Deceased man’s sister is sued for interfering with inheritance

When Marc MacGinnis was in the hospital awaiting surgery, he asked his friend Brent to prepare a will for him that would leave half of his estate to Brent and half to Marc’s sister, Susan. Brent downloaded some will forms from the Internet, but Susan then suggested that she contact a lawyer to set up a trust instead. She said this would be better because it would avoid probate.

Susan never talked to a lawyer, and Marc died a few days after the surgery. Because Marc never signed a will, his entire $1 million estate went to Susan. [Read more…]

Should a will include children conceived after a parent’s death?

What’s the legal status of a child who was conceived after a parent’s death? That question would have been ridiculous not many years ago, but with advances in fertility treatments and the ability to freeze embryos and store sperm for later use, a number of children are now being conceived after one biological parent has passed away.

This has created a number of legal issues. For instance, the Supreme Court recently decided whether twins who were born 18 months after a father’s death were eligible for Social Security survivors’ benefits. (The answer was no, based on the specific language in the Social Security law.) [Read more…]

Prepare now – new 3.8% tax on investment income takes effect in 2013

A new 3.8% tax on investment income will take effect in 2013, and anyone who has significant investments or who manages a trust should be planning for it now.

The tax was included in President Obama’s health care law. In the past, many people didn’t plan for the tax because they thought the law might be struck down by the Supreme Court. But now that the Supreme Court has upheld the law, the tax will take effect as scheduled starting January 1. [Read more…]

Huge tax-saving opportunity available only until December 31

An enormous opportunity for families to reduce their estate taxes – and in some cases, save millions of dollars – will end on December 31, 2012. If there’s a chance you can take advantage of these savings, it’s wise to act immediately, because unless Congress changes the law, the window of opportunity will close permanently when the ball drops on New Year’s Eve.

Between now and the end of the year, the lifetime exemption from the federal gift tax is $5.12 million. But on January 1, 2013, this exemption is scheduled to be reduced drastically, to just $1 million. [Read more…]

IRS cracks down on family gifts of real estate

Amazingly, it appears that most people who have given away real estate to family members in recent years have not filed a gift tax return with the IRS.

The IRS requires a gift tax return to be filed any time a person makes a gift to someone other than a spouse of more than the annual exemption amount (which is currently $13,000). So if a person gives a piece of real estate to a child, or sells it to them for $1, or even sells it to them for a price that is more than $13,000 below its actual value, a gift tax return must be filed. That’s true for residences, vacation homes, and investment properties. [Read more…]

Talk with your heirs about the advantages of inherited IRAs

Leaving an IRA to your children or grandchildren can be a great idea. That’s because withdrawals from the IRA can be “stretched out” over many years, and the IRA can grow tax-free for decades, giving your heirs a huge tax benefit.

However, if you’re planning to leave an IRA to your heirs, it’s important to talk with them now about this strategy – so they understand how to take advantage of it.

A recent study by the AXA insurance company showed that 87% of children who inherit an IRA from a parent liquidate it within a year of the parent’s death. [Read more…]

2012 could be a great time to equalize family gifts

There’s a limit on how much money you can give away each year without paying gift tax. For 2012, for instance, you can give any person up to $13,000 without paying tax.

Many people make annual gifts to family members as part of their estate planning. This is a smart idea, but one problem is that over time it can result in unequal gifts to different parts of a family.

For instance, Edna has three children: Alan is single, Stella is married with one child, and Andy is married with four children. Each year Edna gives $13,000 to each of her children, their spouses, and her grandchildren. [Read more…]

How to transfer a family business to the next generation

Many people who seek estate planning advice are owners of family businesses, and one of their chief concerns is how to pass on the business to the next generation.

The fact is, there are almost as many ways to transfer a family business as there are family businesses. There’s no way to know what’s best for you without a thorough discussion of your goals, your family, and your complete financial picture. However, there’s no question that dealing with a family business is an essential aspect of planning your estate.

Here’s a broad, general look at some of the ways in which a business can be transferred to your children: [Read more…]

‘Joint will’ couldn’t be modified later

Jerome and Sandra Murray signed a “joint will” in 1993. It provided that if one of them died, the other would inherit all the property. It also said that the will couldn’t be modified unless they both agreed to any changes.

