Wachbrit Weblawg - Estate Planning and Elder Law

Don't Leave Your Pet Out in the Cold

If your definition of family includes a beloved pet, keep reading.  Maybe it's your child's canine playmate, a kitty companion to an elderly widow or the family's proud horse.  Regardless of the origin or relationship, your pet is a member of your family and dependent on your for all its needs.  If anything were to happen to you, can you be assured that your pet would be well-cared for?

Many families are asking me this question.  When they create an estate plan to provide for their loved ones, they ask what they can do to provide for their animal dependents as well.  Who will care for the animal(s)?  Will your pets visit you if you are incapacitated?

No Contest Clauses Under Review

The California Law Revision Committee has posted a tentative recommendation about no contest clauses.  These are the provisions in your estate plan that punish a beneficiary for suing the estate by disinheriting him or her.  California has long had a love/hate relationship with no contest clauses.  While there are strong reasons to keep people from suing willy nilly when someone dies, the state is also concerned that legitimate issues get aired in court. 

California changed its no contest laws just a few years ago, which is why so many of our clients needed to update that provision of their estate plan. 

Now the Committee is making a further recommendation.  The Committee suggests that no contest clauses should be honored in general.  But there should be a big exception to protect against elder abuse, a growing problem. 

Diedre in the Wall Street Journal on Minors & Beneficiary Designations

On October 21, 2006, Kelly Greene answered a question in the Wall Street Journal's Encore Personal Finance section on how to name a minor child as a beneficiary of your retirement plan.  I was delighted to be able to contribute to the answer. 

You can see the article, How to Name a Minor as your IRA Beneficiary,  here.  (Subscription to www.wsj.com may be required.)  If not, email me and I'll send you a reprint!

Everyone Loses When Estate Planning is Done by Non-Specialists

An out-of-state court recently found that an attorney who did not work in the estate planning area should not have dabbled.  He bought a form will, modified it and presented it to an elderly relative for signature.  The beneficiary was her relative-caretaker (a dangerous will under California law).  The attorney didn't ask her about other relatives who might not like the will that left everything to one person.

The will ended up in court.  The litigators got paid first, the named beneficiary got 40% of what was left, and the relatives got the rest.  The attorney was suspended for failure to provide competent representation and to avoid conflicts of interest.

You can download the case opinion here.

Educational Workshop: How to Protect Your IRA or 401(k)

Do you have an IRA or 401(k)?

Do you want to turn $100,000 into Millions for your children and grandchildren?

...now you can!

Due to a recent IRS ruling, you can now leave your IRA or other retirement plan to a Retirement Trust and stretch out the tax deferral for a generation or more!

We are offering two free seminars to clients, professionals and our newsletter subscribers.

Tuesday, July 18 6:30-8:00pm at the Agoura Renaissance Hotel (30100 Agoura Road, Agoura Hills)

Thursday, July 20 10:00-11:30am at the Hyatt Westlake Plaza (880 South Westlake Boulevard, Westlake Village)

Call Anna Spektor at 805-778-0600 to reserve a place for you and your guests.  See you there!

Estate Tax Repeal Fails Again

Proponents of estate tax repeal were 3 votes short of forcing a vote on full and "permanent" repeal of the estate tax last week.  The vote broke down almost entirely on party lines with the exception of 2 Republicans who voted against a repeal vote and 4 Democrats who voted in favor.

While some Senators hold out hope for a compromise bill that would allow individuals to pass on more than $1 million after 2010, the Los Angeles Times reports that "striking a deal will be difficult in an election year."

We continue to plan our client's estates to preserve maximum flexibility in the face of current law, which is that the estate tax will be repealed for one year -- 2010 -- and then return to 55% tax on any amount over $1 million.

The New Tax Law ("TIPRA") and You

Last week, Congress passed a $70 billion tax bill, The Tax Increase Prevention and Reconciliation Act of 2005 ("TIPRA").  Seriously.  That's the name.  The President is expected to sign the bill shortly.

Clients and advisors should make note of a few key provisions:

• The 15% long-term capital gains tax rate (down from 20%) is extended for two more years to 2010 but note this is only available to singles earning $30,650 or less and couples earning $61,300 or less
• The "kiddie tax" which taxes children at their parents' marginal rates on any income over $1,700 per year has been expanded to include kids up to 18 years old.  My advice: Use 529 plans inside of trusts to eliminate income tax for kids and keep parental control over the assets.
• In 2009 (but not now... wait.... wait....), Roth IRA conversions (previously available only to taxpayers with $100k in income or less) are now available to everyone.  My advice:  If you have a traditional IRA or a 401(k) that can be rolled over into an IRA, make an appointment in December 2008 to see your financial advisor and project whether a Roth IRA conversion will save you money.

And big shocker:
No action was taken on the Estate Tax!

We are still facing a return of the $1,000,000 exemption in 2011 and forevermore.

Have the Last Word

I leave to my husband, Dom Witte, the sum of Five Dollars,to be given to him at the rate of ten cents a month, because he was so good to me.

                                                               From the will of Barbara Wittte.

Estate plans that disinherit or antagonize beneficiaries may invite challenge.  If, like Barbara Witte, you want to have the last word, be careful.

• Use a no contest clause that complies with the latest California statute on no contest clauses. 
• Think carefully about whether you want to name the person as a beneficiary at all, given that it may increase their rights and access to information about your plan.
• Where there is a chance of heading off the unhappiness, hold a meeting or several meetings while you are still alive to explain your reasoning.

Message to the Future

What would you say to your future self -- the person you will become in 20 years -- if you could speak to that person? 

A host of web projects have sprung up to answer that question.   Future Me allows users to send an email message to their future selves.

For those who want to send a message after they're gone,  www.mylastemail.com  will accomodate your request.

Forbes and Yahoo partnered to allow users to send email to themselves in the future and found that while the biggest group (32%) wanted to receive their email within the next year, a substantial group (19%) opted to receive email two decades from now.

While you may find the idea weird, even creepy, consider that you can remind yourself of goals and dreams!  I plan to use the service to send my 2006 goals (a.k.a. new year's resolutions) to myself periodically throughout the year.

Don't Give Your Kids Affluenza

"When Jessie O'Neill was 28, her mother died unexpectedly, leaving her with a windfall of more than $2 million and absolutely no clue how to handle it."

Her inheritance triggered every parent's nightmare:

"It took her three years of booze, cocaine and wild living in Miami before she got a grip and found advisers she could trust to do the financial work that was beyond her ken. By then, her marriage was history."

Take a peek inside the world of a child who inherits more money than she is prepared to handle in an article published today on the web.  How to Leave Your Kids a Healthy Inheritance does a great job of acknowledging the plight of inheritors, whose problems are rarely taken seriously.  After all, wouldn't we all want to have a couple of million dollars free and clear?  But for many kids it's a curse in the disguise of a blessing.

"Your relationships change so drastically,"  O'Neill says. "You go from whatever normal life you had to people wanting to hang around you for all the wrong reasons. Relatives want to borrow money. If you have not been prepared, you just don't handle any of those situations well, and you make poor choices."