Posts By: Gene Osofsky

“The best laid plans of mice and men often go awry.”  Although we hate to admit it, this statement will also sometimes apply to estate planning; and more often than we would like, it happens with powers of attorney.

A power of attorney is the document in which you nominate an agent (or attorney-in-fact) to make financial decisions and take legal action for you when you are incapacitated or otherwise unable. (This does not include healthcare decisions, covered in another document called a health care directive.) Unfortunately,  depositors sometimes experience difficulty in getting banks or other financial institutions to recognize the authority of an agent under a power of attorney.

This difficulty usually has nothing to do with the validity of the document; rather, it is the bank’s attempt to protect itself.  But while a little bit of caution is understandable, it can have frustrating—or even tragic—results if not addressed.  Luckily, there are steps you can take to improve your chances of having the bank honor the powers you have delegated to your Agent.  Here are a number of suggestions:

  • Talk to your bank about your plans ahead of time.
  • Sign the bank’s own forms in addition to the more comprehensive one prepared by your attorney.
  • Ask your financial institutions if they have any requirement for powers of attorney.
  • Update your power of attorney forms or documents frequently (every 2-5 years.)

Talking to a representative from your bank every 2-5 years may seem like an inconvenience now, but imagine the inconvenience if you are incapacitated and your agent is unable to access the funds he or she needs to pay your bills, make your mortgage payment, or provide for the needs of your family. A little bit of time spent now can save a mountain of stress later on. If all else fails, you might need your attorney to remind the bank that California laws imposes monetary penalties upon banks and others who refuse to honor valid powers of attorney; the threat of legal action from a credible source will often solve the problem.

Posts By: Gene Osofsky

When it comes to estate planning, the steps you take after a divorce are not so different from the steps you’ll take after a death—many of the phone calls will be the same, many of the changes you make and details you change will be similar.  This all makes sense, because a divorce is basically the death of your marriage, and in the financial and legal world your marriage was an entity all its own.

The first question most people ask is “Who gets the estate plan?” The answer is that both of you and neither of you get the estate plan. Ideally, you both put a lot of thought into your estate plan and it reflects both of your wishes.  All of this work was not for nothing.  The details of your plan will have to change, this is true, but the basic ideals will most likely be the same.

Caution:  In California, some of the following things “to do” might need to wait until your divorce is final.  For example, changing beneficiary designations may be prevented by the “automatic restraining order” that takes effect immediately when your divorce starts.  Ask you divorce attorney whether it is O.K. to proceed and then talk to your estate planning attorney:

Subject to the above caution, your first order of business should be to change your beneficiary designations.  Most married couples name their spouses as the primary beneficiary on insurance policies, retirement accounts, wills and trusts, with their children or immediate family members named second.  Unless you think your ex-spouse deserves to benefit from all your hard work you’ll want to remove him or her as a beneficiary immediately. (Documents to change: will, trust, ALL life insurance policies, IRA or 401(k) accounts, savings accounts, investment accounts, POD or TOD accounts, credit card insurance policies.)

Your second order of business will be to amend your agent/executor/trustee.  It is likely that while you were married you named your spouse as the primary person in all of these roles; you’ll now want to move your secondary nominee to the primary position, or find someone new. (Documents to change: will, trust, All powers of attorney, health care directives, nomination of conservator, emergency contact forms.)

Not necessarily your third order of business, but somewhere in there you may want to change your nomination of guardian.  You and your ex-spouse probably chose people you both knew and trusted to be guardians of your minor children if anything happened to both of you.  Divorce can bring up many powerful emotions and hard feelings, so although these people are probably still good and trustworthy people, you may want to nominate someone else.  Keep in mind that your ex-spouse will still be namd your children’s primary guardian if anything happens to you.  This doesn’t mean you shouldn’t execute a new nomination of guardians, but keep in mind that your nomination of guardians will only come into play if your spouse dies first. (Documents to change: nomination of guardians, nomination of conservator, emergency contact forms, authorization for custodian consent to medical treatment of minors.)

The most important thing to remember is that the more you put it off, the more likely it is that your wishes will go unacknowledged. As a rule, it’s a good idea to visit your estate planning attorney after any life change, especially one as significant as divorce.

