Share

Houston Estate Planning and Probate Blog

Wednesday, March 16, 2011

Tragedy in Japan Inspires Reflection: Are You Prepared for Disaster?

Only a few days ago the world was shocked by the terrible earthquake and tsunami in Japan.  Our hearts and prayers go out the people affected by the tragedy, and many people are asking what they can do to help.

The sudden violence of nature has many of us looking at our own situations as well, wondering if we are prepared—as a country and as individuals—should an equally devastating natural disaster strike our own shores. Of course the first thought most of us have in this regard is whether or not we have a well-stocked supply of emergency rations, but as this article from CBS MoneyWatch.com points out, there is much more to surviving a natural disaster than the first 24 hours. “Most people never think about the items to take that help protect your financial assets.”

Author Steve Vernon includes in his article a list of things you can do to prepare for what comes after the first 24 hours of a natural disaster, including:

·         A stash of cash in case ATMs are shut down for a long period of time.

·         Contact information for family members, close friends, and work contacts.

·         A cell phone and charger, plus batteries and chargers for other necessary electronic equipment.

·         A list of account numbers and contact information for all your regular bills and payment obligations. 

·         Your insurance company contact information.

These are only a few of the things you’ll want to have ready (or at least have thought about) if disaster strikes here at home. 

Some natural disasters are so big in scope they are almost impossible to comprehend, let alone try to prepare for; but preparation is the best way to keep fear and panic at bay.  It doesn’t help anybody to dwell too much on what “might happen,” but having a basic emergency plan in place gives you the freedom to go on with your everyday life, knowing that you’ve done what you can to be ready if disaster does strike. 

For more information about disaster preparedness please visit the FEMA website here: FEMA Emergency Planning Checklists.

For more information about how you can help the disaster victims in Japan please check the Crisis Response Page on Google.


Wednesday, March 9, 2011

A Way to Help Parents and Grandparents in Financial Need

Estate planning is often about how people can pass wealth on to their children or grandchildren, but what if a child wants to give financial gifts to a parent or grandparent? This article from Bloomberg discusses just that: how GRATs Let Children Pass Millions to Mom or Granny Free of U.S. Gift Taxes.

As the elderly population of the U.S. increases, and as the effects of the economic downturn hit, more and more adult children find that their parents or grandparents are not doing as well financially as they had hoped.  Many need help paying for medical expenses, home care expenses, mortgage or rent payments, etc.  Adult children would like to be able to help, and a properly executed GRAT can be the perfect vehicle for wealthy children to give financial aid to their parents or grandparents without taking away from their lifetime gift-tax exemptions.

“With a GRAT, a child sets up a trust with a term of at least two years and funds the trust with stock or other investments. The trust pays the principal plus interest back to the child over its term as if it were an annuity, based on an interest rate set by the Internal Revenue Service. Any appreciation of the underlying investments above this ‘hurdle’ rate passes on to the GRAT’s beneficiary, in this case the parents, without being considered a gift for tax purposes.”

However, this opportunity may not be around forever.  The Obama administration has recommended imposing a 10 year minimum term on GRATs, an act which would make the GRAT strategy significantly less useful for many families. Adult children who would like to use a GRAT to pass wealth up to their parents or grandparents should consult with a financial or estate planning advisor sooner rather than later.

If you do miss out on the GRAT window, however, there are other options for helping elderly relatives, including paying medical expenses for the loved one (so long as payments are made to the service provider directly, rather than to the relative.)  Contact our office for other options and more information about helping elderly parents and grandparents.


Friday, March 4, 2011

Tough Decisions Await Executors of 2010 Estates

If you are the executor of the estate of a decedent who died in 2010 you may think you’re in the clear.  After all, there was no estate tax in 2010 right?  Making distributions should be a piece of cake.  Wrong.  Because of the estate tax election available on the estates of 2010 decedents, administering those estates will actually be more work than you may think.

