May 26, 2017October 18, 2022

No Estate Tax Does not Mean no Estate Planning

With the release of President Trump’s tax plan and Republican majorities in Congress, it seems inevitable that the estate tax will go away. That does not eliminate the need to do estate planning.

A big part of modern estate planning is planning around the federal estate tax. Many estate planning instruments were designed to help lower the estate tax burden on wealthy estates. Profit Law Firm helps clients reduce federal estate taxes.

Without an estate tax, it might seem that there is not much of a reason to do complex estate planning at all. Some people anticipate that will be the case soon, since President Trump has released a tax proposal that would eliminate the estate tax and Republicans who hold majorities in both houses of Congress agree with the idea.

However, it is not that simple as Financial Advisor recently discussed in “Estate Planning: It’s Not Over.” Some states such as Maryland and DC, have state estate taxes, at $3 million and $2 million, respectively see more information about these estate taxes. So residents in these states will have to do some extra planning regardless of the federal tax rates and a Maryland estate planning attorney can help.

It still is not clear when, if and how the federal estate tax might be repealed.

Congress could choose to phase it out over a few years or scrap the idea entirely, if they cannot agree on offsetting spending cuts or where to raise revenues from elsewhere. Senate Democrats could also mount a filibuster over any tax plan that Republicans propose, which they are expected to do.

No elimination of the estate tax is permanent, of course. Even if it passed now, it could always be reinstated when Democrats control government again.

While you might be excited about the elimination of the estate tax, do not make the mistake of thinking that means you can make your estate plans with the assumption in mind that it will go away for good, if it does at all.

Reference: Financial Advisor (April 3, 2017) “Estate Planning: It’s Not Over.”

May 25, 2017

Trump’s Tax Plan

After much anticipation, President Trump released his long awaited tax plan. While there is much for wealthy people to cheer in it, including eliminating the estate tax, no one will want to cheer too much or too soon.

Since taking office, President Trump had been promising that he would reveal a plan for tax reform. He gave very few details about it, except that it would contain some of the biggest tax cuts in history, if not the biggest.

Last week, the White House finally released the anticipated plan, although many details are still missing.

The plan, if passed, would be one of the biggest tax cuts in history. Most experts agree that it includes large tax breaks for wealthy people, including eliminating the estate tax and the alternative minimum tax. His plan would eliminate the federal estate tax. Maryland residents would still pay Maryland estate taxes and DC residents would still pay DC estate taxes. The Maryland tax exemption is currently at $3 million and the DC tax exemption is currently at $2 million, learn more about estate tax planning.

Income tax rates on the highest earners would be cut dramatically, as would corporate tax rates.

The proposal does not just cut the taxes of the richest. Some middle class and lower income earners would see tax decreases coming from a doubling of the standard deduction.

The New York Times reported on the plan in "White House Proposes Slashing Tax Rates, Significantly Aiding Wealthy."

The President's tax plan has a long way to go before it is passed.

What was released was a one-page list of bullet points without any accompanying details. It will be up to Congress to determine the details of how to implement the plan.

The list did not indicate how the tax cuts should be paid for, which is likely to displease Republican deficit hawks.

Democrats are also likely to oppose the cuts and might filibuster them in the Senate.

Reference: New York Times (April 26, 2017) "White House Proposes Slashing Tax Rates, Significantly Aiding Wealthy."

May 24, 2017February 23, 2022

John B’s Mistakes

A new podcast is a great opportunity to learn about some basic estate planning mistakes.

Serial might be the most successful podcast of all time. Millions of people tuned in to hear the story of a murder and its aftermath. It was one of the first podcasts to receive mainstream critical attention.

Thus, it is not a surprise that its creators are back with a successor show, S-Town.

This new podcast features the story of John B., the resident of a small town in Alabama. He lives on a 128-acre estate and is believed to be wealthy by the community. He was living with his octogenarian mother with dementia.

John B. apparently told his friend Tyler that he did not have any bank accounts and that Tyler could have $20,000 from his estate. The next day, John B. committed suicide. He did not have a will, but instead left a series of instructions about what to do with his estate.

The drama of the story is in people trying to find out what happened to his money, if he had any at all.

The Wills, Trusts & Estates Prof Blog discussed this podcast in “Estate Planning Lessons from John B.”

John B. made some basic estate planning mistakes that everyone can learn from.

First, he did not have a will. While leaving some written instructions is better than nothing, it is not worth very much legally. If any money can be found, then under Alabama law, it will all go to his mother.

His friend Tyler would get nothing.

A simple will could have solved that problem.

