The New Estate Planning: It's All About the Family!

What is Estate Planning Really About?

Are you like 70% of the folks out there who don't like to think about or hear about wills, trusts and estate planning? Well, if you are, don't fret. Many people believe that estate planning is only for the rich. Not only is that false, wills and trusts actually do more to protect people who don't have millions of dollars and property.

Why estate planning is not for the rich folk!

As the preceding article from one of the top companies in the world reveals, estate planning is about your family. Creating certainty, protecting your spouse and loved ones, protecting children, it's ALL about your family.

So how did the myth start that estate planning was only for the rich? It dates back to when the federal exemption against the federal estate tax (some call it the "death tax") was very low. Do you know the history of this exemption? The exemption is used by the government to define when YOU are wealthy (rich) enough to have to pay estate tax when you die.

The History of the Federal Estate Tax:

Thanks to the good people at Cook & Cook, here is the history and it's shocking.

History of the federal estate tax exemption and rates:

Let's start with the year 1978, the year I started practicing law. The federal estate tax exemption (the definition of wealthy) was a mere $134,000! If your estate was greater than $134,000, you paid federal estate tax and if you look at the chart, the marginal rate of that tax was a horrifying 70%! As you can see from the chart, the exemption has increased over time, not even coming to close to keeping up with the economy or inflation.

So here is where the myth about estate planning started--we were all concerned as estate planners with reducing or avoiding this tax, the highest tax ever imposed on citizens of our country. When the exemption was low, the focus was estate tax planning. Most people were so incensed about the estate tax that they didn't pay proper attention to the real reason for estate planning--protecting the family.

The Federal Estate Tax in 2015:

So where are we today? In 2015, the exemption against the federal estate tax is $5,430,000 and is scheduled to increase in 2016 to approximately $5,515,000! Now that's more like what someone would expect as a real definition of wealth.

With the exemption against the estate tax at this level, the old, historical focus on estate tax planning is less relevant for most families. As you might think, far fewer families have estates over $5,430,000 than that old exemption of only $134,000. Because the exemptions are at historically high levels, the focus for most families is on protecting the family.

Most common is the desire to protect the spouse, then children and then other family members. I have always believed that protecting family should always be the driving reason for a client's estate planning and this focus should be reflected in documents such as wills, trusts and powers of attorney.

Good estate planners never let the tax tail wag the family dog! That's a good rule of thumb to remember when you think about your estate plan. Just because taxes are not a concern doesn't mean that we don't care about our families. We do and here are three short videos that illustrate just how important this is.

Estate planning for young families:

Estate planning for children over 18:

Estate planning for blended families:

So when someone says to you, "I don't have enough money to do a will or estate plan" share this article with them so they can have the full story.

Let know your thoughts on this and please join our conversation by commenting or sending me an email. Thank you for your interest.

Bernie Greenberg

Why There Really Is No Such Thing as a Simple Will

Yes, it's true, there is no such thing as a simple will. Here's why:

As a wills and trusts lawyer, I am asked every day about "simple wills". The interesting fact is that there is no such thing.

As is discussed below, when most clients ask for a "simple will" they believe they will save money, time and complexity. Unfortunately, the opposite is usually true. Simple wills are a misnomer because they simply don't exist once EVERY client asks themselves several questions. More on those later.

The most important that there are no "simple wills" is the differences between families. While this should be evident, many people pretend there are no differences. Let's start with just two families which appear below.

Especially today, family has an expanded meaning. EVERY family is different from every other family. In the first picture, our family includes the parents of one spouse while in our second picture, the family structure is different. Your takeaway is that every family is different, every client is different meaning that every family's estate plan will be different.

Here are the questions to ask to see if your will should be like your neighbor's will:

1. Are you married to the same person?
2. Are your medical situations identical?
3. Do you have the same children with the same needs and medical histories?

As you can see, it is impossible for different families to be the same.

