Saturday, February 28, 2009

Vacation Homes

Do you own or are you considering buying a vacation home?  If you do own a second home or may someday, there are many issues that you should consider.  Here is a link to an article (relatively short) that discusses these issues.

Obama Tax Proposals a Mixed Bag

A recent article provides a breakdown of President Obama’s tax proposals.

One element may be devastating for charities.  The proposal would cap the value of deductions for things like charitable donations, mortgage interest and investment expenses at 28% for couples earning more than $250,000, or 30% less than they would otherwise receive.

On a more positive note, the proposal would stop the scheduled repeal of the estate tax next year and freeze current levels, i.e., a 45% maximum tax rate on a married couple’s estate valued at more than $7 million.


“He’s being so generous at the lower-income level that making $200,000 is going to be like falling off a cliff.  Say what you want about the Bush tax cuts favoring the rich, but this is just becoming punitive.” - Dustin Stamper, an analyst at Grant Thornton LLP, on President Obama’s proposed tax increases.

Thursday, February 26, 2009

What’s an Ethical Will?

According to a Columbus Dispatch article, a hospice physician in Minnesota is promoting a new document referred to as an ethical will.  What is an ethical will?  The article describes an ethical will as a document where the writer describes “forces that shaped their lives, underscore love or admit regret, and pass along life lessons, anecdotes and other treasures immune to a faltering economy.”  One person included poems, favorite recipes, photos, and an account of a trip to South Dakota.  I am not sure that the article adequately stresses that an ethical will should not be considered a legal document.  While I think it would be more effective to teach life lessons, impart wisdom, and express regret to loved ones during your lifetime, some people apparently are willing to wait until postmortem to express themselves.  As an estate planning practitioner, I am concerned people may take the ethical will a step farther and attempt to insert traditional will components in the document, causing several potential problems.  Perhaps the document needs a new name, like scrapbooking.

Wednesday, February 25, 2009


“Who is going to hire an 81-year-old man?” - Fred Dase, a recently laid off octogenarian, in a Wall Street Journal article, Elderly Emerge as a New Class of Workers – and the Jobless.  The reality is that many people, despite their age, are no longer able to retire from the workforce. I am seeing people coming out of retirement, and they are not professional athletes.

Tuesday, February 24, 2009

Probate Law Institute (PLI) Agenda Set - Part II Medicaid Update

The Columbus Bar Association’s 15th Annual Probate Law Institute (PLI) is scheduled for Friday, May 1, 2009.  The Planning Board has finalized the agenda and this year’s event promises to be one of the best ever.  Richard T. Taps is a certified elder law attorney by the National Elder Law Foundation, an author and a well known Medicaid expert.  Mr. Taps topic is "Medicaid Update for Nursing Home and PASSPORT Eligibility."  His presentation will cover court decisions, administrative appeal decisions, and state hearing decisions for the period of March 1, 2008 to  March 1, 2009.  I will be posting more details, including the Course Agenda, in the very near future.

Saturday, February 21, 2009

What Should Your Will Do For You?

We all know that a will can transfer a decedent’s property.  What else should your will do?  First, your will should nominate a person(s) to serve as executor.  It should specifically authorize your executor to do things, like sell property, without requiring probate court approval, and it will usually dispense with the requirement of your executor to post a surety bond.  Second, your will should nominate a guardian for any minor and/or adult disabled children.  Finally, if your estate plan includes a trust, your will may contain a pour-over provision transferring property to the trustee of your trust.

Thursday, February 19, 2009

Life Insurance Review Part II – Minor Child as a Beneficiary

Another life insurance planning mistake is naming a minor child as a beneficiary.  This will almost certainly require that a guardianship be set up for the child through the probate court, incurring court costs and attorney fees.  The probate court would also determine who to appoint as the guardian.  The amount of the insurance proceeds would be public record and the court would have to approve all expenditures.  On top of that, the guardianship terminates and the assets are distributed outright to the child upon turning 18 years of age.  The solution is to create a contingent trust for minor children.

