not planned, a smaller estate can suffer greater percentage shrinkage than a large estate due to increased administration costs necessary in a non-planned estate.

3.   “I’m leaving everything to my spouse, so estate tax doesn’t matter.”  Reality: Leaving everything to a spouse just postpones tax and wastes the dead spouse's estate tax “coupon”:  Wasting a coupon meant wasting $1,575,000 in tax savings in 2009.

4.  Believing one size fits all.  Corollary: You get what you pay for.

5.  Not paying attention to who you have on what and how: Beneficiaries of life insurance, annuities and retirement accounts.  Wrong people get the wrong property.

6.  Failing to consider trusts as vehicles to pass wealth during life or at death.  Convenience trusts, irrevocable life insurance trusts, “Crummey” power trusts, intentionally defective grantor trusts, GRATs, QPRTs (for cabins or vacation homes).

7.  Not planning for your disability; not avoiding a “living probate”.

8.  Not having any will or trust, handwriting it yourself, or having them prepared without proper analysis for your situation.

9.  Too much in joint tenancy with right of survivorship; disproportionate ownership by husband & wife.  Joint tenancy is convenient but it can ruin an estate plan if not used correctly.

10.  Failing to name guardian of minor children.

11.  Failing to prepare business succession plan.

12.  Failing to plan for estate liquidity and/or tax payment alternatives.

13.  Having too little life insurance.  If you, the money maker dies, what is your family going to live on?  Often life insurance is the only affordable way to solve the problem.

14. Not realizing life insurance you own on your own life is included in taxable estate for federal estate tax. While the proceeds may be income tax free, they are not necessarily estate tax free if you own a policy on your life.

15.  Not considering lifetime gifting program:  Children, grandchildren, charitable techniques.

16.  Not considering alternative operating entities.

17.  Procrastination:  Letting indecision lead to inaction.  Usually, doing something is better than doing nothing.  See my post below on How to Avoid Vapor Lock

18.  Lack of Communication.  While your estate is private, you should discuss matters with those you intend to have care for you or handle your affairs after your death.  Often better planning happens when the younger generation is included and aware of what's going to happen.

19.  Not keeping estate plan up to date.  You should review your estate plan at least every few years. 

20.  Believing a magic bullet exists or “This won’t happen to us.” 

21.  BEWARE of “constitutional,” “pure,” or “common law” trust schemes. 

Remember:  If it sounds too good to be true, it is.


I enjoy having Mark as a colleague.  For your information Mark does good work, and his firm, Josephson Law Firm,  has received the highest rating through Martindale-Hubbell and is listed in the Bar Register of Preeminent Lawyers.  Additionally, Mark Josephson has recently been selected by his peers for inclusion in the 2010 edition of The Best  Lawyers in America.® 

If you have questions about any points Mark makes in this post, please leave them as a “comment” below, or call my office.


Wednesday, September 1, 2010

"Dragon Tattoo" Estate Drags On

A recent post by fellow estate planning attorney, Greg Turza offered an interesting commentary illustrating the need to clearly identify who your heirs are.  I hope you find this an interesting story about this famous author and his death without a will.  

Stieg Larsson, the author of the best selling novel “The Girl with the Dragon Tattoo” (now a movie), died in 2004 without a will. His heirs are still fighting it out with Larsson’s live-in girlfriend of 32 years. She and Larsson never married which leaves Larsson’s heirs as the sole beneficiaries of his estate.

Swedish law is the same as many states on this issue. If you die with no spouse and no children your heirs are your siblings and your parents. In Larsson’s case this means his father and his brother. Apparently, the basis for the girlfriend's claim is that she was involved in the editing of his novels. For more details see the story here.

You may be surprised to see who your “heirs” are if you died without a will. It depends on the relationships you have by blood or marriage who survive you. To determine who your heirs are under our state laws, you might want to spend a quick hour with me to get up to speed on this.

One other interesting aspect of the case is that all three of Larsson’s novels were published after he died so the value of his estate at the time of his death was probably nil. But as it turns out, even if he had great wealth at the time of his death Sweden repealed its estate tax in the same year of his death, 2004! If only the United States would follow suit.

