Month: February 2010

How on earth am I going to make this blog post concise with THAT kind of a title!  Rather than write a series of posts, I thought it would be beneficial to share with you some recent occurrences and how they all seem to tie together.

A friend recently received a document from the probate court and asked me what it was all about.  It was a notice of intent to close the estate for failure to file the continued administration forms  What does that mean?  Basically, if a probate goes on for more than a year you are supposed to file a continuation statement with the probate court.  If you don’t, the clerk of the court may close it with notice to the interested persons followed by a waiting period.  Why, I wonder, had it come that far?  It turns out that there are c0-Personal Representatives and they are not talking to each other.  Because of that and their unwillingness to hire an attorney to handle the matter, nothing is getting done and nobody is getting anything from the estate.  She then shared with me that, “during her life, mom always said, ‘equal shares for everyone, a third, a third, and a third.’  Now my one sister (co-Personal Representative) wants it all and she’s not talking terms with me or my other sister (the other co-Personal Representative).”  Here is the statement that cut to the heart for me . . . “I just don’t understand.  Things were fine while she was alive – now that she passed away (over a year ago) and there’s money at stake, nobody gets along.”  Sadly, this is not the first time I’ve heard or witnessed this type of situation.

And yet, it is still difficult to get people to plan for these situations.  In passing conversations many people tell me, “that won’t happen to MY family.”  How do you know?  I’ve been very surprised by some of the families I’ve seen torn apart after one or both of the parents pass away.  In many cases it was directly a result of poor (or no) planning.

So, what does that have to do with a movie, priorities, and tax season?  Well, I recently watched the movie “The Ultimate Gift,” in which a VERY wealth grandfather plans his estate in such a way that his grandson has to perform certain tasks to find out what, if anything, he gets from the estate.  The tasks are designed to teach him a lesson and give him an intangible gift (e.g., gift of work, gift of friends, etc.).  It was a great movie, (although some of the law wasn’t quite right).

And so with those two situations as a background, I come to the topic of priorities.  You may have read my previous post about priorities here.  Planning really comes down to priorities.  Although the mother in the first example put a basic estate plan in place, she did not place priority on planning for as many possible outcomes as she could have.  Maybe she didn’t think the family would have the problems they are now having, maybe her attorney didn’t talk about those issues, maybe, maybe, maybe.  There is no way to know.  What I DO know, is that you do the things that you place priority on.  I’m not saying one priority is right over another, just that I think we all (myself included) need to think a little bit more about our priorities in the grand scheme of things.  A great example is when you have children – your priorities better change or things will not go well.  I know mine changed for the better, and a cherish every moment I get with my kids.

And now tax season is upon us.  You either love it or hate it – you either get a rebate or have to pay.  And priorities come to the forefront.  How?  Well, the most common phrase I hear when someone I know gets a tax refund is, “wow, what should I do with it?”  I know folks who have bought cars, big-screen TVs, saved some of it, paid bills, took a vacation, and numerous other things.  Those may not be bad choices, but here’s one more for you to consider – get your estate plan in order.  Whether that means putting a plan in place based on YOUR most important objectives (rather than the one the government wrote for you), or having your existing plan reviewed to make sure it still works, you should consider this as an important option for those tax rebate dollars.  What better way to use the rebate than to plan for your family’s future and their protection – to know that if something happened to you or your spouse, your children would be taken care of by who you want in the way you want and that your financial planning would be used for their benefit.  Although cliche, I believe that is “priceless.”

I just read a really good article on some items in President Obama’s budget that may affect estate planning.  Better yet is the emphasis the article places on some incredible opportunities in your estate planning that you can take advantage of now. It’s at Yahoo! Finance and you can read it here: http://bit.ly/daQI3d.  When Steve Leimberg speaks on the topic, you know to listen.  He is an estate planning “institution” in this country.

Here is my “short version” of the article (for those who enjoy “cliff notes”):

1. Requirement that the basis of property in the hands of the person who receives it can be no greater than the value of the property as determined for estate or gift tax purposes. The article gives a good explanation of basis, so I won’t rehash it here.  And you can look forward to more paperwork for you to do or for you to pay a CPA or Attorney to do, in an effort to ensure that the new rules are followed.
2. A category of “disregarded restrictions” designed to curb the use of certain valuation discounts in planning. Watch this one closely because it could be a game changer for some very popular planning techniques, depending on how it is enacted.
3. Grantor Retained Annuity Trusts (GRATs) would have to last a minimum of 10 years. Ouch!  Depending on the age of the person using this popular planning technique, the mortality risk may take this option off the table.

As pointed out by Mr. Leimberg, these are just proposed changes and they are a long way from being law.  Keep in mind, however, that with the current economic and budget situation, changes such as these that we didn’t think we would see may just have a chance of becoming reality.

How many times have you heard someone say that?  I’ve not only heard it a lot, I’ve said it a lot.  It brings up a great point and one that is very important to consider.  As a Personal Family Lawyer® and Creative Business Lawyer™, I spend much of my time helping families and businesses properly plan for any number of “unthinkable” events.  A colleague of mine recently had someone ask her, “what really are the odds of an unthinkable event happening?”  That’s a great question – it got me thinking about why I do what I do and why I’m so passionate about helping families and businesses plan.

Quite honestly, the odds of an unthinkable event (e.g., car accident, natural disaster, crime, etc.) happening to any one person on a given day is very small.  However, a wise person once told me, “you live like nothing is going to happen, and plan like something will.”  And that is my approach to helping my clients.  Sure, nothing unexpectedly bad may ever happen to you, your family, or your business, but do you want to take the chance that it will and have to deal with the catastrophic outcome because you didn’t plan?  Why do we get car insurance, homeowner’s insurance, and life insurance?  Do we plan on getting in an accident, having our house be destroyed, or dying today?  No, of course not (or at least I hope not!).  We are simply planning so that we, our families, and our businesses will be well taken care of if any of those unfortunate events occur.

In just the past two weeks, two of my friends have lost one of their parents (one his father and one his mother), another friend’s mother-in-law passed away, and another friend told me about his good friend who was in a horrible car accident (the boy passed away and the mother was in ICU).  These situations truly sadden me.  Having a loved one pass on is one of the toughest things we have to deal with.  And it’s even more difficult when they have not planned or not planned properly.  You just never know what may happen.  Please, please take the time to plan and do it soon – for you family’s sake, and the sake of your business (if you own one).