Archive for the ‘Elder Law Planning for Incapacity and Long Term Care’ category

Basic Estate Planning Video Updated to Reflect ATRA

February 24, 2013

The American Taxpayer Relief Act of 2012 (“ATRA” effective January 1, 2013) will change everything about estate tax planning.  We recently updated our Basic Estate Planning Video to reflect ATRA and posted it to YouTube.

Background

April 30, 2013 (Updated April 20, 2015)

We offer seminars to our clients, their advisors, and other friends of the firm, every year.  One of the most popular has been our Basic Estate Planning Seminar.  On March 14, 2013, we offered our Basic Estate Planning seminar at the Maron Hotel, Danbury, Connecticut.  The seminar covered the topics mentioned below.

Those who could not attend the seminar may be interested in taking a look at the Basic Estate Planning video that we recently finished updating to reflect the recently enacted American Taxpayer Relief Act of 2012 (effective January 1, 2013).

The presentation is in 15 parts.  Click on the red  “Basic Estate Planning after ATRA (15 Parts)”  heading below and then click “Play All” under “Basic Estate Planning” at the top of the YouTube page.

Basic Estate Planning after ATRA (15 Parts)

We describe each of the parts below with an individual link to each one. 

Part 1:  Introduction.  Wills and probate property vs. nonprobate property.

Part 2: Beneficiaries, mistakes with nonprobate property, trust basics, guardian appointments, life insurance beneficiary designations, and estate taxes.

Part 3:  Wills, the estate taxation of life insurance death benefits, tax issues and asset protection issues relating to Wills, and disclaimer Wills.

Part 4: Formula marital deduction Wills, exemption trusts, risk of disinheriting the surviving spouse as estate tax exemptions increase, the portable estate tax exemption, and asset protection bypass trusts.  

Part 5:  Formula marital deduction Wills (and exemption trusts) vs. disclaimer Wills (and disclaimer trusts), and common estate planning mistakes.

Part 6:  Common estate planning mistakes continued, the duties of an Executor, the duties of the Trustee, the duties of a guardian, planning for post-death cash needs, and the generation skipping tax.

Part 7: Retirement plan accounts (IRAs, 401(k) plans, 403(b) accounts, etc.), estate taxation on retirement plan accounts, the risk of a circular tax on tax problem at death of account owner, life insurance and irrevocable life insurance trusts as a solution.

Part 8: Retirement plan accounts and related income tax issues, effects of beneficiary designations on deferral periods, spouse as beneficiary and tax deferred rollovers, required minimum distributions, and tax treatment of inherited IRAs, and the five year payout rule.

Part 9: Revocable living trusts, the living trust as a Will substitute, probate avoidance, planning for incapacity, and establishing a revocable living trust.

Part 10:  Comparison of revocable living trust plan with non-living-trust plan, treatment of lifetime issues, powers of attorney as an alternative to the revocable living trust, and what it means to avoid probate.

Part 11:  Comparison continued, avoiding ancillary probate in other states where real property is located, creditors’ claims and safe harbors for the Executor, and income and estate taxes.

Part 12:  Comparison (continued), accounting requirements, releases from liability, continuing trusts and continuing probate court jurisdiction, reasons for considering revocable living trusts, management during incapacity, and real property in other jurisdictions.

Part 13:  Reasons for considering a revocable living trust (continued), controversial estate plans, probate notice requirements, disruption of support for third parties, probate and related delays, simplifying estate settlement for survivors, nonreasons for considering revocable living trusts, the living trust as tax neutral, and probate court fees.


Part 14: Gift planning, gift and estate tax exemptions, exclusions for small gifts, gifts to education funds (529 plans), exclusions for qualified tuition and medical costs, gift tax marital deductions,  gifts to U.S. citizen spouse, and gifts to noncitizen spouse.

Part 15: Gifts of life insurance policies, incidents of ownership, irrevocable trusts as owner, three year rule relating to transfers of life insurance policies, and sophisticated gift techniques (qualified personal residence trusts, grantor retained annuity trusts, valuations for gift tax purposes, gifts to charities and charitable trusts).

