If you have a family trust—or are considering creating a family trust—to protect your assets you may want to ask your attorney about creating an out of state trust. It’s a grantor’s market (so to speak) and creating a trust these days doesn’t mean you have to simply accept the tax laws of your state of residence. Creating a trust in another state—with tax laws that are friendlier to trusts—is a perfectly legal option, “the only real requirement is that [you] choose an in-state trustee.”

As we mention frequently on our blog, there are many reasons for families to create a trust: credit protection, keeping assets in the family, estate planning, educational savings, and many more. Furthermore, trusts are no longer an exclusive tool for the rich and famous; trusts are useful for just about everybody, and the states recognize this.

“States such as Alaska, Delaware, Nevada, New Hampshire, South Dakota and Wyoming have modified their trust laws in recent years to make them more attractive to individuals and families, including nonresidents, looking to minimize taxes, shield assets from creditors and preserve family assets in the event of a divorce, among other things.”

If you would like to explore your options for out-of-state trusts we recommend working with your local attorney, someone you trust who can meet with you when needed, who can draft the trust documents for you. Your local attorney can then have a licensed attorney from the state of your choice review the documents for state-specific issues.

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Serving as someone’s executor or personal representative is a HUGE job, and not for the faint of heart. Although it is commonly considered an honor, there is a lot of work involved, and an executor must have a great capacity for organization, attention to detail, meeting deadlines, and more. You may be tempted to name your favorite sibling or eldest child just to keep from hurting any feelings, but your family and heirs will not be well served if you choose your executor based on emotion rather than ability.

Keeping this in mind, here are 4 things to consider when choosing your executor or personal representative:

1. Your executor should be trustworthy. Your executor will be privy to all of your financial secrets: reviewing estate assets, determining your liabilities and paying off creditors, settling outstanding debts, and making distributions to heirs. Chances are you don’t want all that information spread throughout the family or community.
2. Your executor should be organized. The person you choose will be in charge of a number of detailed tasks, both large and small. He or she will be making lists of assets, meeting court deadlines, making timely distributions for estate taxes, and more. Missing or being late for one of these many steps can draw out the entire process, costing your heirs both time and money.
3. Your executor should be financially savvy. One of the responsibilities of executor is to keep the estate viable (making sure the mortgage and fees continue to be paid) during the probate process. If you have investment accounts you’ll want to ensure they won’t languish and lose their value before they can be distributed to your heirs.
4. Your executor should have heart. Although probate is a can be a difficult and detailed process, it is at its core about the people you love. Your executor should have the ability to be caring and compassionate during this emotional time.

If you don’t know anybody you would trust with all of these responsibilities don’t lose faith, there are other options. You can choose a bank or financial institution as your executor, or you can ask your estate planning attorney to partner with the person you choose as executor—helping them with the difficult tasks and ensuring a smooth probate for all involved.

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Do you know how your retirement plan fits into your estate plan? Ideally you would never have to worry about this; you would spend the last penny of your savings on the day you die. But life rarely works out according to ideal circumstances, and the reality is that doing a little bit of estate planning for your retirement savings can save your heirs a whole lot of money and confusion.

The good news is that it’s fairly quick and easy to make arrangements for the distribution of your retirement assets after you die—that’s why you fill out all those beneficiary forms when you start a new job or open a new retirement account. The bad news is that it’s also fairly easy to forget about these forms as the years go by, which is how too many people end up inadvertently leaving their retirement assets to a divorced spouse or aging parents rather than to their current spouse or children. How can you ensure that your retirement savings will go to the right people?

• First and foremost, you’ll want to review your beneficiary designation forms frequently: every 2-5 years, and whenever you experience a major life event.
• Second, always name contingent beneficiaries! You may feel that if you name your spouse as the primary beneficiary you’ve done all you need to do, but in life you should always have a fallback plan, and your retirement assets are no exception.
• Third, don’t count on your will to take care of everything. Your named beneficiaries on your retirement account will override the beneficiaries named in your will. If you are certain you want to leave your retirement assets to your estate, do so through a living trust and under the advice of an estate planning attorney.
• Fourth, if you’ve named minor children as beneficiaries (either primary or contingent), make sure you name a guardian for your kids and a trustee for their assets. You may want to use those retirement funds to provide for the kids if anything happens to you, but minors cannot legally control assets, and they’ll need someone to manage their inheritance for them until they come of age.

