What Windsor Means for Estate Planning

Posted on by under Estate Planning, Estate Tax, Family Business, Kansas, Missouri, Trusts, Wills

This morning (26 June 2013) the U.S. Supreme Court decided Windsor v. United States, 1 of 2 pending gay marriage cases, involving whether the (federal) Defense of Marriage Act was constitutional. (They also decided the other case, Perry v. Hollingsworth, kicking the case back to the California court on procedural grounds, which isn’t relevant to our discussion.) Based on a combination of federalism and equal protection grounds, Justice Kennedy wrote the 5-4 decision for the bitterly divided Court. Many will spill much ink analyzing the legal reasoning, politics, and historic importance of Windsor and Perry. But putting aside politics, what does Windsor mean for estate planning?

  • Windsor’s holding (a federal blessing of state-authorized same sex marriages) means that Edith Windsor and other gay men or lesbian women who live in states that permit same sex marriage will be able to claim at least some federal benefits that married couples are entitled to receive. For Windsor, a New York resident, she gets an IRS refund of the roughly $363,000 she paid in estate taxes upon her wife’s (Spyer’s) death. Windsor sued the IRS as Executor of Spyer’s Estate for the refund.
  • Windsor explicitly says it doesn’t authorize same sex marriage across the nation. Under Windsor, for the U.S. government to recognize a valid same sex marriage, the local state has to recognize it. How the President and Congress will react (via executive orders and/or Congressional acts) remains to be seen.
  • Windsor’s logic appears to allow a duly married same sex couple (again, under state law) to use martial deductions and other estate planning and IRS tax tools, just as a duly married heterosexual couple would.
  • Under Windsor, attorneys or advisors counseling same sex couples on their estate planning or financial needs would be well advised to counsel them to (1) move to a state that allows same sex marriage and (2) get married.

What do you think Windsor means for estate planning? (again, no politics please)

While the Court’s opinion doesn’t expressly address the tax and estate planning implications of its holdings, these 4 issues are crucial for estate planning professionals and their clients to know about. If my law firm, Johnson Law KC LLC, can serve you or your family’s estate planning or other legal needs, please call (913-707-9220) or email (steve@johnsonlawkc.com) for a convenient, free consultation.

(c) 2013, Stephen M. Johnson, Esq.

 

Tax-free Retirement?

Posted on by under Elder Law, Estate Planning, Estate Tax, Family Business, Financial Powers of Attorney, Illiquid Assets, Income Tax, IRA, Kansas, Living Wills, Medical Powers of Attorney, Missouri, Retirement, Roth IRA, Trusts, Wills

CNBC has this helpful article about how to plan for a tax-free retirement with lots of good tips and portfolio ideas. Many retirees can expect lower income tax bills than those of us still working (and earning more income), but the article wisely points out the wild card – the Congress/tax wild card.

Thoughts? What are your ideas for planning a tax-free retirement?

If my law firm, Johnson Law KC LLC, can help you or your family on your estate planning or other legal needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) to schedule a convenient and free consultation.

(c) 2013, Stephen M. Johnson, Esq.

The Golden Age of Estate Planning

Posted on by under Uncategorized

The Trusts & Estates website (via Wealth Management.com) has this interesting analysis of America’s current tax laws and estate planning. The highlights:

  • “Every adult should have an estate plan” – you need (1) a will and/or trust, (2) a living will, a (3) durable financial power of attorney, and (4) a medical powers of attorney. Check out Estate Planning 101.
  1. Review your estate plan with your attorney every 3-5 years.
  2. Be alert for changes  – (a) spouse or family member’s death, (b) moving to another state, (c) divorce or remarriage or having children, or (d) becoming disabled or chronically ill – which require estate planning revisions.
  3. What about your executor/trustee, guardians and conservators for your children and/or yourself, and your attorney in fact (your agent)? Have your family dynamics changed since you’ve last done estate planning? Family members died or grown up?
  • Asset Protection – if you’re a professional (lawyer, doctor, accountant, engineer), business owner/serial entrepreneur, or someone who’s likely to be sued, consider an asset protection trust to protect your hard-earned assets from creditors, divorcing spouses, or spendthrift kids. Check out Asset Protection 101.
  • Elder Law – who will pay your bills if you’re in an assisted living or nursing home or develop dementia? Will you qualify for Medicaid, Veteran’s benefits, Social Security disability, or other benefits? Prepaid funeral arrangements? Check out Elder Law 101.
  1. Long term care insurance – how will you pay for assisted living or a nursing home? Many facilities cost up to $3,000-$5,000/month, quickly draining even the wealthiest families, and potentially leaving a spouse or other family members with nothing more than memories.
  • Insurance – do you have insurance to replace income if you become disabled or die suddenly leaving your family? What about paying taxes and debts? Starting the college funds for kids, grandkids, and great grandkids? Leaving money to your church, synagogue, or favorite charity?education funding for younger
  • Retirement income – how do you fund your lifestyle for 20-40 years of retirement?
  1. Social Security – maximizing benefits that you’re paid into
  2. Retirement plans – 401(k)s, IRAs, Roth IRAs
  3. Annuities – a “guaranteed income stream for the life of a retiree”

My law firm, Johnson Law KC LLC, has extensive experience working with families on estate planning, asset protection, and elder law issues. Whether you’ve got $5,000 or $5 million, I’d love to serve your legal needs and give you and your family peace of mind that comes from good planning. Give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a convenient, free consultation.