 Posted on 2/24/2013 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

 

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

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Simplify Your Estate Plan Maybe

January 13, 2013

The recent American Taxpayer Relief Act (effective 1/1/2013) could have been named the Great American Estate Planning Simplification Act. All but the very wealthy could call January 1, 2013, Federal Estate Tax Liberation Day. In other words, all but the very wealthy will be able to rely on simple Wills (Wills that don’t include complicated tax and trust provisions) unless one of the exceptions listed below applies to you.

Exceptions:

(1) You live in a state that still has an estate tax. Connecticut has an estate tax with an “exemption” of $2,000,000 and New York has an estate tax with an exemption of $1,000,000.

(2) Special problems plague your beneficiaries: creditor problems; divorces and troubled marriages; poor judgment; gambling habits; drug dependence; health problems; special needs; and poor financial training, financial skills or lack of interest in financial matters.

(3) A need to plan for long term care, whether at home or in a nursing home, for a surviving spouse or other beneficiary.

(4) Your primary beneficiary is your current spouse from a second marriage and you want to provide for the children of a previous marriage.

(5) Your children or other beneficiaries are too young to handle an inheritance or have special needs to consider.

(6) You have a business which will require management if it is to provide appropriately for your beneficiaries after your death.

(7) You are concerned about the management of your assets for you and your family in the event of your incapacity.

(8) You want to disinherit an undeserving relative or you would like to include provisions in your planning documents that your survivors might consider controversial.

(9) You have difficult-to-manage assets (for example, a closely held business, rental properties, collections of art, antiques and other creative works, weapons, etc.).

(10) You are concerned that your surviving spouse’s remarriage after your death will result in a diversion of your assets away from your children or other intended beneficiaries.

(11) You may be wealthier (for estate tax purposes) than you think you are. To determine the size of your estate, start by counting everything that will pass to others at the time of your death: home, retirement accounts, annuities, IRAs, life insurance, bank accounts, stocks and bonds—everything. Is it over $5,250,000? If so the Great American Estate Planning Simplification Act probably does not apply to you.

(12) You are in a same-sex or other “nontraditional” committed relationship (married or otherwise).

(13) Your estate is increasing and there is a strong possibility that, as a result of your efforts, luck, inflation, additional life insurance, or a combination of such factors, you will join the ranks of the “very wealthy”. In that case, it may be important for your documents to include all the existing tools for effective “post mortem” tax planning. See: It’s Not Too Late (Fixing Your Estate Plan After Your Death).

(14) You want to provide for your grandchildren by bypassing your children to some extent.

(15) You want to provide benefits for your grandchildren in amounts that may exceed one generation skipping tax exemption (currently $5,250,000).

(16) Although disadvantages of probate are often overstated, you nevertheless wish to arrange your affairs to avoid probate.

(17) Unique facts reveal unique problems that often require unique (and perhaps not simple) solutions.

With the above exceptions (and probably others I have not thought of), a simple Will may be all you need.

For those of you who currently have in place more complicated, tax sensitive documents, it may be very important for you immediately to change to something simpler. If the tax provisions in your Will are based on the federal estate tax exemption, failure to change to a simpler Will may result in unnecessary Connecticut or New York estate tax (more than $250,000 for Connecticut residents and more than $400,000 for New York residents) at the time of your death. For more details, see our companion post on this blog here: “New Risks of Unnecessary State Estate Taxes.”

For an excellent summary of the changes resulting from the Act, go to this post prepared by Clearwater, Florida, Attorney Alan Gassmann: Summary of the American Taxpayer Relief Act of 2012.

Posted on 1/13/2012 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

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Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

Video of July Basic Estate Planning Seminar Posted to YouTube

October 8, 2012

The video of our July Basic Estate Planning Seminar has been posted to YouTube.  You can access it below.

The question and answer sections were the focus of this seminar.

Richard S. Land, attorney and member of Chipman Mazzucco, made  the presentation in five parts, each part building on the preceding one and followed by a question and answer session.

Part One (and the Part One Q&A): Will basics; consequences of not having a Will, the difference between probate property and nonprobate property; trusts; guardians; and executors.

Part Two (and the Part Two Q&A): federal and Connecticut estate taxes and estate tax “exemptions”; the “portable” estate tax “exemption”; “exemption” increases and decreases; the estate tax marital deduction; assets included in an estate for estate tax purposes; life insurance as part of the estate for estate tax purposes; 529 education plan accounts; and Will and trust provisions designed to save estate taxes including the differences between trusts created by a surviving spouse’s disclaimer and trusts established under a formula provision included in the Will.

