I had a friend who died and he

On earth so loved and trusted me

That ere he quit this worldly shore

He made me his executor.

He asked me through my natural life

To guard the interests of his wife.

To see that everything was done

Both for his daughter and his son.

I have his money to invest

And though I try my level best

To do that wisely, I’m advised,

My Judgement oft is criticized.

His widow, once so calm and meek,

Comes hot with rage three times a week

And rails at me because I must

To keep my oath, appear unjust.

His children hate the sight of me.

Although their friend I’ve tried to be.

And every relative declares,

I interfere with his affairs.

Now when I die I’ll never ask

A friend to carry such a task

I’ll spare him all such anguish sore

And leave a hired Executor.

- Anonymous

One of the common misconceptions about estate planning is that it’s only for “wealthy” people.  Nothing could be further from the truth!

If you have property (jewelry, a house,  a car, a TV, tools, etc.) you have an estate. 

I’ve found in my years of practice that the thing that causes the most drama after a loved-one passes away is not who gets Grandma’s IRA….it’s who gets the gravy dish, the rocking chair, the photo albums, the china.

The little stuff matters A LOT!

I’ve seen families torn apart over holiday ornaments and childhood dolls.  Don’t let this happen to you!  Don’t let your memory be tarnished but such petty things.

Parents always think that their kids will just “get along” and divide things fairly.  Sadly, that’s oftentimes not the case.  

Grief does crazy things to people, and I’ve heard more stories from my clients about how they felt they never really knew their siblings until their parent passed away.    

Other problems arise where you may think that someone knows that they are supposed to get a certain piece of jewelry. But that may not be the case…

Planning in advance will ensure that your final wishes are kept. 

Nothing makes me, as a probate attorney, happier than to assist in probating / adminstering an estate where a client’s wishes were explicit.  I’ve witnessed the effect that this has on the grieving family members…it’s one less thing that they have to worry about. 

The administration is swift, and they can spend time focusing on the lifetime of good memories that their loved one left behind.  

Contact an estate planning attorney today to get a plan in place to preserve your legacy.

Unfortunately, there are many attorneys who treat estate plans like an order form.

Check here, for children, Check here for single, check there for divorced. 

Looking at estate planning in this manner is very dangerous, because you will likely overlook some major areas where you need planning.

Estate planning is not just about taxes or picking a personal representative or an attorney-in-fact. 

A will or trust is a final expression of your wishes.  Many family memories have been tarnished due to bitter family battles that ensued upon the death of a family member, where a will did not address internal family dynamics. 

A will affects many people’s lives, so the process and the documents drafted should be well-thought out and given the care and attention they deserve.

You, for the most part, probably don’t know what sorts of issues come up after death.  Any attorney who has frequently handled any probate matters, especially contentious ones, like I have, know what sorts of problems pop up if left unaddressed in the estate plan.  These are things like:

-          An 18 year old child who inherits $500,000 and spends it within a couple of months;

 -          The spouse who remarries and then leaves all of his/her first spouse’s assets to her new spouse to the exclusion of his children from a previous marriage.

 -          The financially irresponsible former spouse ends up managing the minor children’s assets.

 -          The distrusted son-in-law who inherits and controls the assets for the grandchildren.

-          The alcoholic or drug-addicted grandchild who inherits $50,000.

 This is just a tiny fraction of the issues that can arise, if you don’t select the property estate planning attorney to draft your will or trust. 

At your initial consultation, any good estate planner will attempt to uncover family dynamics, clarify your goals and, of course, examine your financial documents and review any previous estate planning documents.   If they don’t–  then you should be cautious, as there is likely something that will be missed.

Many times people are solely focused on cost when it comes to estate planning documents.  As with anything, you get what you pay for.  My fees for estate planning will likely be more than the average general practicioner, but you can rest assured that you will be getting the benefit of an experienced estate planning professional, as opposed to a general practicioner, who only dabbles in wills ever once in a while.

Another big difference is that unlike many general practicioners, the final signing of your documents is more than just “sign on the line”- I will walk you through each of your documents to ensure that you understand what’s actually IN your will.  It is extremely important that you understand what is in your will- and sadly, many general practicioners don’t even understand the meaning of some of the provisions in their own wills! 