Unfortunately, the couple divorced in 2001. In the divorce settlement, Sandra received a condo in New York.

In 2006, she put the condo into a trust. The trust document said that if she died, the trust property would be distributed in whatever way she provided in her will. Since the joint will said nothing about the trust, Sandra wrote a new will. The new will said it wasn’t intended to change anything in the joint will, but added that when she died, the trust property would be given to her children. [Read more…]

Many older powers of attorney and health care proxies should be reviewed

Many power of attorney and health care proxy documents that were created years ago should be revised now as a result of a federal medical privacy law.

The law, known as HIPAA, generally prevents health care providers from disclosing your personal medical information to anyone but you and someone you’ve named as your “personal representative.”

Medical privacy may be a good thing – but the law can create complications. [Read more…]

How to avoid taxes when giving away hard-to-value assets

As part of their estate planning, many people want to give away property during their lifetime in order to reduce the size of their taxable estate.

In general, you can give $13,000 a year to anyone you like without having to pay gift tax, and you can make additional gifts over this limit, over the course of your lifetime, up to the amount of your gift tax exemption (although these larger gifts will reduce your estate’s exemption when you eventually pass away). Plus, you can give an unlimited amount to a spouse or charity.

One problem with making gifts for tax purposes is that some types of assets are hard to value. In particular, certain types of real estate, interests in a partnership, and stock in a family-owned business can be very difficult things on which to place a price tag. [Read more…]

Moving? It’s time to update your estate plan

If you’re moving (or considering moving) to another state, it’s a good time to update your estate planning.

Of course, your estate plan should be updated any time you make a major change, such as buying or selling real estate. But even if you’re not buying or selling anything, it’s wise to review your estate plan when you move because different states have different laws about how estate documents are interpreted.

For instance, New Yorker Rosanne McGathy wrote a will in 1997. She moved to Arizona in 2005, and she passed away several years later. Her will made specific bequests to several trusts for relatives, and left the remainder of her estate to some other relatives and charities. McGathy had other assets that went to people outside the will, including a home she co-owned, a life insurance policy, and an annuity. [Read more…]

New estate tax law affects widows and widowers who remarry

Widows and widowers who are considering remarriage should be aware that a new federal tax law could potentially make a huge difference in how much of their assets they are able to leave to their heirs after taxes.

In general, anyone who is considering remarriage later in life should talk to an estate planner first in order to avoid possible tax problems. But this new law gives added urgency to this rule, because it potentially could result in huge additional taxes – or tax savings – and planning for this possibility is essential. [Read more…]

Note to anyone who recently moved to (or vacations in) Florida

Florida has a new law on powers of attorney. The law is important for anyone who recently moved to Florida, as well as anyone who lives elsewhere but owns a vacation home there or regularly spends time in the state.

Florida will no longer accept powers of attorney unless they are signed by two witnesses and notarized. Also, powers must take effect immediately, rather than only if the person becomes incapacitated.

Power of attorney documents that were signed before October 1, 2011 are still valid in Florida even if they don’t meet these requirements, but:

  • A bank or other institution in Florida can refuse to accept an out-of-state document unless the agent provides a letter from an attorney saying the document is legally valid in its home state; and [Read more…]

Some states let you ‘win’ a will contest while you’re still alive

People are sometimes concerned that after they die, a beneficiary (or more likely a non-beneficiary) will go to court to contest their will. Typically, a disgruntled would-be heir might claim that the person who made the will wasn’t mentally competent, or was under undue influence from some other person. These types of will contests can be very expensive, and they can cause a lot of emotional hardship within a family.

Recently, a handful of states have allowed people who make a will to go to court while they’re still alive and have a judge rule that the will is valid – thus preventing a will contest.

These states include Alaska, Arkansas, Nevada, North Dakota and Ohio. Similar legislation is pending in Delaware.

Even if you don’t live in one of those states, you might be able to obtain a court ruling there, such as by putting your assets into a revocable trust and hiring a trustee in that state. [Read more…]

Gifts made in the next year can reduce state estate taxes

Some 22 states have a state estate tax or a state inheritance tax. These taxes are in addition to the federal tax. For some people, it’s possible to reduce or eliminate these state taxes by making gifts before the end of 2012.