To an estate planning attorney like myself, this concept is fundamental. However, I can't tell you how many wills I have had to fix when a client tried to copy a friend's will or one from the internet. If your family's individuality is not considered in your will or estate plan, how do you know that plan will work? The answer is that you cannot.

The essence of estate planning is the uniqueness of your family and this is why your will, your trust and your estate plan will not look like your friend's or neighbor's. In the article below by attorney, Robert Fleming, these concepts are discussed as Fleming explains why there is no such thing as a "simple will".

The Myth of the Simple Will

Let me know if you agree or if you have any questions about this or any of our articles as we explore the world of wills and trusts and estate planning. Thank you.

Bernie Greenberg

Identity Theft After Death!

How To Prevent Identity Theft After Death:

As con-artists and scammers search for new targets, they have extended their nefarious activities to our deceased loved ones and friends. Identity theft of people who have died is now not just limited to Chicago, it is a world wide problem.

Estate planning attorneys offer several steps to clients to help avoid and prevent identity theft. When you are working with your estate planning attorney, make sure you cover this topic.

This article: How to Prevent After Death ID Theft published by the American Academy of Estate Planning Attorneys has several important and effective steps to follow.

Let us know your thoughts by joining our conversation on estate planning topics and issues. Your contribution is welcome.

Thank you.

Bernie Greenberg

Introduction to Estate Planning: A Course for Consumers Chapter 4

Chapter 4: The Components of Every Estate Plan

In Chapter 3 of Introduction to Estate Planning: A Course for Consumers, we discussed identifying estate planning goals and objectives. The client's (your) goals are analyzed by the estate planning attorney and client to set the direction of the client's estate plan.

Here in Chapter 4 we review the basic components of every estate plan. These components are considered in every client's plan in some form. As you read the components, ask whether these have been considered in your existing plan and how you know that. Making sure these are all covered in critical in having a current estate plan.

To preview future chapters, in Chapter 5, we will cover the specific steps to follow to identify and locate a qualified estate planning specialist to work with, so stay tuned.Also, in future chapters we will cover estate planning details and specific strategies.

1. The Testamentary Component:

The testamentary component addresses where property or assets go and how they are handled upon the death of the client. There are numerous ways to address this component using wills and/or trusts which we will cover in future chapters.

2. The Disability Component:

This component addresses who will make decisions (both financial and health care) for the client after the client's incapacity. In this component there is also focus on the client's specific wishes about care at the end of life.

3. The Titling Component:

The titling component focuses on how the client's property and assets are titled and how beneficiary designations are structured. This is critical because the estate plan can be defeated if property is improperly titled or if beneficiary designations have money going contrary to the estate plan.

4. The Probate Component:

This component analyzes the probate impact to the client, family and property of various estate planning and titling options. For example, if the client owns a vacation home in a different state, failing to address that could result in a two state probate process.

5. The Tax Component:

The tax component focuses on the income, gift and estate tax impact of the estate plan and titling options the client is considering. For example, as we will see in future chapters, since the estate tax exemption is $5,340,000 for 2014, clients have greater freedom to plan their estates without worrying about the federal estate tax. However, since Congress frequently changes these exemptions, this component requires a continuing look by every client.

Since every client situation is unique, how these five components are addressed will vary between clients. Still, every client will review all five of these components in the design and implementation of their estate plan.

In Chapter 5 of Introduction to Estate Planning: A Course for Consumers, we will focus on how to choose a qualified estate planning specialist. Picking the right estate planning attorney is another fundamental building block of each client's estate plan.

As always, thank you for your questions and comments which are welcome.

The 6 biggest estate planning mistakes NFL players make | LifeHealthPro

Did you know that professional athletes have to do their estate plans, just like you do? Here is a list of the mistakes NFL players make and the list sounds familiar doesn't it?

The Super Bowl is this coming Sunday and my favorite team is playing. You can guess who that team is since I live in Colorado.