If you have more questions about fitting your retirement assets into your estate plan, more information is available in this article from InvestorGuide.com, or call our office for more detailed and personalized information.

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How much does it cost to raise a child from birth to age 18? Online calculators now estimate the cost at about $250,000 (varying depending on where you live around the country), but any parent will tell you that it costs much more than that to raise a family. This is because children don’t grow up in a vacuum. Raising a child includes the cost of food, clothing, diapers, child care, and other necessities… Raising a family includes all of the above plus college education, insurance, retirement savings for mom and dad, and let’s not forget a little bit of estate planning.

Does estate planning really rank up there with college savings and retirement? If you have a growing family the answer is an absolute yes. Financial experts such as the one quoted in this article in the Boston Globe will agree; your estate plan is a kind of family insurance, and is just as important as your homeowners or life insurance policy.

Raising a family and creating your estate plan both require the kind of split thinking that allows you to look at the long-term future while still keeping yourself firmly grounded in the necessities of the here and now. Just as parents must consider both onesies and universities, roller skates and retirement—so must your estate planning take into consideration what your family would need if you were to disappear today, as well as planning for the possibility that you could be alive and well and spending your money long past the age of 85 or 90.

If you have a growing family—or are a young couple about to jump into the joys of parenthood—don’t let the demands of the here and now blind you to the needs of the future. Schedule time every few months or so to sit down with your partner and re-evaluate your current financial situation as well as your future financial portfolio and your estate plan. Make sure they continue to reflect your long-term needs and desires.

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In many of our previous posts we’ve stressed the importance of keeping your estate planning documents up-to-date. Changes to the law, as well as changes to your own personal, medical and financial status can wreak havoc on a well-crafted estate plan if these changes aren’t addressed. A good rule of thumb is to have your attorney review your estate planning documents every 2-5 years, but are there other changes or life events that might necessitate a more immediate review or update? The answer to that question is YES!

Andrew Chan has written a short article for the Boston Globe in which he lists 13 significant life events that should have you reaching for the phone to call your attorney. To go to the article and read his list click here. To Mr. Chan’s list we would add just a few more life events that could have an effect on your estate plan:

A change in residence—especially if you move to a new state.

Children or grandchildren turning 18 or graduating from college—this may or may not change your estate plan, but at the very least your young adults will now need their own health care directives and privacy forms.

If you anticipate one of your relatives or heirs disagreeing with your wishes and challenging your will.

There are of course a great number of things which could impact your estate plan, not all of which can be named in one article or blog post; but if you stay aware—and stay in touch with your estate planner—you can rest easy that your plan will continue to function exactly as you intend.

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Wills and estate plans are always touchy subjects among family simply because they can have so much hidden meaning… at least that’s what heirs often think:

I got mom’s jewelry but my sister got a cash gift—does that mean mom loves her more than me?

What’s wrong with me that Dad didn’t choose me as executor?

I never really liked the vacation home, but is my brother trying to cheat me by buying me out?

If I ask my parents about their estate plan now will they think I’m eager for them to die?

Wouldn’t things be so much easier if we could just lay all the estate planning issues on the table and discuss them openly and without judgment? Well, that is exactly what this article on abc.com suggests we do.

The article includes 3 “Estate Planning 101 Inheritance Lessons” to help your family become better prepared for the inevitable: 1. practice honesty and transparency, 2. plan ahead and update often, and 3. think through your own wishes and the wishes of your heirs. Three simple suggestions that can save you and your heirs a world of fighting, hurt feelings, and high legal fees later on.

But it’s not always easy to start such a sensitive conversation with family—that’s where our firm comes in. We can help you with the tough questions and decisions, and when the time comes we can help you discuss those questions and decisions with the rest of your family. Although it’s tempting to simply bury your head in the sand, the longer you put it off the more difficult it becomes. Let us help your family find a peaceful solution today.

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2010 has been anything but ordinary as far as the estate tax is concerned. First there was the unexpected repeal of the estate tax (unexpected not because the repeal was unplanned, but because nobody expected it to actually happen), then the idea that congress could reinstate the estate tax and make it effective retroactively, and now there are rumblings that certain Senators are considering a prepaid estate tax!