Ordinarily, you can give up to $13,000 each year to as many people as you like without paying gift tax. Through the end of 2012, you can also make total lifetime gifts in addition to these amounts of up to $5 million. You won’t have to pay gift tax on these additional lifetime gifts, although they will reduce your estate tax exemption when you die.

That means that if you make gifts before the end of 2012 of up to $5 million (such as, for instance, gifts to trusts that will benefit your children), it will have a neutral effect on your federal estate tax – your estate won’t owe more or less as a result. [Read more…]

Many estates can save money by filing tax returns – even if they don’t have to

And people with older wills should have them reviewed now, due to a new law from Congress

A federal estate tax return doesn’t have to be filed every time someone dies. In fact, most estates never have to file one. In 2011 and 2012, a return has to be filed only if the person’s estate (including property, life insurance, taxable gifts, etc.) is worth $5 million or more.

However, even if a return isn’t required, a recent change in the law means there could be big tax savings for many families if they file one anyway.

The change applies to estates of people who die in 2011 or 2012 and are survived by a spouse.

There are strict time limits for filing a return, so if you know of someone whose family could take advantage of these savings, you or they should speak with an attorney right away. [Read more…]

Grantor’s power to substitute insurance policy won’t cause inclusion in estate

Revenue Rule 2011-28 concludes that an individual’s retention of the power, exercisable in a nonfiduciary capacity, to acquire an insurance policy on his life held by a trust he created by substituting other assets of equivalent value won’t cause the value of the policy to be includible in his gross estate under Code Sec. 2042.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The tax attorneys at the Beliveau Law Group provides legal services for federal and state tax law as well as tax returns. The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

No Trustee Fiduciary Breach Where Purchaser of Estate Property Flipped Property (Fla. App.)

Sloan was the trustee for the Hemphill trust, created by a pour-over will, which provided income payments to the beneficiaries, the settlor’s children, until age 25 at which time their trust share could be distributed. In her capacity as trustee, Sloan listed trust property, Keysville Road Grove, for sale. She retained a real estate attorney and listed the property for $1.225M. The plaintiff beneficiary had [Read more…]

Trust property could be tied up by a long-term lease

A Texas man put some ranch property into a trust. The trust was designed to pay regular income from the property to the man’s son. When the son died, the ranch was to go to his grandson.

The trustee (a bank) entered into a long-term lease for the property. The result was that when the son died, the grandson didn’t get the ranch all to himself; instead, he inherited it subject to the lease, which meant he couldn’t immediately sell it.

The grandson sued the bank trustee. But a Texas appeals court sided with the bank. [Read more…]

Creating ‘conservation easements’ to save taxes becomes easier

If you own land that you want to pass on to your heirs, but you also want to make sure that some historic, scenic, or agricultural value will be maintained and not destroyed by future development, you might be able to accomplish this with a “conservation easement”…and also save taxes at the same time.

A conservation easement is a restriction on your land that says it can never be developed in certain ways. When you create such an easement, you give it to a charity – usually one that has been created to preserve some historic, scenic or agricultural heritage. In some cases you can also give the easement to a government agency.

After that, the charity or agency has the right to enforce the easement and prevent such future development. [Read more…]

Now’s a good time to review your beneficiary designations

Did you know that your will does not determine who gets your IRA or your 401(k) account when you die?

That’s right – these accounts are “non-probate” assets, which means they’re not covered by your will. Instead, they will generally go to whatever person you named as the beneficiary when you set up the account.

Similarly, your will doesn’t determine who gets your life insurance – that will go to the named beneficiary on the policy. And your brokerage account might have a beneficiary as well.

So as part of your estate plan, it’s essential from time to time to review your beneficiary designations.

For example:

  • You’ve remarried, but you want to leave your 401(k) to your children from your prior marriage. Under federal law, even if you name the children as beneficiaries, your account will go to your new spouse – and not your children – unless your new spouse signs a waiver. [Read more…]

Have you picked the right person as your executor or trustee?

