After years of work and debate, Massachusetts is about to begin implementation of its new Uniform Probate Code (“UPC”). Part of the UPC will become effective next week on July 1, 2009 and the remaining provisions will go into effect on July 1, 2011.
The biggest change for now will be that guardianships and conservatorships will be split and require separate filings and separate plans for implementation. A new limited guardianship and ability to file petition for a single financial transaction without the need for a conservator will also go into effect on July 1. Since this is new, it is still a bit unclear how useful some of these provisions will be, but some commentators believe they could provide a valuable alternative to a full conservator process.
There is also a change in the language and certain definitions used for these proceedings. A guardianship will address the personal needs of an “incapacitated person” while a conservatorship will focus on the assets of a “protected person.” One of the other language changes was the definition of “ward.” Wards will now refer only to minors.
There are also some new rules concerning Powers of Attorney that will be effective on July 1, 2009. In the past, people may have had problems with various institutions questioning the validity of a Power of Attorney if it was older than three or five years. The UPC now requires any properly executed Power of Attorney to be honored regardless of age. It also provides statutory remedies for damages caused by a third party’s refusal to accept an otherwise valid Power of Attorney. It will take some time for businesses and other institutions to recognize these new rules.
Another element with the new rules is that in the past there has often been a waived sureties on any type of bond when initiating a guardianship or conservatorship proceeding. That is no longer the case. You will be required to have sureties unless you specifically waive them in your Power of Attorney. It is suggested that anyone holding Powers of Attorney consider updating them to allow this waiver. It could be a significant savings each year to not have posted any type of bond. Our clients will automatically receive the new updated Powers of Attorney if they are participating in our Annual Client Maintenance Program.
As always, if we can help you with any of these matters, please feel free to contact us.
Scott E. Squillace, Esq.
Boston Estate Planning Attorney
Friday, June 26, 2009
Thursday, June 25, 2009
New Website Released
We are proud to announce our new website: www.squillace-law.com
You can also check out our new video on the right.
You can also check out our new video on the right.
Sunday, June 21, 2009
Update on NH and RI Estate Tax
It looks like most of the NH papers now agree, a NH Estate Tax is on hold. Several new taxes were thrown out, and instead, the legislature will raise user fees. It also appears the proposed capital gains tax will not be approved.
A legislative committee in Rhode Island has proposed raising the estate tax exemption in Rhode Island from $675,000 to $850,000 and index it to inflation. Stay tuned as this is just the first step in a very long process. (By the way- a proposed changes has also been made to tax capital gains at normal income rates.)
A legislative committee in Rhode Island has proposed raising the estate tax exemption in Rhode Island from $675,000 to $850,000 and index it to inflation. Stay tuned as this is just the first step in a very long process. (By the way- a proposed changes has also been made to tax capital gains at normal income rates.)
Wednesday, June 17, 2009
Probate and Passwords
From Attorney Scott E. Squillace
We attempt to provide considerable information on our webpage (www.squillace-law.com) concerning probate and trust administration. We describe the process, court proceedings, etc. There are, however, some important practical issues that people run in to when probating an estate or settling a trust. These issues are not unique to Boston or Massachusetts. We would like to highlight some of these for you in this posting.
One of the challenges we see more and more has to do with electronic passwords. If you bank on-line, pay bills on-line, have automatic drafts, on-line savings account, or any other type of electronic payments, your executor and/or trustee could run into problems.
If the account is in the trust’s name, the successor trustee could step in and have automatic withdrawals stopped as long as the payments were made from the account. The challenge appears when the payments are set up through the credit card company or on an automatic withdraw. The only way to know there is a withdrawal is to wait and see if it happens. If it is not a trust account, your executor or successor trustee would have to wait months to access the account (assuming you were the sole owner).
While everyone is nervous about secrecy of passwords, and they should be, it does create a probate if you pass away unexpectedly.
Of course, before you embark on any suggestions contained in this posting you should consult with an estate planning attorney for the pros and cons of each suggestion.
To help alleviate the problem created by electronic passwords, you could:
1. Put the cash account into the name of your trust- could be a hassle, but a successor trustee can step in immediately. May require you to close the account and open a new one.
2. Keep a password list in safe place- let your loved ones know you have a password list and that it is stored in safe place. You could store it in a home safe (assuming someone else has the code to get in) or a safety deposit box (again, hoping that someone else’s name is on the box to have access after passing). Or, better yet – give a copy to your estate planning attorney for them to keep in your file at a safe location in their office and be sure to keep it UPDATED when you update your estate plans annually.
If you need help with a probate matter, estate planning, or family business, please do not hesitate to contact us at (617) 716-0300 or info@squillace-law.com.
We attempt to provide considerable information on our webpage (www.squillace-law.com) concerning probate and trust administration. We describe the process, court proceedings, etc. There are, however, some important practical issues that people run in to when probating an estate or settling a trust. These issues are not unique to Boston or Massachusetts. We would like to highlight some of these for you in this posting.
One of the challenges we see more and more has to do with electronic passwords. If you bank on-line, pay bills on-line, have automatic drafts, on-line savings account, or any other type of electronic payments, your executor and/or trustee could run into problems.
If the account is in the trust’s name, the successor trustee could step in and have automatic withdrawals stopped as long as the payments were made from the account. The challenge appears when the payments are set up through the credit card company or on an automatic withdraw. The only way to know there is a withdrawal is to wait and see if it happens. If it is not a trust account, your executor or successor trustee would have to wait months to access the account (assuming you were the sole owner).
While everyone is nervous about secrecy of passwords, and they should be, it does create a probate if you pass away unexpectedly.
Of course, before you embark on any suggestions contained in this posting you should consult with an estate planning attorney for the pros and cons of each suggestion.
To help alleviate the problem created by electronic passwords, you could:
1. Put the cash account into the name of your trust- could be a hassle, but a successor trustee can step in immediately. May require you to close the account and open a new one.
