I simply want to thank all of my friends and clients; past, present and future, for your support. Your trust and confidence in me is always appreciated. Even though I may not send you an email every day to tell you, I want you to know that I am truly thankful that you allow me to serve your legal needs and assist with your business and personal matters.
I hope you and your loved ones have a safe and Happy Thanksgiving!
All my best,
As we near the end of 2012 and think about our estate plans, the main question that arises is "What will happen to the Estate Tax Exemption in 2013?" If only I had a crystal ball I could tell you the answer to the $1,000,000 question. However, since I do not, here is some information to help you plan properly.
In 2013 the Estate Tax Exemption will decrease from $5,000,000 to $1,000,000 per person. There is a chance congress will vote to change the exemption amount, but for now this is the plan. Yes life insurance, in most cases, is included in your estate. For many of you reading this newsletter.... Congratulations! In nine weeks you will have a taxable estate. Depending upon your individual circumstances there are ways to lessen the potential tax issue (55% tax), some of which are listed below:
1. Wills including Credit Shelter Trusts. This process should also include asset splitting between spouses, thereby taking advantage of each person's maximum exemption.
2. Life Insurance Trust. This is to hold life insurance policies outside of an individual's estate.
3. Gifting during 2012. The lifetime gift tax exclusion in 2012 is $5,120,000 . Gifting reduces your estate and this exclusion is substantially lowered next year.
4. Gifting to a Charity. Gifts to charity are not included in your taxable estate. Charitable gifts during life reduce your estate and can qualify for other tax savings.
This information is simply an overview of the issue. Every person's estate plan is unique and should be drafted to suit the individual needs and requirements of the client, If you have questions about your current plan or about the impending changes, do not hesitate to call me to discuss. As an attorney, I don't try and alarm; I provide you with basic information in these newsletters, so that you may make an educated decision that is best for you.
For the past month, the unfortunate tragedy of the Berry family from Houston, TX has been on my mind. Celebrities and communities across the country have come together to help three children, who lost their parents in a car accident that no one could have foreseen or prepared for. Not only did they lose their parents, but the Berry boys, Peter, 9 and Aaron, 8, suffered major spinal injuries in the crash. Their sister, Willa, 6, has broken bones. The children's aunt and uncle have since been named their legal guardians.
I had clients call me in a panic because even though they didn't know this family personally, the catastrophe affected them. I am not writing this article to scare or alarm. In fact, I debated sending it at all because my idea is not to prosper from someone else's misfortune. This is for those of you who want to know how to protect your family in case the unexpected happens.
First, have a Will drafted so that those who are left behind know how you want your assets distributed and your children cared for. In it, name a Guardian to take care of your minors, so that decision is not left to the Court. Appoint a Trustee; someone you have confidence in when handling money. The Trustee and the Guardian do not have to be the same person. Go the extra distance and make a list of "go to" names and numbers to help your Executor.
Second, make sure both parents are adequately insured and the beneficiaries of life insurance are not directly minor children. If the beneficiary is a minor, the Probate Court will have control on how the money is spent. A simple trust for the minors can avoid future costs and loss of control.
Lastly, understand that you cannot prevent the rare tragedy from occurring, and it may not be wise to insure or over document yourself for such misfortune. You should, however, take a few simple steps to provide to the best of your personal ability for your family. Hopefully, they will never have to deal with such heartache.
I heard some "good news" this week at my bi-weekly GNFCC meeting. It is that people are starting to purchase homes again for personal use. That is good news, but how do we get the foreclosure bargain mentality to change and get the market to move in a more positive direction? I'm not talking about 2006 and 2007 numbers...just a recovery of sorts; where buyers are comfortable investing in a new property.
The past few years created a market where buyers are not confident unless they are getting a price below appraised value, and appraisers are not confident in declaring a value above contract price. As investors and home buyers, we are caught in a chicken and egg dilemma, which may only delay recovery. Only a few short years ago, buyers were not concerned because they "knew" the property would increase in value, so at whatever price they paid, the buyer thought it was a deal. It is true that theory did not work out for many purchasers...but over time real estate can be the investment it once was, although most likely not at the same rate of return.
Personally, I think we all need to get back to the basics. If the property is in a good location and can be purchased for a fair price in the current market then the potential for return should be there. Don't borrow more than you can afford to pay back, even if the equity is available. Hire qualified professionals to help you with your transaction. And lastly, buy a home or a property because it works for you and not based on assumed future appreciation.
This is personal opinion and not legal advice.
I would love to hear from real estate agents, brokers, lenders and appraisers to hear what they are doing to help the market and their clients at the same time.