Before you name someone as an executor or a trustee in your will – or before you agree to be an executor or a trustee – it’s a good idea to review exactly what responsibilities are involved.

These are serious jobs, and sometimes people don’t give enough thought to which person should be chosen.

Often, people simply name a spouse, a child, or a family friend. This might seem like a logical choice, and the person might expect to be given such a role, but that doesn’t mean they’re necessarily the best person for the job – particularly if they’re not detail-oriented, good with figures, and adept at handling money. Many people who quickly agree to act in these roles later come to regret it.

An executor’s job typically lasts about a year, and involves a lot of responsibility. Most executors hire an attorney and sometimes other professionals to help them through the steps and make sure they don’t make any mistakes. However, you’ll still want to pick someone who is willing and responsible enough to handle the often difficult and time-consuming tasks.

These tasks typically include:

  • Locating the deceased person’s will (the original, not a copy) and filing it for probate.
  • Obtaining a death certificate, obtaining an estate tax ID number from the IRS, and setting up an estate bank account.
  • Notifying beneficiaries and other potential heirs. [Read more…]

Florida addresses the question what happens if there is no residuary clause in the Will

Ann Aldrich drafted her own will on an “E-Z Legal Form.”  In Article III, entitled “Bequests,” just after the form’s pre-printed language “direct[ing] that after payment of all my just debts, my property be bequeathed in the manner following,” she hand wrote instructions directing that all of the following “possessions listed” go to her sister, Mary Jane Eaton.  If Mary Jane were to predecease her, the possessions were to be distributed to her brother, James Aldrich.  Ann listed all her assets she owned individually on the will.  The will contained no other distributive clauses.  [Read more…]

Trust modification prevents drafting error from resulting in costly transfer tax

In PLR 201132017, the IRS ruled in this case, the documentation submitted by Surviving Spouse strongly indicates that Decedent and Surviving Spouse did not intend to have any control over the assets held in the By-Pass Trust, and that the provision in Section 4.01 of Trust to charge Surviving Spouse’s debts, expenses and death taxes from the By-Pass Trust was the result of a scrivener’s error.  In reforming the By-Pass Trust, Court found that the modification of Trust was an equitable reformation of Trust under common law and
State Statute.

[Read more…]

First Court of Appeals holds that estate tax payers are not entitled to a second filing extension; also refund claim was untimely filed

The Appeals Court has held in Dickdow v US pursuant to 26 U.S.C. § 6511(a), a taxpayer seeking such a refund must file his refund claim within three years of filing the tax return or within two years from the time the tax was paid, whichever is later. Furthermore, for taxpayers who claim a refund within three years of  filing the return, § 6511(b)(2)(A) substantively limits the amount of any such refund to the portion of the tax paid within the three years immediately preceding the refund claim, plus the period of any extension of time for filing the return. [Read more…]

Paine vs. Sullivan decides issue of testamentary capacity – What went wrong?

John Sullivan was born in May 1912.  He married his wife, Odette, in 1956.  John and Odette did not have any natural born children of their own but adopted Odette’s sister’s children, Annabelle and Valerie.    In 1995, Annabelle left the home after a falling-out and never reconciled with John or Odette.  In 1995, John and Odette executed new wills disinheriting Annabelle.  Valerie was to inherit the entire estate should there not be a surviving spouse.  Valerie remained in John and Odette’s home until in 2000 when Valerie and Odette had a falling-out.  Odette banished Valerie from the home.  John would continue to sneak phone calls to Valerie.

[Read more…]

Draft forms for Form 706 for 2010 Decedents released

The IRS has released Draft Form 706 and Draft Instruction 706 for decedents who died within the 2010 calendar year.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Ninth Circuit upholds formula producing larger gifts for charity after valuation challenge

Anne Y. Petter (“Taxpayer” or “Anne”) transferred membership units in a family-owned LLC partly as a gift and partly by sale to two trusts and coupled the transfers with simultaneous gifts of LLC units to two charitable foundations. The transfer documents include both a dollar formula clause —which assigns to the trusts a number of LLC units worth a specified dollar amount and assigns the remainder of the units to the foundations—and a reallocation clause—which obligates the trusts to transfer additional units to the foundations if the value of the units the trusts initially receive is finally determined for federal gift tax purposes to exceed the specified dollar amount. Based on an initial appraisal of the LLC units, each foundation received a particular number of units. But after an Internal Revenue Service (“IRS”) audit determined that the units had been undervalued, the foundations discovered they would receive additional units. Everyone agrees that the Taxpayer is entitled to a charitable deduction equal to the value of the units the foundations initially received. But is the  Taxpayer also entitled to a charitable deduction equal to the value of the additional units the foundations will receive? The Tax Court answered that she was.  The Appeals Court agreed.

