Tuesday, June 30, 2009

Michael Jackson's Children - Petition Filed and Interim Decision Rendered

Now that a Petition has been filed by Michael Jackson's mother/family, Katherine Jackson and a judgment rendered. What next???

The Judge has awarded temporary guardianship of all the children to Katherine Jackson. I agree with the Judge's decision since, in the interim, this probably provides the least disruption to the children. He did not render any decision regarding the "estate" of the children or the administration of Michael Jackson's estate. This will be done (along with a determination of permanent guardianship) at a later hearing which I will continue to monitor.

The question for many is "Doesn't the children's money follow the children so if you get the kids, you automatically get the money?" ANSWER, NOT, NECESSARILY SO!!! The courts can and often do separate the children from their assets.

It is standard in estate planning to provide for a guardian of the children and a trustee for the estate. They could be the same people but not necessarily so. Having a trustee of the estate provides for the money to be held for the benefit of the children for an extended period of time, say, 10, 20, 30 years, etc. A guardian of the "estate" would manage the estate for the benefit of the children until they turn majority 18 or 21 depending upon the jurisdiction.

So, you might say why did Michael Jackson not provide a Will to address all of this? My book addresses this question, what are people waiting for? In any event, at present, the family has stated that there is no Will but I don't think this is a closed matter. Time will tell.

Share your comment or contact us at http://www.ythlaw.com/.

Monday, June 29, 2009

Michael Jackson - Prince Michael II

I previously wrote regarding Michael Jackson's 2 children, Prince Michael and Paris. Today I provide my insight into the fate of his third child, Prince Michael II.

Prince Michael II's mother, based upon the accounts, was a surrogate and has had no relationship with Prince Michael II since his birth. The law around surrogates continues to involve. If the surrogate for Prince Michael II should interject herself in any proceedings regardingt the children, I am sure new law will be made. Once again Michael Jackson's will would be instructive regarding Prince Michael II. What was Michael Jackson's intent? Were there any other legally named guardian/s for Prince Michael since he only had a father? Is the surrogate the "legal" mother? What rights would Michael Jackson's mother have? Generally, grandparents' have limited rights as pertains to their grandchildren when "parents" are still available. But, does a surrogate relinquish parental rights?

Yes, these and many other questions will have to be answered. In my opinion, what would be in the best interest of the children at this time is to maintain as normal a situation as possible before any major change in their living arrangement is made. Their tragic loss has to be processed first before ALL the players start jockeying for them.

Tomorrow, I will look at what custody, guardianship, etc. of the children might actually mean for the person seeking them. Your comments welcomed. Contact us at http://www.ythlaw.com/

Saturday, June 27, 2009

Michael Jackson - Who has rights to his Children

It has only be 2 days since Michael Jackson's death and the speculations continue regarding all aspects of his estate. Take his children for instance. Until a copy of Michael Jackson's will is release, we can only wonder what his intentions were. However, even if he covers it in his will, there still might be a challenge to his decision regarding his children.

Today, I want to speak on the 2 children, Prince Michael and Paris, whose mother Debbie Rowe had been divorced from Michael Jackson since 1999. It is not clear whether she gave up parental rights to her children though Michael had full custoday under an agreement. The reports state that the children are currently with their nanny and their grandmother (Michael's mother) is in line to take care of them.

Well, it is my opinion that it will not be clear cut at all. If the will provides for a guardian and it is not their mother, she may challenge the will or just assert her parental rights which would supercede the will. She is the mother and she has been involved in their life, as so reported. If she gave up parental rights, then under what circumstances and have those circumstances now changed with his death. The legal battle would surround the terms of the (1) will, (2) the divorce decree and any settlement made with the court and, (3) the agreement referred to that was made between Michael Jackson and Debbie Rowe outside of the purview of the court. All of this will be viewed with what would be in the best interest of the children: to be with their mother; to be with their grandmother; to be with another relative; or some other option that I can not even imagine at this time. The children, 11 and 12, are old enough for the judge to even ask what their preference might be. So, we have only just begun!!!

