As we all know politics has everything to do with spin. This is true not only during election cycles but it is also true once legislative processes have begun. We were led to believe that the changes to the estate tax that came out of the new tax act at the end of 2010 represent a positive example of true tax relief, and there is some truth in this. We now have an exemption from estate taxes of $5 million and a tax rate of 35%, which is the lowest rate in recent memory. The real question is whether there ought to be permanent repeal of the estate tax.
Why should the estate tax be repealed? There are a number of very compelling reasons and any one of them would be enough to provide logical support for a repeal.
The death tax is an instance of double, triple or more taxation. The tax brings is a very small portion of the revenue to the federal government and it is expensive to collect and enforce. It tends to break up family owned businesses and keep them from continuing because they have to be liquidated or take on substantial debt to pay the excessive tax.
Left in the hands of the family members who are anxious to see the business continue and grow, the economy will see added employment, and growth in the revenue to the government in the form of income taxes. Wealth that is inherited is invested, again allowing for growth and capital gains taxes.
There is some good news to report for those who agree that enough is enough when it comes to taxation. During the current legislative session no less than five bills (H.R. 86, H.R. 99, H.R.143, H.R. 177, and H.R. 123) have been introduced to the United States House of Representatives calling for a repeal of the estate tax. This is a positive development for anyone who is in favor of paying their fair share of taxes, but encouraging sustained growth at the same time.

We tend to draw dividing lines in our culture regarding the things that are relevant during particular segments of our lives.  Sometimes this makes sense and sometimes it doesn't, but when it comes to estate planning this propensity can lead to some very risky business. To put it bluntly, passing away is something that is generally attached to advanced age, but the fact is that people don't always die due to natural causes when they're in their late 70s, 80s or 90s.
When you are engaged in the active stages of your professional career you may well feel healthy and full of life, and this is fantastic but it can lead to procrastination when it comes to planning your estate. Successful people who make a practice of covering all their bases don't just mindlessly ignore the need to plan for the future. They just put it off for any number of reasons.
One of these is the fact that things are always changing in your life and ironically these changes can at first make you think about taking action with regard to your estate. These events are things like the marriages of your children and the birth of grandchildren. Your first thought may be to stop procrastinating and create an estate plan, but on second thought you may then anticipate future changes just over the horizon and decide to wait until things "settle down" before you make an appointment with an estate planning attorney.
Regardless of your age or your reasoning, the fact is that when you go through life without an estate plan you are putting your family at risk. Conduct a thought experiment and consider the situation that your family would be in if you were to pass away in a car accident on the way home from work. Simply put, if you're not comfortable with that picture, make an appointment with an experienced estate planning lawyer sooner rather than later.

There's an old saying that goes something to the effect of "youth is wasted on the young." This may sound like the musings of some bitter old curmudgeon but there's a kernel of truth in it. When we are young we may squander certain opportunities that we may not recognize at the time. When we get older we may have moments of clarity when we recognize that we would be in a better position if we had done things differently early on.
There are those who recognize the need to make long-term plans at a young age, and these are the people who generally enjoy comfortable retirements and subsequently find themselves more prepared for the eventualities of aging.  If you start considering your retirement on the first day you embark on your career you may be a couple of decades ahead of most people. Aside from the fact that you will be better prepared to retire at the typical retirement age, you may well be able to call all of your time your own at a much sooner time.
Aiming high and keeping your eye on the prize is key, but the fact is that it takes intelligent long-term planning to simply be prepared for the basic expenses that you will be facing after retirement. People are routinely living into their late 80s and beyond these days. If you want to be successful and make the most of your retirement years, the sooner you get started the more time you'll have to accumulate assets, situate them properly, and ultimately reach your financial objectives.

An important aspect of estate planning considers the needs of beneficiares and how best to meet those needs. If you have a beneficiary with a disability it is crtitical to understand the public benefits that they are receiving, or may be eligible to receive, and how a distribution from your estate may affect those benefits. An outright distribution from your estate to such a beneficiary could disqualify him or her for public benefits, including medical benefits, which could be devastating. Medicaid benefits can provide for very costly long-term medical care and they're only available to those who do not have the resources to pay for them out of pocket.
A third-party special needs trust will provide for the special needs of a disabled beneficiary while preserving eligibility for public benefits, including Medicaid and Supplemental Security Income. The language of a Special Needs Trust must be extremely precise so as not to make the assets in the trust directly available to the beneficiary. Generally, the trust resources can only be used for what are considered to be "supplemental needs" under Medicaid rules. A third-party special needs trust may be revocable and you can include a secondary beneficiary to receive distribution of the remaining assets after the primary beneficiary passes away.
By creating a Special Needs Trust for your disabled beneficiary you can ensure that he or she receives all the benefits of your estate without jeopardizing his or her eligibtility for public benefits. Special-needs planning is a very sensitive matter that requires the highly technical expertise of an estate planning attorney knowledgeable in the complex area of disability planning.

