End of the Year Notes – Gifting

Much has been written about strategies for taking advantage of the historically unprecedented $5,120,000 exclusion from gift taxes that is available for gifts during 2012.  Time is running out on the ability to make and document such gifts before the end of the year.

Of course the furor is all about what happens if the Bush era tax cuts expire and the estate tax exclusion amount goes back to $1M and the opportunity to get an additional $4.12M out of the estate and gift tax system is lost.

There are several strategies available that address the concerns, but factors to consider include

  1. Do you have sufficient wealth that you can afford to give away assets of that magnitude?
  2.  After making the gift, will you have enough cash flow to be comfortable?
  3. Do you have assets to give away that are not highly appreciated; and if so, is there an alternate strategy that will work for you?

Giving away $1M does nothing to improve your tax situation.  Because of the uncertainty about what the tax laws will be, it is not clear that giving away even $3.5M will help.  This is a strategy that works best at the maximum level and at best is only neutral at the $3.5M level.  It is also a strategy that must be careful designed and carried out.

Most plans will require a formal valuation of the gift property, mindful analysis, and careful implementation.  If you need help working through the analysis, call me now.

Next week, I will explain the mechanics of the coming changes to capital gains tax and the medicare surcharge and why it is tax efficient to harvest capital gains before the end of the year.

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Planning For After The First Death

A comprehensive estate plan includes understanding what steps will be required when you or your spouse dies.  Tax planning advantages and the intended distribution of wealth to your loved ones takes place in stages and certain opportunities will be lost unless the proper plan is in effect when the first spouse passes away.  This posting describes what steps are necessary after the first death.  Next week’s posting will describe how a comprehensive plan works through the life of a couple, the death of a spouse, and finally the death of the surviving spouse.

The estates of the first spouse to die often avoid probate.  Unless properly planned, the ease of the first transition may lull loved ones into a false sense of comfort that may surprise them upon the second death.  This may be especially true since 1/1/2011 when the new concept of “portability” was introduced allowing properly administered estates less than 10 million dollars to avoid estate taxes altogether.

Even with lack of proper planning many spouses may avoid an estate administration if the value of their estate is less than 10 million dollars.  Real property and accounts may be in joint tenancy or community property with rights of survivorship and life insurance, annuities, and retirement accounts may designate the surviving spouse as the death beneficiary and the surviving spouse may do nothing because there just doesn’t seem to be a need for it – the surviving spouse has complete access to everything and may not appreciate the need to administer those assets.

The recording of a death certificate and notification of the custodians of any policies, contracts, or accounts may be sufficient for the surviving spouse to gain control over all those assets.  Yet a gaping hole has been created unless the surviving spouse takes care to name new beneficiaries of retirement accounts that are retitled in the surviving spouse’s name (a “spousal rollover”) and have a Will or Trust which designates who inherits upon the death of the surviving spouse.  If the decedent has begun taking minimum required distributions, a minimum required distribution must be taken in the year the decedent dies, if none has already been taken.  There are substantial penalties for failing to take that minimum required distribution.  Taxes must be paid on the distributions taken either by the decedent or the beneficiary.

Failing to record a death certificate may cause delay later when trying to sell or transfer the property after a second death.

Accessing accounts after the second death when the first decedent’s name has not been removed may also cause delay and unnecessary expense.

In order to claim the benefits of “portability,” a timely estate tax return must be filed even if no tax is due.  This will be particularly important if the estate tax exemption amount returns to $1,000,000 on 1/1/2013 as is presently projected.

Failing to establish the credit shelter trust provided for in most good estate plans may be an expensive mistake.  It is a mistake of good faith if only estate taxation is considered, but other considerations such as how the children of blended families are treated or how the assets are protected from creditors are non-tax reasons to be concerned about the AB division in addition to the lawful avoidance of estate tax.

I recommend a legal checkup after any death just to be sure loved ones have good advice and guidance about how to proceed.  I like to create a customized checklist for the family of every decedent so they know when the administration of the estate is complete.

If you or a friend wants help understanding the legal process either before or after death, please call me.

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Mark Bregman Selected As One Of Arizona’s Finest Lawyers.

