December 7, 2017July 11, 2023

Tax Inflation Changes for 2018

Every year the Internal Revenue Service adjusts tax exemptions and deduction limits to keep them in alignment with inflation. The changes that are made can have a big impact on estate plans, even if the actual adjustments are relatively small.

The IRS recently announced some of those important changes. They could make a difference for people planning their estates, according to the Wills, Trusts & Estates Prof Blog in “Estate Planning Inflation Adjustments for Tax Year 2018 & 2017-2018 Priority Guidance Plan.”

Changes include:

• Lifetime gift tax exemption increased to $5.6 million.

• Annual gift tax limit increased to $15,000.

• Annual gift tax limit to a foreign spouse increased to $152,000.

• Estate tax exemption increased to $5.6 million.

• Failure to file a return within 60 days of due date, to result in a penalty of $215 or 100% of amount due, whichever is lower.

If you have questions about how these changes could impact your estate plan, visit an estate planning attorney.

Reference: Wills, Trusts & Estates Prof Blog (Nov. 8, 2017) “Estate Planning Inflation Adjustments for Tax Year 2018 & 2017-2018 Priority Guidance Plan.”

Estate Planning Attorney

December 6, 2017

Battle Over War Hero’s Remains

Paul Lewis Morigi fought for the U.S. during World War II. While in England, he met and fell in love with Olive Murphy.

The two got married in 1944. However, the marriage did not last long.

They divorced when Olive decided she did not want to move to America with him. She feared she would miss her family too much.

Morigi went on to be a successful banker and a very wealthy man. He also got remarried to an American, Muriel Morigi. They were married for 40 years and had two children together.

At the age of 92, Paul Lewis Morigi divorced Muriel and moved to England, where he remarried Olive Murphy.

He recently passed away and now the two widows are fighting, according the Daily Mail in "Widows at war: British and American wives of war hero banker both want him buried in their own local cemetery – on opposite sides of the Atlantic – so they can visit his grave."

For now at least, the dispute between the two women does not appear to be over Morigi's assets but over where Morigi should be buried.

They both would like him buried close to them, so they can visit his grave easily. Of course, this could easily turn into a fight over his assets later.

It is not clear whether Morigi left any instructions for where and how he would like to be buried. However, it is clear that he probably should have done so.

Reference: Daily Mail (Nov. 3, 2017) "Widows at war: British and American wives of war hero banker both want him buried in their own local cemetery – on opposite sides of the Atlantic – so they can visit his grave."

Estate Planning Attorney

November 24, 2017February 27, 2023

An Executor Cannot Make Everything Right

Imagine that you are made the executor of your mom’s will. You have several other siblings and the will gives all of you an equal share.

One of your brothers has borrowed a lot of money from your mother over the years and never paid any of it back. Although there is no documentation for any of these loans, you might be tempted to use your powers as the executor of your mother’s estate to collect the debt from these loans.

This is essentially the situation that a reader recently wrote into the Napa Valley Register to ask about in “Can mom make son pay debt?” There are several problems with what the executor wants to do.

The first is that loans to children are often more gifts than they are loans. The mother probably “loaned” the money to the sibling, knowing that it would never be paid back. That makes it a gift.

The second problem is since the loans are undocumented, there is no way to prove they happened short of a court battle over them.

The third problem is that even if these were considered loans and not gifts, they would likely be well outside the statute of limitations, unless they were made recently.

It can be tempting for executors to want to redress past wrongs. However, they should be careful before doing so.

Executors do not have unlimited powers and should consult with an estate attorney before doing anything that is outside the directions given by the probate court.

Reference: Napa Valley Register (Oct. 26, 2017) “Can mom make son pay debt?”

November 23, 2017March 7, 2023

What Aging Parents Need

Planning for retirement can be challenging.

People usually need to save a lot of money before they consider retiring. When that is done, they need to apply for Social Security and Medicare.

At the same time, these same people need to make arrangements for where they want to live during retirement, if they do not want to stay in the same place.

Many people seek their children’s assistance for some of these decisions. They assume that if anything else is needed when they retire, then their children will be able to help them.

However, planning for retirement is not quite done until an estate planning attorney is consulted.

Some fundamental legal documents need to be drafted as Gambit points out in “The legal needs of
aging parents.”

Parents need to think about the legal ability of their children to take over for them, when necessary.

For example, the children need to be able to handle the parents’ finances and make medical decisions
for the parents, if necessary.

Preparing for that goes beyond just making sure a child has the knowledge to do those things. The child
also needs the legal authority.

That is where a visit to an estate planning attorney comes in.

The attorney can draw up a general durable power of attorney to give a child the legal authority to
handle the finances, when necessary. The attorney can also draw up a health care power of attorney to
give a child the legal authority to make medical decisions, when necessary.

Reference: Gambit (Oct. 30, 2017) “The legal needs of aging parents.”