For a number of reasons more and more people have been engaging in do-it-yourself projects over the last several years, and in the big picture this would have to be viewed as a positive development. It can be fun and rewarding to roll up your sleeves and take on a DIY project that improves your home or simply enhances your quality of life in some way. Some people choose to build on their DIY successes and become rather serious hobbyists, and this is a great way to spend some time constructively and save some money while you're doing it.
The fact that you can find information on virtually any subject instantly by popping the term into a search engine has helped fuel the DIY craze, but is important to pick your spots. There are some things that make for good do-it-yourself projects, but there are others that are better left to the experts and estate planning would fit into the latter category.
When you are surfing the web looking for information on estate planning you will invariably see some websites selling estate planning software and do-it-yourself will kits. They claim that all you have to do is fill in the blanks and you'll be good to go, but the fact is that there's no such thing as a "one-size-fits-all" legal document that you can truly count on being legally binding in every jurisdiction.
Plus, each individual estate is different and the correct combination of legal instruments that is appropriate for you may be different from that required by the next person. These software programs and general templates can't evaluate the intricacies of your financial situation and the details of your wishes and make recommendations that are specifically designed for you and your family.
There's nothing wrong with doing your research and using the Internet wisely to gain a basic understanding of estate planning principles. But when it comes actually executing the documents that you will be relying on for the transfer of assets to your loved ones upon your death you would do well to engage the services of a licensed legal professional.

One of the provisions that was included in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced the max rate of the estate tax to 35%. It was scheduled to return from a one year repeal with a 55% top rate, so your first thought upon the news of the change would logically be one of relief.
But we need to put the matter into perspective. Since when is a 35% tax on after-tax earnings a cause for celebration? Compared to 55% this 35% seems almost tame, but in reality it is an extremely harsh bite and an instance of double taxation regardless of the rate.
In addition, the selective nature of the tax is patently unfair. The last time it was in effect in 2009 the exclusion was $3.5 million. Now it is $5 million, so it took a baby step in the right direction, but why should some people pay the tax while others don't? Why should a $10 million estate owe $1.75 million to the IRS while a $5 million estate owes nothing?
The polarizing pro-tax talking points involve making villains of Americans who would be subject to the tax, but it could be argued that anyone who buys into this is being misled. Let's say you created something like Facebook or invented a better mousetrap and you wound up with an estate worth a billion dollars. Under this "tax relief" act, $995 million of it would be taxed at 35% as you passed it along to your heirs after your death. So the federal government would take more than $348 million.
If you had the inspiration to create such a wealth building enterprise, would you feel as though the government deserved over a third of what was earned after you pass away? Some say they could afford to lose that much, if they could create that much wealth, but could the money lost to the government be more effectively used in further research and development that would create more wealth and provide jobs for more families?
Beyond that, consider the potential good that the $348 million could do as an inheritance. If it was in the hands of your children they would invest it to stimulate commerce and create jobs. If it goes to the government, it is swallowed up into a black hole of infinite debt and does little good for anyone.
The bottom line is that the matter of the estate tax has not been resolved, the debate goes on, and many Americans are still in favor of a total and permanent repeal of this draconian federal death levy.

