Wednesday, September 30, 2009

Money, Money, Money

As I was doing my bills the other day, my mind could not help but go to the current state of the economy. You have listened to the gloom and doom news comparing our current state of affairs with the Great Depression. Well, what did we, or our parents/grandparents, learn from that period. They learn to save prudently and cautiously. I can not tell you how many of my clients have benefitted from that saving mentality. Over the generations, the family members of my clients have passed on the wealth in hope of making my clients' life better and it worked! Now we have our greatest challenge. How will future generations benefit from our response to this economic crisis? What should we be doing, now? Among the many things we have to do is work together as a unified society. Individually, we have to take responsibility for ourselves and those dependent upon us. We have to plan for our future generation by taking such actions as making a will to pass on our assets and our legacy. We have to set up trusts to hold and distribute our assets, whatever they may be, in a responsible manner. We have to do these things even when we think we have nothing, especially if we think we have nothing. We never know exactly what the future may bring. However, we can and should plan for the future that we hope for, for ourselves and for our children.
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Tuesday, September 29, 2009

Costly Estate Planning Mistakes

I often attend continuing legal education seminar. Actually, I enjoy them because it keeps me current. I like to learn what others are doing for their clients in the area of estate planning. This evening's event addressed the top estate planning mistakes. Here is the run down of the list so you can see whether you need to see an estate planning attorney, like me, soon:
A. Is your estate in excess of 3.5 million dollars....then you should have federal estate tax planning done, immediately and correctly.
B. Is your estate under 3.5 million dollars and you still have federal estate tax planning done, revisit your plan immediately. You do not want terms and conditions that are no longer relevant to your situation. It will only complicate matters for your estate.
C. How many trusts do you have? Make sure you fund the correct trust. Terminate any trusts that you no longer require.
D. Make sure you review joint ownerships and beneficiary designations to make sure they are consistent with your intent for distribution of your estate.
E. Who will be responsible for the inheritance tax that must be paid? Make sure you cover your preference in your documents.
F. Oh, by the way, do not write on your will after you have executed it. Put it away and keep it clean. AND, do not lose the original....that will be a big problem. So, do you know where your original will is??

These are things to think about that I thought would be helpful to my bloggers. Let me know what you think. Contact us at

Monday, September 28, 2009

Pet Trusts - What Next?

My new book was released September 14th and several papers have made some inquiries regarding the book. The first one that I received asked for information on what is the trend as
relates to Pet Trusts. Yes, that is covered in my book among many other people related trusts.
In any event, according to a 2000 estimate, Americans own about 68 million dogs and 73 million cats. The desire to protect dogs and other animals seems to be of critical importance to many. With an increasing elderly population and more and more people living alone, many people may not have a family member or friends able to care for their dogs.

In states without Pet Trusts, the most predictable and reliable method to provide for a pet is for you to create a trust in favor of a human beneficiary and then name a trustee to make distributions to the beneficiary to cover the pet’s expenses provided the beneficiary is taking proper care of the pet. This technique avoids the two traditional problems with gifts to benefit pets. There is an actual human beneficiary with standing to enforce the trust and there is a human measuring life for the rule against perpetuities (don’t worry, even many lawyers don’t understand that ancient rule). This conditional gift in trust approach provides for more flexibility and a greater likelihood of your intent being carried out.

If your state has a Pet Trust statute and Pennsylvania does, then your dogs can be the beneficiary with the Trustee making distribution for the benefit of the dogs. Your estate planning attorney can help make sure your Pet Trust meets the requirements of the statute.

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Friday, September 18, 2009

JUST RELEASED Stop! What are you waiting for?

My Book:

Stop! What are you waiting for?

Your step-by-step guide

to estate planning

has just been released


Second Wind Press.

I was motivated to write this book to help sustain families, build communities, create legacies one estate plan at a time. Most people hear estate planning and assume it’s not for them because they don’t have an estate. But regardless of income, we all have estates. It includes everything we own – from homes to cars to jewelry and everything we love – from children to our spouse to charitable endeavors.

The following list are upcoming

“Ask the Expert”

Book Signing Events.


