Wealth Preservation, Trusts and Estates

Do End Of Year Gifts To Children and Grandchildren Still Make Sense?
By: David M. Frees III

In the last few days of 2010 Congress passed, and the president signed, a new bill governing federal estate and gift taxes.

Since we are so close to the end of a calendar year, many people are calling and asking whether or not to make their traditional end of year gifts.

General Thoughts On Gifting and Gifting Before The End of 2010

In general, you should not make gifts that will negatively impair your personal lifestyle. This is especially true when you are retired and on a fixed income.

However, many clients find that they are fortunate enough to be building estate value even though they are comfortable in their retirement. In these cases, or even in cases of smaller estates, where you want to preserve assets and protect them from the nursing home spending, gifts may be a valuable end of year planning strategy.

This article deals predominantly with gifts where you have sufficient funds to avoid medicaid and nursing home issue. If you desire to protect
your assets from nursing home costs, click here.

For those who want to continue making gifts to family members, there is some very good news in the new estate tax law.

Here is a quick review of the new federal estate tax law and rates.

Strategies For End of Year Gifting and Gifts in 2011:

Since the federal estate tax rate will be the same for the next 2 years, and since five million dollars will be covered and tax free at death (or even during lifetime) for those same two years (before we fall back again to only $1 million dollars) large gifts do not need to be made before the end of 2010 unless very large gifts are being made to grandchildren.

Annual gift tax exclusion gifts (currently $13,000.00) per person can be made before December 31st and again after January first (for 2011) without using any of your lifetime or death exemption. Note that this amount might adjust again in the future.

These annual gifts can be made to children and grandchildren and can be made to the spouses of your children and grandchildren as well. If you are married, both you and your spouse can make these gifts and effectively double the amount that can be given without filing a gift tax return or paying any tax.

In addition, greater amounts can be paid directly to a school or for medical purposes in certain circumstances as well.

In short, make gifts of up to the $13,000.00 per person annual gift tax exclusion amount before the end of the year. In 2011 gifts in excess of this amount will either be taxed (at the historically low rate of 35% for the next two years)

Since the effectiveness of gifts can vary widely from person to person, and because there are better and worse ways to make gifts depending on your personal circumstances ask your lawyer and/or tax adviser to consider your personal facts and circumstances when advising you on the use of gifts, paying up insurance policies, or the use of trusts, annuities, and other gifting strategies.

David M Frees III
Unruh, Turner, Burke and Frees
Offices serving Malvern, Phoenixville, Devon, Wayne, West Chester,
Chester Springs and many surrounding communities.

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Do End Of Year Gifts To Children and Grandchildren Still Make Sense?
By: David M. Frees III

In the last few days of 2010 Congress passed, and the president signed, a
new bill governing federal estate and gift taxes.

Since we are so close to the end of a calendar year, many people are
calling and asking whether or not to make their traditional end of year
gifts.

General Thoughts On Gifting and Gifting Before The End of 2010

In general, you should not make gifts that will negatively impair your
personal lifestyle. This is especially true when you are retired and on a
fixed income.

However, many clients find that they are fortunate enough to be building
estate value even though they are comfortable in their retirement. In these
cases, or even in cases of smaller estates, where you want to preserve assets
and protect them from the nursing home spending, gifts may be a valuable
end of year planning strategy.

This article deals predominantly with gifts where you have sufficient funds
to avoid medicaid and nursing home issue. If you desire to protect
your assets from nursing home costs, click here.

For those who want to continue making gifts to family members, there is
some very good news in the new estate tax law.

Here is a quick review of the new federal estate tax law and rates.

Strategies For End of Year Gifting and Gifts in 2011:

Since the federal estate tax rate will be the same for the next 2 years, and
since five million dollars will be covered and tax free at death (or even during
lifetime) for those same two years (before we fall back again to only $1 million
dollars) large gifts do not need to be made before the end of 2010 unless very
large gifts are being made to grandchildren.

Annual gift tax exclusion gifts (currently $13,000.00) per person can be made
before December 31st and again after January first (for 2011) without using
any of your lifetime or death exemption. Note that this amount might adjust
again in the future.

