Massachusetts Estate Planning

LegalZoom Sued When Cheapo Wills and Trusts Don't Work!

Every has seen the commercials with OJ Simpson's former attorney, Robert Shapiro, bragging about creating LegalZoom--a website that provides "do-it-yourself" kits for Wills, Trust and just about any other legal document.  Of course, they offer too good to be true prices and claim that "almost" anyone can use their documents!  Well, NOT REALLY!  Turns out a few angry customers fell for their low prices and ordered their living trust kits only to find out there is no customization other than inputing their name and address and the customer ended up paying a lawyer to fix all the problems with the LegalZoom Trust so it would actually work when needed!  Here's a link to the article--which, incidentally, is a class action lawsuit--meaning this has happened to a number of customers--not just one person! 

 http://www.courthousenews.com/2010/06/01/27694.htm

I can't emphasize enough that when it comes to protecting your hard-earned life savings and protecting your family--hire a qualified estate planning attorney to do the job right!  Of course it will cost more than $99!  Why would anyone think they could protect their nest egg from all the predators, government tax programs, and disability problems, for so little?  If it were that simple, everyone would be able to do it!  It's sad that good, hard-working Americans had to be fleeced by LegalZoom before realizing that you get what you pay for.  Like I tell my clients--"you wouldn't operate on yourself, would you?"  Then I beg of you, don't be reckless with your life savings! 

Congress Continues to Screw-up Estate Tax!

Senate Disagreements Stymie Any Deal on Estate Tax    Democrats sharply divided on estate tax rate and exemption threshold.

Posted May 20, 2010   WASHINGTON – Congress Daily reports that an estate tax agreement is far from certain and speculates that it could even return at a 55 percent rate and $1 million per spouse exemption beginning January 1, 2011.   Senate Democrats discussed the issue at a heated policy luncheon earlier this week, while failing to reach a consensus.   Sen. Bernie Sanders (I-VT) advocated the 55 percent/$1 million exemption approach, maintaining that the pre-2001 rates would only affect 2 percent of the country's estates. When asked about reducing the tax to 35 percent while lifting the exemption to $5 million, he said, "I will do everything I can to stop that."   On the other side is Senate Small Business Chairwoman Mary Landrieu (D-LA), who supports the reduced rate and higher exemption. "We've been rasslin' and struggling with how to resolve this estate tax issue, and the fact of the matter is, even in the Democratic Caucus, there are varying views," she told the news source, calling the 35%/$5 million parameters a "reasonable compromise."   Landrieu said she would exempt more than 99 percent of small businesses from the tax, though acknowledged that votes remain scarce. "I don't know what's going to happen," she said. "It just doesn't seem like there's enough votes to do anything. There doesn't seem to be 60 votes at this point to do any of those proposals."   Sen. Bob Casey (D-PA) said that the majority of Senate Democrats oppose the 35 percent/$5 million plan, estimating the split at "80 percent, 20 percent" against.   "I think we're not yet at the point where we're drawing lines, but the idea that we're going to give an incredible economic advantage to less than 1 percent of our taxpaying population is really offensive to me, to understate it dramatically," Casey said. "Most of our caucus is very concerned about what will happen on the estate tax, and I think there are some who would probably be with Sen. Kyl, but I think it's a small number."   Capitol Hill insiders said that Finance Chairman Max Baucus (D-MT) and Minority Whip Jon Kyl (R-AZ) previously were in general agreement on the 35 percent rate with a $5 million exemption, though Baucus dismissed talk of any loose agreement earlier this week. "There is no agreement on the estate tax in either substance or process. None whatsoever."   Kyl conceded that whatever agreement might have existed has now disappeared. "We no longer have an agreement, because the Democratic side has decided that unless a matter has a guaranteed majority of Democratic votes going in, they're not going to allow it on the floor, at least not voluntarily," Kyl said.   Senate Finance Republicans expressed frustration at the unsettled issue. "It's very frustrating because we thought we had a deal," said Sen. Orrin Hatch (R-UT). "We thought we put it together in a way we thought was acceptable, and the Democrats are backing off on resolving it."

Excerpt From "The 10 Most Common Estate Planning Mistakes!"