With that said, if you are ready to schedule your estate planning consultation, contact Mindy with Angstman Johnson at 208-384-8588 to schedule your appointment with attorney Natasha Hazlett.

In our volatile financial world, it seems like there are no safe havens. The stock market continues to fluctuate. Plummeting real estate values in certain markets have yet to recover. Add to this, the difficulty with getting loans in a credit-strapped lending environment. So, where’s the worried consumer to go for financial stability?  Consider permanent, cash value whole life insurance.

Flexibility and Guarantees

If you know anything about life insurance, it’s probably the fact that it pays a guaranteed death benefit to your heirs that is generally free of federal income taxes.1 And, that’s an incredibly important function and most likely why you are considering life insurance. But cash value whole life insurance also offers substantial benefits available to you while you’re living.

One living benefit of whole life is the easy access it provides to your cash value, generally federal income-tax-free, through policy loans. Need money to pay for an emergency home repair, reduce a credit card debt or cover a shortfall in college tuition? If you want to borrow, you can. Unlike a conventional bank loan, there’s no lengthy approval process, and you can’t be turned down. There are also no credit checks or penalties for repaying money too quickly. In fact, there’s no payment schedule on the loan at all.2  

 The longer you own a whole life insurance policy, the more cash value it will accumulate. As long as you

pay your premiums — which are guaranteed never to increase — you’ll have permanent protection and your cash value will grow on a tax-deferred basis. In addition, your policy is eligible for non-guaranteed, income-tax-free dividends which can help grow your cash value more quickly.

 Upgrading Term to Permanent Cash Value Life            

If you have term life insurance, which only pays a death benefit for a fixed period of time, it is easy to convert your policy to cash value whole life. Your New York Life insurance agent can show you how. Then you, too, can take advantage of the many benefits and stability that whole life insurance can bring to you and your loved ones.

This educational third-party article is being provided as a courtesy by Kimber Ericksen, New York Life Insurance Company.  For additional information on the information or topic(s) discussed, please contact Kimber Ericksen at 208-338-6377, 1109 W Myrtle, Boise, ID 83702, klericksen@ft.newyorklife.com.

 1All guarantees are based on the claims paying ability of the issuer.

2If you do not repay a loan, the cash value and death benefit of your policy will be reduced. Loans can cause a policy to lapse and    may have tax consequences.

Great song!  “My Will” to the tune of “My Girl”:

Available on 2nd Helping of Chicken Suit for the Lawyer’s Soul

With the population aging, and Alzheimer’s and dementia occurring more and more frequently, it is crucial that you put a plan in place in the event that you become incapacitated.  Once you are unable to make financial and health care decisions for yourself, your family has two options:

1.  Conservatorship/ Guardianship

A Conservatorship is a method in which a competent suitable person is appointed by a Court to manage the financial and affairs of an incapacitated party. A Guardianship is a method in which a competent suitable person is appointed by a Court to make the necessary “care” decisions for an incapacitated party. A spouse, adult child or sibling can be appointed conservator/guardian.

The court will make the appointment of the conservator/guardian and oversees the administration of the conservatorship “estate” (i.e, the incapacitated party’s assets).

2.  Durable Powers of Attorney

A competent adult typically may execute a Durable General Power of Attorney and a Durable Power of Attorney for Health Care (also known as an Advanced Directive) in order to avoid the necessity of a Conservatorship/Guardianship.

The Durable General Power of Attorney is used to appoint an individual (also known as an Attorney-in-Fact) to manage your financial decisions in the event that you are incapacitated.  The Durable Power of Attorney for Health Care is used to appoint an individual to make health care decisions for you in the event that you are incapacitated.

Because a Court is not involved, Durable Powers of Attorney are the most cost-effective way of planning for your incapacity.   If you are over 18 years of age and do not have Durable Powers of Attorney, you should consider talking with an estate planning attorney.  This can save your family a lot of time and expense at an already  difficult time.

