An estate planner’s office can feel a lot like it’s all about the logistics of death: who gets what and how, who gets to make decisions, where things are kept, etc. But at our office, we know that every estate plan is also about a personal or a family story, and we encourage our clients to include those stories with the other things they leave behind. Elderly people have so much life experience and wisdom to share (even if they don’t always consider it wisdom themselves), and most children or grandchildren—although they may not know how to ask—want to hear those stories.

Now there’s a book that helps teach you how to ask, and with the stories it contains helps the elderly learn how to share. It also teaches us just how valuable the wisdom of the elderly is, and how fun it can be to grow old gracefully. The book is How to Live: A Search for Wisdom from Old People (While They Are Still on This Earth) by Henry Alford. In it, Alford tells the story of his own search for wisdom and the interviews he conducted trying to find it; along the way he relates the sometimes funny, sometimes touching, but always enlightening stories of the elderly people he interviewed. Alford’s book is entertaining, but a reading of it will also teach you the tools you need to interview the elderly people in your own life.

When you sit down to create your estate plan, think not only about how to pass on your assets, but also how to pass on your unique family stories and wisdom. After all, the silver may go back to your great-great grandmother, but the story behind it is what makes it such a valuable family heirloom.

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In these troubled financial times many parents are re-thinking the wisdom of passing on an inheritance with no strings attached. Parents and grandparents still want to help give their heirs a financial boost, but now they want to pass on something else as well—the value of resourcefulness and hard work. How often have you longed for a substantial way to encourage your son or daughter to get a college degree? Or wanted to keep your grandkids away from harmful substances but felt toothless? Well now you can do either (or both) of those things with your estate plan, and something called an incentive trust.

Most parents want to provide for their children, but they also want them to lead satisfying lives as contributing members of society. During your lifetime you can support this goal by giving your children financial gifts gradually, when you feel they need or deserve it. But how do you continue to use that discretion after your death? An incentive trust helps you do just that by defining when financial gifts would be distributed from the trust, and under what circumstances. Most parents choose to give a distribution upon graduation from college, or to help an entrepreneurial child start a new business, but according to this article on APM Marketplace some grantors have even made distributions contingent on who the beneficiary marries or how much weight the beneficiary gains or keeps off!

Okay, perhaps the “Twinkie Trust” is going a bit far, but in many cases an incentive trust can be exactly what a parent or grandparent needs in order to feel good, not just about passing on an inheritance, but about passing on values as well.

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If you have a significant estate to leave to your heirs—but you are still alive and well—to whom does that significant estate belong, you or them? This seem a silly question, of course the property belongs to you, but many adult children have come to count on the property their parents will leave them, and—rightly or wrongly—to feel a sense of ownership over it. As potential beneficiaries, do your heirs have the right to be informed ahead of time of your plans for your own estate?

David Cay Johnston, in his article Learning to Share, suggests that although parents have no responsibility to inform their children of their plans, not talking to your kids about your estate plan is a surefire way to foster hurt feelings and interfamily fights after you pass away. Sharing your plans for your wealth may not always be easy, but even the most ardent supporters of the privacy of the would-be decedent will have to agree with the logic of Johnston’s argument.

Our office understands that every family and situation will be different, and some parents will have good reasons for keeping their plans under wraps. But in many circumstances, whether your intention with your estate plan is to ease the way for your heirs or merely to ensure that your wishes are carried out to the letter, open communication with your children or potential heirs is the best way to support the accomplishment of those goals.

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With all the worrying you’ve been doing about the economy, the stock market, and shrinking investments, have you given any thought to how your existing estate plan may be affected by all of this? The New York Times has. And what they’ve found is hopeful. Although estates may be smaller, there’s now more room for flexibility, and if you play your cards right, more of your estate will end up going to your heirs rather than to the government.

So what does it mean to play your cards right?

1. Be specific about the distribution of your estate. Questions about your estate will inevitably lead to fights between family members. Being clear in your will or trust means fewer questions and fewer fights.
2. With the stock market so volatile build flexibility into your estate plan. A revocable trust as opposed to an irrevocable trust will give your executor more flexibility to manage assets when they need to be managed.
3. Reasses (and possibly re-title) how you hold your assets and take advantage of the latest exemption ($3.5 million per person, $7 million for couples.)
4. Make gifts now, rather than after you’re gone. “To give a child $1 million while you’re alive (if the exemption is gone), it would cost you $1,450,000. But if you wanted to will $1 million to an heir, you would have to give $1,820,000.”

