Estate Planning For Women (And the Men Who Love Them)

A fellow attorney (and award-winning journalist) Deborah Jacobs authored the book, “Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide”.  In her recent Forbes article titled “Estate Planning for Women (And the Men who Love Them)” she indicated the below question is a question every financially savvy woman should be able to answer. 

Question #3

Whom can you trust?

Advancements in medical science and care may enable us to live fuller, longer lives. But that also means more women are likely to suffer from a diminished mental state--a harsh reality that's difficult to accept. In case that happens, you should have a durable power of attorney, appointing a family member, friend or adviser as an agent to act on your behalf in financial and legal matters. Also make sure you have a health-care proxy, a separate document that authorizes an agent to make medical decisions on your behalf.

Choose carefully: A power of attorney, though necessary for all of us, is unfortunately also a license to steal. The best person to put in charge is a close family member--preferably one who lives nearby. Most financial advisers do not want this responsibility, nor is it cost effective to pay their hourly fee to handle routine tasks like paying bills. Naming joint agents, which is allowed only in some states, is one way to provide checks and balances. Or you can appoint another person, like an attorney, an accountant or a family friend, to supervise the arrangement. Before selecting an agent, it is important to determine whether that person is willing to take on the duties.

If you're nervous about giving the signed document to your designated agent right away, you could leave it with your lawyer with instructions on when to turn it over. In that case, remember to tell your agent whom to contact.

Or, instead of making the power of attorney effective from the moment you sign it, you can specify that it be activated by a specific event, for instance, if you become incompetent. The problem with this approach, known as a springing power, is that someone must decide when you have reached that state. Traditionally, this has required a medical opinion.

Questions like this one can often trigger even more questions in your mind.  Please accept my invitation to schedule a meeting where we can discuss this topic and others that might be relevant to your estate planning.  Give my office a call to set a meeting.

 

Do It Yourself Estate Planning

My post below regarding the Larsson estate and a recent article on Forbes.com regarding the pitfalls of do-it-yourself estate planning, The Case Against Do-It-Yourself Wills got me thinking about some additional comments.  I could not agree more with the overall point made in the article.  I do disagree with some of what was said and my disagreement is best expressed by the comments posted to that article by WealthCounsel principals Lew Dymond, Dennis Brislawn, and fellow WealthCounsel member Gregory Herman-Giddens.

The article talks about the Montana court case involving Charles Kuralt (remember he was the famous CBS broadcaster who labeled Montana's Beartooth Highway as the most beautiful drive in America) and his handwritten love letter to his mistress.  In a case that went to the Montana Supreme Court FOUR times, his handwritten love letter was ruled to have given his valuable Montana property to his mistress and to add insult to injury Kuralt's family had to pay the estate taxes due on the Montana property because the handwritten letter did not coordinate with the tax clause of his professionally drafted Will.

The article reminded me of another Montana case, The Estate of Dern, in which case Mary and Clifford Dern, who each had children from a different marriage, bought a trust package from a non-lawyer and also attempted to amend it themselves four times sometimes having proper signatures, sometimes not.  In the end, the children ended up suing Mary with the whole mess finally being resolved by the MT Supreme Court.  I think Justice Nelson in that case summed up the whole do-it-yourself thing as best as I've ever read.   He said:

Given the facts of this case, it is appropriate to make a further observation. If nothing else, our decision here should serve as a warning of the pitfalls of the "canned," "fill in the blanks," "one size fits all" trust instruments that are increasingly being sold to unsuspecting members of the public, particularly senior citizens, by salesmen, many of whom have no professional qualifications whatsoever and some of whom are little better than scam artists. ... In truth, few areas of the law are more technical, complicated and prone to financial disaster than estate planning and trusts, nor more demanding of the sort of individually tailored advice and assistance that can best be obtained from a competent attorney and tax professional. This case, unfortunately, proves that point.  [my emphasis added]

Don't fall prey to the 2011 "Dirty Dozen" tax scams

The IRS has identified the "Dirty Dozen" tax scams of 2011.  Participating in or falling victim to them can result in real harm to your pocketbook and your freedom.  My WealthCounsel colleague, Scott Makuakane, practices in Hawaii and he recently posted five of the Dirty Dozen.  He noted that he did not list them in any particular ranking of "dirtiness":

Hiding income offshore

People used to be able to get away with this because of the IRS' former inability to track offshore accounts.  Things have changed, and penalties have been increased.  Any tax strategy that requires secrecy as an element for success is highly suspect and probably should be avoided. 

Identity theft and "phishing"

It is absolutely critical to protect  your personal information.  All an identity thief needs are your name, birthdate, and social security number to make your life a living hell.  Watch out whenever anyone asks for those bits of information, and protect yourself by shredding documents that may contain sensitive information about you before you discard them.  Also beware that identity thieves are out there trying to gather your personal information any way they can--through email, by posing as government personnel, by spyware programs that can steal passwords from your computer, and a variety of other nefarious means.

Return preparer fraud

Be careful who you trust with preparing your returns.  If you have a fairly complicated return, it would behoove you to work with a CPA.  In any event, be sure to work with trustworthy professionals in whatever you do.

False or misleading forms

Some folks claim refunds to which they know they are not entitled.  Obvious no-no.  Don't file a return that does not pass the smell test.

Frivolous arguments

People sometimes make the darndest arguments.  Here is one that will land you in the pokey.  Premise 1:  there are ample declarations by the IRS in a variety of publications that our income tax system is "voluntary."  Premise 2:  I have the right to opt out of any "voluntary" income tax system.  Conclusion:  by golly, I will opt out of the U.S. income tax system and there is nothing anybody can do to me if I do. 

Please don't get caught up in any "strategy" that would seem to enable you to evade taxes.  Tax avoidance or minimization through recognized legitimate means (such as deductions for charitable contributions and mortgage interest) is good stewardship.  Tax evasion is a crime, and it will eventually catch up with you.

You can check out the rest of the "Dirty Dozen" on the IRS website.  For some information on legitimate approaches to estate planning, please contact me and we discuss the legal path offering confidence in your estate planning.