Houston Estate Planning and Elder Law Attorney Blog

TV Crime Boss Not Wise Guy About Estate Planning

Published on: November 25, 2015 | By McCulloch & Miller, PLLC

The irrevocable charitable lead trust is a trust that cannot be amended, revised or cancelled. We would call that bullet-proof, and it would have been a good idea for preventing James Gandolfini's estate from being "whacked" by estate taxes. The financial website thestreet.com took a closer look at this powerful estate planning tool in"How to Protect Your Estate From Getting 'Whacked' Like James Gandolfini's.

This trustprovides a stream of income for a designated number of years to the specified charity. At the end of that period, the property held in trust reverts back to the donor or to the donor's designated beneficiary.

When the donor makes the gift under a charitable lead trust, he or she immediately receives a federal income tax deduction equal to the present value of the future income stream. But the donor is taxed every year on the value of the income interest that is payable to the charity.

Thanksgiving Dinner: Time to Discuss Estate Planning?

Published on: November 24, 2015 | By McCulloch & Miller, PLLC

Long-standing American family traditions are changing with the times. The sled trips through snowy woods and icy rivers have given way to cross-country jet flights and international Skype visits. But regardless of the changes, when you all do sit down to a holiday meal, according to thestreet.com's "Estate Planning Over Thanksgiving? Time to Talk Turkey," this is a perfect time to start talking about important family matters, including estate planning.

If families or cultures are averse to raising such topics around the holidays, there should be an annual meeting to let family members know where an estate plan stands.

When combing through assets, remember that no item is too small for discussion, especially during the holidays. It is a natural time for emotions to run high, but it is a great time to discuss items of seemingly insignificant value that may take on added significance for each potential heir.

Take Time After Receiving an Inheritance Before Investing

Published on: November 23, 2015 | By McCulloch & Miller, PLLC

If you inherit a portfolio or a large amount of money, proceed with caution, according to "What to Do When You Get an Inheritance," in US News & World Report. Every situation is different, but a few basics need to be kept in mind for heirs who are thinking about investing their inheritance in stocks, bonds, hedge funds or any other investment vehicles.

First, get good information and consider assistance from an expert: speak with an experienced estate planning attorney, one who worked with those giving the inheritance. Heirs should find a CERTIFIED FINANCIAL PLANNER™ practitioner who works for a registered investment advisor with a fiduciary duty to their clients. They aren't commissioned salespeople.

If the inheritance involves a larger sum, it can be administered via a trust that needs to be funded properly due to tax ramifications and expenses.

Cost of Adoption Can be Offset with Tax Credits

Published on: November 20, 2015 | By McCulloch & Miller, PLLC

The average family can face high expenses when adopting a child. But there are tax benefits that will provide some help, as reported in The Middlesboro (KY) Daily News article, "Thinking of adopting? Be prepared for expenses." Among the benefits are an exclusion from your taxable income of employer-provided adoption assistance and a credit for qualified adoption expenses.

The maximum tax benefit you can claim for this year is $13,400, which is reduced if your modified adjusted gross income (MAGI) exceeds $201,010 and is completely phased out if your MAGI is $241,010 or more. The adoption tax credit is nonrefundable, so it's limited to your tax liability for the year.

For example, say that you pay $13,400 in qualified adoption expenses in 2015, and your employer reimburses you for $3,400. If you meet the MAGI guidelines, you can exclude $3,400 from your gross income for 2015 and can claim $10,000 ($13,400 minus $3,400) for the adoption tax credit.

Determining Value of a Property Partnership Can be Fair

Published on: November 19, 2015 | By McCulloch & Miller, PLLC

Ending a property partnership is often a lot like getting divorced. Most splits are the result of an irrevocable break in the personal relationship of the partners, the investment becoming a cash drain, or siblings who inherited property together and now want to sell. In a perfect world, property partnerships end when all partners are ready to sell and move on. But when that is not the case, being able to agree on the value of the property based on a rational evaluation can save all parties concerned a lot of wasted time and resources.

