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    Monthly Archives: October 2012

    “Defective” Trusts – A Confusing Name For A Trust That Could Be Ideal For Many Newport Beach Families

    Defective grantor trust is a really confusing name for something that, in the right circumstances, can be a very good
    idea.  Somewhere along the line somebody
    realized that people might be disturbed by hearing that their trust was
    defective so the term became Intentionally Defective Grantor Trust.  Kind of like – “Hey that defect in your
    trust.  We put it there on purpose.  So you should feel good.”

    Confused ManIf you are an estate planning
    insider, then you understand the legal-speak, the acronyms, and maybe even the
    latest estate law jokes. On the other hand, if you are not, then you may get
    bogged down in some of the insider jargon and, well, find yourself downright
    confused. So it is with “defective” trust planning, as reported in a recent Forbes article titled “Don't Freak Out If You Hear Your Trust Is

    The defective grantor trust, and
    more specifically the Intentionally Defective Grantor Trust (IDGT), is more
    often than not the source of confusion estate planning greenhorns face. That’s
    unfortunate. Why? Because so-called “defective” trusts usually work pretty
    well, and they work well precisely because they are defective.

    Here’s the rub: sometimes you
    want your trust to be a trust and sometimes you don’t, and a defective trust
    only fails when you want it to. The heart of the matter, defective or otherwise,
    is simply to say that there is a lot to learn about this weird intersection
    between your life, unique legal entities, and weird tax laws that we call
    estate planning.

    In the end, you should know your
    tools and how to use them. Work with an open and inquisitive mind, and then
    work with Meier Law Firm to examine your options.

    Contact your Newport Beach estate planning attorneys at Meier
    Law Firm to discuss all of your estate planning needs

    Reference: Forbes
    (October 15, 2012) “Don't Freak Out If You Hear Your Trust Is

    Important Tips for Designating Beneficiaries in Newport Beach

    Assets that allow beneficiary designations
    provide powerful benefits that permit the owner to designate who will inherit
    the assets, how they can inherit the assets, avoidance of probate, and
    potential tax minimization, to name a few. Most individuals do not give the
    necessary attention to how they designate their beneficiaries.

    Family on HillThere is the right way to do
    just about anything, and it’s usually not the easy way. Thankfully there are
    those rare shortcuts that are actually pretty solid, so long as you remember
    when and where to take them.

    When it comes to proper estate
    planning, the shortcuts are the existing options you already have with
    insurances and retirement accounts that allow you to designate your
    beneficiaries on a simple beneficiary designation form.

    For many of us, the beneficiary
    form is the first practical experience we have with estate planning. For
    thoughtful and downright tactful tips for designating your beneficiaries
    designations, consider a recent article in Fox
    titled “Bulletproofing Your Beneficiaries.

    When it comes to beneficiary
    designations, some of them are shortcuts and some of them are dead-ends, and
    still others can completely undo your estate plans if you simply forget about
    them. That noted, there are at least two key points to consider. The second
    point is the beneficiary designation must be coordinated with your overall
    estate plan to the right beneficiaries (or even a system of trusts) to
    eliminate probate and minimize taxes. The first point, and a source of
    immediate concern, is that you must know who all of your beneficiaries are on
    all your accounts at all times. If you don’t know already, then it’s high time
    for a “beneficiary audit” of all your accounts and, if necessary, a reworking
    of those designations to meet your distribution goals.

    Contact your Newport Beach estate planning attorneys at Meier
    Law Firm to discuss all of your estate planning needs

    Reference: Fox Business
    (October 1, 2012) “Bulletproofing Your Beneficiaries

    Qualifying for Medicare Coverage May Be Easier for Newport Beach Families

    Elderly Woman with NurseTens of thousands of people with chronic
    conditions and disabilities may find it easier to qualify for Medicare coverage
    of potentially costly home health care, skilled nursing home stays, and
    outpatient therapy under policy changes planned by the Obama administration.

    Medicare may be opening the
    doors to many who previously had been turned away and left without coverage for
    home health care, nursing home stays and outpatient therapies on the basis of a
    less than positive “improvement” prognosis. This change of course may actually
    be the result of a nationwide class-action suit and an agreement from the

    For a perspective on the
    proposed settlement, turn to a recent article in The New York Times titled “Settlement Eases Rules for Some Medicare

    The Medicare board has had a
    longstanding practice to require a likelihood of medical or functional
    improvement before a beneficiary could receive coverage for skilled nursing or
    therapy services, whether institutional or home-based. That left many care
    recipients in a lurch. If this settlement goes through and becomes practice,
    then the requirement is no longer “improvement” but “maintenance.” Accordingly,
    Medicare will provide services if they are needed to “maintain the patient’s
    current condition or prevent or slow further deterioration.”

