Category Archives: Estates

Let’s start by saying this: annuities can be a legitimate investment and could be the right thing for you.  That said, instances where an annuity is the best financial tool for your situation are rare.

As with any financial product, you should always ask yourself, “does this product make sense for me, or does it only make sense to the person selling it to me?”  This is even truer with annuities.  Scams and elder financial abuse are rampant in the annuity sales industry.  The simple reason is that the sale of an annuity usually generates a large commission for the salesperson.  The sales pitch usually begins with promises of asset protection and high returns with low or no-risk.

Unfortunately, there are “wealth strategy” companies out there that make a living selling annuities to seniors.  In our experience, this problem is only becoming more prevalent.  It is the rare case indeed when a 15-20 year annuity is the best investment for someone over 80 years old.  In addition to annuities sometimes being inappropriate investments, they can also greatly complicate the application process for Medicaid or Veterans Benefits.  In some instances, investing in an annuity can disqualify an applicant from these benefits for years.

If you or a loved one are considering an annuity, please contact our office to discuss how the annuity would fit into your overall estate plan and whether an annuity is really the appropriate investment for you.  We do not sell annuities or any other financial products.  Instead, we serve as an independent advisor who does not stand to gain or lose a commission.  Our goal is to help you create the best financial and estate plan for your individual situation by avoiding probate, minimizing taxes, and ensuring that your assets pass to your loved ones efficiently.

In the event you do choose to invest in an annuity, or need advice regarding other investments in general, be sure to contact a Certified Financial Planner (CFP).  A CFP is a financial professional who has the appropriate education, licensing and background to give you sound financial advice.  Annuity salespeople or “wealth planners or strategists” that hold no professional designations or licenses should be avoided.

You can find a CFP in your area by searching at this website.

It appears that Congress has reached an agreement on the tax-side, but not the spending side, of the Fiscal Cliff situation.  Although the legislation has not been signed by the President yet, he has indicated that he will sign it.  In the agreement, Congress postponed their decision on automatic spending cuts for a short time.  Therefore, another Fiscal Cliff, albeit smaller, is on the horizon.

For our clients, the tax implications of the agreement are mostly good news.  Long-term capital gain and dividend rates will remain at 15% except for those earning more than $400-$450,000 (depending on marital status).  This is great news for anyone holding stocks, bonds or rental properties as the tax rate on the gain when you sell those investments will remain at 15%, assuming you have held them for at least a year before sale.

Perhaps the most important outcome from this agreement is its effect on estate and gift taxes.  In 2012, a person could pass up to $5.12 million by gift or inheritance, tax-free.  Any amounts over that exemption were taxed at 35%.  Absent an agreement from Congress, the exemption was set to fall to only $1 million with a 55% tax rate.  In this agreement, Congress has decided to set the exemption for both the estate tax and gift tax at $5 million with a 40% tax rate.  Additionally, this unused portion of the exemption is portable between spouses, which means the exemption is essentially doubled for a married couple to $10 million.  Best of all, the legislation makes all of the estate and gift tax laws permanent, so there is finally a little bit of certainty in this area.  The vast majority of Americans will no longer need to worry about the “death tax.”

A full summary of the provisions of the legislation, called the American Taxpayer Relief Act of 2012, is available here.

If you would like to discuss how these new laws affect you and your family, call us.  We can review your current plan or create a new plan that takes full advantage of all probate avoidance and tax minimization strategies available.

Here we are on New Year’s Eve and still no deal in Washington to avoid falling off the “Fiscal Cliff.”  You can read our post from last week to find out how the Fiscal Cliff might affect you, your estate and your family.

Unless Congress takes action today, the new year will begin with automatic spending cuts and significant tax increases.  Call our office to schedule an appointment to discuss the best way to minimize taxes and burdens on your beneficiaries.  We can help you protect your assets.

In July we posted about the major changes coming to the estate tax if Congress takes no action before the end of the year.  With only two weeks left in 2012, Congress has still not done anything to avoid the so-called “fiscal cliff.”

The fiscal cliff refers to a multitude of tax breaks all expiring at the beginning of 2013.  It also refers to automatic spending cuts that may be triggered.  Capital gain and income tax rates are set to increase.  However, one tax, which is set to change dramatically, is not getting much attention, but is critical for estate planning:  the estate tax (sometimes called the death tax or known as an inheritance tax).

Currently, the estate tax credit is $5.12 million per person.  There’s also a “portability” provision that effectively allows a married couple to double this exemption to $10.24 million.  At these levels, the vast majority of our clients can avoid estate tax issues and estate tax problems.