I will talk about the third child, Prince Michael II who is 7 tomorrow. His circumstances are different and require a different approach.

Your comments are welcome or contact us at http://www.ythlaw.com/

Friday, June 26, 2009

Michael Jackson - KING OF POP - Dies at 50 - Estate Planning

Stop the presses!!! Yesterday, when I heard about Michael Jackson's death, I was really in shock. He was THE pop icon. More importantly, I grew up on his music. I remember each phase of his musical genius. I loved the Jackson Five!!! Who didn't at 13 and 14 in the 70's. And then, solo, Michael Jackson in the 80's, 90's and beyond. His music evolved and gather new fans throughout the ages. There are just so many favorites that I have. But I will share that I just took "Man in the Mirror" as my personal mantra: "If you want to make the world a better place take a look at yourself and make a CHANGE!!! Oh, yes!!

But, let me tell you Michael Jackson's death now will be for me a continued reason to talk, LOUDLY, about the essentials of Estate Planning. I do not know whether Michael Jackson had a will. As soon as I find out I will blog on it. But as I tell my audiences over and over, You Can Only Plan When You Are Living!!! So, for now we can hope that Michael Jackson did. Time will tell.

What is at stake? He has 3 children!! (What are the rights of the mothers?) He has diverse business interest!! (Who will be in charge?) He has valuable assets!! (Who gets what, when where and how? ) He has DEBT, a lot!! (Did he engage in Asset Protection Planning? Will his debt wipe out his children's and family's inheritance?)

I will be exploring these questions and more on estate planning as the life and legacy of Michael Jackson continues to unfold. Our condolences to Michael Jackson's family.

Leave a comment or contact us at http://www.ythlaw.com/

Continuing Care Retirement Community - Services Provided

The Continuing Care Retirement Communities are diverse in the services that they provide. The services or programs are either included within the monthly fees or may be separately purchased or accessed on-site for an additional fee.

Examples include the following:
· Meals - This changed over time to reflect preference for more flexibility. Today, most CCRC’s either include a meal per day or some number of meals per month (such as 15 to 20) or offer a monthly dining allowance which can be used whenever the resident chooses.
· Housekeeping - weekly, bi-weekly, monthly, or as needed
· Transportation - on a scheduled basis to local shopping and other sites. Transportation to personal appointments and medical services may be offered as needed for an additional fee
· Activities - recreational options including fitness programs, aquatics, arts, crafts
· Other - emergency response or emergency call

It is best to visit any community prior to making a final commitment. Let us know about your experiences by leaving your comments or contact us at http://www.ythlaw.com/

Thursday, June 25, 2009

Continuing Care Retirement Communities

Continuing Care Retirement Communities (CCRC)
We talked about assisted living facilities yesterday. Another supportive housing alternative is the Continuing Care Retirement Communities. These communities offer a blend of housing complex, activity center and health care services. They can consist of independent living, assisted living, and nursing care as well as other programs and activities. Some offer specialized Alzheimer’s memory care units and programs.

There are various types of CCRC types. They differ in the nature of services included or that are optional, the payment structure, the refundability (or non- refundability) of the entrance fee, as well as the physical design features of the accommodations. The three major areas that can be used to assist in defining the types of CCRC’s are services, healthcare options and payment options. Over the next 3 days, we will elaborate upon these three major areas.

Feel free to leave your comments or contact us at http://www.ythlaw.com/

Services (other that health care/nursing care)
Most CCRC’s offer a series of services or programs that are either included within the monthly fees or may be separately purchased or accessed on-site for an additional fee. Examples include the following:
· Meals - This changed over time to reflect preference for more flexibility. Today, most CCRC’s either include a meal per day or some number of meals per month (such as 15 to 20) or offer a monthly dining allowance which can be used whenever the resident chooses.
· Housekeeping - weekly, bi-weekly, monthly, or as needed
· Transportation - on a scheduled basis to local shopping and other sites. Transportation to personal appointments and medical services may be offered as needed for an additional fee
· Activities - recreational options including fitness programs, aquatics, arts, crafts
· Other - emergency response or emergency call

Health Care Options
CCRC can offer independent living, assisted living and nursing care. Many offer all three levels of care or services, though there are some that do not include nursing care as part of the covered continuum or which offer nursing care at a separate location. There are three primary types of health care options:

Wednesday, June 24, 2009

Assisted Living

Today, we continue to address elder law issues. Previously, we discussed staying at home when there are acute health challenges for seniors. But, what if you can not stay in your home? What are the other options and how do they rank in meeting the needs of seniors?

