Familial Communication in Estate Planning.

When I discuss Estate Planning with clients and others I make an effort to emphasize communication to family members on a wide variety of issues.  For example, most parents name Guardians in their Will so that their children will be taken care of in the event the parents are unable to do so.  In this situation, I advise clients to make sure they discuss the responsibility of being named Guardian with the individual they name.

I also emphasize communication when clients name an individual to make decisions on their behalf in the event of their incapacity in a Power-Of-Attorney.  In this situation married individuals typically name their spouse to make decisions on their behalf and name their spouse Attorney-In-Fact…but what about successor Attorneys-In-Fact?  It is also important to communicate to that individual their role and responsibility despite the hope that they will (ideally) not serve.

Lastly when making decisions as to how your estate is distributed it may be important to discuss your choice with the individuals impacted.

There was recently a case decided in Illinois in which a Grandfather decided to disinherit his grandchildren if they married outside of the Grandfather’s religion.  Clearly in this case the Grandfather felt strongly about his religious history and culture and tied the continuation of that religion to his estate disinheriting the grandchildren who married outside of it.  As this issue was litigated, some of his grandchildren clearly did not think this was fair…but what if he had made an effort to communicate his close ties to his religion with his family prior to his death?  Is it possible that by communicating his desire that his family remain connected to his religion then he could have not disinherited his grandchildren?

Of course, it is hard to answer these types of questions – what is important to remember is that communication can often work to forestall conflict not only in the area of Estate Planning…but in life as well!

For more information on the Illinois case described above see:

http://www.huffingtonpost.com/2009/09/24/jews-only-inheritance-pla_n_298962.html.

http://www.state.il.us/court/Opinions/SupremeCourt/2009/September/106982.pdf.

The above information is not intended to provide the reader with any legal advice.  Please contact an attorney licensed to practice in your state with any legal questions. Using this blog does not create an attorney client relationship between you and The Law Offices of David Ravi Sitlani.

Another Interesting Article on the Federal Estate Tax

While Congress has yet to decide what changes to make, if any, to the Federal Estate Tax commentators from around the country have made their opinions known.  This article discussed some proposals in Congress from both parties and also has a brief discussion on various State Estate taxes:

http://www.palmbeachdailynews.com/biz/content/business/2009/11/14/biz1115_Liberman.html

 

While we still do not know what Congress is going to do with the Estate Tax there seems to be some inkling that they will do something before the end of the year.  If they fail to act then there will be no Federal estate tax in 2010!

If/when Congress does act I will make sure to post something here.

 

The above information is not intended to provide the reader with any legal advice.  Please contact an attorney licensed to practice in your state with any legal questions. Using this blog does not create an attorney client relationship between you and The Law Offices of David Ravi Sitlani.

Insight into Estate Planning – The No Contest Clause

When I meet with clients to develop an Estate Plan that meets their distinct needs we discuss many issues that are particular to their goals and concerns.  One issue that could arise is what to do if a client wants to include a provisions that disallows a challenge to a Will or Trust.  These are referred to as “in terrorem” clauses, or No Contest Clauses.

The New York Times article below offers an interesting description of these clauses and how they have been used by prominent individuals such as Michael Jackson and Brooke Astor:

http://www.nytimes.com/2009/10/29/your-money/estate-planning/29ESTATE.html?_r=1

The above information is not intended to provide the reader with any legal advice.  Please contact an attorney licensed to practice in your state with any legal questions. Using this blog does not create an attorney client relationship between you and The Law Offices of David Ravi Sitlani.

Interesting Article on State Estate/Death Taxes

Recently it seems that the Wall Street Journal has had a number of articles about the Federal Estate Tax.  Today they posted another article, this time discussing various State Estate Taxes – including our own in Washington State.  You can link to this article, “State Death Taxes Are the Latest Worry”, below:

 

http://online.wsj.com/article/SB125694593227919879.html

 

 

Have a great weekend!

-David

Estate Planning and Your Online Life

In the past I have blogged about what happens to our online identities when we die.  Below is a link to an interesting Time magazine article that further discusses this issue.

