Your grandson’s birthday is coming up, and once again you’re stumped for ideas.  You may wonder, is there something other than video games I can give him; something with a lasting value?

How about an education?

Give your grandchildren the most useful gift of their lives, and benefit yourself as well; contribute to their education with a 529 plan.

If you don’t know what a 529 plan is, The College Savings Plans Network describes it as “a tax-advantaged investment plan designed to encourage saving for the future higher education expenses of a designated beneficiary.”  How does it work?  According to SavingForCollege.com once you decide which state’s 529 plan is right for you and make the investment, “your investment grows tax-deferred, and distributions to pay for the beneficiary’s college costs come out federally tax-free.”

From an estate planning perspective, a 529 plan is an excellent tool for grandparents because any contributions you make to the plan are considered complete gifts, excluded from your taxable estate, and will pass to your grandchildren free of estate taxes.

Contributions to a 529 plan are attractive on a personal level as well because even though it’s out of your taxable estate you still retain control over it.  The money you’ve put into a 529 plan doesn’t go to the beneficiary’s education until you say so.  You can collect a refund at any time. The amount you originally contributed comes back to you tax free, with only the earnings taxed as ordinary income.

There are some potential drawbacks to a 529 plan, such as medicaid concerns and administrative expenses, so you’ll want to talk to your financial planner before you jump right in.  But if you’re looking for a unique gift that will last a lifetime, and benefit yourself as well, a 529 plan might be just what you’re looking for.

“Probate” is a term that is mentioned quite a bit in the estate planning world.  We’re always talking about the process of probate, the cost of probate, how to proceed with probate or how to avoid it.  With all this talk of probate, a definition and description of the process seems in order.

Probate is the process in which the court determines the legal property of a person who has died, and decides to whom those assets will be distributed. It sounds like it should be simple, but even in the best of circumstances there are procedures that must be followed to the letter, and the actual process (depending on the size of the estate and the laws of the state in which the property is being probated) can take anywhere from 6 months to a few years.

You may be asking why probate takes so long, especially if the deceased person has left a will making their wishes clear.  A good will can certainly make the process easier, but even with a will, there are certain steps that must be followed to complete the probate process, including the appointment of an executor or personal representative, verification of the will, taking an inventory of assets belonging to the deceased, giving notice to creditors and paying valid claims against the estate, preparing and paying taxes, notifying beneficiaries, and eventually distributing the assets to the beneficiaries or heirs.  Whew!

If you think that just reading the above paragraph takes your breath away, imagine the confusion of having to actually go through all of those steps—and possibly more!

Not every estate will have to go through probate, but one way to absolutely avoid it is to hold your assets in a revocable living trust.  A living trust is an entity that continues even after the grantor passes away, which means that the “owner” of the assets still exists, and probate is thereby avoided.

If you would like to know more about probate, or protecting your assets with a revocable living trust contact our office today.

All of us know about saving for retirement, but how much do any of us know about spending during retirement?  With fewer people receiving pensions, and more and more retirees using a combination of IRAs, 401(k)s, stock investments and real estate, your retirement income can begin to look like something even an economics PhD would have trouble with.

“The mathematics of this are beyond what most people could really be sophisticated at,” said Roger Ibbotson, a professor at the Yale School of Management, to New York Times writer Robert Hertzberg, in his article Making Your Money Last As Long As You Live.

Complicated mathematics means that it is unlikely most retirees (or near-retirees) have the correct equation to withdraw the amounts necessary to live month-to-month as well as continue to save for the future.  There is help, however.  Hertzberg’s article explains how two of the biggest fund companies, Fidelity and Mutual, “have introduced mutual funds intended to make it easy for retirees to make systematic monthly withdrawals.”

These particular funds won’t be right for everybody, but with all the different savings and retirement options available today it is definitely worth mentioning to your CFP (Certified Financial Planner) and Estate Planning Attorney.

Why your Estate Planning Attorney?

While investments and retirement accounts may seem like they rest firmly in the camp of your financial planner, the truth is that EP attorneys and CFPs often work hand-in-hand to ensure that your investments are held and protected in a way that will best serve you and your family.  If your CFP can help you manage your savings, your EP attorney will work with you to make sure that your hard-earned money goes efficiently to your children and grandchildren upon your death, rather than being siphoned off by taxes or costly probate expenses.

It is never too early to start thinking about the future. Talk to your Financial Planner and Estate Planning Attorney today.

“So long as men can breathe, or eyes can see,
So long lives this, and this gives life to thee.”

(Sonnet XVIII by William Shakespeare, b. Apr. 23, 1564, d. Apr. 23, 1616)

People do some strange things with their last wills and testaments, and Shakespeare was no exception.   One item in William Shakespeare’s will, for example, is often cited as being a curious one; “I give unto my wife my second best bed with the furniture.”  Why the second best bed?  One might wonder if Shakespeare was having some fun at his wife’s expense.  Perhaps the author of such comedies as The Taming of the Shrew and Much Ado About Nothing was eccentrically trying to interject some comedy into the last document he ever wrote?

