RJP Estate Planning

South Texas’ “Godfather of Movies” Leaves Two Pals to Duel over Estate Plan Mess

Rubin Frels is considered by some as the "godfather of movies in South Texas." His parents met at the Theatre Victoria, built in 1913. Frels designed and installed church organs, and he has a scary movie festival bearing his name. Although he has been dead for almost a year, the prominent Victoria businessman's estate is still being legally contested. Two of his longtime associates, Brad Richards and Gary Dunnam, claim they should be in charge of how it is handled.

Sound like a bit of a mess?  That’s what it looks like, and The Victoria (TX) Advocate has reported all of the details in its article titled“Prominent Victoria businessman's will contested.”

Dunnam, who knew Frels since at least 1971, says the 2001 will is valid. He also claimed Richards, who was Frels' partner of 15 years, isolated Frels from his friends.

Richards is holding that the 2002 will is the valid one, and that he is the trustee of the estate.

"Rubin Frels is an institution here,” Richards' attorney told the paper. “The whole town knows Rubin. To say that Rubin Frels was under influence or not in his capacity 15 years ago, defies everything that anyone in this town knows. He was an incredible man.”

Frels was 85 when he died last June. He described theater and art as his birthright. He was invited in 1955 to be a guest of Metro-Goldwyn-Mayer Pictures one-day ticket-selling workshop. Two years later, he was featured as a harpsichord soloist in the San Antonio Symphony Orchestra.

The court has appointed a temporary administrator to determine what assets are in the estate. Richards' attorney argues that there are no assets. If that proves to be true, the case may be rendered pointless and grind to a halt or Dunnam may continue trying to prove the 2001 will is valid. He is the only person with a copy.

Richards wants to renovate a theater Rubin closed long ago, as he promised him he would before his death. Richards said that’s still the plan "if finances allow, but this challenge to the estate is eating up a lot of money."

Don’t allow this type of fighting and uncertainty surround your estate. Work with a qualified estate planning attorney.

Reference: Victoria (TX) Advocate (May 3, 2015) “Prominent Victoria businessman's will contested”

For more information on setting up a proper estate plan visit us at www.rjpestateplanning.com

Bank of Mom and Dad Keeps the Kids in Touch

Money isn't everything, but it keeps the kids in touch. Though I say that jokingly, I do want you to take estate planning seriously.  Most of us don’t want to just enjoy our retirement and have enough money for old age, but to leave something behind as well. But what's the best way to do that? Should you leave an inheritance, or give your money away while you're still around? That is a very important question because the percentage of taxes owed on gifts and inheritance is the same, but one is inclusive and one is exclusive, and the dollar difference between the two is huge.

A recent MarketWatch article, titled “Why it’s better to give than to bequeath,”reminds us that with both gifts and inheritances, it’s the person giving the money who pays the tax. So, for example, if you give a gift or an inheritance to your children, they don’t pay taxes—it will be your estate that has the tax liability and must pay. However, there are huge tax differences between gifts and inheritances. The gift tax is exclusive: it’s on top of the gift.

Estate taxes don’t come into play for individuals with estates less than $5.43 million (or a married couple with an estate smaller than $10.86 million). There is an exemption from tax liability for most of us, as it’s really just 1% of the population that needs to be concerned. But even though this isn’t going to apply to you now, you should know the difference between gifting and leaving an inheritance. The article tells us that it wasn’t long ago that the tax-free amount was merely a fraction of what it is now. There is no guarantee that the United States won’t someday revert to that early framework, especially with our country’s deficits and the need for tax revenue.

For example, if the person leaving the inheritance or making the gift has $1 million over the tax-free amount, if you were in the 40% tax bracket and gave a million dollars to an heir—you’d also have to cut a check to the IRS for 40%, or $400,000. So that’s a total of $1.4 million: a million to your donee and $400,000 to the IRS.

The article explains that the inheritance tax is inclusive. If you began with that same $1,400,000, but left it as an inheritance rather than a gift, 40% of it would go to estate taxes. The IRS would see a tidy sum of $560,000, and your heirs would get the remaining $840,000.

See the difference?

In both scenarios, you started with $1.4 million dollars, but in the first situation, your donee ended up with a million, and in the other, the person who inherited ended up with just $840,000.

So, when it comes to taxes, it is better to gift while you're alive than to leave an inheritance after you pass away. Even though this discussion is pretty much irrelevant for all but a very wealthy few, remember that gifting is still more efficient than leaving an inheritance. The other benefit of gifting is that you get to enjoy the experience of giving with your friends and loved ones.