How to Manage Your Online Life When You’re Dead

http://www.time.com/time/business/article/0,8599,1916317-1,00.html

The ABC’s of Estate Planning: The Medical Directive/Living Will

 

Recently, I have led workshops educating individuals regarding the basics of Estate Planning and why it is important for individuals to have an Estate Plan.  This series of entries is intended to offer you a summary of the materials presented at those workshops.  Today’s entry will discuss the basics of the Living Will/Medical Directive and what it does in the context of Estate Planning.  The previous entry addressed how the Power of Attorney is an integral part of your Estate Plan and in the coming days I will discuss various other aspects of an Estate Plan including Wills, Trusts, and Estate Planning & the Death Tax.

The Living Will or Medical Directive.

When I discuss Medical Directives/Living Wills with clients or at my workshops I often start the conversation by discussing the case of Terri Schiavo, the Florida woman whose family could not agree as to what should be done regarding her medical care, in particular what life sustaining measures should be undertaken by her medical team.

In this context I then explain the importance of the Living Will and Medical Directive as follows:  Once you complete your Living Will/Medical Directive you have made it clear as to what your decisions are regarding what (if any) medical procedures and/or life sustaining measures you want undertaken in the event that you are unable to make these decisions for yourself.

Thus, the Living Will/Medical Directive is a document that instructs your family, healthcare providers and others about your care should you be unable to make decisions on your own, and it is important to note that the Living Will/Medical Directive only becomes effective under circumstances that you outline in the document.

When I meet with clients I try to explain that the decisions they make in their Living Will/Medical Directive are not to be taken lightly and I recommend that they consider their moral, ethical and religious views when selecting the medical directives they wish to have followed and to discuss these decisions with their family.

Together with a Power of Attorney, the Living Will/Medical Directive is a crucial component to your estate plan.

If interested in this topic you can read more at:

http://www.mayoclinic.com/health/living-wills/HA00014

 

 

The above information is not intended to provide the reader with any legal advice.  Please contact an attorney licensed to practice in your state with any legal questions. Using this blog does not create an attorney client relationship between you and The Law Offices of David Ravi Sitlani.

 

The Death of the Estate Tax in 2010?

Below is a link for an interesting article explaining what will happen if Congress does not address the Estate Tax.  In summary the federal estate tax credit is currently $3.5 million per individual and thus $7 million for a married couple.  However, this credit, along with the federal estate tax, expires at the end of 2009.  But along with the estate tax something else goes away – the step-up in basis of assets!  This means that while no federal estate taxes would be due upon the death of an individual, an heir to an estate may owe taxes when they sell assets they received as part of their inheritance. Take a look at this article if interested in learning more…

http://online.wsj.com/article/SB10001424052748704224004574489581033118194.html

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The above information is not intended to provide the reader with any legal advice.  Please contact an attorney licensed to practice in your state with any legal questions. Using this blog does not create an attorney client relationship between you and The Law Offices of David Ravi Sitlani.

The ABC’s of Estate Planning: Power of Attorney

Recently, I have led workshops educating individuals regarding the basics of Estate Planning and why it is important for individuals to have an estate plan.  This series of entries is intended to offer you a summary of the materials presented at those workshops.  Today’s entry will discuss the basics of the Power of Attorney and what it does in the context of Estate Planning.  In the coming days I will discuss various other aspects of an Estate Plan including the Living Will or Medical Directive, Wills, Trusts, and Estate Planning & the Death Tax.

The Power of Attorney.

A Power of Attorney is a document in which you can name someone to make decisions on your behalf in the event that you are unable to make those decisions for yourself.  For Estate Planning purposes there are two different kinds of Powers of Attorney:

General and Durable Power of Attorney:  This is a Power of Attorney that is effective once it is signed by you.  That means that the person you name would be able to use this document immediately after you sign it.  General and Durable Powers of Attorney are often used when there is an immediate need to provide someone with the ability to act on your behalf.