The repeal of the estate tax in 2010 also brought with it a repeal of the “step up in basis,” meaning that heirs selling inherited assets were taxed based on the original acquisition cost of the assets, not on their value as of the date of the taxpayer’s death.  This generally resulted in a higher tax paid on assets than the normal estate tax rate—not good for taxpayers. But 2010 estates don’t have to go by these rules. The legislation passed in December of 2010 gave 2010 estates the opportunity to elect whether they wanted to use the 2010 estate tax laws, or the new laws for 2011.  This article in Forbes explains what this means:

“The 2010 Tax Relief Act restored the estate tax for individuals dying in 2010 with a $5 million per person exemption and a maximum rate of 35%. It also repealed the modified carryover basis rules for property acquired from a decedent who died in 2010. However, estates of individuals dying in 2010 can elect zero estate tax and the modified carryover basis rules that would have applied before they were repealed. That means the basis of assets acquired from the decedent would be the lesser of the decedent’s adjusted basis (carryover basis) or the fair market value of the property on the date of the decedent’s death.”

In general this tax election is a good thing, it allows executors to choose which tax formula will cost the beneficiaries the least in taxes; but it does mean a lot more paperwork and a lot more attention to detail.  If you are the executor of an estate of a decedent who died in 2010, don’t hesitate to call us.  We can answer your questions and help you explore your options.


Wednesday, February 23, 2011

The Tax-Man Cometh

It’s that time of year again; the time of year when everyone starts gathering receipts, assessing income and expenses, and making appointments with tax advisors.  Tax time can be a very stressful time for many families, but—with the help of this article from MSN Money—perhaps tax season can be made a little bit easier. The article lists 13 tax breaks from 2010 that can help save you money, including:

  • The tax credit for first time homebuyers (if you’re not a first time homebuyer don’t give up, there’s a credit for existing homeowners too.)
  • The parking and transit credit
  • The college tuition tax credit
  • The credit for energy-saving home improvements

And then of course there are the two we’ve been mentioning here on our blog for the past few months:

  • The estate tax exemption, and
  • The annual gift tax exemption

Of course, not every item on the list is going to apply to every reader, but if even one or two credits apply to you or your family it can be a huge help. 

Don’t rely only on this article to ease your 2010 tax burden, your own advisors and tax planners—who know more about your family’s personal and business finances—will be able to give you much more in-depth advice on how best to address your own tax situation.  In addition, talking to a professional advisor right now provides the perfect opportunity to tackle any issues in 2011, hopefully making this time next year a much happier and less stressful time for everybody.


Wednesday, February 16, 2011

Estate Tax Laws Aren’t the Only Things That Change

We’ve written before about the importance of reviewing and updating your estate plan, but it’s a topic worth mentioning again—especially in light of the many recent changes to estate tax law.  The plain truth is that no matter how perfect your estate plan is when you create it, change is inevitable, and when your life (or the tax law) changes, it’s important that your estate plan change with it. 

Reviewing your estate plan every 2-5 years is essential to keeping it up to date and working the way you intended it to work. Luckily, reviewing your estate plan can be quick and easy if you know what you’re looking for.  Here are 5 key components you’ll want to review:

1.    Fiduciaries-How have the people in your life moved or changed?

2.       Assets-Are your finances different than they were a few years ago?

3.       Distribution and Beneficiaries-Are there any new members of your family?

4.       Health Care-What changes have you experienced in your health recently?

5.       Legal Updates-Have the laws changed?

If we’re lucky, our lives are constantly changing—our families evolve, our finances improve or decline, we meet and form strong relationships with knowledgeable friends and professionals. It only makes sense that your estate plan should change too.  What seemed best for your family 4 years ago might not be the ideal situation now.  By reviewing and updating these 5 components on a regular basis, and touching base with your attorney, you will insure that your estate plan will continue to protect yourself and your family the way you intended it to when you first created it.


