If you follow current events at all it is impossible to ignore the fact that we are now in the thick of the Republican primary race—and that the Presidential election will not be far behind. With the political machine in full swing there have been quite a few news stories about the candidates’ financial backgrounds, and more than a little talk of “blind trusts.”

Many of our readers will already know that a blind trust is a vehicle which holds the wealth of a candidate (or a politician serving in office) in an effort to avoid any conflicts of interest. We thought this might be a good opportunity, however, to discuss trusts in general: Which trusts are out there, what are the differences between them, and what purposes do they serve?

Revocable Trust: A revocable trust is one of the most commonly used trusts because it is able to be revoked or changed so long as the grantor (the person who created the trust) is still living. There are many other trusts that fall under the category of “revocable trust”, including a pet trust (which addresses the physical and financial care of your pets), an education trust (which provides for your child’s educational expenses), and many more.

Irrevocable Trust: An irrevocable trust, logically, is one which cannot be revoked or changed after it has been signed. The irrevocability is what makes these trusts useful for tax planning and asset protection. Some types of trusts which fall under the category of “irrevocable trust” include life insurance trusts (which save the beneficiary on the policy from paying exorbitant estate taxes), spendthrift trusts (which reduce the beneficiaries’ estate taxes and protect trust assets from creditors’ claims), and more. It is important to note that any revocable trust becomes irrevocable upon the death of the grantor.

Charitable Trust: A charitable trust is one in which at least one of the beneficiaries is a charity or non-profit. These trusts allow the grantor to claim a portion of their contribution as a charitable deduction under income tax laws. A charitable trust can be either revocable or irrevocable to begin with, but if distributions will be made during the grantor’s lifetime the trust must be irrevocable.

Special Needs Trust: Sometimes also called a “Supplemental Needs Trust”, is a trust created for the benefit of a person receiving government benefits—this usually includes someone with a physical or mental handicap—and its purpose is to allow outside sources to provide the beneficiary with supplemental funds without endangering their right to receive government benefits. A special needs trust can be either revocable or irrevocable, but usually includes a clause instructing that the trust be dissolved if its existence disqualifies the beneficiary for government benefits.

We have only discussed some of the most commonly used trusts here, but there are many, many different kinds of trust which can be valuable for estate planning or asset protection. If you have any questions about trusts or estate planning, please contact our office.

Parents of young children always seem to be busy, and we know that it can be difficult to find the time to think about something that you hope will never happen. With all the “To Do’s” and distractions out there, too many parents simply avoid thinking about a will, trust, or guardianship for their children; hoping that it will never be needed. But your children deserve more than good luck and crossed fingers, and we recommend making 2012 the year that you take the (sometimes difficult) steps necessary to ensure that your minor children are protected no matter what the future may bring.

1. Create a nomination of guardians for your children. The single-most important step you can take to ensure the well-being of your children is to execute a nomination of guardians. This is the document that names who you believe are the best and most loving people to parent your children if something should happen to you. This document is your children’s best protection against unqualified guardians or the foster care system.

2. Talk to your attorney about protecting your children’s inheritance (and in some cases protecting your children from receiving an inheritance too soon) with a trust. With a trust you can ensure that your children will be provided for financially until they reach adulthood, as well as leave a legacy for your children which includes your financial, philanthropic, and educational values.

3. Invest in your child’s higher education. Education is more important than ever in our current economic situation, and parents can resolve in 2012 to secure their child’s education by setting up a 529 education savings plan. This is something that parents can contribute to regularly, as well as grandparents, aunts and uncles, and more. A 529 plan that you set up today will be there even if you can’t be. After all, protecting your child’s future doesn’t stop when they reach 18.

If you have other questions or concerns about how to protect your minor children please contact our office today. We can help ensure your children will be provided for—and that you will have the peace of mind you deserve.

As the old year draws to a close and the new year approaches, many people are taking the time to reflect on 2011 and look forward to 2012, making the traditional New Year’s Resolutions for the year ahead. Many of these resolutions will be very personal—having to do with exercise, work, or personal habits, but there will be some resolutions that can be made which will benefit not just an individual, but their family and loved ones as well. The focus of our blog this week will be on which resolutions you can make to benefit your family and loved ones in 2012, and how we can help.

