Wealth Preservation, Trusts and Estates

By: Lawyer: David M. Frees III Malvern * West Chester * Phoenixville

Tax Deductions and Required Minimum Distributions for 2009 and 2010 - Estate Planning Means Good Tax Planning

If you took advantage of the one year exception last year, you may not have taken a required minimum distribution from your IRA or 401(k). However, as our friend Doug MacGray reminds us in his news letter MacGray Matters, that the RMD is back.

Doug also notes that Haiti earthquake donations made this month can still be taken on your 2009 tax return.

First, the issue of required minimum distributions.

THE RMD is back: If you hold money in a traditional IRA, and you are older than 70 ½, then beginning this year (2010), you must once again withdraw your annual Required Minimum Distribution. Of course, when you make these withdraws, you are subject to tax (on traditional and not Roth IRAs).

The I.R.S. suspended the RMD rule in 2009 due to the large loses many taxpayers experienced. That was great for last year, but the RMD is back.

As your tax preparer will remind you, the RMD is determined by your age and the market value of your IRA. So if you’re 70 1/2 or above, contact your investment advisers soon to plan for this withdraw and the tax issue that will result in on your 2010 return.

Tax deductions still available for 2009:

Just as a reminder, President Obama recently signed into law an act which allows taxpayers to claim a charitable deduction for tax year 2009 for cash donations made for the relief of victims in areas affected by the January 12, 2010 earthquake in Haiti. These contributions must be made before March 1. Ask your adviser for more specifics about the eligible recipients.

Thanks to our friend Doug MacGray
Principal, Senior Vice President Financial Planning
300 Conshohocken State Road, Suite 670 | W. Conshohocken, PA 19428 | (610) 783-4265 (direct)

Hope that you had a great snow weekend and here’s to a safe return to work.
Be well.

David M. Frees III, Esquire
For an estate planning consultation or for advice concerning an estate or trust, call 610-933-8069. Mention OFFER DMFREES2010 for your free consultation.

Unruh, Turner, Burke and Frees maintains offices in Malvern, Phoenixville, and West Chester serving Devon, Berwyn, Exton, and the Western Main Line

dfrees@utbf.com

IRA and 401(k) Distribution Rules For 2010 or How Do I Restart The Withdraws?

By:  Attorney David Frees with offices in Malvern, West Chester and Phoenixville, Pennsylvania

If you stopped taking mandatory IRA or 401(k) distributions last year you might be wondering if you can do the same this year.  The quick answer?  No.

Well then, the next question is: “If they only allowed me to skip distributions last year how do I start taking them again and are their any remaining effects from last years’s law change on how I calculate distributions?”

Again, for almost all tax payers, there is no change.  Your calculation method will be the same as before the 2009 one year change.  However, sinceyou skipped a year of withdraws, your calculation will be based on a larger number.  That’s it.  Fairly simple for a change.

However, there are two technical matters where you might need to pay special attention.

For more on how to calculate mandatory IRA distributions for 2010 see this brief article.

To update your estate planning for greater flexibility during these uncertain times, or for more information about the many options you have in using your IRA or 401(k) assets in your estate planning, call 610-933-8069 for an estate planning guide, or for an appointment.  Mention this code: 2010DavidFrees for a special discount and a frees cd of estate planning ideas to protect your heirs by David Frees.

David M. Frees III Law Offices in Phoenixville, Malvern, and West Chester

Today, the hose passed a bill extending the federal estate tax into next year and beyond. The bill passed 220 to 200 with all support coming from the democratic side of the house. This bill keeps the tax rate at 45% and exempts 3.5 million dollars. A married couple can still protect 7 million dollars of assets and life insurance, but it will still take some careful estate planning.

This is just a quick update. The Senate will now have to take up the issue and is likely to change the bill before the end of the year. We will keep you posted.

David M. Frees III

If you estate plan is more than two years old, it may be desirable to change or update the plan.
For an appointment to review or update your plan please call Donna Brownback or Denise Fox at 610-933-8069 or email dfrees@utbf.com and mention this article to receive a discount on your planning.

Unruh, Turner, Burke and Frees maintains offices servicing the entire Philadelphia region, including the Main Line, Ardmore, Bryn Mawr, Berwyn, Paoli, Chester Spring, and the surrounding areas. The firm has a number of probate, estate planning, and trust lawyers.

I have recently encountered several estates where the shear number of accounts really caused problems for the heirs as they struggled to locate the accounts, discovered escheated accounts, paid an accountant to figure out the tax consequences and more.

And, through the years I have also seen many clients suffer lifetime negative consequences of having just too many bank accounts and investment accounts ranging from extra fees paid to lost accounts to greater tax complexity than needed.

