Posted tagged ‘wills’

October 5, 2017, Seminar: Senior Autonomy for Families as Roles are Reversed

September 2, 2017

Save the Date October 5, 2017
FREE Seminar!

 

We invite you to a free seminar on October 5, 2017, at the Ethan Allen Hotel in Danbury, Connecticut (21 Lake Avenue Ext).

Topic: Senior Autonomy: A Guide for Families as Roles are Reversed

Including: How to Make Certain Your Estate Plan Works as Everything Else Changes

The presentation will start at 6:30 PM. For more information, click here:  Seminar October 5.

To register, call 203-744-1929 (please provide your email address) or email us at rsl@danburylaw.com.  You also can register here: Seminar Registration.

The presenters and their topics:

Make Certain Your Estate Plan Works as Everything Else Changes

Richard S. Land, Attorney

As everything around you changes, you may not recognize the impact the changes have on your estate plan.

Laws change; your health and financial condition change; the health and financial condition of your beneficiaries change; maybe your beneficiary designations change as your assets change; and the fates of the people you are depending on to act as your Executors, Trustees, agents under a power of attorney and health care representatives change.

Attorney Richard S. Land will discuss how to make certain that such changes will not interfere with, or totally disrupt, your estate plan.

Preserving Autonomy as Independence Declines

Alyson R. Marcucio, Attorney

How do you plan to maintain autonomy as your independence declines?

To help guide our clients, last year we invited Attorney Alyson R. Marcucio to join us as a Member of the firm after an exhaustive search for an attorney with her skills, knowledge and experience performing long-term care and estate planning services for seniors and the chronically disabled.

Alyson’s presentation will cover planning techniques designed to preserve autonomy as independence declines with aging including home care options, resources available to help create and maintain a safe home environment, planning techniques to maintain control through properly prepared trust agreements, powers of attorney and health care directives, and the relationships necessary to protect your independence when you are most vulnerable.

No Admission Charge

Our seminars are always strictly educational and well attended.  Space is limited so please let us know if you plan to attend.

Light snacks, desserts and beverages will be offered.

To register, click on this link: Seminar Registration..

Please join us at the Ethan Allen Hotel (21 Lake Avenue Ext., Danbury, CT) on October 5, 2017.

We look forward to seeing you.

Chipman Mazzucco
Attorneys at Law
Matrix Corporate Center
39 Old Ridgebury Road
Suite D-2
Danbury, CT 06810
203-744-1929

Basic Estate Planning Video Updated for 2017

December 18, 2016

richard
Richard S. Land, Attorney

To help you face your estate planning challenges, we have updated our Basic Estate Planning video presentation for 2017.  You can take a look at the video here (Basic Estate Planning Updated for 2017) or below.

Here is a very brief summary of what the videos cover:

Parts 1 and 2:  No matter where you live (or die), your estate plan can be destroyed if you don’t know the difference between probate property and non-probate property.  We cover this distinction in Part 1.  We also cover what a trust is and how a trust can help accomplish certain estate planning goals:  protecting assets from the beneficiary’s creditors and risks; asset management for a beneficiary who needs management help; estate tax reduction; and more.  We acknowledge that the unfortunate Connecticut estate tax exists (and many other states do not have an estate tax) but, in most cases, we can help with effective workarounds.  Part 2 covers Connecticut and federal estate taxes (also New York estate taxes) including how life insurance death benefits are taxed for estate tax purposes.

Parts 3 and 4:  Your Will can include provisions that reduce or eliminate estate taxes.  Parts 3 and 4 describe such Wills.  Danger:  Existing Wills with old estate tax provisions can have the unintended effect of disinheriting a spouse.  We cover how to deal with such a risk.  We also cover new rules allowing one spouse to give his or her federal estate tax exemption to the surviving spouse.  The surviving spouse’s federal estate tax exemption could be almost $11,000,000.  In addition, we cover Will provisions that can protect assets from a beneficiary’s long term care costs.

Parts 5 and 6:  Not all trusts that are designed to save estate taxes are the same.  Part 5 compares the different types of trusts.  As Part 5 ends, we begin a discussion of common estate planning mistakes and Part 6 continues the discussion.

Parts 7 and 8:  These parts cover estate tax and income tax planning for retirement accounts such as 401(k) accounts and IRAs.