And wouldn't you know, an estate planning attorney can weave estate planning into a discussion of the Super Bowl.

Here is an excellent article that discusses how professional athletes must pay attention to estate planning to make their very short careers of value in their lives.

The 6 biggest estate planning mistakes NFL players make | LifeHealthPro:

'via Blog this'

Let me know your thoughts by joining our estate planning conversation. Also, let me know if you can correctly guess my favorite team.

Bernie Greenberg

Happy New Year!

Happy New Year!

Yes, it's that time of year again, when we say goodbye to last year and say hello to and welcome in the new year. As an estate planning attorney, this is always an exciting time of year due to how many people are proceeding with their estate plans.

Each new year brings those familiar resolutions and one of the most popular resolutions is to finally make out a Will or complete that estate plan. That makes for a busy holiday season for Colorado estate planning attorneys like myself.

As I have previously reported to you, many believe that estate planning could be the best gift to give to your family. At this time of gift giving, that makes estate planning a very popular holiday gift!

Enjoy the celebrations as we end 2013 and welcome in 2014. Let me know your thoughts and questions on estate planning and related topics. I will continue to bring you new and hopefully interesting topics and tidbits about Wills and estate planning.

HAPPY NEW YEAR!

Bernie Greenberg

What's New In Estate Planning

What's New in Estate Planning? What was Old is New Again!

Many people mistakenly believe that estate planning is only for rich folk. Others mistakenly believe that it is all about saving death taxes. While these areas can be part of an estate plan, neither is what estate planning is about.

What estate planning is about is protecting yourself and loved ones. I coined this phrase years ago: estate planning is not about how much you have but about how much you care about those you care about and for.

This is what is new again in estate planning. With the federal estate tax exemption making most estates non-taxable, estate planners are returning to their roots and focusing on what really matters with the estate plan--your family. As you read through the other articles here, you will find this theme repeated over and over.

If you care about yourself and family, you will do a plan and make arrangements to protect yourself and family. Every person's plan is different and every plan contains certain components. And making what was the first focus of estate planning new again is very exciting to  me. As an estate planning attorney, it is refreshing to see this return to the core values of estate planning.

What do you think? Please join our conversation and leave a comment here or send me an email. Thank you for your interest.

Bernie Greenberg

What Happens When You Die Without a Will or Estate Plan: 6 Consequences You Need to Know

The Consequences of Dying Without a Will or Estate Plan: What do you need to know?

According to recent statistics, many people die without a Will or any estate plan. Less than 25% of adults may have a plan at all. While this is alarming by itself, it pales compared with the consequences your family will face if you were to die without a Will. We explore six of those consequences in this article so you can decide for yourself.

Here are 6 important consequences of dying without a Will or estate plan:

1. Your State Provides You With a Will.

Your State has a plan for you if you don't do one yourself. Since this is being forced on you and your family and involves choices made by someone other than yourself, this may not be to your liking and the State's choices may not be those you would have made.

2. A Court Decides Where Your Children will Live and be Raised.

By far, this is the primary reason that clients with young children will do Wills or an estate plan. Imagine the issues that this could create for your children and how you would feel knowing that this consequence was easily avoided. The choice the Court might make may not be your choice. When our goals include protecting our children, this is mission critical in estate planning.

This occurs if you die without a Will as part of a public proceeding creating even more stress and problems for your family. Many clients do not want their families subjected to this type of public scrutiny.

3. A Court Decides Who Your Executor (Personal Representative) will be.

If you don't do your own Will or estate plan, a Court will decide who your executor will be. The Court's choice may not be your choice. This is also a public process in Court. Imagine the problems from these two examples:

A. You are in the middle of a divorce and die without a Will. You might not want your estranged spouse as your executor but they have the first priority to appointment if you die without a Will or estate plan.

B. You are single and in a committed relationship and die without a Will. Your intention is for your partner to be your executor, but that may not occur if you die without a Will or estate plan.

