Wealth Preservation, Trusts and Estates

Just over a year ago I posted an article advising you of the birth of our son, James Douglas Kaune. I also took the time to emphasize the need to do proper estate planning to protect your minor children. Well, James is now 13 months old and his Birthday picture is shown on this posting. Time sure flies. James has been great fun and a joy to have in our lives. We are very thankful to have him!

In keeping with the estate planning for minors theme, I thought it was appropriate to remind you that if you have not prepared a proper Last Will with guardianship provisions and trusts for minors you should do so now to make sure your child or children are properly cared for if something happens unexpectedly. You should also remember to update your beneficiary designations on IRA’s, 401k’s, 403b’s and life insurance to properly make use of the trusts you create under your wills. These are very important items to take care of. I know it can be hectic with children, work and other obligations, but you will feel much better after you take care of this important checklist item. Here is an article with some additional considerations when estate planning for your children.

Contact, Douglas L. Kaune, Esquire with questions about your estate planning or other legal questions (dkaune@utbf.com)
Unruh, Turner, Burke & Frees, P.C. having Offices in Malvern, Phoenixville and West Chester, PA
PH (610) 933-8069
Fax(610) 240-9323
www.utbf.com

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Federal Estate Tax Reform and Certainty Is Needed
by: David M. Frees III, Esquire

Congress failed, at the end of the year to enact any estate tax reform. As a result, the tax was eliminated for a one year period. This might seem like a blessing, but currently, many people’s documents no longer function as they were intended to work. To add insult to injury, in just a few more months it is scheduled to return with a vengeance.

On January 1, 2011, absent congressional action, the tax will return and American tax payers will only be able to shelter one million dollars. A couple could, with careful planning, shelter up to two million dollars but that would require the use of trusts prepared during the lifetime of each spouse. And, as if that is not bad enough, the tax rate is going up to a maximum rate of 55%.

However, since this tax includes retirement accounts, the value of a house and business, and life insurance proceeds, the one million dollars may not go as far as it might otherwise.

We need and deserve clarity on this issue.

Yet, just a few weeks ago, negotiations between Republicans and Democrats broke down and Estate Tax reform disappeared from the legislative agenda.

This is not a political or partisan column. And, for my money, both parties have failed to deal effectively with this issue. I simply believe that Congress owes certainty and clarity to the American people. Right now, careful and rational estate and tax planning for families with substantial assets is almost impossible.

Clarity is essential and now requires congressional action.

Here is video of a recent statement on the Senate floor.

David M. Frees, III
is an attorney focusing his practice in the areas of trusts, estates, probate, and estate and asset protection planning. His firm, Unruh, Turner, Burke and Frees also offers elder law planning for families facing nursing home care and the related issues.

The firm maintains law offices that serve many local communities including Devon, Wayne, Malvern, Phoenixville and West Chester.

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David M. Frees III, Esquire on The Ten Year GRAT

The Houses Passes A New 10 Year GRAT Requirement

On June 15th, the US House passed H.R. 5486 (a “jobs bill”) that contained a requirement that GRATS (Grantor Retained Annuity Trusts) be for a term of at least 10 years.

As readers know, we have been promoting and using GRATs for many clients as a way or moving large increases in wealth without triggering significant gift taxes.

GRATs are often used by clients with rapidly rising stock values, real estate, or other assets with a high probability of significant growth.

The government now views this technique as being just too good for the tax payer and is attempting to restrict it’s use to raise additional revenue.

The main purpose of H.R. 5486 is not, of course, to modify the GRAT rules. It is instead intended to create small business tax relief.

However, as mentioned, GRATs have proven to be a highly efficient technique for transferring wealth while minimizing gift taxes, provided that the grantor survives the GRAT term and the trust assets do not depreciate in value. And, taxpayers have become skilled at maximizing the benefit of this technique, by minimizing the term of the GRAT (thus reducing the risk of the grantor’s death during the GRAT term). Many clients use a term as short as two years.

Under the current bill, now also before the Senate, the minimum term would be ten years. This, of course increases the risk that the grantor might die during the term and the benefit to the family would be lost.

