It used to be that trusts were for the wealthy.  Those who had inherited money in trust were often labeled “trust fund babies,” and these were the people who had everything paid for and worried about nothing.  This is no longer the case.  Trusts are used by the middle class more and more, as a tool for avoiding the time and expense involved in the probate process, and in some cases, unnecessary estate taxes as well.  What this means is that just about anybody can now be a “trust fund baby”; your neighbor, your best friend… maybe even YOU!

If you know that your parents (or someone else) have made you the beneficiary of a trust, you might want to take some time to learn exactly what that means.  Although being a “trust fund baby” sounds nice, it’s not completely without responsibilities.  For example, did you know that any steady stream of income received from a trust must be reported as as taxable income?  And if you happen to be the trustee as well as the beneficiary there are even more rules and regulations you must remember to follow.

It all may sound confusing, but it’s not as difficult as you think, as long as you know what to expect.  If you find out that you are the trustee or beneficiary of a trust, the first thing you’ll want to do is to make an appointment with your attorney to answer any questions that will inevitably crop up.  If you don’t have a family attorney, you can contact the attorney who drafted the trust in question.  You may end up getting all of your questions answered in one easy appointment, or you may prefer to meet regularly to ensure that things stay on task.  Either way, it never hurts to have a knowledgeable professional in your corner, even when you’re lucky enough to be a trust fund baby.

In our blog we often address how estate planning can help you provide for your children or protect your elderly parents or grandparents, but today let’s talk about another member of the family—Today we would like to address how estate planning can help you take care of your pets.

According to this article by Angie Campbell, two-thirds of American households have pets, but approximately 70% of adult Americans do not have a will or other kind of estate planning.  This means that if something happens to you, your pets (arguably the most helpless members of your family) are left out in the cold—literally.

Providing for your pets doesn’t have to be a difficult or expensive undertaking.  The first thing, of course, is to find friends or family willing to serve as loving caretakers of your pets after you are gone. Create a letter of intent listing important information such as the age of your pet, medical history if any, and veterinary contact information.  You can make your letter as formal or informal as you like, including as many details about your pet as you think are necessary or helpful. 

Taking on extra mouths to feed can sometimes be a financial strain on a household. If you want to go one step further and provide financially for your pets or their caretakers, ask your attorney about creating a pet trust.  Making your pets (or their caretakers) a beneficiary of your estate doesn’t have to be a Leona Helmsley size endeavor unless you really want it to be.  With the right help, a pet trust can be small and simple, and an ideal way to say a most important thank you to your beloved canine or feline companions.

New Year’s Eve has come again, and it’s time for New Year’s Resolutions. A new year means a fresh start; it is an opportunity to reassess—your life, your work, and your self—and separate the wheat from the chaff; an opportunity to leave the unhelpful things behind with 2008 and bring in new and better habits and ideas in 2009.

Interestingly, with so many people and over so many years, many of the New Year’s Resolutions being made each New Year’s Eve are the same. About.com has compiled a list of the 10 most common New Year’s Resolutions, and many of them sound awfully familiar: Spend time with family, get fit, get out of debt… But what this list really means is that through the years and through cultures, what is important to us remains the same: Family, health, and security.

What are your resolutions for 2009? Are they on this list? And do you have a plan to go about achieving these new goals? We would love to know what our readers and clients have on their minds for the upcoming year.

Whatever your plans for the New Year, whether you have resolutions or not, our firm wishes you the very best in all your endeavors in 2009, may it be a year of health, joy and prosperity.

“In the world nothing can be said to be certain except death and taxes.” –Ben Franklin

It’s that time of year again. With only two days left of 2008 it’s time to turn our thoughts to doing our taxes once more; and unless you’re an accountant, there’s probably a certain amount of grumbling and procrastination involved in this activity. But with a little bit of organization, preparing your taxes doesn’t have to be a painful or grueling activity. Wells Fargo has a wonderful, comprehensive online Tax Preparation Checklist that will help immensely before you sit down with Turbo Tax or meet with your accountant.

One of the things on this list is your 1098 form, which lists your mortgage interest paid. As long as you’re thinking about your mortgage, this is a good time to confirm that your home is held in the name of your trust (if you have one). Even if you are certain you transferred your home into the name of your trust when you first bought it (or when you first created the trust) it is not unusual for a refinancing to change that, and is worth a quick confirmation.

As an estate planning firm, we would also like to remind you that April 15 is not just a deadline for your own personal taxes. If you’ve had a death in the family in the past year, various tax returns may also need to be filed for the decedent. If you are or were the executor of an estate in 2008 and have questions about filing tax returns, we can help you. Please don’t hesitate to call our office and let us take some of the fear out of the April 15 deadline.

The holidays mean different things for all of us; time with family, a celebration of religious values, or an opportunity to show appreciation for loved ones with gifts… but for the elderly it can be a time of loneliness and depression. Those of us with busy and frantic holiday schedules may find it hard to imagine the month of December as a time of solitude—and perhaps some of us feel we would relish solitude at this time—but imagine for a moment that all the reasons for your frantic pace and numerous errands were suddenly removed. The silence that descends is not so comforting when put in that context.

We know how much our clients love their elderly parents and grandparents, and want to ensure that they are taken care of; so we would like to take this opportunity during the busy holiday season to remind you to make some quiet time in your schedule to visit those parents and grandparents. If you don’t visit often, and aren’t sure what to do during a visit, eHow has some good tips for making the most of your time spent together. On the other hand, if you know you won’t be able to go visit grandma or grandpa in the nursing home, why not include them in the family celebration at home? The Comfort Keeper’s blog gives some good suggestions to draw the older generation into the busy preparation and festivities.

