This year, 2010, saw the repeal of the United States Estate Tax. But Alas! It was short lived.

Yes, as expressly set forth in that law which repealed the ominous Estate Tax (otherwise known as the “Death Tax”), that repeal was just temporary! If Congress didn’t make it a permanent repeal, then the tax would be automatically reimposed in the year 2011.

Guess what. Congress did not make the Estate Tax repeal a permanent repeal. They need your money. You see how extravagent and profligate Congress is in spending their constituents money. I can’t count the zeroes in the new national debt.

In any event the Estate Tax is reintroduced as of January 1, 2011. Yes, that’s just next year. But not to worry. The Estate Tax is a tax on only the very wealty. But contrary to popular opinion, many Americans will now find themselves eligible for this tax.

In 2011 the Estate Tax exemption amount will be a whopping big $1million. That means only estates worth more than One Million Dollars will be subject to the Tax. So, you see, it’s only for the wealthy to worry about. Unless you’re a cash strapped farmer, or small business owner, with a nice net worth. In those cases the families of the deceased may have to hold “fire sales” to raise enough money to pay the Tax.

Uncle Sam doesn’t accept intangible such as stock, or even tangibles like farmland, to pay the tax. And it must be paid within nine months of the death. This can, and often does cause great stress and consternation.

Why is something taxed at death, when it has all been taxed while being earned? Doesn’t that amount to double taxation? In the wisdom of Congress it’s just a small tax on those who can afford it.

A small tax? The maximum tax rate is increased by this un-repeal to a whopping fifty-five percent (55%). Yes, that’s more than half the total estate.

If you find yourself in that category of the wealthy who can afford this tax, do you need to do some planning?  Would you rather pay this tax with whole dollars or at a discounted rate? Most of my clients prefer a discounted rate instead of a payment of the whole dollar amount. How can you do that?

You can choose to pay the tax with discounted dollars. It’s now easy with the use of Life Insurance. But it takes some serious planning.

Without the right planning your life insurance death benefit payment may also be subject to that same fifty-five percent death tax. An experienced estate planning attorney can help you with the details. This is when an experienced person can be worth is fee in gold.

I recently visited with a long time client.  It was a sad visit, for more reasons than one.  Her sister, Abby, also a client, had passed away last month.  The surviving sister, we’ll call her Betsy, wanted some help and some answers.  That brings me to the other sad part of our visit.

 Both sisters had established revocable living trusts with me many years ago.  That’s the good part.  Betsy lived with Abby to take care of her in her later years.   Abby was so grateful for her sister’s help that she changed her trust beneficiaries so that Betsy would be the only one to inherit through the trust.

 Abby, on the recommendation of her investment advisor, sold her shares of stock when the market was plummeting in 2002.  That was a smart move.  She could have lost more of her nest egg, and she didn’t have time to make up her losses.

 The investment advisor helped Abby purchase a single premium fixed annuity with a reputable insurance company.  That proved to be a wise move.  She would lose no more of her principle. It was fully insured.

The investment advisor was informed that Abby had a revocable living trust and so he wisely named the trust as the “owner” of the annuity.  That was also a good move.

 But here’s where the bad news starts.  An annuity has three distinct parties.  One, the annuitant, or the person whose life expectancy is used to determine the value.  Two, the owner, the party who is listed as the one who actually holds the policy.  And Three, the beneficiaries.  The beneficiaries are those who will receive the funds accumulated in the annuity upon the death of the annuitant.

 As indicated, Abby was the annuitant.  Her trust was the owner.  But the beneficiaries were the original trust beneficiaries and those individuals would eventually receive the funds upon Abby’s death.

 That doesn’t sound too bad.  EXCEPT that later Abby wanted to change her beneficiaries and leave everything to her sister, Betsy.  You see, her original trust beneficiaries hadn’t kept in touch with Abby, hadn’t taken care of her, and were mostly out of her life.  So a change was in order.

 Abby then amended her revocable living trust to do just that.  Change her beneficiaries.  Her trust was listed as the owner of her annuity, so she assumed that the terms of the trust would control who would receive her assets.

 And it would have IF her investment advisor had just named the trust as the beneficiary of the annuity.  But he didn’t.  He named the original beneficiaries individually.  Guess what controls the distributions of the annuity proceeds?  Yes, it’s the form held by the insurance company which names the beneficiaries.

 If the investment advisor had simply named the trust as both the owner and the beneficiary, then everything would have turned out all right.  But he didn’t.  So instead of Abby taking care of her sister, as the sister had taken care of her, the entire $200,000.00 from the annuity will be distributed to the original beneficiaries of the trust and not to Betsy.

 The sad news in all this is that Betsy, after diligently looking after her sister, does not receive one dime of the annuity proceeds.  This is not what Abby wanted.  She wanted to express her thanks to Betsy for all her care, by leaving her the home, the bank accounts, and most of all, the annuity proceeds.

 This isn’t the first time something like this has happened.  That’s why I knew I’d better warn you to look over your documents.  Check your annuities and your beneficiaries.  See if you need to protect your estate like Abby had intended to.  

 I recommend that you name your trust as both the owner and the beneficiary of any annuity funds.  That way, when you decide to amend your trust and change your beneficiaries, you won’t have to remember to file a change of beneficiary form with your insurance company. There are slightly different rules for ownership of IRAs and 401Ks but again, you need to review all the beneficiary designations

Just this morning I visited with a long time client. It was a sad visit, for more reasons than one. Her sister, Abby, also a client, had passed away last month. The surviving sister, we’ll call her Betsy, wanted some help and some answers. That brings me to the other sad part of our visit.