Marcus Garvey Book Store, Philadelphia, PA
Friday, October 2, 2009
7 – 9pm

Newtown Bookshop, Newtown, PA
Saturday, October 3, 2009
2 – 4pm

David Library, Washington Crossing, PA
Thursday, October 15, 2009
7 – 9pm

Farley’s Bookshop, New Hope, PA
Saturday, October 17, 2009
2 – 4pm

Robin’s Book Store, Philadelphia, PA
Thursday, October 22, 2009
7 – 9pm

Yardley United Methodist Church, Yardley, PA
Saturday, October 24, 2009
10- 12pm

Doylestown Bookshop,
Doylestown, PA
Saturday, January 16, 2010
2 – 4pm

Hope to see you at an event. Leave your comments here or contact us at

Wednesday, September 16, 2009

What's Your Investment Strategy?

I wrote yesterday about an upcoming seminar I was attending. The speaker's topic was about rethinking your investment strategy.

I wish I could say he was optimistic about the direction of our current economic state. However, I suppose the truth of the matter is that these are turbulent times and a magic wand is not going to get us out of it. Our situation was years in the making and obviously it will take years to turn it around. In the meantime, we must continue to be vigilent in our savings and elimination of debt. We can not start over spending with the continued rise of unemployment.

As far of our investment strategy, I would suggest that it be a conservative one. The speaker did suggest that during these times buying gold has some advantages as part of your portfolio. However, the cost of gold is now in excess of $1,000 an ounce. This could be a prohibitive undertaken and though it may rise higher, it also may not.

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Tuesday, September 15, 2009

Your Investment Strategy

I am attending a session this evening on rethinking your investment strategy. In these unsure economic times, it becomes more challenging to know what might work best with your investment, for those that might still have investments.

In my practice, I have met those whose entire savings and investments have been depleted. I have met those affected by the vast Ponzi scheme constructed by Bernard Madoff. This was undisputedly the first worldwide Ponzi scheme — a fraud that lasted longer, reached wider and cut deeper than any similar scheme in history.

What a financial or investment advisor might share at this time is intriguing to me and I look forward to sharing with you my "take aways" from the discussion. Stay tune tomorrow for my report.

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Monday, September 14, 2009

Long Term Care Planning and You

Last week I attended a meeting where our speaker addressed long term care planning. Even as estate planning professionals, we had lots of questions for our speaker and all of them were answered. I thought I would share the hightlights with you.

Long term care planning is the creation of awareness and understanding and aceptance that it is possible for one to have special daily care needs at some point in our lives. Without long term care planning, you are exposed to the largest potential unfunded liability. Of course most of our questions pertained to long term care insurance. Generally, people are advised to get at least 3-5 years of coverage. Such coverage should be obtained early on to get the best rate. That generally means that you should obtain coverage while you are healthy and between the ages of 45 to 55 are the best time to secure the coverage.

Our speaker, John B. Linvill, Jr., CSA of J. Linvill LTC, specializes in long term care and is knowledgeable, professional and can be very helpful in your long term care planning.

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Friday, September 11, 2009

September 11th

We pause today to remember those who died in the terroist attack of September 11, 2001. It has been 8 years and I can remember the moment like it was yesterday. I sat in my office at Prudential Insurance in Holmdel, New Jersey, at the time. There was commotion outside my door with folks heading to the cafeteria and lounge area where our television sets were located. There was news about a plane crash in New York City.

I arrived in the lounge at the time that the second plane hit the World Trade Center and thought it was just a replay of the first plane. It took a moment to realize that this was live. At that moment, there was clear panic. No one knew what to think. Maybe the air traffic control system had gone haywire. No one knew but the phones were ringing and people were calling friends and family living and working in New York. It is amazing how far technology has advanced in 8 years. At that time, it was a bit more primitive getting adequate and timely information.

The office was closed within an hour or so because everyone was just so upset especially when there was news of a plane crashing into the Pentagon. WHAT WAS GOING ON!!!

Now, 8 years later. We remember those who lost their lives and the heroes of that day, many whose lives were also lost.
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Thursday, September 10, 2009

Charitable Trusts

Charitable Trusts are another way to engage in charitable giving. The types of trusts discussed today have significant tax benefits and include the Charitable Remainder Annuity Trust (CRAT), Charitable Reminder Unitrust (CRUT) and Charitable Leads Trust. The first two trusts, CRAT and CRUT, allow you to provide a remainder interest to a charitable organization while you continue to benefit during your lifetime from the asset to be transferred. These trusts are considered split interest trusts. They have both charitable and non-charitable beneficiaries.

