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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: September 2012

    Small Business Owner Quandary

    The weak economy has been tough for
    small-business owners across the board … but for entrepreneurs in their 60s and
    70s, the consequences have been particularly vexing.

    The current recession has been
    tough on just about everyone, but few have felt such dire consequences greater
    than small business owners. This especially is the case when they are on the
    verge of retirement.

    The Wall Street Journal considered this topic in a recent article aptly
    titled “'The Economy Stole My Retirement.'

    If you are a small business
    owner on the one hand – a role that requires flexibility and ingenuity – and a
    baby-boomer on the other, then this recession has been more than a case of
    terrible timing. No, it’s thrust you into “business purgatory.” Do you find
    yourself with one foot in management and the other foot (or maybe just that big
    toe) in the golden sands of retirement?

    A baby boomer who is a small
    business owner faces a very tough call right now. Should he or she sell for the
    best offer today, which is generally the low-ball offer, or hold out for some
    future value which more accurately reflects what the business is truly worth? A
    tough call, indeed.

    For the owners of small
    businesses and the heads of family businesses, make no mistake about the
    difficulty of your position. It’s impossible to foretell the future, but since
    you already know what is most valuable to you (your family and your business),
    take the time to carefully weigh your options and contact Meier Law Firm to discuss your options.

    This is not the time to make
    emotional decisions.

    Reference: The Wall Street
    Journal
    (September 12, 2012) “'The Economy Stole My Retirement'

    Another Case for Estate Plan Updates

    [If anyone needs] proof of the importance of
    revisiting their estate plans annually, consider the case of a wealthy family
    that sold its retailing business to Best Buy.

    Perhaps you have heard that 2012
    is a unique year for planning. However, did you know that 2010 was just that much more unique and many families
    are still either jubilant or remorseful for disrupted plans?

    It just goes to show that
    changing laws matter, and that your estate plans must change accordingly.

    For fresh evidence of the
    necessity for annual visitation of the estate plan, and for the oddities of
    2010, Financial Planner magazine
    recently published an article titled “Family Feud: Review Estate Plans Annually.” It’s the case of the family behind
    Magnolia Audio Visual, and the couple that sold its retail rights to Best Buy
    and accumulated a cool $100 million estate in the process. Unfortunately, the
    parents weren’t as savvy with their estate planning.

    The estate plan provided that
    the maximum amount allowable under the federal estate tax threshold would be
    passed down to the children, with the rest to pass to the surviving spouse to
    thereby avoid immediate estate taxation. Unfortunately, the plan didn’t
    account for the fact that 2010 didn’t have an estate tax (thanks to expiring
    Bush-era laws and a gridlocked Congress).

    The wife died. When the husband
    nevertheless claimed the estate that was to pass to the children under the
    estate tax planning, the children were noticeably irked. It seems they had been
    passed over and were in danger of losing a fortune afforded under the
    once-in-a-lifetime and quite unintended tax loophole. Accordingly, the children
    filed suit against their father on the grounds of “non-compliance, forgery and
    the use of undue influence.”

    If nothing else, this case
    illustrates the necessity to revisit estate plans with greater frequency,
    especially in these uncertain financial times.

    Reference: Financial
    Planning
    (September 1, 2012) “Family Feud: Review Estate Plans Annually

    End-of-Life Tax Tips

    End-of-life tax-ducking techniques can cut
    income taxes as well as federal estate and state estate and inheritance taxes.

    It’s never too late to take
    charge of your assets and the inheritances you plan to leave. For that matter,
    it’s never too late to properly plan for death tax burdens.

    Forbes recently addressed this matter in an article titled “Deathbed Tax Dodges: Take These Steps Now To
    Save Later
    ,” identifying certain fundamental tax moves to make even at
    life’s end.

    The article highlights three
    basic steps: (1) ensure that your spouse has been granted your power of
    attorney, (2) create separate investment accounts for you and your spouse, and
    (3) remember the annually-renewing power of gifts to beneficiaries other than
    your spouse.

    The article describes how these
    steps work together to maximize your estate tax savings, as well as reduce the
    size of your estate subject to such taxes. That said, to take full advantage of
    these steps, contact Meier Law Firm.

    Reference: Forbes
    (August 27, 2012) “Deathbed Tax Dodges: Take These Steps Now To
    Save Later

    Elder Affairs Mediators to the Rescue

    A small but growing number of mediators
    (people who help resolve disputes, typically outside a courtroom) now
    specialize in elder affairs. They help families work through concerns—and
    fights—involving caregiving, inheritance, living arrangements, estate planning,
    and related issues.

    Family arguments have a terrible
    way of escalating into something akin to thermal nuclear war. This especially
    is the case when the fight is over an elderly loved one, their future, and
    their well-being.

    A recent article in SmartMoney, titled “When to Call an Elder Mediator,” provides
    some helpful guidance for families working through myriad issues regarding an
    elderly loved one.