Wednesday, February 9, 2011

Estate Tax Lessons from 2010 and Things to Watch Out for in 2011

We all know from the many news stories of last  year that estate tax laws are not set in stone, they can fluctuate and change both at the state and the federal level; and as this article in Forbes points out, keeping up with those fluctuations can be of the utmost importance to you and your loved ones.

The many celebrity news stories we saw last year provide all the examples we need of what can happen when you plan well (as was the case with Brittany Murphy’s estate plan) or when you neglect your estate plan—or even worse, when you fail to plan at all. Here are some celebrity examples of common estate planning pitfalls and mistakes:

Failing to update your estate plan.We tell all of our clients how important it is to review and update your estate plan every 2 to 5 years; Gary Coleman provides a prime example of what can happen if you neglect to follow through on those updates and reviews. “[Coleman] created a handwritten codicil to his will in 2007 leaving much of his estate to his wife, Shannon Price. After they divorced, however, Coleman never updated his will or created a new one. That led to a court fight after he died about whether Coleman was still married to Price. Even though they never officially tied the knot for a second time, Price claimed they had a ‘common-law marriage,’ which would mean that the handwritten will would be valid.”

Failing to fund your estate plan.A revocable living trust is a wonderful tool, but it’s just an empty vessel until you fund it by re-titling your assets in the name of your trust.  Michael Jackson created what is most likely a wonderful living trust, but his failure to fund it properly means that 2010 saw “The estate of Michael Jackson... dragged on with no end in sight.”

Waiting too long to create your plan.If you are a senior citizen, waiting too long to create your plan leaves you open to the exploitation or undue influence of acquaintances or family members who might try to take advantage of you.  Even if nothing of the sort has taken place, just the suspicion of undue influence can land your estate in a lengthy court battle. “Does the Anna Nicole Smith case come to mind? The United States Supreme Court ruled in 2010 that it will hear her case for the second time. Did she wrongly take advantage of her 90-year old husband, or did his son use fraud and other improper means to stop the billionaire from leaving money to Anna Nicole?”

We can all benefit from the very public airings of these celebrity estates.  Our office can help you avoid the mistakes listed here, plus many more.  The new laws of 2011 provide the perfect opportunity to create a plan (or update your existing plan), and ensure that your family will be well protected now, and in the future.


Thursday, February 3, 2011

It’s Never Too Early to Make Your First Will

We’d like to share with our readers a recent article in Forbes entitled How To Write Your First Estate Plan.  This article supports something we’ve been saying in our blog all along: That everyone needs a will—whether you’re a young couple just starting out, an established family with valuable assets to protect, or an entrepreneurial business owner with succession on your mind. The article reminds us that a will “is the cornerstone of an [estate] plan,” and at whatever stage of life you may be is not too early to make your first will.

“There's a lot more to an estate plan than just a will, even for folks who don't need a more complicated estate-tax oriented version. You might have pieces of it already--a living will signed when you had elective surgery or a beneficiary form filled out for a 401(k) when you got your first job. You need to make sure the pieces fit together.”

Many couples or individuals are first motivated to create a will when they have young children, and the primary purpose of their will is to ensure that their minor children will be cared for and provided for should anything happen to the parents. This is certainly one of the best reasons to create your will or estate plan, but it is not the only reason, not by a long shot.  If you drafted your will when your children were young and haven’t looked at it since—or if you never created a will because you don’t have kids and therefore didn’t think you needed one—it’s time to revisit the subject.

An estate plan not only ensures that minor children will be provided for, but also that:

  • Older children have the means to continue their education if something happens to you
  • Your spouse or children are the recipients of your life insurance or retirement proceeds, and not the tax man or (even worse) an ex-spouse or ex-boyfriend or girlfriend.
  • You have someone trustworthy distributing your assets as you wish after you pass away.
  • Your business will transfer smoothly if you aren’t able to run it anymore.
  • And much more.