Part Three (and the Part Three Q&A): common mistakes made in estate planning; jointly owned assets; things to consider when selecting Executors, Trustees and Guardians; retirement plan accounts (IRAs, 401(k), 403(b), etc.); how rules relating to required minimum distributions from retirement accounts affect the drafting of Wills, trusts and beneficiary designations; and life insurance and irrevocable life insurance trusts to provide estate liquidity.

Part Four (and the Part Four Q&A): revocable living trusts; incapacity planning; probate avoidance; the probate process; controversial estate plans and other reasons to use a revocable trust; and nonreasons for using revocable living trusts.

Part Five (and the Part Five Q&A): gift planning; gift tax exemptions; exclusions from taxable gifts; the marital deduction; gifts of life insurance and irrevocable life insurance trusts; proposals for estate tax reform and changes to estate tax exemptions and tax brackets; Roth IRA conversions; making gifts of interests in a home or vacation home; large gifts in 2012 to take advantage of 2012 (current) large exemptions.

Each part is a slightly condensed version of the more detailed slideshow type presentation you can find here:

The slideshow presentation is more detailed and  includes more subjects relevant to planning for New York residents but has no Q&A. 

We hope you find this information helpful.

Posted on 10/8/2012 by Richard S. Land, Member,  Chipman, Mazzucco, Land & Pennarola, LLC.

 We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below. 

 
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Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

Basic Estate Planning Seminar With Extended Q&A Format

July 5, 2012

LocationMatrix Corporate Center, Sunset Vista Room, Fourth Floor, 39 Old Ridgebury Road, Danbury, CT

Directions:  Directions to Chipman MazzuccoDon’t rely on your GPS.  Please read and follow these directions.

Date:  July 26, 2012

Time:  5:30 to 7:30 pm (Doors open at 5:00)

Register here:  Seminar Registration.  Or, call 203-744-1929 for reservations.  For more contact information, go to the end of this post.  

No admission charge.  Our seminars are always strictly educational.

Description

We will cover the topics listed below.  Each listed Part corresponds to a Part in our Basic Estate Planning Video which you can see on YouTube here:  Basic Estate Planning Video.  If you would like to have the video on DVD, please let us know and we will send you one.

The Seminar will have four sections.  Each section will summarize topics covered in the video.  Q&A will follow each section.

To get the most out of the seminar, attendees should view the whole video before attending.  We understand that time may not permit that, however, and we are structuring the program to make certain it will be well worth your time even if you do not view the video.

Send Us Your Questions

If you think of a question before the seminar, let us know right away before you forget.  If the question is appropriate for a group educational program, we will try to answer it during the program.  Send your questions here: rsl@danburylaw.com (Richard S. Land) or here ksg@danburylaw.com (Kasey S. Galner).

 Seminar Topics

Part 1:  Introduction.  Wills and probate property vs. nonprobate property.

Part 2: Beneficiaries, mistakes with nonprobate property, trust basics, guardian appointments, life insurance beneficiary designations, and estate taxes.

Part 3:  Wills, the estate taxation of life insurance death benefits, tax issues and asset protection issues relating to Wills, and disclaimer Wills.

Part 4: Formula marital deduction Wills, exemption trusts, risk of disinheriting the surviving spouse as estate tax exemptions increase, the portable estate tax exemption, and asset protection bypass trusts.

Part 5:  Formula marital deduction Wills (and exemption trusts) vs. disclaimer Wills (and disclaimer trusts), and common estate planning mistakes.

Part 6:  Common estate planning mistakes continued, the duties of an Executor, the duties of the Trustee, the duties of a guardian, planning for post-death cash needs, and the generation skipping tax.

Part 7: Retirement plan accounts (IRAs, 401(k) plans, 403(b) accounts, etc.), estate taxation on retirement plan accounts, the risk of a circular tax on tax problem at death of account owner, life insurance and irrevocable life insurance trusts as a solution.

