Posts By: Gene Osofsky

Schoolchildren aren’t the only ones putting their noses back to the grindstone after this warm summer and long Labor Day weekend; Congress is also returning to work, and among the many issues they will be discussing is that of the Estate Tax, which is set to expire for one year in 2010.

According to The Wall Street Journal President Obama was expected to take swift action when he took office to prevent the scheduled Estate Tax repeal, locking it in at a permanent rate instead. One of the reasons for this anticipated “swift action” by democrats was that it would be “politically harder to go ahead with their plan to resurrect the estate tax once it [had] disappeared.”

Although action has not been as swift as originally anticipated, it is not likely to disappear. Some ruling on the estate tax is still expected before the end of the year, although it may not be as permanent as people may hope for planning purposes. Here is what Forbes.com has to say about the immediate future of the estate tax:

“President Obama wants to see a permanent extension of the estate tax, but that’s unlikely to happen this year. Instead, look for Congress to give it a one-year extension, as it’s slated to expire for a year in 2010. For 2009, estates valued at less than $3.5 million are exempted from the tax, which has a maximum rate of 45%.”

If you’ve been putting off planning until a permanent decision on the estate tax is reached, it may be time to bite the bullet and take action now.

Posts By: Gene Osofsky

The recent death of Senator Ted Kennedy has given us an opportunity to reflect on the unique nature of trusts not only as a tool to protect assets for future generations, but also as a way to leave a lasting legacy for your children and grandchildren.

The Kennedy trust—or Kennedy trusts, we should say—are some of the best examples of how comprehensive and versatile trusts can be, as this article by Gerald Posner illustrates. The trusts were first established by Joe Kennedy; one in 1926, another in 1936, and another in 1949. Each trust had its own unique purpose: the trust established in 1926 was for Rose and the children, whereas the trust established in 1949 was intended for his grandchildren. Furthermore, each trust was set up as a blind trust, designed to act independently from any other trust.

The Kennedy trusts were built to last, with each successive trustee working to provide for the beneficiaries while protecting the principal for future generations as well. And last they have, to the extent that today—even taking the recent economic downturn into account—the trusts have survived… and even flourished in some cases.

You don’t have to be a Kennedy to leave a legacy for your children or grandchildren. The Kennedys certainly had a financial head start, but trusts can be designed to protect and build on even a modest estate. Whether your desire is to provide for your immediate heirs, or leave a legacy that lasts far into the future, a trust can help you accomplish your goal.

Posts By: Gene Osofsky

A recent study about how divorce may affect your health has been making the rounds in the news sources lately. This article discusses how the added stress of divorce, family upheaval, and tighter finances can be so detrimental to your health that the effects can last years into the future.  Because our firm works frequently to help divorced or remarrying couples update their estate plans to protect their new blended families this article sparked our interest. But what was even more interesting was this recent post by Paula Span about the effects divorce can have 20 or 30 years down the road—not just on the couple but on their grown children now acting as caregivers.

According to Ms. Span, adult children of aging parents often find themselves caring not only for mom and dad but also for stepmom, stepdad and sometimes even another stepparent from yet a third (and current) marriage. Dividing time (and often finances) between so many parents with new and special needs can quickly take its toll, as can the family politics that come with adult siblings, half siblings, and step siblings. “It adds another layer of complexity to an already complex and emotional situation.”

With all of this complexity and intermingling family ties, it is more important than ever to have conversations about estate planning and long-term care with parents and siblings before mom and dad (and stepmom and stepdad) get to an age where they need in home or around the clock nursing care. A good estate plan can eliminate much potential fighting and confusion by clearly defining who will be making financial decisions and who should be making health care decisions when mom or dad become incapacitated. And a caregiver agreement can provide financial assistance to the one sibling who inevitably ends up shouldering most of the care giving burden, and at the same time help to reduce any potential resentment.

If you are a part of a blended family don’t wait for time to take its toll; talk to your parents and siblings now about any challenges the future may bring—and discuss how to meet those challenges together.