(c) 2013, Stephen M. Johnson, Esq.

Estate Planning 101

Posted on by under Digital Estate Planning, Elder Law, Estate Planning, Estate Tax, Financial Powers of Attorney, Gifts to Minors, Kansas, Living Wills, Medical Powers of Attorney, Missouri, Probate, Small Business, Trusts, Wills

We’ve all heard that every adult needs an estate plan. But what does that mean? What’s are the essentials or the bare basics that you need to protect you and/or your family? T.S. Eliot memorably wrote in The Four Quartets: “What we call the beginning is often the end/And to make and end is to make a beginning./The end is where we start from.” So what’s your estate planning end game? Start from there to figure out how to get there.

An estate plan includes 4 basic documents:

  • Will/trust
  • Living will
  • Durable financial power of attorney
  • Durable medical power of attorney

1. Will/trust

– Tells your executor/trustee how to handle your property and who gets what when you die

-Pour over wills go with a trust

-Married couples can have a joint trust or individual trusts

-Trusts can be separate from your will or integrated with it

2. Living will

-Directions about your end of life choices (e.g. CPR and life support) to avoid a situation like Nancy Cruzan or Terri Schiavo

– Customized based on your faith, convictions, and moral beliefs

3. Durable medical power of attorney

– Gives spouse or child power to make medical decisions (e.g. authorize surgery if you’re injured in a car wreck)

– Gives access to medical records protected by HIPAA and privacy laws

4. Durable financial power of attorney

– Gives spouse or child power  to pay bills on your behalf and handle other financial affairs for you

– Digital estate planning – online account, email, photo, Facebook, LinkedIn access

-Elder law – Medicaid, gift, Veteran’s benefits, and Social Security disability planning

If my law firm, Johnson Law KC LLC, can help you or your family with your Kansas or Missouri estate planning needs, call me (913-707-9220) or email me (steve@johnsonlawkc.com) for a free, convenient appointment.

(c) 2013, Stephen M. Johnson, Esq.

Asset Protection 101

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Illiquid Assets, Kansas, LLCs, Missouri, Small Business, Trusts, Wills

What does asset protection mean? Asset protection is about preserving and safeguarding your hard-earned money and other assets from creditors, divorcing spouses, or others. Asset protection is best done through a trust, an LLC, or a family limited partnership. The key to asset protection is (1) finding a good, protective place and (2) setting up an entity to hold the assets. Missouri was one of the 1st asset protection states in America. Kansas or Missouri residents can set up a Missouri asset protection trust to hold their assets. Kansas law doesn’t allow an asset protection trust, but does allow other trusts. An asset protection trust is irrevocable – a stand-alone entity that must file an annual income tax return. LLCs or family limited partnerships (FLPs) can be used to hold farm land, real estate, stock, the family business, or other assets. A family LLC or FLP must have a valid business purposes, but members or partners may be able to claim some discount off the value of contributed assets – e.g. if you put a minority (say 30%) interest in the family farm or business into a family LLC or FLP, you can claim a discount since your stake wouldn’t be easily marketable to outside buyers.

My law firm, Johnson Law KC LLC, is experienced counseling families and small business owners on using various asset protection tools. If I can help you or your family with your asset protection needs, call (913-707-9220) or email me (steve@johnsonlawkc.com) to schedule a convenient, free consultation.

(c) 2013, Stephen M. Johnson, Esq.

Elder Law 101

Posted on by under Elder Law, Financial Powers of Attorney, Kansas, Missouri, Retirement

What’s the deal with elder law? With America’s aging population, elder law is important both for older clients and younger folks too. My law firm, Johnson Law KC LLC, includes elder law provisions standard in all powers of attorney.

Your financial power of attorney should include elder law clauses like:

  • Gifts
  • Medicaid planning
  • Veteran’s benefits
  • Social Security
  • Social Security disability
  • Balancing tax/estate planning with elder law planning

Beyond your financial power of attorney, what about your retirement income? Long term care insurance to pay for an assisted living facility or nursing home? Life insurance? Disability insurance?

Elder law a complex field that affects everyone. You need an experienced elder law attorney on your team. Call (913-707-9220) or email (steve@johnsonlawkc.com) my law office, Johnson Law KC LLC, for a free, convenient consultation and let’s discuss your elder law needs.

(c) 2013, Stephen M. Johnson, Esq.

