I’ll be presenting a seminar on DIY — Do It Yourself — Estate Planning at the Pleasant Grove Library on Wednesday, March 8, 2017 at 7 PM. Come an enjoy the discussion. The address is 30 E Center St, Pleasant Grove.
If you have a question about wills, trusts, and other aspects of estate planning, maybe I can answer it.
The Rural Law Center at the University of Wyoming College of Law is sponsoring the Farm and Ranch Transition Conference on March 3, 2017, a Friday, in Laramie. It’s free. The conference is open to the public. Those interested may attend either in person or via live streaming video. The program sounds interesting.
Northwestern Mutual recently published a survey of caregivers, those who take care of the infirm and aged. Among other things, this is what they found, according to Financial Advisor magazine:
Caregivers comprise a massive population segment, with 40 percent of the survey’s 1,003 respondents saying they were caregivers. Another 20 percent expect to step into that role.
While only 25 percent of future caregivers thought of financial support as a key attribute of caregiving, 64 percent of current caregivers ended up providing some level of financial support to their charges. Expenses related to giving care comprised nearly one-third of their budgets, according to the current caregivers.
Most future caregivers, 70 percent, expect to incur financial costs, yet only 60 percent said that they were equipped to handle the potential financial aspects of caregiving. (Emphasis supplied)
Just one more reason for people–both caregivers and those who will need it–to plan for the future. Long-term care insurance, life insurance, trust planning anyone?
So by now, you probably know that the Larry and Gail Miller family insured that the Utah Jazz would forever be the Utah Jazz--musical Mormon jokes aside (by the way ever heard of BYU’s Synthesis?). They did so via a so-called dynasty or legacy trust, a trust intended to live on and on and on, well beyond the lifetimes of the Millers and their children and even their grandchildren.
I intend to write more on this subject, but for now think about what financial legacy would you like to leave your family, your city, your school? A well-drafted trust will allow you to do that.
Something to think about from the MIT Technology Review:
In August 2015, Samantha Schilit went to her primary care doctor to get a blood draw. A PhD candidate at Harvard specializing in human genetics, she was itching to unlock the secrets of her genes with a test called whole-genome sequencing, which provides a full readout of a person’s DNA.
Patients must give their informed consent before undergoing whole-genome sequencing or any other genetic test. But there are no laws that restrict what patients can do with their own genetic information, or that require patients’ family members to be involved in the consent process. This raises questions about who owns an individual’s genetic code, since family members share many genetic traits and may harbor the same genetic abnormalities associated with certain diseases. (Emphasis supplied)
Odd as this may sound, this is an estate planning issue worth worrying about.
We all know the rule:
Sections 402(c)(3) and 408(d)(3) provide that any amount distributed from a qualified plan or IRA will be excluded from income if it is transferred to an eligible retirement plan no later than the 60th day following the day of receipt. A similar rule applies to § 403(a) annuity plans, § 403(b) tax sheltered annuities, and § 457 eligible governmental plans. See §§ 403(a)(4)(B), 403(b)(8)(B), and 457(e)(16)(B).
No, actually, we all know that rule stated this way:
You have 60 days to get your distribution from one IRA or retirement plan to another IRA or retirement plan, or you suffer the tax consequences. The “getting to one from another” is called a rollover–typically an IRA rollover.
If you fail to complete the rollover within 60 days, the penalties can be severe, including income and excise taxes, interest, and penalties.
People do rollovers for a variety of reasons. They retire. They change jobs. They become dissatisfied with their current IRA provider. In those cases and others, there’s a need to change move your retirement money from one plan to another. And typically the move goes smoothly–without a hitch.
Except when it doesn’t. What if the rollover takes more than 60 days? Then what?
Well, the IRS recently issued a new rule, Revenue Procedure 2016-47, that recognizes certain realities: Life happens.
Yup. If life hits you in the face, the IRS is going to wipe the tears away and tell you to go back outside and play–that is, they’re going to waive any penalties. There is a catch–of course:
The Revenue Procedure provides a handy self-certification letter, the wording of which you must follow almost to the T. You can find the sample letter here, in the appendix of the actual Revenue Procedure. Enjoy the read.