 Here's an excerpt from my Special Report on the 10 Most Common Estate Planning Mistakes That Could Cost You Thousands of Dollars AND How to Avoid Them! 
 

"The First Most Common Mistake is that the government will take your house if you don’t have a Will.  Washington doesn’t want your property and they are NOT trying to steal from you in a situation where you die without a Will.  

 

THE STATE DETERMINES WHO GETS YOUR ASSETS WITH NO WILL!

 

Each state has laws that dictate who should get your estate if you die without leaving directions in a Will or a Trust.  So why not just write down who you want to inherit your belongings then tuck it away in the safe deposit box?  Because it’s not that easy. 

 

WHAT you write…HOW you write it…and WHO witnesses you…matter!  In other words, it MUST BE LEGAL!!

 

The tricky part is what’s legal in Massachusetts may not be legal in another state!  So, if you own property in more than one state, you have a PROBLEM in each and EVERY STATE you own property. 

 

But the real question is “do you want career politicians telling you who should inherit your life savings?” 

 

I can’t think of anyone who would want a stranger, especially an entrenched politician, dictating who inherits their life savings!  Yet, most Americans still don’t have a simple Will!  Most Americans have no protection at all.  Why? 

 

To clarify--Please don’t think I’m saying ..."

 
Get your FREE Copy of this Special Report while supplies last by calling our toll-free 24 hour pre-recorded hotline.  CALL NOW:  1-888-205-4004!

FREE REPORT--the 10 Most Common Estate Planning Mistakes That Could Cost You Thousands--And How to Avoid Them!

All of us make mistakes.  While most mistakes are not costly, some can be devastating, especially when they relate to one's life savings and retirement.  To often I see the same costly mistakes over and over and over again.  Hard working, decent Americans simply think these common errors will save them money when in fact, they end of costing them everything.  Imagine having to sell the family home to pay for nursing home care or having to move in with your adult children because of well-intentioned gifts gone bad.  It happens all the time.  But it doesn't have to be that way.  Over the years I've compiled a list of the 10 most common and most costly estate planning mistakes and how to avoid them!  This is a fantastic report packed with legal techniques and tips to help all of us keep what we've earned, live a more comfortable and stress free life and even pass something along to our heirs without the government taking more than their fair share.  I've never done this before, but while supplies last, you can get a FREE copy of this special report by calling my toll-free, 24 hour prerecorded hot-line, 1-888-205-4004.  Listen to the message and provide your mailing information and we'll send it out to you right away.  Enjoy and read it a few times so you can take advantage of all the tips I included in the report.   

Worcester Office Now Open

I'm very excited to announce the expansion of my firm with the opening of a second office for Estate planning and Elder law in lovely Grafton, Massachusetts.  The Northampton office will remain open full time to serve the needs of Western Massachusetts clients.  The new Grafton office will serve the Central Massachusetts community, from newlyweds to Baby Boomer's to retired folk, to those in their Golden Years, with top estate planning and elder law legal services.  The new office is conveniently located on Two South Street, across from the beautiful Grafton Common.  It is intended to incorporate all planning needs including financial planning and CPA services.  The grand old Victorian house that houses my office is also home to the W. B. Smith Companies, a world class financial and investment adviser and an accounting firm.  Together, a visit to the Law Offices of Howard S. Kirkpatrick in Central Mass in Grafton, will be a full service planning process for those who want to control their estate, pay less in taxes and protect their family with financial security during these difficult and uncertain economic times.  Hope to see you soon! 

Summary of New Healthcare Law

On March 23, President Obama signed the Patient Protection and Affordable Care Act passed by the Senate on December 24, 2009 and by the House of Representatives on March 21, 2010. The House of Representatives and Senate also passed the Health Care and Education Reconciliation Act of 2010, which made changes to the Patient Protection and Affordable Care Act. Here are bullet key overage provisions of the legislation.