But the first thing you have to do is dust off your existing estate plan and take it to your attorney for review. It’s time to reassess, revise, and take control again.

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When people think of lawyers they usually think of the fast-paced lives of the characters in John Grisham’s legal dramas, or maybe the dramatic and exciting courtroom scenes from the movie A Few Good Men. But Estate Planning Law has never been like that. Estate Planning has always been a calm and sedate area of law—until now. According to this article in The Wall Street Journal’s Smart Money.com longer life spans and shifting familial roles is changing not only the face of Estate Planning, but also values and traditions going back hundreds of years.

“It’s rare that an inheritance passes from one generation to the next without leaving some scars. But smooth transitions are becoming even rarer thanks to the growing influence of a new player: the second spouse. As Americans live longer, they’re more likely to move into second marriages, and legal experts and financial planners say the resulting friction with the kids is steadily mounting. In more cases grown children are going to court against their parents even while they’re still alive, only to run up against a legal framework that leaves them with surprisingly few rights compared with their parents’ new spouses. The once-sleepy field of trust and estates law is now brimming with hardened litigators. In Texas, personal-injury lawyers in search of big paydays have begun taking on will contests. And just as court squabbles are on the rise, so are prenups and sophisticated trusts that are designed to forestall them.”

All of these changes mean that we lawyers have a lot more to learn and anticipate, but so do our clients. The best way to keep the values of your family intact is to talk about it ahead of time and take steps to protect those values. As Chris Leyerle says at the end of the article, “You do it… out of love.”

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When we talk to clients about “the estate” they will pass on to their heirs, that estate includes a number of components: home, life insurance, bank accounts, investment accounts, secondary properties, and IRAs or other retirement assets. Many people consider their IRA the least of the assets in their estate, because they intend to spend down the IRA before they die, leaving nothing (or almost nothing) to pass on to heirs. But should you die before that IRA is spent down it can end up being a significant inheritance over time, provided you—and your heirs—play your cards right.

According to this article by Dan Caplinger, one of the biggest mistakes you can make is to not designate a beneficiary for your IRA, “based on how the tax laws treat IRA money that goes through your estate, your heirs may miss out on a tax break that could save them thousands of dollars over their lifetimes.” Caplinger’s article continues to explain what he thinks is the best way to designate a beneficiary for your IRA, and how the beneficiaries can spread out distributions over time to make the most out of their inherited investment.

Of course, at our firm we know that every situation is unique, and there may be times when perhaps it will be more beneficial to your purpose to distribute your IRA to your heirs through your trust. We always recommend asking your trusted estate planner, financial advisor, or both before making changes that will affect the distribution of any part of your estate.

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If you are one of the thoughtful people who already have an estate plan you may be looking at the news stories about President Obama and his changes to the estate tax and wondering if it will affect your plan. “How long ago did I create my plan?” is the inevitable question we ask ourselves, “What has changed? Has it been long enough that I have to update it?” Well, we’re here to tell you that if you have to ask the question then yes, it’s time to update your plan.

You may think that your plan is simple, your assets haven’t changed, and so changes in the estate tax law won’t affect you, but as this article points out, it’s not just changes in the estate tax law that can impact your estate plan. “A law change that inadvertently has affected some estate plans in recent years is the law protecting medical privacy (commonly referred to as HIPAA or Health Insurance Portability and Accountability Act). This law, while protecting your privacy, can be a problem if you become incapacitated, and someone who is supposed to act on your behalf cannot get the necessary information.” Does your estate plan include an updated HIPAA? Ours do.

Inevitable life changes are another reason to update your estate plan regularly. These include changing friendships or family relationships, the births or deaths of family members, your own changing medical needs, and more.

It’s not so hard to make an appointment with your estate planning attorney for a quick review of your plan and of changes to the law. And chances are that most years changes won’t be sweeping but small, such as the inclusion of a HIPAA or the addition of a new grandchild. Don’t let the passage of time render your plan obsolete.

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