Both sisters had established revocable living trusts with me many years ago. That’s the good part. Betsy lived with Abby to take care of her in her later years. Abby was so grateful for her sister’s help that she changed her trust beneficiaries so that Abby was now the only one to inherit through the trust.

Abby, on the recommendation of her investment advisor, sold her shares of stock when the market was plummeting in 2002. That was a smart move. She could have lost more of her nest egg, and she didn’t have time to make up her losses.

The investment advisor helped Abby purchase a single premium fixed annuity with a reputable insurance company. That proved to be a wise move. The investment advisor was informed that Abby had a revocable living trust, and so he wisely named the trust as the “owner” of the annuity. That was also a good move.

But here’s where the bad news starts. An annuity has three distinct parties. One, the annuitant, or the person whose life expectancy is used to determine the value. Two, the owner, the party who is listed as the one who actually holds the policy. And three, the beneficiaries. The beneficiaries are those who will receive the funds accumulated in the annuity upon the death of the annuitant.

As indicated, Abby was the annuitant. Her trust was the owner. But the beneficiaries were the original personal relatives who would eventually receive the funds upon her death.

That doesn’t sound too bad. EXCEPT that later Abby wanted to change her beneficiaries and leave everything to her sister, Betsy. You see, her original trust beneficiaries hadn’t kept in touch with Abby, hadn’t taken care of her, and were mostly out of her life. So a change was in order.

Abby then amended her revocable living trust to do just that. Change her beneficiaries. Her trust was listed as the owner of her annuity, so she assumed that the terms of the trust would control who would receive her largess.

And it would have if her investment advisor had just named the trust as the beneficiary of the annuity. But he didn’t. He named the original beneficiaries individually. Guess what controls the distributions of the annuity proceeds. Yes, it’s the form held by the insurance company which names the beneficiaries.

If the investment advisor had simply named the trust as both the owner and the beneficiary, then everything would have turned out all right. But he didn’t. So instead of Abby taking care of her sister, as the sister had taken care of her, all the money from the annuity will be distributed to the original beneficiaries of the trust and not to Betsy.

The sad news in all this, is that Betsy, after diligently looking after her sister, does not receive one dime of the annuity proceeds. This is not what Abby wanted. She wanted to express her thanks to Betsy for all her care, by leaving her the home, the bank accounts, and most of all, the annuity proceeds.

This isn’t the first time something like this has happened. That’s why I knew I’d better warn you to look over your documents. Check your annuities and your beneficiaries. See if you need to protect your estate like Abby had intended to.

I recommend that you name your trust as both the owner and the beneficiary of any annuity funds. That way, when you decide to amend your trust and change your beneficiaries, you won’t have to remember to file a change of beneficiary form with your insurance company.

Better yet, come see me for your annuity, insurance, and asset protection needs. I’ll make sure you get the right kind of policy, and the right kind of protection. And that your funds will always be consistent with your overall estate plan.

There is some confusion associated with the terms Living Will and Living Trust. Are they the same type of thing? Not at all. To help you avoid this confusion let me give you a short description of each.
A living will is a written instrument which expresses your desires in regard to medical attention. In the living will you state you intention not to be attached to or kept on artificial life prolonging measures or be given extreme medical procedures in the event that you are either terminally ill or when there is no prospect for your recovery from a serious illness.
Most people sign a living will when they want to avoid being kept alive by technology to maintain a vegetative state or to prolong the dying process. So a living will governs your health care or medical needs. It has nothing to do with your home, your possessions or your financial assets.

A living trust on the other hand, has nothing to do with your health care or medical needs. It has everything to do with your home, your possessions, and your financial assets.
A living trust is a written document which governs how your home, your possessions, and your financial assets will be managed during your lifetime. And it describes how your several assets will be used or distributed in the event or your incapacity or upon your death.
Because your home, your possessions, and your financial assets will be titled in your trust’s name, there will be nothing in your name to require court interference should you die or become incapable of managing your own affairs.
The trust has three parties. The Settlor (or Grantor) is the person setting up the trust. The trustee is the manager of all the trust assets. The beneficiary is the person or persons who have the benefits of the trust assets while they are in trust.
If you set up a trust for yourself, you can be all three parties. You will be the Settlor, you may still manage the trust assets as the trustee. And you can be the lifetime beneficiary.
Your written trust agreement also names someone to replace you if you can no longer act as trustee. This person is called a successor trustee. You are the lifetime beneficiary, but you name others to become beneficiaries upon your death. The trust avoids a probate at the time of your death because there is nothing in your name. It’s all in your trust. The terms of the written trust agreement specify how your estate will be distributed.
For the same reason, your trust also avoids the need for a court conservator to be appointed in the event of your incapacity. The terms of your trust will govern in all matters consistent with its terms and without judicial interference.
Just think, all your instructions can be followed without the need for judges, lawyers, and nosey relatives. Don’t you think you should have a living trust? And also a living will?

If you own your own business you are in control of what happens if you should no longer be there. Don’t let your business be interrupted by your death or incapacity. If your business entity isn’t owned correctly it may be subject to probate. Link your business with your estate plan. Avoid an interruption in your business in the event of your death or incapacity. Use a Living Trust to own your LLC membership interest or corporate stock. This will eliminate the probate of your estate.

With proper planning, upon your death or incapacity, your business entity, or even your network marketing company, will not be tied up in the expensive, time-consuming, and public process of judicial interference called “Probate.” You want to do all you can to create a seamless transfer of your business upon your death. This is what a living trust will do for you.

How great would it be if all those who enter into a business entity or company, would take a moment to consider what would happen to their business if they for some reason were suddenly not there. Who would take over? How would it happen? How expensive and time consuming would it be? And above all, what can they do to make sure things go the way they intend! Make estate planning a part of your business plan.