“Whatever motivates you, fine. The point is--whether you're in estate tax territory or not, if you don't have an estate plan, you need one. (And if you have a really old one, you probably need a whole new one.)” Any opportunity is the perfect opportunity to start planning to protect your loved ones.  Call our office (or your own trusted attorney) to learn what steps you can take toward protecting your loved ones right now.


Wednesday, January 26, 2011

5 Essential Tips for Executors or Trustees

Serving as executor or trustee of a will or a trust is an honor... but it’s also a job—a BIG job—and not one to be taken lightly. The role of executor or trustee can be one of great financial power, but it carries with it a heavy fiduciary obligation.  Fiduciary obligation means that an executor or trustee must act in the best interests of the beneficiaries; it means that although the executor or trustee may be doing all the work, he or she may see very little return on that work, which is all for the benefit of the named beneficiaries.

If you have been nominated (or are currently serving) as an executor or trustee there are a few things you’ll want to remember as you go about your duties:

1. The will or trust is your guide, the mission statement by which you should operate; read and understand the document completely, and have an attorney help you, if necessary.

2. You need to be pro-active—to an extent.  If you are managing a large amount of money or assets over a period of time it is probably not in the best interests of the beneficiary to let those funds sit in a savings account.  Create (with an advisor, if necessary) a financial plan for the trust assets.

3. Although you may be handling the estate assets, you should not have any personal financial dealings with the trust.  You should under no circumstances borrow from or lend money to the trust.  Keep your finances separate!

4. Communication and transparency is key!  Keep detailed records of all of your actions and transactions regarding the will or trust, and send regular reports to the beneficiaries.  Regular communication prevents unhappy surprises or angry lawsuits in the future.

5. You don’t have to do it alone.  If you were picked as a trustee because of your financial knowledge and experience—great!  But if you were picked because you are the oldest, or the most responsible, or the favorite you may feel overwhelmed by the job ahead of you.  Don’t try to muddle through alone, get the help and support of an experienced attorney or advisor.


Wednesday, January 19, 2011

No More Excuses, It’s Time To Plan Your Estate

The dust surrounding all the estate tax law “remodeling” is finally settling, and it’s time now for families to give their old (or future) estate plans some serious scrutiny. For all of you who were waiting until Congress made some firm decisions on the estate tax laws—there are no more excuses. Forbes writers Janet Novack and Ashlea Ebeling explain in their recent article why—now that the estate tax is no longer in flux—it is so important to move quickly on your estate plan. 

Many first time planners will be ready to take advantage of the new laws, now that the “hefty $5 million exemption, combined with a new portability provision, should allow many affluent couples to simplify their planning.” Couples with estate plans already in place will be able to take advantage of the new laws as well, but the motivation to update their existing plans may have more to do with the need to undo outdated formulas in wills and trusts that, with the new laws in place, may now do more harm than good.

“Many couples have old wills designed mainly to preserve the estate tax exemption of the first spouse to die, something the law now does. Under these old "formula" wills, when the first spouse dies assets equal to his or her federal estate exemption go into a "bypass trust" for their kids. The surviving spouse has access to the trust's earnings and, if need be, principal, but what's in the trust "bypasses" the survivor's estate. Problem is, with the exemption jumping to $5 million (it was only $2 million in 2008) the survivor could be left with nothing outside the trust.”

The new estate tax laws are much friendlier to middle-income families, but don’t let that fool you into thinking you don’t need to plan at all.  “Whatever your age, marital status or net worth, you need a will (saying who gets your stuff); a living will (stating your wishes about end-of-life care); a health care proxy (naming someone to make medical decisions for you if you can't); and a durable power of attorney (designating someone to act on your behalf in financial and legal matters if you can't).” Not to mention you still may have state taxes to contend with in your estate plan.

Now is the time to call your attorney and talk about estate planning in the New Year. There is no more reason to procrastinate, and it’s your family’s legacy that’s on the line.