4. Your State Determines Where Your Property Goes.

When you die without a Will, your State has a default plan called the law of intestacy about where your property goes and how it gets there. This could mean that your spouse is forced to share your estate with children. Most couples want the surviving spouse to inherit everything with the kids as secondary beneficiaries. If you want your own plan, then you can't die without a Will or estate plan. Are you sensing a theme here yet?

5. Children's Inheritances are in Short Term Court Managed Conservatorships.

These conservatorships last to your State's age of majority. It may be your plan to have a child's inheritance last for a longer period of time. Dying without a Will insures that this will not occur. For example, all money could be distributed to your child before they are ready for the responsibility. The inheritance passes to your child unprotected from the risks of unwise spending; creditors and predators. Most parents do not want this result.

6. Property Passes to the Surviving Spouse With No Protections.

Many clients seek to protect the surviving spouse by making sure inherited property is not subject to risk of creditors and predators. When you die without a Will, your spouse becomes a target for con-artists and the unscrupulous. This is a particular problem with seniors. We hear constantly about the importance of protecting ourselves in later life, but so few people do so.

All six of these problems and negative consequences are eliminated by doing a properly designed and drafted Will or estate plan.

Since a crucial part of estate planning is protection of family, protecting them against these six consequences or at least considering doing so is important. Are these important factors and goals for you? If so then make sure you have a current and valid Will or estate plan in place and be prepared for the unplanned and unexpected.

Let me know your thoughts on this topic and join our conversation by leaving a comment or sending me an email. Thank you.

Bernie Greenberg

What To Do If A Loved One Dies: 10 Steps

It is difficult enough when a loved one dies and even more difficult and challenging if you are the administrator of the estate or trust. Knowing the steps to follow and building your checklists and road map will help make this very difficult time less trying.

As an estate and trust lawyer, I am asked frequently, "what do I do if my spouse dies", or "what are my first steps". This article will help start to answer those questions.

Your Ten Initial Steps of Estate or Trust Admnistration:

Here we explore your initial administration tasks and checklist. Use this in your meetings with the estate or trust lawyer to help guide your meetings and in developing your master action list of all tasks you are responsible for. Your master action list is your list of ALL actions and tasks that you take or assign to others from the beginning to the end of the estate or trust administration.

This is not meant to be used as your master action list, but as a guide to follow to understand the initial steps in estate or trust administration and to help you build your master action list. Here is an excellent article from the Colorado Bar Association that you will also find useful.

Your First Ten Steps:

1. File the decedent's Will with the Court or determine the requirements to register the decedent's trust. You will also determine the necessity of obtaining taxpayer identification numbers for the estate or trust.
2. Take steps to reduce identity theft by contacting Social Security, the DMV, all banks and brokerage firms where the decedent held accounts. The Death Certificate will be necessary at some places.
3. Close the decedent's accounts, but not trust accounts if there are any.
4. Determine the property and assets. You will do this with the estate or trust attorney. You will be creating schedules of assets based on how assets are owned by the decedent. I have discussed in prior articles the ways that assets can be owned.
5. Obtain asset values. All of the assets must be valued as of the date of death. These are easy to obtain, and the estate or trust attorney can help you.
6. Determine if a probate proceeding is necessary. This will depend on your state law, the type of assets and ownership or title by the decedent.
7. Determine whether estate, inheritance or death tax filings are required for either the IRS or individual states. Again, the estate and trust attorney will guide you.
8. Start your accounting as of the date of death. You are required to track all receipts and all disbursements from the date of death forward.
9. With the guidance of the attorney determine who will receive copies of the decedent's Will and/or trust.
10. Commence the estate or trust administration.

These ten steps will get you started, provide direction and help you in developing your master action list. Administering an estate or trust is like playing croquet, you learn the map, then proceed through the right hoops in the right order until you get to the finish.

