Monday, May 16, 2011
How to Protect and Pass On Artwork, Antiques, and Other Valuable Assets
Some assets—such as real property, stocks and savings—are fairly straightforward when it comes to leaving them to your beneficiaries; other assets—such as valuable artwork or antiques—are not always so easy. How do you will an asset to a loved one when there is no deed or title of ownership? And just as importantly, how do these paperless assets figure into the size and administration of your “taxable estate”?
According to this article by Bonnie Kraham, how you dispose of these assets can be extremely important to the administration and taxation of your estate. One particularly dangerous method is referred to as “the empty hook” method, wherein “When the collector dies, the beneficiaries simply remove the artwork (from the hooks) in accordance with name tags on the items for the intended recipients. Thus, the estate is left with "empty hooks" of what may be part of a sizable taxable estate for estate tax purposes.”
The problem that arises with the “empty hook” method is that wealthy families who collect artwork or antiques as investments often have records of their purchases and sales, as well as a list of valuable items for insurance purposes. Any of these documents and records would be reviewed during probate or administration of the estate. “If you don't fully disclose the value of your art collection, or don't properly plan to gift art in compliance with estate tax rules and regulations, you can pass on tax fraud, instead of art, to your beneficiaries.”
Perhaps the best way to hold and legally dispose of your art or antiques collection upon your death is to transfer ownership of these valuable assets into a trust. “Transferring your art collection to a trust may be the most effective, efficient and transparent way to administer your estate after death . . . Trusts are private documents and, although the tax reporting remains the same for trust assets, trusts protect the privacy of an art collector or artist, which can be an emotional protection for the beneficiaries.” Additionally, keeping valuable artwork in trust can provide an extra layer of protection from divorce or lawsuits during your lifetime.
Contact our office, or your own local estate planning attorney, for more information.
Friday, April 08, 2011
Royal Couple Has Many Asking “How Effective Are Prenuptial Agreements?”
It’s all over the news lately that Prince William and his fiancé Kate Middleton will likely not sign a prenuptial agreement before the royal wedding on April 29th. Although many reasons have been given as to why the couple will forgo signing a prenup, one of the reasons is that “while prenuptial agreements are common in the United States, they are far less prevalent in the UK. Only in the last year have British courts agreed to recognize such deals.” This is a statement that has some Americans asking exactly how legally binding are prenuptial agreements here in the States?
The answer to that question depends on a number of factors: your state of residence, the terms of your prenuptial agreement, how long you stay married, and more. Fortunately, the longer prenuptial agreements are around, and the more common they become, the more respect they get from the courts. But if you’re worried that your prenuptial agreement won’t hold up in court, here are few tips to help ensure the validity of your agreement.
Neither party must be signing under duress. The more time each party has to review the agreement before the wedding the better. Any prenuptial agreement signed the day of or the day before the wedding could be looked upon as being signed under duress.
The agreement should include full disclosure of income and assets. If you live in a state where it is possible to waive full disclosure of assets then BOTH parties should specify that they do so knowingly.
Each party should have their own legal representation.In order to be sure that neither party is being taken advantage of, each party should have their own independent attorney review the document before it is signed.
Details regarding children or child support in a prenuptial agreement may or may not be enforced by the courts.Partners my want to include details about possible custody or child support arrangements in a prenuptial agreement, but keep in mind that any court will always give the best interests of a child the highest priority, even if it means disregarding those sections of the agreement between spouses.
Of course, every couple hopes that a prenuptial agreement will never come into play, but these tips and many others can help ensure that your agreement will be considered valid by a court if the worst should happen. Contact our office if you have any questions about prenuptial or marital agreements, we’d like to help.
Friday, December 03, 2010
Are Misconceptions Keeping You From Planning for Retirement?
