How much do you know about estate plans? And how do you know when you need one?

Many people have a vague feeling that they should execute some kind of estate plan eventually, but think (hope) that they really don’t need one right now. On our blog we spend a lot of time telling people that they do need an estate plan, and they probably need one right now—or yesterday!—and we hope we do a good job of explaining why you need one. But maybe it’s time for you to decide when the time is right. This quiz will help you determine just when (and if) you need to do some estate planning.

1. Do you own a house?

Owning your own home means you have at least one significant asset, which affects your need for planning in a number of ways: First, a piece of property cannot be split between people, it will have to be sold (which can take months or even years) and the proceeds divided among your heirs—often at a loss, especially if the house was undervalued to sell quickly. Second, many people who feel they have “small estates and won’t have to worry about Probate or the estate tax” are surprised when they find that the value of their home does indeed push their estate over the line. Third, if you are married you may need to make provisions for your spouse if you would like them to be able to continue to live in your home.

2. Do you have minor children?

If you have minor children and have not made provisions for them in case of your death or incapacity the government will be in charge of their futures. This could mean your children are put in the care of foster parents or become wards of the state. That is not a chance you want to take.

3. Do you want your heirs to have to wait months (or years) before receiving an inheritance that is only a percentage of what you left them?

Probate is a long and expensive process. Without a plan in place your assets will have to be probated before they can be distributed. Not only does this often take years, but the probate fees (which can be considerable) are taken out of your estate—leaving less for your heirs.

4. Do you know how you want to spend your final moments?

Most people don’t die quickly and quietly at the ripe old age of 98. Most people fall victim to accidents, illness or dementia—unable to make their own health care decisions. Without a healthcare directive or living will that specifically outlines your wishes and instructions for your health care and nominating an agent to carry out those wishes, you could end up in a Terri Schiavo situation—costing your loved ones both financially and emotionally.

(NOTE: There is much that goes into your estate plan decision-making; this is only a partial quiz, and not a planning tool. Please contact our office for more information and an in depth interview to determine what kind of planning will be best for you and your family.)

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The days are getting shorter, the weather cooler, and the skeletal arms of trees reach for the skies as their colorful apparel rests on the ground. All of these signs point to just one thing… No, not the estate tax repeal (although that does loom close); I’m referring, of course, to the upcoming holiday season—a time to slow down, spend time with family, and appreciate the blessings in our lives.

During this time of celebration and Thanksgiving, our office would like to offer our sincere thanks to you, our clients and readers, for the time you have spent with us, the trust you have put in us, and the role you have let us play in your lives. We hope we may continue to serve you in the coming year.

Happy Thanksgiving to all of our readers, and may you enjoy a wonderful holiday season.

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Most people are surprised at just how many documents there are in an estate plan. An estate plan is not merely a trust, it incorporates a number of other documents to help protect your finances, your children, your health, and especially your right to make your own decisions. Depending on the size of your estate, feelings of your family, and intricacy of your wishes, your estate plan can be anywhere from 4 to 14 documents—or more!

But there is one document that many attorneys undervalue—sometimes to the point of neglecting to include it altogether—that document is the Memorandum of Intent, sometimes also called the Letter of Instruction.

The Memorandum of Intent is easily overlooked because it’s not a legally binding document the way your will, power of attorney, or other estate planning documents are. The Memorandum of Intent is the letter you write to your heirs and fiduciaries expressing your hopes for the future, the reasoning behind your final decisions, and the practical details your fiduciaries may need. As this article by Bob Carlson states, “the letter of instruction is your last word on a number of issues.”

It is easy to understand why the Memorandum of Intent might be overlooked; if it’s not legally binding, how important can it really be? But the importance of the Memorandum of Intent lies in the personal nature of its contents. It is this document that can prevent family fights and bad feelings by giving an explanation for any surprise inheritances. This is the document that parents can use to leave detailed and loving instructions for the guardians of their minor children. And the Memorandum of Intent is where you let your fiduciaries know that you hope your favorite charity can continue receive an annual contribution in your name. The possibilities are endless.

The Memorandum of Intent is not—strictly speaking—a necessary document; but it is the most personal and heartfelt document in your estate plan. This one document can provide explanation and closure for the loved ones who are left behind. If you have any questions, or would like to include a Memorandum of Intent in your estate plan, please contact our office for more information. Our mission is to provide you and your family with the most comforting and complete estate planning experience possible.

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Our previous installments on how to review your estate plan discussed how and why to review the more financial portions of your estate plan; for this final installment we will cover how to review the documents that may be closer to your heart: your health care documents and documents pertaining to minor children (such as a nomination of guardian.) Also covered is what is perhaps the most pressing reason of all to regularly review your estate plan—changes in the law.

