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    Joshua and Laura Meier Newport Beach Trust and Estate Planning Attorneys Focused on Helping Families with Young Kids
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    Monthly Archives: June 2012

    Leave Your Loved Ones Something Far More Valuable Than Money

    Every family has stories and lessons that are intangible assests of the family. The philosopher Abraham Maslow said, “The ultimate disease of our time is valuelessness.” Poll results show that boomers agree. But how do you pass on something so intangible as a value?

    Giving a gift is one thing, giving a lesson is another entirely. With a gift, you may make another happy, but with a lesson, you may make another wise. Interestingly, intangible gifts such as wisdom and values are of rising concern with baby boomers.

    This concern is evidenced by the findings in a recent survey, as reported in an article in TIME Magazine’s Moneyland. In the article, titled “How to Give Heirs What They Most Want (It Won’t Cost Much),” more and more people consider “family stories” to be their greatest legacy, along with the lessons behind them. In fact, a whopping 86% of boomers named “family stories” as the most important part of their legacy, even if they also had complex assets to leave or a family tradition of wealth to continue.

    Against this backdrop, the question today, as it has always been, is about how to instill or commemorate such values and heritage. The article concludes with this thought:

    “It takes reflection to understand what is most important in your life and how you might get that message to heirs. But it won’t be a waste of time. Sometimes a scrapbook is worth more than an investment portfolio.”

    Contact Meier Law Firm to learn about our unique Legacy Interview—a special audio recorded interview with you where you can pass along your insights, wisdom, values, special memories, hopes, and love for those who mean the most to you.

    Reference: TIME Moneyland (June 12, 2012) “How to Give Heirs What They Most Want (It Won’t Cost Much)”

    Living Will Challenges

    Critical documents about your preferences for end-of-life care don't always work as planned. More flexibility might be the answer.

    Making end of life decisions means generating and updating your living will (or advance health care directive). These documents often appear simple, but that doesn’t mean the underlying issues themselves aren’t complex.

    According to a recent article in The Wall Street Journal titled “A New Look at Living Wills,” unfortunately these issues are only growing increasingly complex.

    In its essence, the living will is a document in which you clarify your medical wishes. This allows your loved ones to implement them if you are incapacitated and unable to reflect upon them yourself in the future. Given modern medical science, doctors can keep a human body “alive” long after the “person” inside has lost what he or she would have regarded as a minimally acceptable quality of life.

    With each new advance in medical science, there seem to be more and more ethical and legal dilemmas. For example, the typical living will contemplates feeding tubes and respirators, but these can maintain a “persistent vegetative state” leading to shades of gray for the appointed health care agent and physician as they interpret your wishes. Moreover, the boundary between the patient being “there” or “not there” is only getting hazier as science progresses. In the end, even physicians don’t always seem to understand the power they may be wielding over life and death.

    Planning for your end-of-life scenarios is never easy, nor is it easy to faithfully interpret the wishes of a loved one. Nevertheless, as with all aspects of estate planning, communication with your agents, loved ones, physician, and spiritual advisor holds the key to success as you define it.

    Contact Meier Law Firm to discuss how you can create an estate plan that fulfills all of your wishes.

    Reference: The Wall Street Journal (June 8, 2012) “A New Look at Living Wills

    Inheritance Planning Considerations for the Inheritor

    While not always easy to think about, inheritances are a part of the financial pictures for many baby boomers. Handling an inheritance sometimes requires thought and a game plan, and it is a topic that can be too easily set aside to be dealt with in the future.

    An inheritance can be a blessing or a curse. Proper planning, however, can tilt the odds in favor of the former, rather than the latter.

    “Inheritance.” The word alone is packed with emotion. Whether you are planning to leave an inheritance or planning to receive one, there are weighty considerations to be made. In fact, the prospect of an inheritance presents the perfect opportunity for significant intergenerational dialogue about the family wealth.

    If you are looking for some practical guidance about how to manage an inheritance, a Forbes article offers some timely advice. The article, titled “How To Manage An Inheritance,” suggests four matters every prudent inheritor should consider regarding his or her inheritance: Make it a part of your plan; Don’t ignore retirement accounts; Have a tax plan; and Disclaim.