Becoming a Philanthropist

Posted on by under Dynasty Trusts, Estate Planning, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Kansas, Missouri, Trusts, Wills

The WSJ has this interview with  Laura Arrillaga-Andreessen, a Stanford business school lecturer and leading philanthropist in Silicon Valley. Her Stanford course is to be offered free online. She argues that individual philanthropists (whether of the $10 or $10 million variety) tend to give sympathetically, instead of strategically.

If my law firm, Johnson Law KC LLC, can help you or your family with your estate planning needs or with establishing structures to facilitate your philanthropic goals, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a convenient, free consultation.

(c) 2013, Stephen M. Johnson, Esq.

Undue Influence?

Posted on by under Business Succession Planning, Business Transitions, Elder Law, Estate Planning, Estate Tax, Family Business, Financial Powers of Attorney, Gift Tax, Gifts to Minors, Illiquid Assets, Kansas, Living Wills, Medical Powers of Attorney, Missouri, Probate, Small Business, Trusts, Wills

This NY Times article discusses how a hospital manipulated a long term patient (net worth > $100 million) to obtain gifts, pledges, and other favors from her. Undue influence is a common probate or trust litigation issue. Wills in Kansas and Missouri are only valid if executed without undue influence. Most attorneys hear undue influence and think of a child or other prospective heir trying to persuade a family member to favor them over other relatives or heirs. But what about organizations, hospitals, and others looking for a piece of an individual’s or family’s inheritance? Food for thought.

If my law firm, Johnson Law KC LLC, can help you or your family with your estate planning needs, call (913-707-9220) or email me (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2013, Stephen M. Johnson, Esq.

Is New York “Offshore?”

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Generation Skipping Tax, Illiquid Assets, Income Tax, Kansas, LLCs, Missouri, Small Business, Trusts, Wills

The NY Times has this fascinating article about the recent corporate tax controversy of large global companies parking money in international holding companies that have domestic bank accounts or investments. But poof (now you see it; now you don’t) – by tax accounting magic, the money’s held internationally. America has the highest corporate tax rate in the developed world –  35%. Some other countries, like Ireland, have much lower tax rates, so having the money held by an Irish subsidiary in a New York bank account yields a substantially lower (say 13%) tax rate.

While offshore bank accounts (for individuals or corporations) are often discussed in political terms, they’re a bipartisan issue. While companies some might view as conservative do it (like oil and gas companies), so do seemingly more moderate or even liberal giants like Microsoft, Google, and Apple. (A few months back, Apple passed ExxonMobil as the biggest company by market cap – all those iPhones, iPads, and iPods everybody loves fueled its rise to the coolest big business on the planet.) And wealthy folks of all political stripes like Mitt Romney, Al Gore, Terry McAuliffe, and Penny Pritzer have offshore accounts or investments. Why? Lower tax bills. Whether you think offshore holdings are great or terrible, the math tells the story.

The unfortunate moral of the story is the obscene complexity of America’s tax law – call it the lawyers’ and accountants’ full employment act. Most Americans, whether conservative or liberal, favor a less complex IRS Code. Meanwhile, if my law firm, Johnson Law KC LLC, can help you or your family with your personal estate planning or small business needs, give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) for a free consultation.

(c) 2013, Stephen M. Johnson, Esq.

Talking to Family about Inheritances

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Gift Tax, Illiquid Assets, IRA, Kansas, Living Wills, Medical Powers of Attorney, Missouri, Probate, Small Business, Trusts, Wills

CNBC has this article about a recent US Trust study about when parents should talk to their children (and grandchildren) about inheritances. As the article points out, many children of wealthy families realize they’re wealthy based on the lifestyle they enjoy. But there’s a big difference between knowing “My family’s wealthy and takes exotic vacations” and knowing “Mom & Dad have XYZ income each year, a house held in ABC trust, a controlling interest in Family Co LLC, a vacation home also held in trust, and a net worth of $_______.” When to tell family members specifics is an important question to consider in careful consultation with your family’s accountant, attorney, and other professional advisors. As the article suggests, maturity levels, financial acumen, and other factors come into play. But as the article rightly concludes, “even if parents don’t give their kids “the number” for their wealth, they should at least give them the skills and the values to manage it well.”

Beyond the tax and legal details of structuring entities that attorneys and other wealth advisors do, imparting skills and values to manage a legacy is vital. Without the skills and values, a child or grandchild may not know how a family member became wealthy, why a family member managed their lifestyle as they did, or what legacy the wealth should have. I encourage clients to be open and honest with their families when the time comes to discuss inheritance and legacy. But don’t just give your family the numbers, give them the context and share your values and passion and legacy with them.

If my law firm, Johnson Law KC LLC, can help you or your family with estate planning or asset protection needs, or give you ideas for spurring these important conversations with your family, please call (913-707-9220) or email me (steve@johnsonlawkc.com) for  a convenient free consultation.

(c) 2013, Stephen M. Johnson, Esq.