View The AFL Letter

I have recently received an important accolade. I have been selected as one of Arizona Finest Lawyers, a peer reviewed validation that strives to identify the top 10% of Arizona lawyers. This was an unsolicited and no-fee accolade bestowed on me without any action by me. The validating organization is a group of Arizona’s most impressive lawyers.

I was also recently notified by Martindale-Hubbell that I have been peer reviewed by that organization, America’s oldest and foremost attorney rating service, and once again qualified to receive their highest rating A-V which includes a designation as a preeminent lawyer. I have been A-V rated by Martindale Hubbell for many years.

I will be pleased to assist you with your estate planning, estate tax, gifting, probate, or trust administration issues.

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Observations From The Trenches: Logical Estate Planning

Over my many years practicing law I have become a niche lawyer concentrating on estate planning. A growing part of my estate planning practice involves administration of trusts and estates. An inevitable part of trust or estate administration is resolving contested matters. Unhappily, a large number of those disputes become litigated matters instead of models of dispute resolution. Worse yet, if the patriarch or matriarch is still alive they are often heartbroken when their children cannot agree about basic issues facing the family.

As I enter my 32nd year of practicing law, I realize my clients value my common sense experience just as much as my legal technical expertise.

As a result I no longer tell people I “prepare wills and trusts” because I realize the will, trust, or power of attorney is only a tool. I seldom see disputes or problems with documents, but I often see disputes or problems because assets are not properly titled, beneficiary designations are not up to date, or the chosen role players are not adequately equipped. A better answer when I am asked what I do is to say that I am a problem solver; I am a family lawyer, I am an estate lawyer focusing on the affordable and efficient transition of wealth and values in an environment that protects loved ones from the problems that come with inheriting money.

I have become a bore to many of my clients, financial planners, and others because of my obsession of putting my clients’ financial affairs in order before they reach the point in time when they can no longer do it themselves because of death or diminished capacity or ability. It is not a simple task and I force everyone connected to the plan to stop making assumptions and actually prove to me that everything is in order.

I have banished from my office the idea that anyone can take an action that gets work off their desk without being able to explain how the step taken moves a problem one step closer to resolution. Each day, I tackle the most unpleasant problem on my desk first to be sure I can clear my head. Seldom is the least pleasant also the most difficult or most important; often it is the longest neglected or the most time critical.

To me, these thoughts have become the logical basis of my philosophy of helping clients. Taking to heart my 2 favorite mottos – “begin with the end in mind” (from Stephen Covey’s 7 Habits of Highly Effective People) and my favorite Eisenhower quote – “plans are useless but planning is indispensable,” I clearly see the mission I must accomplish for my clients.

If you have not been in to see us for awhile, call us today to ensure that your family affairs are in order. We will work together until we have a high degree of confidence that your estate plan will work as intended in as many different scenarios as we can reasonably envision. If you are not yet a client and you would like to see this planning in action, call me and I will send a “Welcome Kit” to start you on our journey together.

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Confessions Of An Estate Planner

Do I provide what my clients really want?

It has been suggested that estate planning lawyers rely too heavily on what they think clients want, providing services that are the easiest and most economical to give, rather than listening to what our clients really want.

As a result we give our clients hefty estate planning binders containing long documents covering every imaginable situation, and lengthy instructions that give our clients the impression that this work is too complicated for anyone other than professionals, so they need to come back to us to interpret the documents we prepared for them.  But as important as they are, revocable living trusts, pourover wills, financial durable general powers of attorney, health care powers of attorney, living wills and an assortment of related documents are all simply tools of the trade.  They should not be the end result.

I’ve met many people who tell me they have a great estate planning attorney, but I’ve met very few who can tell me why they think so.

I’ve been an attorney since 1979 and have concentrated on advanced estate planning techniques and strategies since 1998.  I have litigated contested probate cases that go awry when the planning fails.  And I have testified as an expert witness on trust matters that almost always arise because the lawyer did not adequately listen to the client’s needs and desires.  The listening failure often occurs because the lawyer failed to ask the right questions.  I’ve interviewed many clients, and I bring my unique experience to each client experience; yet I still find the most difficult part of my job is getting clients to express what they really want.