    Contact your Newport Beach estate planning attorneys at Meier Law Firm to discuss all of your estate planning needs.

    Reference: The New York Times
    (October 22, 2012) “Settlement Eases Rules for Some Medicare

    Lowest Ever Social Security Increase for Newport Beach, California Families

    The increase is among the lowest since
    automatic annual adjustments were adopted in 1975. It reflects relatively low
    inflation over the past year.

    At a mere 1.7%, Social Security
    will see its lowest increase ever come 2013. What does this mean for seniors
    Seniors with Boat

    The COLA is the Cost
    Of Living Adjustment added to Social Security annually,
    based on inflation and increases in the Consumer Price Index (CPI.) For some
    seniors, planning for the new year means planning around the COLA and hoping
    for the best. Alternatively, a reduction or a weak increase in COLA may mean
    seniors will need to make up the difference out of savings. Nevertheless, the
    CPI is an imperfect indicator and a debated one as well.

    This matter was taken up
    recently by USA Today in an article
    titled “Social Security benefits to rise 1.7% in

    In conjunction with the small
    Social Security increase and the uncertainty of taxes for next year, you may
    want to brush up on what could happen in 2013. 
    A recent Forbes article titled
    Social Security Benefits To Rise 1.7%; Workers
    Face Up To $2425 Payroll Tax Hike
    may offer some knowledge on these very
    important changes. Seek appropriate counsel if you have further questions about
    your benefits.

    Contact your Newport Beach, California Estate Planning Attorneys at Meier Law Firm to discuss estate planning for your family.

    References: USA Today
    (October 16, 2012) “Social Security benefits to rise 1.7% in

    Forbes (October 16, 2012) “Social Security Benefits To Rise 1.7%;
    Workers Face Up To $2425 Payroll Tax Hike

    Racing the Clock on 2012 Mega Gifts for Newport Beach, California Families

    I think the case for urgency is fairly
    self-evident.  Given how difficult and
    involved estate planning can be, people, for whom this is relevant, should be
    gearing for action now, if they have not already done something.

    When it comes to 2013 taxation, the future
    may be catastrophic for estate tax planning. As each day of 2012 passes us by,
    incredible wealth transfer opportunities are dwindling away.  Can you beat the clock before time runs out?

    These last few months are either a time to
    seize the unprecedented gifting opportunity of a $5.12 million gift tax
    exemption, or a time to run out the clock on this opportunity perhaps for the
    rest of your lifetime. The gift tax exemption is scheduled to return to $1

    Alarm ClockIf you are looking to seize the
    opportunity in 2012, then you will find encouragement in a recent Forbes article titled “Romney Wants No Estate Tax – Case For 2012
    Mega Gift Remains Compelling
    In short, the article notes that there are ways to give now without spoiling
    future opportunities, if you think carefully about the right kinds of assets to
    give. The author of the article calls such strategic assets “legacy assets,”
    and offers this quote from an attorney comrade:

    Legacy assets are ideal for the
    “megagift” for several reasons:

    1. art, real estate, family business interest and other Legacy Assets
      are secular investments, that is held for more than 10 years, and so the
      gifting of an asset does not substantially reduce the lifestyle or
      disposable financial wealth of the client,
    2. The financial value of Legacy Assets is not correlated to the
      investment market,
    3. The personal and social value of legacy assets is both real and significant,
    4. Since there is both a financial and a social value to the
      ownership of legacy assets, they work well with charitable split interest
      trusts that can significantly leverage the Unified Credit, and
    5. There are techniques that can be used with legacy assets that
      cannot be used for investment assets.

    In terms of a Mega Gift, legacy
    assets are definitely worth considering. Remember, the time is now to
    act on these amazing wealth transfer opportunities.  Don’t wait until it’s too late and the ball
    is already dropping in Time’s Square.

    Contact your Newport Beach, California Estate Planning Attorneys at Meier Law Firm to discuss estate planning for your family.