There were some big changes to the estate tax parameters included as part of the new legislation signed into law by the president on December 17th that is being called the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
The lead story from an estate planning perspective involved the rate of the tax and exclusion amount. Rather than the $1 million exclusion that was scheduled upon the expiration of the Bush tax cuts the exclusion is set at $5 million, and the rate of the tax is now 35% rather than the 55% that was on tap.
Is worthwhile to underscore the fact that this $5 million estate tax exclusion is for each individual. So if you are married you and your spouse have a total combined estate tax exclusion of $10 million to work with going forward in 2011 and 2012. If you think this through, a logical question will arise: If I passed away would my spouse get to use my $5 million exclusion as well as his or her own?
In estate planning circles this idea is defined as the issue of "portability." To many observers the estate tax in and of itself is unfair, so as you might expect most of the rules surrounding it tend to defy logic as well. Until the passage of this new tax relief legislation in December the answer to the above question was no, your surviving spouse could not use your estate tax exclusion if you were to pass away.
The reason why this is unfair is because the estate that is accumulated by a married couple is the product of the earnings and investments of each individual; this wealth represents the combined efforts of two people. When one of these two people passes away his or her contribution to the estate still exists and it is taxable, but his or her exclusion is not available to defray the tax liability.
As a result of the new law the estate tax exclusion is now portable, and your spouse can indeed use your $5 million exclusion if either of you were to pass away. Unfortunately, the new measure is only available for the next 22 months and dies with the sunset provision in 2013. Who knows what the law will look like at that time, but at least there is now a "toe in the door."

When you are a busy person you have to set your priorities, and when you do some things are going to wind up being neglected as other "more pressing" matters arise. Estate planning is something that people often procrastinate about because let's face it, dying is something that you have etched onto the very bottom of your to-do list in almost permanent ink.
Aside from the the fact that people simply don't want to consider the unpleasant notion of passing away, there are actually some practical reasons for the procrastination. For one, even if you have no difficulty accepting the fact that you have to plan for the distribution of your assets after your death you may simply feel as though you will get to it when you have more time - maybe after retirement.
But once you retire, you may be occupied doing the things that you always wanted to do while you were busy working, and once again estate planning goes to the back burner. This is understandable, but it is risky all the same. And the fact is that that the people you are damaging when you do not plan your estate intelligently in advance are the ones that you love the most.
If you do not create an estate plan and record your wishes, should you pass away the state will decide who gets your assets, and the matter can be held up in the probate court for a significant period of time. There will be court costs and a number of additional fees, and of course many of your family members may be left out in the cold by the state when you would have remembered them had you taken the time to record your wishes.
How you use your time is a personal choice, but not all choices are good ones. To put it bluntly, when you move through life without having an estate plan in place you are neglecting one of the core responsibilities of adulthood and turning a blind eye to the needs of your loved ones. When I am asked who my competitors are, I always respond, "My biggest competitor is procrastination." Now is the time to act.

People are routinely living into their late eighties and nineties these days. Life is a gift and we all welcome each new day but there are certain perils looming when for those who reach an advanced age. Dementia is one of those risks and it is in fact alarmingly widespread. Statistics tell us that approximately 50% of people eighty-five years of age and older are suffering from some form of dementia. Though the severity of these cases can vary widely, those who suffer the effects of dementia generally are unable to make their own medical and financial decisions in a sound manner.
For this reason it is a good idea to include durable powers of attorney in your estate plan. You can execute a durable medical power of attorney and appoint someone that you trust to make health care decisions in your behalf. In addition, you can appoint an attorney-in-fact to handle your financial matters via the execution of a durable financial power of attorney.
Though you may well enjoy mental clarity throughout your final years, it is a good idea to be prepared for any eventuality. If you do need others to make decisions in your behalf at some point in time it is comforting to know that they will be people that you have personally selected rather than a guardian appointed by the court.

When you start to do some research into the topic of estate planning you will invariably see frequent mention of probate avoidance strategies. For people who deal with these matters professionally the term speaks for itself, but the layperson has no particular reason to know what probate is much less why you might want to avoid it.
Probate is the legal process that an estate must pass through before assets can be distributed according to the will of the deceased. If there is no will, the laws of your state determine how assets will be distributed. In the will you nominate an executor or personal representative. That person, or if there is no will, the person who desires to serve as personal representative, is required to present the court with a petition to be appointed. Once the court makes the appointment, this person is responsible for actually administering the estate, but he or she does so under the supervision of the probate or surrogate court.
The reasons that some people choose to implement strategies that enable probate avoidance are usually twofold. For one, there are a number of expenses that go along with probate. There are court costs, attorney fees, personal representative fees and bond fees. In addition, the final taxes of the deceased must be paid so an accountant is often necessary, and sometimes there are appraisers that must be paid as well as estate liquidators.
The other primary reason why probate avoidance strategies can be attractive is that probate can be time consuming. Depending on the complexity of the estate it can take anywhere from several months to several years for the estate to close. And of course, the heirs do not receive their inheritances until the probate process has been completed.
All of this having been said, probate serves a useful purpose. If anyone wants to contest the will or present an alternate will, they would do so in probate court. Consider a scenario when an octogenarian marries a twenty-something and then passes away three months later with a new will leaving everything to his new spouse. You can see how this person's children might be grateful for the opportunity to address the court.
Plus, even in uncontested cases, the supervision of the probate court ensures the transparency of transactions made on behalf of the estate by the executor. For some families, this additional protection is worth the extra expense and time of the probate process.