Health Care- Your EP health care documents should include: an Advanced Health Care Directive (or Health Care Power of Attorney), a Nomination of Conservator, and a HIPAA Release. If you have minor children you should also have a document giving a close friend or family member authorization to make health care decisions for your child in case you and your spouse are unavailable in an emergency. Take note of the date these were signed, and any changes in your health status. Health Care documents should be re-signed every 3-5 years to keep them “fresh”.

Minor Children and Guardianship-Documents pertaining to minor children include your Nomination of Guardian, Exclusion of Guardianship (if you have one), and often a Memorandum of Intent. If circumstances or relationships have changed and you are uncomfortable with anybody listed in the documents now serving as guardian, you’ll want to execute a new one. If your minor child is a teen and almost grown he or she may now want to have some input in the process. The Memorandum of Intent is not always an officially notarized document; it is your letter of instruction to your guardians and other fiduciaries. As such, this document will probably change the most over the years. The good news is that you probably don’t need to make changes through our office, however if you do make changes, please let us know or even send us a copy.

Legal Updates-Estate planning is a very fluid area of law. Tax laws have a tendency to change (for example the estate tax law which is slated to expire completely in 2010 and return again in full force in 2011), and attorneys are always changing and improving your documents to keep up, and keep your plan working the way you intend. Call our office and we can discuss with you any significant changes in the law since the signing of your plan.

Reviewing your estate plan is not as intimidating as you might think, especially when you know exactly what to look for. Taking an hour now to review your plan will save your loved ones many long hours in the future. Don’t you think it’s worth it?

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In our recent blog post we listed 6 essential components of your Estate Plan that should be reviewed on a regular basis and why it’s so important to keep them updated. Today we’ll go into more detail about the first of these components; what they are, and how to review them.

Fiduciaries- Make a list of all the people you’ve named in any fiduciary role in your estate plan, including Trustees, Executors, Health Care Agents, Financial Agents, Guardians, and Advisors. Has your relationship with any of these people changed? What about the person’s own family or financial situation? Do you still feel confident in each person’s ability to carry out your wishes?

Assets- Look at the schedule of assets you have with your Estate Planning materials. If you don’t already have a schedule of assets, make one right now. Don’t forget to include property, bank accounts, stocks, Retirement accounts and Life Insurance policies. Of all the assets on this list, have all of them been put in the name of your trust or have your trust named as the beneficiary? Have all of your new assets been added to your trust? If you refinanced your home, was it put back in the name of the trust? If you answered “no” to any of these questions, it’s time to call our office.

Distribution and Beneficiaries- For most people, the whole purpose of a will or trust is to make sure that property is distributed according to their wishes upon death. So take your time reviewing that section of your estate plan. Is your list of beneficiaries still accurate? Do you have any new children or grandchildren? If so, your estate plan should reflect these changes.

In our next blog we’ll have more information about the second part of the list of things to review in your estate plan: Health Care, Guardianship and documents pertaining to minor children, and last but not least, legal updates.

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For many people the holiday season brings more than just celebration. Seeing family and friends you may not have seen since this time last year means seeing children who have shot up like weeds, siblings and cousins with noticeably more gray in their hair, and even sometimes seeing an empty place at the dinner table that wasn’t empty last year. In short, for many people the holiday season means facing the passage of time and the changes that passage can bring.

The passage of time is inevitable, as is the change it brings; and when your life changes it’s important that your estate plan change with it. Reviewing your estate plan every 1-3 years is essential to keeping it up to date and working the way you intended it to work. Luckily, reviewing your estate plan can be quick and easy if you know what you’re looking for. Here is a list of 6 key components you’ll want to review regularly:

• Fiduciaries
• Assets
• Distribution and Beneficiaries
• Health Care
• Guardianship and documents pertaining to minor children
• Legal Updates

If we’re lucky, our lives are constantly changing—our families evolve, our finances improve or decline, we meet and form strong relationships with knowledgeable friends and professionals. It only makes sense that your estate plan should change too. What seemed best for your family 4 years ago might not be the ideal situation now. By reviewing and updating these 6 components on a regular basis, and touching base with your attorney, you will insure that your estate plan will continue to protect yourself and your family the way you intended it to when you first created it.

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Jane Hodges of the Wall Street Journal recently jumped in where few would fear to tread—and lived to write about it. Where most people would prefer not to think about taxes and estate planning at all if they could help it, Hodges went through the process of creating an estate plan not only once, but with four different Do-It-Yourself Will or Trust kits, and shared her findings with her readers.

Although Hodges gives a decent description of her experience with the various kits, her final verdict is inconclusive. But what does come through loud and clear in the article is that a “Do-It-Yourself” Trust or Will isn’t as easy as it seems, and that anyone with a significant amount of assets (and by significant we mean a house or life-insurance policies) should not be doing it themselves; “the program presented a pop-up note indicating that people with more than $1 million in assets might need an attorney…” One million may sound like a lot, but as mentioned above, just about anybody with a house or life insurance policy is going to fall into this category.