There has been an increase of supportive housing alternatives. The options are no longer limited to an agonizing choice between staying at home and moving to a nursing home.

Assisted living facilities are one supportive housing alternative that has experienced significant growth. These facilities provide room, board and 24 hour supervision as well as help with some of the activities of daily living. Housing is often in small apartments where there are medical supervision and recreational options.

Assisted living facilities are not as costly as nursing home care though the expense is significant. Where the average cost in 2009 for nursing homes in Pennsylvania is approximately $7,000, for assisted living facilities, the average cost is approximately $3,000. The cost varies depending upon the level of service provided by the facility and the specific needs of the person.

Do you have an experience to share with our readers? Leave a comment or contact us at http://www.ythlaw.com/

Tuesday, June 23, 2009

Family Care Agreement - Personal Service Contract

We started talking yesterday about our preference to stay in the home as long as possible even when illnesses become more acute. This discussion lead to our current topic, the family care agreement or personal service contract.

The family care agreement or personal service contract has been a way to address some of the issues that arise regarding the care of an elderly family member with acute health problems. The family care agreement can cover the services provided by the family member, the fee for the service, and how that fee is paid. Another important issue that can be addressed in the family care agreement is the ownership of the family home. If the parent has to go to a nursing home, can the family home be protected from nursing home costs? In such a situation, the parent’s home could be transferred to any child who resided in the home for at least two years prior to admission to the nursing home and provided care to the parent. It must be demonstrated that the care provided enabled the parent to stay at home rather than have to go to a nursing home.

State and federal government officials are slowly recognizing that home care is much more cost-effective than long term institutional care. Depending on the state, financial or other non-financial assistance may be available for those who choose to remain in their homes despite declining capabilities.

Throughout all states, public and private agencies offer a variety of home care services that may be needed:
- healthcare in the home, either part-time or 24-hour care
- personal care services, such as cleaning, shopping, and cooking
- special services at home, such as meals programs, transportation, lawn care, and home repair
- day care centers for seniors
- financial planning and money management focused on the unique needs of elders
- programs for caretakers to take a periodic break.

A estate planning or elder law professional can help a family work through these issues and come up with an arrangement that might work for everyone or at least extreme frustration.

Leave a comment or contact us at http://www.ythlaw.com/

Monday, June 22, 2009

Elder Law - Staying At Home

I will continue over the next week to discuss the issues posed in the elder law area. You can feel free to leave a comment or ask a question in this area and I will answer it for all our readers.

As we age, certain decisions have to be made regarding our accommodations. Often families "downsize" when their children leave home. They look for a place that is more manageable for a smaller family. Consideration is also given to whether the home has stairs or not to make it easier for seniors with health issues.

Even when health issues are more acute, most people prefer to stay in their own home if they possibly can. This is not a surprise. As a result of this preference, most care is provided at home, by family or by hired help. This does have many consequences some of which may be quite unexpected.

To begin with, family members shoulder most of the responsibility of caring for elders at home. Being the primary caregiver for someone who requires assistance with activities of daily living, such as walking, eating, dressing, and going to the bathroom can be an all-consuming and exhausting task. An important consideration is the question of equity with other family members when one family member has the sole responsibility of caring for a parent or other elder relative. Should a child be compensated for the work? If the parent is living with a child, does the parent help pay for the house? If the care is taking place in the parent’s home, should the child have an ownership interest in the house?

For parents with only one child, such arrangements may not be so complicated, but if the parent has more than one child, equity does become an issue. An arrangement that seems equitable today may not seem that way after a child has devoted a number of years to the parent’s care. If a plan is set up that is fair for several years of care, what happens if the parent suddenly moves into a nursing home during the first year? With no planning for such eventualities, the care of a parent can foster resentment and guilt among family members.