Posts By: Gene Osofsky

Coping with the death of a loved one can be a crushing task.  There are so many things to do and details to remember; all of this at a time when each small task can serve as a reminder of your loss. At such a time it can be helpful to know that you’re not going through this alone; there are a number of people who can help when you begin to feel overwhelmed.   To relieve some of the stress, and help ensure that no important task is forgotten, we offer a list of people to call after the death of a loved one:

Funeral home – This will likely be your first call.  The funeral home you or your loved one has selected will be able to help you with a lot of the immediate details and tasks.  The funeral director will also be able to help you obtain 10-20 copies of the death certificate, something you will need later.

Family and Friends – This probably goes without saying.  Not only will you want to notify family and friends, but they can also help with a lot of the endless tasks and overwhelming details.  Don’t be afraid to delegate.

Veteran’s office (if deceased was a Vet.) – If the deceased was a Veteran you may have to stop benefit payments; you may also be able to get assistance with the funeral or memorial service.

The deceased’s employer – You will need to do this not only to inform the employer of the death, but also regarding termination of health insurance.

Attorney or Tax Professional – You will need to know what to do about probating the deceased’s estate, filing tax returns, dealing with bank accounts, etc.  An attorney or tax professional can help. It is especially important to find out if your loved one had any existing estate documents.

Office of Social Security – If your loved one was receiving benefits you’ll need to stop payments. You will also want to find out if survivors are entitled to any benefits.

Insurance company of the deceased – You will probably need to file a claim.  This is something your attorney or accountant may be able to help with.

Local Newspaper – You may want to publish an obituary or notice of death, as well as information about the funeral or memorial service.

Credit card companies and utilities – Give written notifice of death to each creditor.  However, check with your estate’s attorney before paying any outstanding balances, as your attorney may advise paying them only after furnishing to each creditor the required legal notice and awaiting timely claims.  Generally, you have no obligation to pay these debts from your own funds unless you, too, were a signer on the account(s) or are the surviving spouse with a legal obligation to pay the debt(s).

Bank – Arrange to change any joint accounts or to open an account in your name.  Do not close any accounts right away!

Although this list is a good starting point; a complete list of people to call and things to do will depend on where the deceased lived and the details of their estate. Contact your loved one’s estate planning attorney (or your own) to ensure that nothing is left to chance.

Posts By: Gene Osofsky

There’s a useful saying that goes something like this: “Expect the best, but prepare for the worst.”  Never has that saying been as useful as it is right now in regards to asset protection and estate planning.  As Laura Lallos mentions in her article in the Morningstar Advisor, “Estate attorneys are trained to prepare for every contingency. But how do you plan for the unimaginable? Who would have predicted a U.S. tax system with no estate tax at all–and no certainty about what the estate tax will look like in 2011?”

Planning for the future when the future is so foggy is a challenge at best, but this unique year for taxes offers some once-in-a-lifetime opportunities for giving and saving as well.  This seems to be a time of contradictions. As the article points out, “The best strategy that financial advisors and attorneys can pursue now is to prepare their clients for the worst. On the bright side, some clients can also seize opportunities created by the gaping holes in the tax law for 2010.”

The article suggests a number of strategies that you can implement now to prepare for an uncertain future.  Some of these include:

Give monetary gifts now, when the gift tax rate is a low 35%, in order to lessen your taxable estate. Better still, gift away assets, such as real estate,  that are likely to appreciate in the future.

Take advantage of the one-year-only lapse in the Generation Skipping Transfer Tax.

Create a Grantor Retained Annuity Trust before the end of October to take advantage of the currently very low Section 7520 rate.

See your estate planner and make sure your estate and asset protection plans truly are “prepared for the worst.” We may not yet know what next year will bring, but that doesn’t mean we can‘t take steps to ensure our clients are prepared for whatever the future may hold.

Posts By: Gene Osofsky

When people think about estate planning they generally think about inheritance, or taxes, or even guardianship—but rarely are the words “executor” or “agent” the first ones that come to mind.  And yet, choosing your executor or your agent is one of the most important decisions you’ll ever make.

Your executor is the person who carries out the instructions in your will.  You may spend hours (sometimes months or even years) agonizing over inheritance plans and making decisions; but in the end, when the time comes for all of those decisions to be implemented, you’re not going to be around.  If there are any questions to be answered or clarifications to be made they’re going to fall to your executor.

Your agent is the person who—depending on whether the document is a health care directive or a financial power of attorney—will make your important financial or health care decisions when you are unable. This person is your proxy during your life, signing checks on your behalf or talking to doctors about your treatment.

