Showing posts with label powers of attorney. Show all posts
Showing posts with label powers of attorney. Show all posts
Wednesday, April 7, 2010
CONSERVATORSHIPS - The result of not preparing.
Client's mom & dad did their own trust. Dad is deceased and mom has alzheimers. Trust wasn't done right and there was no power of attorney. For son to get mom's property into her trust, he has to go to court to be appointed a conservator of mom's estate. Have your parents set up their estate plan properly? Call Amy Alvis at 516-1617 for an estate plan consult.
Friday, October 23, 2009
THE FUTURE OF THE ESTATE TAX EXEMPTION
I just finished reading a a Wall Street Journal article by Laura Saunders on the issue of what will happen to the Estate Tax next year the and consequences thereof. The current Federal Estate Tax exemption ($3.5 million) is set to "disappear" next year. (The current law is expiring). Most people would say "Great! So it doesn't matter how much I own, if I die next year there will be no estate tax due for my kids." Unfortunately, there may be much bigger problems to consider.
The current estate tax law was enacted by Congress back in 2000. It increaed every year and it is currently at $3.5 million per person ($7 million per couple). In otherwords, if you and your spouse own $7 million in assets and died in 2009, you can pass all the assets to your heirs and they wont owe any estate tax - which is at 45%.
Under the current law, the will be no federal estate tax at all for 2010 and in 2011 it will follow the current lifetime gift tax exemption of $1 million per individual ($2 million for a couple). In the above situation, if the above couple died in 2011 with an estate of $7 million, $5 million would be taxed - if the rates stays at 45% - then the heirs would owe $2.25 million on their inheritance.
It is believed among most in the industry that Congress will step in very soon and extend the current exemption because of the collateral tax damage this "lapse" can cause. It is really an issue of what is called a "step-up in cost basis". This means that when someone inherits an asset, the value of that asset is "stepped up" to the current value at the time of inheritance (date of death). Without a "step-up", the asset would retain the original value from when the original owner acquired it. If the estate tax goes away, so will this "step-up in cost basis".
Here's an example:
Let's say your mother leaves your son a stock that she bought in 1970. She paid $5 for the stock but tody it is valued at $75. Under the current tax law, if mom died today, when your son inherits the stock, the value is $75. So if next year your son sells the stock and it sells for $80, he will only have to pay capital gains tax on the $5 profit. Without the "step up", the original cost of $5 for the stock would transfer to your son (called a "carry-over basis"), so when he sold the stock at $80, he would now have to pay capital gains tax on $75 profit. Now if you apply that same principal to something larger, like a home purchased for $50k in 1970 and is valued at $750k today, it is clear how much of a tax burden this will place on your son. This is also why gifting an asset versus allowing it to pass through inheritance is not always the best option.
There are many possible solutions being proposed in congress right now. Something may be passed by the end of the year, something may happen later and be applied retroactively, it is definately an area to be aware of and if you haven't developed your estate plan, yet, it is definately a time to get things done and protect your estate not only from probate, but also to attempt to minimize the tax burdens on your heirs while we still have the ability to do so.
Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.
Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including attachments, was not written to be used and cannot be used for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. If you would like a written opinion upon which you can rely for the purposes of avoiding penalties, please contact us.
The current estate tax law was enacted by Congress back in 2000. It increaed every year and it is currently at $3.5 million per person ($7 million per couple). In otherwords, if you and your spouse own $7 million in assets and died in 2009, you can pass all the assets to your heirs and they wont owe any estate tax - which is at 45%.
Under the current law, the will be no federal estate tax at all for 2010 and in 2011 it will follow the current lifetime gift tax exemption of $1 million per individual ($2 million for a couple). In the above situation, if the above couple died in 2011 with an estate of $7 million, $5 million would be taxed - if the rates stays at 45% - then the heirs would owe $2.25 million on their inheritance.
It is believed among most in the industry that Congress will step in very soon and extend the current exemption because of the collateral tax damage this "lapse" can cause. It is really an issue of what is called a "step-up in cost basis". This means that when someone inherits an asset, the value of that asset is "stepped up" to the current value at the time of inheritance (date of death). Without a "step-up", the asset would retain the original value from when the original owner acquired it. If the estate tax goes away, so will this "step-up in cost basis".