Wednesday, January 12, 2011

Government Rescinds Medicare Coverage of End-Of-Life Planning

Apparently the suspicion surrounding end-of-life planning is not as far in the past as we might have hoped.  The recent Medicare regulation which would have allowed the government to pay doctors who advise patients on options for end-of-life care was rescinded only days after it was enacted.

Why such an abrupt turnaround?  The reason is probably not too difficult to guess.  Most people know that Medicare-covered end-of-life planning has a tempestuous history both in politics and in the media.  This article in the New York Times stated that “while administration officials cited procedural reasons for changing the rule, it was clear that political concerns were also a factor.”

The alteration of the rule may be disappointing, but it shouldn’t stop you from thinking—or talking to your doctor—about your choices for your own end-of-life care.  After all, this administrative change of heart does not alter the fact that having these discussions with your doctor (as well as with your health care agent and loved ones) preserve patient autonomy at a time when events may seem to spiral out of control.  As National Public Radio pointed out in their article, “it remains perfectly legal for physicians to talk with patients during annual visits paid for by Medicare about how much or little care they want when facing a terminal illness.”

Media firestorms and political debate notwithstanding, your decisions about your end-of-life care are important.  When you have these discussions with your doctor and loved ones, and when you have a living will or healthcare directive in place, you are far more likely to get the care you want at the end of your life, regardless of how invasive or restrained you want that care to be.

If you have reservations about what a health care directive might mean to your future medical care, or if you have any questions about this issue, please don’t hesitate to call our office.  Your peace of mind is our first priority.


Wednesday, January 5, 2011

Resolutions to Last You Through the Year

What are your resolutions for 2011? A majority of New Year’s resolutions have to do with money and health—or more specifically, with saving money and losing weight.  Unfortunately, most New Year’s resolutions don’t last through the first month of the year.  But what if there were steps you could take in that first month, when you’re still feeling inspired and motivated, that would pay-off throughout the rest of the year when all your good intentions fall by the wayside?

Luckily, there are steps you can take right now that will help you save money throughout the rest of the year. This article in USA Today lists 5 steps you can take right now to help you save money in 2011:

1.      Order your free credit report

2.      Get a medical exam

3.      Update your beneficiaries

4.      Increase your 401(k) contributions

5.      Rebalance your portfolio

All of these will help you keep your 2011 resolutions throughout the entire year, but the ones we’re most concerned with are #s 2 and 3.  Too many people “take care of business” pertaining to beneficiaries and 401(k)s when they first get hired (or open a new account or life insurance policy) and then never think of it again. But lives change over the years, and the people you listed, or the amount you contributed 5 or 10 years ago is probably not what’s best for your family right now.

The New Year brings with it new beginnings... and new hopes.  Why not take advantage of this feeling of optimistic euphoria by taking steps now that will carry you through the entire year?


Archived Posts

2017
2016
2015
2014
2013


Schnurr Law Firm, PLLC serves clients throughout the greater Houston area, including, but not limited to Houston, Bellaire, West University, Sugar Land, Missouri City, Richmond, Rosenberg, Katy, Cypress, The Woodlands, Kingwood, League City, Webster, Clear Lake, Pearland, Angleton, and throughout Harris County, Fort Bend County, Montgomery County, Brazoria County and Galveston County.



© 2017 Schnurr Law Firm, PLLC | Disclaimer
1111 North Loop West, Suite 1115, Houston, TX 77008
| Phone: 713-662-2889

Estate Planning | Family Limited Partnerships | Qualified Personal Residence Trust (QPRT) | Irrevocable Life Insurance Trust (ILIT) | Advanced Estate Planning | Probate / Estate Administration | Special Needs Planning | Elder Law | Pet Trusts | Business Law-Entity Formation | Uncontested Divorces | Mediation | Planning for Same Sex Partners & Unmarried Couples | Resources

Lawyer Website Design by
Zola Creative