These annual gifts can be made to children and grandchildren and can be made
to the spouses of your children and grandchildren as well. If you are married,
both you and your spouse can make these gifts and effectively double the amount
that can be given without filing a gift tax return or paying any tax.

In addition, greater amounts can be paid directly to a school or for medical
purposes in certain circumstances as well.

In short, make gifts of up to the $13,000.00 per person annual gift tax
exclusion amount before the end of the year. In 2011 gifts in excess of this
amount will either be taxed (at the historically low rate of 35% for the next
two years)

Since the effectiveness of gifts can vary widely from person to person, and
because there are better and worse ways to make gifts depending on your
personal circumstances ask your lawyer and/or tax adviser to consider your
personal facts and circumstances when advising you on the use of gifts,
paying up insurance policies, or the use of trusts, annuities, and other gifting
strategies.

David M Frees III
Unruh, Turner, Burke and Frees
Offices serving Malvern, Phoenixville, Devon, Wayne, West Chester,
Chester Springs and many surrounding communities.

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Avoiding Trustee Mistakes - David M. Frees III

How To Avoid The Most Common Mistakes Trustees Make

Failing To Communicate Properly

by: Pennsylvania Attorney David M. Frees III

You have heard that communication is vital in marriage and communication is important with your children but communication is also critical in trust administration.

As a trustee to avoid unnecesary hostility from family and beneficiaries communicate with them. It is not only important to keep the beneficiaries informed it may also limit your liability and limit the ability to be sued.

Read this article about the mistake many trustees make of failing to communicate properly and how you can take advantage of of keeping the beneficiaries informed.

See all ten of our articles on How To Avoid The Most Common Mistakes Trustees Make:

Avoiding Trustee Mistakes No. 1:  Trustees Failing To Understand The Trust Language

Avoiding Trustee Mistakes No. 2: Trustees In Trouble  Making Early Distributions

Avoiding Trustee Mistakes No. 3: Trustees Failing To Follow The Prudent Investor Rule

Avoiding Trustee Mistakes No. 4: Trustees Failing To Follow The Uniform Trust Act

Avoiding Trustee Mistakes No. 5: Trustees Failing to Follow The Principle And Income Act

Avoiding Trustee Mistakes No. 6: Trustees Failing to Communicate Properly

Avoiding Trustee Mistakes No. 7:  Failing to Properly Reform, Amend, or Terminate

Avoiding Trustee Mistakes No. 8: Failing to File Tax Returns Or To Seek Professional Assistance

Avoiding Trustee Mistakes No. 9: Failing To Understand The Role Of Multiple Trustees

Avoiding Trustee Mistakes No. 10: Trustees Failing To Do The Job

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Avoiding Trustee Mistakes - David M. Frees III

How To Avoid The Most Common Mistakes Trustees Make

Failing To Follow The Principle And Income Act

by: Pennsylvania Attorney David M. Frees III

As a Pennsylvania trustee what investment strategy should you follow?

Is a “unitrust” right for you?

A mistake that many Pennsylvania trustees make is not understanding the rules governing trusts such as the Principle and Income Act.

The Principle and Income Act, the Uniform Trust Act, the Prudent Investor Rule, and many other regulations are rules that must be followed by a trustee.

As a trustee if you fail to understand, comply, utilize these rules and regulations you are setting yourself up for headaches, personal liability, and lawsuits.

Learn about the laws that govern trusts and the tools you can utilize as a trustee to administer the trust.

See all ten of our articles on How To Avoid The Most Common Mistakes Trustees Make:

Avoiding Trustee Mistakes No. 1:  Trustees Failing To Understand The Trust Language

Avoiding Trustee Mistakes No. 2: Trustees In Trouble  Making Early Distributions

Avoiding Trustee Mistakes No. 3: Trustees Failing To Follow The Prudent Investor Rule

Avoiding Trustee Mistakes No. 4: Trustees Failing To Follow The Uniform Trust Act

Avoiding Trustee Mistakes No. 5: Trustees Failing to Follow The Principle And Income Act

Avoiding Trustee Mistakes No. 6: Trustees Failing to Communicate Properly

Avoiding Trustee Mistakes No. 7:  Failing to Properly Reform, Amend, or Terminate

Avoiding Trustee Mistakes No. 8: Failing to File Tax Returns Or To Seek Professional Assistance

Avoiding Trustee Mistakes No. 9: Failing To Understand The Role Of Multiple Trustees

Avoiding Trustee Mistakes No. 10: Trustees Failing To Do The Job

Call David Frees for trustee consultation to avoid liability as trustee of a Pennsylvania trust.