Part 8: Retirement plan accounts and related income tax issues, effects of beneficiary designations on deferral periods, spouse as beneficiary and tax deferred rollovers, required minimum distributions, and tax treatment of inherited IRAs, and the five year payout rule.

Part 9: Revocable living trusts, the living trust as a Will substitute, probate avoidance, planning for incapacity, and establishing a revocable living trust.

Part 10:  Comparison of revocable living trust plan with non-living-trust plan, treatment of lifetime issues, powers of attorney as an alternative to the revocable living trust, and what it means to avoid probate.

Part 11:  Comparison continued, avoiding ancillary probate in other states where real property is located, creditors’ claims and safe harbors for the Executor, and income and estate taxes.

Part 12:  Comparison (continued), accounting requirements, releases from liability, continuing trusts and continuing probate court jurisdiction, reasons for considering revocable living trusts, management during incapacity, and real property in other jurisdictions.

Part 13:  Reasons for considering a revocable living trust (continued), controversial estate plans, probate notice requirements, disruption of support for third parties, probate and related delays, simplifying estate settlement for survivors, nonreasons for considering revocable living trusts, the living trust as tax neutral, and probate court fees.

Part 14: Gift planning, gift and estate tax exemptions, exclusions for small gifts, gifts to education funds (529 plans), exclusions for qualified tuition and medical costs, gift tax marital deductions,  gifts to U.S. citizen spouse, and gifts to noncitizen spouse.

Part 15: Gifts of life insurance policies, incidents of ownership, irrevocable trusts as owner, three year rule relating to transfers of life insurance policies, and sophisticated gift techniques (qualified personal residence trusts, grantor retained annuity trusts, valuations for gift tax purposes, gifts to charities and charitable trusts).

SEMINAR LOCATION AND TIME

The seminar will be on July 26, 2012, at the Matrix Corporate Center, Sunset Vista Room, Fourth Floor, 39 Old Ridgebury Road, Danbury, Connecticut from 5:30 p.m. to 7:30 p.m. The doors will open at 5:00. Refreshments will be served.

These seminars are always well attended and space is limited. If you wish to attend, or if others you know are interested in attending, to reserve space call us (203-744-1929) or send an e-mail message to me (Richard Land at rsl@danburylaw.com) or Kasey Galner (at ksg@danburylaw.com) or Lynn D’Ostilio (at lsd@danburylaw.com) containing your name, number attending, telephone number and e-mail address.

You may also register here: Seminar Registration.

 Posted on 7/4/2012 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

Planning Question and Answer Sessions. Please Take This Survey!

May 15, 2012

When Do You Want an Estate Planning Q&A Session?  Please take this survey.

 May 15, 2012.

We recently published a Basic Estate Planning video on YouTube and DVD.  We hope that you will have a chance to see it if you have not already done so.

You can see the YouTube version here:  Basic Estate Planning Screencast on YouTube

We are scheduling group meetings so that interested parties can ask questions related to the subjects in the video.  There will be no charge or obligation. 

Location: Chipman Mazzucco, Attorneys, Matrix Corporate Center, 39 Old Ridgebury Road, Suite D-2, Danbury, Ct. o6810.

We ask you to click on the link below to complete this survey so that we know what will be convenient for you.  It will take only one minute.

Survey Link

 
Thank you for participating in the survey.  It will be a great help to us in our efforts to help you.
 
 
Posted on 5/15/2012 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

     
  Join Email List  
     

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Seminar Podcast/Slide Presentation (December 8, 2011)

December 26, 2011

Background

On December 8 we made an estate planning presentation to clients,  friends of the firm, and our new neighbors at the Matrix Corporate Center.  The title:  Planning Your Whole Estate (Coordinating Life Insurance, Employee Benefits and Other Nonprobate Property with the Rest of Your Estate Plan).

A question and answer period followed.  One of the more challenging questions, relating to the ability to roll over  lump sum distributions from retirement plans, inspired a post that you can find here:  Lump Sum Rollover of Retirement Account Not as Simple as Expected.

Although a podcast/slide show is not quite as effective (you miss out on the questions and answers) or fun (you miss out on the food, refreshments and good-natured conversation) as the actual in-person presentation, we thought those who could not attend might appreciate the podcast/slide show as presented below in eight parts. 

The Podcast/Slide Presentation

We hope you find the presentation helpful.