Right now I want to rededicate myself to creating estate plans that work.  To me, a good plan is one that accomplishes my client’s objectives in a cost efficient manner.  Cost efficiency means avoiding as much estate tax, administrative expenses, and legal fees as possible. It begins with the initial client meeting and isn’t finished until the assets are safely distributed as desired by my client.

I believe the process must begin by intimately knowing what my client owns and values, how each family dynamic works, and my client’s hopes, dreams, and aspirations for how these assets accumulated over a lifetime can be used to assure the comfort of my client, the future success of my client’s descendants, and the support of my client’s favorite causes.

Although a good clear set of documents is a necessary tool, establishing a strong ongoing relationship is even more important, and the linchpin to any successful plan. If you are relieved at “completing” the estate planning process merely because you sign your documents, but don’t identify your estate planning lawyer as among your most trusted advisors, I haven’t done my job.  If you sign a will or trust and then check it off your to do list to never think of it again, then I haven’t done my job.

However, if you are able to think about your estate plan without becoming melancholy, then I have done my job.  If you relish knowing you can call me whenever you have a problem, without fear of the “meter running,” then I have done my job.

These are a few of the things I believe go into a good relationship.  Now I’m interested in whatyou want in a good client attorney relationship.  I’m listening; please share your thoughts with me.  Your comments will help me be a better advisor for all of you.  I look forward to hearing from you online or in person.

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16 (Potentially Fatal) Problems With Joint Tenancy

  1. No creditor protection is available when property passes by joint tenancy. Creditors come in many shapes and sizes these days. Jury verdicts in even the most common accidents easily exceed insurance limits. Aging survivors are more susceptible to lapses of concentration while driving or otherwise. Why unnecessarily expose all of the survivor’s assets to creditors when a trust can provide creditor protection to your spouse or your descendants? This is valuable protection that can not be purchased at any price if you miss this planning opportunity.
  2. No estate tax protection for post-death appreciation is available if joint tenancy is used. Although the asset will pass to your spouse estate tax free; upon the death of the survivor, the entire estate is exposed to estate taxes and the estate tax exemption available to the first decedent is lost. If your estate, including life insurance is likely to exceed $1,500,000, then you have unnecessarily benefitted the government at the expense of your descendants. However, if a “credit shelter” trust plan is utilized, the decedent’s estate, up to $1,500,000, will escape taxation no matter how much it appreciates before the death of the surviving spouse. If a spouse outlives the decedent by nine years, the statistical average, an estate worth $1,350,000 at the first death, can be expected to grow to than $2,000,000 to $2,700,000. With proper planning, the estate tax can be legally reduced to nothing, but if joint tenancy is used, the estate taxes will exceed $400,000.00 to $600,000. Quite an expense for the convenience of joint tenancy!
  3. Reduced protection from accumulated capital gains. Individually owned or community property receives a “step up” basis to fair value at the date of death and your heirs can sell the property and pay no capital gains. If property is held as joint tenants, the joint tenant avoids probate, but receives the favorable “step up” basis treatment on only one-half of the property.
  4. Lack of control. A joint tenant has no control over what happens to the property after death. A surviving joint tenant can sell or transfer the property, or can pass it to the survivor’s choice of heirs, including subsequent spouses. Joint tenancy deprives you from assuring that your property stays in your bloodline. Without any further planning, property owned by a surviving joint tenant will pass automatically to the heirs of the survivor. If the survivor’s heirs are not the same as the decedent’s this could lead to an unintended result.
  5. Guarantees public probate proceedings. Although there will be no probate administration when the first joint tenant dies, unless the survivor creates a new plan, upon the death of the survivor, a public probate proceeding is necessary to complete the transfer of the property.
  6. May subject you to expensive and potentially devastating results. Joint tenancy property is fair game for creditors of your joint tenant. Although you may have an opportunity to prove the property was placed into joint tenancy for convenience and that the property really does not belong to the debtor, you are exposed to litigation and the expense and uncertainty that are the natural results.

 

Mark Bregman is an experienced planner of estates, let him show you how to avoid common pitfalls, save money, and create a comprehensive estate plan that will reflect your hopes, dreams, desires, and aspirations for you and your loved ones while taking advantage of advanced planning techniques when necessary to maximize estate tax savings.