To schedule an appointment with Natasha Hazlett at Angstman Johnson to discuss Powers of Attorney or any estate planning or probate matters, call (208) 384-8588.

Below is an article from the New York Times on the rise of Dementia in America.

May 4, 2010

More With Dementia Wander From Home

By KIRK JOHNSON

ASHBURN, Va. — For generations, the prototypical search-and-rescue case in America was Timmy in the well, with Lassie barking insistently to summon help. Lost children and adolescents — from the woods to the mall — generally outnumbered all others.

But last year for the first time, another type of search crossed into first place here in Virginia, marking a profound demographic shift that public safety officials say will increasingly define the future as the nation ages: wandering, confused dementia patients like Freda Machett.

Ms. Machett, 60, suffers from a form of dementia that attacks the brain like Alzheimer’s disease and imposes on many of its victims a restless urge to head out the door. Their journeys, shrouded in a fog of confusion and fragmented memory, are often dangerous and not infrequently fatal. About 6 in 10 dementia victims will wander at least once, health care statistics show, and the numbers are growing worldwide, fueled primarily by Alzheimer’s disease, which has no cure and affects about half of all people over 85.

“It started with five words — ‘I want to go home’ — even though this is her home,” said Ms. Machett’s husband, John, a retired engineer who now cares for his wife full time near Richmond. She has gone off dozens of times in the four years since receiving her diagnosis, three times requiring a police search. “It’s a cruel disease,” he said.

Rising numbers of searches are driving a need to retrain emergency workers, police officers and volunteers around the country who say they throw out just about every generally accepted idea when hunting for people who are, in many ways, lost from the inside out.

“You have to stop thinking logically, because the people you’re looking for are no longer capable of logic,” said Robert B. Schaefer, a retired F.B.I. agent who cared for his wife, Sarah, for 15 years at home through her journey into Alzheimer’s. He now leads two-day training sessions for the Virginia Department of Criminal Justice Services.

Mr. Schaefer told his class of mostly police officers here in northern Virginia that unlike the ordinary lost child or hiker, a dementia wanderer will sometimes take evasive action to avoid detection, especially if the disease has made them paranoid about authority figures.

“We’ve found them in attics and false ceilings, in locked closets — you name it,” said Gene Saunders, a retired police officer from Chesapeake, who started a nonprofit company called Project Lifesaver 11 years ago to help find wanderers or people with other cognitive impairments. The group’s technology, fitting patients with wristbands that can be tracked by police officers with radio devices, is in use in 45 states, but its widest use is here in Virginia.

Wanderers often follow fence or power lines, and tend to be drawn toward water, Virginia state rescue officials said, bound on a mission that only they — and sometimes perhaps not even they — can imagine. (A search trick: try to figure what door they exited from, then concentrate first in that direction. But don’t bother calling out the person’s name, which he or she has often forgotten.)

Searching for them often also means learning a patient’s life story as well, including what sort of work they did, where they went to school and whether they fought in war. Because Alzheimer’s disease, the leading cause of dementia, works backward, destroying the most recent memories first, wanderers are often traveling in time as well as space.

Some World War II veterans, for example, have gone huge distances believing they needed to report to base or the front lines. A man in Virginia was lost for days until searchers, in interviews with his family, learned he had long ago been a dairy farmer, rescue officials said. It turned out he had headed for a cow pasture not far from his home, believing it was time for the morning milking.

The all-too-human stories of exhausted family members caring for Alzheimer’s sufferers must be taken in account as well, searchers say. The son or daughter or spouse who nodded off or was briefly inattentive, allowing a loved one to slip out, might feel guilty, and so understate, sometimes by many hours, how long the person has been gone — a crucial variable because time on the run in turn hugely increases the potential size of the search area.

Meanwhile, cold cases are piling up.

In Arizona, James Langston, the state’s search and rescue coordinator at the Division of Emergency Management, is haunted by the stories of people who simply stride out into the desert in high summer and vanish. A few years ago, a 20,000-square-mile area was searched after an Alzheimer’s patient’s car was found on a dirt road at the desert’s edge, he said. No trace of the person was ever found.