Times have been tough financially for a lot of people over the past few years, and although things are finally beginning to look up, many people will still be making New Year’s resolutions that focus on fiscal responsibility and financial security. Below are three financial resolutions that can help your family in 2012:

1. Take stock of your current financial situation. Being well-informed and keeping good records of your income, expenses, investments and assets is absolutely essential for good financial health. If something happened to you tomorrow would your spouse or family know what to do and have access to the documents or information needed to protect or pass on your estate? Make a list of all your assets and investments, including account numbers and contact information and keep it in a safe place where your financial agent (or someone else you trust) can find it if and when necessary.

2. Make an investment plan for the future. As with anything in life, it’s important to be prepared for what the future may hold. Having a five year, ten year, and fifty year plan for your financial future is one of the best things you can do for yourself and your family. When making your plans take into account your current situation, your future goals, and your wildest hopes and dreams for the years ahead. Consult with a knowledgeable financial advisor who can help you plan for and achieve these goals.

3. Protect your assets. We live in a litigious and uncertain world and protecting the assets you have is of the utmost importance. Our firm can help you evaluate and implement the many options available to you to protect your assets. The asset protection strategies you choose will depend on the nature of your assets, the situation of your family, and your goals for the future.

Taking the right steps in 2012 can mean a strong financial base now, as well as a bright and secure future in the years ahead for you and your family. Our firm would like to help protect that future. Call us today.

President Obama, in his Presidential Proclamation of National Family Caregivers Month – November 2011 – states;

“Across our country, millions of family members, neighbors, and friends provide care and support for their loved ones during times of need.  With profound compassion and selflessness, these caregivers sustain American men, women, and children at their most vulnerable moments, and through their devoted acts, they exemplify the best of the American spirit.”

Statistics from the Administration On Aging show that the population 65 and older is expected to grow from its current 13%  to 19% of the total population by 2030.  With the older population increasing, the need for elder caregiving will continue to increase.  Family caregivers play a vital role in filling these caregiving needs.  Who better than family can understand the needs and ensure the best care of their loved ones….read the entire article by going to the link below

Please go to the following URL for the entire article and previous articles: Either click on the link   http://www.planforcare.org or copy and paste the following into your browser:      http://www.planforcare.org

There is good news today for senior citizens! According to this article in CNN Money, “Social Security recipients will receive a cost of living adjustment of 3.6% starting in January.” This will be the first “raise” recipients have seen in three years, and most welcome the increase. “Many seniors have felt squeezed since banks are paying virtually no interest on savings accounts and stock market declines has eroded their retirement accounts.”

Unfortunately, many seniors may not see a useful increase in their social security income thanks to a hike in Medicare premiums expected to be announced next month. “For the past two years when Social Security benefits stayed the same, many seniors were shielded from the increase in Medicare premiums because of a “hold harmless” provision that protects more than 70% of beneficiaries… However, high-income beneficiaries and new enrollees did see their benefits reduced because they are not covered under the provision.”

Even with the expected increase to Medicare premiums, most seniors are simply glad to see evidence that The-Powers-That-Be recognize the rising cost of living. While most recipients of Social Security do have an alternate form of income, with their SS benefits representing “about 41% of the elderly’s income”; there are some who “rely on the monthly checks for 90% of their income.”

For more complete information about the coming changes in Social Security please read the full article. For help understanding how this change may fit in with your other benefits, or may affect your estate planning, please contact our office.

The recent death of creative visionary and Apple co-founder Steve Jobs saddened the world. News of his death traveled like wildfire, and had the online social networks humming with tributes, memorial posts, and sentiments of grief. Mr. Jobs was very private about his personal life, but through his public appearances and his support of various creative enterprises he touched and changed the lives of many individuals; just as his visionary ideas changed the face of technology.

The sad announcement of his death has many people now wondering “what next?” How will this change the company he started? What will happen with his family? As this article from ABC News relates, “The ever-private Steve Jobs was famously secretive when it came to Apple’s new products. As with his personal life, the future of Steve Jobs’ wealth [and family] will also stay under the radar.”

The article mentioned above states that “Given Jobs’ vast wealth and penchant for privacy, he likely set up private trusts for his family and charitable purposes.” Private trusts would certainly have been the logical thing to do, under the circumstances. Trusts are a much more flexible, powerful, and private tool than a simple will when it comes to estate planning. Trusts are useful under any circumstances, but they provide a much greater amount of control and protection of assets, especially when dealing with very large estates.