Offices are located in Malvern, Phoenixville, and West Chester serving the Main Line, Exton, Chester County and surrounding counties.

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Avoiding Trustee Mistakes - David M. Frees III

How To Avoid The Most Common Mistakes Trustees Make

Failing To Follow The Uniform Trust Act

by: Pennsylvania Attorney David M. Frees III

The Pennsylvania Uniform Trust Act has mandatory  requirements for the trusts creation, termination, modification among others. It is important to follow all of the rules and regulations as a trustee so you do not set yourself up to be held personally liable or to get sued.

So if you are a trustee read this brief article on the Pennsylvania Uniform Trust Act to avoid personal liability and lawsuits.

See all ten of our articles on How To Avoid The Most Common Mistakes Trustees Make:

Avoiding Trustee Mistakes No. 1:  Trustees Failing To Understand The Trust Language

Avoiding Trustee Mistakes No. 2: Trustees In Trouble  Making Early Distributions

Avoiding Trustee Mistakes No. 3: Trustees Failing To Follow The Prudent Investor Rule

Avoiding Trustee Mistakes No. 4: Trustees Failing To Follow The Uniform Trust Act

Avoiding Trustee Mistakes No. 5: Trustees Failing to Follow The Principle And Income Act

Avoiding Trustee Mistakes No. 6: Trustees Failing to Communicate Properly

Avoiding Trustee Mistakes No. 7:  Failing to Properly Reform, Amend, or Terminate

Avoiding Trustee Mistakes No. 8: Failing to File Tax Returns Or To Seek Professional Assistance

Avoiding Trustee Mistakes No. 9: Failing To Understand The Role Of Multiple Trustees

Avoiding Trustee Mistakes No. 10: Trustees Failing To Do The Job

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Avoiding Trustee Mistakes - David M. Frees III

How To Avoid The Most Common Mistakes Trustees Make

Failing To Follow The Prudent Investor Rule

by: Pennsylvania Attorney David M. Frees III

Are you a trustee of a Pennsylvania trust?

Do you want to avoid personal liability and lawsuits?

If you answered yes to either of these questions you will want to read the series of brief articles for Pennsylvania trustees on the Most common Mistakes that Pennsylvania Trustees Make And How To Avoid Them.

Too many trustees have been sued for failing to properly administer or invest trust assets under Pennsylvania law such as failing to follow the Prudent Investor Rule.

Read this article about what the Prudent Investor Rule is and how to follow its rules and regulations so you can avoid the headache, money, and time a lawsuit can bring.

See all ten of our articles on How To Avoid The Most Common Mistakes Trustees Make:

Avoiding Trustee Mistakes No. 1:  Trustees Failing To Understand The Trust Language

Avoiding Trustee Mistakes No. 2: Trustees In Trouble  Making Early Distributions

Avoiding Trustee Mistakes No. 3: Trustees Failing To Follow The Prudent Investor Rule

Avoiding Trustee Mistakes No. 4: Trustees Failing To Follow The Uniform Trust Act

Avoiding Trustee Mistakes No. 5: Trustees Failing to Follow The Principle And Income Act

Avoiding Trustee Mistakes No. 6: Trustees Failing to Communicate Properly

Avoiding Trustee Mistakes No. 7:  Failing to Properly Reform, Amend, or Terminate

Avoiding Trustee Mistakes No. 8: Failing to File Tax Returns Or To Seek Professional Assistance

Avoiding Trustee Mistakes No. 9: Failing To Understand The Role Of Multiple Trustees

Avoiding Trustee Mistakes No. 10: Trustees Failing To Do The Job

Call David Frees for trustee consultation to avoid laibility as a trustee of a Pennsylvania trust.