I'd like to hear your comments. Did you find this helpful? Do you have further questions? Please join our conversation and let me know. Thank you.

Bernie Greenberg

Is Time Your Ally or Enemy? 3 Ways to Make Time Your Estate Planning Ally

Whether time if your friend or enemy in your estate plan is a critical factor in whether you and your family will be protected. In this article, I explore the 3 ways you can have time be your friend and ally.

Recently, David Scott wrote in in his article about business succession planning about time as an ally or enemy to the business owner contemplating succession planning. Mr. Scott's points are well taken and apply equally to estate planning.

Time is your ally when you use time to get things done before they are needed. Any part of your estate plan, your Will, Durable Powers of Attorney, potential trusts for children etc. are all examples of documents that you may not  need until later. However, they are all documents that you can't create after they are  needed. If you get them done now, time is your friend and ally. If you wait too long, time is your enemy because you are out of time and you and your family are in trouble--it's too late to do the planning.

By doing your estate plan before it is needed, you and your family are protected against unplanned and unexpected emergencies, accidents and illnesses. That's the reason to do IT NOW! Then the plan is done, it is in place and you have used time wisely--as an ally.

Whenever you wait and procrastinate time is always your enemy. A need can arise, the family is in crisis mode or worse, chaos and it was all preventable. Solving the need is more difficult, more complex and always more expensive.

3 Ways to Have Time be Your Friend and Ally:

1. Start your estate plan now. Do it and get it done before any need arises. Starting now is easy, and will save you and your family money, heartache and TIME later. There are numerous articles here that discuss the specific components and documents your estate plan requires. Also, my firm's website has a good section on estate planning you should read.

2. Complete your plan soon after starting. I have heard stories from clients about having started a plan with a different adviser and not receiving drafts or documents for months. This is not how estate planning is done when done properly. Even complex estate plans can be designed, drafted, signed and funded in days to a few short weeks. As part of this second step, make sure assets are titled correctly and your beneficiary designations are drafted correctly.

3. Review your plan. Even after you create your plan, you want to make sure, from time to time, it does what you want. Follow the review schedule suggested by your estate planner. Staying current with changes in your family, property and the law makes time your ally.

Time can be either your friend or your enemy. The choice is yours and hopefully with these three steps, you can choose wisely. Good luck.

Please join our conversation and leave a comment or send me an email with your thoughts and ideas. Thank you.

Bernie Greenberg

Tax Law Permanence? No Chance!

Tax Law Permanence is Never Permanent

Recently, well just three months ago, Washington presented us with a brand new tax code called the Taxpayer Relief Act of 2012 or TRA.. This new law changed our income, estate and gift tax systems entirely. One of the features of this new tax law was supposed to be it's permanence. Well, the tax law is permanent no longer.

The TRA of 2012 brought new tax rates and exemptions. It was designed to create permanence and certainty to allow you to plan your financial affairs and estate without having to redo everything from year to year. This is now going up in smoke (the whole tax law looks like smoke and mirrors anyway) with the President's new budget proposal.

The new budget would do many things to our tax code and all of them are bad. Here is a sample list of just a few of the negative and adverse changes proposed:

1. Reduction in exemptions used in estate planning to 2009 levels.
2. Increase in tax rates for estate and gift taxes to the highest levels, 55%.
3. Extreme restrictions on the use of IRA's and similar savings tools.
4. Elimination of the ability to stretch inherited IRA payments over the lifetime of a beneficiary other than the surviving spouse.

While the budget proposal would do many, many more things to our tax code, this short list should be enough to alarm everyone what may be coming. Please remember to not shoot the messenger and consider writing your Congressional representatives to express your feelings about the proposed changes.

Also remember, if the budget proposal passes, it will be time again to review your planning and make appropriate changes. Please let me know if you have questions about these changes and how they impact you.

Also, please join in our conversation and post a comment here or to me via email about this or any of our estate planning topics.

Bernie Greenberg