    Reference: Forbes
    (October 14, 2012) “Romney Wants No Estate Tax – Case For 2012
    Mega Gift Remains Compelling

    A Collection of Estate Planning Articles for Newport Beach, California Families

    With all the noise these days about taxing
    the rich and the future of the federal estate tax, the message that ordinary
    folks also need to plan, to protect themselves and their families, gets drowned

    Last WillDid you know we just passed National
    Estate Planning Awareness Week (Oct. 15-21)? Don’t worry if you missed it,
    estate planning is a continuous endeavor and one that is never out of season.

    While proper estate planning is
    no Do-It-Yourself project and competent legal counsel should be retained, there
    is plenty of literature available to help you learn the basics of estate
    planning and beyond. Leave it to Forbes
    to compile “The Forbes Guide To Estate Planning
    from its storehouse of past estate planning articles. Of course, these 40 some
    articles give only the Forbes
    perspective, but it’s a quick glimpse at the panoply of topics and worth a

    Contact your Newport Beach, California Estate Planning Attorneys at Meier Law Firm to discuss estate planning for your family.

    Reference: Forbes (October
    14, 2012) “The Forbes Guide To Estate Planning

    Will Charitable IRA Donations Be Back This Year For Families in Newport Beach, California?

    The charitable IRA rollover provision, which
    expired at the end of last year, allowed IRA owners ages 70½ or older to donate
    up to $100,000 of their IRA assets to a charity. The donor didn't receive a tax
    deduction for the contribution. But he or she didn't have to report the IRA
    withdrawal as taxable income, either. And the contribution could count toward
    the annual required minimum distribution, or RMD, that people 70½ or older must
    take from a traditional IRA.

    Cash and CoinsWhile taxes are uncertain for
    2013, you may be thinking Congress and the White House may retroactively extend
    some “expired” taxpayer favorites. For example, one that expired in 2011 is the
    ability to give the “required minimum distribution” (RMD) from your IRA to

    But do not count on retroactive
    resuscitation for this favorite in time for your 2012 taxes.

    Until the end of 2011, as you
    likely recall, it was possible for individuals over the age of 70 ½ to simply
    rollover their RMDs from their IRAs straight into the waiting hands of their
    favorite charity. As a result, this saved these taxpayers from any pesky
    taxable income.

    The Wall Street Journal took up this matter in a recent article
    titled “Should You Wait on IRA Donations?
    According to the article, aside from benefiting charity, the benefit to seniors
    making this savvy move include:

    “By reducing your adjusted gross income, the tax provision
    may help you keep it below the thresholds at which you could lose some of your
    deductions and other tax benefits, or become subject to higher Medicare
    premiums and taxes on your Social Security benefits.”

    The verdict: it might not be
    worth risking the wait on Congress and the White House to find out the official
    ruling on charitable IRA distributions for 2012.

    The article notes, however, that
    even if you have to take the RMD and accept the taxable income, you can still
    give it away and claim a charitable deduction. Although that’s not as
    beneficial as the Charitable IRA rollover, it’s better than nothing and
    certainly far better than inaction. Why? There’s an excise tax on the failure
    to timely accept the full amount of your RMD.

    Contact your Newport Beach, California Estate Planning Attorneys at Meier Law Firm to discuss estate planning for your family.

    ReferenceThe Wall Street Journal (September 22, 2012) “Should You Wait on IRA Donations?

    Importance of Special Needs Planning For Families in Newport Beach, California

    They navigate a confounding thicket of tasks
    and rules. On one side, there is the bureaucracy that government program
    administrators may erect at any moment. On the other, there are specialized
    trust accounts and estate planning issues to consider.

    Kids Posing on GrassIn this election season and
    numerous others, there are many debates on which government programs should
    stay put and which ones should be cut. 
    Oftentimes, the disabled population gets forgotten in these
    debates.  If you have a family member
    with special needs, what are you to do if the aid they depend on gets thrown on
    the chopping block? Planning ahead is a must in this situation.

    Unfortunately, few parents of
    children with special needs fully appreciate what is at stake and how to
    protect it. To make matters worse, too few professional financial planners are
    versed on the need to provide a long-term solution for such children,
    especially with shrinking public assistance benefits.

    The New York Times recently provided a mini-primer of sorts on the
    subject titled “Assuring Care of a Family Member With
    Special Needs
    .” While proper
    planning will vary from one family to another, given different needs, there are
    many tools to employ ranging from special needs trusts to life insurance. The
    key is to know which ones to use.