Durable Power of Attorney:  This is a Power of Attorney that is effective when you become incapacitated.  Oftentimes this is referred to as a “springing” power of attorney because the Durable Power of Attorney only “springs” into effect when you are incapacitated.  The Durable Power of Attorney is generally used more frequently in Estate Planning than the General and Durable Power of Attorney because it requires you to be incapacitated to become effective and many individuals prefer to have control of their affairs while they have capacity.

Both the General and Durable Power of Attorney and the Durable Power of Attorney have a Financial and Medical component.  The Financial component allows you to name someone to make financial decisions on your behalf.  For example, if you were incapacitated then the individual named in your Power of Attorney could ensure that your bills were paid.  The Medical component of your Power of Attorney allows you to name someone to make health care decisions on your behalf should you be unable to make such decisions.  It is important to understand that the Medical and Financial components of the Power of Attorney can be part of one inclusive document but may be executed as two separate documents.  For example, you could choose one individual to serve on your behalf for Financial matters and someone else to serve on your behalf for Medical issues.

It is also worth noting that a Power of Attorney is often used outside of the context of Estate Planning.  For example, oftentimes a bank will have you execute a Power of Attorney for a particular bank account.  In addition Powers of Attorney can be used for specific transactions when you are out of town or otherwise unavailable.

In the context of Estate Planning, a Power of Attorney can protect you by ensuring that someone you name, and presumably trust, would be able to make decisions for you in the event of your incapacity.  Because of this characteristic some refer to the Power of Attorney as the first line of defense in Estate Planning making it a document that everyone should have.

The above information is not intended to provide the reader with any legal advice.  Please contact an attorney licensed to practice in your state with any legal questions. Using this blog does not create an attorney client relationship between you and The Law Offices of David Ravi Sitlani.

Interesting Article on Estate Planning

Every now and then I stumble upon interesting article on Estate Planning.  This article at Forbes.com discusses some of the basics on Estate Planning in a way that is both helpful and easy to understand.  While this article is geared towards women it really provides information about Estate Planning that all of us can benefit from.  Not only that, it gives you something to think about before you meet with your attorney to discuss your estate planning needs.  I hope you find this article useful!

-David

Your Go-To Guide to Estate Planning:

http://www.forbes.com/2009/09/02/estate-financial-planning-forbes-woman-net-worth-guide.html

The Pitfalls of Do-It-Yourself Estate Planning

In the current economy, many individuals are considering DIY, or do-it-yourself, Estate Planning.  While this is certainly a way in which an individual can save some money there are certainly some pitfalls associated with drafting your own Estate Planning documents.  Below I will discuss two of the main reasons why DIY Estate Planning is risky.

For one, the legal profession has its peculiarities, nuances and, of course very particular laws that must be followed.  Lawyers are trained to navigate these rules for their clients to ensure that their clients’ needs are met.  In the case of drafting wills, trusts or other Estate Planning documents there are a number of formalities that must be followed to ensure that the document will be respected by the court.  If certain rules or formalities are not met then it is possible that a will or other Estate Planning document could be challenged in court.  If a challenge occurs then it is possible that the Estate and assets will not be distributed as intended.

Of course the formality of drafting documents is only one of the issues.  Another issue deals with objectivity.  For example, when I meet with clients and develop an estate plan I go through a detailed process to determine the Estate Planning needs of my client.  Oftentimes it is through this process that a client and I discover an issue regarding a client’s Estate Plan that the client never considered.  I believe that an attorney’s objectivity and thorough questioning is an important step in the Estate Planning process that the Do-It-Yourselfer may not go through.

The goal with Estate Planning is to ensure that your needs are met, that your family will be provided for in the event of your death, and that, when the process is complete, you not only have a good understanding of the Estate Planning documents that have been put in place, but that through the process you have peace of mind that you have protected your family.

The above information is not intended to provide the reader with any legal advice.  Please contact an attorney licensed to practice in your state with any legal questions. Using this blog does not create an attorney client relationship between you and The Law Offices of David Ravi Sitlani.