2. Keep a password list in safe place- let your loved ones know you have a password list and that it is stored in safe place. You could store it in a home safe (assuming someone else has the code to get in) or a safety deposit box (again, hoping that someone else’s name is on the box to have access after passing). Or, better yet – give a copy to your estate planning attorney for them to keep in your file at a safe location in their office and be sure to keep it UPDATED when you update your estate plans annually.
If you need help with a probate matter, estate planning, or family business, please do not hesitate to contact us at (617) 716-0300 or info@squillace-law.com.
Monday, June 15, 2009
Fees, taxes eyed to balance state's books
New Hampshire Legislature looks to 8% Estate Transfer Tax on estates larger that $2,000.000. Stay tuned on the budget details that should be passed by July 1, 2009.
Foster's Daily Democrat
By: Adam D. Kraus
CONCORD — Maybe you're a smoker, or every so often enjoy a cheap cigar, a meal at your favorite restaurant and, for whatever reason, need a copy of your driver's license or vehicle registration.
It's going to cost you more — if the New Hampshire Legislature agrees on a budget that includes some form of the tax and fee increases approved by the House and Senate.
The Senate wants to increase the $1.33 tax on cigarettes by 45 cents, while the House has eyed 35 cents. The proposals would bring in between $56 million and $66 million over the biennium for the general and educational trust funds.
Both houses agree on taxing cigars and a 30 percent hike to the 19 percent tax on the wholesale price of other tobacco products, with the measure bringing in $6 million over two years for the funds.
Representatives and senators back a .75 percent increase in the 8 percent rooms and meals tax, which would bring in as much as $40 million over two years.
The budget process remains very fluid, those involved stress, so any proposal can change up until both chambers reach agreement, which could come this week.
Neither chamber is behind a sales or income tax, a position that is the backbone of the state's cherished low tax status.
New Hampshire government is heavily dependent on property taxes, but the state's overall tax burden, estimated at 7.6 percent of income, has ranked among the nation's lowest in nearly every year of the past three decades, according to the nonpartisan Tax Foundation in Washington, D.C.
The budget contains proposals to tax capital gains and estate transfers, but the N.H. Center for Public Policy Studies says the state won't lose its "low tax, low fee" advantage.
"Every other state in the country is in the same boat we're in" because of the recession, said Dennis Delay, the center's deputy director. Just about every state is eyeing revenue enhancers in hopes of closing budget shortfalls that average between 10 to 15 percent, he said.
Gov. John Lynch and lawmakers are seeking consensus on a two-year budget, which kicks in July 1, as they try to close what The Associated Press reported last week is a $650 million revenue gap. The shortfall is in the $3.2 billion general fund portion of the budget, while the total spending package is closer to $11.6 billion with federal and other funds included.
Economic slowdowns tend to ratchet up tax burdens, Delay said.
And it appears few, if any, Granite Staters will escape the pain this time around, according to a compilation of some of the proposed tax and fee increases that passed each chamber.
A slew of changes to motor vehicle-related items could be on tap, including:
— A $4 increase for electronic motor vehicle record requests and a $7 hike for others so it costs $8 and $12, respectively;
— Adding $5 to the $10 fee for certified copies of registrations, licenses or driving records;
— Increasing the cost of getting a vanity plate by $15 so it costs $40, with a similar increase to the service fee;
— Adding $10 to driver's license fees, $15 to motor vehicle registrations, with a $15 surcharge for vehicles more than 8,000 pounds, and increasing motorcycle registrations by $10.
The Senate version includes a 75-cent jump on inspection stickers, from $2.50 to $3.25, while the House likes a 40-cent change.
Elsewhere, the $150 charge for the Department of Environmental Services to review subdivision plans and site plan inspections could go up by $150, and the $140 charge for review of sewage or waste disposal plans could go up to $300.
Courts would be able to increase the penalty assessment fee by 4 percentage points, making it 24 percent, and the Department of Safety will be able to charge $100 for the annulment of criminal records.
Plus, boat registration fees are set to double; they currently range from $12 to $46 depending on the boat's size. Registration, agent, ownership transfer and licensing fees would also rise.
It would also cost someone from out of state $80 more to carry a concealed weapon under the Senate plan.
The House and Senate disagree on major areas.
Whereas the Senate's budget relies on more than $200 million in projected revenue from expanded gambling, the House proposal envisions a 10 percent tax on gambling winnings, a 5 percent capital gains and an 8 percent tax on transfers of estates greater than $2 million. The estate tax is projected to collect $10 million.
Proponents say more than 90 percent of those impacted by taxing capital gains — the sales of assets like stocks, businesses and real estate investments — earn $200,000 or more. The measure also increases the exemption for the interest and dividends tax from $2,400 to $5,000.
Lynch is set to present a plan today for $150 million in new revenue, including from a mortgage refinancing tax, that could do away with gambling and the capital gains tax, the governor told the AP.
The Senate has also gotten behind the temporary suspension of the business enterprise tax credit, which is used against the state's business profits tax. That could bring in $40 million.
The House opted to freeze the insurance premium tax, which lawmakers agreed to begin lowering four years ago. That could bring in $5.1 million.
Elsewhere, the House also got behind a 15-cent hike in the gas tax over three years while the Senate is on board with Lynch's plan to modify the E-ZPass discount program and restructure the funding relationship between highways and turnpikes.
The deficit exists despite deeps cuts throughout the budget, particularly to health and human services, said Sen. Jackie Cilley, D-Barrington. And further cuts are challenged by the need to meet residents' rising needs, maintain infrastructure and funding tied to federal stimulus dollars, she said
"We have a choice of building a budget that tries to address the needs of the people of this state or willy-nilly cut this budget in a way that's going to send these problems back in bigger droves to the community," she said.
Foster's Daily Democrat
By: Adam D. Kraus
CONCORD — Maybe you're a smoker, or every so often enjoy a cheap cigar, a meal at your favorite restaurant and, for whatever reason, need a copy of your driver's license or vehicle registration.
