B. H. G R E E N B E R G & A S S O C I A T E S

ATTORNEYS & COUNSELORS AT LAW

26 West Dry Creek Circle, SUITE 520

LITTLETON, COLORADO 80120

(303)730-7100 Office; (303)730-7195 Fax; E-Mail:

This is our firm's articles page. Various published articles will be reproduced here for your reading.

The economy is booming, the stock market is soaring, and political talk has again turned to revising the United States tax system. Many different tax reform proposals have again surfaced in 1999, some of which bear watching and some of which merely approach the bizarre.

That tax reform is a necessary part of our future is not debated. However, the form that revising our tax system should take is the subject of great debate. The debate apparently centers around two camps. The first camp is those people who pay taxes, and the other camp is those people who pay little tax but are significant beneficiaries of entitlement programs.

The debate focuses on whether the money paid into the tax system by taxpayers is their money before it is paid or, on the other hand, whether the entitlement handouts represent the birthright of American citizens. While some would conclude that my analysis of the debate is cynical, the analysis is nonetheless accurate.

So what kind of tax reform can we expect? The answer to this question is more difficult to reach than could be imagined. Because politicians play politics with the tax code and our money, it is difficult to assess the political landscape at any point in time. However, various conclusions can be drawn based on the status of the economy.

Some reduction in the income tax brackets appears likely. While many, including myself, would like to see a total reform of the tax system, total reform does not appear possible given the political landscape in Washington. Accordingly, minor tinkering with the income tax rates creates little political fallout and is more likely to occur.

The Estate and Gift Tax may be reduced or possibly eliminated. Since the government derives no net revenue from the Estate and Gift Tax (its administrative cost is approximately equal to the taxes raised), there is little monetary reason for the tax itself to actually exist. However, the tax is quite political as its elimination could be seen as a government handout to the wealthy. Accordingly, expect only minor revisions in this area due to politics.

Do not expect any reduction in Capital Gains taxes because of the political fallout which occurred when Capital Gains taxes were reduced by only 7 points. This is another political tax, and the political environment seems to indicate that the American public prefers to pay taxes when it liquidates its investments or property.

Another reform proposal is the National Retail Sales Tax Act of 1999. This proposal, originally introduced last year and sponsored by members of the Colorado Congressional Delegation, represents the best example of true tax reform. The reason that the National Retail Sales Tax Act is such an intriguing proposal for tax reform is that the proposed National Retail Sales Tax raises the same amount of revenue currently raised by the existing tax system, but saves additional money through abolishing the IRS and eliminating the bureaucracy associated with the current tax system. This can occur since a nationwide tax administration system exists for the collection and enforcement of the sales tax, and that is the current sales tax structure across the country. The sales tax proposal would rely on this structure for its administration. The proposal also, in addition to abolishing the IRS, would eliminate the Income tax, Capital Gains tax, and Estate and Gift tax. Because of the political sensitivity in the elimination of these taxes, the eventual adoption of a National Retail Sales Tax may be unlikely. Another risk with this type of tax reform is that politicians may seek to add additional taxes on top of a National Retail Sales Tax.

You can see that tax reform is a hot topic merely by reviewing the newspaper or listening to the news. Whether we will see any real tax reform though remains a political question with as much uncertainty as any other question dependent upon politicians to resolve. However the tax

reform debate is resolved in the future, an important question to ask yourself at this point is whether or not your money and earnings belong to you or whether they represent government property you are simply allowed to keep a portion of.

Questions & Answers – How to Avoid Rip-Off Estate Planning Seminars

Many people are interested in estate planning but confused about what it is. Unfortunately, this confusion often leads to people not starting the estate planning process, or not completing their estate planning. The AARP estimates that the vast majority of Americans have not done proper estate planning placing themselves, their families and their assets at risk. This article explores the nature of estate planning and how proper understanding of estate planning process can assist you in your own decision making.

Question: With all of the estate planning seminars being advertised, how do I make sure that I attend a worthwhile program that will benefit my family and me?

Answer: Your question raises important issues due to all the recent advertising and promotion of estate planning seminars. With newspaper ads, flyers in the mailbox and on your porch, you probably receive many of these ads each week. Unfortunately, many of these programs are sale-a-thons led by unqualified people selling books, tapes or fill-in-the blank forms. The dangerous part is, without being prepared with good information, you may not be able to tell the difference between a valuable educational program and one designed to part you from your money.

Question: How do I tell them apart and pick one that is worthwhile?

Answer: Many of the advertised programs can be hazardous to your wealth. There are two methods you can follow to protect yourself and your family from unqualified people masquerading as estate planners and from programs that are of little or no value.

First, determine the type of the program you may attend. Many of the unqualified people offer programs that focus solely on revocable living trusts. There is a place for these types of trusts. Many of the worthless programs are just sales scripts for revocable trusts. The scripts, written by out-of-state marketing organizations, are designed to sell you books, tapes, or an appointment for generic documents. One attorney who was caught using this material, did not know the estate tax results of the documents he sold. This same lawyer was later prosecuted for criminal violations.