    Interestingly, the last of the four considerations, Disclaim, actually involves “giving up” the inheritance in whole or in part before you actually inherit it. To effectively disclaim an inheritance (or a gift), there are and specific steps you must take. As with any complex estate and tax issues, contact Meier Law Firm early rather than later.

    Reference: Forbes (April 19, 2012) “How To Manage An Inheritance

    Elderly Senior’s Extravagant Gifts Spark Litigation

    While clashes over who got what and how during someone's lifetime crop up in many will fights, the staggering size, two-decade timeframe, and uncommon circumstances distinguish the dispute surrounding [Huguette] Clark's gifts.

    Are you planning your estate or perhaps caring for an elderly loved one who is planning his or her own? If yes, then you can learn some important lessons from Huguette Clark’s case, as recently reported in the San Francisco Chronicle.

    In the article, titled “Copper heiress' huge gifts spotlighted in NY court,” Ms. Clark was cast as either an oddball or a thoughtful “eccentric.” Such was the description of one side to the litigation over her estate. The other side, however, painted her as a “poor, manipulated old woman.” In case you haven’t followed the case, Ms. Clark was a wealthy heiress to a copper fortune, and she died recently at the age of 109 after two decades of hospitalization.

    Before dying, however, Ms. Clark gave extravagant gifts to her staff:

    Her nurse was showered with almost $28 million in gifts, including three Manhattan apartments, two homes elsewhere and a $1.2 million Stradivarius violin. Her doctors' families received more than $3 million in presents. A night nurse received a salary plus money to cover her children's school tuition and to help buy two apartments.

    Now, after her death, a court-appointed official has begun to demand the return of these gifts, valued at $37 million, to her $400 million estate. The basis for the demanded return is that the recipients received the gifts through manipulation. The case is ongoing.

    When it comes to estate planning, however, old age and wealth are a dangerous combination. Some wealthy seniors are generous by nature, but others kept the first nickel they earned. Regardless, expect extra scrutiny of any gift or inheritance from a wealthy senior when the object of such bounty is not someone with a family tie or a long relational history.

    Contact Meier Law Firm to to discuss your gifting or estate planning questions.

    Reference: The San Francisco Chronicle (June 17, 2012) “Copper heiress' huge gifts spotlighted in NY court

    First Comes Love, Then Comes Marriage (or is it the Prenup?)

    Prenuptial agreements are increasingly becoming an important part of estate planning.”…“So should the recently engaged rush to sign a prenuptial agreement? Not necessarily.”…[and then again]…“Even if you exchanged rings long ago, there's still time to set the financial terms of your marriage.”

    Summer is the official “I do” season as couples across the country exchange marriage vows. However, given the dismal marriage success rate, many of those exchanging nuptials (not to mention their respective parents) are also pondering their exit strategies in case things don’t work out.

    Single life can be complex on its own with its own hopes, debts, investments, family members, obligations, and health concerns. Marriage, on the other hand, can be a uniquely tricky institution. When you multiply single life by two in a manner legally recognized by IRS agents, insurers, and in-laws, then everything becomes compounded.

    Estate planning can be a complex adventure, too, especially if you are blending families with children from a previous marriage. In addition, issues regarding family inheritance, family businesses, farm and ranches, can require careful navigation. Now that you have a special someone in your life worth keeping, it may be worth mitigating concerns early and intelligently through prenuptial agreement planning.

    If you recoil, or simply want to know more, then a recent article in WealthManagement.com will be worth your time. The article is titled “Debunking the Pre-nup Myths,” and, as the title promises, it may help you and your intended get a more accurate handle on the subject.

    On the other hand, even if you are familiar with the world of prenups, The Wall Street Journal offers some practical premarital counseling of its own in an article titled “Easing the Sting of Divorce.”

    Finally, even if there’s already a slice of wedding cake resting in the freezer and all is happy and well, there’s the less frequently discussed option of the postnuptial agreement. This matter was taken up in another article by The Wall Street Journal titled “Spouses Turn to Postnups.”

    Ultimately, the relevance of any of these approaches varies depending upon your unique needs and objectives, along with those of your partner. This is not a do-it-yourself project. Be sure to engage appropriate independent legal counsel to represent your respective interests to avoid potential conflicts of interest and unnecessary litigation down the road.