If Steig Larsson had spent an afternoon with me, he would have avoided many of these problems.  And the lives of his heirs would have been considerably less stressful.  If you want to avoid Steig Larsson’s fate, please contact me, and let’s meet.  If you’d like to read Larsson’s trilogy, you can find it here:  Millennium Trilogy.

Thursday, August 12, 2010

ILL WILL calls for a WILL with special terms

Not surprisingly situations occur that drive a person to disinherit a child or heir.  My colleague in Wealth Counsel, Greg Turza , offered the following comments, and I am sharing them with you. 

Has one of your children run off and joined a religious cult where he was taught to reject his parents? Or become a compulsive gambler--or even worse -- a criminal?

Disinheriting a child who has become estranged from his family is often understandable. Knowing how to do it right is critical if you want to avoid court battles over your estate when you are gone.

Generally, children have no right to inherit under a will or trust. In Illinois you can exclude a child from your will or trust simply by omitting the disinherited child’s name. But this can lead to costly litigation.

Suppose after you die the disinherited child claims that the omission was inadvertent? Or a product of “undue influence” by the children who were included? Costly litigation will erode their inheritance.

To avoid this calamity the best policy is to specifically mention the disinherited child and state explicitly your decision. For example: “I acknowledge the existence of my son Michael Smith but have decided to make no provision for him as beneficiary.”

Remember, sometimes children are disinherited simply because they are wealthy or because the other children need more help. In such a case consider as an alternative: “It is not for lack of love and affection that I have decided to make no provision for Michael Smith in this instrument.”

Not surprisingly, to disinherit a child or heir requires attention to detail.  Knowing how to do it right is critical to preserve your estate from expensive court battles when you are gone.  If this is a topic we should discuss, call me or leave a comment here.  

Tuesday, July 13, 2010

Include your Digital Assets in your Estate Planning

Before we leave the topic of Digital Assets, I have one more excerpt from an article by Dennis Kennedy, who is an information technology lawyer and legal technology writer who publishes a monthly column in the ABA Journal.  You can find the full text of the article at The rapid explosion of digital information and accounts is making this a topic of interest to nearly everyone of us.

Inventory Your Digital Assets.

I spent a large part of my early legal career as an estate planning lawyer.  In the case of either death or incapacity, the first important step is to track down and identify all of the assets, liabilities and other concerns that must be addressed.  Once an inventory is created, you can move forward with marshalling and collecting assets, identifying outstanding liabilities and paying them in a timely fashion, and dealing with outstanding issues, such as turning off utilities, canceling credit cards, arranging for storage or disposal and the like.

In the real world, your family and designated successors (personal representative of your estate, trustee of your trust or attorney-in-fact under a durable power of attorney) will be aided immensely by any list of assets and liabilities that you can prepare for them and leave in a place that is easy for them to obtain.

In your digital world, you also want to help your successors by creating an inventory.  The more detailed and accurate the better, of course, but even a small start can be of help.  Here are some of the things I suggest that you inventory:

  • Hardware.  Inventorying your hardware seems like an easier project that it actually will be.  I suggest that you create a list of your hardware with a summary overview of what is on it.  Creating the inventory is likely to be an eye-opener for you.  You are likely to find that you have important information not only on the computer system you use everyday, but also on multiple other computers.  Many of us have at least one laptop and one or more desktop computers.  Many people keep copies of vital information on their work computers.  Where do you back up information?  You might have many USB flash drives, USB hard drives, backup CDs or DVDs.  There might be important pictures still on digital cameras and even information on iPods or other devices.
  • Software.  Do you use Quicken or another financial program?  What income tax preparation programs do you use?  Do you create spreadsheets or Word documents with important financial information?  If you blog, is there a program that someone would need to use to post news to your blog?
  • File structures.  Your inventory should sketch out the main folders and places where you keep personal, financial and client files and documents.  For someone like me, I also have audio and video of presentations and podcasts that I’d want someone to be able to locate and deal with.  You might have important collections of family photos or videos or work in progress.
  • Online presence.  Create a list of your Web site(s), blog(s), Facebook and other social media accounts, online backup sites, online sites where you store documents, photos or other files, and listservs, groups or other sites to which you belong.
  • Online accounts.  Amazon and other shopping sites make it easy for you to create accounts and include credit card information.  You might also have online access to bank and investment accounts.  In fact, in many cases, you might no longer be receiving paper statements for accounts.  If you don’t identify these accounts, it will be difficult for your successors to even know that they exist because there simply will be no paper trail.  Also, make a list of all the e-mail accounts you have and use.  Many of us have several e-mail accounts these days.
  • Work information.  Lawyers might have access to client sites, collaboration sites, online document repositories or other information that no one else knows about.  In addition, they might have access to software, online tools or online databases that someone taking over their work will need to have.  In some firms, lawyers might have important network passwords, backup media or other digital assets the existence or value of which is not realized until they are gone.