Care for his mother is set to go to another relative who has been appointed as guardian. Of course, no one should go completely without a bank account.

Do not make the same mistakes as John B.

Hire an attorney and get a will and use other fundamental estate planning techniques.

Reference: Wills, Trusts & Estates Prof Blog (April 21, 2017) “Estate Planning Lessons from John B.”

May 23, 2017

Mary Kills People

If you have ever wanted to watch a television drama about physician-assisted suicide, you now have your chance.

A normal television show about a brilliant emergency room doctor who kills people in her off hours, would probably be a very dark drama about a serial killer, if there was such a show at all.

Normally, doctors are treated on television as nothing but heroic and rarely involved in anything too controversial. However, a drama from Canada now airing in the U.S., seeks to tell a different story.

In this show, the brilliant doctor is killing people who wish to pass away. She moonlights by performing euthanasia, also known as physician-assisted suicide.

The New York Times recently reviewed the show in "Review: 'Mary Kills People,' but It's for a Good Reason."

While the Times review is somewhat mixed, that this show exists at all highlights the changing attitudes about euthanasia.

It was only a couple of decades ago when Dr. Kevorkian was seen as the evil "Doctor Death." Now, many people are taking the idea of physician-assisted suicide seriously.

A few states have recently legalized the practice and many more are considering it as part of the dying with dignity movement, which seeks to allow terminally ill people the choice of when they want to pass away and under what circumstances.

The concept, however, is still controversial since not everyone agrees it is a good idea.

This new television show is certain to draw more attention to the concept and get people talking about it even more.

Reference: New York Times (April 21, 2017) "Review: 'Mary Kills People,' but It's for a Good Reason."

May 22, 2017

Daughter Sues Mother for Wasting Her Inheritance

A case in New York is a good reminder that it is very important to make sure that trusts details are specific, in order to make the settlor's wishes crystal clear.

The story had a Hollywood beginning. A schoolteacher and a wealthy real estate investor met through a singles ad, fell in love, got married and had a child.

From that beginning, things quickly turned south.

According to court records filed by the child of that marriage, Elizabeth Marcus, her mother refused to sleep with her father after she was born. The two divorced after a few years and the father passed away, when Marcus was nine years old.

The father did not want his ex-wife to receive any of his assets and instead left half his estate in trust to Marcus. Another child from a previous marriage received the other half.

The trust was originally overseen by Citibank, but after fighting for several years, the mother took control of the trust in 2003, according to the Daily Mail in "Daughter sues her 'self-involved' mother for 'frittering away more than $13m of her inheritance – so she could buy cars and a $6m mansion next to Gwyneth Paltrow in the Hamptons'."

Marcus is suing her mother now, claiming that her mother has stolen her inheritance to buy expensive items for herself, including a mansion and fancy cars. Most of the original inheritance is now alleged to be gone.

The mother, of course, denies the accusations.

The missing piece of the puzzle from the reports is how the mother was able to gain control of the trust, if the father did not wish her to have it. He might have neglected to be clearer about his wishes in the trust documents. Profit Law Firm can help make your issues crystal clear in our documents.

Reference: Daily Mail (April 23, 2017) "Daughter sues her 'self-involved' mother for 'frittering away more than $13m of her inheritance – so she could buy cars and a $6m mansion next to Gwyneth Paltrow in the Hamptons'."

May 18, 2017June 14, 2025

Making Sure Your Family Has the Cash They Need

Even a great estate plan cannot help your family, if they do not have the cash they need to meet expenses before the estate plan can be executed.

People often go to great lengths to get an estate plan carefully crafted that covers every possible need their family could have. That is a good thing, but it might not be enough.

If you are your family’s sole breadwinner and most everything is in your name, then you also need to think about how your family is going to make ends meet while your estate is being administered. Bank accounts in your name are supposed to be closed as soon as you pass away, so your family cannot legally access them.

Unfortunately, that is not going to stop any bill collectors from making calls, and grocery stores are not going to sell their food on credit to your family.

As a result, you also need to plan for your family to have access to cash.

Some advice on how to do that comes from South Africa by way of Personal Finance in “Will your family avoid a cash-flow crisis on your death?” The advice is also applicable to the U.S.

Getting an estate through probate can take a lot of time, depending on the size of the estate and the probate laws in the state.

Your family will not receive the cash from your will for a while, in most circumstances.

If you do anticipate that your family will need cash after you pass away, the most effective way to provide it is normally to take out a life insurance policy. These policies pay out almost immediately upon learning of death.

