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January 23, 2009 by admin.
Today’s post is the first in what I expect to be a series devoted to answering some of my readers’ E-Mail to me.
(Note that my Disclaimers in my first post and on my Notices page are still in full force. The following is neither legal advice nor financial advice – and is not intended as such. An attorney-client relationship is neither created nor intended in this and other blog posts. I merely present the below for entertainment and educational purposes for friends and clients.)
This first E-Mail comes from Geri, who runs a law firm marketing company. Geri has been very kind in offering me advice, and here is one such piece of it.
is there a way you can make your hyperlinks open another window rather than take you away from your site? i had to use my back button to get back to your site. usability standards consider hyperlinks that take you away from the original site to result in people reading less. . .especially if they then use another hyperlink in the site you’ve taken them to. (does that make any sense?)
Dear Geri,
That definitely does make sense. Wordpress has been frustrating at times to figure out. Additionally, it has been years since I’ve done any HTML programming, so I have only recently picked it up again. I appreciate my readers bearing with me as I strive to make and keep this blog excellent.
That said, I have recently figured out how to make my links open in a new window. All of the links on the Blogroll should now open in a new window, and all links included in future entries should do so as well. The next time I update the About page, I will similarly update the links within it. Links in blog posts prior to this one have not been updated to include this feature (at least, not yet).
Thanks for your feedback. I appreciate it – and continue to invite my readers to contact me.
- Joe Stanganelli, Esq.
The next correspondence I address comes from a new friend of mine, Richard. Richard works in the financial services industry. In response to my remarks on Suze Orman’s estate plan, Richard writes (over the course of multiple E-Mails):
All life insurance is term insurance. Take a look at those whole, universal, and variable policies, there is a section regarding the cost of either the Annual Renewable TERM or Decreasing TERM insurance that the company pays for.
All life insurance falls under those 2 categories. Yes ART can have a level period, but they all boil down to one of those 2.
…
It’s that one bone in my body that must have everything right.
Dear Richard,
Not being someone who is a life insurance expert (I deal with it only as it pertains to estate planning), I defer to the wisdom of those who are when it comes to life insurance definitions and the like. I haven’t discussed the above with others who know more about life insurance than I do because whether you are technically correct or not is irrelevant for my purposes (i.e., offering an estate planning perspective); I only meant “term insurance” in the “pure” sense, i.e., for a specifically enumerated, limited period of time, as a pure insurance tool (a.k.a. the sense just about everybody usually means when they use the term “term insurance”).
One of the ultimate purposes (albeit not the only one) of estate planning is to pass on the greatest amount of wealth possible to those you care about. I want to emphasize that I am looking at this strictly from an estate planning point of view – and when it comes to estate planning, pure term insurance is usually not as useful as those “impure term” policies.
I am aware that some “pure term” policies can offer better yields than whole, universal, or variable policies. Life insurance, after all, pays out when – and if – you die during the policy period. If your loved one has a “pure” term insurance policy on your life, and you’re still alive when it runs out, then it was useless from the estate planning viewpoint; it passed on zero wealth to said loved one. (True, some term insurance policies, such as an ART, are renewable, but often the premiums go up each year.)
In any case, thank you for educating me more about life insurance.
- Joe Stanganelli, Esq.
Next we have a comment from “SaxophoneMan” in response to my January 16 post. Saxophone Man writes:
“The law will arbitrarily decide who gets your assets” if you don’t have a will? That is not actually true. The law of intestacy is actually designed to prevent the arbitrary allocation of assets in the absence of a will. Rather, intestacy rules seek to provide order in the allocation of the estate. While such allocation may not be the deceased’s preference, it is far from arbitrary.
Dear SaxophoneMan,
I realize that one of the many dictionary definitions of the word “arbitrary” is: “established by a court or judge rather than by a specific law or statute.” That is not how I use the word here.
Rather, I use the word in accordance with the following, alternative definition: “based on preference, bias, prejudice, or convenience rather than on reason or fact.”
As a Massachusetts attorney, I am well aware of the existence of Mass.Gen.Laws ch. 190 (the Massachusetts intestacy laws). To say that the intestacy laws were “designed to prevent the arbitrary allocation of assets” is not really correct. While they may have been designed to prevent probate judges themselves from divvying up estate assets arbitrarily, that does not make the intestacy laws any less arbitrary themselves.
In writing and enacting the intestacy laws, the legislature has arbitrarily decided for you the succession of your estate assets without a valid will in force. You yourself acknowledge that “such allocation may not be the deceased’s preference.” It is hard to imagine how that is something other than arbitrary.
After all, what is the basis for “such allocation”? Why, nothing more than the discretion of a group of state legislators huddled around a consanguinity chart! Yes, blood relations can be definitively shown and proven (and are therefore more convenient from a legal perspective), but that doesn’t change the fact that they make for no less arbitrary a standard than anything else that is not the deceased’s wishes.