Considering all of this, it is understandable why so many people have trouble naming an agent or executor.  It’s not easy to choose your own replacement, so to speak.  But the most difficult decisions are often the most important. If you are a parent of more than one child then you know about the sibling fights that can erupt seemingly out of nowhere, even in loving and agreeable families. This is especially true when there is any uncertainty about what mom or dad’s true wishes were.  The right agent or executor can relieve much of that uncertainty.

So how do you choose the right agent or executor?

First of all, think it through carefully.  Choose someone reliable, whose decisions you trust. You’ll want someone who’s careful; and you’ll want to choose someone who isn’t already overloaded, because they’ll need to have time to do a thorough job. Choose someone who knows you and who knows your family; a familiar face will be comforting in hard times.  On the other hand, nominating a financial institution rather than a personal friend can work out well under the right circumstances, but research your choices carefully.

If there isn’t one clear choice you may decide to nominate two people to make decisions together.  This can be a good alternative if the two work well together and share your values, but it can also be a recipe for disaster, so be sure to build in some protections: instead, consider naming an uneven number of agents or executors to prevent tie-decisions, or nominate a mediator or tie-breaker who can step in to prevent serious disagreements from having to be decided in court.   If you wish to include the power to make family gifts, special legal considerations come into play: talk to your attorney about gifting powers if you wish to include them in your documents. They can often be very helpful, especially if you wish to delegate the authority to qualify you for a long term care subsidy under the Medi-Cal program.

Posts By: Gene Osofsky

Wealthy grandparents have a unique opportunity this year to give their grandchildren gifts of substantial value without incurring any generation skipping transfer tax. This is a huge savings opportunity!—so why aren’t more people taking advantage of it?

Part of the reason may be lack of awareness. Everyone knows about the Bush administration’s year-long repeal of the estate tax, but very few people seem to be aware that the Bush tax cuts included a year-long lapse of the generation-skipping transfer (GST) tax as well.  The GST was an additional tax on top of the estate or gift tax.   In effect, it operated as a second transfer tax imposed on transfers which “skipped” generations.  According to this article in Reuters, last year (2009) “generous grandparents could give away $3.5 million without paying the [GST] tax”. During 2010, they can give away even more. . . . assuming that Congress does not reinstate the GST retroactively.

But before you call the grandkids with the good news, consider whether or not you feel comfortable giving them such a large sum outright.  If your grandkids are still young (and not yet responsible about money and finances) you may not want them having such a large sum to play with; and unfortunately, giving the gift in trust is not an option in this case.  “To take full advantage of the GST tax break, assets should be transferred directly to beneficiaries and not to a trust. Money placed into a trust may lead to taxes when distributions are made later on.”

If your grandchildren are responsible adults, and if you’ve been considering giving them a monetary gift anyway, this lapse in the generation-skipping transfer tax could be just the push you need.  Although there is still a basic gift tax for lifetime gifts in excess of $1 million, the tax on the excess in 2010 is only 35%–much less than the scheduled leap to 55% come January 1, 2011.  This, in conjunction with the one-year GST tax lapse (which would otherwise add a second layer of tax to any gift to grandkids) makes 2010 a great year to give gifts to your grandchildren.  Talk to your attorney or financial advisor about your gift-giving options.



Posts By: Gene Osofsky

Most parents come into our office with one concern on their minds: protecting and providing for their children. We help these parents select loving guardians and set up solid trust or inheritance plans to ensure that their children will have everything they need.  But parents often have another concern as well—how to keep their children from squandering an inheritance received too early.

These parents want to protect their children from the potential disaster of being given too much financial means before they are mature enough to handle it; they want to gradually relinquish control as each child reaches the milestones which prove they are fiscally prepared. We are happy to help parents design a plan that helps them achieve this goal.

One strategy to help a child reach financial maturity is to specify an age at which a child may be co-trustee of his or her own trust. The child can then partner with a co-trustee of the parents’ choosing; this could be a close friend of the family, a trusted financial advisor, or even a corporate trustee such as a bank. This gives the child the opportunity to get a taste of responsibility and begin making decisions, but with a safety net beneath them. When the child reaches a certain age (or alternatively, after attaining a goal such as graduation from college, or gainful employment for a specified amount of time) he or she may then become sole trustee of his or her own trust.

Another strategy is to give the child access to the trust principle itself in gradual increments. For example, the child may receive 1/3 upon graduation from college, another 1/3 four years later, and the remaining 1/3 four years after that. Of course the ages and amounts are completely up to each client, but the slow distribution of assets allows the child to have a learning curve, something which may make the parents (and the child) much more comfortable.