Planning Your Whole Estate Part 1 (your will; probate property vs. nonprobate property)

Planning Your Whole Estate Part 2 (common estate planning mistakes; life insurance beneficiary designations; trusts; guardianships; “in trust for accounts”, retirement accounts; joint property; protection from long term care costs; simple wills)

Planning Your Whole Estate Part 3  (jointly owned property; “in trust for” accounts; life insurance beneficiary and ownership)

Planning Your Whole Estate Part 4 (taxation of life insurance; retirement plan accounts; special tax problems relating to individual retirement accounts and other similar accounts)

Planning Your Whole Estate Part 5 (continuation of special tax problems relating to individual retirement accounts and other similar accounts)

Planning Your Whole Estate Part 6 (continuation of special tax problems relating to individual retirement accounts and other similar accounts; trusts as beneficiary of IRA; beneficiary designation forms)

Planning Your Whole Estate Part 7 (revocable living trusts; reasons to consider: asset management during disability and probate avoidance)

Planning Your Whole Estate Part 8 (continuation of issues relating to revocable living trusts including bogus reasons for revocable living trusts)

We hope you will join us at our next seminar.  If you would like to attend, join our email list by clicking on the button below.

Posted on 12/26/2011 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

     
  Join Email List  
     

Chipman Mazzucco | Promote Your Page Too

December 8, 2011, Seminar: Planning Your Whole Estate

November 12, 2011

Planning Your Whole Estate—Coordinating Life Insurance, Employee Benefits, and Other Nonprobate Property with the Rest of Your Estate Plan

LocationMatrix Corporate Center, Main Auditorium, First Level, Danbury, Connecticut, 39 Old Ridgebury Road, Danbury, CT

Directions:  Directions to Chipman MazzuccoDon’t rely on your GPS.  Please read and follow these directions.

Date: December 8, 2011
 
Time: 5:15 to 6:45 pm.

Call 203-744-1929 for reservations.  For more contact information, go to the end of this post.

The Last Will and Testament is usually the keystone of an estate plan. It contains the most important instructions for your survivors regarding the use of your assets after your death.

Unfortunately, many people are not aware that a Will usually will not control the disposition of nonprobate assets such as life insurance death benefits, retirement accounts such as 401(k) and IRA plans, annuities, jointly owned property and many other benefits provided under plans offered to employees as part of their employment package.

Unless you properly designate beneficiaries for nonprobate assets and coordinate them with the terms of your Will:

• Your estate plan may be largely ineffective
• Your heirs may pay taxes that could have been avoided
• Family conflict may ensue
• A young beneficiary may receive significant assets too soon 

In addition, unique income tax rules apply to many nonprobate assets. Without proper planning, income tax saving opportunities can be lost and tax traps may ensnare the unwary.

At the seminar, we will be discussing issues related to planning for nonprobate assets and how to coordinate the disposition of such assets with the terms of your Will (or Will substitute such as a revocable living trust).

Go here for a flyer about the seminar: Planning Your Whole Estate—Coordinating Life Insurance, Employee Benefits, and Other Nonprobate Property with the Rest of Your Estate Plan.

SEMINAR LOCATION AND TIME

The seminar will be on December 8, 2011, at the Matrix Corporate Center, Main Auditorium, First Level, 39 Old Ridgebury Road, Danbury, Connecticut from 5:15 p.m. to 6:45 p.m. The doors will open a little before 5:00. Refreshments will be served.

These seminars are always well attended and space is limited. If you wish to attend, or if others you know are interested in attending, to reserve space call us (203-744-1929) or send an e-mail message to me (Richard Land at rsl@danburylaw.com) or Kasey Galner (at ksg@danburylaw.com) or Lynn D’Ostilio (at lsd@danburylaw.com) containing your name, number attending, telephone number and e-mail address.

Posted on 11/12/2011 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

Join Email List

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“I Don’t Need a Will”—Common Misconceptions Regarding the Necessity of Wills in Connecticut

November 5, 2011

1. “My spouse and I don’t need Wills because, if one of us dies, the surviving spouse will inherit everything automatically.”

While this may be true for property that is held jointly with rights of survivorship or property that passes by beneficiary designation (a/k/a non-probate property), this is not always the case for property that is held in the deceased spouse’s sole name (a/k/a probate property). 