Add the spousal elective share into the mix, and things become even more wild. As I stated in an earlier post, one of the common goals of estate planning for a couple is to avoid estate taxes until the second death (i.e., the death of the surviving spouse). This is because all estate taxes can be avoided by way of the marital deduction (assuming that the decedent is married to a United States citizen) and the Unified Credit (i.e., the $2,000,000 estate tax exemption). The logical thing for the married decedent-to-be with a greater than $2,000,000 estate is to leave $2,000,000 to the kids (or whomever s/he wishes), and the rest to his/her spouse (and/or a qualified 501(c)(3) charity to take advantage of the Qualified Charitable Deduction).
When a married person with children dies without a will in Massachusetts, the spouse gets half of their estate and the children get the other half. Even if we set aside personal circumstances that would make this a ridiculous distribution, if the decedent’s estate exceeds $4,000,000, then this is a wholly illogical distribution for tax purposes; the portion of the children’s half that exceeds $2,000,000 would be subject to federal estate tax.
(This is even setting aside the fact that the Massachusetts state estate tax exemption is less than that of the federal estate tax exemption.)
There are many, many more cases where the intestate statutes just quite clearly fail to dispose of assets in the best possible manner – let alone succeed at indicating that they are anything other than arbitrary distinctions.
While the laws of intestacy, spousal shares, and the like do serve their purpose of providing a default (so that probate judges aren’t just left to wing it), it is hard to argue that the way they were written is anything other than arbitrary. What is more, the certainty of the intestate laws pale in comparison to the certainty a well-written will provides.
Thanks for your comment.
- Joe Stanganelli, Esq.
Beacon Hill Law is on its way to being officially open for business. I have but about half a dozen forms left to fill out, plus the construction of the website. Please keep visiting this blog for updates – and don’t hesitate to contact me if you have any feedback or if you think there is something I can do for you.
- Joe Stanganelli, Esq.
Posted in Wills, Unified Credit Trust, Children, Probate, Reader Mail, Preventative Law, Charitable Giving, Marital Deduction, LinkedIn, Disclaimers, Intestacy, Marriage, Estate Taxation, Life Insurance, estate planning | Print | No Comments »
January 16, 2009 by admin.
It’s a new year, and with a new year can come new developments.
Many new developments may have happened in your life in the past year or so; I know that that is true for me.
One of these events is my having gained about 9 pounds and a couple of inches on my waistline. This has led me to one my New Year’s Resolutions: Be Healthier. To accomplish this, I have joined an affordable gym, am working out more often, and am at least trying to eat less junk food (the soda I am drinking right now notwithstanding).
Many other significant things and events (more significant than gaining 9 pounds, even) have happened in my life within the past year or two. Because of this, another one of my New Year’s Resolutions is to write a new will for myself.
Why am I writing a new will for myself? After all, I am currently young, unmarried, childless, relatively healthy, and lacking in substantial wealth.
The fact of the matter is that most everybody probably *should* have a will. As I mentioned in a blog post earlier this month, when a person dies without a will, that is known as intestacy. Generally, intestacy is not a particularly good thing because it means the following:
For my own part, I am writing my will:
It is a good idea to have an attorney review your estate plan whenever you have new developments in your life, such as:
The above is not an exhaustive list, but should give you some clue as to when an estate plan is due for a review. Additionally, anyone with a net worth in excess of $2 million has no excuse to not have an updated estate plan in place.
Additionally, it is a good idea to have an attorney review your estate plan about every two to five years. If it has been more than two years since your most recent estate plan review, strongly consider contacting an attorney who can meet your estate planning needs today.
Now that we’re well into 2009, it’s important for clients and potential clients to realize how new tax laws impact their estate plans.
For starters, the annual gift tax exclusion has been increased to $13,000. The obvious implication of this is that an individual can now give up to $13,000 per donee per year tax-free. Additonally, these gifts can be split with one’s spouse – with the spouse’s consent – for a maximum of $26,000. Indeed, some married couples make their annual gifts as early in the calendar year as possible – to ensure that both spouses are alive at the time of the gifts (after all, a deceased spouse cannot consent).
Because of this, 2009 is a great time to review your trust plan and/or giving program (especially if it has been more than two years since your most recent estate plan review), so as to continue to maximize the use of lifetime gifting strategies. Additionally, all good trust plans, giving programs, and estate plans afford some degree of flexibility – not only to account for a client’s changing plans, priorities, and life developments, but also changes to applicable laws. Contact an attorney for your estate planning needs today.
- Joe Stanganelli, Esq.
Posted in Children, Gifts, Grandchildren, Gift Taxes, Probate, Wills, Living Trust, LinkedIn, pets, Intestacy, Divorce, Marriage, estate planning | Print | No Comments »
January 3, 2009 by admin.
At some point when I was in law school, I had a realization.
No matter the state of the economy – and how good or bad things may be – someone is getting rich somewhere.
I studied historical economic markets. Someone, somewhere, is always making money on a rising stock (or, in the case of a short sell, a falling stock). Some business is always performing swiftly. There were people who amassed large fortunes even in the Great Depression.