And remember, your holiday visit to grandma or grandpa can have more significance than just to bring holiday cheer. The holidays are a good time to check on the health status and living situation of your loved ones, to ascertain if they may need more help around the house, or even in-home care. Caring.com provides a list of things to look for to help you determine this. Include your elderly relatives in your festivities and you’ll find that doesn’t only benefit them; you may come to appreciate the company and wisdom they have to share as well.

Our office hopes the holiday season is a time of warmth, charity and joy for you and your entire family. Happy Holidays!

It used to be that people stayed at one company—one job—for their whole lives. Employers were benevolent, and almost part of the family; took care of families, once upon a time, offering health care coverage, life insurance, retirement packages… all this and an annual company picnic to boot!

As we all know, the world is a different place now. Very few people stay at one company longer than a decade, and not even that long if you’re under the age of 30. There is, however, one exception to this… if you’re self-employed.

As an estate planning firm, we meet with a good number of self-employed clients and small-business owners, and one of the most important things we can convey to these clients is how very, very important it is to have an effective estate plan. As S. du Plessis states in her article Estate Planning for the Self Employed: A Helpful Guide, “I am so responsible in other areas of my life, I feel compelled to be responsible about my death too. Plus, I hate to fail, and those who fail to plan. . . fail. So in fairness to my husband and children and because I own a business (which complicates my estate), it’s time to come up with an estate plan.”

Du Plessis is absolutely correct that failure to plan—especially for small business owners—can have disastrous consequences for both their families and their businesses. When you are so responsible in all other areas of your life, why let the ball drop in this one area? Especially when it’s your family who will end up suffering?

Small business owners spend so much of their time taking care of other people, we think it’s time that someone helped take care of them. Our office can help preserve the legacy you’ve worked so hard to build—for both your family and your business.

There are only eleven days left in 2008. If you had plans for this year—things you were absolutely going to get done before 2009—you are quickly running out of time to do them. This doesn’t only include your 2008 picks from the 1000 Places to See Before You Die, this includes smaller things, more prosaic things, like tax write-offs or charitable deductions.

The New Year is generally a time for people to look to the year ahead and make their plan of action, but before you do that, you must review the year that is coming to a close. What were your goals for this year? Did you achieve any of them—or all of them? Especially important is to review all of your expenditures, both business and personal, to ensure that you’ve taken advantage of any opportunities for tax relief. Once you know you’ve put yourself in the very best position possible to close out 2008, then it is never too soon to start planning for 2009.

And the nice part is that should you choose to create or update your estate plan before the end of the year, and if your plan helps you protect income-producing property, you may be able to deduct a portion of the cost of planning your estate from your 2008 taxable income.

Don’t let 2008 slip away!

With the holidays approaching and the economy in crisis, we’re all trying to cut back financially, especially on what we think of as non-essential items. And one of the areas in which people are cutting back, according to this article by Leslie Wimmer, is the area of estate planning. Some people are cutting back by holding off on updates to their existing plans, some by waiting to plan at all, and some people are cutting back by creating their own wills and other legal documents using online legal software.

The thing you just can’t get around when you use an online service is that, as Wimmer quotes in her article, “There’s nobody to answer specific questions, and that’s what a lawyer does, you might have all kinds of issues that, to you, don’t seem notable but to an attorney who practices in this area they might require special attention in your estate plan.”

The problem with using online software is that a website doesn’t explain how estate laws vary in different states, neither can it address your specific needs—especially if you aren’t even aware that you may have specific needs! And worst of all, in some states these software-created documents may not even be legal due to laws stating that only a licensed attorney can create a will for another person.

Choose your estate planning representation wisely, after all, these are the documents designed to protect your family when you can no longer be there to protect them yourself.

Do you know who will be making your end-of-life decisions when you are incapacitated? Joe John Sorce found out the hard way that failure to execute a healthcare directive or living will doesn’t mean you don’t have a healthcare agent, instead it means that your agent will be chosen by the laws of your state of residence. In Mary Clark’s case, the laws of the state of Nevada put her healthcare decisions into the hands of her long estranged daughter rather than her companion of 18 years.

Executing a healthcare directive and nominating a healthcare agent is not just about choosing the right person to make the big life-and-death decisions for you, it’s also about taking care of the loved ones you leave behind. Perhaps Mary Clark would have wanted to be removed from life-support, as her estranged daughter chose to have done, but she may also have wanted her beloved companion to be involved in the decision, and have a chance to say a peaceful goodbye.

Most people have strong wishes about life-support and end-of-life care, but rarely do they want those wishes carried out at the expense of their loved ones. Creating a healthcare directive which outlines those wishes is important not only for your own peace of mind, but also to ensure the peace of mind of your loved ones, those who will be left to mourn your absence after you’re gone.

The author of a recent newsletter related a story about a friend of his whose father passed away leaving his mother (age 66) with $400,000 in a brokerage account, a modest pension that would continue to pay, a residence with no debt and a vacation condo in FL with debt (that is rented). 

At a meeting with the Mother’s money manager, they were advised that she needed a “properly balanced stock and mutual fund portfolio,” which is not uncommon advice.  However, to put a 66 year old lady with all of her remaining liquid assets into the stock market with no protection, especially with its recent decline, is a bad idea.  The author educated his friend on Fixed Indexed Annuities (FIAs) and told him to review the following PowerPoint presentation and ask the money manger if he knew anything about them. 

The following PowerPoint not only discusses FIA but also the 7% guaranteed return FIA (accumulation value) with a lifetime income benefit. 

http://www.thewpi.org/Flash.presentations/GIB7/Presentation_Files/index.html

We recommend you review the information provided in this link and ask your Money Manager/Financial Planner about an FIA.