A recent ad was by a person with no estate planning experience although the ad claimed he was nationally known. This speaker is only known by the national marketing company for which he sells forms. He told the attendees at his seminar about the "evils of probate" and why they should buy his forms

This is not real estate planning and is misleading. Genuine estate planning focuses on your particular situation. Because everyone has a different situation, the planning for each client should reflect this uniqueness. We each have different assets, goals, children, health conditions that make us special. Your estate planning should reflect this. Using fill-in-the-blank forms and software results forces your family into a generic approach that does not work.

Question: Shouldn’t I consider probate as part of my estate planning?

Answer: Yes, but in Colorado a seminar that focuses solely on this question is misguided. Probate is a problem for property held in other states. Due to Colorado’s system of unsupervised, informal and through-the-mail estate administration, programs that emphasize the evils of probate are misleading for many Colorado citizens. Most people don’t know that in Colorado, you can bypass even our informal probate system without a trust.

Many of these programs originate from California or states where the problems of probate administration remain serious. Some of the lawyers offering these types of programs have purchased the program materials and ads from out of state marketing companies

Question: How do I make certain that the speakers are qualified as estate planning experts?

Answer: Ask questions about the program and the speakers. Check the qualifications of the speakers before you attend the seminar. There are speakers advertising programs who have no experience at all as estate planners.

There is no law that prevents someone from calling themselves an estate planner, even if they have no qualifications or experience.

Follow these four steps:

Make sure the attorney is an estate planning expert with at least seven consecutive years of full-time estate planning experience. Seven years of experience offers some measure of the person’s expertise and is typical of members in the local estate planning councils. Ask yourself, if you needed delicate surgery, would you use a doctor who was doing the operation for the very first time?

Make sure that estate planning, wills, trusts and estate administration is the attorney’s only area of practice. You simply cannot do divorce work, traffic tickets and other matters and be a full-time estate planning expert. Estate planning is a complicated and sophisticated area of legal practice.

Determine if the attorney is a member of the Denver Estate Planning Council, Rocky Mountain Estate Planning Council and the Colorado Bar Association Probate and Trust Law Council. The estate planning councils require that the members be voted in by other experts in estate planning. National organizations where membership is helpful are: National Academy of Elder Law Attorneys; American College of Trust and Estate Counsel; and the National Association of Estate Planners. There are other fancy sounding organizations out there which are worthless to your protection because anyone can join by signing up to market the organization’s materials.

If other speakers are involved, then check out their qualifications also. Many of these programs also involve someone’s latest idea for selling you stocks, bonds, mutual funds or insurance. None of these are bad investments necessarily, but are risky for you in a group setting. Sometimes a state of mass-buying hysteria is generated at these programs.

There are lots of qualified estate planning experts in Colorado and they speak at educational programs as often as the unqualified speakers do. You can contact the organizations mentioned above for names of qualifed estate planning experts.

Don’t shy away from estate planning educational programs, but do make sure that you attend worthwhile programs with expert speakers.

Would you enjoy driving downtown and searching for a parking place just to spend two hours in an attorney's office to talk about distributing your property when you die? Well according to recent statistics, hardly anyone does. According to the AARP, not very many people make such an effort, or any effort at all towards their estate planning. More than 90% of the Americans have failed to take appropriate steps to protect themselves, their families and their property through proper estate planning.

Many experts debate the reasons that so few people do anything about estate planning. Some say its because the subject is inherently unpleasant. Others say the reason is that Americans are basically lazy and irresponsible. Still others say that people don't trust lawyers and the legal system. Who's right? Probably none of these answers is completely true and correct. However all of these theories ignore one reason that most people fail to take action: if that action is inconvenient and a hassle, most people will delay or fail to take the action, no matter how beneficial.

Now imagine the following scenario: knowing that you want to protect your family and property, you decide to take action and investigate your estate planning options. You decide to do some research to collect information about your options.

Instead of making an appointment to see a lawyer downtown, you turn on your television and press a button on your remote control unit. You select a forty-five minute educational presentation on trusts, wills, powers of attorney and other estate planning arrangements. As the program proceeds, you interact with the program by clicking buttons on your remote console which apply to certain information concerning your family and property. You select the parts of the program which you are interested in and which apply to your family. You are doing this while sitting in the comfort of your own home. If there are parts of the program you want to review, you click your remote control and it is saved for your later viewing.

After your viewing, the compact laser printer sitting next to your interactive television prints out a set of questions for you to review and discuss with your spouse. Since you both know that it is the right time to finally do something about your estate planning, you both sit down over some fresh coffee and discuss the questions. Later you input your answers using your remote control unit back into your television. One of the questions you answer is about your choice of an estate planning attorney to assist you in implementing your choices.