If Steve Jobs did choose to create trusts to protect his estate then it is possible that we may never truly know how he chose to distribute his wealth. It is probably safe to assume, however, that in addition to providing for his family and loved ones, he may have left a considerable amount to charitable or visionary endeavors. His words and actions during life provide a clue about how he thought about wealth: “Being the richest man in the cemetery doesn’t matter to me…Going to bed at night saying we’ve done something wonderful…that’s what matters to me.”

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.

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.

2011 and 2012 are good years not only for heirs but also for charities; high estate- and gift-tax exemption amounts (as much as $5 million per person) have many wealthy families exploring their options for gift-giving, and record-low interest rates are prompting many financial advisors to recommend that their clients set up charitable lead trusts to leave money to both their favorite charity and their heirs with little or no tax hit.

When setting up a charitable lead trust the grantor puts the desired assets into a trust for a specified number of years, naming a charitable foundation as the first beneficiary, and a non-charity (children or grandchildren) as the remainder beneficiary. Each year during the specified time period payments are made from the trust to the grantor’s designated charity, once the trust’s term expires, what is left goes to the grantor’s heirs.

Charitable lead trusts have fallen in and out of favor with financial advisors over the years, and were most recently popular after Ms. Jacqueline Kennedy Onassis used one to great effect. This recent article in the New York Times describes the pros and cons of the charitable lead trust:

“Over the years, charitable lead trusts have been a way to give money to charity with the possible benefit of passing what was left to children without paying estate taxes.” Although the payout (to both beneficiaries) of a charitable lead trust is highly dependent on the starting interest rate, “the likelihood today that one of these trusts would have money left for heirs [is] 95 percent. The trusts are written so that the assets appreciate substantially over time, but even if they do not, the designated charity — often a family foundation — will still get the money.”

One of the downfalls of a charitable lead trust is that rules and regulations can be confusing, “they are hard for someone who is not a tax lawyer to understand.” Furthermore, some families have “used these trusts to give money to their family foundation. This runs the risk of being deemed self-dealing if the person who set up the trust names his foundation as the recipient and then parcels out the money himself.”

The bottom line is that while a charitable lead trust can be an incredible useful tool benefitting both your heirs and your favorite charity (especially if set up during the next year and a half), it is not something to be done lightly, without the advice and help of an experienced attorney or financial planner.

Trudy Lieberman has had plenty of experience with Medicare—of course up until now most of it was from the outside looking in. As a journalist for more than 40 years specializing in insurance, health care, health care financing and long-term care, one would think that when the time came this year for her to enter the Medicare system herself she’d be an old pro. Unfortunately, as Ms. Lieberman discovered—and shared with the readers of her exceptional five part article series in Time Magazine’s Moneyland—entering the Medicare system as a patient can be confusing for even the most knowledgeable of inside reporters.

While her experience as a reporter may not have made signing up for Medicare any easier for Ms. Lieberman, her willingness to share her entrance into Medicare with readers may make the process easier for the rest of us. Here are just a few of the issues Lieberman has written about thus far:

Sorting through Medicare information and choosing a plan: “Brochures and ‘lead cards’ for Medicare Advantage plans and Medigap policies began flooding my mailbox in January. This stuff can be a real burden, but some of it’s worthwhile – some even important – so you can’t just throw it all away…Hopefully, my sorting system (partly informed by decades of reporting on Medicare, partly by common sense) will make the task easier for you.

Choosing a Medigap Plan to fill in the gaps of Medicare coverage: “It quickly became clear that the push to give consumers more choices and more information has actually made the job of picking a Medigap plan much harder. I ended up having to check out multiple websites, brochures, handouts and make several toll-free calls for assistance.”

Finding a plan to cover the cost of prescription drugs: “I decided to ask my pharmacy about the retail cost of the drugs I currently take. I’ve always had great drug coverage, so it was shocking to learn that my prescriptions would cost $3,131 a year if I had to pay out-of-pocket. (Of course, from interviewing seniors over the years, I know some folks actually pay four or five times that amount.)”

We know how confusing and time consuming dealing with Medicare can be, so it’s helpful to know that many elder law attorneys specialize in helping seniors with this very process—we can help you too.