The Right Way to Plan for Your Special Needs Child

Parents of special needs children have unique needs when it comes to estate planning. As a recent article explains, parents of special needs children who have not yet created an estate plan should put it on the top of their to-do list.

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(Photo credit: Wikipedia)

Unlike the majority of non-special needs children, many special needs children will require constant care for the remainder of their lives. Additionally, many special needs children are not able to work or otherwise earn the income necessary to pay for their care. Therefore, planning for a special needs child includes not only leaving the proper amount of resources for procuring the proper care, but also helping to determine how that care will be provided.

However, planning for special needs children is not as simple as leaving ample resources and a plan for that child’s continuing care. This is because most special needs children already receive government benefits to assist in paying for their care. However, these benefits are need-based and will cease if the child no longer qualifies to receive them. Therefore, many parents of special needs children employ a special needs trust. This trust, rather than the child, owns the child’s inheritance. By using this trust, the money is not considered to be the child’s and he or she will continue to receive government benefits.

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The Fifteen Best Countries for Overseas Retirement in 2014

It is not uncommon for Americans to spend significant time away from their home state in order to take advantage of more favorable living conditions. Be it to live for less, for diversity investments, or to simply enjoy one last adventure, more and more Americans are choosing to retire abroad. A recent article discusses the 15 best countries for Americans to retire in 2014.

The Annual Global Retirement Index created the list based on a series of factors, including the price of necessary goods and services such as groceries and utilities, average temperature, and friendliness of the locals. As executive editor Jennifer Stevens explains, the list is “designed to be a real-world snapshot of the places we deem most worth a potential-retiree’s attention today.”

English: View of the Chagres River in Gamboa, ...
English: View of the Chagres River in Gamboa, Panama. (Photo credit: Wikipedia)

Topping the list for 2014 is Panama. As Stevens explains, Panama offers American retirees a “great combination of variety and value…No matter what it is you’re hoping to find, Panama is a good place to look for it.” The remaining rankings are as follows: (2) Ecuador, (3) Malaysia, (4) Costa Rica, (5) Spain, (6) Colombia, (7) Mexico, (8) Malta, (9) Uruguay, (10) Thailand, (11) Ireland, (12) New Zealand, (13) Nicaragua, (14) Italy and (15) Portugal.

Taking advantage of overseas options does not always mean changing your place of residence, but precautions should be taken to make sure that your estate plan is appropriately adjusted for your travel. To determine your unique considerations before booking your tickets, consult with a qualified estate-planning attorney.

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Are You a Sitting Duck? Four Asset Protection Strategies to Consider

Many investors are so focused on their return on investment that they fail to consider or implement asset protection strategies. As a recent article explains, an investor who has not protected his investments is a mere sitting duck. If you haven’t considered asset protection for your investments, below are four strategies you should consider:

(Photo credit: Wikipedia)

    1. Insurance: This is an important part of any asset protection plan because it shifts the risk of loss to somebody else. Insurance can be purchased for almost any asset or activity.

    2. Wait for Social Security: Social security is an important safety net for an individual or couple as they age. By waiting as long as possible before withdrawing benefits, an individual or couple can increase their ultimate return.

    3. Execute and Update an Estate Plan: An estate plan accomplishes many tasks. Not only does it provide for your loved ones after your death, but it can also utilize various tools to reduce the tax liability on your estate and your heirs.

    4. Consider Business Ownership for a Favorable Tax Rate: Ownership of assets by a business entity rather than an individual often means a lower tax liability on the assets. If you have a home business or simply a large amount of assets, consider forming a corporate entity to lower your tax liability.

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About an Angel: Estate Planning Lessons from Farrah Fawcett

Recently, a number of legal battles have stemmed from Farrah Fawcett’s death. Perhaps most notably, the University of Texas sued Fawcett’s partner Ryan O’Neal for taking Andy Warhol’s famed Farrah Fawcett painting from Fawcett’s home after her death. A recent article discusses what can be learned from the legal mess.

Farrah Fawcett
Farrah Fawcett (Photo credit: rocor)

Although most families do not own million dollar items such as Warhol paintings, it is not uncommon for families to get into similar legal fights concerning valuable or sentimental property left behind after a loved one dies. These fights are also common when a person gifts a piece of personal property before his or her death. Often, these gifts are inconsistent with the person’s estate planning documents, leading to a fight over whether the gift was valid.

In order to avoid similar fate, it is important to make your wishes concerning specific personal items exceedingly clear. If you are aware of a particular object that may cause fighting amongst your heirs, explain its disposition in your will. If you would like to give it away before your death, discuss the gift with your other heirs. If they understand your reasoning, they will be less likely to file suit after your death.