    Before you tie the knot, contact Meier Law Firm to discuss all of your estate planning needs.

    Reference: WealthManagement.com (June 12, 2012) “Debunking Pre-nup Myths

                    The Wall Street Journal (June 15, 2012) “Easing the Sting of Divorce

                    The Wall Street Journal (June 16, 2012) “Spouses Turn to Postnups

    WILL CHARITABLE DEDUCTIONS SURVIVE TO 2013?

    As the tax-code debate heats up this election season, one cherished break for taxpayers in upper brackets—the deduction for charitable contributions—is under fire.

    The bridge is out. As the current tax code barrels down the track there seems to be no one in the engine room. If, or when, the tax code pitches (“sunsets” on December 31, 2012) over the edge, one major casualty will be the current charitable deductions.

    In many ways, charitable deductions are the common point of unity between savvy tax planners of all income levels. There are so many ways to give, and give wisely. This said, if the current laws change for the worse, either by expiring or by getting twisted in an unfavorable way, it could spell trouble in a host of ways for a host of people.

    To get a better handle on some problems that may arise and the kinds of steps to take in 2012 while there’s time, you will find plenty of resources to research. Want to get the 2012 deduction, but still have some extra time to think about which charities to benefit? If yes, then consider a “donor advised fund.” Read more about this approach in The Wall Street Journal article titled “Invasion of the Charity Snatchers!”

    So, you are concerned about facing a maximum cap on your eligible deductions read another WSJ article titled “Charitable Deductions Under Fire.” And, finally, if you are hoping to mitigate the tax burden of taking a required minimum distribution from your IRA by contributing it to charity instead, then don’t miss the Forbes article titled “The IRA Charitable Donation in 2012.”

    In conclusion, although there remains great uncertainty regarding the future of charitable tax planning, there is plenty of information to keep you informed.

    Contact Meier Law Firm to discuss how you can make charitable deductions before it is too late.

     

    Reference: The Wall Street Journal (June 8, 2012) “Invasion of the Charity Snatchers!”

    The Wall Street Journal (June 8, 2012) “Charitable Deductions Under Fire

    Forbes (May 26, 2012) “The IRA Charitable Donation in 2012

    Estate Planning for the Family Farm

    Farmers and ranchers are typically strapped for cash so when one of them dies leaving an estate large enough to be exposed to the federal estate tax the family can expect to have to sell something to cover the tax. That does not have to be the case. The estate tax has been described as a “voluntary” tax. Voluntary, that is, if you are willing and able to take advantage of the planning opportunities that are in the law. If not, life insurance can be a very appealing alternative to having to sell the family farm.

    Living and working on a farm oftentimes means taking a different position toward land itself. If you also own the land, then it means you need to take a different stance toward your assets and your family wealth.

    Farmers are in need of a proper and exhaustive estate plan more than anyone else. Fortunately, Hoosier Ag Today provided some helpful pointers in an article titled “Estate Planning for Family Farms and Ranches.”

    While there are consistently bumper harvests, the land keeps on giving. Unfortunately, the land also is an incredibly valuable thing due to this potential giving. As a result, that value makes it fall prey to estate taxes if you try to pass it on to the next generation.

    To truly own and understand the ownership of your land, it is necessary for a farm owner to make proper estate plans and to prepare for succession of the farm. For small farms that might be a simpler process, even modest planning can help preserve the family and the farm alike.

    In the end, many farms will need far more than modest planning. The key is to select and implement the appropriate strategies for your unique circumstances. I recommend reading the original article, even if you aren’t a Hoosier (or don't even own a farm as the same issues hold true for most businesses).

    Contact Meier Law Firm to discussion the bussiness succession options you can implement in your business.

    Reference: Hoosier Ag Today (June 4, 2012) “Estate Planning for Family Farms and Ranches

    Charging Order Challenge Successful

    If a creditor’s remedy is restricted to a charging order, that means that the creditor cannot get at the assets of a partnership or LLC, right?

    Wrong.

    Most business owners seek to protect their personal assets from problems arising from their business activities. They do this by creating business entities like a partnership or LLC. Unfortunately, sometimes these personal and business worlds collide, and that can be an asset protection nightmare.