Estate of Anne Y. Petter v Comm, (CA 9 8/4/2011) 108 AFTR 2d ¶ 2011-5149

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Guidance issued on how executors can elect to have carry over basis rules apply for deaths occuring in 2010

The Internal Revenue Service issued guidance on the treatment of basis for certain estates of decedents who died in 2010. The guidance assists executors who are making the choice to opt out of the estate tax and have the carryover basis rules apply. Form 8939, the basis allocation form required to be filed by executors opting out of the estate tax, is due Nov. 15, 2011. Under the guidance issued, an executor must file Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent, to opt out of the estate tax and have the new carryover basis rules apply. The IRS expects to issue Form 8939 and the related instructions early this fall.
[Read more…]

Charitable transfers of non-voting common stock aren’t split-interest transfers

In PLR 201129033, IRS has privately ruled that transfers of non-voting common stock by a donor or his spouse to charity will be transfers of the entire interest in the property, not a nondeductible split-interest under Code Sec. 2522(c), reasoning that the non-voting common stock was a separate property interest from the other class of stock in the corporation. Additionally, IRS found that the value of the charitable gifts for Code Sec. 2512 purposes equals that of the gift tax charitable deduction under Code Sec. 2522.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Tax Court approves valuation of homes and paintings

The Tax Court in Estate of Mitchell, TC Memo 2011-94, rejected IRS’s deficiency determinations and found that an estate properly determined the fair market value of the decedent’s real property and two paintings he had owned.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

PLR 201128011, the IRS has ruled that a reformation of a grandfathered generation skipping transfer trust will not trigger adverse tax consequences

In PLR 201128011, IRS has privately ruled that no adverse income or transfer tax consequences will result from reformation of a grandfathered generation-skipping transfer (GST) tax trust.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

IRS reads “it is my desire” in decedent’s will to be a specific bequest rather than precatory, causing a reduction in the marital deduction

In PLR 1126030, the language “it is my desire” in Article III of Decedent’s Will was determined by the IRS to be given mandatory construction as passing the described property interests to the Decedent’s children as specific bequests, thereby reducing the marital deduction under § 2056 and increasing the taxable estate, taking into consideration the rules of abatement under Statute in regard to Decedent’s debts and obligations. [Read more…]

Ins and outs of multi-state estate planning and probate

July 2011
Author: Attorney David M. Beliveau
Published by: Massachusetts Lawyers Weekly

It is becoming more common for estate planning attorneys to have clients who own real estate in multiple states. Whether it is a cottage on a lake in New Hampshire or a snowbird getaway in Florida, understanding the similarities and differences of estate planning and probate law in the states most commonly encountered by Massachusetts attorneys is essential to competently managing such matters.

All three states have common estate-planning documents, including revocable trusts, last wills and testaments, financial durable powers of attorney and health care directives.

[Read more…]

Massachusetts Secretary of State Wants More Regulation of Power of Attorneys

Massachusetts doesn’t regulate powers of attorney — a signed, notarized letter of appointment is the only requirement — and advocates for the elderly say the absence of oversight makes it too easy for an unscrupulous person to exploit the position for personal gain. Secretary of State William Galvin aims to remedy the problem with a proposal he submitted to the Massachusetts legislature earlier this year that would bar people with power of attorney from enriching themselves or otherwise abusing their authority.

Source/more information: Boston Globe (June 25, 2011)

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Do surviving spouses have a right to a 401(k) or an IRA?

When choosing a beneficiary for a retirement plan, it’s important to understand how your spouse will be treated under the plan. The rules are different for 401(k)s and IRAs. With a 401(k) plan, a surviving spouse is the automatic beneficiary of the plan. If you want to name someone other than your spouse as a beneficiary, your spouse must agree to this in writing.