Posts By: Gene Osofsky

Approximately $10 BIllion in Social Security Benefits go unclaimed every year, primarily because married couples do not know how to optomize their social security benefits.  Being wise about these spousal benefits and how they work, can result in increased social security income  for a married couple.  According to a recent article in AARP Magazine by Lynn Brenner, in some cases by electing a spousal benefit first, and by later electing your own benefit on your own work record, you may increase your  household income substantially over time.  Since you can’t get both of them at the same time, the trick is to elect these benefits consecutively and in the right order. Sometimes you can opt to claim one, and then later opt to claim the other, with the net result being increased income for the household.  The article discusses little known strategies for Two-Income Couples, One-Income Couples, and Divorced Singles.  Well worth reading!

Posts By: Gene Osofsky

Planning for retirement often requires a fine-tuned equation which includes such variables as where you plan to live, how many years you’ve worked and how much social security you can expect, health care expectations, long-term care, and especially your life expectancy. Well, part of that equation is about to change, because according to U.S. News and World Report the life expectancy in the United States has increased 1.4 years since 1997.

It may seem like a small change, but the article reminds us that when planning for retirement “it’s also important to note that many people live far longer than average and life expectancy increases every year.” And time is the great equalizer, it seems. The expectancy gap between the lifespan of men and women is closing, as is the gap between Caucasians and African Americans.

What this means is that if you planned for your retirement based on an equation from 10 years ago, you may need to revisit your plan with your financial advisor. “Most financial advisers recommend budgeting for at least 20 years of retirement and preferably 30 years in case you do live into your 90s.” Planning this way means you may end up with a surplus, but “it’s better to leave something behind for your children than to use up your entire savings and have no income outside of Social Security.”

And if you do think you may have a surplus to pass on to your children and grandchildren, our firm can help you protect your retirement nest-egg right now, AND for future generations.

Posts By: Gene Osofsky

Parents, grandparents, aunts and uncles often come into our offices to make estate plans, and one of the questions they ask is how they can support the people in their lives who have special needs. Special needs can include anything from Autism or Down Syndrome to Paralysis or blindness, and everything in between. These special needs family members may be receiving public benefits, such as SSI or Medi-Cal.  Leaving money directly to them in a Will or Trust would, in most cases, bounce them off of such public benefits.  A much better approach is to leave them a bequest in a way that will allow your special person to enjoy BOTH the public benefits upon which they rely AND your bequest.  The way to do this is by leaving your gift in a Special Needs Trust. 

Special needs trusts are not yet well-known, but they are gaining attention among attorneys, financial advisors, and in the mainstream media.  They are permitted by both federal and state law, and recognize the need for families to “partnership” with government to improve the quality of life for the disabled.   For Questions and Answers, and more information, visit our site at “Special Needs Planning”.

A Special Needs Trust can be useful for children or for disabled adults.  It is a far better alternative than cutting your special person entirely out of your Will or Trust, simply to avoid jeopardizing their SSI or Medi-Cal benefits.

A special needs trust can mean the difference between living an enriched life and barely getting by. If you have someone in your life with special needs, inquire about a special needs trust as a way to leave an inheritance.  It could make a world of difference.

Posts By: Gene Osofsky

We’ve all been learning a lot more lately about economics and investment practices than we ever thought we would… but do these lessons from the global economy transfer to the family circle?

Studies have shown that most families have one person who takes care of all the finances: paying the bills, setting aside money for investment and savings, planning the family budget, etc. This may be convenient in the short term, but it can create long term problems. If both partners aren’t aware of the family budget and financial status there can be a tremendous disconnect in spending habits, leading to resentment and often a slow decline into debt. Furthermore, what happens to the family finances if the “accountant spouse” dies or becomes incapacitated? The surviving spouse often has no idea what the family financial status is, or even where accounts or investments are located and how to access that money. The best solution is for couples to talk about their finances often, or take turns being the family CFO.

Even children benefit from a certain amount of involvement in the family financial planning. Having a regular allowance or earning pocket money for chores not only teaches kids about money management, but also helps them understand when they have to wait to get that new video game, or when the family may have to cut back on certain luxuries. Including children in certain financial decisions, such as which charities to support or how to spend surplus cash, teaches them accountability, and that the choices they make can have a lasting impact.

Many of us look upon our finances with dread; but it doesn’t have to be that way. Skill with money matters can bring us just as much pride and joy as skill with a paintbrush, tennis racquet, or any other skill that must be acquired with practice and hard work. With a little education, and the involvement of the entire family, we can all become the masters of our own financial futures.