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13 Basics of Estate Planning

In our planning process, we subscribe to the following definition of “estate planning”: To control my property while I am alive and well; to provide for me if I become disabled; and to give whatI have, to whom I want, when I want, the way I want; all at the lowest possible overall cost. We have found this to be a broad comprehensive definition which encompasses our clients and their families’ hopes, dreams, aspirations, and peccadilloes and allows us to design a unique estate plan for each client that works when coupled with a regular updating program that insures that the plan is current and all assets are properly titled.

Keeping the basic definition of estate planning in mind, here are 11 basic concepts to consider in a good estate plan.

  1. Protect your loved ones’ future. You have worked hard to accumulate and protect assets during your lifetime. Through a proper understanding and utilization of trust based planning, you have unique opportunities to provide your spouse and descendants with full access to enjoy the fruits of their share of your assets, yet protect those assets from their creditors, their spouses, and their own excesses or lack of adequate financial acumen to manage their own affairs.
  2. Pass your values to your descendants. You have an opportunity to pass more than $$$$ to your loved ones. You can create financial incentives or disincentives to encourage or discourage conduct such as staying sober, attending religious services, getting higher education, travel, avoiding criminal convictions, achieving excellence in chosen fields, making charitable contributions, participating in cultural or community activities, or any other ideal that you hold dear or abhor. Through detailed instructions to your trustee, we can create an environment to encourage your children to succeed or instruct the trustee to exercise reasonable discretion based on the beneficiary’s life choices. These are very personal solutions unique to each family, not off the shelf solutions purchased for a fixed price. I also place a high value on the creation of a family letter or ethical will which describes your values and life experiences to your descendants. I will explain the importance of this concept and how to create the letter during the planning process.
  3. Establish a team to help you and your loved ones in the event of diminished capacity or death. With many couples, one spouse usually handles the principal checkbook and is responsible for the investing. If you fit that profile, think about how those matters will be handled if you die. Now think about how they will be handled if you become disabled and are no longer able to handle your own affairs. Wouldn’t it be a comfort knowing that your spouse and children have a team of professional advisors who are already familiar with your finances and your plan? Wouldn’t it be beneficial to create a plan that is understood by your spouse, lawyer, accountant, and financial advisor or advisors? Even if you don’t utilize the team in the present, if there is a team chosen by you standing by ready to assist your spouse and children in the time of need, you will benefit from knowing that life does indeed go on and in fact can go on without the severe problems that can be associated with your loved ones trying to scramble for help without a clue when you suddenly are no longer able to perform your accustomed role.
  4. Avoid unnecessary legal expenses whether you are dead or alive. This may be as simple as using joint tenancy to avoid probate, but for most large estates ($500,000 or larger) there is much more to the story. Some plans save legal fees at the expense of significant taxes which could have been legally avoided if a proper plan been instituted at the proper time. It is important to find out what services are involved in conservatorship, death administrations, and trust administrations and how to pay for it. Properly planning with a qualified estate planner can identify these expenses and how to effectively utilize a plan to minimize your legal expenses. Each individual has unique situations and no two plans should be the same. If you have a fixed price, one price fits all plan, planning opportunities were probably sacrificed in the interest of low cost. An experienced planner can discover and describe those opportunities. A reputable planner will identify the potential issues, possible solutions, and then tell you how much you should pay to satisfactorily resolve the issue.
  5. Why “Avoiding Probate” is a tired, oversold, disreputable concept. The slogan “avoid probate” arose as hook to sell living trusts in the 1960s. It exists because it states such as New York and California, there are statutory fees out of line with the actual cost of providing probate services. It is still used today as a “come on” for sellers of trust packages, but in Arizona there is little to fear from a probate case, the cost of a probate is usually based on a lawyer’s efforts and even a trust administration will not avoid the use of attorneys to settle a decedent’s estate as many probate avoidance salesmen intimate. There are economical and practical alternatives to probate that include using a trust package, but only a knowledgeable, experienced lawyer can identify and explain which tools best fit your individual circumstances.
  6. Find out about the legal expenses involved in creating an estate plan, a disability, or a death. You want to be able to distinguish necessary from unnecessary legal expenses. The best time to find out about legal expenses is before you need them, not when you or your loved ones are in a panic mode and anxious about making the decision. You should interview several lawyers before you need one so you are in a position to compare the services they offer and the relative value for the services provided.