Life Insurance Review Part I – Beneficiary Designations

If you own life insurance, chances are you have designated a primary beneficiary and a contingent beneficiary.  If your primary beneficiary is living at your death, she will inherit the insurance proceeds.  If your primary beneficiary fails to survive you, your contingent beneficiary will inherit.  What happens if both your primary and contingent beneficiaries fail to survive you?  This could be trouble.  If your beneficiaries fail to survive, your policy would become part of your probate estate.  Why is this a problem aside from the fact that the proceeds may be going to someone other than whom you intended?  In Ohio, insurance proceeds passing through your probate estate are subject to estate tax and creditors.  If the policy is a large policy, an otherwise non-taxable estate could become taxable.  The teaching point is to keep current beneficiary designations with your important papers for your review.  If your beneficiary preferences change or a beneficiary predeceases you, make sure that you update your beneficiary designations.

Second Byte - The Columbus Bar News Bytes

The Columbus Bar Association (CBA), as a benefit to its members, publishes Columbus Bar News Bytes. The CBA asked me to share my personal experience with internet marketing.  The article was divided into two parts.  The second part discusses social networks, Twitter, and more.  If you missed the first part you can find it here.

Tuesday, February 17, 2009

Probate Law Institute (PLI) Agenda Set - Part I The Charitable Lead Trust

In a recent Wall Street Journal investment article, the reporter covered the use of a charitable lead trust (CLT) and the benefit of doing so in a depressed economy.  [We covered this topic in a blog post last year]. Coincidentally, the Wall Street Journal article provided an example of the use of such a trust right here in good old Columbus, Ohio.  The charitable portion of the trust is handled through a donor-advised fund with The Columbus Foundation.

What does this have to do with the Probate Law Institute?  Everything.  Brad Britton, Director of Planned Giving with The Columbus Foundation is presenting a section on The Current Benefits of Planning with Charitable Lead Trusts.  I will be posting more details, including the Course Agenda, in the very near future.

Monday, February 16, 2009

529 College Savings Plan Follow Up

Yesterday I posted an update on 529 college savings plans, noting that the IRS will allow investors to make two investment changes for 2009.  Coincidentally, The Columbus Dispatch ran an article today, stating that the Ohio Tuition Trust Authority has expanded investment options by adding six new funds designed to give investors more diversity of funds and to reduce investment fees.

Sunday, February 15, 2009

Do You Have a 529 College Savings Plan?

This year there is a slight but significant change to the investment rules for 529 college savings plans.  Previously an investor could only change investments once a year.  This created some issues in 2008 when the market sank and investors had already made an investment change for the year.  The IRS will allow investors to make 2 investment changes for 2009.

Quotable II

The current market environment is a “series of earthquakes with constantly changing epicenters.  - Deutsche Bank Chairman Josef Ackermann in a recent Wall Street Journal article.  Comparing the economy to natural disasters does wonders for investors’ confidence.


“This is the best prospecting list ever. You’ve got the names and addresses of a whole bunch of rich people who don’t demand much accountability.”  - Ken Phillips, RCG Capital Advisors, quoted in the Wall Street Journal article, Madoff Clients Exposed.  Such a comment is probably why some investors were upset with the release of the list.

Lost Money, Now Found

Do you ever check the Department of Commerce’s Division of Unclaimed Funds to see if it is holding your money or your clients’ money?  According to its website, the division has more than 3,200,000 accounts worth over $1,000,000,000 in its custody.  It takes less than five minutes to search for any unclaimed funds.

Want to impress your clients?  Have your secretary check the names of your clients.  Your client would love to receive a letter stating you uncovered an unclaimed fund.

If you reside outside of Ohio, you can locate your state’s website by checking  Happy hunting.

Monday, February 02, 2009

The Elderly May be Targeted by Some Ponzi Schemes

The term “Ponzi Scheme” derives from a financial fraud perpetrated by con man  Charles Ponzi, where he promised investors very high returns in a relatively short period of time.  The initial investors are actually paid their returns from subsequent investment victims.  Because these schemes entice the investor with tempting and remarkable profits, they usually involve a proposition that is difficult to understand or vague in its description.

 A Wall Street Journal article reports that the number of alleged Ponzi Schemes has mushroomed since the Bernie Madoff scandal.  The reason for the proliferation is that financially-strapped investors are trying to access their assets.  Also, the inevitable failure of this type of pyramid scheme is accelerated when new investors are difficult to lure.  The poor economy is like fuel to the fire.

 A troubling detail of the article is that many of the victims are the elderly.  People who will likely need access to their nest egg in the near future and will not be able to work to try to rebuild any wealth.  In the meantime, the predators typically enjoy a lavish lifestyle.

If you personally are approached by someone offering incredible returns with little or no risk, recall the old saying “if it sounds too good to be true, it probably is.”