David M. Frees III on What To Do About The Federal Estate Tax Problem
If you are confused about why Congress allowed the federal estate tax to lapse and then failed to enact a new law – leaving Americans in an estate planning limbo, then you are not alone. Most political commentators, trust and estate lawyer, and even the past federal reserve chairman Paul Volcker have weighed in on this issue by condemning congressional inaction.
So what is a confused citizen to do? Well first, read a few articles on the federal estate tax so that you are more familiar with this crazy situation. Then, you’ll probably want to review your existing plan with your lawyer to make sure that it works now -when there is no tax, as well as next year when the tax returns with a vengeance.
Being an informed consumer of legal, tax, and estate planning advice is more important than ever.
David M Frees III
Chairman: Trust, Estates, and Wealth Preservation Section
Unruh, Turner, Burke and Frees
Malvern, Phoenixville, and West Chester Pennsylvania
610-933-8069
If you are a Pennsylvania resident and want to update your estate planning, protect your heirs, or deal with the uncertainty of the federal estate tax please call 610-933-8069 and mention code FREES2010 for a complimentary phone or in person consultation.
On Friday, December 12th 2009 Chester County Attorney David M Frees was a faculty memeber at the Philadelphia Convention Center to present his well attended program: Estate Planning For Families With Young Children.
Frees, who spoke for the PBI (Pennsylvania Bar Institute) was asked to return to the event faculty for his second year of presenting on this topic. Frees, who Chairs the Unruh, Turner, Burke and Frees Trust, estate and Wealth Preservation section, taught lawyers from around the state about the most important topics for lawyers representing families with young children and how to best serve their clients.
Frees’ topics included many of the best practices in estate planning including: how to help families to select guardians, 2) the advantages and disadvantages of trusts vs uniform transfers to minors accounts, 3) who should be the trustee?, 4) At what ages should distributions be made and how should you instruct the trustees when you’re no longer available?, as well as how to use 529 plans for Pennsylvania residents and, 5) should parents consider a sprinkle trust where there is an age gap between the children and until they graduate from college?
Other topics included planning to protect children and grandchildren from divorce and lawsuits.
Many of the lawyers in attendance have returned to see David on this topic for more than one or two sessions knowing that they will get the latest thinking and a real overview of the pros and cons of many different estate planning options to share with their clients.
If you need to update a will, trust, or estate plan, or if you are the parent or grandparent of young children and want your plan to truly reflect your thinking and wishes, please call Donna or Denise in the office of David M. Frees III at 610-933-8069. Mention this press release to receive a free copy of David M. Frees’ recent report: The Ten Most Common Mistakes Executors Make and How To Avoid Them.
Rarely do our blog postings and articles come under the category of urgent. But, if you have an estate in excess of $1 million dollars (including life insurance), then you might need to review this immediately.
Why?
The failure of Congress to act on the issue of the end of the federal estate tax has caused an estate planning debacle for Americans that is both complicated and involves risk in either taking a wait and see or an early action strategy.
In other words, since the tax appears headed for an automatic disappearance at 12:00 on December 31st, but might be reenacted after the Congressional holiday break, there is no perfectly clear choice of action.
Thanks to Congress, any decision you make could end up being a problem. However, you need to consider your options before the end of the year and in 2010. And many people need to consider wills that use disclaimers or QTIP (Qualified Terminable Interest Property) trusts rather than outright gifts to spouses or the traditional federal estate tax formula trusts.
Why? Many wills which are drafted to deal with federal estate tax issues have formula clauses that might no longer make sense but may work again if congress reenacts the estate tax after January 1, 2010. Planners simply did not believe that the tax would ever really disappear and clients could not tolerate plans that tried to deal with every possible eventuality because of the complexity involved.
For example, many wills carve out a portion of the estate to go into a generation skipping trust. That is, a trust that goes to children or grandchildren at some point, or is for their use. However, if there is no generation skipping transfer what happens to those funds?
There are also complications for state death tax planning caused by the elimination of the tax. Not only did Americans generally, and their tax advisers believe that this was unlikely, but so did the states. In Pennsylvania, this is less of a problem than in other states, but there are still consequences to consider when using trusts (either created during lifetime, or under wills).