    Enter the elder mediator.

    An elder mediator essentially
    allows the family to come together around the advice of a third party who has
    no interests, no psychological baggage, and no need to distrust anyone.
    Sometimes you simply can’t say that of other adult siblings or loved ones (or,
    if we are honest, of ourselves).

    When the end sought by the
    family is the well-being of the elderly loved one, an elder mediator can be
    essential in helping the family work out solutions while preserving family
    harmony.

    Reference: SmartMoney
    (August 28, 2012) “When to Call an Elder Mediator

    Roth IRA Conversions – Act Now

    In 2010, the conditions were
    ideal for converting traditional IRAs into Roth accounts. Previous restrictions
    on conversions had been removed, and income triggered by conversions was taxed
    at relatively low rates. Today, we are once again looking at excellent
    conditions for Roth conversions.

    It can be hard not to sound like
    a broken record, but it’s also hard to let important messages fade away without
    one more reminder. Such is the case with Roth IRA conversions.

    If you were actively planning in
    2010 and the years since, then you’ve heard much about the power of Roth IRA
    conversions. Guess what … Roth IRA conversions are still remarkable and
    tax-smart.

    A recent article in MarketWatch, titled “Roth IRA conversions: Still tax-smart,”
    extolls the virtues of the conversion strategy and the math behind it. A Roth
    IRA works like a backwards IRA by allowing you to pay the tax upfront rather
    than delaying it until later, as with a traditional IRA. Moreover, a
    traditional IRA can be converted to a Roth within certain restrictions.

    This is a retirement planning
    tool, but it also can also become a powerful estate and gift planning tool.
    While an IRA can always be left to beneficiaries, every dollar withdrawn is
    subject to ordinary income taxation. Distributions from an inherited Roth IRA,
    on the other hand, are taken without any income tax bill. That’s pretty
    powerful.

    The important and timely message
    is that all of the relevant conversion rules and taxes are at fairly gentle
    levels for the remainder of 2012, but the future beyond that is uncertain.
    Accordingly, you should act now if you want to take advantage of this window of
    opportunity before it closes.

    Contact Meier Law Firm to discss all of your estate planning options.

    Reference: MarketWatch
    (August 28, 2012) “Roth IRA conversions: Still tax-smart

    If it’s Between Death and Taxes…Give Me Taxes

    The old adage “nothing is certain but death
    and taxes” is very true. Since income taxes occur on an annual basis we think
    about them frequently. Our own death, however, we seldom think about or plan
    for. That’s a problem.

    Admittedly, it’s fairly
    difficult to plan for death and taxes at your passing. But if I could
    delay only one of them, it would be death.

    Anyone who has stuck by their
    family during the passing of a loved one knows just how powerful the ensuing
    emotional (and financial) tsunami can be. There are many decisions that must be
    made during a time of grief. This fact of life was recently addressed in a Forbes article titled “Are You Ready For Both Death And Taxes?

    Death taxes aside, death itself
    presents choices that must be made. You, and you alone, are in the best position
    to make proper estate plans to preserve and protect your assets and your family
    at your passing.

    The original article presents a
    good, better, and best approach. But what is the best approach? In the
    end, you know your assets and loved ones better than anyone else.

    Doesn’t it make sense for you to
    make proper plans now, rather than later?

    Contact Meier Law Firm to start your estate planning.

    Reference: Forbes
    (August 21, 2012) “Are You Ready For Both Death And Taxes?

    Buffett Birthday Benefits His Children’s Charities

    Warren Buffett celebrated his 82nd birthday
    Thursday by announcing an additional $3.1 billion in donations to the charities
    run by his three children.

    Most of us spend our birthdays
    receiving gifts. In fact, that’s been the standard operating procedure since
    our first birthday.

    We all can learn from Warren
    Buffet’s example, however, and the so-called “reverse birthday.”

    In an article titled “Buffett gives $3 billion to his kids'
    foundation
    s
    ,” CNN Money
    reports how the Oracle of Omaha celebrated his most recent birthday “in
    reverse.” While Mr. Buffett already pledged some 17.5 million Class B shares of
    his firm, Berkshire Hathaway, to each of his three children and their
    respective charitable organizations back in 2006, now, in an open letter to his
    children, he has doubled down to about 29.7 million Class B shares. Mr. Buffett
    himself even estimates that the annual distribution will average more than $100
    million each.

    Whether there’s an approaching
    birthday or other occasion to celebrate, there may be something to take away
    from the Oracle’s example. Mr. Buffett is giving to his children and working to
    charitable ends in the same moment.

    So who do you love, what do you
    care about, and what are your loved ones passionate about?

    Contact Meier Law Firm to discuss your gifting options.