Here's an example:
Let's say your mother leaves your son a stock that she bought in 1970. She paid $5 for the stock but tody it is valued at $75. Under the current tax law, if mom died today, when your son inherits the stock, the value is $75. So if next year your son sells the stock and it sells for $80, he will only have to pay capital gains tax on the $5 profit. Without the "step up", the original cost of $5 for the stock would transfer to your son (called a "carry-over basis"), so when he sold the stock at $80, he would now have to pay capital gains tax on $75 profit. Now if you apply that same principal to something larger, like a home purchased for $50k in 1970 and is valued at $750k today, it is clear how much of a tax burden this will place on your son. This is also why gifting an asset versus allowing it to pass through inheritance is not always the best option.
There are many possible solutions being proposed in congress right now. Something may be passed by the end of the year, something may happen later and be applied retroactively, it is definately an area to be aware of and if you haven't developed your estate plan, yet, it is definately a time to get things done and protect your estate not only from probate, but also to attempt to minimize the tax burdens on your heirs while we still have the ability to do so.
Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.
Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including attachments, was not written to be used and cannot be used for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. If you would like a written opinion upon which you can rely for the purposes of avoiding penalties, please contact us.
Sunday, September 20, 2009
Chosing Guardians
During one of my recent client consultations we discussed the difficulty for them to chose their guardian(s) for their children. Whether or not to include a spouse, who should be alternates, what if one of the couples chosen get's divorced, etc. Choosing guardians is probably the hardest decision for parents to make in the estate planning process.
In my research about a way to help "simplify" this process for my clients, I found a great article written by an attorney in Thousand Oaks, CA. I don't want to improperly reproduce her article without her permission, but I would like to recap some of her wise and helpful ideas.
First, she wanted to remind parents that when naming guardians, we are not just choosing who will take care of your children when you die, but who will take care of your children if you become incapacitated or incompetent.
It was noted that parents should really provide as much detail as they desire about not just who will raise their children, but how. Basically what this will allow for example, is if college education is very important to you then you can express that the guardians strive to ensure that your children go to college. If your family religion is very important to you, you can express that your child continue to be exposed to and participate in their religion. You can be as detailed as you want to ensure that your children continue to be raised with the same morals and values you would instill in them if you were still there to raise them.
She went out to list out four basic steps for parents to chose a guardian.
The first step was to "Make a List"
It was recommended that the list be long, including anyone who you think might be a good guardian. This would mean, people you would chose over the foster system basically. In doing this, also list those you would absolutely NEVER want to raise your children. You can specifically exclude someone if you want. If you are having trouble making a long list, be sure to come up with at least 3-4 though. This list can include family members, friends, colleagues, etc. especially if they have similar values to you. Remember, the person(s) who takes over as guardian for your children does NOT need to be the same person who acts as trustee over their money, so don't limit your list because of financial considerations.
The article also discussed the difference between Temporary & Permanent Guardians and your ability to chose both if that feels better for you.
Temporary guardians are basically for a certain defined time period. They may be appointed to care for your children if you become temporarily disabled or even for a short time to finish the school year out before having to move to a new city, state or country even.
Permanent guardians would be the ones to care for your children until the age of majority when you pass away. (You don't need to have separate Temporary and Permanent Guardians named, but in some situations, you may feel it would be best)
A new concept she discussed was a "Guardianship Panel" which is basically a collection of people you name (friends, family, maybe even a doctor) who will decide who would be the best caretaker for your children. Personally, I don't think this is the best "first" option as it can lead to a lot of disagreements. I think as a last resort if all named guardians are not able to serve or chose not to serve, it might be okay.
The second step was to write down "What Matters Most". Factors she states to consider about a prospective guardian are:
• maturity
• patience
• stamina
• age
• child-rearing philosophy
• presence of children in the home already
• interest in and relationship with your children
• stability
• ability to meet the physical demands of child care
• presence of enough "free" time to raise children
• religion or spirituality
• integrity pets
• potential conflicts of interest with your children
• willingness to serve
• social and moral habits and values
• marital or family status
• willingness to adopt your children
I would write these in order of importance, then see how each potential guardian measures up.
Once again, don't let money issues guide you. For example, let's say you have been a stay-at-home mom and want to be certain your children continue to haven a parent at home full time if you should die. But what if your top choice for a guardian works full-time and her children are in day care? What you can do is properly prepare financially with life insurance and investments to be able to provide adequate financial support so that the guardian you want to raise your children is able to stay at home and raise your children.
The third step was to "Match People to Priorities"
After you measured everyone up based on the above factors, narrow your list down to 3-4. Rank those in order, and there you go!
Now that you have your list, as I would ask my clients, ask yourself: what if that couple you name first should get divorced, what if one of them dies? Are you willing for either of the two to raise them on their own, or would you rather move down the list to your next choice of guardian? In some cases, it may be best to only name one person than that person and their spouse.