The process of estate planning has many aspects. One one level you may plan the transfer of your wealth to your loved ones free of creditor claims and tax liabilities. But on another level, estate planning also involves planning for a time when you are no longer around to provide guidance or support to your loved ones. For many it can be difficult to cope with the fact that you will no longer be able to fulfill your long held sense of responsibility to your loved ones.
An ethical will is an effective way to address this dilemma. The tradition actually dates back to early biblical times when ethical wills were passed down orally, but they are now composed in writing. The writing of ethical wills has been firmly embedded in the Judaic tradition for generations, but the practice is now widely accepted throughout the estate planning community.
In an ethical will you may share your moral and spiritual values. It is a method to convey the lessons you learned in life to your loved ones. An ethical will can be looked at as a heartfelt final letter to your family. You let your loved ones know how you feel about them, share personally acquired wisdom, and get things off your chest if you find that to be necessary. In short, it is a way to transmit to future generations what makes you and your family who they are. People usually find the composition of an ethical a defining time that is as beneficial to the author as the content is to the readers.

As estate and retirement planning attorneys, part of what we do is help our clients prepare for some of the challenges that go along with aging; things like possible incapacitation and addressing long term care costs. Preparing for these contingencies is necessary and prudent, but there is a lot of quality time left after your working years are behind you. Opportunities abound during your retirement years, and the fact is that seniors can use their free time to accomplish some truly amazing things.
One case in point involves a now 68-year-old fellow from Costa Mesa, California named Bill Burke. Bill is an adventurer, and as part of his goal to scale the world's highest peaks he tackled the grandest challenge of them all in 2007 when he attempted to climb Mount Everest in Nepal. He made it to within one hundred yards of the summit when he had to make a decision. He was concerned that he may not have the strength to make it back to the bottom safely if he pushed on those last grueling 300 feet, so he turned back.
Making it to within 100 yards of the top of Mount Everest as a 65-year-old is quite an accomplishment, but Bill was in it to win it. He returned the next year with the added experience under his belt, but he didn't make it as far. After suffering from pulmonary edema he had to be evacuated off the mountain by helicopter.
One might expect that this senior citizen would recognize the limitations of age at that point, but Bill Burke is not set up that way. He went back to Everest for the third consecutive year in 2009, and he reached the summit. It is believed that at 67 years of age he was the oldest American to do so.
The suggestion here is to consider all that is possible, aim high, tune out the naysayers and make the most out of your retirement.

When you are working through your estate planning checklist you may have a lot of ground to cover depending on the size of your estate and the specificity of your wishes. And as we always remind our clients, estate planning is not something that you take care of in a day, a week, or a month. It is an ongoing process that is going to require adjustments because there are changes all around us. Our own lives change, tax laws are subject to revision, interest rates are always fluctuating, and the economy as a whole is largely unpredictable.

We mentioned a checklist in the opening because with so much to consider it would be easy to forget something, and your fine furry friend just might fall through the cracks. Just as your stocks, bonds, cash, real property, and prized possessions are going to need a new home when you pass away, your pet is going to need one too.
Our pets become members of the family and they can really provide senior citizens with a tremendous boost as companions, protectors, and in many cases, master entertainers. The good news is that you may not have to look too far to find a new owner for your pet. You may well have a family member or friend who lets you know that he or she would be more than glad to take care of your dog or cat when you pass away.If you have no volunteers, you can ask around, and when you find a caretaker it is a good idea to make sure that your pet and its future guardian get to know one another so that the transition won't be as hard on the animal. To cover the expenses you can leave a bequest to the new owner-to-be if you so choose.

Another option is to create a pet trust to provide for your dog or cat. You fund the trust, name a trustee to administer it, and select a caretaker for the pet. It is also sometimes possible to develop a relationship with a non-profit animal placement facility and arrange for the people there to find your pet a home while you make a donation in return to show your appreciation. For some valuable information on pet trusts and pet planning in general visit our page on page pet planning.