Advanced age, meanwhile, can compound health risks of exposure.

“We’ve had them die in as little as seven hours because they just keep going and don’t recognize they’re getting dehydrated,” Mr. Langston said.

Many states do not collect or fully categorize local data on search-and-rescue cases, so it is impossible to gauge the full impact of dementia wandering on law enforcement. But in Oregon, for example, the number of searches for lost male Alzheimer’s patients nearly doubled just last year, to 26 from 14 in 2008, and has more than tripled since 2006, according to emergency management officials.

For many people involved in those searches — or in training rescuers for the demographic tsunami to come — the turbulent emotions and grief that swirl around Alzheimer’s disease and dementia are simply part of the terrain. In the middle of his training courses, Mr. Schaefer sometimes pauses, choked up by memories of his wife, who received her Alzheimer’s diagnosis at age 50. She died 17 years later, having forgotten how to swallow, he said, and then finally, even how to breathe.

On a recent afternoon at the Northern Virginia Criminal Justice Training Academy, Mr. Schaefer told his class about the day he asked her if she knew who he was. He had taken steps by then to keep Ms. Schaefer from wandering away, disguising their home’s doors, for one thing, covering them with posters that looked like bookshelves.

But now he could see the panic and horror in her eyes, he said, that she could not find the right answer to his question. Could she recognize her own husband?

“No,” she answered. “But you take very good care of me.”

For John McClelland, 57, a retired volunteer fire and rescue officer who now leads training courses in Colorado, the story is even more personal: He has a diagnosis of Alzheimer’s himself. The disease killed his grandfather and three other people on that side of the family. He said he has already lost the ability to remember the faces of new acquaintances, even a day after meeting them.

Knowing what is coming for him as the fatal disease takes its course has made his training work all the more important and urgent, he said.

“The mission I’m on is that I’m willing to talk about Alzheimer’s as long as I’m articulate,” he said. “The hell of the disease is that I know what’s coming.”

In addition to death benefit protection, permanent life insurance accumulates tax-deferred cash value which can be accessed for college, to buy a home and help build your retirement nest egg.^2,3

As you watch the value of your property, home or retirement investment savings struggle in the current economy, you may be wondering about ways to protect your family in the event of an unforeseen event. One option you may not have considered is the purchase of a whole life insurance policy.

It may not be something you’d automatically turn to, but whole life insurance offers guaranteed death benefit protection in addition to multiple tax advantages and flexibility. Owning a whole life policy can be a great financial alternative, not only for the protection of your loved ones but also a financial option for your living needs.

Invest in Your Loved Ones

The primary promise of life insurance, of course, is that your loved ones will be protected in the event of your death. And with a whole life policy, your death benefit is guaranteed,¹ whether the payout comes in a matter of years or decades. This is an investment that provides protection in the long-term interests of those you care for most, as well as your own peace of mind.

Invest in Your Future

But, what you may not know is that a whole life insurance policy is much more than protection against the unknown. It also provides you with tax-deferred cash value that accumulates over time. In the event of sudden unforeseen or happily anticipated expenses, it provides a readily available source of funds. And in the long run, it can also supplement your retirement income.^2,3

Any kind of financial strategy these days seems fraught with uncertainty, so it’s important to consider carefully what vehicles work best for your own circumstances.

This educational third-party article is being provided as a courtesy by Kimber Ericksen, Agent, New York Life Insurance Company. To learn more about the information or topics discussed, please contact Kimber Ericksen at 1109 W Myrtle, Ste 300, Boise, ID 83702 klericksen@ft.newyorklife.com or 208-338-6377.

¹Guarantees backed by the claim-paying ability of the issuer.

²If your life insurance policy is paid up and your need for a death benefit decreases.

³Loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest; withdrawals reduce the available death benefit.

Neither New York Life Insurance Company, nor its agents, provides tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions.

From the April2010 edition of The Timesheet from The Billable Hour:

The NBKTL Story
Many inspiring, breakthrough ideas have exciting and illustrious beginnings. The apple falling on Newton’s head. Hewlett and Packard tinkering in the garage. Reese having his chocolate bar “mishap” with the peanut butter.