With a little research we discover that giving the “second best bed” to his wife was actually a perfectly natural bequest for 1616, and even more interestingly, Shakespeare did not, in fact, write his own will.  This is not to imply that the will is not authentic, but research suggests that even Shakespeare, arguably the most brilliant writer of all time—not to mention he of the quote, “first thing we do, let’s kill all the lawyers”—hired a lawyer to help him write his will and dispose of his property.

Creating a valid will is even more complicated now than it was in the 1600s, and getting the advice of a legal professional even more essential.  If your estate planning documents are incomplete or unclear it can result in costly court delays and legal fees, not to mention heated fights between family members that can leave lasting scars.

Even Shakespeare wasn’t afraid to ask his lawyer for help.  When the time comes to write your will, follow Shakespeare’s example and let your attorney worry about the legal details, leaving you free to consider the more important questions such as. . . To whom will you give your second best bed?

“The entrepreneur is our visionary, the creator in each of us. We’re born with that quality and it defines our lives as we respond to what we see, hear, feel, and experience. . . The entrepreneur in us sees opportunities everywhere we look. . . “ - Michael Gerber, founder and chairman of E-Myth Worldwide

The week of April 21-25, 2008 is National Small Business week, a week dedicated to recognizing the important role of America’s small business community. If you’re wondering just how important is the role of small businesses in the U.S. economy, take a look at these figures from the U.S. Small Business Administration, Office of Advocacy.

Small businesses:

• Represent 99.7 percent of all employer firms.
• Employ about half of all private sector employees.
• Pay more than 45 percent of total U.S. private payroll.
• Have generated 60 to 80 percent of net new jobs annually over the last decade.

These statistics are nothing to sniff at. Small businesses are what our country was built on, and even now serve as the backbone of our culture and economy. As such, small businesses must be nurtured and protected to the best of our ability. This includes taking steps to ensure a business can continue into the next generation with business succession planning, reducing the risk to a business-owner’s family and personal assets by forming an LLC or FLP, and keeping up to date with legal requirements and changes in state and federal tax codes. Your attorney can help with all of these.

If you are an entrepreneur or small business owner, the relationship with your attorney should be one of the closest relationships you have. In addition to answering your legal questions and providing asset protection, your attorney can also help you plan for the future, and update your business plan as your company grows.

This week our nation recognizes and honors small businesses. Give your own business the recognition and attention it deserves by protecting it and planning for the future.

It started with video wills, and now we have people divorcing on YouTube.  It is undeniable that technology and the internet have changed all areas of our lives, and the law is no exception, but how far is too far?

According to Leslie Kaufman’s article in the New York Times, “When the Ex Blogs, the Dirtiest Laundry Is Aired”, we haven’t reached too far quite yet.  Kaufman’s article states that although most judges agree that airing grievances against an ex in a blog or podcast may be ill-advised and inappropriate, the right to air those grievances is still protected by the first amendment.

So, what does this mean for attorneys and their clients?

Some attorneys have started including confidentiality provisions in their divorce agreements.  Such provisions forbid either party to publish any information about the marriage, including fictionalized accounts.  It is likely that we will soon see similar provisions included in many prenuptial agreements as well.

Thus far, firms specializing in family law have been the most affected by such posting to the internet, and the privacy issues that result, but estate planners will not be immune.  People have been making video wills for years now, how long before these video wills are being aired on YouTube?  It’s not such a leap if you consider the fact that a Last Will and Testament is not a private document, but becomes a matter of public record once it has been submitted to the probate court.  And almost every will or trust contains a no contest clause; will these have to be updated to include “no blogging clauses”?

None of us know what the future holds, but the best way to prevent trouble is to be prepared.  Visit our office to make sure your family is protected; right now, and in the years to come.

April 16th is National Healthcare Decisions Day, a day dedicated to “ensuring that all adults with decision-making capacity in the United States have the information and opportunity to communicate and document their healthcare decisions.” Our firm is in complete support of such a goal. In fact, we include a Health Care Directive as an important component of each estate plan we draft.

Every adult should have a Health Care Directive, whether they anticipate a forthcoming hospital stay or not. Executing a Health Care Directive will ensure that, in case of emergency, you receive the medical treatment you need—and want—and prevent the receipt of treatment to which you are opposed.