Another idea is to open a joint bank account with a trusted family member and to put some money in the account that will only be used in the event of your passing.

Reference: Personal Finance (April 22, 2017) “Will your family avoid a cash-flow crisis on your death?”

May 17, 2017

Getting Upset Over Another’s Estate Plan

Sometimes when we hear about another person's estate plan, we may tend to get upset, if we think we are slighted in some way. It is a good idea to think about the plan from the other person's point of view.

There is a very human tendency to get upset whenever we initially feel slighted by someone else. A recent advice column in philly.com, "Wife upset by in-laws' plans for their estate," illustrates why it is sometimes better to hold off on the anger and look at things from other people's points of view.

A woman wrote in to say that her husband had a teenage son from a previous marriage. The woman was cleaning out papers from their office and discovered a printed out email from her father-in-law to his attorney. The father-in-law was asking how to set up his estate, so it would be certain to go to the teenage son, and not the woman, after her husband passed away.

This upset the woman, since she felt that she was being viewed as not being trustworthy enough to make sure the teenage son received an inheritance after her.

The problem here is that if the woman had seen this from the father-in-law's point of view, she might not have been so upset.

He wanted to make sure that his assets were kept in the family and that his grandchild would eventually receive them. The woman could have possibly gotten remarried or had a falling out with the son after her husband passed away.

From the father-in-law's perspective, he merely wanted to make sure his grandchild was taken care of, which was not necessarily making a judgment on the woman's character. "At our firm, we may hold two family meetings, to help a family understand and accept the plan," says Michelle Profit, an estate planning attorney.

Reference: philly.com (April 23, 2017) "Wife upset by in-laws' plans for their estate."

May 16, 2017

Do Not Put Your Will in the Bank

It is important to keep your will and other estate planning documents in a safe, secure location where they can be easily found, when needed. A safety deposit box in a bank is not one of those places.

A will is only effective if it can be used after you pass away to administer your estate. If no one knows where your will is or if it has been destroyed, then it cannot be used by the courts.

You could have the most detailed will that has ever been created, but it is worth nothing if it cannot be found.

For this reason, it is important to make sure your will can be found and accessed quickly by those who need it after you pass away. Many people believe that a good storage place is somewhere safe and secure.

That is true.

Many people also believe that the safe and secure place is at a bank in a safety deposit box.

That is not true, as Noozhawk recently explained in "12 Things to Keep in a Safe at a Home, Not at a Bank."

The biggest drawback to safety deposit boxes is that they are secure because access to them is extremely restricted. The bank is not going to let someone show up and access your box, even if that person has your key and your death certificate.

Access normally requires a court order, which can be time-consuming to get. Courts are often reluctant to give them to anyone other than the executor of the estate. However, without seeing the will, it would not be known who the executor of your estate is supposed to be.

The better option is to keep your original will home and put it in a secure place, such as a safe.

Reference: Noozhawk (April 23, 2017) "12 Things to Keep in a Safe at a Home, Not at a Bank."

May 15, 2017

The Danger of Wills

It is easier to get wills today than it ever has been, since forms can be downloaded and filled out on your own. However, that ease has led to many people not understanding the potential dangers of wills.

That everyone should have an estate plan is a principle which most people understand when the reasons are explained to them. Estate plans, even as simple as a will, at the very least can help prevent families from fighting over estates.

Since you do not know when you will pass away, you should go ahead and get an estate plan.

While most Americans still do not have a will, a greater percentage of Americans have them than ever before. It is easy and cheap to get wills today, since you can purchase downloadable forms from several different services.

However, there are some hidden dangers in doing that, as The New York Times explained in "Wills Can Avert Family Warfare, but Have Their Own Hidden Traps."

The biggest issue is that the probate process is different in every state.

Submitting a will to probate for administration, in some states, is very expensive and can take a long time. That suggests that probate avoidance strategies should be used, which could lead some people to utilize a trust instead of a will as their primary estate planning vehicle.

Trusts, however, are more expensive to get than wills and in some states probate is relatively quick and inexpensive. Consequently, trusts may only be needed for people with larger estates.

There are other probate avoidance strategies that can be used, but they also have their drawbacks. For example, retitling an asset as joint property with a child, which is a common tactic, can make the asset vulnerable to the child's creditors.

The best thing to do is to hire an experienced estate planning attorney in your state, so that attorney can help you with the best estate planning strategy for your state and your estate.

Reference: New York Times (April 21, 2017) "Wills Can Avert Family Warfare, but Have Their Own Hidden Traps."

Building Legacies that Last Estate Planning and Elder Law

Author: Profit Law Firm