    Reference: CNN Money
    (August 30, 2012) “Buffett gives $3 billion to his kids'
    foundation
    s

    The Annual Gift Exclusion

    Given the uncertainty surrounding next
    year's taxes, here is a reassuring thought: One of Uncle Sam's most useful tax
    benefits isn't expiring, shrinking or otherwise under threat after 2012.
    Experts call it the "annual gift exclusion."

    Been following the news about
    the uncertainty of estate taxes. Pretty gloomy, yes? Cheer up! That old
    planning stalwart, the annual gift exclusion, continues to be a safe bet for
    wealth transfer planners.

    The Wall Street Journal recently took up the praises of the annual gift
    exclusion in an article aptly titled “The Gift That Keeps Giving.” Indeed,
    gifts will keep giving, and it’s
    important to know how they work and how to give them appropriately.

    Currently you can give up to
    your annual exclusion to as many parties as you wish each calendar year,
    without any corresponding reduction in your lifetime gift/estate tax exemption.
    The current annual gift exemption is set to $13,000 and will expand with
    inflation.

    Don’t forget, if you are
    married, “gift splitting” is a way to give $26,000 to your loved ones. This is
    especially important in blended families when the entire $26,000 will be coming
    from separate resources of one spouse to his or her own children. Note: there
    is some simple IRS paperwork required to make this work.

    Depending on the number of
    family members (or other loved ones) you may have and the extent of your resources,
    maximizing the annual gift exclusion truly is a simple but significant
    technique for wealth transfers.

    Reference: The Wall Street
    Journal
    (August 17, 2012) “The Gift That Keeps Giving

    UCP-OC- A Local Charity Helping Children with Disabilities Worthy of Your Time, Talents, and Financial Gifts.

    With so many great causes in our
    community, it can be difficult for families and donors to choose which charity
    they should support with their time, talents, or financial gifts.  As an attorney who advises many high-net
    worth individuals and donors, and also as a member of local organizations
    dedicated to philanthropic causes, I’ve found that charities worthy of support
    offer more than a great cause, but also the leadership, vision, and internal
    framework necessary to truly make a difference in people’s lives. This is why I
    believe that United Cerebral Palsy Center of Orange County deserves your
    support.

    UCP-OC serves children with all
    types of developmental disabilities and provides vital support to families.
    Each year, they provide direct services to nearly 4,000 families, 86% of
    whom have a primary disability other than cerebral palsy. Their goal is to help
    children with disabilities live “Life Without Limits”.

    I first learned of UCP-OC when
    one of my young children experienced speech delay.  And while it is a minor challenge compared to
    what many children at UCP-OC are facing, my husband and I still experienced the
    fear, frustration, and helplessness that many parents do when you want to help
    your child and don’t know where to turn. I recall sitting in a UCP-OC play room
    after our child’s initial evaluation and hearing the speech therapist tell us
    “he has some work to do, but don’t worry, we can fix this. We can and will help
    him.” From that point on, we knew we were in the right hands. 

    We’re grateful to UCP-OC for
    helping our son overcome his challenge, and even more grateful for the way they did it. From the friendly face
    at the reception desk each visit, to the special waiting area with toys and
    coffee welcoming the whole family, to the speech therapists personally
    committed to making our child feel important and each session count, to the
    proven leadership under Cathleen Collins that ensures families will get the
    education, resources, and support necessary to help the little ones under their
    care thrive—UCP-OC is more than just a great cause—it is a special charity that
    truly makes a difference in the lives of children with disabilities and their
    families.

    I hope that as you consider which
    charities are worthy of your support, that you reach out to UCP-OC and learn
    how you can be part of the special difference they are making in children’s
    lives. For more information on UCP-OC, visit www.ucp-oc.org.

    Laura K. Meier, Esq.

    Naming Your Business Matters

    There are a number of reasons you might want
    to put your name on your business.

    But before you launch your eponymous company,
    project yourself into the future—the very reason you’ve chosen to name your
    company after yourself may be the reason you shouldn’t.

    When it comes to forming and
    operating your business, sometimes thinking about where to begin means thinking
    about where you will end. For the family business, or the succession-minded
    businessperson, the stumbling block is often the basic question: what do you
    name the business? Should your business bear your name, or should the family
    business bear the family name?

    While some may consider the
    decision a matter of personal or family pride, or even a matter of vanity, that
    doesn’t mean there aren’t important issues in play. The consequences of naming
    your business was tackled recently by Forbes in an article titled “How Having Your Name On Your Business Limits
    Your Options
    .”

    The essential point, however, is
    that putting your name on the company forges an inextricable link. On the plus
    side, this can be a boon if your business and brand do well, especially if your
    heirs carry on the business. On the down side, doing so may not be in the best
    interests of the business, or even your heirs.

    The original article is a quick
    read for a review of some practical considerations and problems. In the end,
    this decision is a tough one.

    Reference: Forbes
    (August 17, 2012) “How Having Your Name On Your Business Limits
    Your Options




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