News sources recently revealed that Facebook founder Mark Zuckerberg—as well as other Facebook top brass—use Grantor Retained Annuity Trusts to protect their assets and investments from excessive taxation. Grantor Retained Annuity Trusts (more commonly called GRATs) are a perfectly legal—and very efficient—way to protect and pass significant assets from one person to another without incurring an exorbitantly high tax bill.

According to the article cited above, “GRATs offer a perfect vehicle for wealthy investors who put money in start-ups, while other trusts don’t.” But we don’t recommend GRATs only to wealthy startup investors. GRATs are “an excellent way to shift wealth to others at little or no tax cost and with minimal legal and economic risk.” As such, they can be the perfect tool for business owners, professional investors, and many others.

Setting up a GRAT allows the investor/grantor to give assets over to the trust for a pre-determined number of years. During this time the assets appreciate and the grantor receives “annual payments adding up to the asset’s original value plus a return based on a fixed interest rate determined by the Internal Revenue Service.” At the end of the trust term the assets (at their new value) are transferred to the beneficiary named in the trust with none of the usual gift or estate tax on the appreciation.

This makes GRATs sound like the perfect (and perfectly simple) tool, but nothing is perfectly simple. The pre-determined lifetime of your GRAT will depend on your individual circumstances, as well as the tax laws at the time, so you’ll want to make sure you have the help of an experienced and knowledgeable attorney helping you design your trust. Contact our office for more information.

The good news is that Americans are living longer, the bad news is that it costs a whole lot more to retire than it used to. But the rising cost of retirement has more to do with just longer life expectancy. As this recent article in the New York Times points out, “Social Security and Medicare are being eyed for cutbacks and 401(k)’s produce ever-varying lump sums.” This means that people are learning to think differently about saving, to think differently about planning for the future, and especially to think differently about when and how they will retire.

Another related article from U.S. News and World Report mentions that “the average expected retirement age and been gradually increasing over the past seventeen years from age 60 in 1995 to 64 in 2005,” and most recently to 67 in 2012. In addition to influencing your financial planning, this shift in the retirement age can also influence your estate planning in some of the following ways:

1. Gift-giving. Parents and grandparents may now choose to hold off on giving significant cash gifts to their heirs; socking that cash away for a longer retirement, if necessary.

2. If your estate plan includes a Retirement Trust you will absolutely want to talk to your estate planning attorney before making any significant decisions regarding your plans for retirement.

3. Long-Term Care Insurance. The longer you’re working, the longer you may be able to contribute to a long-term care insurance policy. Consider adjusting your contributions accordingly.

Everybody’s happy about a longer life expectancy, and there are many people who are happy to push off retirement a few years as well, but it does require a little extra planning. “If life expectancy continues its upward curve, you’ll have your work cut out for you, because you may need to think about what you want to do in your 10th and 11th decades.”

Imagine this: You’re retired, your only significant asset is your home, you’re very close to your child or children, and you don’t want the cost of creating an estate plan. In such cases, what’s the harm of simply putting your home in the name of your child to avoid probate and then be done with it?

We’ve gotten this question more than once at our office, and we almost always advise against it. There are a number of reasons to keep your home in your own name, and this article in the Huffington Post points out two of the biggies: Property taxes and your child’s liabilities.

These aren’t the only reasons to keep your home in your own name, however. Other reasons include:

* Your relationship with your child may not be as great as you think it is. Once the home is in their name they have no obligation to continue to let you live in it one, two or ten years down the line.

* You have more than one child. Putting your home in one child’s name can cause a rift of bad feelings between siblings. The alternative, of putting the home in the names of all your children, only makes it more vulnerable to liabilities and paperwork errors.

* There are other, safer ways to avoid probate. One of those ways is with a Revocable Living Trust. A Revocable Living Trust is flexible and reliable, and doesn’t have to be expensive. In fact, a Revocable Living Trust can actually end up saving your family money in the long run.

Don’t make a mistake that could end up causing you to lose your home. Contact our office to discuss how we can help you protect your family and your assets from probate and liabilities.

All parents hope to pass their values onto their children; and of the many values they hope to pass on religion and spirituality often tops the list. In some cases, religious values are so important to a parent that they will even include mention of these values in their estate plan. Our firm strongly believes that an estate plan is not just about money, but about leaving a legacy, and we often encourage our clients to include mention of their values—religious or otherwise.

Formalizing a legacy of values is not always as easy as leaving a financial legacy, however; and as this recent article in the Wall Street Journal mentions, there is a limit to how far a parent or grandparent can go in dictating religious values to their heirs. The article points out that “being too restrictive in an estate plan in an effort to pass on religious values—say, disinheriting children who marry outside the faith—can create divisions within a family and spark extended, costly legal battles, all while failing to have any impact on the heirs’ beliefs.”

One of the most common value-imposing strategies used by parents in estate planning is to require that children marry within a certain faith in order to receive their inheritance. This strategy has worked in some instances, for example, “in a 2009 case that was closely watched by estate planners, the Illinois Supreme Court—overturning the decisions of lower courts—unanimously ruled that a Jewish man, Max Feinberg, and his wife, Erla, could legally cut off their grandchildren who chose to marry outside of the Jewish religion.”

This strategy is often hurtful, however, and quite frequently expensively controversial, causing some heirs to challenge the will or trust; a process which can take many years and thousands of dollars to resolve. It is often better to explore other options as far as passing on values. “One increasingly common alternative to strict provisions that may penalize certain heirs is to leave money for children and grandchildren in a trust and give the trustee discretion to make distributions based on broader criteria that you set out when creating the trust… That way you provide guidance on how you would like your money to be distributed, but you leave some leeway for the trustee to consider special circumstances that you may not have anticipated and to weigh the consequences of each decision on distributions.”

A trusted and sensitive estate planner can talk to you about what is important to you and your family, and help you choose the best and most respectful way to pass on your wealth and your values.