It's going to cost you more — if the New Hampshire Legislature agrees on a budget that includes some form of the tax and fee increases approved by the House and Senate.
The Senate wants to increase the $1.33 tax on cigarettes by 45 cents, while the House has eyed 35 cents. The proposals would bring in between $56 million and $66 million over the biennium for the general and educational trust funds.
Both houses agree on taxing cigars and a 30 percent hike to the 19 percent tax on the wholesale price of other tobacco products, with the measure bringing in $6 million over two years for the funds.
Representatives and senators back a .75 percent increase in the 8 percent rooms and meals tax, which would bring in as much as $40 million over two years.
The budget process remains very fluid, those involved stress, so any proposal can change up until both chambers reach agreement, which could come this week.
Neither chamber is behind a sales or income tax, a position that is the backbone of the state's cherished low tax status.
New Hampshire government is heavily dependent on property taxes, but the state's overall tax burden, estimated at 7.6 percent of income, has ranked among the nation's lowest in nearly every year of the past three decades, according to the nonpartisan Tax Foundation in Washington, D.C.
The budget contains proposals to tax capital gains and estate transfers, but the N.H. Center for Public Policy Studies says the state won't lose its "low tax, low fee" advantage.
"Every other state in the country is in the same boat we're in" because of the recession, said Dennis Delay, the center's deputy director. Just about every state is eyeing revenue enhancers in hopes of closing budget shortfalls that average between 10 to 15 percent, he said.
Gov. John Lynch and lawmakers are seeking consensus on a two-year budget, which kicks in July 1, as they try to close what The Associated Press reported last week is a $650 million revenue gap. The shortfall is in the $3.2 billion general fund portion of the budget, while the total spending package is closer to $11.6 billion with federal and other funds included.
Economic slowdowns tend to ratchet up tax burdens, Delay said.
And it appears few, if any, Granite Staters will escape the pain this time around, according to a compilation of some of the proposed tax and fee increases that passed each chamber.
A slew of changes to motor vehicle-related items could be on tap, including:
— A $4 increase for electronic motor vehicle record requests and a $7 hike for others so it costs $8 and $12, respectively;
— Adding $5 to the $10 fee for certified copies of registrations, licenses or driving records;
— Increasing the cost of getting a vanity plate by $15 so it costs $40, with a similar increase to the service fee;
— Adding $10 to driver's license fees, $15 to motor vehicle registrations, with a $15 surcharge for vehicles more than 8,000 pounds, and increasing motorcycle registrations by $10.
The Senate version includes a 75-cent jump on inspection stickers, from $2.50 to $3.25, while the House likes a 40-cent change.
Elsewhere, the $150 charge for the Department of Environmental Services to review subdivision plans and site plan inspections could go up by $150, and the $140 charge for review of sewage or waste disposal plans could go up to $300.
Courts would be able to increase the penalty assessment fee by 4 percentage points, making it 24 percent, and the Department of Safety will be able to charge $100 for the annulment of criminal records.
Plus, boat registration fees are set to double; they currently range from $12 to $46 depending on the boat's size. Registration, agent, ownership transfer and licensing fees would also rise.
It would also cost someone from out of state $80 more to carry a concealed weapon under the Senate plan.
The House and Senate disagree on major areas.
Whereas the Senate's budget relies on more than $200 million in projected revenue from expanded gambling, the House proposal envisions a 10 percent tax on gambling winnings, a 5 percent capital gains and an 8 percent tax on transfers of estates greater than $2 million. The estate tax is projected to collect $10 million.
Proponents say more than 90 percent of those impacted by taxing capital gains — the sales of assets like stocks, businesses and real estate investments — earn $200,000 or more. The measure also increases the exemption for the interest and dividends tax from $2,400 to $5,000.
Lynch is set to present a plan today for $150 million in new revenue, including from a mortgage refinancing tax, that could do away with gambling and the capital gains tax, the governor told the AP.
The Senate has also gotten behind the temporary suspension of the business enterprise tax credit, which is used against the state's business profits tax. That could bring in $40 million.
The House opted to freeze the insurance premium tax, which lawmakers agreed to begin lowering four years ago. That could bring in $5.1 million.
Elsewhere, the House also got behind a 15-cent hike in the gas tax over three years while the Senate is on board with Lynch's plan to modify the E-ZPass discount program and restructure the funding relationship between highways and turnpikes.
The deficit exists despite deeps cuts throughout the budget, particularly to health and human services, said Sen. Jackie Cilley, D-Barrington. And further cuts are challenged by the need to meet residents' rising needs, maintain infrastructure and funding tied to federal stimulus dollars, she said
"We have a choice of building a budget that tries to address the needs of the people of this state or willy-nilly cut this budget in a way that's going to send these problems back in bigger droves to the community," she said.
Wednesday, June 10, 2009
State receives $13 million from single estate
Here is a reminder about state estate taxes. While this article is from Vermont, don’t forget that Massachusetts imposes a significant estate tax for estates valued above $1 million (which can include Life Insurance!). In these current economic times, we do not expect that any state to eliminate or even reduce this revenue source. Careful planning, however, can reduce or eliminate this tax for your heirs. The choice is often whether you will engage in ‘voluntary philanthropy’ (like naming a charity as a beneficiary) or ‘involuntary philanthropy’ – meaning the State will take a chunk. Careful planning can help make these choices.
Burlington Free Press
By Terri Hallenbeck, Free Press Staff Writer
MONTPELIER — As lawmakers were stretching the last nickels and dimes to pull together the 2010 state budget last week, an unlikely thing happened: A $13 million windfall blew through the door.
That’s how much the state received in estate tax from one person’s estate last month.
“That’s a very unusual, large, one-time estate tax,” said Tax Commissioner Tom Pelham. He is precluded by law from identifying the estate’s owner. Somewhere in Vermont, someone died last year who was worth something on the order of $80 million to $100 million.