The family care agreement or sometimes referred to as a personal service contract has been a way to address some of these issues. It is an agreement between an elderly person and one or more persons (family member or unrelated person) to provide care including housing if necessary for the elderly person for a specified term which may be for life.

More on the family agreement tomorrow. Leave a comment or contact us at http://www.ythlaw.com/

Friday, June 19, 2009

Retirement insurance and financial planning

Most of you have heard and all of you know that Social Security should not be your only nest egg. First of all, as have been covered yesterday, Social Security may not be around for everyone, definitely not in its current form.

That being said, it should have always been understood that Social Security is intended to supplement, not replace, the total financial resources needed by a worker at retirement. Social Security retirement benefits replace about 40 percent of an average wage earner’s income, less if the benefit is permanently reduced due to early retirement. The belief is that at retirement age your financial needs are reduced. The mortgage on your home is paid off or you downsize to a smaller home. Your children have left home and are independent or possibly providing assistance to you. You have no long term care health needs.

Ok, is this the reality for most retirees? How many are still paying a high mortgage? How many still have kids at home, grown or otherwise? Many financial planners suggest that 70–80 percent of an average wage earner’s income will be needed for a comfortable retirement. Our changed reality demands more advance planning for retirement than most people have realized.

Let us help you plan. Visit us at http://www.ythlaw.com/ for a free phone consultation. Feel free anytime to leave a comment.

Thursday, June 18, 2009

Seminar Tonight - Everything You Wanted to Know about Estate Planning but did not know to Ask

Good Morning readers, I invite you to my seminar this evening from 7pm to 8:30pm at the David Library, 1201 River Road, Washington Crossing, Pennsylvania. My seminars are always a lively event with lots of questions answered and new estate planning ideas rendered. You can be a part of this FREE event.

This year I have enhanced the presentation with video information on Living Wills and flyers and booklets to take away for FREE!!! It is important to me that you become an educated consumer with respect to estate planning as well as elder law. That is why I do these seminars and why I blog DAILY!!!

I hope you have some time this evening to join us. You will be glad you did and so will I.

If you have a comment, please leave it here or if you have questions, please contact us at http://www.ythlaw.com/.

Wednesday, June 17, 2009

Social Security Retirement Insurance

As we continue our discussion on elder law, let's turn to a subject most of us may be addressing at some time. Even with the controversy over whether social security will continue, at present it is still our current system. Therefore, we need to have some idea how our specific circumstances will be affected.

Social security benefit payments would be based on how much you earned during your working career. Higher lifetime earnings result in higher benefits. If there were some years when you did not work or had low earnings, your benefit amount will be lower than if you had worked steadily.

The full retirement age is 65 for people who were born before 1938. But because of longer life expectancies, the Social Security law was changed to gradually increase the full retirement age until it reaches age 67. This change affects people born in 1938 and later.

You can choose to receive your Social Security benefits before you attain your full retirement age. If you begin to receive Social Security retirement benefits before full retirement age, your monthly payments will be reduced. Once the full retirement age is 67, the permanent reduction if you retire at age 62 will be 30 percent. Nevertheless, there are many retirees who choose to take benefits as soon as possible at age 62 due solely to the fear that Social Security is not secure and that benefits may be reduced in the future.

More on social security tomorrow. Leave your comment here or contact us at http://www.ythlaw.com/ with your questions.

Tuesday, June 16, 2009

Long Term Care Insurance - FIFTH - Obtain Coverage from a Reputable Company

Today, we discuss a final item to consider when purchasing long term care insurance.

FIFTH, Shop for the Best Company and Best Rate.

You want to make sure that the insurer is a highly rated insurance company. The coverage will not be effective if the insurer goes out of business in your time of need. In addition, rates charged by insurance companies in the long term care field tend to vary widely. You must compare different companies’ rates and offering before making a final decision.

AM Best Company provides news, ratings and financial data products and services for the insurance industry. Check this source as you shop companies.