So, while the GRAT will remain a valuable planning tool. The days of the short term GRAT might be limited. If you find yourself moving toward a public offering, a land development plan or some other planning that might produce large value increases, be sure to consult your legal and tax advisers about all of your options in the face of this pending legislation and the appearance that it will pass both houses.

David Frees III, Esquire

David Frees writes on GRATs and other sophisticated estate planning techniques and actively helps affluent families and individuals in Pennsylvania to implement sophisticated estate and estate tax planning.

For more information on GRATs and related estate and asset protection planning call 610-933-8069. Law offices in Phoenixville, Malvern, and West Chester Pennsylvania.

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It is very important that same sex couples review the estate planning and estate/inheritance tax issues they are confronting.  In Pennsylvania alone there will be a hefty tax consideration.  The

Pennsylvania Inheritance Tax rate on transfers to a surviving same sex partner at the death of the first partner will be 15%.  For transfers of jointly owned assets to the surviving partner there will be a 15% PA Inheritance Tax rate on one-half of the value of the asset.   Take a look at this article for detailed look at the PA Inheritance Tax system and the resulting tax to be paid by the surviving same sex partner. Without proper planning, a surviving same sex partner could find himself or herself with a significant financial burden and unprepared to pay for it.

Please feel free to contact Douglas L. Kaune, Esq. any time at 610-933-8069 or dkaune@utbf.com to discuss your particular Estate Planning matter to determine the appropriate planning for you and your loved ones.
Wills * Trusts * Elder Law * Probate * Asset Protection * Power of Attorney * Estate Planning
Unruh, Turner, Burke & Frees, P.C. is a full service law firm with offices located in Malvern, Phoenixville, West Chester and also serving Philadelphia and other towns in Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).

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So many clients are interested in purchasing long term care insurance (LTCI), but are scared to pursue the coverage because of the perceived prohibitive cost. There are so many different types of policies and levels of coverage that there may be a policy to fit your budget. That being said, you should become an educated consumer of the LTCI products available to you and the average cost for coverage. This will make it easier for you to enter into the marketplace in order to protect you and your family. Start with this article by the American Association of LTCI which I have linked for you. The article gives some data on the average LTCI cost paid by U.S. purchasers. Please keep in mind if LTCI is not appropriate for you or if the cost does not fit your budget, you might want to initiate Medicaid/Nursing Home asset protection planning in order to safely put away your assets for you and your family.

Please feel free to contact Douglas L. Kaune, Esq. any time at 610-933-8069 or dkaune@utbf.com to discuss your particular Medicaid Asset Protection, Nursing Home or Elder law case to determine the appropriate planning for you and your family.
Wills * Trusts * Elder Law * Probate * Asset Protection * Power of Attorney * Estate Planning
Unruh, Turner, Burke & Frees, P.C. is a full service law firm with offices located in Malvern, Phoenixville, West Chester and also serving surrounding locations such as King of Prussia, Newtown Square, Media, Exton, Downingtown, Norristown and other towns in Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).

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Your estate planning documents such as wills, trusts and powers of attorney require periodic review and updating.  Changes in your life circumstances such as a divorce necessitate modification of your estate planning documents.  Regardless of whether or not you created a will or other planning documents during your marrieage, you should have these documents prepared after a divorce.  If you do not, unwanted results may occur. For example, if you have young children and pass away after a divorce, your ex-spouse is likely to gain control of your children’s inheritance as guardian if you to not make necessary estate planning provisions.  You should also make sure to modify beneficiary designations on you life insurance, IRA’s, 401k’s, annuities and pension plans.  This will avoid any problems resulting from your ex-spouse still being listed as beneficiary after divorce.  Check out this article to review some of the other estate planning considerations after divorce.

Please contact Douglas L. Kaune, Esq. at 610-933-8069 or dkaune@utbf.com to discuss your particular estate planning questions and to determine the appropriate planning for you and your family.

Wills * Trusts * Elder Law * Probate * Asset Protection * Power of Attorney * Estate Planning
Unruh, Turner, Burke & Frees is a full service law firm with offices in Malvern, Phoenixville, West Chester and serving surrounding areas such as Collegeville, Wayne, king of prussia, Media, Exton, Downingtown and the following counties: Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia Pennsylvania (PA).

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