For the state, the $13 million in unexpected revenue is like an inheritance from a long lost relative and couldn’t have come at a better time. Various revenue that fund state spending have shrunk in the last year because of the ailing economy, forcing program cuts and layoffs.
As they put the last pieces of the 2010 budget together, legislators found the estate-tax money a welcome bandage to stop the bleeding. They earmarked $1.5 million of it for college scholarships that would otherwise have gone unfunded. The rest will be used as insurance in case revenue takes another dive in June. If the revenue doesn’t materialize, the money could help spare various state special funds from being cut and could give the state the first step out of a $67 million hole in the 2011 budget.
Because of that one estate, estate tax revenue was up $13.6 million above what economists had predicted in May, said state Finance Commissioner Jim Reardon. Other revenue continued to lag, he said, and the estate tax windfall left state $11.6 million over the expected General Fund revenue mark.
“Relying on a large settlement to balance your books is not the greatest position to be in,” he said, “but a worse position is not to balance your books.”
Estate taxes of that size are rare, said Joseph Bilodeau, a certified public accountant with Bilodeau Wells & Co. in Essex Junction. He estimated that a person’s estate would have been worth about $80 million to yield a $13 million tax bill. Many people with such a sizeable estates donate at least a portion to charity, making it tax-free, Bilodeau said.
Reardon said the state’s economist estimated the estate could have been worth $100 million, depending on whether all the assets were held in Vermont.
Burlington Free Press
By Terri Hallenbeck, Free Press Staff Writer
MONTPELIER — As lawmakers were stretching the last nickels and dimes to pull together the 2010 state budget last week, an unlikely thing happened: A $13 million windfall blew through the door.
That’s how much the state received in estate tax from one person’s estate last month.
“That’s a very unusual, large, one-time estate tax,” said Tax Commissioner Tom Pelham. He is precluded by law from identifying the estate’s owner. Somewhere in Vermont, someone died last year who was worth something on the order of $80 million to $100 million.
For the state, the $13 million in unexpected revenue is like an inheritance from a long lost relative and couldn’t have come at a better time. Various revenue that fund state spending have shrunk in the last year because of the ailing economy, forcing program cuts and layoffs.
As they put the last pieces of the 2010 budget together, legislators found the estate-tax money a welcome bandage to stop the bleeding. They earmarked $1.5 million of it for college scholarships that would otherwise have gone unfunded. The rest will be used as insurance in case revenue takes another dive in June. If the revenue doesn’t materialize, the money could help spare various state special funds from being cut and could give the state the first step out of a $67 million hole in the 2011 budget.
Because of that one estate, estate tax revenue was up $13.6 million above what economists had predicted in May, said state Finance Commissioner Jim Reardon. Other revenue continued to lag, he said, and the estate tax windfall left state $11.6 million over the expected General Fund revenue mark.
“Relying on a large settlement to balance your books is not the greatest position to be in,” he said, “but a worse position is not to balance your books.”
Estate taxes of that size are rare, said Joseph Bilodeau, a certified public accountant with Bilodeau Wells & Co. in Essex Junction. He estimated that a person’s estate would have been worth about $80 million to yield a $13 million tax bill. Many people with such a sizeable estates donate at least a portion to charity, making it tax-free, Bilodeau said.
Reardon said the state’s economist estimated the estate could have been worth $100 million, depending on whether all the assets were held in Vermont.
More wealthy Americans donating through foundations
We work with The Boston Foundation that also has donor advised funds. There are, of course, other options for charitable giving, some which can also produce an income for you during your lifetime. We are happy to discuss charitable giving with new estate planning clients or with clients that already have estate plans that may want to add a charitable giving compenent.
The Bradenton Herald
By Grace Gagliano
BRADENTON — The charitable giving of wealthy Americans like Warren Buffett and Bill Gates has called attention to philanthropy as a way to give back to the community while you are still living.
Instead of leaving behind large estates that are taxed heavily before distributed, the wealthy can give through charitable organizations and protect their portfolios from government taxes.
The current estate tax, often known as the death tax, charges all estates worth $3.5 million or more at a 45 percent rate.
A tax-cut package enacted in 2001 called for the estate tax to be phased out over 10 years. The tax cut expires next year if Congress doesn’t act. However, an estate tax repeal is expected to go before Congress soon. It would reduce the amount of the exception from $3.5 million for individuals to $600,000 with a top tax rate of 55 percent after 2009. Estates valued at more than $1.2 million would be subject to estate taxes.
The benefit to charitable giving is tax write-offs that range between 30 percent and 50 percent of the actual amount donated depending upon a person’s adjusted gross income and the charity receiving the donation, financial advisers say. While donors are giving away a portion of their wealth, tax benefits and giving back to their community can make it worthwhile.
Tom Kubik, president of Kubik Financial Services, advises his clients to review estate plans every five to seven years to assure they are kept up to date with changes in the estate laws. He also wants them to avoid probate, a process that takes nine to 12 months during which the wealth shrinks by 6 percent, the legal fee charged to settle the estate.
“In estate planning you have two choices,” Kubik said. “You can do nothing and let the state of Florida and IRS decide what’s left over after you die. Or you can set it up in a will or a trust that a certain amount of your estate is going to go to your church, the Salvation Army, Red Cross or wherever. That’s a decision for your estate and at least that amount is not going to be subject to the estate tax.”
People don’t have to postpone charitable giving until after death, experts say.
Jim Brennan, president of the Sarasota division of GenSpring, an asset management firm, guides clients to help them manage charitable giving.
The initial step is a capital sufficiency analysis in which Brennan helps clients determine how much capital they’ll need to achieve life goals and whether they can simultaneously afford charitable giving.
“Assuming the answer is yes they’re able to (donate), we sit down and walk them through their goals through philanthropy,” Brennan said. “We look at why do you want to give, is it compassion, legacy, honoring loved ones or tax motivated.”
By completing a survey that helps determine a client’s basis for charitable giving, Brennan is able to build a mission statement for the family that includes how much control clients want of their financial gifts and what charities they want to support.