Part 9 to Part 13:  These parts include a complete discussion of revocable living trusts with a comprehensive comparison between a plan that uses a revocable trust and a plan that relies on a Will without making use of a revocable living trust.  Part 13 ends with a description of how Connecticut probate court fees are calculated.

Part 14:  This part covers the basic gift tax rules and techniques.

Part 15:  This is the final part and covers gifts of life insurance policies with brief mention of other advanced gift techniques.

We hope our updated basic estate planning videos help you.  If you have questions about any of the estate planning concepts mentioned in the video, please call.

185775_1745456110853_1072275011_31952001_6630745_n[1]Posted by Richard S. Land, Attorney, Chipman, Mazzucco, Land & Pennarola, LLC, Attorneys at Law, Danbury, CT, 06810, 203-744-1929 x29, rsl@danburylaw.com.

 

A Seminar: Planning to Protect Seniors & Remedies for Financial Elder Abuse

September 2, 2016

Join Us September 22, 2016

To Our Clients, Clients’ Advisers and other Friends of Chipman Mazzucco:

We invite you to our September 22 Seminar.  For details click here: September 22 Seminar.

We added another segment on Powers of Attorney to our seminar.

A Power of Attorney is an essential part of any plan related to protecting seniors.

The grant of broad powers to the right person can be a lifesaver.

The grant of any power to the wrong person can be tragic.

In addition to the other seminar segments Attorney Richard Land will be making a short presentation on Connecticut’s new wer of Attorney law which is effective October 1.

To register, call us at 203-744-1929 (make certain you give us your email address) or email us at rsl@danburylaw.com.

You also can register by clicking here: REGISTER.

Location: Ethan Allen Hotel (21 Lake Avenue Extension, Danbury, CT) on September 22, 2016, at 7:00 PM (doors open at 6:30).

We look forward to seeing you on September 22.

Posted 2/11/2016 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC, 39 Old Ridgebury Road, Suite D-2, Danbury, CT 06810.

P.S.  See below for brief descriptions of the rest of the program:

Alyson Marcucio presents: What Seniors Need to Know about Long-Term Care but Would Never Think to Consider (a/k/a traps for the unwary) regarding Medicaid and planning for long-term care.

Christopher J. Gawley presents: FINRA Rules Designed to Protect Seniors: Warning signs of elder abuse; best practices for financial professionals when serving aging clients; the special responsibility of financial institutions and professionals when encountering seniors with signs of diminished capacity.

Timothy H. Herring presents: Legal Remedies for Financial Elder Abuse Victims (A Case Study):  What can litigators do when asked to make things right after something has gone wrong?

No admission charge.

Our seminars are always strictly educational and well attended.  Space is limited so please let us know if you plan to attend.

Light snacks, desserts and beverages (even wine and cheese) will be offered.

Please join us at the Ethan Allen Hotel (21 Lake Avenue Extension, Danbury, CT) on September 22, 2016, at 7:00 PM (doors open at 6:30).

Estate Settlement and Trust Administration Seminar

August 6, 2015

LocationEthan Allen Hotel, 21 Lake Ave Ext, Danbury, CT 06811

Date:  September 24, 2015

Time:  7:00 to 9:00 (Doors open at 6:30)

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 Estate Settlement and Trust Administration video which you can see on YouTube here:  Estate Settlement and Trust Administration Video.

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.  Estate settlement steps starting with the probate application and the inventory.

Part 2: A continuation of estate settlement steps including problems relating to real estate, tangible personal property and estate and income taxes.  The importance of identifying problems early.  A description of our estate settlement letter and estate settlement checklists.  A discussion of the importance of post mortem tax planning.

Part 3:  Accounting requirements and fees and costs including the fees of the Probate Court, Executor fees and attorneys.

Part 4:  A description of trust administration, the duties of a trustee and the related risks.

Part 5:  The most common problems related to being a trustee including accounting, investing and self-dealing.

Part 6:  A continuation of a description of the Trustee’s most common problems including personal liability for contracts entered into as trustee and claims based on a trustee’s negligence and torts including claims related to contaminated property.  Trustee compensation is also discussed.