Planning for retirement can be tricky business. When we discuss our clients’ estate plans and assets with them we can’t help touching on retirement plans, so we hear a lot about the worries that go along with preparing for an uncertain future. There are many variables and unknowns that can crop up between starting out in your 20s or 30s and your eventual retirement at 60 or 70; and there are a lot of myths about retirement which are daunting, discouraging, or just plain misleading.
U.S. News and World Report recently published an article which attempts to address some of these myths and set readers back on the right track to retirement. We hope that all of our readers are already saving for retirement, but because we know just how important it is to save early and save often we’d like to list some of the myths here for our readers:
#1 You don’t make enough money to save for retirement.
#6 You need to be debt free before you can invest for retirement.
#8 Social Security benefits will be enough to retire on.
#9 You have to retire at age ___.
These are only 4 of the 10 myths covered in the article. Click on the link above for a full list of commonly-held assumptions about retirement that may be preventing you from making the most of your retirement savings.
At our office we help our clients protect and plan for the future, retirement is often a part of that future. If you have any questions about how to protect your retirement investments, or how to ensure that they transfer properly to your heirs if anything should happen to you, please call our office.
Monday, November 15, 2010
Family and Future: The Keys to Top Notch Estate Planning
We write a lot on this blog about what estate planning is truly about: it’s about laws, taxes, assets, and documents of course; but deep down, estate planning is about relationships.
As estate planners and advisors, an important part of what we do is creating the best estate planning or asset protection vehicle we can for our clients; but achieving this goal involves far more than simply writing a document—it also involves listening to our clients, reading between the lines of sensitive family interactions, and it often involves looking into the future to catch potential problems before they happen.
A recent article in the Wall Street Journal describes the unorthodox lengths to which advisors will go to help clients achieve their goals. “For the family with the gridlocked siblings, [their financial advisor] arranged a session of personality-type charting with an outside expert. The tests showed one of the brothers-in-conflict to be a hard-driver who loved to make decisions on the fly. His brother was more analytical, and needed time to reach conclusions... Establishing that these conflicting traits are permanent characteristics has helped the brothers understand each other’s work habits and function better as a team. “
Our firm may not yet have had to arrange personality-type charting sessions, but this “running interference” or acting as a mediator and guide is exactly what we do. Evaluating goals, assessing relationships, identifying priorities and facilitating productive discussions is part and parcel of being a good estate planner and a great family attorney and advisor.
Estate planning and asset protection may sound like it’s about things and wealth, but a good advisor knows that it is always about family and relationships. Consider this when you’re looking for an estate planner: Do you want an advisor who is simply protecting your wealth, or do you want an advisor who is looking out for your future and your family?
Monday, October 25, 2010
“Nothing Says Romance More Than A Prenuptial Contract.”
You may have your doubts about the sentiment above (which is also the opening line of a recent article in the Wall Street Journal) but many couples are beginning to see the truth of this statement. Younger couples, older couples embarking on second marriages, and couples with family businesses or assets to protect are coming to realize that prenuptial agreements can actually take the pressure off a relationship, making more room for romance rather than less.
A recent ruling in Britain’s Supreme Court has thrown prenuptial agreements back into the limelight, not only in the U.K. and Europe, but also here in the United States. The above-mentioned article in the Wall Street Journal offers a few basic guidelines for couples considering drawing up a pre-nup, the most important of which include: there must be no signs of duress, each party must have their own legal counsel, and nothing concerning children can be fixed in a pre-nup.
But if you’re on the fence about whether or not a prenuptial agreement is right for you and your spouse-to-be you may be most interested in the final paragraph of the article, which states that “Prenups are romantic... You’re making a provision for somebody. You’re saying, ‘I want you to know now that you’ll be alright’... this should be part of the process of falling in love and going forward with that commitment.”
Wednesday, October 20, 2010
Plan Ahead to Avoid Financial Pitfalls in 2011
A recent article in U.S. News and World Report points out that although “the Great Recession may technically be over... Consumers [still] don't want to spend and are still slowly digging their way out of the mountain of mortgage and personal debt that helped fuel the downturn.” Among those groups who are still struggling the most are seniors and retirees, many of whom took a devastating hit to their retirement investments and savings, and are still struggling to recover.