For more detailed information and how this could apply to your specific situation, get in touch with a qualified estate planning attorney.

Reference: MarketWatch (May 4, 2015)“Why it’s better to give than to bequeath”

For more information on setting up a proper estate plan visit us at www.rjpestateplanning.com

Which Is the Worst State to Die in (as Far as Estate Taxes)?

Fewer estates are subjected to the federal estate tax than ever before. The Brookings Institute estimates that only 1 in 700 taxpayers end up paying any federal estate taxes. Unfortunately, the same cannot be said for estate taxes levied by certain states. With a handful of states assessing both estate and inheritance taxes, dying in the wrong state could prove costly for your beneficiaries. After working a lifetime to accumulate assets, it may be wise to preserve as much of that legacy as possible.

An article in The Times of Trentontitled, “N.J. ranks among worst states to die from an estate tax perspective,” asks why more taxpayers are paying estate tax on a state level than the federal?

While the federal applicable exclusion is $5.43 million in 2015 or $10.86 million for a married couple, many states have much lower thresholds. This casts a much wider net—meaning there’s a better chance that your estate will be subject to state tax.

Also, the article points out that some states don’t index their exemption amount for inflation, which gradually increases the number of taxpayers affected.

Sixteen states and DC have an estate tax with some taking a bigger chunk of your estate than others. That’s why it’s important to understand which states are going to take more out of your beneficiaries’ inheritance when you pass away.

Which state is Number One?
New Jersey! Of all of the states, New Jersey has the distinction of having the lowest exemption level for estate taxes ($675,000). Estate tax rates range from 4.8% to 16% of the total estate.

But wait! There’s more: not only does the Garden State levy an estate tax, it’s also one of only two states to assess an inheritance tax where applicable. The state also has a three-year look-back on gifts considered to be in contemplation of death—this could trigger more inheritance taxes!

Remember that spouses are exempted from paying estate or inheritance tax, and in some states, this exemption applies to civil unions.

So it is really at the death of the surviving spouse when assets are passed to other beneficiaries that estate taxes come to the forefront. Too many people wait until it is too late to establish a plan that addresses these taxes.

Develop an estate plan to help to reduce future estate taxes. Speak to your estate planning attorney to determine the most appropriate approach for you.

Reference: The Times of Trenton (April 25, 2015) “N.J. ranks among worst states to die from an estate tax perspective”

Announcing Your Estate Planning Service Team!

Help is on the way! Let’s meet the team members who are there to help you to be a great fiduciary, or for you to set up to help, indeed maybe to be, your own. Then, we’ll surf some available information sources, too.

The Myrtle Beach (FL) Sun News recently published an article titled “Assembling your team for estate management”which reminds us that one person or a firm can serve in more than one fiduciary or team-member role.

Some team members are fee-based professionals, while others can be volunteers. In many instances, not all of the specialties will be required. The team should consist of the combination of members that best suits the situation. The article suggests these possible team members:

• Personal representative(s)      are nominated in the will and appointed by the probate court when the will      is probated. This is the team leader who has the ultimate decision-making      power and responsibility for administration of the probate estate.
• Trustee(s) are in charge      of the trust, responsible to carry out its terms, and have ultimate      decision-making authority and responsibility for its administration.
• Guardian(s) are      court-appointed persons to provide day-to-day care for a child or a      legally incapacitated person, managing and being responsible for his/her      personal business.
• Attorney(s)-in-fact and/or      health-care agent(s) have responsibility and authority during a person’s      end-of-life.
• Professional life and      property insurance agents who are professionally qualified to handle      claims in their fields.
• Business associates,      partners, key employees, even competitors.
• Funeral director.
• Late-life caregivers.
• Spiritual advisers.
• Financial planner.
• Tax adviser, if other than      the CPA, financial or legal professional.
• Advisory staff of the      client’s long-term-care residential facility.
• Personal bankers.

A key player on this team is the estate’s attorney. He or she is hired to handle the estate’s legal matters. Estate attorneys are specialized attorneys who practice solely or primarily in estate planning matters. An estate planning attorney can be extremely beneficial in cases where highly sophisticated, specialized expertise is needed. This may often include issues of taxation, evaluation, litigation, international commerce, securities, and commercial real estate transactions. This is also true with trusts and the business interests.