At this beginning point, you really want to gather and collect as much information as you can for your inventory.  You can work on organizing and prioritizing later.

This is a new area of estate planning, and this information is helpful to trigger our thinking about our digital lives…..and which parts of our internet interaction, our home computer, and our business computer have become our digital assets that should be part of our estate planning.  My suggestion is that digital assets are  well worth organizing and treating as assets of your estate. Your comments or suggestions are welcomed to this blog.  And I am available to discuss  steps for managing your digital assets beyond the above list…..if advisable, let’s talk.

Monday, June 28, 2010

Who takes care of your Estate's Digital Assets?

The following is an excerpt from an article by Dennis Kennedy, an information technology lawyer who authors a monthly  column in the American Bar Association Journal.  You can find the full text of the article at

Andy Olmsted was a rare individual, in no small part because he is one of the few who thought carefully about what would happen to his online presence if he were to die. A popular blogger, Olmsted wrote a post before he left for service in Iraq, along with instructions for his survivors to post it to his blog in the event he was killed in action. Unfortunately, it had to be posted. I read the post on the day it appeared in 2008, and I re-read it when I prepared to write this article. It remains for me one of the most moving posts in the history of blogging

Tips for Providing Digital Assistance After the Death of Another

It’s also possible that either as a survivor, you might find yourself in a position where you need to handle someone’s digital affairs. I have a few tips.

  • Find knowledgeable technical and legal help.
  • In the case of a death, try to get to contact lists, e-mail accounts and social media accounts to notify friends who the deceased would want to be notified.
  • Change all passwords as soon as possible.
  • Try to understand the totality of the person’s online presence and identify some of the people he or she has interacted with most for assistance, especially in the social media platforms.
  • Do not start closing accounts, shutting down hosting and e-mail, or taking other drastic steps until you have a good sense of the individual’s presence and what you are ultimately going to do with it. Keeping a Web site up for a year or more will not be expensive. Shutting it down too early and losing valuable data could be quite expensive.
  • Be slow to delete, but when you delete or dispose of computers and drives, delete in accordance with forensic standards so data cannot be retrieved by others.
  • Spend $100 on an external USB hard drive and make a copy of all hard drives, flash drives and other data and keep them in one safe place. Once you start to go through the data, you can keep another drive with the “good stuff.”
  • Make copies of Web sites and other online accounts.
  • Locate all the financial information and client records as soon as possible and aggregate and isolate them.
  • Remove credit card information from shopping accounts.
  • Err on the side of keeping e-mail, documents and photographs for family members.

Tuesday, June 15, 2010

Resurrection of the Estate Tax?

The absence of rules for the estate tax is concerning.  Greg Turza is a fellow estate planning attorney who practices in Skokie, IL.   He read a recent article on the estate tax situation, and what follows is his summary.  His post also includes a link to the more detailed article.  And you are welcome to contact me with any of your questions.   

The good news is the estate tax is repealed! The bad news is, not for long. Since Bush's 2001 tax cuts went into effect the exemption from estate taxes climbed year by year from $1 million to a high of $3.5 million in 2009.

This year, 2010, is the repeal year but the Bush administration could never garner the 60 votes he needed in the senate to make the repeal permanent.
The consequence is the so-called "sunset" rule. As of January 1, 2011 the law automatically goes back to the way it was in 2001. In the case of the estate tax that means only a $1 million exemption and a top 55% tax rate.

The Obama administration advocates extending the 2009 exemption of $3.5 million on a permanent basis. This appeared to be where the Senate was headed on May 18th when an agreement was reached that had the support of more than 60 senators.

But the deal fell apart when the Democratic leadership decided that it will not allow the legislation to come to the floor for a vote unless the legislation has the support of more than half of the Democrat's 59 votes. Since the Democrats lack 50% support within their party the legislation failed.