Let us have your comments about these considerations. Do you have others that you might want to share? We encourage you to leave a comment or contact us at http://www.ythlaw.com/

Monday, June 15, 2009

Long Term Care Insurance - FOURTH - Tell The Truth

Today we cover a fourth item to consider when obtaining long term care insurance.

FOURTH, Do Not Make Misrepresentations or False Statements in the Application for Coverage.

If in completing the application for insurance, you fail to tell the insurer about an illness or a doctor’s visit, the company may refuse you coverage at the time benefits are needed. It is better to be denied a policy and to be able to plan knowing that coverage is not available than to believe that coverage will be forthcoming, only to have it denied when it is most needed. This is even more important if you have an illness or a family condition that could affect your eligibility for long term care insurance. You want to plan ahead and know the answer to important questions regarding your health and eligibility for coverage.

What are your thoughts and concerns? Share them here or contact us at http://www.ythlaw.com/

Sunday, June 14, 2009

Long Term Care Insurance - THIRD -Consider the number of Years of Coverage

Yesterday, we addressed the second important thing to consider when purchasing long term care insurance. Today we look at a third consideration.

THIRD, Purchase several years of coverage. Given the unknown length of time anyone may require long term care in the future, many individuals purchase between 3-5 years of long term care coverage. Longer terms, of course, are also available.

If you would want to transfer any of your own assets, long term care insurance may be needed to cover the cost of your nursing home care. Any transfer of assets would be subject to the 5 year look back period for medicaid eligibility. During that period of ineligibility, you (through your long term care insurance) would have to pay for your care. After the ineligibility period, application for medicaid could be made.

Do you have any comments or questios? Leave your comments here or contact us at http://www.ythlaw.com/.

Saturday, June 13, 2009

Long Term Care Insurance - SECOND, Get Home Care rider

Yesterday, we covered one of the first things to consider when purchasing long term care insurance. Today we cover one of the second things to consider.

SECOND, Purchase a home care option or rider. You want to make sure that your long term care coverage provides for skilled care in your home. You want coverage not only while you are in a nursing home but if you can get skilled care in the home you want that covered as well. You do not want to be financially compelled to go to a nursing home. This additional rider can help you avoid moving to a nursing home.

Most seniors want to stay in their home as long as possible. This is also the desire of those family members who care for seniors.

What has been your experience? Do you want to share a comment? Feel free to do so here or contact us at www.ythlaw.com.

Friday, June 12, 2009

Long Term Care Insurance - FIRST, Get Sufficient Coverage

There are generally 5 things to consider when purchasing long term care insurance. We will cover all 5 over the next 5 days.

FIRST, Purchase Sufficient Coverage. You want to get enough coverage to pay for the cost of long term care. This can be done by considering the current cost of nursing home care (ie. in 2009 the average nursing home cost in Pennsylvania is $7,235.00) and consider the inflationary rate in order to project the future cost. The insurance company will assist with this projection. If you fail to get adequate long term care coverage the future cost could bankrupt your family.

Get as much information up front about long term care insurance before you buy. Make sure your agent is knowledgeable about the coverage provided by the company they represent.

Do you have questions or want to make a comment? You can leave your comments here or contact us at http://www.ythlaw.com./

Thursday, June 11, 2009

Elder Law - Long Term Care Insurance

Now is the time to think about long term care insurance. Long term care insurance is a means to protect your assets when there is a long term care need. Without it, long term care can rapidly deplete most of your assets. Most long term care insurance policies will pay for home care and assisted living and cover the cost for nursing home care. The problem for most people is being able to afford the policy and choosing a good policy.

In order to minimize the cost of long term care insurance, you need to purchase the coverage when you are young and healthy. Many people start to consider the purchase of long term care insurance in their 50s. However, it can be done earlier to save even more.

Long term care insurance is a contractual agreement between an insurance company and a policy holder to pay for certain health conditions. In general, long term care policies are sold to policyholders by insurance agents, although group policies are available as an employee benefit, through membership organizations, and from health maintenance organizations.