SEMINAR LOCATION AND TIME

The seminar will be on September 24, 2015, at the Ethan Allen Hotel, 21 Lake Ave Ext, Danbury, CT 06811 from 7:00 p.m. to 9:00 p.m. The doors will open at 6:30. 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 Deb Jewell (at doj@danburylaw.com) containing your name, number attending, telephone number and e-mail address.

You may also register here: Seminar Registration.

 Posted on 8/6/2015 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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Complimentary Online Estate Plan Review

August 1, 2015

Chipman Mazzucco is pleased to announce a new complimentary online Estate Plan Review.

Answer a series of thought-provoking questions about your circumstances and objectives and receive a personalized report.  We are providing this service without charge to encourage you to reflect on your estate plan from time to time.

To register and participate in the Review, click on this link: Chipman Mazzucco Online Estate Plan ReviewNote: The password you use to register must have at least eight characters, one or more upper case letters and one or more numbers (example: Reviewplan123).

Although anyone can benefit from the review, it is meant specifically for Connecticut and New York residents.

For a short demonstration (4.5 minutes), click on the video below.

We hope this helps you keep your estate plan current.

185775_1745456110853_1072275011_31952001_6630745_n[1]Posted on August 1, 2015
by Richard S. Land
Member
Chipman Mazzucco

Chipman Mazzucco Offers Complimentary Estate Plan Review

January 15, 2015

Chipman Mazzucco is pleased to announce a new complimentary online Estate Plan Review.

Answer a series of thought-provoking questions about your circumstances and objectives and receive a personalized report.  We are providing this service without charge to encourage you to reflect on your estate plan from time to time.

To register and participate in the Review, click on this link: Chipman Mazzucco Online Estate Plan ReviewNote: The password you use to register must have at least eight characters, one or more upper case letters and one or more numbers (example: Reviewplan123).

For this initial test, we are limiting this offer to the first 100 participants who are residents of Connecticut and New York.

For a short demonstration (4.5 minutes), click on the video below.

We hope this helps you keep your estate plan current.

Posted on January 15, 2015
by Richard S. Land
Member
Chipman Mazzucco

Estate Settlement and Trust Administration Video Posted to YouTube

June 5, 2013

 New Video: Estate Settlement and Trust  Administration in Connecticut

Parts One and Two of our video/slideshow presentation on Estate Settlement and Trust Administration in Connecticut  have been posted to YouTube.  They discuss estate settlement up to preparation of the final account.

Additional parts will be posted in the future dealing with fiduciary accounting, expenses involved in estate settlement and trust administration, and important principles of trust administration.

Go directly to the YouTube Playlist. Click on the image below:

Web-Playlist-Image

You can view Part I separately (13 minutes) here:

Estate and Trust Administration in Connecticut Part 1

Connecticut Estate and Trust Administration Part 1

You can view Part 2 separately (15 minutes) here:

Estate and Trust Administration in Connecticut Part 2

Connecticut Estate and Trust Administration   Part 2

We hope you find our Estate Settlement video informative.  Stayed tuned for the rest of the videos in the series.

 If you have any questions, please contact us.
 
 

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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Do You Qualify for Wills Without Charge in Honor of Mother’s Day and Father’s Day?

May 2, 2013

Only for New York and Connecticut Residents

In honor of Mother’s Day and Father’s Day, Chipman Mazzucco offers this too good to be true opportunity to new parents who have had Wills on their minds but have not yet done anything about it.

You may qualify for a Last Will and Testament without charge if: (1) You are a new parent and your life is still relatively simple; (2) You are a resident of Connecticut or New York and your estate is less than $1,000,000; (3) You contact us between May 12 (Mother’s Day) and June 16 (Father’s Day); and (4) You can meet at our offices in Danbury, Connecticut, so that we can properly supervise the signing of your documents.

If you qualify, your Power of Attorney, Health Care Instructions (including “Living Will”) with Appointment of Health Care Representative, and Designation of Conservator also will be included without charge.

Helpful Screencast. Your Will, and related planning, are too important for you to attempt without an understanding of some essential basic information. We therefore ask you to watch our seminar on YouTube entitled “Basic Estate Planning after ATRA” (the American Taxpayer Relief Act).

Is your situation simple enough to qualify?

To give us the information we need to prepare your Will properly, and to find out if you qualify for our Wills Without Charge program, please complete our estate planning client questionnaire. You can find it here: Estate Planning Information Form.