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Four Actions to Take Before Your Death

The end of a person’s life can be a difficult and confusing time. However, it doesn’t have to be. A recent article discusses four actions that every person should complete as they prepare for the next life. By completing these four actions, an individual can get the most out of his or her final days.

  1. Estate Planning: Estate planning is a process. Every person should execute his or her first estate plan upon becoming an adult. Importantly, however, a person should not neglect his or her estate plan. It is good practice for individuals to update their estate plans every three to five years, as well as after an important family event such as a birth, death, or marriage.

    Cover of "The Bucket List"
    Cover of The Bucket List
  2. Making Decisions for End of Life Care: The method through which a person wishes to leave this world is a highly personal decision. Unfortunately, many people don’t realize that they can take control over how they spend their final days. This control is gained through a living will and medical power of attorney.
  3. Bury the Hatchet: It is impossible to know when the end will be. While some people may have the time and notice necessary to atone and make amends with the individuals they have hurt or from whom they have otherwise become estranged, others will pass on suddenly without any warning. It is therefore important to take care to not carry old grudges or remain estranged from former friends or family members.
  4. Bucket List: The idea of a bucket list has been gaining in popularity since the 2007 movie of the same name. A bucket list is a list of things that an individual or couple would like to do before “kicking the bucket.” If you have any such desires, consider documenting them as the first step toward making them happen.
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Tax Avoidance Scheme for Wealthy: Move Assets Across State Borders

Not all states are created equal when it comes to income taxes. As part of their estate planning and asset protection schemes, wealthy Americans are taking advantage of this inequality by moving billions of dollars’ worth of assets to newly created trusts in states that do not impose income taxes. A recent article discusses this tax avoidance scheme.

Income Tax
(Photo credit: LendingMemo)

The scheme is similar to that employed by large corporations that move operations or assets overseas to avoid or reduce taxes. Popular states for tax avoidance include Delaware and Nevada. The legislatures for both states have passed laws in order to make their state more appealing for wealthy Americans considering moving their trusts. While Nevada has no state income tax, Delaware allows out-of-state beneficiaries to avoid income tax liability.

Estate planners shifted their focus to income tax avoidance after Congress significantly narrowed the field of individuals who will be responsible for paying federal estate tax. Currently, federal estate taxes only apply to those who have an estate with a total value of $5.34 million.

However, this practice is not without scrutiny. Officials in the state of New York are particularly concerned, as this practice drains an estimated $150 million per year from the state. Recently, a New York tax commission recommended laws that would limit the use of out-of-state trusts.

To evaluate your options in setting up a trust, please contact us at 732-521-9455.


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One Family’s Quest to Pass on the Business

For families that own small businesses, one vital part of estate planning is succession planning. Through succession planning, a business owner plans for the future of his or her business. A recent article discusses how Charlie Luck IV is planning to keep family-owned firm, Luck Stone, in the family.

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At only 53, Luck is in no hurry to pass the business on to his heirs. However, in planning ahead, Luck shows the forethought that all small business owners should have when it comes to succession planning. Luck is already considering which, if any, of his three children display the responsibility and interest necessary to run the business.

Although Luck’s biggest goal is to keep the business in the family, he knows that it will only work if he selects the right successor. As Luck explained, “One of the worst things in the world you can do is put any person in a company role, family or non-family, that does not align with who they are, with their skill set and their capacity…that is unethical.”

Statistics are not on the side of family businesses. Only three percent of family businesses in the same position as Luck Stone – moving from generation three to generation four – survive the transition.

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Can Only One Child be Given Power of Attorney?

For those parents who have multiple children, estate planning is often a matter of attempting to determine what distribution of powers will be perceived as ‘fair’. The reality is that different children have different interests and skills that make them appropriate for various estate planning responsibilities. A recent article discusses how to divvy up estate planning powers between your children.

Family Discussion
(Photo credit: LRJ53)

This decision may be an easy one. For example, if all but one of your children has moved out of state, it makes sense to name the local child as your power of attorney. However, if the local child is irresponsible or untrustworthy, somebody else should be named.

Sometimes it is easier to first consider which children should not serve as your power of attorney. Your power of attorney will be responsible for making financial and legal decisions on your behalf. Some children are simply not cut out for this task.

If you have more than one child who you believe could serve as your power of attorney, it is possible to draft several limited powers of attorney to spread out responsibility among your children. For example, you could assign one child to tend to your business affairs and another to handle your personal financial affairs.

For assistance in setting up a power of attorney, please contact us at 732-521-9455.

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Hotel Executive May Face Liability in Best Western Deaths

Damon Mallatere, president of Appalachian Hospitality Management, is in hot water after three hotel guests died of carbon monoxide poisoning. As a recent article explains, the business executive was recently indicted on charges of involuntary manslaughter.