Sarasota resident Jean Hendry went through an estate planning with Kubik years ago and decided she wanted to begin distributing her wealth to Mote Marine Laboratory. She started volunteering at the aquarium in 1984 after her husband died and about 10 years ago began giving contributions — some of which have been in the six figures.
And when Hendry, 84, dies, she will leave her home valued at $887,100 to Mote Marine.
“It’s been my pleasure to give to them,” Hendry said. “To me, it is just the satisfaction of giving to Mote now rather than me trying to invest it someplace. I can give to them and they can spend it now or as necessary.”
At the Manatee Community Foundation, Executive Director Marilyn Howard said tax savings are not the sole reason clients are setting up family or charitable funds.
“The economy is tough on everybody right now. It’s tough on profits and it’s making people feel, in some ways, as if they have less to be charitable with,” Howard said. “However, we still have some very, very generous people out there.”
The philanthropic organization manages 110 donor funds and 36 donor advised funds worth about $12.5 million and has distributed grants and scholarships over the past year totaling $842,556.
Setting up a fund at the Manatee Community Foundation starts with a consultation in which officials help clients determine what would be their most suitable fund: restricted, unrestricted, field of interest, donor advised, scholarship or agency endowment funds.
The donor advised fund allows a client to distribute charitable contributions and make recommendations about their fund while they are living.
“It’s like having your own small private foundation,” Howard said. “It’s one of our more popular funds because people want to take a much more active role in making decisions about where their charitable dollars go.”
Bob Firkins, owner of Firkins Chyrsler in Bradenton, set up a charitable fund with the Manatee Community Foundation about six years ago to support local charities. “You never know what the future holds,” Firkins said. “So it’s nice to put it away in good years so in years when they’re not as good it is already there.”
Bob Blalock, of the Bradenton law firm Blalock, Walters, Held & Johnson, PA and a board president for the Manatee Community Foundation, set up a family fund with the foundation.
Neither Firkins nor Blalock would say how much they contribute each year but their funds with the Manatee Community Foundation are classified as founders funds, which have a minimum donation of $25,000.
Money from the fund is distributed annually to local non-profits such as the Bishop Animal Shelter, Ringling Museum, United Way and the Anna Maria Island Community Center.
“There’s just so much need out there right now, you might as well distribute what you can while you’re here,” Blalock said.
Monday, June 8, 2009
The Bradenton Herald
By Grace Gagliano
BRADENTON — The charitable giving of wealthy Americans like Warren Buffett and Bill Gates has called attention to philanthropy as a way to give back to the community while you are still living.
Instead of leaving behind large estates that are taxed heavily before distributed, the wealthy can give through charitable organizations and protect their portfolios from government taxes.
The current estate tax, often known as the death tax, charges all estates worth $3.5 million or more at a 45 percent rate.
A tax-cut package enacted in 2001 called for the estate tax to be phased out over 10 years. The tax cut expires next year if Congress doesn’t act. However, an estate tax repeal is expected to go before Congress soon. It would reduce the amount of the exception from $3.5 million for individuals to $600,000 with a top tax rate of 55 percent after 2009. Estates valued at more than $1.2 million would be subject to estate taxes.
The benefit to charitable giving is tax write-offs that range between 30 percent and 50 percent of the actual amount donated depending upon a person’s adjusted gross income and the charity receiving the donation, financial advisers say. While donors are giving away a portion of their wealth, tax benefits and giving back to their community can make it worthwhile.
Tom Kubik, president of Kubik Financial Services, advises his clients to review estate plans every five to seven years to assure they are kept up to date with changes in the estate laws. He also wants them to avoid probate, a process that takes nine to 12 months during which the wealth shrinks by 6 percent, the legal fee charged to settle the estate.
“In estate planning you have two choices,” Kubik said. “You can do nothing and let the state of Florida and IRS decide what’s left over after you die. Or you can set it up in a will or a trust that a certain amount of your estate is going to go to your church, the Salvation Army, Red Cross or wherever. That’s a decision for your estate and at least that amount is not going to be subject to the estate tax.”
People don’t have to postpone charitable giving until after death, experts say.
Jim Brennan, president of the Sarasota division of GenSpring, an asset management firm, guides clients to help them manage charitable giving.
The initial step is a capital sufficiency analysis in which Brennan helps clients determine how much capital they’ll need to achieve life goals and whether they can simultaneously afford charitable giving.
“Assuming the answer is yes they’re able to (donate), we sit down and walk them through their goals through philanthropy,” Brennan said. “We look at why do you want to give, is it compassion, legacy, honoring loved ones or tax motivated.”
By completing a survey that helps determine a client’s basis for charitable giving, Brennan is able to build a mission statement for the family that includes how much control clients want of their financial gifts and what charities they want to support.
Sarasota resident Jean Hendry went through an estate planning with Kubik years ago and decided she wanted to begin distributing her wealth to Mote Marine Laboratory. She started volunteering at the aquarium in 1984 after her husband died and about 10 years ago began giving contributions — some of which have been in the six figures.
And when Hendry, 84, dies, she will leave her home valued at $887,100 to Mote Marine.
“It’s been my pleasure to give to them,” Hendry said. “To me, it is just the satisfaction of giving to Mote now rather than me trying to invest it someplace. I can give to them and they can spend it now or as necessary.”
At the Manatee Community Foundation, Executive Director Marilyn Howard said tax savings are not the sole reason clients are setting up family or charitable funds.
“The economy is tough on everybody right now. It’s tough on profits and it’s making people feel, in some ways, as if they have less to be charitable with,” Howard said. “However, we still have some very, very generous people out there.”
The philanthropic organization manages 110 donor funds and 36 donor advised funds worth about $12.5 million and has distributed grants and scholarships over the past year totaling $842,556.
Setting up a fund at the Manatee Community Foundation starts with a consultation in which officials help clients determine what would be their most suitable fund: restricted, unrestricted, field of interest, donor advised, scholarship or agency endowment funds.