There are some exceptions; for example, the rule might not apply if you and your spouse have been married for a very short time. But in general, it’s a strict rule. In fact, even if your spouse signed a prenuptial agreement saying that he or she has no right to your 401(k), that might not be good enough, because he or she wasn’t your “spouse” at the time of the signing. On the other hand, this rule is not true for an IRA. Surviving spouses are not automatic IRA beneficiaries.

In a recent case, a husband rolled his 401(k) into an IRA after he retired. He named his children as the IRA’s beneficiaries. After he died, his wife claimed that she was entitled to the account funds as his surviving spouse. She argued that because her husband had rolled his 401(k) into the IRA, she should receive the same protections that the 401(k) had given her. But a federal appeals court in California disagreed, deciding that the IRA rules applied even if the funds originated in a 401(k).

In general, whether you have a 401(k) or an IRA, it is important to regularly check your beneficiary designations to make sure they are current and fit with the rest of your estate plan.

Here’s yet another example of why trusts in a will are a good idea

In a recent case, a Texas man inherited $400,000 in cash from his aunt. The man’s ex-wife went to court and claimed that as a result, his child support payments should be increased. The Texas Court of Appeals agreed with the ex-wife. It said that even though the $400,000 wasn’t wages or earnings, it was still a “resource” that had to be considered in determining how much the father had to pay for his two children.

Now, we don’t know what the aunt’s feelings were. It’s entirely possible that she was happy to use her money to take care of her nephew’s children. However, she probably never considered that after her death, a large portion of her assets would end up under the direct control of her nephew’s ex-wife. It’s a good bet that the aunt might have been happier if she had put the $400,000 into a trust that would benefit the nephew and his children. In that way, she would have had control over how the money was spent for their benefit – rather than the ex-wife. [Read more…]

…More implications of the new tax law from Congress

The new tax law, which temporarily raises the estate and gift tax exemptions to $5 million, has many important implications. Almost everyone should have their estate plan reviewed in light of this significant change.

Here are just a few of the other important consequences:

  •  Many wills that were drafted years ago need to be revised right away. Frequently, these wills were set up to avoid taxes by giving children an amount of property equal to the estate tax exemption, and having the rest go to the surviving spouse. For instance, if the exemption amount were $600,000, then $600,000 would go to the children (or to a trust for the children), and the rest would go to the surviving spouse (or a trust for the spouse). [Read more…]

Congress creates ‘window’ in 2011 and 2012 for big tax savings

Congress has created a temporary “window” – between now and the end of 2012 – in which many people can save a lot of money in estate and gift taxes. You might be able to take advantage of this opportunity by transferring significant assets to a trust. But as they say on TV, hurry – this is a limited-time offer from the federal government.

During 2011 and 2012, the federal estate tax exemption will be $5 million, meaning the tax will be applied only to estates that are larger than that. Importantly, the lifetime exemption from the federal gift tax has also been raised, from $1 million to $5 million. The gift tax applies to transfers of assets. In general, any person can give any person up to $13,000 a year without there being any gift tax. If you give someone more than $13,000 in a calendar year, then the excess is subject to gift tax. [Read more…]

New Statutory Notice Requirements for Trustees in Florida effective June 21, 2011

Effective June 21, 2011, Section 11 of Ch. 2011-183, Laws of Florida, amended s. 736.0813(1)(a) and (b) to require trustees to give notice to the qualified beneficiaries of the trust that “the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the trustee and any attorney employed by the trustee.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

New Statutory Notice Requrements for Personal Representatives (Notice of Administration) in Florida effective June 21, 2011

Section 8 of Ch. 2011-183, Laws of Florida, amended s. 733.212(2)(b), Fla. Stat., effective June 21, 2011, to require that notices of administration contain a statement that “the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the personal representative and any attorney employed by the personal representative.”  Until such time as the pre-printed forms have been updated, you may include the above statement in your existing notice form.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

New report issued stating that Social Security Income (SSI) doesn’t even cover the cost of adequate shelter

A report entitled Priced Out: The Housing Crisis for People with Disabilities, just released by Technical Assistance Collaboration, Inc., shows that in 2010, the basic cost of shelter, represented by the average rent for a modest one bedroom apartment, was more than the entire income of an individual receiving Supplemental Security Income (SSI).