  7. The only way to use both spouses’ estate tax exemptions and the importance of planning. Unless the “credit shelter” or “bypass” trust plan is created before the first spouse passes away, a family may forfeit the right to use the decedent’s estate tax exemption ($1,500,000 in 2004 and 2005). Couples often mistakenly believe because their estate is less than two times the exemption amount they won’t pay estate taxes. Wrong! If your combined estate is only $2,000,000 and you both die before the end of 2004 without proper planning, your heirs will pay more than $200,000 in estate taxes, when they could have legally paid nothing!
  8. How to legally avoid all possible estate taxes. “Credit shelter” or “bypass” trust planning is the most common way for a couple to save estate taxes. But there are other techniques for married and single individuals, including life time giving to your descendants, charitable contributions, forming family companies, using life insurance, and other techniques which can assure that the fully value of your assets pass to your loved ones undiminished by estate taxes. If your joint estate is currently worth more than $1,500,000, you owe it to yourself to find out what techniques might be appropriate for you. A consultation with a qualified estate planner will reveal which techniques might work for you.
  9. How to keep a family business in the family. In most circumstances, the estate tax bill comes due 9 months after your death or the death of your spouse. Illiquid family businesses are often sold to raise money for estate taxes. There are limited opportunities to defer estate taxes for family businesses, but there are also planning opportunities where your loved ones can take advantage of court approved techniques for dramatically reducing the amount of estate taxes payable on a family business. The key is proper ownership of the business before your death and the use of available planning techniques to obtain significant valuation discounts for marketability and control, even if your business is real estate rentals or investing in marketable securities.
  10. How to minimize income taxes and gains on appreciated property. Through the use of a Charitable Remainder Trust, appreciated property can be converted to productive or diversified assets without paying capital gains tax until the proceeds are actually withdrawn. The value of the assets are also removed from your estate for estate tax purposes. The Trust can be set up to provide a life time stream of income for you, your spouse, and your children. In combination with life insurance strategies, the net result can dramatically reduce estate taxes while increasing the actual value of the assets passing to your descendants. You can control the size of the payouts, can control the investing of the proceeds, and retain the right to name the charitable beneficiary. We can show you illustrations of how you might benefit from using one or more of these advanced planning techniques.
  11. Why joint tenancy is so dangerous. Joint tenancy may be a good way to avoid probate, but it eliminates the ability to use tax advantaged planning and the decedent loses control over the distribution of the assets. No asset in joint tenancy can be used to fund a “credit shelter” trust or achieve any other objectives of the owner. Right of survivorship may be simple, but it may not be right for your family. It also exposes the owner of the asset to the creditors of the joint tenant. An attorney can explain when to and when not to use right of survivorship as part of your overall estate plan.
  12. Why Qualified Plans (IRAs, 401ks and others) must be considered. There are significant and complicated opportunities that must be integrated with your estate plan. Spousal rollovers may or may not be right for a surviving spouse and a post-mortem division of an account into more than one share may provide additional planning opportunities, but these opportunities must be carefully considered and the structure implemented prior to your death if your family is to take advantage of some of the best tax deferral opportunities or access the cash without penalty prematurely. Federal statutes and regulations affecting qualified plans have been amended or changed twice in the past four years and may yet be changed again. These assets are now a significant part of many estates and should be integrated into your overall planning.
  13. Why updating your estate plan is so important. Unless you periodically review your estate plan it may be outdated and not effective. Objectives change, assets grow in value, assets get retitled as properties are bought and sold, and the composition of families change. These changes cause your plan not to work the way you want. Just as your insurance or investment portfolios are reviewed periodically, so should your overall estate plan be reviewed to insure that the objectives and assets are still consistent with your values and intentions. Once you have an appropriate estate plan, keeping it up to date is relatively inexpensive compared with the price of having an estate plan that no longer works. A single omitted asset or growth in the size of your estate can cost many thousands of dollars of unexpected estate taxes and what is the cost of not taking into account changes in your distributive intent?
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25 Ways To Mess Up Your Estate Plan

Most of us don’t plan to fail, we fail to plan.