The final/fourth step "Make it Positive"
This will be an opportunity for parents to really share their thoughts, hopes, and fears with each other. Hopefully the two of you can grow from the process. Remember as well, when you make your wishes know, and detail them out, and share them with your intended guardians for your children:
• The relationship between all parties may increase
• As parents, you have a mutually focused idea of what you want for your children and can share this with your named guardians.
• You will know what you want to achieve with your children while you are still there for them.
So once it is all said and done, you will have "secured your peace of mind" and will rest easier at night knowing your children will be cared for according to YOUR wishes, whatever may come your way.
Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.
In my research about a way to help "simplify" this process for my clients, I found a great article written by an attorney in Thousand Oaks, CA. I don't want to improperly reproduce her article without her permission, but I would like to recap some of her wise and helpful ideas.
First, she wanted to remind parents that when naming guardians, we are not just choosing who will take care of your children when you die, but who will take care of your children if you become incapacitated or incompetent.
It was noted that parents should really provide as much detail as they desire about not just who will raise their children, but how. Basically what this will allow for example, is if college education is very important to you then you can express that the guardians strive to ensure that your children go to college. If your family religion is very important to you, you can express that your child continue to be exposed to and participate in their religion. You can be as detailed as you want to ensure that your children continue to be raised with the same morals and values you would instill in them if you were still there to raise them.
She went out to list out four basic steps for parents to chose a guardian.
The first step was to "Make a List"
It was recommended that the list be long, including anyone who you think might be a good guardian. This would mean, people you would chose over the foster system basically. In doing this, also list those you would absolutely NEVER want to raise your children. You can specifically exclude someone if you want. If you are having trouble making a long list, be sure to come up with at least 3-4 though. This list can include family members, friends, colleagues, etc. especially if they have similar values to you. Remember, the person(s) who takes over as guardian for your children does NOT need to be the same person who acts as trustee over their money, so don't limit your list because of financial considerations.
The article also discussed the difference between Temporary & Permanent Guardians and your ability to chose both if that feels better for you.
Temporary guardians are basically for a certain defined time period. They may be appointed to care for your children if you become temporarily disabled or even for a short time to finish the school year out before having to move to a new city, state or country even.
Permanent guardians would be the ones to care for your children until the age of majority when you pass away. (You don't need to have separate Temporary and Permanent Guardians named, but in some situations, you may feel it would be best)
A new concept she discussed was a "Guardianship Panel" which is basically a collection of people you name (friends, family, maybe even a doctor) who will decide who would be the best caretaker for your children. Personally, I don't think this is the best "first" option as it can lead to a lot of disagreements. I think as a last resort if all named guardians are not able to serve or chose not to serve, it might be okay.
The second step was to write down "What Matters Most". Factors she states to consider about a prospective guardian are:
• maturity
• patience
• stamina
• age
• child-rearing philosophy
• presence of children in the home already
• interest in and relationship with your children
• stability
• ability to meet the physical demands of child care
• presence of enough "free" time to raise children
• religion or spirituality
• integrity pets
• potential conflicts of interest with your children
• willingness to serve
• social and moral habits and values
• marital or family status
• willingness to adopt your children
I would write these in order of importance, then see how each potential guardian measures up.
Once again, don't let money issues guide you. For example, let's say you have been a stay-at-home mom and want to be certain your children continue to haven a parent at home full time if you should die. But what if your top choice for a guardian works full-time and her children are in day care? What you can do is properly prepare financially with life insurance and investments to be able to provide adequate financial support so that the guardian you want to raise your children is able to stay at home and raise your children.
The third step was to "Match People to Priorities"
After you measured everyone up based on the above factors, narrow your list down to 3-4. Rank those in order, and there you go!
Now that you have your list, as I would ask my clients, ask yourself: what if that couple you name first should get divorced, what if one of them dies? Are you willing for either of the two to raise them on their own, or would you rather move down the list to your next choice of guardian? In some cases, it may be best to only name one person than that person and their spouse.
The final/fourth step "Make it Positive"
This will be an opportunity for parents to really share their thoughts, hopes, and fears with each other. Hopefully the two of you can grow from the process. Remember as well, when you make your wishes know, and detail them out, and share them with your intended guardians for your children:
• The relationship between all parties may increase
• As parents, you have a mutually focused idea of what you want for your children and can share this with your named guardians.
• You will know what you want to achieve with your children while you are still there for them.