National Be Kind to Lawyers Day shares this great tradition. Steve Hughes, a mild-mannered non-lawyer from St. Louis had been working with attorneys for several years in the presentation skills arena. He liked his job and the clients who hired him.

However, whenever Steve mentioned to friends and neighbors that he worked with lawyers he was met with crinkled-up faces, snide remarks and sarcastic sighs. They would say things like, “Lawyers? I bet that’s a treat.” Or, “Lawyers? You poor thing.” (Can’t you just feel the animosity?) Suddenly he found himself playing defense counsel for an entire profession.

Then one day as Steve was putting away the decorations from National Bubble Wrap Day (late January) his thoughts drifted to National Ice Cream Day (late July) and then it struck him. Why not a special day for lawyers? Lawyers are just as good as bubble wrap and ice cream; in fact, they’re better. Thus, the idea for National Be Kind to Lawyers Day was hatched.

After extensive planning, detailed research and countless reviews by a team of legal experts, National Be Kind to Lawyers Day was established as an annual holiday celebrated on the second Tuesday in April. This date was chosen because it is strategically sandwiched between April Fool’s Day and Tax Day April 15th.

So now lawyers of every stripe can be honored and treated like regular people for at least one 24-hour period every April.

How to Participate
The best part of National Be Kind to Lawyers Day is that you’re the judge of exactly how much you participate. Here is a brief list of idea starters to get your legal kindness flowing.

• Take your favorite lawyer out to breakfast or lunch (make sure it’s not billable!)
• Send your lawyer a “just because” greeting card or a bouquet of flowers
• Switch your ring tone to the “dah-dah” sound from NBC’s “Law & Order”
• Abstain from telling lawyer jokes for 24 hours
• If you can’t abstain, tell your funniest lawyer joke but switch out the lawyer with your profession (we bet it’s still funny)
• If you accidentally say something wrong or inappropriate on this day, just follow it up with the words, “Strike that from the record.” Then continue talking as if nothing happened.
• Salute the flag as you walk or drive by your local courthouse
• Watch your favorite legal drama and pretend you’re the one delivering the powerful closing argument. Some suggested films: “The Verdict,” “To Kill A Mockingbird,” “A Few Good Men” and “And Justice For All”
• Do some simple repairs around the house with a gavel instead of your trusty hammer.
• Try to slip words like “I object!” or “You’re out of order!” into your everyday conversations
• Try to write up your own Articles of Organization for an LLC or draft your own will. See, it’s harder than it looks.
• Take notes at a meeting on a legal pad. Don’t you just feel smarter looking at the glorious yellow hue of that 8-1/2″ x 14″ pad?

Go ahead, be creative. What are some ways you can be kind to lawyers today? Be sure to let us know so that we can add your ideas to our list.



I know… I know…your neighbor’s sister’s friend is a lawyer and she SWEARS that the best estate plan includes a Living Trust. In my experience, Living Trusts rarely end up working out as promised. Here are some common myths about Living Trusts:

Myth #1:  You avoid Probate with a Living Trust and probate is EXPENSIVE and COSTLY! 

In order to avoid Probate using a Living Trust, you must ensure that all assets are titled in the name of the Living Trust.  If the decedent forgets to properly title just one asset, you’ll most likely have to go to Probate.  However, going to probate isn’t all the bad!  There are may states out there where probate is extremely time consuming and costly, but Idaho isn’t one of those states, in my opinion. You may hear stories about probates taking years to complete, but chances are- you don’t know all of the facts.  It could be a dispute among the heirs, or the IRS that is causing the hold-up.  A straight-forward probate doesn’t take long at all.  Many take less than 6 months.  Another thing most proponents of living trusts won’t tell you is that administration of the trust could take just as long as a probate.  

Myth #2:  Assets in a Living Trust Don’t Count for Medicaid Eligibility.