November 22, 2017March 7, 2023

Parents Should Explain Finances to Their Children

If you are a typical parent then you probably expect that your children will inherit your assets.

You probably also expect that when you get older and are unable to handle everything for yourself, your children will assist you.

That is what happens in most families.

However, most families also make a pretty big mistake when it comes to these expectations. They
assume the children will be able to step in immediately and take over for the parents having little or no prior knowledge about any details.

This can lead to big problems, which is why parents should talk to the adult children about the finances as TC Palm discusses in “Acquaint grown children with your financial affairs.”

You do not need to tell your adult children every last little detail about your finances.

Nevertheless, they need to know enough so that they can take over with few problems.

They certainly need to know where to look for details regarding your assets. While you are at it, make sure your children are familiar with financial concepts that they might not know.

What do they know about basic “financial planning”?

One great way to make things easier for your children is to get an estate plan. Going through that process can give you an idea of what you need to let your children know.

Reference: TC Palm (Oct. 30, 2017) “Acquaint grown children with your financial affairs.”

November 21, 2017February 27, 2023

Common Marriage and Estate Planning

In most states, the idea of common law marriage has been abolished for a long time. Only a small
number of states recognized the concept until recently.

Courts in some states are beginning to recognize these marriages again.

Why? Probably because more couples are choosing to live together for long periods of time and acting
like married couples, despite never making it “official” through the process of formally getting married.

By recognizing the existence of a common law marriage, the courts are then able to treat the couple as
they saw themselves when it comes to divorcing or settling an estate.

Not all states will recognize these marriages though as the Wills, Trusts & Estate Prof Blog points out in
“Why Common Law Couples Need an Estate Plan (New York).”

What makes a valid common law marriage varies from state to state.

Normally, if the couple holds itself out to the public as married or tells a government agency that they
are married, then a common law marriage exists. For example, if the couple files a joint tax return with
the IRS, then the existence of a common law marriage will be recognized in those states that allow them
and the couple will be in trouble with the IRS in other states.

Since not all states recognize common law marriages, it is important that you understand that you will
still need an estate plan to protect your common law spouse’s interests in some states.

Even if you act like you are married, you are not actually “married” in most states and you need to
account for that in your planning.

Reference: Wills, Trusts & Estates Prof Blog (Oct. 25, 2017) “Why Common Law Couples Need an Estate Plan (New York).”

November 20, 2017March 7, 2023

Mediation in Estate Disputes

When family members start fighting over the estate of a loved one, the battle can turn acrimonious.

There is almost no way for there to be a civil intra-family estate dispute, unless the case goes to trial before a judge.

When family members start testifying against each other it is extremely difficult for the wounds to heal. To avoid this problem, many courts prefer that families to try to solve their disputes through other methods before a case goes to trial.

A common way to do this is for the litigants to be sent to mediation which the Wills, Trusts & Estates Prof Blog discussed in “Court Rejects Effort to Avoid Settlement Agreement.”

In mediation a trained, neutral third party attempts to facilitate an agreement between the parties to the dispute. A mediator will often try to get the parties to see the other person’s side and to compromise.

Even when mediation does not instantly help the parties to reach an agreement, it often helps to clarify the issues. Many feuding family members do decide to reach post-mediation settlements.

Mediation does not always work. Some people feel that they are pressured into settling during mediation.

For that reason, it is important to have an attorney during estate litigation as courts are reluctant to allow people who have second thoughts out of any agreements reached during mediation.

Reference: Wills, Trusts & Estates Prof Blog (Oct. 25, 2017) “Court Rejects Effort to Avoid Settlement Agreement.”

November 10, 2017March 7, 2023

The Dangers of Guardianships

Rudy and Rennie North were a normal Nevada couple in their 50s. Rennie needed some assistance with day to day living, which she was able to get from a nurse at home.

Then, a woman named April Parks came into their lives.

Parks owned a business and was considered a professional guardian. Without consulting the Norths or anyone in their family, Parks was able to get a letter from a physician’s assistant declaring that the Norths needed a guardian.

Parks took this letter to court and was appointed their guardian.

The Norths again were never consulted.

No tests were conducted on them, to see if they were lacking in cognitive functioning and unable to care for themselves.

Eventually their life savings were used up and they now live in a converted office with their daughter.

The New Yorker reported this story in “How the Elderly Lose Their Rights.”

Although things like this should never happen, they occur all too frequently.

If the legal system is not diligent in protecting the elderly from so-called guardians who just want to take what the elderly have, there is little the elderly can do about it. In this case, the court system was complicit in Parks’ scam.

If you suspect that someone has used the guardianship system to take advantage of you or someone you love, it is vital that you speak to an elder law attorney immediately.

The attorney can help you to stop the guardian before it is too late.

Reference: The New Yorker (Oct. 9, 2017) “How the Elderly Lose Their Rights.”

Building Legacies that Last Estate Planning and Elder Law

Author: Profit Law Firm