A recent article in Forbes has shed light on a fact that estate planners have always known: There is far more to creating a good estate plan than just drafting the documents. In fact, according to the article, there is a fine art to putting together a good estate plan. “Estates are often shrouded in some mystery even for the people who plan and manage them. It is logical that an estate plan should offer a clear map of what a person owns, but this isn’t always the case.”

The point is made in the article that very few estate plans contain an accurate accounting of what the estate entails. There may be any number of reasons for this; in some cases a person “doesn’t have an accurate balance sheet to start with, and chooses not to update it or to share every detail.” In other cases “people may withhold information because they do not entirely trust an adviser, or because they are embarrassed to talk about money.”

The job of an estate planner is to draft a plan solid enough to offer security, but flexible enough to hold up to unexpected surprises—and how to achieve this will be different for every client. “A big part of the job is to value assets properly, and that task is an art, not a science.”

Of course, the clients who come back every few years for an update and review have a much better chance of their estate plan remaining accurate and secure, but not every client will be willing or able to do this, and estate planners do take this into account. However, “even a plan that starts out based on a complete accounting will be thrown out of whack if the estate owner doesn’t come in to update it after a big life event like marriage or the sale of a business.”

Whether you are considering creating a new estate plan, or looking for someone to help you update an existing one, contact our office for help. We can help you make sure your plan is a masterpiece.

Everyone will remember the “wonderful boon” that was the 2010 estate tax repeal, which (in theory) allowed decedents to pass on their assets free of any estate taxes. However, the situation was complicated in December of 2010 when, as this article in Bloomberg puts it, “Congress extended the tax retroactively [giving] executors of estates of people who died that year a choice. They could decide to skip the estate tax or pay the tax with a $5 million per-person exemption and a 35 percent top rate, the same as in 2011.”

Executors have had almost a year to consider their options, but now it is just about time to make the decision, because “the Internal Revenue Service is giving executors of estates of people who died in 2010 until Nov. 15 to opt out of the estate tax.” According to the IRS the forms and instructions for 2010 estate tax returns will be made available early this fall.

But executors don’t have to wait until the forms are available to consider which tax option might be the most profitable one. Many financial planners and estate planning attorneys have already done their research, and they’ve found that opting not to pay estate taxes may end up costing you more in the long run. This article in Forbes explains: “Opting out of the estate tax regime means opting out of stepped-up basis (for income tax purposes)… and opting into the modified carryover basis rule… One of the main plusses about estate tax is that it is paired with a stepped-up income tax basis. You should not be paying both estate tax and income tax on the same assets.”

Of course, each estate will be different depending on a number of factors, including the size of the estate, the nature of the assets, the preferences of the beneficiaries, and any previous planning the decedent may have done. Executors should consider their options carefully, and consult with an experienced estate planning attorney before deciding whether opting out of the estate tax is really in their best interest.

In a recent article in the Huffington Post financial columnist Don McNay tells the frustrating, sad, and “unusual” story of how the greater part of his mother’s and his sister’s estates ended up in the hands of people they would never have chosen to receive it… all because neither of them had a will or estate plan when they died.

When McNay’s mother died unexpectedly in April 2006 neither he nor his sister really worried about her lack of a will. After all, “her only asset was our childhood home, and my sister and I were her only children. We would split the ownership of the house equally.” McNay paid for the funeral, and “advanced the estate money to pay delinquent property taxes, some outstanding bills, and the mortgage on Mom’s house,” and he and his sister worked out an informal deal to even things up financially once the estate was settled and the house was mortgaged.

Tragically, his sister fell down some steps and died in October 2006, also without a will, and this is when the real trouble began. Although his sister had left her husband years before, they had never formally divorced; which meant that McNay’s sister’s share of their mother’s estate now belonged to her ex-husband, her adult son, and her minor daughter—and none of it would be used to reimburse McNay for what he had lent the estate.

McNay writes honestly and persuasively about his experience, and we recommend reading the entire article, but the long and short of it is this: After several rounds in court, after the involvement of several attorneys, and after being forced to sell the family home for less than what it was worth, “the person who got the most money from my mother’s estate was my former brother-in-law.”

Unfortunately, McNay’s story is all too common. Situations such as this one could be easily (and inexpensively) avoided simply by consulting an attorney and drawing up a simple will; and yet more than 60 percent of Americans don’t have wills. Whether it’s because they’re uncomfortable thinking about their own death, think they’re too young to worry about it, or simply feel they don’t have enough assets to worry about it, more than half of Americans today refuse to take the one simple step that can protect their families from heartache and expense.

We suspect that most people believe (erroneously) that this kind of thing just won’t happen to them. After all, as McNay writes in his article, “My family’s series of events was unusual,” but then again, “unusual things happen every day.”

The hot and lazy days of summer are almost over; parents are thinking about back-to-school sales, kids are making the most of their final days of freedom, and college freshmen are getting ready to embark on their first year of adult-hood. Most of these college students have a list (whether mental or physical) of all the things they’ll need as they leave the nest for the first time, but most of these lists will be missing two key items: A Healthcare Directive and a HIPAA Form.

You may be wondering why a college student needs estate planning documents—aren’t those just for older, established people? Not at all.

Most incoming college students are now (or will soon be) 18, and considered adults under the law. This means that hospitals and medical personnel are no longer required to ask the parent’s permission before performing medical procedures. In fact, once your child is 18 health care providers are no longer required to share information with the parents at all.

Most college students (and parents) are unaware of this side-effect of turning 18, and parents and children alike can run into frustrating roadblocks should an accident occur. You can avoid these roadblocks by simply having your young adult execute the two simple documents mentioned in this blog post.

A Healthcare Directive (or Living Will) can be an in depth document or a very simple one, but the most important part for your new 18 year old will be the nomination of a healthcare agent. A healthcare agent is the person who will make medical decisions for your child if he or she is unable to make them alone.

A HIPPA Authorization Form addresses the issue of security and privacy of health data. In a HIPAA form your child can list the people who have permission to receive information about his or her medical records and status.

For a fledgling 18 year old these two documents are of the utmost importance, and with the right help, they are very easy to execute. Don’t wait until it’s too late; make sure your young adult has these documents completed before they leave the nest.

In our line of business we like to think that what we offer our clients is more than a way to minimize estate taxes or avoid a lengthy probate, we like to think that what we really offer our clients is an opportunity for peace and comfort during a time of stress and emotional upheaval.

Sharon Epperson, in her article on MSNBC entitled “How Dad’s Planning Helped Us Cope With His Death” gets to the heart of what we think everybody is trying to accomplish when they contact an estate planner. “By making some important decisions while living, my father helped to lessen the overwhelming stress of coping with sudden loss.”

Epperson goes on to explain that while simple things like a clear-cut will, pre-made funeral arrangements and an up-to-date life insurance policy can make all the difference in the world to grieving relatives, “only 45 percent [of respondents in a State Farm survey] say they’ve actually made plans.”

The truth is that the hardest part of creating an estate plan is simply getting started. Asking that first question, making the first decision, creating the first document… once you’ve taken the first step the rest comes easily—especially if you have a knowledgeable and compassionate advisor to help you along the way.

When clients come to our office asking about a last will and testament, or a trust for their children, we know that the question underlying the entire experience is “How can I ensure my family will be taken care of?” Our goal is to address ALL of your concerns, and help you provide your loved ones with a port of comfort and security in the storm.