If you satisfy the conditions described above, there is a very good chance that you will qualify for our Wills Without Charge opportunity.  If you are concerned about any of the issues listed below, however, your planning may require special attention which is not part of the program.

Speical Concerns:

(1) Special problems plague your beneficiaries such as creditor problems; divorces and troubled marriages; poor judgment; gambling habits; drug dependence; health problems; special needs; and trouble handling financial affairs.

(2) You are interested in planning for long term care, whether at home or in a nursing home, for yourself, your spouse or other beneficiary.

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

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

(5) You are concerned about the management of your assets for you and your family in the event of your incapacity and you want to consider a revocable trust.

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

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

(8) 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.

(9) Your estate for estate tax purposes is larger than $1,000,000.  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 $1,000,000?

(10) 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 “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).

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

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

Other unique facts may require unique (and perhaps not simple) solutions.

If you believe you may qualify, contact us: Richard S. Land (rsl@danburylaw.com); Kasey S. Galner (ksg@danburylaw.com); or Lynn D’Ostilio (lsd@danburylaw.com). Or, call us at 203-744-1929.

For a PDF announcement go here: Wills Without Charge in Honor of Mother’s Day and Father’s Day.

 Posted on 5/1/2013 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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Estate Planning For Married Couples: The Basics

April 28, 2013

Married couples who are U.S. citizens have estate planning options available to them that are not available to unmarried couples. Opportunities arise upon the death of the first spouse which, if proper planning is done, can protect assets from estate taxes, creditors, and long term care costs.

The following is a massive oversimplification of the estate planning process as it relates to estate taxes for U.S. citizen spouses (the rules for non citizens spouses are different and will not be addressed in this article). The purpose of this article is to help married couples understand some of the basic estate planning and estate tax concepts that we typically cover in an initial estate planning meeting. Without this basic understanding, important estate planning decisions are frequently postponed or, too often, ignored.

Although I refer primarily to Wills in this article, it should be noted that, for estate tax purposes, the planning techniques described below can be implemented through the use of Wills or Will substitutes such as Revocable Trust Agreements.

Estate Taxes

The Internal Revenue Service imposes a tax on certain transfers made for less than fair market value. If the transfers are made during life (i.e. gifts) the IRS imposes a gift tax. If the transfers are made upon death either through the terms of our Wills or through the laws of intestacy, the IRS imposes an estate tax. To keep things simple, I will limit our discussion to transfers at death and the estate tax. However, it is important to note that the two taxes are related and gifts made during life may have an impact on estate taxes payable upon death.

For the last few years, we have been writing about the uncertainty of the federal estate tax laws. Will the estate tax be repealed? Will the estate tax exemption be $1,000,000 or $5,000,000 or something in between? Will the portable exemption law become permanent or was it just a flash in the pan? Thanks to some last-minute decisions made by Congress, as of January 1, 2013, we now have some “permanent” federal estate tax laws (whatever permanent means). The federal estate tax exemption is now $5 million, indexed for inflation, which means that each U.S. citizen has a $5,250,000 estate tax exemption in 2013. In addition, portability has become a permanent fixture. I will discuss the portable exemption law later in this article.

Congress was not the only one keeping us on our toes – state estate tax laws have also fluctuated drastically over the years. Within the last decade, the Connecticut estate tax laws have changed numerous times and the Connecticut estate tax exemption has recently swung from $2,000,000 to $3,500,000 and back to $2,000,000.

As a result, for at least the time being, we are facing a $5,250,000 federal estate tax exemption and a $2,000,000 Connecticut estate tax exemption. New York has a $1,000,000 estate tax exemption which, unlike the Connecticut and federal exemptions, has remained relatively consistent over recent years.

Planning Considerations for Married Couples

At the core of estate tax planning for married couples is the concept that transfers between spouses who are U.S. citizens occur free of gift or estate tax because there is an unlimited marital deduction. Accordingly, if our focus was merely on estate tax exposure upon the first spouse’s death, our job as estate planners would be pretty easy: “Just leave everything outright to your spouse and you have no estate tax issues! (Now here’s our invoice).”