The legislation will do the following:

• Most individuals will be required to have health insurance beginning in 2014.
• Individuals who do not have access to affordable employer coverage will be able to purchase coverage through a health insurance exchange with premium and cost-sharing credits available to some people to make coverage more affordable. Small businesses will be able to purchase coverage through a separate exchange.
• Employers will be required to pay penalties for employees who receive tax credits for health insurance through the exchange, with exceptions for small employers.
• New regulations will be imposed on all health plans that will prevent health insurers from denying coverage to people for any reason, including health status, and from charging higher premiums based on health status and gender.
• Medicaid will be expanded to 133 percent of the federal poverty level ($14,404 for an individual and $29,327 for a family of four in 2009) for all individuals under age 65.
• The Congressional Budget Office estimates that the legislation will reduce the number of uninsured by 32 million in 2019 at a net cost of $938 over ten years, while reducing the deficit by $124 billion during this time period.

Who Will Inherit Your IRA!

IRAs and 401(k)s are wonderful!  They combine the incredible power of  tax deferred investing with the benefit of choosing ones own investments.  In addition, IRAs and 401(k)s allow us to take advantage of the miracle of compounding.  Compounding of interest along with tax deferral have turned these retirement tools into the second largest asset of most estates in America, topped only by the family home.  But what happens to all that IRA money when you die?  Well, most people complete a beneficiary designation form when they open the account and designated their spouse or children as beneficiaries.  Therefore, when they pass away, the money goes to them.  Sounds easy and simple.  But, like anything else, it's not that easy.  For example, what if your beneficiary wasyour spouse when you filled out the form, but since that time, you got a divorce and then died before getting around to changing the form to remove her as beneficiary?  Oops.  Your kids will be in for a big shock when your ex gets a windfall!  But wait...your lawyer has it clearly stated in your will that your IRA goes to your kids!  That would be great if your will had anything to do with your IRA beneficiary designation.  Your lawyer should have know that your will has nothing to do with your IRA.  Here's another one for you.  You filled out the form and named your son as beneficiary of your IRA.  Your son dies and you never named a backup in case something happened to him.  What happens to your $300,000 IRA when you die?  Will it go to your son's wife, your daughter-in-law?  Will it go to your grandchildren?  Will it go to the state?  Will it go to your 85 year old brother?  I hate to say it, but it depends.  More likely than not, the probate court will make the determination.  But you heard that IRAs and 401(k)s avoid probate, right?  It depends upon the beneficiary designation form.  In the scenario above, your family will visit the probate court.  Bottom line--make sure you update your IRA and 401(k) beneficiary designation forms on a regular basis--every few years or immediately after a beneficiary dies or becomes incompetent.  These accounts hold too much money to be careless.  If you can't put your hands on your beneficiary designation forms within 10 minutes or at least be able to tell me who your beneficiaries are off the top of your head, I can tell you that you're playing with fire.  Call your IRA custodian (Fidelity, Ameriprise, etc.) and ask them to send you your beneficiary designations so you can review them and make sure they are what you still want.  This task costs nothing but a few minutes of your time.  Not doing so could cost your grandchildren their college fund!

No Death Tax in 2010 Could Hurt Middle Class!

By now most people have heard that the best year to die is 2010!  Why?  No federal death tax (so far).  Sounds great, right?  It depends.  If your estate is over 3.5 million dollars, then you may have hit the jackpot.  If not, 2010 could be a nightmare.  Why?  Because with the repeal of the death tax comes new tax rules targeting the middle class who wouldn't have had to pay anything had Congress left the death tax alone.  The target is appreciated assets.  In prior years, those who inherited appreciated assets like stocks or property, received a stepped-up basis to the fair market value date of death.  In other words, when your grandchildren sell the IBM stock you leave them in your will, they would only pay capital gains tax on the appreciation from the date you died until the date they sold the stock.  They would not pay tax on the difference between the sale price and your original purchase price.  But, these favorable basis rules changed for 2010 so your heirs will no longer get a full step-up in basis on appreciated assets.  This means your heirs will get hit with a much larger tax bill then they would have had you died in 2009!   Moreover, Congress is still talking about changing the rules back to the old rules at some point in 2010.  So what will happen if you die between January 1, 2010 and the time Congress goes back to the old rules?  We'll wait and see.  And what about all the people who have clauses in their wills or trusts that link distributions to the federal estate tax?  Who will get what if there is no federal estate tax?  These answers will be decided by the courts--which means many families like your could end up in protracted legal battles pitting siblings against each other for years after you're gone.  The financial and emotional costs of battling it out in court will be devastating.  The bottom line--2010 can be your worst nightmare or, with competent estate planning, your family could be protected.  Will your family get the shock of their lives after your gone?   The way it stands now, they will and the middle class will pay dearly.   