Over the next few days, we will look at five (5) things to consider when choosing a good long term care insurance policy.

Leave your comments here or contact us at http://www.ythlaw.com/ if you have any questions.

Wednesday, June 10, 2009

Elder Law - Medicaid

Nursing home cost can deplete the resources of most people who find themselves in need of full time nursing care. When you can no longer afford the cost of such care, many have to rely on Medicaid.

Unlike Medicare, Medicaid is not an entitlement program. You have to qualify for Medicaid. Since Medicaid is for those with low income or for the indigent, you can only have minimum assets. Assets can be transferred to others; however, this transfer must be made well before you apply for Medicaid coverage. There is a 5 year look back period for transfer of assets. If assets have been transferred within 5 years of applying for Medicaid, you may be ineligible for a period of time based upon the value of the transferred assets. There are some options available.

For a married couple, there are options available to provide support to the spouse. The spouse who is not in the nursing home is referred to as the community spouse and is entitled to a monthly maintenance needs allowance. Income from the spouse qualifying for nursing home care can be used to supplement the community spouse’s income so that the spouse does not become improvised. In addition, the community spouse is entitled to a resource allowance that would represent a certain part of the total resources of the couple. This includes certain types of annuities, cash, checking accounts, savings accounts, stocks, bonds, CDs, and the retirement plans of the nursing home eligible spouse. If eligibility is still an issue after considering the community spouse's monthly maintenance needs allowance and spousal allowance, then you may have to consider spending down some of the assets to qualify for medical assistance.

The following is a list of the type of items available for spend down:
· purchase clothing or medical equipment
· pay off debts
· prepay funeral and burial expenses
· take a vacation
· make home improvements and repairs
· upgrade the car
Further, there are assets that are specifically excluded as resources for purposes of Medicaid eligibility. The community spouse does not have to include any of the following items when applying for Medicaid for the spouse in need of nursing home care:
· The primary residence is an excluded resource. If you are not married, the house could still be excluded as a resource if you intend to return to the home. However, if the equity in the home exceeds $ 500,000 (in Pennsylvania, may be higher in other states), whether married or not, you would not be eligible for medical assistance, Medicaid. If the community spouse intends to continue to reside in the home then the equity limit is not applicable.
· One car is an excluded asset.
· Household goods and personal effects are excluded.
· Pension funds of the community spouse, Mary, are excluded.
· Certain qualified annuity purchases are excluded.
Even if you do not currently need nursing home care, now is the best time to seek advice from an attorney and have a plan.

Our firm can help. Leave a comment or contact us at http://www.ythlaw.com/ You will be glad you did.

Tuesday, June 9, 2009

Elder Law - Rapid Growth

In 2006, the oldest of the baby boomers, the generation born between 1946 and 1964, turned 60 years old. As a result, new concerns have given rise to a specialized area of law, Elder law. This term was not even mentioned when I attended law school in the early 1980s. However, with the anticipated increase in the elderly population, the advances in technology and the increase in life expectancy, the dynamics of our society are changing and the Elder Law area of practice is growing rapidly. Elder law looks at the needs of seniors during their longer lifetime.

Estate planning as well as retirement and long term care planning form a natural part of the Elder law practice. Seniors are finding themselves working longer to address the cost of healthcare for themselves as well as elders under their care.

Over the next few days, I will address some of the primary issues in Elder Law. Feel free to leave a comment or contact our firm at http://www.ythlaw.com/

Monday, June 8, 2009

Rethinking Your Estate Plan - Question 5

This is the last question from the Money Magazine article that I have been quoting from over the last few days.

"So you've constructed your estate plan. Congratulations! Now you can forget all about it and get back to watching the Cubs game, right? Not exactly. If we have learned anything from the past year, it is how drastically things can change. New tax laws get passed; fortunes get steam-rollered; grandchildren are born. Such changes can quickly render even the best estate plan obsolete. So be sure to contact your attorney every three years or so and ask whether your plan needs updating. Always call when you hear of estate tax changes that may affect you. That way, when the inevitable happens, you really can rest in peace."

