Posts By: Gene Osofsky

The inauguration of Barack Obama is only days away, and many people are curious (to say the least) about what his presidency has in store. We all know there are changes ahead; some you may be looking forward to, and others about which you may be apprehensive. If you’re looking right now with an interested eye to the future, you’re not the only one.

The Wall Street Journal, for example, followed Monday’s news story “Obama Plans To Keep Estate Tax” with a strong opinion piece entitled “Estates Of Pain.” As you may be able to guess from the title, the author has some critical points to make about the decision of Congress and the President-elect to keep the estate tax.

The points with which our firm is most concerned are the ones that will have an impact on our clients, and which seem to be the timeless effects of the estate tax in general:

The Journal points out that “the death tax strikes most heavily at small- and medium-sized family-owned businesses that generate the majority of new American jobs.”

The article also cites a 2006 Joint Economic Committee (JEC) study that says “family-run firms and farms particularly feel the pinch of the estate tax, because they are less likely to have the liquid resources needed to meet their estate tax liabilities.”

That same study concludes that estate tax “liabilities depend on the skill of the estate planner, rather than on capacity to pay.”

That last one bears repeating: The amount of estate tax your family pays is going to depend more on the skill of your estate planning attorney, than on how much money you have.

The fact is, regardless of whether you (or the current administration) are democrat or republican, it only benefits you to be prepared. The estate tax is not a simple matter, and the better prepared you are the better your family and your business will fare when the time comes.

Posts By: Gene Osofsky

When President Bush was elected in 2000, one of his campaign pledges was to make the estate tax go away. And Congress did, in fact, pass legislation that would abolish the estate tax.

Kinda.

Sorta.

What they passed, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGGTRA),  enacted a series of increases in the amount of money your estate could be worth without paying “death taxes” — increases in the estate tax exemption, leading eventually to abolition of the tax. There was a big catch, however. One of the most notable characteristics of EGTRRA is that its provisions are designed to sunset, or revert to the provisions that were in effect before it was passed. EGTRRA will sunset on January 1, 2011 unless further legislation is enacted to make its changes permanent.

But we may not have to wait even that long. According to today’s Wall Street Journal:

“The Senate Finance Committee will move within weeks on legislation to reverse that law, and Mr. Obama is expected to detail his estate-tax preservation proposal in his budget next month, congressional tax writers said.

“Under the Obama plan detailed during the campaign, the estate tax would be locked in permanently at the rate and exemption levels that took effect this year. That would exempt estates of $3.5 million — $7 million for couples — from any taxation. The value of estates above that would be taxed at 45%. If the tax were returned to Clinton-era levels, it would exclude $1 million from taxation with the rest taxed at 55%.”

Bottom line: if you were one of the few who expected the estate tax to actually go away, you were mistaken. As the laws change, it is important that you have your plan reviewed to make sure it is up to date. And if you haven’t yet created an estate plan, you should come and see us for a plan that takes all these new realities into account.

Posts By: Gene Osofsky

Most Americans have become aware of the benefits of financial planners, and of having a financial plan of their own. And now with the recent Wall Street crisis, public talk about financial plans and goals (and how yours may be weathering the storm) has become a lot more common. With all of this, it may seem that “financial planners” have been around forever. But according to Forbes.com, the financial planning profession has actually only been in existence for 40 years or less, and the idea of a “financial plan” is still a lot more nebulous and diverse than you may think.

What this means is that if you were thinking of hiring a financial planner so you can promptly hand over that mysterious and confusing responsibility, you’ll have to think again. You may have to be a lot more educated and involved in choosing your financial planner than you had hoped. A financial plan is not a “one-size fits all” commodity. Not even close. Mike Patton has titled his article “The Elusive Financial Plan”, and says “If you were to stop 10 people in the street and ask them, ‘what is a financial plan?’ you’d likely get 10 different answers.”

If you are not financially savvy you may be starting to worry just about now. How can you possibly be expected to know which of those 10 different plans (or which of 10 different planners) may be right for you? Luckily, you don’t have to decide alone. The best way to find a good match is to consult with friends who have financial goals and values similar to your own. Another option is to ask other trusted advisors for recommendations. Estate Planners work closely with many different financial planners and firms, and will be more than happy to help you find a good fit. An added benefit to asking your attorney is that the best estate plan to have is one that has the input of all of your advisors. The better the relationship between your financial planner and your estate planner, the better your plan will be.

Posts By: Gene Osofsky

Estate planning can be a touchy subject. Luckily, more and more people are coming to realize just how crucial it is to plan for their deaths, but even knowing its importance, few people want to spend time thinking about it. We understand why people might shy away from it. After all, estate planning deals with some very difficult subjects: your own or your spouse’s mortality, dividing assets among your children and grandchildren (perhaps unequally in some cases), and giving control over decision-making to someone else. It’s no wonder most people want to avoid thinking about it.

