Estate Planning

Is Your Neighbor a Con Artist?

Affinity fraud is becoming a major problem here in Utah. If you listen to the radio regularly, you've likely heard a number of ads put out by the Securities Division of the State of Utah about consumer fraud. One variety of consumer fraud is called "Affinity Fraud."

The Utah Securities Division website defines this term as follows:

Affinity fraud is when someone abuses membership or association with an identifiable group to convince a potential investor to trust the legitimacy of the investment. Common affinity groups include religion, ethnicity, profession, education, common handicaps, language, age and any other common likeness or shared characteristics that allow investors to trust members of the group.

It has probably happened to all of us at some point, whether or not we recognized it at the time. You know how it goes. A friend or someone you trust approaches you or your spouse about this "amazing" opportunity to invest that has almost no risk whatsoever, but the returns on your investment will be potentially staggering. However, you've got to act fast, because the opportunity to invest won't last long. People are lining up with money in their hands on this one and you're going to miss out if you don't get on the ball.

Don't Like Paying Taxes? Geithner Says Too Bad.

It has been a busy year for us here at Platt Law, and we haven't been as regular with our e-newsletter as we have in the past. For that, I apologize.

There has been a great deal of uncertainty and debate in the wealth management and planning world regarding the future of the tax laws and how they will affect the average American as we try to build wealth for our families and provide for them in the future.

A question I get almost daily from my clients centers on the future of the wealth transfer taxes in this country. If you recall, the current tax laws will lower the estate and gift tax exemption to $1 million per person on January 1, 2013 (less than six months from today). What this means to you is that if your estate (which includes the death benefit value of any life insurance policies you own) is over $1 million, your family could pay up to 55% of each dollar over that amount to the IRS.

Amy Winehouse's House: Not So Orderly After All?

A few months back, I shared a report by Forbes magazine indicating that the late singer, Amy Winehouse, had done a good job of estate planning. It was reported that she had updated her estate planning documents shortly after her divorce to reflect her wishes that he not inherit her wealth were anything to happen to her.

However, Forbes is now reporting that an intestacy proceeding has been filed in court with a majority of her estate being listed as the assets that must pass through probate. What does this mean? It could mean a number of things:

A Mother’s Love

If a theme is to be found from my many interviews with clients over the years, it’s that parents love their children and will do anything for them.  Over and over, when I work through the estate planning process with my clients, I find that the guiding principle motivating parents in their planning is the happiness and well being of their children.  Parents will frequently state to me that they are willing to do anything for the success and happiness of their children. 

 

This sentiment was proven again in a dramatic fashion recently.  You’ve likely heard by now about the amazing story of the mother in Louisville, KY who protected her children from almost certain death when a tornado with 175 mph winds ripped their brand new brick home to shreds.  If you’ve not seen the inspiring newsreport yet, it’s well worth watching.

How Will You Die?

A few days ago, my wife and I learned that a friend we went to college with is in need of a heart transplant. As any of us would be, this woman is overwhelmed at the thought of facing her own death. Unfortunately, we can be faced with end-of-life health care decisions at any age. This is why every adult should give some thought to planning for those decisions and then take the simple step of executing an advance health care directive.

This week, Governor Herbert will sign SCR2, a concurrent resolution encouraging every adult in Utah, whether they have a known serious medical condition or not, to consider preparing an advance health care directive (AHCD). The Utah AHCD form has two parts: (1) Part I allows you to appoint someone (an agent) to make medical decisions for you when you cannot make or communicate your own medical decisions (also called a Health Care or Medical Power of Attorney). (2) Part II allows you to express your preferences about health care decisions under particular circumstances and helps ensure your health care wishes will be honored (also called a Living Will).

Over the River and Through the Woods . . .

It is becoming more common these days for families to own vacation homes. Often, these second homes become the center of a lifetime of fond memories for generations. In many cases, the sentimental feelings attached to these vacation homes are more pronounced than the feelings attached to the family’s actual residence. It’s not hard to see why.