At our firm, we stay in touch with you regarding new laws affecting estate planning. Every 3 years we contact you to determine whether there have been any life changing circumstances that should be considered in your estate plan. Let us stay on top of your plan for you. Leave a comment or contact us at http://www.ythlaw.com/

Sunday, June 7, 2009

Rethinking Your Estate Plan - Question 4

The questions posed in the Money Magazine are very insightful. That is why I have been sharing these questions with you in my blog. I hope you are looking at your answers for your next steps.


"If you'd like to donate some of your estate, one of the smartest ways is through a traditional IRA. Say you named your niece as the beneficiary of your IRA. She'd owe income tax on withdrawals, and the value of the IRA would be included in your estate for tax purposes.
But if you name a qualified charity instead, it would owe no tax on withdrawals and you could reduce the taxes your estate would pay. (This strategy makes less sense with Roth IRAs; because they're funded with after-tax money, whoever withdraws the dough won't owe income tax on it.) Prefer to give the money now? Through the end of 2009 you can transfer up to $100,000 directly from a traditional IRA to a charity as long as you're 70½ or older. You won't be able to claim a tax deduction for the contribution, but you won't owe income tax on the withdrawal either. Another option you may want to ask your lawyer about: a charitable remainder trust. You put assets into the trust, which then pays you an income for a specified number of years or the rest of your life. After the trust matures, the assets go to the charity you've chosen. (At least 10% of the amount you put into the trust must go to the charity.)
This trust has several advantages. When you fund it, you can take a tax deduction right away based on the present value of the gift that the charity will ultimately receive. You can get a reliable stream of income (you must draw down at least 5% of the trust's value each year). And you can shift into the trust assets that have appreciated quite a bit - such as shares of Exxon Mobil that you've held for decades - and sell them in the trust without incurring capital gains right away. "

Check out some of our archives for more information on charitable estate planning. Leave a comment or contact us at http://www.ythlaw.com/

Saturday, June 6, 2009

Rethinking Your Estate Plan - Question 3

The article from Money Magazine shared 5 questions to ask when rethinking your estate. Today I share the 3rd question presented in the article.


"Most people need only a simple will or living trust (which helps you avoid the cost of probate). But if you want to put conditions on your bequests, you definitely need a trust. Take the example of a woman who had kids, divorced, and remarried. Through a qualified terminable interest property trust, she can make sure her spouse has enough income if she dies first but preserve the bulk of her assets for her kids." If your estate is large enough that you face taxes (either federal or state), you may need to consider one of these popular options:
"A bypass trust, also known as a credit shelter trust. It lets a couple essentially double their estate-tax exemption. Let's say you're the husband and you die first. Your assets fund an irrevocable trust for the kids, up to the estate-tax exemption level (we'll assume it's the current $3.5 million). Any remaining assets go to your widow in a separate trust. To make sure she won't run out of money, set up the trust so she can receive income from the kids' trust and tap the principal for needs such as medical costs.
The big payout: When she dies, she can pass on $3.5 million in assets tax-free, on top of the $3.5 million you passed to the kids in the bypass trust. And this arrangement ensures that your kids - rather than some guy your widow winds up marrying later - get the money.
A grantor-retained annuity trust (grat). It works like an annuity: You put money in and receive an annual payout based on the IRS-assumed interest rate at the time you set up the trust (it's currently 2.4%). At maturity any appreciation above that goes to designated beneficiaries, such as your children, tax-free.
Now that both interest rates and asset values are low, guess what? There's a good chance that the contents of the trust will grow more quickly than 2.4%, with plenty of money left over."

Have a comment? Contact us at http://www.ythlaw.com/

Friday, June 5, 2009

Rethinking Your Estate Plan - Question 2

This is a continuation from the previous day. An article in Money Magazine could prove very beneficial to you and so I share the 5 questions posed in the article with you over the next few days.

"How should you split your money among your offspring? In a 2007 Money survey, 69% of respondents said dividing their estate equally was very important to them. Experts agree that equal is generally better, even if one of your kids is a struggling actor and another is a successful software developer. You don't know what the future holds. Your single son marries and has five kids; your techie daughter loses her job and becomes a teacher. Unless you're willing to constantly tinker with your will - and explain every change to your kids - parceling out different amounts can back-fire bigtime.