But a recent article in the New York Times will motivate you to think again about your estate plan. Writer Paul Sullivan has identified four common estate planning mistakes, and suggests a program for identifying them in your own plan. Look carefully, and have your attorney look with you, because failure to recognize even one of these issues in your estate plan could completely unravel all the time and money you put into the creation of it:

  1. Naming the wrong heirs—failure to update your accounts after a divorce or other major life change, or failure to transfer your accounts correctly in the first place.
  2. Liquidity deficit—passing on assets that value highly, but cannot be sold quickly or easily enough to pay estate taxes when they are due (real property, artwork, antiques, etc.)
  3. Lack of estate management at crucial times—distributing everything immediately upon your death is not always the best strategy.
  4. Choosing an unqualified executor—choosing well-meaning but unqualified family members over skilled professionals.

Any one of these mistakes can be disastrous, but the good news is that once they’ve been identified they are easy enough to fix. Our firm understands the challenges involved with planning your estate, and can help ensure that you’ve covered ALL your bases.

We also pay particular attention to another common oversight:  the need to plan for your Long Term Care.   We have developed estate plans to help our clients avoid estate depletion in the face of the significant expense of Long Term nursing home care. Don’t let the hard work and money you’ve put into your estate plan go to waste.

Posts By: Gene Osofsky

It used to be that trusts were for the wealthy. Those who had inherited money in trust were often labeled “trust fund babies,” and these were the people who had everything paid for and worried about nothing. This is no longer the case. Trusts are used by the middle class more and more, as a tool for avoiding unnecessary probate expense and, sometimes, estate taxes. What this means is that just about anybody can now be a “trust fund baby”; your neighbor, your best friend… maybe even YOU!

If you know that your parents (or someone else) have made you the beneficiary of a trust, you might want o take some time to learn exactly what that means. Although being a “trust fund baby” sounds nice, it’s not completely without responsibilities. For example, if you are entitled to an ongoing stream of income from the trust, that would usually be considered by the government to be taxable income, and must be reported as such. And if you happen to be the trustee as well as the beneficiary there are even more rules and regulations you must remember to follow, as you would then be a “fiduciary” with responsibility to other beneficiaries.

It all may sound confusing, but it’s not as difficult as you think, as long as you know what to expect. If you find out that you are the trustee or beneficiary of a trust, the first thing you’ll want to do is to make an appointment with your attorney to answer any questions that will inevitably crop up. If you don’t have a family attorney, you can contact the attorney who drafted the trust in question or, if you prefer, you may contact our office.   You may end up getting all of your questions answered in one easy appointment, or you may prefer to meet regularly to ensure that things stay on task. Either way, it never hurts to have a knowledgeable professional in your corner, even when you’re lucky enough to be a trust fund baby.

Posts By: Gene Osofsky

In our blog we often address how estate planning can help you provide for your children or protect your elderly parents or grandparents, but today let’s talk about another member of the family—Today we would like to address how estate planning can help you take care of your pets.

According to this article by Angie Campbell, two-thirds of American households have pets, but approximately 70% of adult Americans do not have a will or other kind of estate planning. This means that if something happens to you, your pets (arguably the most helpless members of your family) are left out in the cold—literally.

Providing for your pets doesn’t have to be a difficult or expensive undertaking. The first thing, of course, is to find friends or family willing to serve as loving caretakers of your pets after you are gone. Create a letter of intent listing important information such as the age of your pet, medical history if any, and veterinary contact information. You can make your letter as formal or informal as you like, including as many details about your pet as you think are necessary or helpful.

Taking on extra mouths to feed can sometimes be a financial strain on a household. If you want to go one step further and provide financially for your pets or their caretakers, ask your attorney about creating a pet trust. Making your pets (or their caretakers) a beneficiary of your estate doesn’t have to be a Leona Helmsley size endeavor unless you really want it to be. With the right help, a pet trust can be small and simple, and an ideal way to say a most important thank you to your beloved canine or feline companions.  We would be happy to assist you in taking this extra step, which can be easily incorporated into your Estate Plan and/or updated Estate Plan.

Posts By: Gene Osofsky

New Year’s Eve has come again, and it’s time for New Year’s Resolutions. A new year means a fresh start; it is an opportunity to reassess—your life, your work, and your self—and separate the wheat from the chaff; an opportunity to leave the unhelpful things behind with 2008 and bring in new and better habits and ideas in 2009.

Interestingly, with so many people and over so many years, many of the New Year’s Resolutions being made each New Year’s Eve are the same. About.com has compiled a list of the 10 most common New Year’s Resolutions, and many of them sound awfully familiar: Spend time with family, get fit, get out of debt… But what this list really means is that through the years and through cultures, what is important to us remains the same: Family, health, and security.

What are your resolutions for 2009? Are they on this list? And do you have a plan to go about achieving these new goals? We would love to know what our readers and clients have on their minds for the upcoming year.