Determining fair value for property owned in a partnership can be approached in a business-like manner in order to avoid possible litigation, according to "Splitting up property is hard to do," from The Orange County (CA) Register. Unfortunately, this is not always what happens when it becomes necessary to place a value on jointly owned property.

If you are really interested in getting to a fair property value for all concerned, there's a formula for the situation where one party wants to purchase the other party's share and keep the property. In that case, each party chooses one appraiser, and each conducts his or her own appraisals. Then the two appraisers agree on a third appraiser to do another appraisal. The final value is an average of the two appraised values closest to each other.

Guardian Abuse is a Growing Problem

Published on: November 18, 2015 | By McCulloch & Miller, PLLC

Guardianship is a fairly straightforward and basic function. A person who is not able to handle her or his own affairs, for any number of reasons, is assigned a guardian by the court, who is to act on their behalf for financial, medical and care-taking purposes. The guardian is charged with putting the interest of their ward first, and the guardian is entrusted with a great deal of responsibility.

However, as the Wall Street Journal reports, in "Abuses Plague Guardianship Systems Across the Country," the financial abuse of elderly people by guardians is rampant throughout the United States.

Court appointed guardians with no family relationship to the elderly wards too often act in their own interests and deplete the wealth of the wards.

Wealthy Estates Just Look Different

Published on: November 17, 2015 | By McCulloch & Miller, PLLC

The media tends to place a great deal of focus on federal income tax, but despite that, the number of estates that actually pay this federal tax are proportionately small. Less than 12,000 estate tax returns were filed with the IRS in 2014, and of those, most of the estates did not even have to pay any federal estate taxes.

Thus, the estates that do pay the tax are those of the wealthiest of the wealthy in the country. By looking at the data on the returns where an estate tax was due it is possible to get an idea of what kind of assets wealthy people have.

As reported by the Wall Street Journal, in "When the Superrich Die, Here's What's in Their Wallets," the IRS has recently released that information for estate tax returns filed in 2014.

Avoiding Estate Planning Mishaps

Published on: November 16, 2015 | By McCulloch & Miller, PLLC

In many cases, knowledge is power. But in estate planning, knowledge by itself can be a dangerous thing. You need to pair knowledge of the most common estate planning mistakes with another kind of knowledge: what to DO about those mistakes. And we would even add a third thing: knowing WHO to ask for help!

For example, you might know that it is desirable to avoid probate, but that is of little use unless you also know how to create an estate plan that will keep an estate out of probate. For the same reason it is important to not only know what common estate planning mistakes are but also to know how to avoid them.

A recent article by The Street entitled "How to Avoid the Most Common Estate Planning Mistake" discusses the most common mistakes and how to avoid them. Tips from the article include:

Robin Williams Will Limits Use of Likeness

Published on: November 13, 2015 | By McCulloch & Miller, PLLC

Certain celebrities continue to earn phenomenal amounts of money, even though they are deceased. Using advanced technology, audiences enjoy what appear to be live performances and new material from actors and singers who have been gone for decades. Holograms are good enough to convince stadiums filled with fans that they are seeing the real deal.

For the estates that hold the rights to the likenesses of celebrities this can earn millions of dollars a year. Such is the case with the likenesses of Michael Jackson, James Dean, Betty Page and many others.

Not every celebrity, however, is comfortable with the idea of their name and likeness being used after they pass away to make money.

Escheatment: Monitor Unclaimed Property Lists

Published on: November 12, 2015 | By McCulloch & Miller, PLLC

A state government has the legal right to claim the property of a person who has passed away and has no heirs or beneficiaries. Here's the problem: almost all state governments today are experiencing significant shortfalls in revenues. As a result, some states have become a little too eager and too aggressive about claiming property through escheatment.

What often happens is that an account holder has not stayed in contact with a brokerage or financial institute for a long time. The financial institute then reports the assets in an account as unclaimed property. Rather than making any effort to locate the person who owns the account, the government claims the property as its own. This can create issues for people who have long term investments as part of their retirement and estate plans.

Recently, Investopedia listed how you can avoid this happening to your stock accounts in "4 Ways to Avoid Escheatment of a Stock Account."