The New York Times also recently addressed this issue and if you want to read more about the problems of too many bank and investment accounts including:
lost accounts
higher management and account fees
unintended estate consequences
unexpected inheritance tax allocations and more
increased likelihood of estate disputes between heirs

Just click here to read David M. Frees and The New York Times on Why You Can Have Too Many Accounts For Your Own Good.

David M. Frees III
Call 610-933-8069 for an appointment to solve the problem of too many accounts in your estate plan.
Make sure that your will or trust works with all of your accounts.

Do It Yourself Wills Trusts and Estate Plans are in the news and are the subject of debate. Is there a right answer. Yes and No. Isn’t that just like a lawyer.

Can you really do a will on line that is valid in Pennsylvania?

Are will forms valid? Do they work to save taxes?

What if a do it yourself will is challenged?

How much do DIY wills cost?

Is a lawyer worth the extra dollars?

How about Legal Zoom? (the cost by the way was almost the same for a simple will as our lawyers from the Trust, Estate, and Wealth Preservation Section of the firm)

These and other questions are answered in my recent article on do it yourself wills and the battle raging over a Wall Street Journal reporter who used several systems. If you have ever thought about doing your own estate planning, you owe it to yourself to peruse these articles.

Do It Yourself Wills And The Lawyer Attacks on The Wall Street Journal

Enjoy! And, let me know your comments and questions below.

Thank you
David M. Frees III
610-933-8069 for an appointment or telephone conference

Unruh, Turner, Burke and Frees has law offices for their
will, trust, estate, and estate planning and asset protection
lawyers in Phoenixville, Malvern, and West Chester Pennsylvania.

These law offices serve Exton, Spring City, Gladwyn, Devon,
Chester Springs, Berwyn, Ardmore, and many surrounding
communities.

For directions to the law offices click here.

By: David M. Frees III Review David Frees’ AVVO Lawyer Rating.
Wills * Trusts * Estates * Estate Planning * Asset Protection Planning
Malvern, Phoenixville, and West Chester Law Offices

It is that time of year when we start to get questions about gift taxes, the gift tax exemption, and about how much you can give to your children and grandchildren.

This year we are getting a new question for the first time, “I thought that the amount goes up every year so how much can I give this year?”

Well, the reason many people believe the amount of the gift tax exemption (the amount that you can give without paying gift tax or filing a gift tax return) goes up every year is that it is indexed for inflation and has gone from the original amount of $10,000.00 to $11,000.00 and recently, to $13,000.00.

However, the amount does not go up every year. And, because the rate of inflation is so low (or perhaps non existent), the amount will remain the same for 2009 and 2010 unless Congress acts to change it as part of the review of the estate and gift tax that is still pending in Congress.

Quick Facts and Reminders about Gift Taxes:

Each person can give up to $13,000.00 for 2009.

A married couple can give $26,000.00 to each recipient even when one spouse has the assets and the other does not. (This is called a split gift and may require your spouse to sig the gift tax return)

If your child or grand child is married, you can also make a gift to the spouse. However, that gift is not protected in the event of a divorce.

You can make gifts of property, real estate, Limited partnership interests, stock or cash. However, the recipient acquires your basis in the asset and may have to pay capital gains taxes on the gift if the specific property is later sold for more than your basis.

Learn more about avoiding end of year gifting mistakes.

We also have a related article on our Estate Planning Blog on Three Gift Tax Questions
Thank you.

Please leave your questions and comments below.

David M Frees III
Will, trust, and estate planning lawyer
Chairman: Trust, Estate, and Wealth Preservation Section

You can find out more about David Frees and the trust, estate, and asset protection lawyers in the firm at Unruh, Turner, Burke and Frees.

* Note: In Pennsylvania, there are no legal specialties. Lawyers may not refer to themselves as “experts” or “specialists” in trusts, estates, wills, or other practice areas. Therefore, when we make reference to ourselves as will or trust lawyers, we mean only that we focus our practice to the areas of wills, estates and related matters.

To see a list of Unruh, Turner, Burke and Frees lawyers and Unruh, Turner, Burke and Frees practice sections click here.

OK. This is not a completely serious blog entry. But wait. Federal estate taxes and death taxes are a serious topic. Have you ever wondered why your family has to pay a death tax? Have you ever thought that the federal estate tax seems unfair or that you have already paid taxes many times already and wondered why they get taxed again at death?

Well, I was surprised to see that Whoopie Goldberg might agree with you. Take a moment and watch this brief discussion on abolishing the federal estate and all death taxes.

Just click this link to my Pennsylvania Estate Planners Blog ( a rich source of ideas, information, tips, and more for Pennsylvania residents who are either planning their estates, doing asset protection planning, or who are executors and trustees for others) and watch Whoopie on the View talking about death tax abolition.

For more ideas, information, strategies and tactics on estate planning, death taxes, asset protection, and estate administration for Pennsylvania residents you can also follow me on Twitter. Just click here to follow David M. Frees III on Twitter.