    As funds available for public
    assistance programs such as Medicare, Medicaid, and Social Security become more
    restricted and unpredictable, planning for special needs is going to be more
    and more important each year. Seek appropriate counsel for your special needs
    family member to gain peace of mind for their future care.

    Contact your Newport Beach, California Estate Planning Attorneys at Meier Law Firm to discuss special needs planning for your family.

    Reference: The New York Times (October 5, 2012) “Assuring Care of a Family Member With
    Special Needs

    Five Ways To Be Charitable

    There is certainly a place for special
    trusts and foundations, but they are not a requirement.  There are many ways people aren’t aware of to
    be charitable both in your own family and also in your community.

    Giving can be complicated,
    especially when it moves beyond handing over cash or writing a check. A recent Forbes article provides some practical
    advice you may not have considered. The article is titled “Five Ways To Be Charitable Even If You
    Aren't Bill Gates
    .” And if you’re not Bill Gates, the “five ways” do
    not require the complexities of family foundations.

    Here are the Forbes tips for your charitable

    1. Give the gift of
      Have you thought about giving to your own children or
      grandchildren and in the form of a 529 college savings plan or a direct gift to
      the college?
    2. Give your IRS
      distribution to charity.
      Since you have to take your required minimum
      distribution anyhow, send it directly to a charity instead. This option is
      available for the remainder of 2012, but its future is uncertain. 
    3. Name
      your charity as your beneficiary on your retirement account.
      This option is
      appropriate if you’ve decided that any retirement funds left over should
      eventually pass to charity instead of loved ones. Be sure to designate your
      charitable beneficiaries accordingly! Note: The full amount of your retirement
      account given to charity is income tax free. If left to a non-charity, then the
      full amount is taxable as ordinary income.
    4. Donor-advised funds. By giving to a
      donor advised fund, you can give today, take the charitable deduction in this
      year’s taxes, but decide which charities to benefit next year or beyond. They
      are easy to establish too.
    5. Charitable gift annuity. Are you keen
      on the idea of receiving a guaranteed lifetime monthly income, especially as an
      assurance in old age? If you also want to benefit charity in the process, then
      consider hitting two birds with one stone by opting for a charitable gift

    This is just an overview of the
    “five ways” featured by Forbes, so be
    sure to consult with your financial, tax, and legal advisors regarding the
    appropriateness of each for your circumstances.

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

    Reference: Forbes (September
    20, 2012) “Five Ways To Be Charitable Even If You Aren't
    Bill Gates”

    Annual Gift Exclusion to Get Inflation Increase?

    Next year, that $13,000 limit on gifts is
    expected to increase to $14,000—an inflation adjustment required by law. The
    number isn't yet official—and won't be until later this year when the Internal
    Revenue Service will announce this and many other inflation adjustments.

    When it comes to estate
    planning, it ultimately comes down to what the laws themselves provide. But
    fear not, not all questions of estate planning law come down to politics. For
    example, with no political posturing involved at all, the annual exclusion
    amount is set to rise for the first time since 2009.

    The Wall Street Journal broke the good news as early as it could, in a
    Q&A entitled “Expect Gift Limit to Rise Next Year.” First, a caveat: it’s not the present
    lifetime exclusion of $5.12 million you can expect to see increase, as the jury
    is still very much out on that one. Rather, it’s the annual gift tax exemption
    presently set at $13,000.

    Currently, you can exclude
    $13,000 per person per year, before ever reducing your lifetime exemption
    amount. Good news: that amount is set to adjust up to $14,000.

    We await official numbers, but
    they should arrive later in the year. If and when the annual gift exclusion
    increases, this will bring a welcome bump in your wealth transfer

    If nothing else, the attention
    given to this uptick in the annual gift exclusion also may offer a wake-up call
    to the power of annual giving. Just think of what you can do for each of your
    loved ones with an annual gift of $14,000.

    Likely your loved ones could use the extra assistance
    in these tight financial times, and you get the benefit of seeing their
    stewardship (or lack thereof). In fact, depending on whether they are wise or
    foolish with the gift, you can make adjustments to your estate plan

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

    Reference: The Wall Street
    (September 29, 2012) “Expect Gift Limit to Rise Next Year

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