So once it is all said and done, you will have "secured your peace of mind" and will rest easier at night knowing your children will be cared for according to YOUR wishes, whatever may come your way.
Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.
Wednesday, August 19, 2009
Conservatorships...What, why, who, and how to prevent them
WHAT:
A conservatorship is when someone is legally appointed to be responsible for the financial affairs of another person who has been legally deemed to be unable to manage their financial affairs for him or herself. (Also known as guardianship of the “estate” – typically as it may relate to minor children vs. guardianship of the “person”)
WHY/WHO:
In many situations, a person may still be physically or mental able to care for themselves on a day to day basis, yet due to decreasing health, disability, judgment, etc, they may need help managing their finances. Examples may include, but are not limited to:
Persons with physical or mental condtions that prevent them from managing their own
financial affairs;
Persons who have legal authority to take over responsibility for them; and
When other forms of help with financial management will not adequately protect them.
HOW:
A conservator is typically appointed through probate court proceedings. A petition must be filed with the probate court by anyone who has a concern for an individual's financial well-being.
The petitioner has a buden to prove the individual is unable to manage their financial affairs on their own supported by medical and/or other sworn statements with any other supporting evidence. There is generally a court hearing, and if there is a contest by the allegedly incompetent individual and/or as to who hould be appointed as the conservator, the case will typically go to trail.
Once appointed, a conservator assumes financial management for the conservatee and generally receives compensation for performing these duties. This compensation is overseen by the court and is paid from the assets of the incompetent individual. The conservator will be also be responsible to account for all expenditures, and for the assets of the estate, typically on an annual basis or more frequently if ordered by the court.
If the legally incapacitated person is capable of participating in financial decisions, the conservator is ordinarily required to permit the legally incapacitated person to participate to the extent he or she is able. In some circumstances, a court may appoint a conservator to perform a certain set of tasks which are beyond the ability of the legally incapacitated person, while permitting that person to manage his or her own affairs for other financial tasks which remain within his or her ability.
CHECKS AND BALANCES:
The court supervises the conservator's actions by requiring that permission be obtained in advance of certain major transactions (i.e. home sales, withdrawal of retirement investments, etc), and through annual accountings, in order to ensure that the legally incapacitated person's assets are being properly managed, bills are being paid, nobody is misappropriating funds, and the estate is not being wasted.
ENDING:
A conservatorship can be terminated by the court which created it. This ordinarily happens if the legally incapacitated person recovers from the incapacity that necessitated the conservatorship. A particular conservator's role may be terminated by the court or by resignation, in which case the court will ordinarily appoint a successor conservator to take over management of the legally incapacitated person's assets. A conservatorship also ends upon the death of the legally incapacitated person.
HOW TO PREVENT THEM - OR AT LEAST CHOOSE YOUR CONSERVATOR IN ADVANCE:
Through proper estate planning, a general or springing durable power of attorney will allow you to appoint someone you trust (as well as some alternates) to manage your financial affairs in the event of your incapacity or incompetency. These powers may be broad or limited in scope. For example, you may name one person to manage all of your personal financial affairs and another person to manage business affairs on your behalf if the need arises. You may also leave some powers to be controlled by a court for additional protection if you so desire. With a properly executed power of attorney with nominated agents and conservators, those persons nominated by you may not have to seek appointment by the court in the event of your incapacity or incompetency.
Additionally, when assets are placed in a living trust, the sucessor trustee also has power to manage your affairs in the event of incapacity, for which a will alone does not provide.
Disclaimer:The information provided is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem. Use of this information or any related information does not create an attorney-client relationship between Amy Alvis and/or Living Trusts by Amy. The opinions expressed at or through this site are the opinions of the individual authors and does not reflect the opinions of any firm or attorney.
A conservatorship is when someone is legally appointed to be responsible for the financial affairs of another person who has been legally deemed to be unable to manage their financial affairs for him or herself. (Also known as guardianship of the “estate” – typically as it may relate to minor children vs. guardianship of the “person”)
WHY/WHO:
In many situations, a person may still be physically or mental able to care for themselves on a day to day basis, yet due to decreasing health, disability, judgment, etc, they may need help managing their finances. Examples may include, but are not limited to:
Persons with physical or mental condtions that prevent them from managing their own
financial affairs;
Persons who have legal authority to take over responsibility for them; and
When other forms of help with financial management will not adequately protect them.
HOW:
A conservator is typically appointed through probate court proceedings. A petition must be filed with the probate court by anyone who has a concern for an individual's financial well-being.