In our regular homes, kids do homework, complete chores, get disciplined by parents, etc. But at a vacation home, parents tend to relax, kids make fun memories with aunts, uncles, cousins, and siblings. There are often fun activities and lots of good food that go along with the time spent there.

Over the holidays I had the opportunity to spend a few days with my family at just such a vacation home. It was hard to come back to reality after that weekend, but I so enjoyed watching my kids have the time of their lives with their cousins playing in the snow, wrestling, playing hide and seek, beating their uncles in checkers and more.

Guitar Shopping Anyone?

Merry Christmas! December and all of the holiday celebrations that this month brings has finally arrived. My kids are bouncing off the walls already. Last night, I took each of them to the store to help them pick out presents for their siblings and mother. After we got them all wrapped back at home, our little girl asked if she was going to get to open them tomorrow. I told her, “No. We still have about 20 days before you can open them.” I couldn’t help but feel her pain as a drawn-out whimper of despair escaped her lips while she tried to comprehend the eternity of the next 20 days. Ahhh, waiting for Christmas morning. What torture!

December is also a big birthday month in my family. Last Saturday I had the chance to go with my nephew Talmage to Guitar Center to help him look for a new electric guitar that his parents wanted to get him for his birthday. Of course, my doing so wasn’t entirely selfless as I will jump at any opportunity to go to Guitar Center and play with the big boy toys that fill my dreams on these long winter nights.

There Is No Good Reason to Make These Mistakes

Today I read an excellent article warning CPAs (Certified Public Accountants) of the risks that many of their clients face with regard to estate planning. Even when some form of estate planning has been done, the following mistakes show up repeatedly in clients' estate plans:

(1) "Outdated or Unsigned Estate Planning Documents" (i.e., if they have a plan at all, most clients' plans are either outdated or inadequate, and worse yet, unexecuted)

(2) "Lack of Coordination between the Estate Planning Documents, Titling of Assets and Apportionment of Estate Taxes" (i.e. the house is still in dad's name rather than in the name of the trust resulting in an unnecessary probate proceeding)

(3) "Lack of Understanding That a Transfer of $1 Is a Gift" (i.e., that transfers (typically of real property) for less than the fair market value of the property constitute a gift)

(4) "Life Is a Movie, Not a Snapshot" (i.e., that estate planning should be viewed as a process rather than a one-time transaction)

Sorry Folks, That Ship Has Sailed

It is not uncommon for my office to receive a call from a panicked family member of an elderly individual. The call may go something like this:

Caller: Hi, I'm calling to see how much it costs to get some estate planning done for my mom.

Paralegal: We'd be happy to help you if we can. Why don't you first tell me a little bit about your mom.

Caller: Okay. Well, mom's not doing too well these days. She's in an assisted living facility and mostly doesn't recognize us anymore. Although she sometimes has good days, most of the time she's confused and is asking for her husband who died three years ago.

Paralegal: Okay. What kind of property does your mom have?

Caller: Well, she has a home that's paid for. She has a brokerage account, a checking and savings account, some farm land in Tooele and I think she has some municipal bonds that she invested in once. But I'm not really sure.

Paralegal: Does your mom know what property she owns and does she understand its value?

Caller: Oh heavens no! She put me on her checking account years ago because she was so overwhelmed with trying to manage her finances. I don't think she has a clue how much she owns, nor could she keep it straight even if we told her.

Paralegal: I think we can help you, but you'll need to meet with an attorney to discuss some of the legal implications of your mother's situation.

Although this above excerpted conversation is a fictitious example, and a very abbreviated one at that, it illustrates a trap that many people fall into with regard to estate planning.

Can You “Hide” Your Assets Legally?

I’ve had a number of clients ask me if it is possible for them to “hide” their money legally. The answer is, of course, not a simple one. It really depends upon who you’re trying to hide it from and how you define the word “hide” in this context.

Can you conceal how much wealth you have from those whom you casually associate with on a regular basis? Sure. Why not? Don’t dress expensively, drive a Maserati, vacation in the French Rivera, or live in a palace on the mountain benches and you’ll probably be able to fly underneath the radar of most people.

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