The donor advised fund allows a client to distribute charitable contributions and make recommendations about their fund while they are living.
“It’s like having your own small private foundation,” Howard said. “It’s one of our more popular funds because people want to take a much more active role in making decisions about where their charitable dollars go.”
Bob Firkins, owner of Firkins Chyrsler in Bradenton, set up a charitable fund with the Manatee Community Foundation about six years ago to support local charities. “You never know what the future holds,” Firkins said. “So it’s nice to put it away in good years so in years when they’re not as good it is already there.”
Bob Blalock, of the Bradenton law firm Blalock, Walters, Held & Johnson, PA and a board president for the Manatee Community Foundation, set up a family fund with the foundation.
Neither Firkins nor Blalock would say how much they contribute each year but their funds with the Manatee Community Foundation are classified as founders funds, which have a minimum donation of $25,000.
Money from the fund is distributed annually to local non-profits such as the Bishop Animal Shelter, Ringling Museum, United Way and the Anna Maria Island Community Center.
“There’s just so much need out there right now, you might as well distribute what you can while you’re here,” Blalock said.
Monday, June 8, 2009
Monday, June 8, 2009
Deciding if Your Kid Is Trust-Worthy
Parenting is more than reading to your children or getting them to eat their vegetables. It's also about securing their financial future. One way to do that is by drafting a trust and naming a trustee. In this excerpt from her new book "The Wall Street Journal Financial Guidebook for New Parents," Stacey L. Bradford explains why parents may want to consider estate-planning tools beyond a will.
You don't need to be Bill Gates to consider setting up a trust for to manage your child's assets until he reaches 18 or 21, depending on the state.
That property guardian may be a complete stranger who won't understand your values. Perhaps more important, the guardian could add one more layer of bureaucracy to an already complicated situation. When your child needs money, the guardian may have to make a formal request that then goes through the court system. It can be a real headache for your kids to get funds when they need it, and it's not an arrangement that's always in their best interests.
One way around the court system is to set up a custodial account for your kids through your will. In that case, you get to name the custodian, and he decides how the money is spent. Once your son or daughter is legally considered an adult, he or she inherits the money outright. The problem with this setup is that your kid might blow through the money and have nothing left over for college or grad school.
For many parents, setting up a trust is a better alternative that allows them more control over how their money is spent once they're gone. If you have the means and want your child to go to private school, for example, include that in the trust document. A trust can also delay the age at which your kids get their hands on the money.
This is often the biggest selling point for parents. Most people, looking back, would probably agree that they didn't necessarily make the most responsible decisions about money when they were 18 or 21, a time of life when it may have seemed perfectly reasonable to rack up credit-card debt. Even delaying a few more years -- until, say, 25 -- makes the money more likely to be put toward, for example, education or a down payment on a house.
While setting up a trust is a bit more complicated than a custodial account -- it requires a lawyer's assistance, for one thing -- it also provides more financial security for your children and is therefore worth considering. Ideally, you should set up a trust when you draft your will. But you can always add a trust later as your estate gets more complicated or your assets grow. For most parents, a simple trust will do. For more advanced planning purposes, such as reducing estate taxes, you could consider other options, such as a marital bypass trust or a grantor-retained annuity trust.
Here are a few questions to ask yourself to determine if a trust is right for your family:
Do you anticipate leaving your children more than a modest sum of money? A trust may not be worth the effort if you think you'll only be leaving a child (or children) $100,000 or less. On the other hand, if you're leaving life insurance money to cover four years of school and you own a home, there's a good chance a trust would make sense for you.
Do you want to have some say in how your children's money is spent?
A trust allows you to restrict spending to basic support, including food, clothing, education and health care. This is something that can't be done with a custodial account. If the custodian is a soft touch, he could end up lavishing your child with designer jeans and a fancy car, leaving very little left for the college years. Even worse, if the custodian is also the guardian, he could start writing himself large "support" checks to help cover his other expenses.
Would you prefer that your children not inherit the money when they turn 18 or 21?
If you think giving a high-school senior a large sum of cash is a recipe for disaster, then you should consider a trust. The ability to delay inheritance was the main draw for drafting a trust for Laurie and Greg Wetzel, a New York City couple in their mid-30s with three small children. Should something happen to both of them, they decided, their kids will each receive half of their inheritance at age 30, and the remaining amount when they reach 35. "Your 20s are such a transitional time that we don't want our children to have significant financial decisions to make," Ms. Wetzel says.
Do you want the money to be used for a college education?
If you specifically bought life insurance so that there would be enough money to help fund college in the event of your death, then you'll definitely want to delay the age at which your kids inherit your money. Otherwise, your child could think a red Ferrari is a better investment than a crimson Harvard diploma.
Would you like your children to have recourse if their money is mismanaged?
One more benefit of a trust that you don't get with a custodial account is that a trust is a legal contract; the trustee has an obligation to follow your directions and act in a reasonable and prudent manner. If the beneficiary feels the trustee spent the money frivolously, he can demand an accounting, and can sue for reimbursement if the trustee acted improperly with the funds. It may be pretty tough to prove illegal or improper actions with a trust, but just the threat of a possible lawsuit can keep someone in line.Choosing a trustee. The trustee holds the purse strings, so don't delegate this job lightly. You need someone who is trustworthy, is good with money and has great attention to detail. In other words, don't choose your brother who has trouble remembering to pay his own bills.
Your trustee is going to be working with your guardian, so they had better get along. While they don't need to be best friends -- in fact, it's probably better if they aren't -- they also can't be archenemies. You want your trustee to be able to tell your guardian she can't use the money to buy your son a new sports car, but you also want your trustee to take your guardian's phone calls when she needs more money to pay for your son's braces.
