Plannning for Life's Unexpected Challenges

Until the Lion King, I never heard of or knew what a Warthog was.  Though a bit romanticized in the Lion King, the Warthog is not one of the loveliest creatures in the wild.  It is like a pig, hog or boar but least attractive.  It can move rather quickly when approached, not that you want to get near.

Not everything in life is attractive, lovely or even romantic.  The unexpected situation could cause difficulty in your life.  But there are ways to make those difficult situations less challenging for those you love.  Advance planniing!!!  This would include getting a healthcare power of attorney, general power of attorney, living will and a will. 

Don't wait until itis too latte.  Plan now by contacting us at http://www.ythlaw.com/

Tower of Giraffes

As I walked the path of our hotel complex, I came face to face with a giraffe.  It was surreal..  We both stared at each other with initial surprise then wonderment, for me.

When we encounter something strange or out of context, we pause to take it in, at least after the danger dissipates.  But what if that encounter results in danger.  We really never know when incapacity or death might happen.  In a nanosecond, we could be faced with that possibility. 

Are you prepared for the unexpected??

Contact us at http://www.ythlaw.com/ for your Powers of Attorney, Trusts, Wills, Living Wills and other advise and guidance on your estate planning needs.

Divorce American Style

I received a newsletter from Marianna Goldenberg, a financial advisor who specializes in working with women experiencing a divorce. There are unique financial and estate planning matters that must be addressed during such a transition.

Here is a particular scenerio she presented with some slight modifications. Amy and Ted have been married for 12 years. They have no children and are each currently in the 25% federal tax bracket. They are trying to decide how to equally divide their remaining three assets. Those assets are a shore house in New Jersey worth $300,000, an IRA worth $200,000, and a savings account worth $250,000. The $250,000 in the savings account represents a loan taken against their shore house.

Ted has proposed that Amy take the shore house and sell it netting $50,000 after repayment of the outstanding loan. He suggests she should also keep the IRA worth $200,000. He would keep the savings account and they would both end up with $250,000.

Amy thinks this sounded fair since each would be getting half of the $500,000 total asset value. However the one question that she overlooked asking was “what is the cost basis?”

If this question had been asked of Ted it would have revealed that he only paid $110,000 for the shore house 8 years earlier. This asset has a capital gain of $190,000 which creates a capital gain of $28,500 (15% capital gain) plus $5,700 state tax due (3% state tax rate). Amy received $50,000 from the beach house but had to pay out $34,200 in taxes, so she only had $15,800 remaining.

Her after-tax value of the IRA is approximately $150,000 (25% tax bracket, not counting the 10% early withdrawal penalty since she is not planning to liquidate the account prior to age 59 ½).

The after-tax results show Amy ending up with only $165,800 while Ted keeps $250,000 tax-free and clear. This would hardly be considered an equal split.

To avoid potentially nasty surprises it is best to thoroughly investigate the basis in all assets prior to agreeing to accept transfer in order to have a clear picture of the financial outcome. Once the marital settlement has been signed and the divorce is final there is little to no opportunity to renegotiate an unfavorable deal.

AND do not forget those other documents that need to be updated after a divorce including your Will, Power of Attorney and Living Will. Contact us at