Regardless of what happens there will be an estate tax next year. The only question is whether the exemption will be $3.5 million or $1 million –and $ 2.5 million is a huge difference in the plans for millions of taxpayers.

For the full story click here.

The “up-in-the-air” situation with the estate tax is concerning.  It is best to have a plan of action that you can execute quickly once the direction is finally established.  If you’d like to discuss ways to assemble a plan in advance, either comment on this blog with your questions or call me to meet in person.     


Thursday, June 10, 2010

Listening is Key with Aged Adults

Mary Lynn Pannen is one of the nation’s leading experts on Geriatric Care Management and Home Care for seniors. As President of Sound Options, she has built a very successful home care business in the Puget Sound region.  Mary Lynn recently described her company’s service this way: “Able to transform potentially stressful circumstances into readily manageable solutions, Sound Options works with clients with a wide range of needs and medical conditions.” I was struck with how similar her mission is to my mission in constructing comprehensive and well-thought-out estate plans.  For those of you wrestling with plans for your older adult parents, I thought you would benefit from this recent blog post by Mary Lynn.

One of the reasons that I am intrigued with working with older adults is their life stories. I really like listening to how a person summarizes their life or how they remember the simplest detail. Listening is a pleasure and it is so important while helping older adults live out the last chapters of their lives. One can learn so much by listening. As an adult child you may hear things you never knew before and that may allow you to see your parent in a different light. You may learn the very reason for why your parent made decisions – good or bad. I find listening creates for me more understanding and that at the end of the day we all have similar wishes and desires.

  1. If possible have your older parent participate in planning their care
  2. Create a safe environment for your parent
  3. Provide quality of life- this will be different for each person.
  4. Talk about the old times. Reminiscing can be very satisfying to both your parent and you.
  5. Do not make promises you cannot keep
  6. Make sure that their end of life desires are fulfilled
  7. Do not forget that your parent is an adult – not a child
  8. Provide ways for your parent to remain as safely independent as possible

Planning and sensitivity becomes even more important with age.  And it is even more important to address the personal as well as the factual elements of the situation.  If I can be of assistance in “transforming your potentially stressful circumstances into readily manageable solutions”, please, let’s talk.  Call me.

Tuesday, June 1, 2010

A word or two about ethics brings the comfort of confidentiality

Meet one of my fellow Wealth Counsel attorneys, Suzann Beckett. Suzann is a colleague who practices in Connecticut, and she recently posted to her blog this reminder of ethics guidelines as they apply to sharing confidential information.

Perhaps one of the least talked about aspects of working with a lawyer
is the fear some of us have of exposing our personal lives to a total
stranger. That reluctance takes a back seat in criminal law, where the
process you are thrust into isn't voluntary. But when considering the
larger decisions in life, opening the books on a lifetime of financial
acquisitions, debts, and concerns to a total stranger can lead some
people to avoid involving a lawyer when making long term plans.

Like most fears, the emotional reaction we have can be profoundly
counter-productive. Sadly, it isn't all that unusual for costly,
irreparable mistakes to be the result of our attempts to keep prying
eyes out of our business.

The key is to be selective. When you plan for the future, you don't
necessarily want to show the records of your financial holdings to your
hairdresser, or the guy who mows your lawn. But it would be a good idea
to come clean with the IRS on an annual basis. And although it may seem
counter-intuitive, the best way to maintain control of your wealth and
property over the long haul is to have an open, honest discussion of
your plans with a legal professional who has your best interest at
heart. Whether you are buying a home, building a business, filing for
bankruptcy protection, or planning for the handling of your estate, you
want to be the person in control - and you want the decisions you make
to be based on solid legal grounds, not a gut feeling that may or may
not stand up when you need it to.

Keep in mind that you are the customer, and the law is in a very real
sense, a service industry.

So rest easy when you think about laying open your books, and your plans
to a lawyer. The Bar Association holds lawyers to a very high ethical
. Like your doctor, your lawyer is required by law to keep your
confidence. A responsibility that we take very seriously, and one that I
find comforting whenever I sit with a client who indicates the slightest
concern for the security of their personal information.

When serving as your legal counsel, it is my responsibility to act with your best interests at heart. This posting by Suzann Beckett is a concise reminder that my counsel to you is for you and in your best interest. When offering counsel in my professional capacity, it is always confidential and it is specific to your needs.