A complete Health Care Directive (sometimes known as a Healthcare Power of Attorney) will consist of the following key elements:

1. Nomination of Agents—those who will make your decisions if you are unable

2. Instructions as to your wishes for healthcare and invasive treatment

3. Whether or not to include a “Do Not Resuscitate” (DNR) order

4. Nomination of a Primary Care Physician

5. Your intention (or not) to donate organs

6. Burial/Cremation instructions

There is one more key element to a truly complete Health Care Directive, and that element is discussion. It is absolutely essential that you discuss your wishes for your health care with the people who will be involved should something happen to you; this includes your family, any friends you have named as agents, and your doctors.

Once you have executed your Health Care Directive, give a copy to your doctors and to each of the people you’ve named as agents.

Executing your Health Care Directive early will take the pressure off your loved ones if anything should happen to you, and make it easier for them to ensure you get the care you want and need. Don’t put off this important document; create your Health Care Directive today.

What is the most important word in your estate plan?

It is the word that determines when your successor trustee takes over, when the agent nominated in your Healthcare Directive gets the authority to make health care decisions for you, and when your financial Power of Attorney goes into effect. That word is “incapacity”. With so much hanging on a single word, it’s important to know exactly what that word means.

Merriam-Webster defines incapacitated as “legally incapable” or “deprived of capacity or natural power”. Your trust defines incapacitated as well, and—all due respect to Merriam-Webster—your trust defines it much more thoroughly.

Every standard trust should have a definition of incapacity as determined by a court of law. This means that you are deemed incapacitated when a court of competent jurisdiction determines that you are unable to legally handle your own affairs. That’s the simple definition.

A good trust will also include a definition of incapacity as determined by two physicians, which means that two independent, licensed physicians have examined you and have determined that, again, you are unable to effectively manage your property or financial affairs.

A really great trust will give you the option to appoint a disability panel to determine your incapacity. A disability panel is a group of people that you appoint (before your incapacity, of course) to judge whether or not you are competent to make financial decisions. A disability panel can consist of as many or as few people as you like, usually working in conjunction with at least one licensed physician.

There are many reasons why you want to have more than just the standard definition of incapacity, the primary reason being that court proceedings can be lengthy and filled with red tape. While your agent is spending days or weeks going through the legal process, your estate is languishing and your financial agent is powerless to take action on your behalf. Giving a disability panel or two physicians the power to determine your incapacity will circumvent the red tape and prevent lengthy delays.

Call or come into our office for more information about incapacity and what it means in your trust or Healthcare Directive. After all, it could end up being the most important word in your estate plan.

April marks the opening of baseball season, the season of the great American past-time; a season when, every few years, an average Joe can step up to the plate and make himself a national hero. One of the most famous of those heroes is George Herman “Babe” Ruth, the boy from an institution for underprivileged boys who grew to become one of the most recognizable names in American history.

Babe Ruth was not only a titan of baseball, but a generous and giving man as well. One year before he died, Babe Ruth established the Babe Ruth Foundation for destitute children. Upon his death, in addition to providing for his wife and daughters, the Babe left a sizeable chunk of his estate to his foundation through his last will and testament.

Babe Ruth was not the first to make a charitable donation through his will, and he certainly wasn’t the last. Charitable bequests through wills and trusts are a common occurrence in estate planning, not only for altruistic reasons, but also because of the tax benefits that can come with leaving part of your estate to a non-profit organization.

There are some who fear that the estate tax repeal due to happen in 2010 will result in a decline in this kind of posthumous giving. Without the tax incentive, will wealthy donors feel quite as generous when making their will or trust?

If you have a charity or non-profit organization that is close to your heart, and to which you donate regularly now, why not make a provision for it in your estate plan? There’s a peace that comes from knowing that you are leaving a legacy not only for your family, but also for the cause that is closest to your heart.

Will your business still be in the family 400 years from now?

The answer to that is “not likely”. Statistically, Only 40% of family owned businesses survive to the second generation, 12% to the third, and 3% to the fourth. One reason for this might be lack of interest by subsequent generations, another might be the evolving market and economy, but one of the main reasons that family businesses don’t survive to the second and third generation is lack of planning.

Passing on the family business may be difficult, but not impossible, as this article about Shirley Plantation in Charles City, VA shows. Shirley Plantation has been in the same family for almost 400 years, and is still going strong. The reason for this success, says Charles H. Carter, the current executive director of the plantation, is that the family has planned for the future each step of the way.

Business succession planning is a key element to owning your business at any step of the game, not just at retirement age. This is because it is not merely about exit strategy, but about making goals and planning for future success. And leaving the business to your children is not your only option. You may decide to sell your business, or leave it to a partner. The options are out there, if you only know where to find them.

That’s where your estate planning attorney comes in.

Whether your business is in its first generation or its fifth, whether you intend to pass it down or sell, planning is essential if you want your business to survive. Your estate planning attorney can help you do just that. Whether through wills and trusts, or the succession planning described in this blog, it is our business to look to the future. Trust us to help you do the same.