If you are married and your spouse dies without a Will, you may not receive all of your spouse’s property.  In fact, your IN-LAWS could receive a portion of your spouse’s probate property (which is not what many people would intend).  For example, the following table illustrates what happens if your spouse dies without a Will in Connecticut, with probate property worth $1,000,000, based on the following circumstances:

 

You Receive

 

Children Receive

Spouse’s Parent’s Receive

If you and your spouse have no children

 

$1,000,000

 

n/a

 

n/a

If you and your spouse have children

 

$550,000

 

 

$450,000

 

n/a

If you and your spouse have children and one or more of the children are your spouse’s from a prior marriage

 

 

 

$500,000

 

 

 

$500,000

 

 

 

n/a

If you and your spouse have no children and your spouse has surviving parents

 

 

$775,000

 

 

n/a

 

 

$225,000

Based on the table above, consider the following scenarios:

a. Your spouse dies and you have a two-year-old child.  Your two-year-old child will receive an inheritance of $450,000 and you will receive $550,000.

b.  Same example as above except the two-year-old child is your spouse’s child from a prior marriage.  The child will receive even more, $500,000, and you will receive $500,000.

c.  You and your spouse have no children, but one or both of your spouse’s parents survive your spouse.  No matter how you feel about your in-laws, they will receive $225,000 (a quarter of your spouse’s probate property).

In addition, if you and your spouse do not have Wills, you could lose out on some significant tax planning and asset protection planning opportunities.  For a detailed discussion about tax planning and asset protection planning see our previous articles (Special Needs Trusts, Making Use of Estate Tax Marital Deductions and Estate Tax Exemptions in 2010–To Be Updated).

2. “I don’t need a Will because I am not married and I have no children so everything will pass to my siblings, right?”

If you are single and you die without a Will in Connecticut with probate property worth $1,000,000, the following table illustrates how such property would be distributed based on the following circumstances:

 

Children Receive

Parents Receive

Siblings Receive

Nieces & Nephews Receive

Next of Kin Receives

If you have children $1,000,000        
If you have no children and one or more parents survive you n/a $1,000,000 $0 $0 $0
If you have no children, no surviving parent, but surviving siblings n/a n/a $1,000,000 $0 $0
Same as above, except no surviving siblings but surviving nieces/nephews n/a n/a n/a $1,000,000 $0
No children, parents, siblings, nieces or nephews n/a n/a n/a n/a $1,000,000

As illustrated above, if you do not have children and die without a Will in Connecticut, your parents will receive your property, if your parents survive you.  For some people, leaving property to their parents is not a problem.  However, consider the following scenarios:

a.  Your parents are in a nursing home and rely on government benefits to cover the cost of their nursing home care.  Any inheritance that they receive from you will cause them to lose their government benefits.  They will have to spend the inheritance on their nursing home care and, if any assets are left when they pass away, the state may be entitled to the remainder.

b.  Your parents have large estates and they may have an estate tax problem when they die.  Any inheritance they receive from you could push their estates over the applicable estate tax exemption and could result in a potentially large estate tax when they die.

c.  Your parents are doing fine but your brother is struggling to make ends meet with three kids to support.  Without a Will, your brother will not receive any inheritance from you if your parents are still living.

If the last row of the table above applies to you and you die without a Will, your next of kin will inherit your property.  This could mean that distant cousins you have never heard of will share equally with cousins you have known all your life.  In addition, your Administrator will have the responsibility of locating your heirs and proving to the Probate Court that no other heirs exist.  Proving a negative can be a costly and time consuming endeavor.  Some Probate Courts will require your Administrator to hire an heir search firm (and pay the costs of such firm out of your estate).

3.  “I don’t need a Will because I don’t have any assets, so why waste the time and money?”

Appointing a Guardian

If you have minor children, the most important reason to have a Will, regardless of your net worth, is to name a Guardian who will take care of your children when you and the other biological parent have passed away.  If you do not have a Will that appoints a Guardian, the Court will appoint someone for you.  Most people do not want to leave this kind of decision up to the Court’s discretion.