Monday, May 10, 2010

First String or Second String..They should all be good

Being a member of the Wealth Counsel organization gives me access to the first string across the country, and recently one of these colleagues addressed what is a concern for many of my clients.  So I’m passing along his thoughts. I think you will find them, as I did, to be very relevant and helpful.

“Typically a client builds a team of advisors to pull all the planning and implementation pieces together.  We all know that selecting this first team of advisors is very important. Many people are extra thorough in their approach.  Getting referrals, researching others experiences, and hopefully assembling a trusted group of advisors in the process. And in most cases, once they pick their advisors they typically stick with the team. Most people don’t like change, so a well chosen team avoids future stress and churn in the team’s makeup.  

One the First Team has been built.  Then comes the next most important task – choosing the Second String.  This is a critical next step, but often people don’t take this “second string” step. What do we mean by “second string”? Just as in sports, these are the “subs” or the ones that come into the game when something happens to the “first string” or starters. These are the ones waiting in the wings to take their place without a loss of momentum. 

The same situation occurs in working with your advisors for some of the most important aspects of your life – your wealth, your wills, your trusts, etc. We can all agree that no one is going to live forever. But few people take the next step to minimize their estate risks by picking “successors” to back-up each member of the first team. 

When it comes to managing personal risks, a succession plan should be implemented, especially for estate planning. It does take a bit of time, and it is a nominal investment.  But it is wise to have that second string in place sharing the “playbook” for your estate. It just helps lower your risks, lowers your stress and allows you to sleep better at night.”

Friday, April 30, 2010

Take your's Good For You

Americans just do not like to discuss estate planning. Supposedly 7 out of 10 of us have no plan. Of the 3 who do, what are the chances that the plan is up to date? 

A friend of mine, Michael Stuart, just sent me this article in the NY Times, Estate Planning as Family Conversation, talking about talking. I wanted to share it with you as it paints the picture of what happens with no plan, and even how to open a conversation about one. 

When I think about the plans that I have helped clients create, many stories come to mind. One recurring theme is a senior couple who own some investments and real property, with one of their adult children serving full-time as a caretaker. Other kids are not too involved in things… and the caretaker daughter pretty much has her hands full with children of her own and helping out the folks. In this situation, the adult daughter has a full time job or two already… and no outside means of support. 

Many parents want to treat children "equally." But what do you do when there is only so much to go around, and the cost to one kid (the helper) is simply going to be too high for that to even remotely be fair? Parents must first plan for their care, then consider being "fair" rather than "equal" to those who follow. 

It's often the right thing to do… but without some conversation, and openness, it will likely have a huge cost in terms of relationships down the line. And ignoring this dynamic is unlikely to provide a better result. So start talking, it is a big first step to helping you with your estate planning today and well into the future.


Tuesday, April 13, 2010

Why is better than an attorney

A legal colleague of mine, Dennis Brislawn, wrote an interesting blog post about the use of compared with the services of an attorney, and I thought you might find his perspective interesting.
I recently had an opportunity to check out some LegalZoom documents.  One of my friends used the LegalZoom service to prepare some Wills for his kids.  They were simple trust planning documents.  Each spouse left the estate to the other, but if both were deceased, they had a Common Trust for all kids until they turned 21, then money would split into shares that each child would receive in equal installments at ages 24, 27, and 30.  These LegalZoom documents even had powers of attorney and all the trimmings.
The documents looked pretty "legal.”  My friend did the plan himself, in an hour or two on the weekend, and only spent a few hundred dollars.  He did this lieu of going to an attorney for budget reasons and scheduling difficulty with his activities.  At least he did something, which is far better than not covering this important issue – so kudos to my friend.
When he sought my opinion, my comments were that I thought the documents were good from a simplistic technical perspective.  I actually kind of liked them as they were well-written and clean.  How did that work compare to what I or one of my estate planning attorney colleagues would do?  They were simple, not elegant.  But the most important missing component is they did not demonstrate insight, personalization, or the awareness of core values important to my friends.  The document was clear for the kids after age 21, but there was no meaningful guidance into how a trust would be used by the guardians of children to raise them until age 21.  Guidelines create the comfort that their kids will become the adults their parents would be proud of.  What about asset protection for adult children to protect their inheritance against divorce or bankruptcy?  I think you get my point.
Result?  I was retained to do a comprehensive plan to address all the things that were not part of the simple LegalZoom plan. We also looked over their investments, retirement planning, insurance coverage, and the separate inheritances each was to get from their own grandparents and parents.  I reached out to my friend's advisers and got their help in relooking at all these things to make sure that they were properly handled too.
LegalZoom provides documents.  But I’m reminded by this experience that law is far more than the preparation of documents.  It is about listening, discerning, and identifying core values.  It is about understanding what can keep your clients awake at night.  It is about pulling together resources to resolve those concerns and to put a plan in place.  But, even more important, it is about working to keep that plan tuned up so that as things change, it changes.  Documents are simple.  Wisdom is harder to come by.
My experience is similar to this post by Dennis.  I help people with information that will lead to good decisions and workable plans.  The forms that I use are secondary part of my service. LegalZoom is better than doing nothing, and an attorney providing good advice offers more than just a set of forms. If you agree – or disagree – I’d welcome your comments. 