Your answers and information are transmitted automatically over a completely confidential fiber optic line to a network attorney who perfectly matches with your choices and answers. You receive back biographical information about the attorney, including a multi-media presentation about the attorney, references, and testimonials from previous clients. As you find your choice to be acceptable, you are prompted on your television about billing and payment options and you click the button for the options and alternatives which are appropriate for you and your situation.

Instead of sitting in a high-rise office building where his/her law firm pays over a million dollars in year in rent, your attorney sits at his/her console computer station reviewing your information and questions in their office, or even their own home. The attorney, deciding that additional information is necessary, sends you, over the electronic network, a mail message requesting additional information to some additional questions. Embedded in the electronic mail message--which, by the way, consists not of characters and letters on your TV screen, but of the attorney him/her self actually speaking to you-- is a multi-media presentation about the type of estate plan your initial survey questions indicate you desire.

As you watch this presentation at your leisure, and at the time which is convenient for you and your spouse, in your own home, you interact with it further by clicking buttons to indicate various choices or refinements which you believe are appropriate for your own family. You ask the attorney questions to clarify your thinking on various issues. You are still sitting in your own home in front of your TV. As you ask these questions, and supply the additional information, it is transmitted automatically back to the attorney over the fiber optic network.

Even though substantial amounts of information is being sent over this network, it is completely confidential, just like one of your telephone calls is confidential. Of course, the proper authorities can still investigate suspected criminal activity. You are comfortable in knowing that your family information is and remains confidential and you are secure in being able to proceed with your estate planning in the comfort and safety of your own home.

How does this approach to estate planning sound to you? Well, its not as far-fetched as it you may think. The technology to accomplish this type of relationship with your lawyer is available today. Many attorneys are being trained now to use this technology and are installing the necessary equipment and software today. If your attorney is not part of the information age and this new technology, then that attorney will be left behind when the current archaic practice methods of today will be declared obsolete.

Make sure your attorney is up on the information revolution by asking them how involved they are in installing and using the new technologies of today. This way you can make sure that attorney will be equipped to assist you tomorrow.

Bernard H. Greenberg is a Colorado Attorney in his 17th year of practice. He is a member of the Denver Estate Planning Council, the Colorado Bar Association’s Probate and Trust Law Section Council, and the National Association of Estate Planners, an organization that governs estate planning councils.

Recent changes in our pension and IRA laws have captured the attention of many planners. There have been several articles that suggest that you should use the three waiver on excise taxes that commences in 1997 to start drawing down your IRA or pension. Is this a correct strategy? If you don’t have the right information, then making an uninformed move with your IRA or pension could be extremely hazardous to your wealth.

Our pensions and IRA’s are subject to rules about when and how much we can withdraw from them. Generally, withdrawals are subject to ordinary income tax and must commence when we reach a certain age. Excess withdrawals have been subject to a 15% excise tax over the ordinary income tax. As a tax raising measure, President Clinton recently signed a bill that waives the 15% excise tax for three years beginning January 1997. This is designed to encourage people to take excess withdrawals from IRA’s and pensions during the three year period. But is it a good idea to take advantage of the three year waiver of the 15% excise tax? The answer may not be as clear as you think.

It seems that taking money out not subject to the tax reduces the overall tax that your IRA or pension would be subject to. However, the benefit or detriment of taking money out of your IRA is more involved then just the excise tax savings. Because of the tax deferred nature of growth in your IRA and pension and your ability to invest in assets that grow, you should consider performing a "pension first vs. pension last" calculation. This means that projections can show you the effect of spending your pension first in retirement, or spending it last. You may be surprised at the results of these calculations.

Performing these calculations allows you to see the actual dollar results of spending your pension or IRA first, last or some other combination in retirement. This analysis also allows you to calculate whether you will have sufficient funds for your retirement purposes, for gifting to family members and even enough to buy life insurance in the future. Without these projections, you can only guess on how long your pension or IRA will last and which option for your retirement funds you should select. Guessing with your retirement funds is generally not wise.

These calculations have become even more important now with the three year waiver of the excise tax on withdrawals for your IRA which goes into effect in 1997. The three year waiver of the 15% excise tax is designed to encourage people to withdraw money faster from their IRA’s and pensions. If you do make withdrawals from your IRA or pension, you will owe ordinary income tax on the amount withdrawn. This is why this proposal was signed by the President, to increase current tax revenues, by causing people to draw down their retirement accounts faster. However, whether you should take excess withdrawals from your IRA or pension plan is solely a function of the results of the "pension first vs. pension last" analysis that I refer to here.

Improperly planning withdrawals and the order of settlement of your pension or IRA can trap you when you are least able to respond--during your retirement years. Since everyone’s situation is different, proper planning for your IRA or pension does involve getting the right information and analysis. In addition to accumulating and reading good information, a good place to start is to obtain a "pension first vs. pension last" analysis to review and discuss with your financial advisor.

If you would like more information about "pension first vs. pension last" analysis, then contact our office at 303- 730-7100.

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This page last edited on: January 31, 2008