English: Logo of Best Western International, I...
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Although investigators determined that the deaths were the result of several factors, Mallatere is the only person who has been charged. The deaths occurred when carbon monoxide from the hotel’s swimming pool rose out of a corroded exhaust pipe and into a hotel room. The first two deaths occurred in April and the third occurred in June.

Although it is uncommon for business executives to face criminal charges for injuries and deaths that occur on business property, this case should serve as a warning to all business men and women that accidents can happen, and they may be held responsible.

Competent performance is only the first line of defense against potential liability incurred through a business. Not only can competent performance reduce mistakes, but it lessens the likelihood that a businessperson will be held responsible for accidents. For those accidents that cannot be avoided or defended against, asset protection is a vital back-up plan. If individuals like Mallatere do not have asset protection plans in place, their personal property and belongings may be at risk.

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It’s Good Enough for Walmart: Tax Avoidance with a GRAT

Billionaire Sheldon Adelson is not alone in his disdain for estate taxes. As one of the world’s richest men, Adelson has the ability to hire top attorneys and advisors to employ financial and estate planning tools that ensure his estate pays little or no taxes. One of these tax avoidance tools is the Walton grantor retained annuity trust (“GRAT”). A recent article discusses the use of this popular trust.

Walmart exteriorcropped
(Photo credit: Wikipedia)

Named after Walmart heir Audrey Walton, the Walton GRAT is a popular tool used by the wealthy to avoid estate taxes. Essentially, a Walton GRAT works by rapidly transferring large quantities of stock into a trust fund that requires that the initial investment be returned after two years. If the stock gains value while in the Walton GRAT, the additional value will be left over in the trust. The trust can then transfer the remaining value to a third party without incurring gift tax liability.

Recognizing this loophole, the government sued Audrey Walton for using a similar scheme in 1993. The court ruled in Walton’s favor, thereby legitimizing and nicknaming the Walton GRAT. Since then, many wealthy individuals – such as Facebook chief executive Mark Zuckerberg and Goldman Sachs chief executive Lloyd Blankfein – have benefited from their own use of the Walton GRAT.

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Zip It: Put Your Plans on a USB Drive

We cannot predict when an accident or emergency is going to take place. All too often, hospitals and caretakers are unable to follow a person’s wishes for medical treatment – even if he or she had the correct documents in place – because these documents are not immediately available. In order to avoid this fate, a recent article discusses the option of keeping critical documents on a USB drive.

English: A Sandisk-brand USB thumb drive, SanD...
A Sandisk-brand USB thumb drive, SanDisk Cruzer Micro, 4GB. (Photo credit: Wikipedia)

A USB drive is a portable storage device that can be attached to a keychain or stored in a wallet. In order to view its contents, a user can simply plug it into any computer with a USB port. If your friends or family members are aware that you carry it with you, they can review its contents should they be required to make any medical or legal decisions on your behalf.

In order to protect yourself and your wishes in the event of an emergency, your USB drive should include a HIPAA release, living will, and medical power of attorney. It is not advisable to put a password on this drive because then the documents will not be easily accessible. However, do not store sensitive information on your USB drive, such as account numbers and passwords, unless it is password protected or encrypted.

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LGBT Estate Planning

Estate planning is especially important for those who put a large amount of time and energy into cultivating their wealth. Additionally, investors within the Lesbian, Gay, Bisexual and Transgender community have unique estate planning needs that should be addressed by an estate planning professional. According to a recent Spectrem Millionaire Corner Study, fewer LGBT investors have estate plans in place than their non-LGBT counterparts.

Rainbow flag (LGBT movement) LGBT (lesbian, ga...
LGBT (lesbian, gay, bisexual, transgender) Pride flag (Photo credit: Wikipedia)

The study revealed that only sixty-three percent of LGBT investors have executed a last will and testament, and only fifty-four percent of LGBT investors have executed a living will. Both of these documents are vital pieces of an estate plan, as a last will and testament allows a person to control the disposition of his or her assets, while a living will allows a person to control the end-of-life medical care he or she receives.

Although the percentages of LGBT investors with various estate planning documents rise with the wealth of the investor, they never reach the percentages of their non-LGBT counterparts. This is not only true for the execution of a last will and testament and living will, but for the creation of trusts as well. At the time the study was conducted, only eight percent of LGBT investors had an irrevocable trust in place.

Estate planning is particularly important for LGBT investors if they wish to have a comparable level of control over the disposition of their assets at death as their non-LGBT counterparts. Accordingly, LGBT investors are encouraged to seek able counsel to formulate an appropriate estate plan for their needs.

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