David M Frees III, Esquire
David is rated “Superb!” on the lawyer rating and information service AVVO.

Our best laid plans can go awry. And, as they say in the armed forces, “No plan survives contact with the enemy.” Indeed, many financial plans have been rendered obsolete or non functional by recent events.

As we have observed before, many wills and estate plans in Pennsylvania fail because families fail to structure their assets and beneficiary designations to match the plan. A will or trust says one thing but the assets are jointly titled or otherwise pass outside of the plan. In other cases, a plan fails because the unimaginable happens.

Does this mean that you shouldn’t plan for retirement, college tuition, weddings, tax savings, and to pass on your assets? To the contrary. Plans are like goals.

If we fail to set goals we have no basis to act or to judge the progress we are making. Just yesterday I met a 24 year old man who set a goal to create a million dollar a year company by the time he was 21. He missed his goal by 18 days. But, he said that he would never have achieved it without setting that goal. It motivated him and it allowed him to see how he was doing and to adapt.

Establishing a plan means that we might fail to achieve the end result. The plan may need to be revised and we may need to adapt. But we are almost always better off having gone through the planning process.

And, in times of trouble, we need information to help us to adapt the plan. So, below are a few links that might be useful in revising the plan and in adapting to our new circumstances.

And because many people hear only the bad news, take a moment to consider the good news. Gas prices, while rising slowly have been quite low. Many families are saving at rates not seen for decades. We are still giving to charity and are vacationing in our own country rather than spending dollars overseas.

There is little purpose in subjecting ourselves to constant bad news. For many people, that means that they become so absorbed in the bad and what is beyond their control, that they fail to act on matters still within their control.

We can still have a say in government. So watch how the government spends the money and tell them what you think with your letters and your vote. The spending can be viewed by clicking here. or by visiting http://www.recovery.gov/

Want to calculate how much you now need to retire? Want to make a gift to charity and need to know if you can? There are a number of great financial and personal calculators here. Just click www.paesateplanners.com for links to several tax and personal financial calculators. Then start doing what you can. Work on what you can control rather than worrying about the matters outside of your control. You will feel better.

David M. Frees III

Follow David Frees on Twitter for estate, tax, financial, and asset protection planning information
for you and your loved ones.

Unruh, Turner, Burke and Frees offers legal services in a variety of fields and has offices in West Chester Pennsylvania, Phoenixville Pennsylvania, and Malvern Pennsylvania. The firm services clients the greater Philadelphia area including Chester County, Montgomery County, and Delaware County.

Effective as of January 1, 2009, the federal estate tax has a new exemption amount.

Currently, estates are exempt if they are below $3.5 million Dollars. That’s the good news. The bad news is that many people may still be subject to the tax even though they think that they and their families are free of that very large burden.

First, the estate subject to that tax exemption includes assets such as the death benefit of most life insurance policies, retirement accounts, joint accounts, and many trusts and other assets as well as assets that pass outside of an estate by beneficiary designation. In other words, non probate or life insurance does not mean tax exempt. Also, if a married couple has assets and life insurance that exceed that number they may still need significant planning to eliminate the tax. The current top rate of the tax is 42% which is scheduled to return to 55%.

Also, the tax is currently scheduled to return to a $1 million dollar exemption in 2011. So individuals or spouses with assets that exceed $1 million dollars should still consider estate tax planning.

Congress is currently considering a change to the tax and may or may not make the $3.5 million dollar exemption “permanent.” See my earlier article on Obama and the estate tax. And, that would be great for clients. In that way, you only need federal estate tax planning when your assets exceed that amount.

However, if the tax no longer applies to you, then you can and should focus your planning and spend planning dollars on protecting your spouse in the event or remarriage and divorce, protecting your children and grandchildren from divorce and lawsuits, and in minimizing state death taxes. Our enhanced Estate Planning(TM) and Family and Friends Plans(TM) focus on these issues and how to avoid family disputes, how to pass on the personal assets and how to make sure that your family history, values and wisdom are also preserved.

These planning approaches were often made more expensive and complicated when the federal estate tax applies. So, elimination of the tax for you may open some new planning options without breaking the bank. And, gifting stock, real estate and other assets in a bad economy with low interest rates may offer real planning opportunities. See my article on effective planning in tough economic times.

For now, make sure that your plan really works and is coordinated with the way you hold your assets, and make sure that you have the right tax planning, the right executors and trustees. And, if for fun you want to see if the Federal Estate Tax applies to you, be sure to check out this little tool from SmartMoney. Just click the link.

But remember that an estate planning check up from your professional advisers, focused on you and your family is the best and that no general calculator will replace that personalized attention.

David M. Frees III, Esq.
Follow David on Twitter for more legal updates or for more information on family communications skills and business skills

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David Frees dfrees@utbf.com
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Also be sure to leave us comments and questions below about what you want and what you need in these articles to help you get the most from your estate planning, for you and your family.