The petitioner has a buden to prove the individual is unable to manage their financial affairs on their own supported by medical and/or other sworn statements with any other supporting evidence. There is generally a court hearing, and if there is a contest by the allegedly incompetent individual and/or as to who hould be appointed as the conservator, the case will typically go to trail.
Once appointed, a conservator assumes financial management for the conservatee and generally receives compensation for performing these duties. This compensation is overseen by the court and is paid from the assets of the incompetent individual. The conservator will be also be responsible to account for all expenditures, and for the assets of the estate, typically on an annual basis or more frequently if ordered by the court.
If the legally incapacitated person is capable of participating in financial decisions, the conservator is ordinarily required to permit the legally incapacitated person to participate to the extent he or she is able. In some circumstances, a court may appoint a conservator to perform a certain set of tasks which are beyond the ability of the legally incapacitated person, while permitting that person to manage his or her own affairs for other financial tasks which remain within his or her ability.
CHECKS AND BALANCES:
The court supervises the conservator's actions by requiring that permission be obtained in advance of certain major transactions (i.e. home sales, withdrawal of retirement investments, etc), and through annual accountings, in order to ensure that the legally incapacitated person's assets are being properly managed, bills are being paid, nobody is misappropriating funds, and the estate is not being wasted.
ENDING:
A conservatorship can be terminated by the court which created it. This ordinarily happens if the legally incapacitated person recovers from the incapacity that necessitated the conservatorship. A particular conservator's role may be terminated by the court or by resignation, in which case the court will ordinarily appoint a successor conservator to take over management of the legally incapacitated person's assets. A conservatorship also ends upon the death of the legally incapacitated person.
HOW TO PREVENT THEM - OR AT LEAST CHOOSE YOUR CONSERVATOR IN ADVANCE:
Through proper estate planning, a general or springing durable power of attorney will allow you to appoint someone you trust (as well as some alternates) to manage your financial affairs in the event of your incapacity or incompetency. These powers may be broad or limited in scope. For example, you may name one person to manage all of your personal financial affairs and another person to manage business affairs on your behalf if the need arises. You may also leave some powers to be controlled by a court for additional protection if you so desire. With a properly executed power of attorney with nominated agents and conservators, those persons nominated by you may not have to seek appointment by the court in the event of your incapacity or incompetency.
Additionally, when assets are placed in a living trust, the sucessor trustee also has power to manage your affairs in the event of incapacity, for which a will alone does not provide.
Disclaimer:The information provided is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem. Use of this information or any related information does not create an attorney-client relationship between Amy Alvis and/or Living Trusts by Amy. The opinions expressed at or through this site are the opinions of the individual authors and does not reflect the opinions of any firm or attorney.
Wednesday, February 11, 2009
Living Trusts by Amy
Did you know that over 50% of adults have not prepared for their death with a will or trust? Did you know that 100% of adults will die? The problem is that we don't have a crystal ball to tell us when that will happen. So ask yourself, what would today look like for your family, if you had died yesterday? Are they properly taken care of? What will happen to your assets? Will your family have to struggle with the time and expense of probate? Will there be an estate tax bill left for your heirs to resolve? What will happen to your children? Worse yet, what if you and your spouse both die and you leave minor children behind, who will take care of them?
If you answered, "I don't know" to any one of these questions, then you MUST start figuring out the answers to these, and many other questions. That is where I can help. By sitting down and discussing what is important to you and your family, I can help you identify your estate planning needs and start you on your way to PRESERVING YOUR ASSETS and PROTECTING YOUR FAMILY.
Disclaimer: Information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.
So give me a call at 925-301-7195 to schedule your FREE CONSULTATION TODAY! There is no obligation and my goal for my clients is to "SECURE PEACE OF MIND, ONE TRUST AT A TIME".
FOR MORE INFORMATION OF SERVICES PROVIDED BY LIVING TRUST BY AMY VISIT ME AT http://www.livingtrustsbyamy.com/
If you answered, "I don't know" to any one of these questions, then you MUST start figuring out the answers to these, and many other questions. That is where I can help. By sitting down and discussing what is important to you and your family, I can help you identify your estate planning needs and start you on your way to PRESERVING YOUR ASSETS and PROTECTING YOUR FAMILY.
Disclaimer: Information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.
So give me a call at 925-301-7195 to schedule your FREE CONSULTATION TODAY! There is no obligation and my goal for my clients is to "SECURE PEACE OF MIND, ONE TRUST AT A TIME".
FOR MORE INFORMATION OF SERVICES PROVIDED BY LIVING TRUST BY AMY VISIT ME AT http://www.livingtrustsbyamy.com/
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