No one really thought that the federal government would ever let this happen, especially, in light of the federal deficit, but it appears to be a real possibility if not the most likely scenario. And, we are not the only ones who think that this failure of Congress created a big mess. See Forbes article on the estate tax mess. So how do you get the information that you need?
Call your estate planning attorney at least for a conference call. And, if your will or trust, has federal estate tax planning provisions, then be sure to review it promptly.
Our Telephone Strategy Telephone Seminars:
For our clients who are reading this, or for you if you want to become a client of the firm, we know it is the holiday season, but we are scheduling telephone seminars on some of these issues in light of the last few days. There will be two different calls. The first is for those who have estates of under 3.5 million dollars. The second will be for those with estates of 3.5 million or above. These calls will brief you on your options and what needs attention right away, and what can wait and you can enjoy them from your home or office just by calling in to the number we provide you.
Our Limited Emergency Update Plan Option:
Also, for our clients, or prospective clients, who want to act now to protect your estate but worry that you might be revising them again, we are currently offering you our Emergency Estate Plan Update (TM) which includes the opportunity to revise and update your plans right now, and pre-arranged small additional fee if revisions are required if Congress acts next year.
So, you can get the coverage and updates you need now without worrying about being recharged the full price for another round of revisions. Preference for these Update Plan appointments is given to existing clients and their are a limited number of such appointments available in December and January.
How To Get Information:
There are three ways to get more information on these calls, or our Emergency Estate Update Plan: 1) leave a comment below, 2) call 610-933-8069, or 3)email dbrownback@utbf.com and put “telephone seminar” in the subject line. We will let you know when the schedule is set. For an Update Plan appointment, simply call Donna, Denise or Beth at 610-933-8069.
Please Get Us You Updated email Information:
We will also be sending client emails on these important issue so make sure that you call the office and give Donna, Denise, or Beth your current email address. You can give them your email address by phone at 610-933-8069 or by email at dfox@utbf.com.
And the entire team at the Unruh, Turner, Burke and Frees
Trust, Estate and Wealth Preservation Section
610-933-8069
P.S. The Emergency Update Plan appointments are limited so please book yours today if you are worried about this confusion or if you feel that your plan is out of date. The plan’s prices start at $600.00 and go up from there depending on your plan and it’s complexity. There is no charge for the additional appointment. And, at the end of the appointment you are quoted a flat fee and a fee to be paid only if another round of revisions is required. We hope that this helps you. Update Plan appointments can be made by calling 610-933-8069.
As many of you know, the Trust, Estate and Wealth Preservation Section of the firm is a very paper intensive operation. And, as many of you have observed, law offices are notorious for their wasteful use of not only paper but many resources.
Hello. I’m Dave Frees, and I Chair the Trust, Estate and Wealth Preservation Section of Unruh, Turner, Burke and Frees with our offices in Phoenixville, Malvern, and West Chester.
At Unruh, Turner, Burke and Frees, the firm and our practice section have been “Greening” the firm for many years now. Even when we did not have municipal recycling, for example, partner Doug Kaune was our resident enforcer of recycling glass, aluminum, and newspaper.
For the last five years, we have increasingly sourced recycled paper products and have been actively looking for ways to further reduce our carbon foot print. However, in a recent audit, and after some additional research you have helped us to identify and to detect a number of ways to further improve our efforts to reducing, reuse and recycle whenever appropriate.
So what is a green business, what are we doing and why does it matter to you?
Why Green Businesses Matter and What We Are Doing
Earth Share recently offered the following definition:
A “green” business strives to have a positive impact on the environment and community. It develops and practices business strategies that go beyond regulation and demonstrate commitment to a healthy and sustainable future. A green business adopts principles, policies, and practices that improve the quality of life for its customers and employees.
And that is exactly what we have been doing and what we are about to do even more aggressively.
For example, many clients do not realize, how many pages of paper are used until you sign the final draft of your estate plans. Many plans have over over forty to fifty pages of documentation ( and some plans including asset protection plans, trust plans, and even simple wills containing trusts for protecting your heirs from divorce and lawsuits run to the hundreds of pages of documentation).
