Upcoming Workshops

Unless otherwise noted,  

all workshops will be held at:

The Dale Law Firm, PC  

Conference Room

127 Aspen Dr., Pacheco, CA 

Register by contacting shelley@dalelawfirm.com  

or by calling (925) 826-5585

SPECIAL NEEDS TRUSTS WORKSHOP FOR  

FAMILY MEMBERS  

 Two dates to choose from:

 Saturday, September 22
10:00 a.m. - 12:30 p.m.

or Wednesday, November 7

 6:00 pm - 8:00 pm

For more information on these and other workshops,  

learn more at

www.specialneedsalliance.org   

Nina S. Jones, Editor  

The Achieving Independence Newsletter   

Estate Plans - Time For a Check Up

GUEST ARTICLE 

By Ryan Lovill, Vice Pres. and Market Executive

The Commerce Trust Company,  

Central Missouri Region

Published 04/30/12 - Columbia Business Times

It's 2012. Do you know what your estate plan says? If it has been a while since you last reviewed your will and living trust, you may be in for a surprise. Some changes in estate tax and gift laws may result in your family experiencing consequences you never intended when you originally created your estate planning documents. Others offer tax advantages that will disappear at the end of the year unless Congress acts to extend them.

All in all, 2012 is a critical year for tax planning. To make sure your estate plan still accomplishes your goals, no matter what happens next, now is an excellent time for a check-up. To get started, ask yourself these questions:

What has changed in your personal life?

There are multiple events that can trigger a need for changes in an estate plan. Think about births, deaths, marriages or divorces that have occurred since you completed or last updated your plan. Are your children still minor dependents? Do any beneficiaries face new financial burdens as a result of illness, disability or changes in their own financial situation?

Any changes could make your current plan out of date. And now is a good time to update any charitable beneficiaries as well.

What has changed in your professional life?

When it comes to your estate plan, what happens at the office does not stay at the office. If you have retired, sold a business, entered into any new business arrangements or formed a new business entity, it may impact what you can and can't leave your surviving spouse or other beneficiaries. Don't wait for these changes to take place. The best time to review your estate plan is before you make significant business decisions.

What has changed in your financial situation?

Depending on how you invest your savings, there may be a significant difference between what you project your assets will be at age 65 and what they actually end up being. Your estate plan should accurately reflect your financial situation. Changes in your wealth resulting from asset appreciation, an inheritance or the purchase or sale of real estate should also be considered in light of current estate tax law. Recent changes may affect your retirement benefits in particular.

Are your estate planning documents up to date?

The people who play important roles in your life can change. Are the persons you've assigned as executors and trustees still the best persons for the jobs? Also review the language in your estate planning documents. Many wills and trusts were written under the assumptions of old estate tax law. Under current estate tax laws, that could result in your surviving spouse getting shut out of your estate.

How is that possible?  

Let's say you signed your will in 1999 when the estate tax exemption was $650,000. Rather than referencing the specific dollar amount of $650,000, most wills used a "formula clause" that left the amount equal to whatever the estate tax exemption is at your death, to beneficiaries who may not include your spouse. For example, you might bequeath your wealth equally to your children up to the estate tax exemption, with the remainder put into a trust for your surviving spouse. The problem? Today, the estate tax exemption is $5.12 million. If you have an estate valued at $3 million, all your wealth would go to your children, leaving your surviving spouse empty-handed.

Do you need new strategies for managing your estate?

Back when estate tax exemptions were much lower, many families bought life insurance policies to cover estate taxes. Is life insurance still a good idea if your estate will not be liable for estate taxes, especially if the policy's death benefit puts the value of your estate over the exemption limit? To find out, you might consider a life insurance review along with your estate plan review. There are many ways to limit your estate plan liabilities.

And beware: If Congress fails to take action sometime in 2012, the estate, gift, and generation-skipping tax exemptions will revert back to pre-2001 Tax Act levels in 2013. That means a $1 million estate and gift tax exemption and a 55 percent maximum rate and a $1.36 million generation-skipping tax exemption.

You'll want to learn how those changes affect you while there is still time to do something about it. The time to plan is now.  

Updating Your Special Needs Trust -

Begin with a Self Review

by Stephen W. Dale, LL.M., Esq. -  

The Dale Law Firm, PC

A common question that I hear is "how often should I have my child's special needs trust reviewed by my attorney?" Let me give you the typical lawyer's answer for almost every question....."It depends." As unsatisfying as that might be, let me try to give some further guidance.

We believe there are two levels of review that you should consider. The first is an annual review that you can do yourself, or with the assistance of your advisors (including your financial and tax advisors if you have them.) The second is a review with your attorney. This is typically done on an "as needed" basis when a significant change happens in your life or there are major changes in the law. The estate planning clients from our office typically create a revocable special needs trust to be funded upon their death or incapacity. We often flag specific sections of their special needs trust when the trust is being signed with instructions to review these sections annually to ensure that the trust is up to date.

Below are the typical issues that need periodic review.

Annual Self Review -  

questions to ask myself:

Are all assets titled properly into my estate plan? You need to review your estate plan to make sure that all of your assets either designate your estate plan as the owner or the beneficiary. This is where a financial advisor can be invaluable. Assuring that all of your assets are properly titled or correctly listing proper beneficiary designations is important within any estate plan, but it is critical within a special needs trust. An error could cause unnecessary taxes, a lengthy probate, and in the worst of circumstances court supervision.

Is my plan practical? We have seen major changes in our clients' portfolios. There may have been major changes to your disabled loved one's condition or needs. For instance, if your finances have diminished, you may want to make some changes in the directives in the trust or rework the Memorandum of Intent to adjust what you feel the trust management's focus should be in light of decreased funding.

Are my named Successor Trustees and Advisory Committee Members appropriate? The most common change we see in our office has to do with changing the trustee, trust protectors or advisory committee members. 

Ten years ago, it may have made sense to have "Uncle Eddy" serve as an adviser. A decade later, "Uncle Eddy" may be in prison on federal racketeering charges. It is a good time to rethink your decisions. Luckily, most situations are not this extreme, but the point is that lives can change drastically within a few short years. You will want to be sure that you have identified who is best able to perform the duties necessary to provide for and protect your loved one.

Have there been major changes in my loved one's condition or benefits? Consider any changes in needs or situation including changes in government benefits, medical condition or support systems. If there have been significant changes to your loved ones' benefit eligibility, make sure that you bring the official documentation outlining those changes when you come see your attorney. We will then be able to clearly focus on how such circumstances affect your situation. This will also be a good time to review whether your loved one is receiving all of the benefits they deserve.

Have there been changes in my ability to be my loved one's advocate? Many of our clients serve as the primary advocate for their disabled loved one. If there is a question regarding your ability to continue this role, it is very important to discuss your situation with your legal representative. For example, say you have been diagnosed with a psychological condition (i.e., dementia or Alzheimer's,) or possibly even a physical condition which can impede your ability to advocate for your loved one. For both your sake and that of your loved one, you must make changes accordingly. Our office has discovered that the engagement of a care manager to assess the situation and plan for the future is one of the most efficient, and in many cases, financially advantageous steps available. The Dale Law Firm, PC, like many law offices, maintains a list of qualified care managers or you can locate one directly through www.caremanager.org.

Once you have performed this self-check, you will be able to determine if now really is "the time to update your estate plan". You will certainly be better prepared, which will very likely make the review process less stressful and less costly.

Stephen W. Dale, LL.M, Esq.
The Dale Law Firm, PC