What Hodges and her husband discovered (and we think this would be the experience of most people looking for a DIY solution to estate planning) is that there is a lot more to creating a will or trust than a simple distribution of assets. Most people have specific wishes for leaving their home to their spouse; for ensuring that the surviving spouse has access to joint assets but does not have the ability to bypass your children and leave everything to a new husband or wife if they remarry; for earmarking a certain percentage of the estate for brothers or sisters, nieces or nephews; and so much more. Add to this the complicated and changing state and federal estate tax laws and DIY estate planning kits can be a frustrating recipe for disaster.

The goal of estate planning is not only to distribute your assets, but also to protect them—and to protect and provide for the family and loved ones who are left behind. Ultimately, no program can understand this and help you with it the way a living, feeling, and experienced estate planning attorney can.

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Everyone knows that the estate tax is also sometimes known as “the death tax”; similarly, estate planning attorneys are also sometimes known as “those death lawyers.” This is something most of us have learned to good-naturedly roll our eyes at; but eye-rolling aside, the worst thing about the “death lawyer” assumption is the disservice it does to you—our clients. You see, as estate planning attorneys our role is to help you protect your family and your assets, both of which exist in the here and now, not in some ethereal “someday”. What follows are only a few of the things we can help you with right now:

Retirement planning: Ask about the recently developed Retirement Trust, which not only extends your retirement fund past its initial payout date, but gives you more options for distributions.

Saving for college: If you have children who will one day be in college, we can help you make sure they will have the wherewithal to follow their (and your) dreams for education in the event that anything happens to you. An education trust is the perfect way to provide for your children’s schooling.

Investing for the future by laying a foundation NOW: The future is the business of an estate planning attorney, whether it be protecting your life insurance policy for your family, saving your property from probate fees, or minimizing your taxes; but neglecting to prepare now means it may be too late when the time comes.

Yes, as estate planning attorneys our specialty is going to be helping you prepare for your inevitable death (which will take place sometime far in the future, of course) but one thing we know for sure is that the best way to prepare for the future is by taking action in the present. Family, finances, health and education—all of these are within the realm of the “death lawyer’s” expertise, and all of these need your attention today. Let us help you with the things that are important to you and your family right now.

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If you are a senior 70 ½ or older who owns an IRA we have good news for you. Last year Congress approved legislation that waives the minimum withdrawal requirement for seniors in 2009.

This leaves seniors with more options than usual regarding their IRAs. You can still choose to take the withdrawal, of course; but deferring the withdrawal has the double benefit of allowing your investment to continue to grow within your IRA and lowering your taxable income for 2009.

If you were unaware of this legislation and you’ve already taken your withdrawal for 2009 you’re still in luck—the IRS is allowing seniors who have already taken the withdrawal to change their minds and roll their money back into a retirement account.

Of course, all of this good news doesn’t come without restrictions and exceptions, the first of which is that the deadline for the rollover is November 30^th, or 60 days after you receive your withdrawal, whichever is later. Sandra Block explains all of the rules and restrictions—and goes into further detail regarding the benefits to seniors—in her article in USA Today.

The bottom line is that seniors with IRAs have more options this year than usual. You’ll want to explore those options with a trusted advisor and take advantage in whatever way you can.

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Most people die in a hospital; sometimes after a long and slow decline, sometimes after a quick and unexpected tragedy. If you are an executor of the deceased’s estate this is significant because it means that there are usually final medical bills to be paid. What most executors do not know is that these final medical bills are not necessarily just like all the other final expenses, especially when it comes to filing a final tax return for the estate; this article from The Wall Street Journal explains why.

“…When a person incurs medical expenses and dies before they are paid, the executor of the decedent’s estate can elect to treat those medical expenses as if they were paid when incurred – as long as the estate pays the expenses within one year after the date of death. In other words, this election allows those expenses to be deducted on the decedent’s final Form 1040, even though they were not paid by the date of death.”

Many executors may not think of this because medical expenses can only be deducted if they exceed a certain percentage of the deceased’s adjusted gross income (7.5% to be exact); but health care being what it is, final medical expenses can quite often reach this point.

This sounds easy, but be careful if the deceased’s estate exceeds the $3.5 million estate tax exemption—you may want to look into other options. The Wall Street Journal suggests that in this case it might be beneficial to “forgo the election and count the unpaid medical expenses as liabilities on the estate tax return.”

As the executor of an estate you may have more options than you are aware of when it comes to taxes, probate, and achieving the best results for the beneficiaries. If you are unsure, contact a professional who can help advise you on all angles of the trustee or probate process.

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