    Usually, when these two worlds collide, there is an attempt to attack personal assets by piercing the corporate veil. But as a recent case illustrates, an attack can come through the personal world to attack the business assets…even when that business interest is in a partnership or LLC.

    Forbes recently reported on just such a case in an article titled “Webb & Carey: When Control Is Bad — Receiver Uses Debtors' Controlling Interests In Partnerships To Get At Partnership Assets.”

    There’s a new trick in which a creditor can access assets within a partnership by pairing the often created “charging order” with the powers of a “receiver” who, in return, takes up the powers of a debtor with controlling interests in the partnership. Whew!

    Teaching point: if you have a controlling interest in a partnership or LLC, be aware. A creditor may seek to take control over your interest and thereby for distributions or even the sale of the business.

    As a result, if you are working to protect your assets and the assets of your company, it is worth handing off control and closing that back door before the creditors come.

    Contact Meier Law Firm to discuss your asset protection options.

    Reference: Forbes (June 3, 2012) “Webb & Carey: When Control Is Bad — Receiver Uses Debtors' Controlling Interests In Partnerships To Get At Partnership Assets

    Giving Real Estate to Charity? Remember the Appraisal!

    A California entrepreneur got a harsh lesson on the rules of charitable contributions…when the U.S. Tax Court denied his $18.5 million deduction for real estate donations—not because he inflated their values, but because he didn't follow the rules.

    When it comes to charitable giving success, you must dot all the i’s and cross all the t’s. Remember, with the IRS and the tax court, the devil truly is in the details.

    This was the lesson Joseph Mohamed, Sr., a generous (and wealthy) real estate developer, recently learned. Rueters recently reported on his case in an article titled “A harsh lesson on charitable contributions.”  

    It seems Mr. Mohamed had more than the requisite charitable intent but failed to follow the strict rules required to claim the deduction for his generous contribution of real estate worth in excess of $18.5 million. The problem? If you make a charitable contribution in the form of real property worth more than $5,000, then the real estate must be properly appraised and the appraisal must accompany the donation form.

    Unfortunately, Mr. Mohamed (who, ironically, is a certified appraiser) failed to follow this fundamental requirement. Even though the tax court conceded that the real estate in question likely was worth at least $18.5 million, the deduction was not granted.

    Contact Meier Law Firm to discuss the best strategies for giving money to charities.

    Reference: Reuters (June 1, 2012) “A harsh lesson on charitable contributions

    Old and Young Differ on How Assets Should be Distributed

    The heads of ultra-high-net-worth families often have different views of how money should be bequeathed than those who will inherit it, according to a recent study.

    For every planner considering the inheritance to leave and the arrangements to make, there is also a would-be inheritor with their own thoughts and strategies. As if figuring out your own plans and ensuring that they fall into place without a hitch weren’t difficult enough, it might also be necessary to contend with the would-be inheritor.

    According to a new study out of Morgan Stanley Private Wealth Management and Campden Wealth entitled, "Next-Generation Wealth: The New Face of Affluence,” and as reported on over at Private Wealth Magazine, there is a tangible divide between the heads of today’s high-net-worth families and their inheritors.

    The Private Wealth article, titled “In Rich Families, Old And Young Differ On Inheritance Issues, Study Says,” found a disconnect between the heads of families and their thirty-something inheritors. On the other hand, inheritors who are age 40 and older generally have either more involvement in the family wealth or greater complacency.

    As for those thirty-something inheritors, the study reveals them to be an increasingly discontented bunch:

    “Of the respondents aged 30 to 39, one quarter said they were not satisfied with their families' investment decisions and 43% disagreed with the wealth transfer plans. This compares to 84% of those in their 40s who said they have a high degree of satisfaction with the wealth transfer plans.”

    Statistics aside, if you are passing wealth to a new generation, you might want to take into account their hopes and intentions. After all, planners increasingly want to leave more than a mere financial legacy. If you want the inheritance you leave to carry your values and insights, then plan and communicate.

    Contact Meier Law Firm to discuss your estate planning goals.

    Reference: Private Wealth (May 10, 2012) “In Rich Families, Old And Young Differ On Inheritance Issues, Study Says




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