Then there's the issue of naming a family member as your trustee. There's no general rule here, and many people prefer to name a sibling since there's no one in the world they trust more. Siblings also typically don't charge to perform the service. On the other hand, my husband and I chose a close family friend. In our case, we felt he would be less biased and more likely to follow through with our wishes without passing judgment on how we want our child's money spent.
You'll also face the debate over naming your children's guardian as the trustee. On one hand, it's rather convenient. The person raising your kids won't have to ask anyone for permission about how the money will be spent. But a division of power can be a safer route. Some estate-planning attorneys worry that having one person fill the dual role leads to a conflict of interest and the risk that the guardian could take money for herself.
If you have a lot of money -- more than a million dollars -- you may want to name a bank or a lawyer to act as trustee. An institution has a lot of experience handling accounts and taking care of all the investments and necessary tax paperwork. You could also offer your trustee the option to hire a bank and act as co-trustee or as an agent, so that he or she still has ultimate control. He or she would basically keep an eye on the bank. Just be aware that a bank's services aren't free. They typically charge an annual fee of 1% to 2% of the principal.Drafting the trust.
Now that you've gotten this far, it's time to hire a lawyer, or use the same one who drafted your will. An attorney may ask you to sign standard forms, but don't feel locked in; you can personalize the trust to better meet your family's needs.
As much as trusts are about maintaining some say in how your money is spent, the language in the document should be vague enough to allow your trustee some leeway should your child's needs change or should something come up that you couldn't have anticipated.
Finally, you'll want to write your trustee a letter expressing your wishes for how you want the money spent on your children. Some parents go so far as to say that some of the money can be used to help raise the living standard of the other kids they may be living with, so everyone feels equal. Of course, it's up to the trustee to crunch the numbers and make sure there is still money left over to meet your main goals.
Adapted from 'The Wall Street Journal Financial Guidebook for New Parents,' by Stacey L. Bradford. Copyright 2009 by Dow Jones & Co. Inc. Published by Three Rivers Press, an imprint of the Crown Publishing Group.
You don't need to be Bill Gates to consider setting up a trust for to manage your child's assets until he reaches 18 or 21, depending on the state.
That property guardian may be a complete stranger who won't understand your values. Perhaps more important, the guardian could add one more layer of bureaucracy to an already complicated situation. When your child needs money, the guardian may have to make a formal request that then goes through the court system. It can be a real headache for your kids to get funds when they need it, and it's not an arrangement that's always in their best interests.
One way around the court system is to set up a custodial account for your kids through your will. In that case, you get to name the custodian, and he decides how the money is spent. Once your son or daughter is legally considered an adult, he or she inherits the money outright. The problem with this setup is that your kid might blow through the money and have nothing left over for college or grad school.
For many parents, setting up a trust is a better alternative that allows them more control over how their money is spent once they're gone. If you have the means and want your child to go to private school, for example, include that in the trust document. A trust can also delay the age at which your kids get their hands on the money.
This is often the biggest selling point for parents. Most people, looking back, would probably agree that they didn't necessarily make the most responsible decisions about money when they were 18 or 21, a time of life when it may have seemed perfectly reasonable to rack up credit-card debt. Even delaying a few more years -- until, say, 25 -- makes the money more likely to be put toward, for example, education or a down payment on a house.
While setting up a trust is a bit more complicated than a custodial account -- it requires a lawyer's assistance, for one thing -- it also provides more financial security for your children and is therefore worth considering. Ideally, you should set up a trust when you draft your will. But you can always add a trust later as your estate gets more complicated or your assets grow. For most parents, a simple trust will do. For more advanced planning purposes, such as reducing estate taxes, you could consider other options, such as a marital bypass trust or a grantor-retained annuity trust.
Here are a few questions to ask yourself to determine if a trust is right for your family:
Do you anticipate leaving your children more than a modest sum of money? A trust may not be worth the effort if you think you'll only be leaving a child (or children) $100,000 or less. On the other hand, if you're leaving life insurance money to cover four years of school and you own a home, there's a good chance a trust would make sense for you.
Do you want to have some say in how your children's money is spent?
A trust allows you to restrict spending to basic support, including food, clothing, education and health care. This is something that can't be done with a custodial account. If the custodian is a soft touch, he could end up lavishing your child with designer jeans and a fancy car, leaving very little left for the college years. Even worse, if the custodian is also the guardian, he could start writing himself large "support" checks to help cover his other expenses.
Would you prefer that your children not inherit the money when they turn 18 or 21?
If you think giving a high-school senior a large sum of cash is a recipe for disaster, then you should consider a trust. The ability to delay inheritance was the main draw for drafting a trust for Laurie and Greg Wetzel, a New York City couple in their mid-30s with three small children. Should something happen to both of them, they decided, their kids will each receive half of their inheritance at age 30, and the remaining amount when they reach 35. "Your 20s are such a transitional time that we don't want our children to have significant financial decisions to make," Ms. Wetzel says.
Do you want the money to be used for a college education?
If you specifically bought life insurance so that there would be enough money to help fund college in the event of your death, then you'll definitely want to delay the age at which your kids inherit your money. Otherwise, your child could think a red Ferrari is a better investment than a crimson Harvard diploma.
Would you like your children to have recourse if their money is mismanaged?
One more benefit of a trust that you don't get with a custodial account is that a trust is a legal contract; the trustee has an obligation to follow your directions and act in a reasonable and prudent manner. If the beneficiary feels the trustee spent the money frivolously, he can demand an accounting, and can sue for reimbursement if the trustee acted improperly with the funds. It may be pretty tough to prove illegal or improper actions with a trust, but just the threat of a possible lawsuit can keep someone in line.Choosing a trustee. The trustee holds the purse strings, so don't delegate this job lightly. You need someone who is trustworthy, is good with money and has great attention to detail. In other words, don't choose your brother who has trouble remembering to pay his own bills.
Your trustee is going to be working with your guardian, so they had better get along. While they don't need to be best friends -- in fact, it's probably better if they aren't -- they also can't be archenemies. You want your trustee to be able to tell your guardian she can't use the money to buy your son a new sports car, but you also want your trustee to take your guardian's phone calls when she needs more money to pay for your son's braces.