We understand that there is no substitute for parental involvement, but we can give parents options that can lay a strong foundation for fiscal responsibility.

Posts By: Gene Osofsky

You have a longer life expectancy than a man, different ideas about what constitutes risk, often work for a different pay-scale… and if you’re a woman, you likely need a different kind of retirement plan as well.

You may think that the financial advisor recommended by your husband/father/brother will suit you just fine, but this new article in the Wall Street Journal suggests that what works financially for men doesn’t always work for women—and this includes old-school financial advisors. According to the article, when women start seriously planning for retirement, “many find that the financial-services industry is an obstacle, not an ally. In a recent Boston Consulting Group survey of women investors, respondents said they routinely feel underserved by the financial-services industry, with more than 70% expressing dissatisfaction with the service they’re getting. Among the complaints: disrespectful advisers, narrower investment choices based on the assumption that women can’t handle risks and patronizing pitches.”

This isn’t just a case of emotional discomfort; it also hits women in the pocket-book, where it’s likely to hurt the most. “A recent survey by financial-services company MassMutual found that women’s retirement accounts were, on average, just two-thirds the size of men’s.”

Not all of this can be blamed on financial advisors though. Women have a dangerous (if generous) tendency to put their spouses and families first, with little thought for their own financial security until it’s too late. In addition, married women often count on their husband’s retirement plan to take care of the both of them—only to find that his plan works for his life expectancy, leaving her without a plan when he’s no longer around.

What can women do?  The first thing each woman should do is have is her own retirement account, and contribute to it each month.  Make sure your financial advisor recognizes your unique needs and listens to your hopes and concerns.  You can plan with your partner for golden years spent together, but it’s your responsibility to save for yourself.

Posts By: Gene Osofsky

Shakespeare said that old age is a return to childhood; without teeth, without voice… and in the case of Alzheimer’s patients, without memories.  But if the elderly have to endure the drawbacks of childhood, shouldn’t they get some of the benefits too?

The Family Caregiver Alliance must have thought so too, because a few times a year they sponsor a weekend sleepover in Alamo, California called Camps for Caring. The program provides campers with an experience “of shared meals and stories, of activities creative and expressive, of exercise in the outdoors and of new friends and memories made over the weekend.” But the significance of the experience can go far beyond that.

According to a recent story about Camps for Caring on NPR Radio, although “campers typically don’t remember details of the retreat… the experience significantly lifts their mood.”  In fact, “Post-camp surveys of family caregivers indicate that the ‘good feeling’ lingers, and it even can improve daily functioning.”

Beyond being a beneficial experience for the elderly attendees, Camps for Caring provides a much-needed break for overworked caregivers, who often attend to their elderly loved one around the clock, and can quickly find themselves dangerously close to the burnout breaking point.

Out of state residents may find it difficult to take advantage of the Camps for Caring program, but that doesn’t mean that caregivers or their elderly charges must leave themselves at the mercy of the effects of Alzheimer’s.  In addition to information about Camps for Caring itself, the NPR article includes some tips from experts that can make dealing with Alzheimer’s easier on everyone. Or you can go to the Family Caregiver Alliance’s Family Care Navigator to find organizations and resources in your area.

Posts By: Gene Osofsky

If you have a special needs child, parent, or sibling then you know that planning for the future can be overwhelming under the best of circumstances; which is why so many parents and caretakers tend to live for today, while planning for tomorrow is always put off until… well, until tomorrow.  But if planning and caring for your loved one is this difficult for you, can you imagine how difficult it would be for a friend or guardian if something were to happen to you?  For this reason, the importance of planning for the care of your special needs loved one cannot be overstated.

Getting started with your planning can feel like climbing Mt. Everest at first, especially if you’re trying to navigate through government programs and federal financial aid.  But as overwhelming as it can be in the beginning, with the right advisors the planning process can and should be a relieving and beneficial experience for all. The following article from CNN Money gives a few tips on how—and why—to begin planning for your special needs loved one.

If you would like to have a secure plan for the future but aren’t sure where to begin, perhaps the best way to start is to find an attorney in your area who specializes in Special Needs planning.  The laws and requirements for government aid will vary from state to state, but more importantly, there is no substitute for a knowledgeable expert who will listen to your family’s unique story and help you blaze securely into the future. Click here for more on Special Needs Planning.