Unfortunately, according to the article, 2011 may bring with it some new financial concerns for seniors. Some of the “major money issues” seniors will have to think about in the coming year include a zero cost of living adjustment from the Social Security Administration, changes to certain Medicare policies, a rise in income and capital gains tax rates, and the return of the estate tax, among others.
Although the article itself offers no particular solutions to these financial concerns—it merely gives a warning of what’s to come—there are steps you can take to avoid some of the worst financial pitfalls. Because each individual situation will be different there is a danger to blindly following (or offering) standard advice across the board. However, with consultation and careful planning there are a number of strategies estate planners can recommend that may help your family protect your assets now, and when the estate tax returns. Forewarned is forearmed, and taking the time to consult with your estate or financial advisor and plan ahead may be the best action you can take.
Wednesday, September 01, 2010
You’re Never Too Young to Need a Financial Planner
Most people don’t think about visiting a financial planner until they’re old enough to have some money to manage, but if your child is a recent college graduate, or in his or her final year, you may want to consider a joint trip to your financial planner. A recent article in the Boston Globe lists a number of very compelling reasons why even young adults with little or no savings can benefit from a little bit of planning.
1. A visit to a financial planner can help young adults learn early the importance of budgeting: “If you are living on your own for the first time you haven’t had the responsibility yet of paying bills and learning to make your paycheck last until the next payday... One of the basic tenets of financial planning is to know where your money is going.”
2. Start planning for retirement while you’re still young.The earlier you start, the better off you’ll be. “A financial planner can go over the various fund choices in your 401(k) or other retirement plan and help you choose one or more funds that suit your needs.”
3. Learn how to turn big dreams for the future into a reality. Whether you plan to get married, buy a house, or start your own business, “A Certified Financial Planner® can figure out how much you need to save and create a plan to make saving painless.”
4. And finally, a financial planner can help young adults learn the basic tenets and terminology of borrowing, lending, saving smart and paying off loans with interest. “Learn about interest rates and how they work, whether they are for credit cards, auto loans, student loan or other borrowing. See how compound interest can help you reach goals faster.” An early trip to a knowledgeable professional can ensure that your child doesn’t get taken in by persuasive credit card companies.
Monday, August 30, 2010
Planning to Live Through the 2010 Estate Tax Repeal? You Can Still Save on Taxes
It is common knowledge that 2010 is a great year for heirs. If you didn’t know about the 2010 estate tax repeal, all the media coverage of George Steinbrenner’s recent death (and his heirs’ lucky tax break) probably alerted you. Everybody is saying that 2010 is a good year to die... But what about those of us who plan to live through 2010?
According to the New York Times even hale and hearty individuals can save on their taxes in 2010—it just takes a little more planning. “A bigger issue [than the estate tax]... has become the gift tax, which is linked to the estate tax to prevent people from giving away their fortune in life to avoid taxes at death. It now stands at 35 percent, the lowest rate since the 1930s.” The gift tax is a tax on money or property that you give to another individual while you are still living. Currently an individual may give up to $13,000 per year (or up to $26,000 if you give as a married couple) without incurring gift tax.
If you’re a wealthy parent or grandparent trying to decrease your taxable estate through gift-giving, this is the year to do it for a number of reasons. First, of course, is the historically low 35% gift tax rate. Second, “in addition to the historically low rate, another reason to make sizable gifts this year is that the values of many assets are still depressed. Long-held stocks, real estate and shares in private businesses could all increase in value, and giving them away now will allow them to appreciate with your heirs and not in your estate.” A final reason to consider giving your large gifts before the year is over is that the 35% rate won’t last forever; the gift tax is expected to rise to 55% next year.