Offices are located in Malvern, Phoenixville, and West Chester serving the Main Line, Exton, Chester County and surrounding counties.

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Avoiding Trustee Mistakes - David M. Frees III

How To Avoid The Most Common Mistakes Trustees Make

Making Trust Distributions Too Soon

by:  Pennsylvania Attorney David M. Frees III

Throughout history, trustees have been sued for failing to properly
administer or to invest trust assets under Pennsylvania law.

And, to make matters worse, (or  much better depending on your perspective)
Pennsylvania has  recently become more highly regulated from a trustee’s standpoint
thanks to the Uniform Trust Act and The Prudent Investor Rule as well as the
Pennsylvania Principal and Income Act.

Bottom line?  More things for trustees to do and more opportunity for error and for
lawsuits and personal liability.

What’s a trustee to do?

Well, we have researched some of the most common trustee mistakes and will, in this and related articles review 10
of the most common mistakes and how to avoid them.

For example, many trustees distribute assets too early, only to find that they owe bills, taxes, or other charges and
that the recipients of those funds have spent them, making the trustee potentially personally liable .

So, if you’re the trustee of a trust for a minor or even another adult read on to limit the chances of personal liability.

See all ten of our articles on How To Avoid The Most Common Mistakes Trustees Make:

Avoiding Trustee Mistakes No. 1:  Trustees Failing To Understand The Trust Language

Avoiding Trustee Mistakes No. 2: Trustees In Trouble  Making Early Distributions

Avoiding Trustee Mistakes No. 3: Trustees Failing To Follow The Prudent Investor Rule

Avoiding Trustee Mistakes No. 4: Trustees Failing To Follow The Uniform Trust Act

Avoiding Trustee Mistakes No. 5: Trustees Failing to Follow The Principle And Income Act

Avoiding Trustee Mistakes No. 6: Trustees Failing to Communicate Properly

Avoiding Trustee Mistakes No. 7:  Failing to Properly Reform, Amend, or Terminate

Avoiding Trustee Mistakes No. 8: Failing to File Tax Returns Or To Seek Professional Assistance

Avoiding Trustee Mistakes No. 9: Failing To Understand The Role Of Multiple Trustees

Avoiding Trustee Mistakes No. 10: Trustees Failing To Do The Job

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Avoiding Trustee Mistakes - David M. Frees III

If you are a trustee of a Pennsylvania trust and you want to avoid personal liability and lawsuits by the beneficiaries, then you’ll want to read David Frees’ latest post on avoiding trustee mistakes and liability. It will take less than three minutes and might save you emotional pain and lost time, money,
and energy.

This article should be of interest to trustees of living or revocable trusts as well as irrevocable trusts of all types including GRATs, CRUTs,
and irrevocable life insurance trusts.

This is the first in a series of brief articles for Pennsylvania trustees on the most common mistakes that trustees make and how to avoid them.

David M. Frees III
dfrees@utbf.com
610-933-8069

See all ten of our articles on How To Avoid The Most Common Mistakes Trustees Make:

Avoiding Trustee Mistakes No. 1:  Trustees Failing To Understand The Trust Language

Avoiding Trustee Mistakes No. 2: Trustees In Trouble  Making Early Distributions

Avoiding Trustee Mistakes No. 3: Trustees Failing To Follow The Prudent Investor Rule

Avoiding Trustee Mistakes No. 4: Trustees Failing To Follow The Uniform Trust Act

Avoiding Trustee Mistakes No. 5: Trustees Failing to Follow The Principle And Income Act

Avoiding Trustee Mistakes No. 6: Trustees Failing to Communicate Properly

Avoiding Trustee Mistakes No. 7:  Failing to Properly Reform, Amend, or Terminate

Avoiding Trustee Mistakes No. 8: Failing to File Tax Returns Or To Seek Professional Assistance

Avoiding Trustee Mistakes No. 9: Failing To Understand The Role Of Multiple Trustees

Avoiding Trustee Mistakes No. 10: Trustees Failing To Do The Job

Call David Frees for a trustee consultation to avoid liability as trustee of a Pennsylvania trust.