The Charitable Leads Trust is also a split interest trust. However, it is the reverse of the CRAT and CRUT. The Charitable Leads Trust pays income first to the charity for a term of years and then the remainder amount is paid back to you or, if the trust is established after your death, to your beneficiaries. This means that the charity gets paid first and then the non-charitable recipient. Therefore, the charity leads the non-charitable recipient. That is why this particular trust is referred to as a Charitable Leads Trust.

The use of CRAT, CRUT and Charitable Leads Trust offer financial advantages to you during their lifetime. With the CRAT and CRUT, you, as the non-charitable beneficiary, have the right to receive, at least annually, an annuity or unitrust amount for life or for a term of years (not more than 20 years). At the end of the established term, the remaining assets of the trust are paid to or held for the benefit of charity. If the interest is an annuity interest, then the trust is considered a CRAT. When it is established, you choose the payout rate. The higher the payment to you, the lower the charitable deduction will be for tax purposes. If the interest is a unitrust interest, the trust is considered a CRUT. In the CRUT, the assets are revalued every year to determine the payout rate each year.

Whether you use a CRAT, CRUT, or a Charitable Leads Trust, you should choose appreciating assets to give and place in the trust. Since charities are not taxed, this will avoid a capital gain tax when the asset is sold by the charity. Therefore, for appreciating assets like real estate and stock, you get a charitable deduction during your lifetime and the charity avoids a capital gain tax.

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Wednesday, September 9, 2009

Ways to Make Charitable Gifts

Many people during their lifetime engage in charitable giving activities. They make gifts to cancer research, heart associations, educational institutions, or well water projects. Many give to hospitals, churches, or other religious and cultural institutions. Others have long term relationships with charities and want to continue charitable giving upon their death but they just do not know how. That is where estate planning comes into play.

There are many ways to engage in charitable estate planning. Today, I will address one of the most basic ways to make a charitable gift. That is through a bequest made in your will or trust. A bequest is appealing to many people because they can maintain control of their assets until they die, it is the easiest way to give, and it can also be changed at any time. The bequest is a statement in the will or trust identifying assets you want to leave and to which charitable institution you want to leave the assets.

Tomorrow, we will address other charitable estate planning methods. Stay tuned.

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Tuesday, September 8, 2009

Gift Tax Law

It is unusal but it does happen. I had a client who was the sole beneficiary under his aunt's will. His aunt did not have any children or a surviving spouse. However, there were other relatives but the aunt only saw fit to leave her estate to this particular nephew. No one disputed the will. The client came to me because he wanted to share the wealth with others.

Bottom line; the inheritance is his and he has to pay all of the inheritance taxes. If he chooses to share any of his inheritance, it would be a gift to the other relatives. Whenever assets are given to another for less than its full value, the amount by which the asset’s value exceeds the money paid for them is a gift. In this case, the $95,000 for each of 5 relatives would be a gift of $475,000. Everyone has a lifetime gift exclusion amount of $1,000,000. As long as he does not gift over $1,000,000 during his lifetime, there will be no gift tax due. However, there is a gift tax filing required if his gift over a certain amount annually. This annual exclusion amount for 2009 is $13,000. Therefore, in his case, the gift tax filing will be required.

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Monday, September 7, 2009

Labor Day

Well, it is Labor Day and I was wondering what might be of interest to people today. First, I thought I would reflect on its purpose. Labor Day is a holiday started by the Central Labor Union to honor the working man/woman and reward him/her for all his/her hard work by giving him/her a day off, a day of rest.

But, why are we working any way? What is the purpose of all this labor? You know I always think in terms of estate planning. And, I have found that there are three broad views that most people have when asked about estate planning and its application to their circumstances. First, there is the traditional view that estate planning is just about money, real estate, and guardianship. Second, there is the expanded view of estate planning that addresses nontraditional assets, turning human potential (ones' legacy) into valuable assets to pass on to others.