To read the entire report click Priced Out 2010 Report

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

What is a ‘trust protector,’ and do you need one?

A new idea for people who set up long-term trusts is that of the “trust protector.”

A trust protector is different from a trustee. A trustee’s job is to administer the trust on a day-to-day basis according to how it is written. A trust protector’s job is to “protect” the trust by making very occasional changes to its rules as needed to further its goals.

The idea is to keep a long-term trust serving the purposes you intended, despite inevitable changes in family situations and tax laws. [Read more…]

Bank pays $64,000 for not honoring a power of attorney

Clarence Smith Sr., a Florida resident, decided he no longer wanted to have to manage his finances. He signed a power of attorney document authorizing his son to handle his affairs. Clarence owned a bank account jointly with a female friend from his retirement community. His son became suspicious about some withdrawals from the account and contacted the bank. He asked the bank to transfer $64,000 from the joint account into an account owned solely by Clarence.

Before doing so, the bank contacted the joint owner. She objected to the transfer. She also told the bank that Clarence’s son was trying to steal his money. The bank then refused to transfer the funds.

Shortly afterward, the “friend” withdrew all the money in the joint account, leaving Clarence with nothing. Clarence died a few weeks later. His son sued the bank on behalf of Clarence’s estate. A jury sided with the estate, finding that the bank acted wrongly in refusing to honor the son’s power of attorney, and awarding the estate $64,000 in damages.

If you’re hiring home help, beware of the ‘nanny tax’

If you or an elderly relative is hiring someone to provide care in their home, you should be aware that the “nanny tax” may apply.

Generally, the tax applies if you hire someone and pay them $1,700 or more a year. Here’s what’s involved:

  • You must pay the employer’s share of Social Security and Medicare taxes for the employee. That’s 6.2% of wages for Social Security and 1.45% for Medicare. [Read more…]

Sometimes it can be smart to turn down a bequest

Here’s something you probably never thought about: Just because someone leaves you money or other assets in a will, that doesn’t mean you have to take it. You can also just say, “No, thanks.”

(Actually, you have to do more than that. You have to sign an official document called a “disclaimer.”)

Why on earth would someone turn down a bequest? Well, it turns out that in some cases, doing so can save a family money in the long run. [Read more…]

It might be time to update your health care proxy

A health care proxy states who you want to make medical decisions for you if you’re not able to make them yourself. A living will provides a roadmap as to how you want those decisions to be made. It’s a very good idea to create these documents, and to review them on a regular basis.

Here are some things to consider:

Has your state recently adopted a “standard” health care proxy form? Some states have adopted a particular form by law. It might not be necessary to use this form, but you might want to do so, because doctors and hospitals will be more familiar with it and using it might avoid delay and confusion about whether to accept a document. [Read more…]

Be careful with joint property and ‘payable on death’ accounts

If you intend to leave your children equal shares of your estate, don’t forget to consider any money or property held jointly with a child. If you have recently added a child to a bank account, own property jointly with one of your children, or have set up a payable-on-death account with a child as the beneficiary, you might want to revise your will, or at least reconsider how the asset is titled.

Here’s why: Property in a joint account passes outside of your estate. If you add a child to one of your bank accounts, perhaps as a convenience because the child is helping to manage your finances, the account will pass to that child alone when you die. This is true for any property held in joint tenancy, or any property in a payable-on-death account. [Read more…]

There may be better alternatives to charitable gifts in your will

Many people include charitable gifts in their will. Not only do they want to help certain charities, but doing so can reduce estate taxes. But suppose that at some point, it becomes clear that your estate will likely incur little or no estate tax. You might consider removing all or part of such a bequest from your will, and instead making a gift while you’re still alive. Doing so could give you a large income tax deduction, while having no effect on your estate tax – leaving more assets for your heirs.

You might also want to amend your will and your power-of-attorney document so that if you become unable to manage your affairs, your agent can “pre-pay” a charitable bequest while you’re still alive in order to save taxes in this way. [Read more…]