In reality, any assets that can be used for your support will be counted towards your Medicaid eligibility.  A living trust is “revocable” which means that you have the right to withdraw assets at any time, for any purpose, including your own support.  For this reason, assets in a Living Trust will be counted towards your Medicaid eligibility.  Additionally, the assets in a revocable living trust are also subject to the Medicaid recoupment lien once the surviving spouse dies.  Moreover, if your home is titled in the name of the trustee of a living trust, it loses its exempt status for Medicaid purposes.  Only assets in a certain irrevocable trusts may be excluded in determining Medicaid eligibility, 60 months after the assets are transferred to the trust. 

Myth #3:  Creditors can’t reach the assets in your Living Trust:

During your lifetime, the assets in your living trust are subject to creditor’s claims.  Upon your death, the assets in your living trust are subject to the claims of the creditors of your estate.

Myth #4:  By having a Living Trust, I can avoid a Will Contest:

Although a “Trust” and a “Will” are completely different legal instruments, it is true that a Living Trust cannot be the subject of a “Will Contest.”  However, the typical grounds for a will contest:  Undue Influence, Fraud, and Lack of Capacity, apply to Living Trusts as well as Wills.  So, beneficiaries or people who are left out of a living trusts, can attack a Living Trust.

Myth #5:  If I have a Living Trust, it will Save my Estate from Taxation:

A revocable living trust will save no more estate taxes than a properly drafted will with testamentary trust tax-planning provisions.

Myth #6: Attorneys charge from 3% to 10% More to Probate Your Estate:

If your family members hire an attorney to assist with probate, your family will agree upon the attorney’s fee.  It should typically be based on an hourly charge, but in some cases, I will agree to a flat fee regardless of the hours it takes me to complete.  Additionally, I have been brought in on several cases to help a Trustee administer a Living Trust, where the Trustee is not a corporate fiduciary, and has no experience in Trust administration. 

Myth #7:  Everyone Should Have A Living Trust:

In reality, the cost of creating and administering living trusts outweighs the benefits for many individuals.  For some individuals who lack the capacity to manage their assets, or are too ill to manage their assets, a living trust is a useful method of asset management.  Additionally, for those who own real property outside of Idaho, a living trust can be useful for avoiding the other’s state’s probate process.  But, in my experience, the majority of my clients are equally as prepared with a complete estate planning package including: a Will, Durable General Power of Attorney, Durable Power of Attorney for Health Care, and a Living Will.  The price for this simple estate planning package is approximately one-third of the cost of a Living Trust.

To learn more about Boise Estate Planning Attorney Natasha Hazlett visit www.angstman.com.  To schedule an appointment today, call 208-384-8588

 While it may be a bit time-consuming, being prepared when you walk into a meeting with your estate planning attorney will ensure a quicker turnaround time for your estate planning documents.  Here are some of the things that I think are helpful in meeting with your attorney: 

1. Think of a couple of people who you think would be capable of handling your estate (these people will be named as Personal Representative/Executor in your Will).  Make sure to talk with them to see if they would be willing to take on this role.
2. Think of a couple of people who you think would be capable of handling your financial affairs and/or health care decisions if you are unable to make the decisions yourself (these people will be named under your Power of Attorney). You will also want to talk with them to see fi they are willing to serve in this role if and when the time comes.
3. Jot down a list of the people/charities that you want to name as a beneficiary of your estate.
4. Make a list of all of your assets. Don’t forget to include all bank accounts, Certificates of Deposit, real estate, stocks, 401(k)s, Life Insurance Policies, etc.
5. Make a list of all of your liabilities such as your mortgage, car loans, debts owed to individuals, loans on a 401(k), etc.
6. Make a  list of the names and contact information for your accountant, financial advisor, etc. I generally prefer to have this information in my file because after their death, if their executor/personal representative is unfamiliar with the decedent’s assets, these individuals can provide the necessary information and can save the personal representative a lot of time.
7. You will also need to  list of the names, addresses and birthdates of your children.
8. If you have a minor child, you will want to think of a couple of people whom you trust to take care of your children in the event that you die before they are 18 years old.  Again, make sure to speak with these individuals beforehand to see if they would be willing to serve as guardian.  What you don’t want is to appoint someone to take care of your children who ultimately decides that they dont feel comfortable serving as guardian. 