Posts By: Gene Osofsky

There seems to be a lot of fear around President Obama’s proposed healthcare reforms, most of that fear centering on the end-of-life planning included in the proposal. As a firm that deals with elder law issues, it is important to us that our clients be informed about their health care and choices. As we regularly counsel clients (elderly or not) about the wisdom of including end-of-life planning in their health care directive, we feel it’s in your (and our) best interest to clear up a few details about exactly what that planning entails.

One of the fears currently sweeping the nation is that the current administration’s healthcare reforms are about euthanasia; or denying someone lifesaving medical treatment simply because they are elderly. Republican Senator Johnny Isakson explains in this article in the Washington Post that this is simply not true. Rather, Senator Isakson explains, thinking about your end-of-life healthcare options, talking about them with your doctor and family, and including them in your health care directive is responsible. It is about controlling your own destiny in your final days; whether that means you choose to forgo invasive procedures, or want every heroic measure taken—the decision is yours. But there is no way for your family or your doctor to know what your wishes are unless you’ve had the conversation and specified those wishes in your written health care directive.

Our firm has no political agenda in creating this Blog. We know that there is certainly much debate to be had about the pros and cons of the proposed health care reforms, but as regards end-of-life decisions and health care directives, we hope we have been able to clear up some confusion and ease your mind. If you still have questions about what it means to have a health care directive please don’t hesitate to call our office.

Posts By: Gene Osofsky

Some of the clients who seek our estate planning advice are parents of small children whose primary goal in creating an estate plan is to protect their children. This includes providing for their immediate financial needs, ensuring they will have the means to receive an education, and so forth, but often the very first question these parents ask is about guardianship. Most often they want guidance in choosing the best person to care for their children when they are gone, but sometimes a client asks if there is a way to keep their children out of the hands of abusive or irresponsible relatives. The answer is a resounding “yes”.

Of course, the first thing you should do to keep your children safe from an unsuitable guardian is to execute a Nomination of Guardians in which you name the people who would be good and loving parents. But beyond that, you can execute an Exclusion of Guardians (also known as an Anti-Nomination of Guardians). In this document you name the person or couple who should under no circumstances receive guardianship of your children. You may, in the document, state the reasons why your child should be kept out of the care of this person, but it is not always necessary.

For many parents, the excluded guardian is often a member of their extended family, and they fear that executing so strong a document might break the peace. For this reason, you can request that the Exclusion of Guardians be kept completely confidential. Unless and until the excluded guardian tries to gain guardianship over your children there is really no need for anyone except you and your attorney to be aware of its existence.

There are many valid reasons to execute an Exclusion of Guardians; alcoholism, history of abuse, mental illness, extreme financial irresponsibility, and more. How is a judge or court to know of these reasons unless you tell them? And that is exactly what an Exclusion of Guardians does. If you have any fears along these lines talk to your attorney. You hope the document will never need to be used—never even be seen by any eyes other than your own—but the peace of mind it can bring is invaluable.

Posts By: Gene Osofsky

Tolstoy said that “happy families are all alike; every unhappy family is unhappy in its own way,” but sometimes even the most stable and happy of families can turn angry and litigious when death and property are involved. It never ceases to be surprising how many seemingly strong family relationships devolve into backbiting and grudge-holding when a loved one dies and the Last Will and Testament does not live up to expectations.

When a will, or a Trust,  is contested by an angry beneficiary (or someone who thought they should have been a beneficiary), the core motivation is often more about emotion than finances. Unfortunately, however, a will contest (if the contest is deemed valid)—and the ensuing litigation process—will delay probate considerably and make it significantly more expensive.

For this reason, if you are named as the executor of a will, it is important to know what the legitimate grounds for will contests are, and to have a trusted attorney to whom you can turn if and when surprises occur. Serving as executor of a will can be stressful enough when everything goes as planned; dealing with the unexpected—especially when those surprises come from hurt or angry relatives—can take over every part of your life and have a lasting effect on family dynamics.  A trust may also be contested, on most of the same grounds.

We hope you will never have to deal with a will contest in your family; but if you do, we hope you will let our firm help you make the process as fair and as painless as possible.