How can you take advantage of this lucky confluence of events? Well, as always when you’re dealing with large sums of money (not to mention dealing with the IRS), you’ll want to be careful. We do NOT recommend that you simply write a check for $13,000+. Contact your estate planner or your financial planner to find out how you can safely reduce your taxable estate while giving security to the people you love.
Friday, August 20, 2010
Women and Finances: How Estate Planning Can Help
When it comes to family matters, women are often the head (and sometimes the sole member) of the planning committee. Vacations, dinner parties, school activities and celebrations... many of these wouldn’t happen at all if the women of the family didn’t take the lead. Estate Planning tends to be no different: Many first phone calls, appointments, and attendance at estate planning or elder law seminars are initiated by women. However, studies suggest that this tendency in women to plan ahead may not apply to financial planning.
A recent article from CBS news suggests that although women are actively involved in family and household finances, they are less likely to be involved in long-term financial decisions. According to the article, although many women “know how to spend and get by on a short term basis... they have a time getting a grip on their long term saving and planning." Of course this is a generalization, and won’t apply to everyone; but considering the importance of the topic, it is definitely a worthwhile subject for discussion.
Here are a few statistics to consider that impact women and their long-term financial decisions:
Older women (65+) outnumber older men by 22.4 million to 16.5 million. (Administration on Aging)
Poverty rates are higher among older women than older men by 20.4 to 13.1. (U.S. Census Bureau)
The median weekly earnings of full-time wage-earning women is $657, or 80 percent of men’s $819. (U.S. Dept. of Labor)
Not to mention that on average, it is the woman of the family who will end up putting her career on hold for caregiving duties at various times in her life (either to care for young children or aging parents.)
Put all of this together and it means that women need to take control of their finances, not the other way around! Luckily, this may not be as difficult as you think. The CBS news article mentioned above has some suggestions on how to take charge of your finances; but beyond that, planning your estate can be a huge step toward planning for your financial future as well, because any estate planning includes taking stock of of your financial assets—including savings accounts, retirement assets, individually owned assets as well as those owned jointly by a married couple.
We encourage women (and their families) to let their estate planning contribute to their financial future—it’s not just about how your assets will be distributed after your death, but also what steps you’d like to take to preserve those assets during your lifetime.
Wednesday, August 18, 2010
Do Expected Changes to GRAT Legislation Affect YOUR Plans?
If you (or your financial planner) have been considering creating a Grantor Retained Annuity Trust (GRAT) to avoid gift taxes on financial gifts to family members you may want to read this article from Forbes before you take the final step. According to author Seth R. Kaplan there has been much talk in Washington of late about what he calls “anti-GRAT legislation”, and although the offending bills have not passed in the Senate thus far, it seems as though it’s only a matter of time before the rules and regulations regarding GRATs change—and not necessarily for the better.
According to Kaplan, “a bill co-sponsored by 10 senators (relating to an extension of COBRA premium assistance) was introduced at the end of June containing provisions targeting GRATs, the most significant of which requires GRATs to have a minimum term of 10 years. So it appears that some form of this anti-GRAT legislation will eventually become law.”
This ten year minimum will put a stop to the short-term GRATs (2-4 years) which have been especially popular among elderly individuals (a popularity that is understandable considering that if the grantor dies before the expiration of the trust the assets will revert back to the grantor’s estate and are subject to estate taxes.) But Kaplan claims that long-term GRATs can still be “a powerful tool for effective wealth transfer planning, especially where interest rates are low and asset values are depressed but expected to rise.”
If you’ve been considering creating a GRAT, and know that you want the short-term GRAT, you’ll probably want to talk to your estate planner or financial advisor ASAP, before the restrictive legislation Kaplan is expecting comes to pass. However, the proposed legislation doesn’t have to be a loss. If you have the time, you may want to consider the benefits of the long-term GRAT.
Law Offices of Elyssa M. Schnurr focus their practice on Estate Planning, Wills and Trusts of all degrees of complexity, Probate, Estate Administration & Business Entity Formation. They are also available to assist with Uncontested Divorces and Mediation. They serve 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.