Finally, make a list of any questions you may have for your attorney. Together, these things will greatly assist your estate planning lawyer and will help make your initial consultation extremely productive.

I just came across a very disturbing article in SmartMoney Magazine last May that I wanted to share with you. I was very hesitant to spread this poorly researched article, but it raises so many misconceptions that I believe it will serve as a great starting point for me to address several common misconceptions about Estate Planning.

Misconception #1: If Your Estate is Under $3.5 Million, You Won’t Owe Any Estate Tax, So You Don’t Need An Estate Planning.

The Truth: It infuriates me how the author of this ridiculous article quotes some “spokesman” from the IRS, and states:

The overwhelming majority of estates don’t trigger the federal estate tax,” says a spokesperson for the Internal Revenue Service. In fact, as of 2009 you must be worth at least $3.5 million when you die to pay tax at all. If you fall below that—and don’t have any complicated estate issues—you probably don’t need a lawyer to draw up a will for you. Instead, you can use software like Quicken’s WillMaker Plus (around $45 at Amazon. com) and dispense with the whole task in a single afternoon.

The reality of the situation is that we are in a very unsual time right now. As of the time I’m writing this article (2/22/2010), anyone who dies in 2010 will owe no estate tax. However, in 2011, the Estate Tax comes back with an exemption rate of $1 Million and the highest tax rate is over 50%! This will be quite an ugly reality check for the beneficiaries of the estate whose loved one takes SmartMoney’s advice on estate planning…

Additionally there are some issues presented with the “carryover basis” of items inherited right if someone dies in 2010. Typically, the beneficiary gets a “step up in basis” (so, if Grandpa bought land in 1930 for $5000, that is now worth $100,000- in 2009, the beneficiary would receive the “step up in basis” of $100,000. So if he sold the land for $100,000 he would owe no capital gains tax. If Grandpa died this year, unless the tax laws change, the beneficiary gets only a $5,000 basis….so if he sold the land for $100,000 he would have to pay tax on the $95,000 in capital gains. Suffice it to say, things are far more complicated than the media may have you believe, and an estate planning lawyer can assist you in ensuring that you take advantage of all available tax savings tools.

The author of the article also says, unless your estate is “complicated” you don’t need an estate planner. Let’s see what might “complicate” things:

• Minor children (under 18)
• Children from a previous marriage
• Do you want your children to receive their inheritance at the tender age of 18, or do you want to protect your children from creditors, predators, bad marriages, and themselves until they are more mature?
• Do you want to ensure that your children receive an education?
• Do any of your beneficiaries have Special Needs – or receive needs-based government assistance like Medicaid?
• Have you nominated one of your children to be the Trustee over their siblings? Have you considered how this might affect their relationship?
• Do you have a system in place to remove a Trustee who is not doing their job – without having to take them to court?
• Do you have an iron-clad system for carrying out your decisions on health care, or finance, if you are not able to speak for yourself?
• Do you live in a community property state? Have you moved from a non-community property state to a community property state like Idaho? Do you know how this move will affect the characterization of your assets as separate or community property?

These are just a few of the “complications” that an experience estate planner can assist you with, as opposed to a fill-in-the-blank estate planning program.
Misconception #2: Your Lawyer Wants to Be Your Executor:

The article says:

Who should execute your will once you’re gone? It’s a tricky question, especially for parents who don’t want to favor one child over another but who also aren’t crazy about the idea of entrusting the job to the son who just depleted his 401(k) for a new Miata.

In California, for example, where executor fees are based on an estate’s size, a $1 million estate would pay $23,000 to the executor. Many people give the job to family members, who often refuse payment. But an estate planner stepping in to do the job will understandably want to pocket the profit.

The Truth:I can’t speak for every estate planning attorney, but I personally have no desire to be the Executor of my client’s estate. I find that I’m much more valuable to my client’s family in advising and navigating their loved ones through the probate process. I believe that only in the rarest of circumstances should an attorney serve as executor (for example, there is literally no other person whom the client trusts and a corporate executor is impractical due to the fees charged).