(Speaking of the Great Depression, and in the spirit of continuing to include interesting recipes on this blog (even though it’s a law blog), I found this recipe for Depression Cake online. Depression Cake was a common dessert during the Great Depression; most recipes do not use sugar, milk, or eggs, because they were scarce and expensive during the Great Depression. Anyway, try it out. Who knows? With the economic climate these days, it may become popular again.)
I also read cases – and saw a glimpse of the amount of litigation there is in the country.
Where Party A and Party B are separate entities in a given set of economic circumstances, three outcomes are possible: 1.) A wins, B loses.
2.) B wins, A loses.
3.) C – the assortment of attorneys for Parties A and B – wins.
Even among attorneys, however, the effects of economic collapse are felt. Presently, I know a lot of lawyers who are actually not faring so well right now. Many are out of work, and most others have seen their practices want for business. Additionally, a recent American Bar Association survey indicates that 69% of attorneys in the United States report that they will be negatively impacted by the recession – with a whopping 19% expecting to lose their jobs entirely.
Nonetheless, in the decaying fields of economic downturn, there are patches to be found where the grass is greener.
The American Bar Association puts out a monthly publication known as the ABA Journal. This month’s issue (billed on the cover as a “SPECIAL RECESSION ISSUE”) features a piece about Eleanor Breitel Alter, who heads up her law firm’s family and matrimonial law department (in other – more relevant –
words, she’s a divorce lawyer).
While bankers and lawyers and others pinch pennies, Ms. Alter finds her divorce practice to be doing just fine, thank you. “Moneyed spouses” whose jobs and/or stock have “gone to the devil” – as Ms. Alter puts it – are flocking to get divorced – when they might otherwise have waited – in an attempt to limit a court’s determination of their earning power. Additionally, people who are already divorced are bombarding Ms. Alter’s office with requests to get a permanent divorce order or separation agreement changed – in light of the economically bleak times.
Aside from the intellectually droll revelry to be had in observing Ms. Alter’s circumstances (i.e., a successful divorce attorney whose surname is a homonym for the sacred table at which her clients once wed) (get it?), it is clear from the article that, as the economy changes, people are making changes in their own lives that impact their assets and their families.
This leads me, albeit somewhat circuitously, to the topic of estate planning.
Anytime you marry, remarry, divorce, annul, or otherwise change your marital status, your estate plan may be dramatically impacted.
For starters (and I am going to type in all caps now to emphasize the drama of this point): MARRIAGE ALMOST ALWAYS VOIDS YOUR WILL.
When you marry, with rare exception, any will that you have becomes null and void. Once this happens, you need a new will unless you want your estate plan to be governed by intestacy.
Intestacy is a fancy lawyer word for “the government gets to decide who gets your stuff, regardless of your wishes.” Many, many trees have been killed in publishing the complex laws that dictate how an estate is distributed in intestacy. And regardless of how it turns out, the lawyer (“C”) will definitely win.
(Intestacy can be especially distasteful when a person dies with no next-of-kin remaining. If this happens in Massachusetts, for example, the deceased’s property goes to the state government.)
Intestacy, quite obviously, is usually a bad idea. The advice I would typically give to a client is to pony up the dough to fix up a will now so that his/her loved ones don’t have to deal with a probably more complex (and probably more expensive) probate process later.
Divorce does not a void a will, but it does treat the divorced spouse as being already dead. This means that, when a court interprets your will, they will totally ignore anything that mentions the spouse you divorced. This probably seems like a good thing.
The problem arises, however, when alternative arrangements are not made. Let’s look at a basic example. Jack has a simple will that leaves everything to his wife, Jill, and names Jill as his executrix. A year later, Jack and Jill divorce. Several years after that, Jack dies – without ever having updated his estate plan. Now, the court will distribute all of Jack’s property will be via intestacy. Additionally, because no executor/executrix has been appointed (remember that Jill is treated as predeceased!), probate may be delayed because of the process of appointing an appropriate administrator for Jack’s estate. Time is money, and probate delays can be costly. This is not a good thing (except for “C”).
With rising divorce rates among society’s better heeled, estate plans will be impacted across the board. Naturally, if you are divorced, or considering getting married or divorced, contact an estate planning attorney to review your estate plan. Your estate planning attorney can help you make sure that your assets are distributed according to your wishes – no matter what happens.
A young man asked an old rich man how he made his money. The old man leaned back in his chair with a hefty sigh and replied, “Well, my boy, it was 1932 – in the middle of the Great Depression. I was down to my last nickel.” “I invested that nickel in an apple. I spent the entire day polishing that apple until it shined like never before. Then, at the end of the day, I sold that apple for ten cents.” “The next morning, I invested those ten cents in two apples. I spent the entire day polishing them and sold them at 5:00pm for 20 cents. I continued this system for a week, by the end of which I’d accumulated a fortune of $25.60.” “Then my wife’s father died and left us two million dollars.”
Posted in Divorce, Marriage, Recipes, Economy, LinkedIn, Intestacy, estate planning | Print | No Comments »