And, we have often reviewed two to three drafts of some documents before they are even sent to you for your review and at least one more set will be produced as final copies for execution at your signing appointment. For those of you who have found typos of a misspelled name of “uncle Joe” in your wills, it may not seem like it, but before we are done many plans have used over two hundred pages or more of paper. Most of which is actually shredded and recycled already.
However, we are now conducting a more comprehensive audit of our many practices and procedure, as well as our products and have identified a number of new initiatives including but not limited to the following:
1. We are now sourcing a higher percentage of recycled paper without sacrificing the bright white appearance and acid free content that we currently use for your documents.
2. We are attempting to identify vendors who use and who offer more environmentally friendly products ranging from recycled paper in writing paper, document paper, and coffee cups to tissue, and will shift our purchasing to these “greener” vendors whenever possible without sacrificing our products and services.
3. We will use long lasting and green bulbs in light fixtures whenever possible. Although for the time being, some areas of the office are still lighted in incandescent bulbs for the comfort of our staff who must read in that environment for extended periods.
4. We are currently replacing computers and electrical equipment with more efficient models and are implementing policies of turning these devices to a dormant mode if they have not been used for 10 minuets or more (that rarely happens since we’re working on documents all day long!) and completely off at night so that they do not continue to use power after business hours.
5. We will be selecting and sponsoring educational programs in our community that offer real world education and actionable information to young people about how they can positively impact their local and global environment.
6. We are creating an employee green team and will be taking these initiatives to the entire firm.
7. We are actively seeking ways to send more to you electronically – such as the Estate Planning Questionnaire rather than printing it and mailing it needlessly. So, many of our documents, articles, and tools for our clients are now posted on line which saves paper and is often more convenient for the client.
8. We are using recyclable ink cartridges and are exploring the use of other ink products.
9. We also value your comments and input on this issue just as we do in all other respects. Many of our best client service policies originated with you. And, we hope that you will share suggestions on this topic by calling, emailing or leaving a comment below. Have a green strategy at your house or at your business that you want to share with us. Let us know.
Anyone who comments below with a suggestion, or who calls or emails with a suggestion will be eligible to win one of our new Green Law Firm shopping bags (to help you to avoid using plastic and paper bags when shopping, and one of our green suggestion books about how to make your life more environmentally friendly. Finally, our grand prize winner will get a check for $100.00 payable to a green charity of your choice.
So act now! You could be a winner and you’ll be helping the environment for all future generations.
This article was posted
by Douglas L. Kaune, Esquire
Estate Planning, Estate Administration, Wills,
Trusts, Elder Law,
Unruh, Turner, Burke & Frees
Phoenixville, Malvern, West Chester
Pennsylvania Attorney
dkaune@utbf.com PH: 610-933-8069
I have had a recent addition to the family, my son, James Douglas Kaune. Welcome to our lives James!! Taking my own advice, my wife and I immediately updated our estate planning documents including wills, powers of attorney and trusts. We also modified our beneficiary designation forms in IRA’s, 401k’s and life insurance to name the testamentary trust for my son if something happens to my wife and me. We want to make sure James is well taken care of and that the correct trustee is apppointed to oversee his inheritance. This will help to make sure these assets are protected from poor spending habits, future creditors and possible divorce (A long time from now I hope!) Take a look at this article for some advice when determining what type of trust, what trust provisions and what trustee would be best suited to take care of the assets you leave for your children. We are looking forward to long healthy lives with James, but want to make sure that we take all the necessary steps to make sure he is well cared for under all circumstances.
Douglas L. Kaune, Esquire
Serving, Chester, Montgomery, Delaware
Bucks and Philadelphia Counties
If you are a Pennsylvania resident, there are many different taxes and tax systems that have to be considered in creating any truly effective plan. In addition to the federal estate taxes, you should also consider the effect of gift taxes, state and federal income taxes, the Pennsylvania Inheritance Tax, and in many cases, the generation skipping tax.
Why? These taxes often make one planning technique just the thing for one client and a terrible mistake for another. Consideration of these taxes is usually time very well spent. For more see my article here.
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