Misconception #3: You Need a Living Trust

The Truth:This is pretty much the only thing on which I agree with the author of the article. While Living Trusts may be very favorable in states like California where probate is extremely expensive and time consuming- Idaho is not one of those states. In my experience, clients don’t end up properly funding the trust, and the estate ends up going to probate anyways. Plus, the cost of the Living Trust can be quite hefty. Especially when you consider that in many cases the estate ends up being probated anyways due to the failures of the grantor to properly fund the trust.

Misconception #4: “I make more money in insurance than on planning your estate.”

The Truth:I don’t sell insurance, and I personally don’t know of any estate planning attorneys that do- if they do sell insurance, ask them candidly about their relationship with the Company.

Misconception #5: Once You Have A Will, You’re Done!

The Truth:You need to review your will from time to time, especially in life changing circumstances:

• Birth of a Child
• Death of a Spouse, Beneficiary, Executor, etc.
• Substantial increase in assets
• Moving to another state
• Divorce
• Marriage

Additionally, a good estate planner will follow up with you as there are major changes to the tax code that may affect your estate plan. If you have not revised your will, and you have an estate that is approaching $1 Million, I would suggest that you immediately contact your estate planning attorney and schedule a consultation to discuss the current issues regarding the estate tax. I will discuss the current issues regarding the estate tax in a future article.

Misconception #6: All Estate Planners Are Created Equal

The Truth:  In reality, the best estate planning attorneys to use, in my opinion, are the ones who also frequently handle the probating of estates. The reason is that these attorneys have seen the “other side.” In other words, they know what circumstances arise after an individual’s death. As a result, they have the unique ability to help you avoid the mistakes that others have made.

A “general practicioner” may be able to draft a simple will, power of attorney or living will…but if you have unique circumstances (see Misconception #1) you may be better off going with a more experienced estate planner.

Stu Rees. All rights reserved.

Canadian Lawyer, Charles Vance Miller, played the ultimate prank upon his death.

Miller’s will left his Jamaican vacation home jointly to three men who hated each other for a period of ten years.  After that, the home was passed onto the Canadian woman who had the most children during the ten years. 

The home passed jointly to four women, each of whom had nine children during the ten years.

Check out the whole story at TruTV, Weirdest Wills.

You may remember that in 2001, The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) made sweeping changes to wealth transfer taxation. EGTRRA gradually phased out the estate and generation-skipping transfer (GST) taxes and completely eliminated both in 2010, and in 2011 the taxes came back in full-force.

If you met with an estate planner between 2001 and 2009, I’m certain that they told you that although they couldn’t predict the future, it was doubtful that Congress would allow the estate tax to be repealed in 2010. 

Well…we were wrong. 

Congress has been so focused on health care, that time ran out for them to fix the estate tax. So here we stand in 2010 with no estate tax and a carry over basis.  Plus, for those individuals who die in 2010, a host of unique issues are presented.  I’ll be addressing these issues and the concept of a carry over basis in a future post. 

Suffice it to say, we aren’t certain what congress will do (if anything) before the tax hike of 2011 is scheduled to hit. 

I’m sure you are wondering “What tax hike?”

Well, last year, estates under $3.5 million were exempt from federal estate tax.  The top tax rate in 2009 was 45%.  In 2011, if Congress does nothing, the federal exemption level will drop back down to $1 million and the top tax rate will shoot up to 55%.  That rate doesn’t even include the 5% surtax on wealth transfers ranging between $10 million and $17.18 million.   If the tax does come back at this level, it’s going to be an ugly reality for those who have estates of $1M and chose not to incorporate some minimal tax planning in their will. 

A recent article from The Hill indicates that Congress may have something in the works relatively soon on the Estate Tax.  Click here to read the article.  I can only hope that Congress does something and soon regarding the estate tax, so that we can better assist our clients with developing a plan. 

By the way, in Idaho, House Bill 492 was introduced in order to solve some of the issues caused by the repeal of the Estate Tax.  I think that this legislation will go a long way in solving some of the problems we face today due to the estate tax repeal.

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