The Taming of Tiger Woods

Tiger Woods finally came out of hiding and held a press conference.  Yes it was controlled.  Sure it was on his terms.  In true form, Tiger was robotic like his golf game.  His prepared remarks were all of these things and more.  The "more" is his speech was probably required by his re-negotiated prenup with his wife.  Of course, since Tiger is married, his re-negotiated prenup can't really be called a prenup anymore. It's more like a postnup.  The difference between a prenup and a postnup is a prenup says "I'm not sure I can trust you because we haven't been married yet."  A postnup, on the other hand, says, "Now that we're married I know I can't trust you!"  Big difference, right?  In Tiger's situation, this certainly rings true.  After all, Tiger went from the wholesome golf superstar to the poster boy for men behaving badly.   So what does Tiger's newly re-negotiated prenup actually say?  Your guess is as good as mine, but I promise you it involves more money than the combined GDP of most tropical vacation destinations in the Caribbean!  So what does this have to do with estate planning?  It has to do with asset protection.  Yes, Tiger had a prenup and prenups are wonderful tools.  But they have their problems.  For starters, many state court judges don't like prenups and when push comes to shove, that spells trouble for someone like Tiger.  Another problem is they have their loopholes.  For example, if the rumors are true that Tiger renegotiated his prenup with his wife, it leads one to believe that the prenup didn't provide much protection in the first place.  In addition to a well drafted prenup, someone like Tiger Woods would benefit from asset protection trusts that effectively place the assets therein out of reach from creditors, ex-spouses, lawsuits, etc.  So does this mean that Tiger's wife would get nothing if they divorced?  Of course not.  Alimony, child support and the laws of the state the couple reside in would all play a part in the settlement.  It does mean, however, that a sizable portion of his assets would be beyond the court's reach and the reach of creditors.  Now, Tiger may already have such trusts in place.  We simply don't know because trusts are private.  The sad thing is many of the wealthiest people in the world fail to plan accordingly and wind up broke, especially athletes.  Just remember that no matter who you are, asset protection is important. 

Are All Living Trusts Created Equal? NO!

Of course all living trusts aren't created equal.  Are all cars the same?  What about hamburgers?  How about mortgage loans?  The question seems silly in reference to cars and hamburgers, right?  But until the real estate market dove off a cliff, most Americans thought loans were just boilerplate legal documents with different interest rates.  Why anyone would believe such a myth with hundreds of thousands of dollars at risk is beyond me.  But just like loans, many Americans believe the same thing about living trusts.  And just like loans, this mistake could cost hundreds of thousands, if not millions of dollars in losses.  All living trusts are NOT created equal.  First, we must understand what a living trust is to appreciate the differences between them.  A "living" trust is simply a trust that created while you are alive.  It is that simple.  All living trusts have this one fact in common.  After that, however, remember this truth--all living trusts are unequal.  Some attempt to solve tax problems.  Solve attempt to solve probate.  Some attempt to solve probate and taxes.  Some attempt to prevent distribution disputes.  Some attempt to provide asset protection for your heirs.  Some attempt to address disability issues.  Some are flexible, while others have very rigid rules.  Remember, a trust is nothing more than a tool to achieve a goal.  The important thing is, did you discuss all of these options and more with your lawyer?  Did you know there are about 10 different ways to set up the estate tax provisions alone?  Do you know if you have an AB trust?  An ABC trust?  A Disclaimer trust?  A QTIP Trust?  A Marital Exemption Trust?  A special needs standby trust?  Did your attorney discuss you family situation with you?  The financial and marital stability of your heirs?  I think you get my point.  Living trusts are wonderful estate planning tools that, if used correctly, can provide incredible benefits such as tax and probate savings as well as asset protection and peace of mind.  However, one size does not fit all and the drafting of a living trust, or any trust for that matter, should never be left the jack-of-all trades attorney.  If you choose this method, your heirs may be in for the shock of their lives.  All trusts are not created equal, just like cars, hamburgers and mortgage loans.  Remember this when thinking about a living trust.  Don't make the same mistake many made about loans.