Appointing an Executor

If you have no Will, the Probate Court will have to appoint an Administrator to settle your estate.  The Court will typically look for a family member to be the Administrator.  However, you will have no control over who that family member will be.  Your estranged untrustworthy cousin may be the only family member who lives nearby.   

Instead of letting the Court choose who has control over your assets when you pass away, you can name an Executor (and back-up Executors) in your Will.  Besides being able to control who will control your assets when you die, naming an Executor makes the estate settlement process quicker, easier, and less costly.

Posted on 11/5/2011 by Kasey S. Galner, Associate, Chipman, Mazzucco, Land & Pennarola, LLC.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

 
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What a Trustee’s Account Looks Like

October 12, 2011

We recently posted an article on standards of conduct that apply to Trustees here: Avoiding the Trustee’s Worst Nightmare.

We also posted a related article on trust administration here: Dreams Come True (Fiduciary Accounting Made Easy?).

Those posts mentioned the Trustee’s duty to account. You can find a sample of a Trustee’s account here: Sample Trustee’s Account.

If you have any questions about fiduciary accounting, give us a call or email us at the email addresses shown below and we will be pleased to help.

Posted on 10/12/2011 by Richard S. Land, Member,  Chipman, Mazzucco, Land & Pennarola, LLC.

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Congress Converted Your Federal Estate Tax “Exemption” to an Asset You Can Transfer.

July 12, 2011

As a result of legislation enacted last December, each of us has a federal estate tax “exemption” of $5,000,000. The first reaction of many might be, “So what? I have nothing to tax anyway. This means nothing to me.”

If you are married at the time of your death, however, your $5,000,000 estate tax “exemption” can be transferred to your surviving spouse. As a result, your surviving spouse could have an “exemption” of as much as $10,000,000 (your spouse’s “exemption” plus your “exemption”). Potentially, your “exemption” could save a surviving spouse from $1,500,000 to $2,500,000 in federal estate taxes.

To transfer your “exemption” to your surviving spouse, your Executor must file a federal estate tax return by its due date (nine months after your death unless an extension is requested). If your Executor fails to file the return and make the election, the opportunity to transfer the exemption to your surviving spouse is lost. Problem:  As of July 25, 2011, the IRS has not issued an estate tax return form that includes the election.  Executors of decedents who died early in 2011 should consider filing, before the due date for the return, a request for an extension of time to file the return to preserve the ability to make the election.

Not only will the new portable exemption be a new and useful estate planning tool, the “exemption” probably will be considered when negotiating many prenuptial agreements. It is not a stretch to imagine the lawyer of the wealthy groom-to-be asking his client’s betrothed to make certain her Executor will make the “exemption” election after her death.

It is also not too much of a stretch to think that some wealthy bachelors and bachelorettes may seek out singles with unused “exemptions,” short life expectancies, and no assets, as ideal marriage partners.

Look at it from this slightly different perspective. Imagine that your spouse passes away this year with no assets. You (the surviving spouse) expect to receive a large inheritance in the future when your parents pass away. The inheritance from your parents will push the size of your estate well above $5,000,000 (the size of your exemption).

In such a case, the exemption of your deceased spouse would be very important in shielding your estate (augmented by the inheritance you receive from your parents) from estate taxes at your death; and, as the Executor of your spouse’s estate, you should file a federal estate tax return within nine months after your spouse’s death to claim your spouse’s unused exemption even though your spouse’s estate has no value at all.

The current federal estate tax rules, including the rules relating to the portable exemption, are temporary and are scheduled to expire on January 1, 2013. Estate planners expect Congress to act to prevent expiration of the current rules or to enact different rules. In the meantime, while waiting for Congress to give us a permanent set of rules, it makes sense to take steps to preserve the portable “exemption” for the surviving spouse by filing estate tax returns for the estate of the deceased spouse even when the estate has no value.

Posted on 7/9/2011 by Richard S. Land, Member,  Chipman, Mazzucco, Land & Pennarola, LLC.

We frequently post articles relating to estate planning, estate settlement and elder law issues to this blog. We also post notices about our client seminars here. When we do, we send out notices to clients and friends of the firm. If you would like to get our notices, please join our mailing list by clicking below.

     
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Notice: To comply with U.S. Treasury Department rules and regulations, we inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction, tax strategy or other activity.

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