Instead, our focus is on the surviving spouse’s estate and what happens at the surviving spouse’s subsequent death. If the first spouse to die gives everything outright to the surviving spouse, there may not be any estate tax issues upon the first spouse’s death, but the surviving spouse may end up with an estate that is larger than the applicable estate tax exemptions and may be exposed to estate tax upon the surviving spouse’s death.

For example, let’s say that Gracie and Dunkin are married U.S. citizens (in reality Gracie and Dunkin are our family dogs, but for the purposes of this article they are a happily married human couple). Dunkin dies (sorry dad) owning an estate worth $4,000,000 which passes outright to Gracie according to the terms of Dunkin’s Will. Now Gracie has Dunkin’s $4,000,000 in addition to her own assets worth $2,000,000 leaving her with a total estate of $6,000,000. When Gracie passes away, if the federal estate tax exemption is $5,250,000, then (ignoring the impacts of the portable exemption law discussed below) $750,000 could be exposed to federal estate tax. In addition, if Gracie was a Connecticut resident when she died, $4,000,000 could be exposed to Connecticut estate tax ($6,000,000 – $2,000,000 (the Connecticut exemption)).

If Gracie and Dunkin had taken certain steps in their estate planning, their estate tax liabilities could have been eliminated or significantly reduced. The most common way to do so is through the use of trusts which would be established through the terms of the Wills (or Will substitutes). For a discussion about the basics of trusts, including factors to consider regarding the use of trusts, please see: The Benefits of Trusts and Avoiding the Trustee’s Worst Nightmare.

The Wills would allow for a portion of the first spouse’s estate to pass to a trust for the benefit of the surviving spouse (frequently called a “credit shelter trust,” “bypass trust” or “exemption trust;” for the purposes of this article, we will call it an “exemption trust”). Property passing to the exemption trust would not qualify for the marital deduction because it is not property passing to the surviving spouse (unless the trust is drafted in a way which would qualify for the marital deduction). Instead, the property passing to the exemption trust would use part of or all of the first spouse’s exemption. The exemption trust would then be shielded by the first spouse’s exemption and would not be subjected to an estate tax when the surviving spouse dies (again, this is an oversimplification, intended to highlight the basic concepts).

There are two techniques which are frequently used to reduce or eliminate estate taxes for the surviving spouse through the use of exemption trusts – the Disclaimer Option and the Formula Option.

The Disclaimer Option

The Disclaimer Option would look like this: Dunkin’s Will provides that, upon his death, all of his estate will pass to Gracie outright, but it would give Gracie the option to “disclaim” (refuse to accept) all or a portion of the property. The “disclaimed property” would pass to a trust for Gracie’s benefit (the “Disclaimer Trust”). The Disclaimer Trust is a type of exemption trust which would use a portion of or all Dunkin’s estate tax exemption and would not be subject to estate tax on Gracie’s subsequent death.

[Note: A “disclaimer” is the irrevocable refusal to accept a gift of property. The general rule is that for a disclaimer to be effective for tax purposes the disclaiming party cannot have any interest in the disclaimed property following the disclaimer. There is, however, a special exception which allows a surviving spouse to disclaim property passing into a trust created under the deceased spouse’s Will for the benefit of the surviving spouse. Such a trust must, however, be narrowly drafted because the surviving spouse may not have any powers over trust principal.]

The Formula Option

The Formula Option would look like this: Dunkin’s Will provides that, upon his death, a fraction of his estate equal to the applicable estate tax exemption at the time of his death (either the federal exemption or the state exemption) will pass to a trust (the “Formula Exemption Trust”) for Gracie’s benefit. The Formula Exemption Trust would use a portion of or all Dunkin’s estate tax exemption and would not be subjected to estate tax on Gracie’s death. The rest of Dunkin’s estate would pass either outright to Gracie or to a trust for Gracie’s benefit which could qualify for the marital deduction.

Which Works Best?

The Disclaimer Option and the Formula Option can produce almost identical estate tax results but in different ways; and there are pros and cons associated with both options.

Under the disclaimer option, the surviving spouse has flexibility to make the planning decisions at the time of the first spouse’s death. No trust is created unless the surviving spouse decides that it makes sense from a tax perspective (with some help from advisors). The surviving spouse would have the option to disclaim any portion (or none) of the deceased spouse’s property. This is typically viewed as a good thing – allowing the decision to be made when all the facts are available (applicable exemptions, value of estate assets, surviving spouse’s needs, etc.).