According to this article in the Christian Science Monitor, “News reports suggest that the Senate may soon consider restoring the estate tax with an option allowing people to prepay their tax before they die. Details are apparently still in flux as senators negotiate. We—and maybe they—don’t know yet what they’ll propose for the basic estate tax but it’s unlikely to be harsher than the 2009 version.”

If something like this gets passed, a visit to your estate planning attorney will be more important than ever, especially if you have the wealth to protect and the means to spend some money now to save a lot of money later.

Of course, this is all just speculation right now, but even the idea of prepaid estate taxes tells us just how much the government is counting on that revenue—one way or another. If you were under any illusions that the repeal of the estate tax might turn into a permanent thing this should be more than enough to convince you that the estate tax is here to stay.

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There are any number of things for which you can be earning and saving money: investments, retirement, college, a home, a car, the current high-tech gadget… The thought of it all is enough to make a person dizzy! So how do you decide what are the most important things for your family’s financial happiness and security right now, and years down the road? Choosing your financial priorities requires taking stock of the present, a lot of thought about the future, and a little bit of help from trusted advisors.

Robert Brokamp has written an article entitled “Should You Save For College Or Retirement”, which focuses on helping families and individuals organize their financial priorities. In spite of the title of his article, what Brokamp really stresses that there is more to good financial health than just college or retirement; a good financial future means taking care of your finances now by paying off credit cards, building an emergency fund, and having adequate insurance.

Building a strong financial future includes more than just planning for college and for retirement, it should also include planning to ensure your family’s financial security should something happen to you. Brokamp alludes to this in his article when he mentions purchasing an adequate life insurance policy, but he neglects to mention how little that policy will actually provide if your assets are eaten up after your death by estate taxes, probate fees, or a young and spendthrift son or daughter.

When it comes to your financial health, our firm may not be able to help you with the credit card fees, but we can help with the rest—especially ensuring that your efforts to save right now will not go to waste years down the line.

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How will you be planning for your retirement? According to CNBC your gender could play a bigger role than you think in your retirement plan. While of course not everyone will adhere to gross generalizations, studies have shown that men and women do have a tendency to take a different approach to saving and investing for retirement. Which way is the right way? Well, as John Ameriks points out in the article, “It’s not a matter of one gender being right and the other wrong… You just need to be aware of the differences when you’re making investing decisions.”

The differences may not be as surprising as you think. Here are some of the things CNBC had to say about how men and women invest and save:

• Men tend to be overconfident about their investing and retirement planning skills.
• Women generally prefer less risky investments.
• Men don’t plan for a long retirement.
• Women save more over time.

Considering the fact that our society still tends to view the stock market as “a man’s game”, and one with which women aren’t quite as comfortable, it makes sense that a man would be more confident with frequent buying and selling, while a woman might tend to go for the safer investment requiring less action and attention over the long haul. But lack of attention doesn’t necessarily mean lack of awareness. Women tend to worry more than men about security in their Golden Years. The article posits that this is because many men don’t expect to live much past 80, but another possibility is that men have more confidence in their ability to earn a living at any time in their lives; whereas women (who are often the ones to leave the job market in order to care for family) are more afraid of having to depend on an outside source for their livelihood.

Part of planning for your retirement is planning for your estate. Whether you are a man or a woman, adventurous or conservative, a trader or a saver—your retirement plan and your estate plan need to be in line with each other. Our office can help ensure that your retirement and estate plans are compatible… both right now and decades down the line.

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It may seem like you just can’t catch a break when it comes to paying taxes, but according to this article in the Wall Street Journal there are a few little known tax breaks that could end up saving your family money. Some are new—so new, in fact, that it is still before the Senate—such as the tax exemption for employer provided cell phones and smart phones; and some—like the tax free income homeowners can earn if they rent out their home for 14 days or fewer during a year—have been around for a few years.

Of particular interest to our clients is the gift tax exclusion (another lesser known tax break that has been around for a few years.) As stated in the article, “Anyone may give anyone else up to [$13,000] per year in cash or property, free of gift tax. One partner of a married couple can double the gift and the exemption. So a couple with three married children and six grandchildren could give away over $300,000 a year, tax-free.”

We say that this gift tax exclusion may be of particular interest to our clients because if you are looking for a way to lower your estate tax, or anticipate applying for government medical services in the next few years, giving gifts to loved ones right now may help you achieve your goal—if you go about it the right way.

Contact our office for more information on how any of these “Robin Hood” tax saving techniques may help your family this year.

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