Sunday, February 28, 2010


The problem for most Americans when it comes to doing an estate plan is the "P" word. The "P" word does not stand for "Probate"; but,for "Procrastination". Most people think that Estate Planning is always something that one will get around to tomorrow. It is never urgent....until something happens.

According to a recent survey by, the number of Americans with some type of estate planning document has dropped from 64% in 2007 to 51% in 2009. I have heard of other surveys that suggest that fewer than 30% of Americans have properly drafted and funded estate plans in place. I suspect that in these rough economic times, people are simply testing fate to put off the expense of creating their estate plan. What people do not understand is that a good estate plan helps one avoid probate and saves significant wealth for the benefit of one's family. A good estate should have the ability to benefit the beneficiaries many times over the cost of the initial plan. For example, while the cost of a will is rather inexpensive up front, the cost of administering a will through the Probate process [all wills go through probate] can be as much as 6-8% of the value of the entire estate. While one is alive, a will is meaningless. A will only speaks at the date of death. If one becomes incapacitated and a guardian or conservator has to be appointed while one is still living, the annual cost of such probate administration can be literally thousands of dollars. A simple living trust can avoid both the cost of disability probate and death probate.

We often get calls like "Mom is in the intensive care unit having just suffered a stroke. Can you do her estate plan now?" The answer is: NO. The time to do one's planning is long before the crisis of disability or death. If you are loved one has not effectuated an estate plan, do something about it today. Do not procrastinate! It is not a question of "if" you will need this. The only question is "when" you will need it.

Tuesday, February 16, 2010

A Suggestion for Congress

There is a lot of talk these days about "bipartisanship" in Congress. Perhaps Congress needs to find some baby steps for the concept of putting the American taxpayer ahead of politics. Here is a suggestion for our legislators. Since we are waiting on a new Tax bill to straighten out the debacle of the repeal of the Estate Tax and Generation Skipping Transfer Tax, fix the imposition of the new "Modified Carryover Basis" tax regime that became effective on January 1, 2010. These new income tax rules dealing with basis are a nightmare for the heirs of those who have lost loved ones after January 1 of this year. Assuming the new tax bill will take a while to work out, at least spare those who were unlucky enough to die in this calendar year from the headache of trying to figure out all the new modified carryover basis rules. Surely both sides of the aisle can agree that the imposition of these taxes at this time are patently unfair. A simple bill to repeal the modified Carryover basis rules should be a slam dunk to sail through the House and Senate.

Saturday, February 6, 2010

Estate Tax Battle Resumes

Secretary of the Treasury, Timothy Geithner, and the Senate Finance Charmian, Max Baucus agree on one thing. Both want to extend the 2009 estate tax rate and exemption amount to 2010 and make it retroactive to January 1, 2010. In the 2011 budget released Feb. 1 by President Obama, the administration is backing the legislation passed by the House last December to repeal the repeal of the Estate Tax in 2010. Too bad nobody has explained to them the due process clause of the Constitution has been interpreted such that the tax code in effect as of the date of a person's death is the law that is to be imposed. Anyone who has a relative who has died in 2010 and who inherited amounts in excess of the proposed $3.5M exemption may wish to contest such retroactive application of any new estate tax law.

Some insiders suggest that the estate tax bill could be linked to the proposed jobs bill being submitted to boost the economy. All we can say is "stay tuned". The final chapter in this area has not yet been written.