Dwight Eisenhower said, “when preparing for battle, I always found plans useless, but planning indispensable.”

If you can envision it, we can make it happen efficiently with a minimum of delay, tax, and cost. Our goal is for you to control your property while you are alive and well and to transfer what you want, to whom you want, when you want, the way you want, all at the lowest overall cost.

  1. Not understanding how your assets will pass at your death.
    1. Contractual (beneficiary designations)
      1. life insurance
      2. annuities
      3. retirement accounts
      4. POD/TOD
    2. Right of survivorship
      1. joint tenancy
      2. community property
    3. beneficiary deeds
    4. remainder interests
    5. small estate probate
  2. Planning around specific assets
    1. Accounts
    2. Property
    3. business
  3. Not minimizing estate taxes
    1. A/B trust planning
    2. Marital deduction
    3. FLPs and other allowed valuation discount techniques
    4. Advanced techniques to separate the right to income from ownership of the asset
    5. Life Insurance mistakes (failure to use ILIT)
  4. Woes of Joint Tenancy
    1. Avoids only one (1) probate
    2. Lost control over the asset (survivor may not distribute the property in accordance with your intentions)
    3. Incurs an immediate gift tax liability
    4. May lose step-up in basis
    5. May need to litigate against creditor of joint tenant to establish and retain title to your own property
    6. “Botched” attempts could have unintended consequences (importance of “right of survivorship” language)
    7. Creates unintended heirs
  5. Sloppy drafting that looks good but fails to accomplish your intentions
    1. Common with trusts purchased from non-lawyers. May look very professional or even been drafted by an attorney, but unless the attorney discussed your intentions in sufficient details, the plan probably relies on “boilerplate” in an inappropriate manner that may be disastrous.
    2. The documents should be nearly free, it is the counseling that is valuable – i.e., the difference between cheap versus inexpensive.
  6. Assuming your trust plan works
    1. See above
    2. Do you know what your plan actually says
    3. Not realizing that with or without a Will and with or without a trust, you will need professional guidance and incur most of the same expenses. With a trust, you may avoid a probate, but you will still have all the other expenses associated with transferring titles and seeking professional help, legal advice, tax returns – final return for decedent, income tax return for the estate for each year that it remains open, estate tax return if necessary.
  7. That disinherited child
    1. Does your plan provide for after born child or other descendants
    2. Are your beneficiary designations up to date and are the contingent beneficiaries correctly described.
  8. Relying on beneficiary designations
    1. Unless current, the default provision may not be your personal choice.
  9. Trying to do it yourself
    1. You can fill out the forms, but can you fill out the form correctly, and how do you know the difference?
  10. Not considering who pays the estate tax
    1. The incidence of taxation may not fall evenly on all assets and may have disastrous consequences if not properly described.
  11. Not understanding income tax consequences
    1. IRA assets will be taxed as distributed
  12. Gifting appreciated assets
    1. Donee loses opportunity for step up in basis
  13. Giving the wrong gift to charity
    1. Better to donate appreciated property at FMV without paying capital gains (rather than sell property and then contribute cash, or merely contributing cash)
  14. Missing disclaimer deadlines or failing to meet all requirements
    1. Must be done within 9 months after date of death
    2. Disclaimant must not exercise control or accept a benefit
    3. Must give proper notice
  15. Using Uniform Gift to Minor Accounts
    1. Minors will take entire account with no accountability at age 18 or 21 depending on the nature of the gift
  16. Property left to minors
    1. Property must be held in trust without specific guidelines
    2. Minors will take property outright at age 18
  17. Not using Special Needs Trust
    1. May disqualify special needs person from government benefit; or
    2. Unnecessarily deprive special need sperson from using allowable private help
  18. Not protecting loved ones from themselves, creditors, and predators
    1. In many cases trust provisions and corporate trusts can provide continuing control and supervision over assets
    2. Urban legend that all outright inheritances are spent or lost within 18 months.
  19. Wills can always be changed
    1. Can’t rely on heir living up to his or her part of the bargain except with appropriate trust with appropriate characteristics.
  20. Not avoiding probate
    1. Not a biggie in AZ, but many folks with non-taxable estates fall prey to “trust mills” based on selling the fear of probate, and then fail to avoid probate because of lack of proper supervision.
  21. Trusts not fully funded
    1. Same as above, if you have a trust and fail to retitle all proper assets, you will have accomplished little or nothing.
  22. Relying on Wills for tax planning when it is impossible for the plan to be effective beyond the first death
  23. Not contemplating changes during a divorce
  24. Power of Attorney not containing a gifting power or containing an inadequate gifting power
    1. Particularly important for ALTCS planning, but also
    2. Estate tax planning
  25. Inadequate powers of attorney
    1. Must comply with AZ law concerning exploitation of vulnerable adults or may be useless.
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Exploding The Myths About Estate Planning