Whatever your plans for the New Year, whether you have resolutions or not, our firm wishes you the very best in all your endeavors in 2009.  May it be a year of health, joy and prosperity.

Posts By: Gene Osofsky

“In the world nothing can be said to be certain except death and taxes.” –Ben Franklin

It’s that time of year again. With only two days left of 2008 it’s time to turn our thoughts to doing our taxes once more; and unless you’re an accountant, there’s probably a certain amount of grumbling and procrastination involved in this activity. But with a little bit of organization, preparing your taxes doesn’t have to be a painful or grueling activity. Wells Fargo has a wonderful, comprehensive online Tax Preparation Checklist that will help immensely before you sit down with Turbo Tax or meet with your accountant.

One of the things on this list is your 1098 form, which lists your mortgage interest paid. As long as you’re thinking about your mortgage, this is a good time to confirm that your home is held in the name of your trust (if you have one). Even if you are certain you transferred your home into the name of your trust when you first bought it (or when you first created the trust), it is not unusual for a refinancing to change that.  We suggest that you check to verify that your home and other real estate is still titled in the name of your trust.

As an estate planning firm, we would also like to remind you that April 15 is not just a deadline for your own personal taxes. If you’ve had a death in the family in the past year, various tax returns may also need to be filed for the decedent. If you are or were the executor of an estate in 2008 and have questions about filing tax returns, you should check with your tax advisor for help.  An early meeting with you tax advisor can take some of the fear out of the April 15 deadline.

If you have made gifts in excess of $12,000 per recipient during 2008, or added a child or parent on title to your real poperty, you should also bring that to your tax advisor’s attention.  You made need to file an informational Gift Tax Return.

Posts By: Gene Osofsky

The holidays mean different things for all of us; time with family, a celebration of religious values, or an opportunity to show appreciation for loved ones with gifts… but for the elderly it can be a time of loneliness and depression. Those of us with busy and frantic holiday schedules may find it hard to imagine the month of December as a time of solitude—and perhaps some of us feel we would relish solitude at this time—but imagine for a moment that all the reasons for your frantic pace and numerous errands were suddenly removed. The silence that descends is not so comforting when put in that context.

We know how much our clients love their elderly parents and grandparents, and want to ensure that they are taken care of; so we would like to take this opportunity during the busy holiday season to remind you to make some quiet time in your schedule to visit those parents and grandparents. If you don’t visit often, and aren’t sure what to do during a visit, eHow has some good tips for making the most of your time spent together. On the other hand, if you know you won’t be able to go visit grandma or grandpa in the nursing home, why not include them in the family celebration at home? The Comfort Keeper’s blog gives some good suggestions to draw the older generation into the busy preparation and festivities.

And remember, your holiday visit to grandma or grandpa can have more significance than just to bring holiday cheer. The holidays are a good time to check on the health status and living situation of your loved ones, to ascertain if they may need more help around the house, or even in-home care. Caring.com provides a list of things to look for to help you determine this. Include your elderly relatives in your festivities and you’ll find that doesn’t only benefit them; you may come to appreciate the company and wisdom they have to share as well.

You might even try using your visit(s) as a time to record your elderly relatives’ recollections and family history.  You can start by using a simple recorder or, better yet, why not a video?  You can take your time, and add to it on subsequent visits.  Our attorney, Gene Osofsky, took 2 years to record his Grandmother’s story, over multiple visits, some lasting only 15 minutes.  Once you start, it is easy to continue. That recording has now been duplicated for every family member and is now one of his family’s treasures.

Our office hopes the holiday season is a time of warmth, charity and togetherness  for you and your entire family. Happy Holidays!

Posts By: Gene Osofsky

It used to be that people stayed at one company—one job—for their whole lives. Employers were benevolent, and almost part of the family; took care of families, once upon a time, offering health care coverage, life insurance, retirement packages… all this and an annual company picnic to boot!

As we all know, the world is a different place now. Very few people stay at one company longer than a decade, and not even that long if you’re under the age of 30. There is, however, one exception to this… if you’re self-employed.

As an estate planning firm, we meet with a good number of self-employed clients and small-business owners, and one of the most important things we can convey to these clients is how very, very important it is to have an effective estate plan. As S. du Plessis states in her article Estate Planning for the Self Employed: A Helpful Guide, “I am so responsible in other areas of my life, I feel compelled to be responsible about my death too. Plus, I hate to fail, and those who fail to plan. . . fail. So in fairness to my husband and children and because I own a business (which complicates my estate), it’s time to come up with an estate plan.”

Du Plessis is absolutely correct that failure to plan—especially for small business owners—can have disastrous consequences for both their families and their businesses. When you are so responsible in all other areas of your life, why let the ball drop in this one area? Especially when it’s your family who will end up suffering?

Small business owners spend so much of their time taking care of other people, we think it’s time that someone helped take care of them. Our office can help preserve the legacy you’ve worked so hard to build—for both your family and your business.