An interesting piece at Wealthmanagement.com about how and why charities seek to enforce charitable pledges and what theories courts use to accommodate their claims. The first two paragraphs are key:
In August, it was widely reported in the media that Duke University had filed a claim against the estate of Aubrey McClendon, the former CEO of Chesapeake Energy Corp., for payment of nearly $10 million in outstanding charitable pledges, once again raising the question of whether and to what extent charitable pledges are legally enforceable.
States typically rely on one of three theories to find that a charitable pledge is enforceable. A pledge may be enforceable as a bilateral contract, as when a donor pledges a sum of money in exchange for the charity’s naming a building after the donor.1 A second theory treats a charitable pledge as a unilateral contract. A donor offers to make a gift in the future that’s accepted when the charity incurs a liability in reliance on the offer.2When the charity provides no consideration for a contract, a pledge may be enforceable under the doctrine of promissory estoppel, an equitable remedy applied when a charity would suffer damages if the pledge weren’t enforced.
The rest of the piece is worth a read, especially if you’re interested in how the law is developing or in why charities should care about those developments.
Naomi Cahn, a law professor at George Washington University, has some good advice for those who’ve recently parted ways with their spouse. You can read her advice in her piece “Protect Those You Love in Divorce, and Remarriage,” posted at Slitopia. If you find yourself a member of the recently divorced, I recommend you read it.
As we’ve discussed elsewhere, in an almost knee jerk way, people want to avoid probate. And for some good reasons. But what if I told you there were a possibility your heirs might have to go through two or even three probates? It’s true. If you own titled property, especially real estate, in another state than the one you live and die in, your personal representative is probably going to have to file probate papers in all the states where that property is located. And with that comes the added expense of additional attorneys and such.
It’s called ancillary probate, ancillary because its subsidiary or supplementary to the larger probate, the one in your state of residence where presumably most of your property is located. You can avoid ancillary probate a variety of ways. If the out-of-state property is real estate, you could simply make sure that another person is on the deed with you with rights of survivorship. That way, when you die, the property passes automatically to that person, without probate. Or you could title the property using a so-called transfer on death deed, which are allowed in a number of states. Or you could hold the property in a revocable or living trust.
The trust approach is my preferred method because, unlike the other methods, this one makes it easier to direct the property to where you want it to go once the property is held in the name of the trust.
Everybody wants to avoid probate, but far too many of those who want to avoid it, know what is. Here’s a primer:
Probate is the legal process in which a deceased person’s will is proved valid; her personal representative or executor appointed; her property collected and preserved; and her debts, including taxes, paid. Usually, the deceased’s family hires an attorney to file the appropriate papers with the probate court to begin the process. Depending on the state and the complexity or size of the state, the probate process can be complicated or streamlined. In Utah, for example, if the deceased’s estate is under $100,000, probate can be handled via a s0-called small estate affidavit, a much more simple process.
The deceased person’s personal representative (another term for executor) is the point person in the process. Essentially, a personal representative fills the shoes of the deceased. What the deceased could do if she were still alive, the personal representative does instead. Need to transfer title? The personal representative does that. Need to close a bank account. Again, the personal representative steps up. Often (but not always) named in the deceased’s will, the personal representative, once he has the court’s blessing, is the one who goes about collecting property, paying debts, and–finally–distributing what’s left to the deceased’s heirs. Often (but again, not always) this is done under court supervision, depending again on the state and the size/complexity of the estate.
Why do people say they want to avoid probate? Probably because they’ve heard it’s expensive–which it can be–or because they’ve heard it’s public–which it is; that is, it’s public in the sense that your nosey neighbor can walk down to the courthouse and ask the clerk to see your probate file. Then it really becomes public.
There are a number of ways to avoid probate the attendant publicity and some of the cost. One is to establish a revocable or living trust. For more on that, go here.