When listening to sales pitches to buy estate planning or financial products beware of “The Ring of Truth”:

  • A broken clock is right twice a day
  • One size does not fit all!
  • Is it an endorsement or is it paid for advertising?

FLPs, trusts, annuities, asset protection are popular seminar topics because they are serious and confusing topics.

When choosing professionals don’t be led astray by self-promotion and testimonials, ask questions and listen to the answers, even well credentialed or experienced professionals may not be right for you.

  1. “Avoiding Probate” is not an expensive or difficult task in Arizona nor is it necessarily desirable!
    1. TOD/POD, beneficiary deeds for simple estates
    2. Trusts if there are more issues
    3. FLPs and LLCs are not for family homes – you lose step up basis and the §121 capital gains exclusions.
  2. [asset protection] 95% of our listeners can adequately protect themselves from the most likely class of unexpected creditors by using common sense and insurance they probably already have.
    1. After liability insurance (auto and home), umbrella insurance is the first line of defense.
    2. Retirement accounts are exempt
    3. Cash value in insurance policies are exempt under most ordinary circumstances
    4. $150,000 homestead allowance and the actual protection is much greater
    5. Professional liability insurance is the next line of defense if you are a magnet for litigation.
  3. Favorite line from the Michael Douglas character in “The American President

    “He is not the least bit interested in solving your problem, he is only interested in making you afraid of it, and telling you who to blame for it”

  4. If you are interested in learning more about common estate planning topics, call my office and I will send you my Available Reading List from which you can choose several free basic flyers that describe common estate planning issues.
  5. Or if you are ready to put your affairs in order, call for an appointment.
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Four Good Reason For Formal Updating

“Formal Updating” refers to meeting with your attorney periodically on a set schedule to determine if any changes should be made to your trust. There are four (4) principal reasons why this is important:

  1. Changes in the law. Both the federal tax law and state laws on issues such as asset protection, beneficiary rights, state death taxes, and other unpredictable changes may affect the efficacy of your trust planning.
  2. Significant changes in your family dynamics, including changes in those persons who are named as alternates for financial agents, health care agents, or guardians for you or your children.
  3. Significant changes in your net worth.
  4. Your lawyer will be better educated next year than last year and may have learned, discovered, or created techniques not commonly used when your plan was created which may apply to you.

In addition to the foregoing reasons, it is just a good idea to refresh your understanding of your estate plan in order to insure that it remains consistent with your current intentions.

I make this easy for all my clients by sending reminders each December and an invitation to a group meeting in February where current topics are discussed. The first year after your trust is created, the invitation is complimentary. Thereafter, you will receive the reminder and the invitation together with an invoice for continued participation. For those participating in the formal updating program, there is no charge for phone calls or an office visit to determine if you need or could benefit from additional work.

I encourage you to participate in the formal updating program if you believe in the value of relationship building to better serve you.

At Bregman & Burt, we use a comprehensive counseling approach to estate planning to be sure you have a unique estate plan specifically tailored to solving the tax and non-tax issues confronting your family. Failure to keep your plan current and your trust fully funded are among the most common reasons estate plans fail to work.

Mark Bregman is an experienced planner of estates; let him show you how to avoid common pitfalls, save money, and create a comprehensive estate plan that will reflect your hopes, dreams, desires, and aspirations for you and your loved ones while taking advantage of advanced planning techniques when necessary to maximize estate tax savings.

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