A better solution: Bequeath your children an equal amount upon your death, but make gifts as needed to them while you are alive if you can afford it. Want to help your daughter with your grandchildren's education? Contribute to their 529 college savings plans. (The IRS allows you to make the equivalent of five years' worth of gifts to a 529 all at once - that's $65,000 a child, or $130,000 if given by a couple.) The struggling actor is trying to buy a home? Help him with the down payment.

There are exceptions to the "equal" rule, however. A disabled child who is dependent on you will probably require a bigger share of your assets, which you can provide through a so-called special-needs trust. A child who works in the family business may deserve a larger share of it than one who doesn't. No matter what you decide, explain your thinking so that your kids won't have wrenching and potentially costly disputes later."

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Thursday, June 4, 2009

Rethinking Your Estate Plan - Question 1. Part B.

This is a continuation of from yesterday. These questions were from an article I read in Money Magazine that I thought was very good and may also be of interest to you.

"How much will you need? If you're a 65-year-old retiree and want to withdraw an inflation-adjusted $60,000 a year from investments (in addition to whatever you'll get from pensions and Social Security), you should have roughly $1.5 million set aside for yourself. Okay, let's assume you have enough for your retirement needs but less than $3.5 million. Giving while you're alive may still make sense - and not just because your recession-hit kids may need help now.
For example, your state may levy its own estate tax that kicks in at a lower level than the federal one. Or you may want to hedge against the very real possibility that Congress will eventually lower the estate-tax exemption back to, say, $1 million, where it was as recently as 2003.

If you're going to give, now is an ideal time to make a present of assets that have been beaten down but could appreciate significantly in the future. Say you own stock in General Electric. The price at the October 2007 market peak was $38.40; today it's around $12. As a result, you can give three times as many shares without triggering a gift tax today as you could during the bull market."

Do you have a comment? Feel free to contact us at http://www.ythlaw.com/

Wednesday, June 3, 2009

Rethinking Your Estate Plan - Question 1. Part A.

I read a very good article in Money Magazine entitled:
Rethinking your estate plan
A smaller net worth and bigger worries about your kids' finances (not to mention uncertainty about taxes) have major implications for your estate plan

In the article the author posed 5 questions that one should ask when rethinking their current estate plan. These same questions should be posed if you have not done your estate plan. I will cover each question over the next 5 days.


"Estate planners used to advise relatively affluent people to give some money or other assets to their intended heirs while everyone was still alive. The reason: taxes. Giving now reduces the size of your taxable estate, beefing up the total amount that goes into your heirs' pockets. (You can give up to $13,000 per recipient per year tax-free, or $26,000 for a couple.)
But because the federal estate-tax exclusion rose to $3.5 million this year - up from $2 million in 2008 - and could be extended for at least another year, taxes probably aren't a pressing concern for you right now. Instead, you should be thinking about whether your diminished assets will be enough to take care of you."

Obviously now, in this economy, you want to make sure you have enough money for you before you start giving it away. So, planning becomes even more essential. Leave a comment or contact us at http://www.ythlaw.com/

Tuesday, June 2, 2009

Family Trust

When I talk about a Family Trusts many people feel that they can not have one. They think that there is not enough money to leave to their children to even fund a Trust.

Well, I was reviewing a Family Trust recently. This one was set up as part of an Irrevocable Life Insurance Trust. This is a Trust that is funded by life insurance proceeds when a person dies. The person did not have a lot of money. Actually, the only money they had was the money that would come from the insurance proceeds. The money would go into the Trust to be use for the support, education and health of their children. This was a better way to make sure insurance proceeds lasted for a long time. If the money was given to the children without a Trust, then the money might not last long enough to porovide for the support, education and health needs.

So, there are ways to engage in estate planning with lots of assets or with no assets. There are strategies that everyone can use to help the next generation in some real way. Feel free to leave a comment or contact us at http://www.ythlaw.com/