The third view is more about our purpose, why we Labor. I read about a two-year study by William Marsten, a prominent psychologist, who asked 3,000 people the following question: “What have you to live for?” He discovered that amazingly 94% of those interviewed had no definite purpose. For me, that means that those individuals did not realize the importance of their own traditional assets nor the potential of their nontraditional assets or their legacy. The men and women interviewed and many more like them are not active participants in their own lives. They are in a holding pattern, like a plane on a runway awaiting clearance to take off. But, what clearance are they all waiting for? How will they ascertain their life’s purpose so they too can soar?

If this study is indicative of our society, most of us are not living life. We are merely enduring life or letting life just happen to us. I have come to realize that if we contemplate our life circumstances now, we will discover our purpose and what we may have to pass on. The estate planning process requires that you assess your life now, to identify your assets (traditional or nontraditional), to determine your beneficiaries (family or otherwise), and to control when and how your assets are distributed.

Let your Labor have a purpose that will transcend your mortal life. Leave your comments here or contact us at

Thursday, September 3, 2009

Protecting Your Wealth For Your Family - GRAT

I read a great article on, Keeping Family Wealth From the Taxman, by Elda Di Re and Scott Ferritti. I share a part of that article pertaining to a great taxing saving vehicle for this economy, the GRAT. If you get the chance you may want to read the entire article.

"In view of historically low interest rates, the current environment is an optimal time to give consideration to establishing a Grantor Retained Annuity Trust, "GRAT". A GRAT is a particularly attractive estate planning strategy due to the fact that the resulting gift tax cost can be eliminated.

The GRAT is an estate-freezing strategy that enables the business owner to transfer future appreciation in the business to children at a substantially reduced gift tax cost. Under the GRAT arrangement, the owner would transfer assets to an irrevocable trust and retain the right to receive a fixed annuity for a term of years. At the end of that term, the remaining assets in the GRAT would pass to the children.

The benefit of a GRAT is that, although all remaining assets would go to the owner’s children at the end of the term, the gift tax on the transfer to the GRAT is computed on the value of the remainder interest at the time of the transfer. The value of the remainder interest is computed by taking the original value of the transferred property and subtracting the present value of the annuity payments.

The owner receives annuity payments from the GRAT each year and may be established high enough so that the annuity's value approximates the value of the assets transferred into the trust, thereby reducing the gift tax cost to zero. The ability to "zero-out" the GRAT makes the GRAT an ideal estate planning tool."

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Wednesday, September 2, 2009

Get Your Deeds in Order - ISSUE THREE - Trust Provision

This is the third day of looking at the issues surrounding Deeds. Many Deeds need to be updated to current situations.

Today, we address those Deeds that provide that they are held in Trust for designated individuals. Many times this occurred because the person was underage and needed to have someone named as the Trustee over their assets. Does that need still exist when the person is no longer underage?

I would suggest that some of the reasons for establishing the Deed in Trust for others after time, no longer applies. However, no one takes the time to make the change to updated circumstances. It is best to revise Deeds when all parties are well and can make sound decisions. Do not wait for an emergency which will make it more costly and time-consuming.

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Tuesday, September 1, 2009

Get Your Deeds In Order - ISSUE TWO - Other Deceased Relative or Person Still on Deed

Yesterday, I discussed taking a deceased spouse's name off of your Deed. Today, we look at other deceased people whose names still appear on a Deed. In order to remove a deceased person's name off of a Deed, it has to be determined who received the interest in the property upon the person's death. Did the person hold title with the others as Joint Tenants with Rights of Survivorship or was the interest held as Tenants in Common?

Joint Tenants with Rights of Survivorship
If the property was held with rights of survivorship then the interest of the deceased person will go to the other owners named on the Deed. A new Deed can be issued with just the names of those currently listed with the deletion of the deceased person.

Tenants in Common
If the property was held as Tenants in Common than the interest of the deceased person will be distributed in accordance with the person's will or if the person died without a will the interest will be distributed in accordance with the state's intestate laws. This could get very complex and confusing. But, it must be addressed because it will continue to grow more complex otherwise. For example, what if the deceased person's heirs are also deceased? Who did those heirs leave the property to? And it goes on and on the longer one waits to clean up family Deeds.

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