Offices in Malvern, Phoenixville, and West Chester serving
the Main Line, Exton, Chester County and surrounding counties.

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The Estate Tax Returns in 2011 - Can Your Get An Extension To File A Return?

Can You Get An Extension To File A Federal Estate Tax Return (Form 706)?

In 2010 there is no federal estate tax and the IRS is not currently accepting the form 706.

In case you’re wondering why anyone would file an estate tax return when there is no estate
tax, that’s another story for another time.  But, in just a few more weeks the federal estate tax will come
back with a vengeance.

On January 1, 2011, the IRS will again begin accepting estate tax returns for descendants dying after
that date.  And, they will be taxing your estate (including life insurance) for every dollar over $1 million.
Additionally, the tax rate will return to a top marginal rate of 55%.

Many clients find, that because of the complexities of the estate, or the lack of ability to get accurate
appraisals, or because of a lack of clear record keeping by an aging relative, that hey are not in a position to file the return
within the nine months permitted by law.  The good news is, that there is also a provision for an automatic extension of up to six months.

Note, that this extension is merely to file a return and is not an automatic extension of time to pay the tax.  In addition, a federal court recently
held that the IRS failed to grant an additional extension (when the extension was requested after the due date for the return).  However,
there are a number of important limitations cited in this case.  But, this ruling  in favor of the tax payer might give you a basis for
requesting an extension other than the automatic extension of six months.

In any case, file requests for extension in a timely manner to avoid the litigation costs experienced by the estate in this case.

To review the case and the federal courts ruling on extensions to file a federal estate tax return, click here.

David M Frees focuses his practice in the areas of trusts and estates, and probate.  He also works with many closely held

family businesses in the areas of succession planning and asset protection planning. 610-933-8069

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Are Your Pets in Your Estate Planning?

Are Your Pets – horses, cats or dogs included in your estate plan? If you have horses, cats, dogs or other pets with long life spans, it might be time to include those pets in your estate planning.  Pets in estate plans are often thought of as an estate planning activity of the rich and famous, but many Americans now purchase pet health insurance, pet vacations, pet day care and many other luxuries for their beloved animals.

So, it’s only rational to make provisions for your pets in the event of your death.

Estate planning for pets can range from the very simple to the very complex and from very inexpensive to more costly arrangements.

From simple to more complicated here are a few points to consider:

1) The Informal Memo Option -At the very least, consider putting together a memorandum to your executor and/or family members suggesting the disposition of your pets.  In this case, where no financial provision is being made for the pets and their care, it is often advisable to discuss the plans with the friends or relatives involved to ensure that they will, in fact, take on the responsibility. In any case, a memorandum that sets out instructions is still always a good idea.

Equine trusts in your estate plan

What something more complicated but more certain?

2) The Outright Gift Option – Consider a bequest to heirs or others who agree to care for one or more pets.  Remember, selection of such care takers is important where there is a flat and outright bequest sine there is no way of knowing how long the responsibility will last.  For that reason, and given the high cost of equestrian care, many horse and other pet owners prefer a gift to a trust where the trustee can ensure that care givers get what they need to Providence continuing care at the right level anticipated by your trust and in your memorandum of instructions.

3) The Trust Option – First, be aware that not all states permit a trust for pets and animals. Pennsylvania and thirty one other states have, however, adopted such a law.  Next, review the issues such as: identifying your pets (the ASPCA site even suggests DNA identification), identifying a caretaker and trustee.  A memorandum to the trustee and care takers with specifics about your pets needs, and your desires for care can be vital. Finally, determine how much will be needed and who gets the balance at the death of your pet or pets.

For more on these issues and equestrian issues watch for more articles.

Attorney David M. Frees III - Pets, Horses and Estate Planning and Trusts

By:  David Frees – Attorney

For more information on estate planning and trusts for horses, and pets, call at  no obligation for a consultation with David M Frees III.  David’s practice focuses on trusts, estates, and related pet and equine issues in estate planning. dfrees@utbf.com

610-933-8069

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