Then there's the issue of naming a family member as your trustee. There's no general rule here, and many people prefer to name a sibling since there's no one in the world they trust more. Siblings also typically don't charge to perform the service. On the other hand, my husband and I chose a close family friend. In our case, we felt he would be less biased and more likely to follow through with our wishes without passing judgment on how we want our child's money spent.
You'll also face the debate over naming your children's guardian as the trustee. On one hand, it's rather convenient. The person raising your kids won't have to ask anyone for permission about how the money will be spent. But a division of power can be a safer route. Some estate-planning attorneys worry that having one person fill the dual role leads to a conflict of interest and the risk that the guardian could take money for herself.
If you have a lot of money -- more than a million dollars -- you may want to name a bank or a lawyer to act as trustee. An institution has a lot of experience handling accounts and taking care of all the investments and necessary tax paperwork. You could also offer your trustee the option to hire a bank and act as co-trustee or as an agent, so that he or she still has ultimate control. He or she would basically keep an eye on the bank. Just be aware that a bank's services aren't free. They typically charge an annual fee of 1% to 2% of the principal.Drafting the trust.
Now that you've gotten this far, it's time to hire a lawyer, or use the same one who drafted your will. An attorney may ask you to sign standard forms, but don't feel locked in; you can personalize the trust to better meet your family's needs.
As much as trusts are about maintaining some say in how your money is spent, the language in the document should be vague enough to allow your trustee some leeway should your child's needs change or should something come up that you couldn't have anticipated.
Finally, you'll want to write your trustee a letter expressing your wishes for how you want the money spent on your children. Some parents go so far as to say that some of the money can be used to help raise the living standard of the other kids they may be living with, so everyone feels equal. Of course, it's up to the trustee to crunch the numbers and make sure there is still money left over to meet your main goals.
Adapted from 'The Wall Street Journal Financial Guidebook for New Parents,' by Stacey L. Bradford. Copyright 2009 by Dow Jones & Co. Inc. Published by Three Rivers Press, an imprint of the Crown Publishing Group.
Thursday, June 4, 2009
Bill would protect animals when owners die
Good news for our family and friends with furry loved ones in Connecticut.
By Ken Dixon
Connecticut Post
HARTFORD -- Animal lovers will be able to establish trusts for their pets under legislation that won unanimous approval in the House Tuesday morning.
The 142-0 vote sends the legislation to Gov. M. Jodi Rell for final action.
If signed into law, it would allow for pet owners to care for their animals after they die or if they become incapacitated.
Lawmakers on both sides of the aisle praised the legislation for giving pet owners a process under which they can ensure their animals will be treated properly.
Under the bill, trust protectors would be established for animals by Superior Court judges. If the issue comes up during hearings in Probate Court on an estate or guardianship, it would stay in that court.
Rep. Michael P. Lawlor, D-East Haven, co-chairman of the Judiciary Committee, said the bill has been three years in the making. "This is a very simple addition to our state statutes," Lawlor said. "I'm delighted this has come forward," said Rep. John W. Hetherington, R-New Canaan. "This will enable people who want to care for their pets when they pass away, or who become incapacitated, to create these trusts."
He said about 39 states have provisions for animals who survive their owners.
In Connecticut a new trust-protector provision would be similar to a conservator in handling the housing and feeding of a pet.
Rep. Jason Perillo, R-Shelton, joked that the issue could divide families. "If my wife were given the option between me and the dog, I don't know which one would win," Perillo said.
By Ken Dixon
Connecticut Post
HARTFORD -- Animal lovers will be able to establish trusts for their pets under legislation that won unanimous approval in the House Tuesday morning.
The 142-0 vote sends the legislation to Gov. M. Jodi Rell for final action.
If signed into law, it would allow for pet owners to care for their animals after they die or if they become incapacitated.
Lawmakers on both sides of the aisle praised the legislation for giving pet owners a process under which they can ensure their animals will be treated properly.
Under the bill, trust protectors would be established for animals by Superior Court judges. If the issue comes up during hearings in Probate Court on an estate or guardianship, it would stay in that court.
Rep. Michael P. Lawlor, D-East Haven, co-chairman of the Judiciary Committee, said the bill has been three years in the making. "This is a very simple addition to our state statutes," Lawlor said. "I'm delighted this has come forward," said Rep. John W. Hetherington, R-New Canaan. "This will enable people who want to care for their pets when they pass away, or who become incapacitated, to create these trusts."
He said about 39 states have provisions for animals who survive their owners.
In Connecticut a new trust-protector provision would be similar to a conservator in handling the housing and feeding of a pet.
Rep. Jason Perillo, R-Shelton, joked that the issue could divide families. "If my wife were given the option between me and the dog, I don't know which one would win," Perillo said.
Wednesday, June 3, 2009
Attorney Squillace selected for Prestigious Advisory Group
Attorney Scott E. Squillace was recently selected to serve a two-year term on the prestigious Professional Advisory Committee for The Boston Foundation. Every year, members of the Boston estate planning community, including attorneys, accountants, and investment advisers, are asked to serve. The Committee "counsels The Boston Foundation as we work to establish, develop and maintain strong working relationships with members of Greater Boston's advisor community."
In addition, the group regularly shares best practices and insights into philanthropic giving.
"I am so honored to have been selected for the Professional Advisory Committee. I am humbled to join such a talented group of individuals in the philanthropic community. It is a privilege to be a part of one of the most successful and well respected community foundations in the country," Squillace said.
The first meeting of the new Committee will be in September.
In addition, the group regularly shares best practices and insights into philanthropic giving.
"I am so honored to have been selected for the Professional Advisory Committee. I am humbled to join such a talented group of individuals in the philanthropic community. It is a privilege to be a part of one of the most successful and well respected community foundations in the country," Squillace said.
The first meeting of the new Committee will be in September.
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