Friday, April 2, 2010

The Children get Stuck with the work

I wanted to share a story with you that a good friend of mine and associate recently shared with me about one of his clients. It was very applicable to what I see all the time.

"I had the incredible opportunity to attend my aunt’s birthday party and take this photo. It was indeed a happy occasion for all – especially when she invited everyone back for her 100th birthday party in 2011.

While enjoying the celebration and festivities, I was reminded of the sobering thought of all the financial and legal plans that her only daughter has been saddled with as her mother aged. As the children of aging parents, we never know if we will be buying a celebration balloon like this for their 99th birthday – and it is usually the least of our challenges as the years creep forward for a centenarian parent.

While attending her birthday party, my mind drifted to the many issues her only child has had to deal with for nearly 25 years. Getting to this 99th birthday has been a lot more work and worry for the daughter than for the birthday mother. The daughter has had to manage finances, coordinate moves, work with doctors, screen assisted living homes, and of course, work with the attorneys.

I was personally relieved, knowing I could attend the celebration, wish my aunt a “Happy Birthday”, and return home. My cousin, on the other hand, would be at the party to the very end. She would be cleaning up the leftover cake, policing the party room at the assisted living facility, etc. And she still has to deal with all the fiduciary responsibilities that continue long after the party has ended."

People deal with these types of real issues every day – most of which are neither easy nor pleasant. Working with attorneys and other professionals should be the least of their worries. After all, they have to start planning for the next big birthday party for their mom!

Wednesday, March 24, 2010

How to eat an elephant

Aah, it is the age old conundrum.  How to eat an elephant?  It is a much used description for the large and seemingly undoable challenges we all face.  In our legal practice, it is often the best way to describe the challenge of estate planning.  It’s not a simple fast foot dish to take on.  Instead, estate planning is the proverbial “elephant” and the successful plan will address your estate plan much like the old “how to eat an elephant answer…….you take it one bite at a time.”

Estate planning is often viewed as the “elephant” challenge for many people.  And as an attorney, it is my job to help turn the “elephant” into bite sized tasks.  And advise on where to start and where to take the next bite.  Since one of the most common comments from a client is, “I just don’t know where to start”, I knew we needed to talk about “eating the elephant.”

You know the old saying, “How do you eat an elephant?”  One bite at a time.  Most people don’t know how to prepare the elephant (estate planning).  After my discussion with Bill and Sally, they understood what it was to create a process where you can reduce the different elements of estate planning into bite sized pieces.  This allowed them to take them on, one element at a time – dealing with those that were most pressing first.  After they understood it was “one bite at a time,” you could feel a huge “sigh of relief” instantly hit the room.

Just like an elephant, it might take a while to eat it one bite at a time.  But with the right plan and persistence, Bill and Sally eventually saw the successful (and less stressful) result.  The key is to approach it with a bite sized view of the challenge rather than facing a daunting elephant-sized single project.  There is a great article talking about the ways that businesses (as opposed to estate plans) use this approach to take on these types of elephant issues.  The article is by E-Myth, and you’ll find it at this location, "How to Eat an Elephant" - might give you some interesting perspectives on applying the “elephant eating solution” to your other business situations.  As for elephants, they really aren’t that hard to eat…