Although we live in the information age, there is sometimes too much information. This can be dangerous. The article gives some wise words of advice for everyone:

Well-meaning publications, websites, helpers and family members can lead you wrong with outdated, jurisdictionally invalid, technically inapplicable information, and inapplicable, superficial generalizations. The guidance of the right professionals in matters that count so seriously in the profoundly serious business of estate planning, preparation and administration always should be the governing resource of choice.

Reference: The Myrtle Beach (FL) Sun News (April 25, 2015) “Assembling your team for estate management”

For more information in taking the next step to setting up a proper estate plan visit RJP Estate Planning at www.rjpestateplanning.com

A Word or Two about Guardianship

 “Planning for death is a morbid thing to do,” admits Kelli Gardner, an estate attorney in Portsmouth. “People don’t like to deal with unpleasant things.” But if dying isn’t bad enough, parents of young children must face the choice of deciding who will replace them and take over the day-to-day care of their children if the unlikely occurs. Choosing a guardian is one of the toughest estate planning choices people have to make. “It’s the reason why many don’t have an estate,” says Michelle Arruda, an estate lawyer in Concord. For some “it’s just not an obvious choice [and others] just can’t get it done.”

New Hampshire Magazine’s May 2015 issue contains an article titled “Don't put off writing down your last words.” The article admits that the likelihood of two people who have at least one child under the age of 18 dying simultaneously is quite low. Even so, for many young parents death seems like a long ways away. Parents of all ages should have their affairs in order—including guardianship.

If you just can’t decide on a guardian, you should still move ahead with your estate planning. It is better to have this issue undecided than to die without a will. That said, the article suggests that it’s a good idea to nominate two people. That way you have one to be the guardian of the children and a second to be a trustee of the funds dedicated to their care. 

Some parents feel that they must choose family members, but in many instances a close friend will work better than family. Think about close friends with children at about the same age as yours. Here are a few other things to ponder about selecting a guardian:

Does your guardian have a similar parenting philosophy, religious, and personal values?

Do they live close to you?

Do they have children, and how will your child(ren) fit in that situation?

Is the household stable?

Is age of the guardian an issue?

The article also advises not to exclude someone because they aren’t well off. You can create a trust that is funded through assets or life insurance to ensure the day-to-day care, health care needs, and the college expenses of your children. Talk to a qualified estate planning attorney about setting up this type of trust and reviewing your estate plan.

Finally, when you have decided on a guardian, review your plans and expectations with them (including the trust created by the attorney) and give them some time to think about assuming this role.

Reference: New Hampshire Magazine (May 2015)“Don't put off writing down your last words”

For more information in taking the next step to setting up a proper estate plan visit RJP Estate Planning at www.rjpestateplanning.com

Living Longer Means Better Estate Planning

Living longer changes the dynamics of financial planning. Old age can be very expensive. Everyone is different and there is no way to predict the future. That is the challenge of planning for later years. Challenging to predict your future lifestyle, including where you will live, and challenging to estimate the cost of growing old. The ultimate trade-off of financial planning is whether to spend now or save for a rainy day. How do you really know what is best since the future is unknown?

It’s very useful to look forward and understand the types of medical issues that could happen down the road. Medical issues associated with aging are most apt to be the reason life gets expensive during your later years. That’s the advice from a recent article in the Oakville (ONT) Beaver titled“Living in your later years can be expensive – plan ahead.”Americans, just like our friends to the north, need to better understand how to plan for the future. This article gave some interesting perspectives on the aging process. Here are some facts:

• People are living longer      and many live into their 90s.
• More than 25% of seniors      living at home receive help with day-to-day living activities.
• More than 10% of seniors      older than age of 80 live in a long-term care facility.
• One of the leading causes      of injury to seniors is a result of a fall.

Also, the article points out that as we live longer, dementia can become a real medical reality. Research shows that dementia issues are low at age 65 but increase steadily until age 90 where they affect half of seniors. With adult children living far from their parents with both husband and wife working, there is less time available to be devoted to caring for an elderly family member.

Initially, care can be received from the healthier spouse, but that takes a toll. Also, some seniors are single, so this isn’t an option. Thus, aging seniors will be increasingly dependent on others.

An experienced estate planning and elder law attorney can help devise your financial strategy to ensure there are enough financial resources in the event you have increased medical and living expenses in your later years.

Aging is expensive. Talk to an estate planning and elder law attorney and plan accordingly.

Reference: Oakville (ONT) Beaver (April 23, 2015) “Living in your later years can be expensive – plan ahead”

For more information in taking the next step to setting up a proper estate plan visit RJP Estate Planning at www.rjpestateplanning.com