The Formula Option also has advantages. The most significant advantage is that the surviving spouse can have broad power over the principal of the trust in the Formula Exemption Trust but not in the Disclaimer Trust. For example, the surviving spouse can have unlimited authority to appoint principal to other family members (typically descendants) both during life and at death through the terms of the surviving spouse’s Will.

This can be particularly beneficial in situations where a child falls on hard times (drug addiction, creditor issues, bad marriage, etc.) after the death of the first spouse. The surviving spouse would have the flexibility to change how the assets in the Formula Exemption Trust will be distributed when the trust terminates. For example, the surviving spouse’s Will could direct that assets in the Formula Exemption Trust will not pass outright to the child dealing with problems, but would be held in a separate trust which would protect the assets from creditors, divorcing spouses, or the beneficiary’s addictions. The surviving spouse can not have this authority over assets in the Disclaimer Trust.

Another potential advantage with the Formula Option is that the terms of the Will already provide the amount (based on the formula) that will pass to the Formula Exemption Trust. With the Disclaimer Option, the decision to disclaim assets is left to the surviving spouse and must made within nine months of the first spouse’s death. This can be challenging for a surviving spouse who is grieving and may have trouble focusing on estate tax planning issues soon after the first spouse’s death.

On the other hand, if assets or estate tax exemptions change significantly and documents are not updated to reflect the changing circumstances, the Formula Option has the potential to “disinherit” a surviving spouse. For example, if the formula is based on the federal exemption (currently $5,250,000), and the value of the first spouse’s estate is less than $5,250,000, all of the assets could pass to the Formula Exemption Trust and nothing would pass outright to the surviving spouse. This may not have been the couples’ intent back when the federal exemption was $1,000,000 (when the Wills were prepared).

Each couple will need to determine which option is best suited to their unique situation. If you prefer the “wait and see” approach and are not concerned about your spouse’s ability to make the decision in the future, then perhaps the Disclaimer Option would be your best bet, even though the Disclaimer Trust is a less flexible trust. On the other hand, you may decide that the Formula Option is better suited for your situation since it will provide your spouse with greater control over the property in the Formula Exemption Trust.

Portable Exemption Law

The now “permanent” federal estate tax laws have introduced another layer to our estate planning discussions. This added layer is referred to as the portable estate tax exemption law. The portable estate tax exemption law is applicable to married couples and provides that, when the first spouse dies, the surviving spouse may elect to take the unused portion of the deceased spouse’s federal estate tax exemption.

For example, if Dunkin dies and leaves everything outright to Gracie, we’ve already established that the assets pass free of estate tax due to the unlimited marital deduction. This means that Dunkin has not used any of his $5,250,000 federal estate tax exemption. The portable exemption law allows Dunkin’s executor to elect to allow Gracie to add Dunkin’s unused exemption ($5,250,000) to Gracie’s own estate tax exemption ($5,250,000), leaving Gracie with a total federal estate tax exemption of $10,500,000 (in this example) at her death.

The new portable exemption law has led many estate planners to encourage clients to consider simplifying their documents and eliminate complex trust provisions. However, trust provisions, like the ones described above, are still applicable in many cases.

For instance, the portable exemption does not change the state estate tax obligation. The fact that the portable exemption law may allow $10,500,000 to be sheltered from Gracie’s federal estate tax, does not mean that the same amount would be sheltered from Gracie’s Connecticut or New York estate tax. She would only have her $2,000,000 Connecticut estate tax exemption (or her $1,000,000 New York exemption if she moved to New York). Accordingly, for Connecticut and New York residents, planning techniques described above are still an important tool in reducing or eliminating estate taxes.

Factors unrelated to estate taxes such as asset management, young beneficiaries or beneficiaries dealing with special problems, may also warrant the use of trusts and other complex provisions in our Wills. For more on this issue, see: Simplify Your Estate Plan Maybe.

In addition, many people are worried about nursing home costs and are interested in protecting assets from the costs of long term care. Married couples have a unique opportunity to shelter assets upon the death of the first spouse through the use of trusts established under the terms of their Wills. For more information about protecting assets from long term care costs, please see our other posts:

Special Needs Trusts

Elder Law – Basics of Planning for Incapacity

Posted on 4/28/2013 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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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 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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