However, unless Congress passes a law stating otherwise, in 2013 estates worth $1 million and up will be subject to the estate tax.  In the event that no action is taken, and no new law is enacted, the exemption will drop to $1 million per individual, and the portability provisions of the estate tax will not exist.  At the new level of $1 million and without portability, there are a great number of people who need to review their current documents and planning to ensure the most tax advantageous plan.

Additionally, the top estate tax rate will go up to 55%!  This is not an error or typo – the top rate really is 55%.

While $1 million may sound like a lot of money, your estate for estate tax purposes, called the “gross estate,” includes your home, rental property, farming property and equipment, retirement accounts, life insurance, bank accounts, and everything else you own.  If you own your own business, it’s also included in your gross estate.  It does not matter if this property passes to your heirs by Will, Trust, beneficiary designation, through probate or avoiding probate.  By dropping the exemption from $5.12 million to $1 million, many people will be affected by the estate tax and will need a tax advantaged plan.

If you would like to discuss the estate tax in further detail and how you can limit the taxes on your own estate, contact our office.  We can help you protect your assets.

As of today, undue influence constitutes the crime of financial exploitation of an elderly or disabled person under RSMo 570.145. This puts Missouri among a growing number of states that are strengthening their stance against elder abuse, and it is a strong stance indeed. If the amount of money involved is $50 or more, the crime is a felony, and as the amount of money involved increases, so does the penalty.

This law applies to all people using a durable power of attorney, guardians, conservators and trustees who take financial advantage of elderly or disabled persons. Anyone who is an agent under a power of attorney or who has been given authority over the finances of another person needs to take notice of this new elder law. It is more important than ever to consult an attorney before taking any action that affects the finances of an elderly or disabled person. We can help caregivers and children as they act as agents for their parents, and we can help you or your loved one create an efficient and effective plan. We can help, contact us.

Financial elder abuse, along with physical elder abuse, often goes unreported. If you suspect that someone may be taking advantage of or abusing an elderly person, contact the Missouri Department of Social Services hotline at 1-800-392-0210.

No! Wills are your instructions to the probate court about what to do with your property. Property passing through a will goes through the probate process. The probate process is, essentially, a formal method to make sure that your bills are paid and that your beneficiaries receive the property that you are leaving to them.

So, what are the benefits of a will if it doesn’t avoid probate?

1 – A will allows you to control who receives your property after you die. Do you want to give all of your money to your spouse, your children, or only some of your children? Do you want to make sure that a disabled child, your parents or other dependent is taken care of? Is providing for your place of worship, school or charity important to you? A will can ensure that your wishes are followed. A will can also provide for contingent beneficiaries if a beneficiary unexpectedly predeceases you.

2 – Wills save your family money, as they can authorize many shortcuts that streamline the probate process. Wills can allow your executor to proceed without probate court hearings, waive the surety bond requirement, and allow the court to authorize independent administration. Without a will, your family may have to endure the long form of probate – supervised administration.

3 – A valid will is the only legal way to nominate a guardian for your minor child or children. If you have minor children, you know how important they are. Without a will, your opinion will not legally count. Neither the court nor your family members will have the benefit of your insight when determining who will care for your children and who will manage their money. You can also use your will to create a trust for your children’s education and support.

4 – Wills are the lowest cost planning option. They can be simple and yet very effective. Wills cost less than trusts or other sophisticated legal documents. A simple will, drafted by a licensed attorney, is the baseline protection that everyone with a child, home or bank account needs.

5 – Wills never expire during your lifetime, they are good for life. The will you create today has no expiration date. A valid and proper will can provide for the transfer of current assets as well as any property you may accumulate in the future. This is not to say that you should never review your will. Any time you have a major life change, you should make sure your will still reflects your wishes.

6 – Your will is a roadmap for the probate judge and your executor to follow. You direct how your property is handled and distributed. Without a will, your property will be distributed according to the intestate laws – these are the laws that provide the general default plan for people who die without a will. These default rules do not authorize any of the allowable shortcuts and may or may not fit your wishes regarding who receives your property.

7 – Your will shows your family that you care. A valid will makes everything easier, simpler and more streamlined. It eliminates hassle and gives your family the tool that they need in a crisis. The last thing a family wants to deal with during a time of mourning is a complicated and messy legal situation, especially one that could be avoided.

If you would like to learn more about what a will can do for you and how it is an integral part of an estate plan, contact us.

The months after a loved one passes away can be overwhelming, and important deadlines can easily fall through the cracks.  One of the most important steps to take is submitting your loved one’s will to the probate court.  In Missouri, wills must be admitted to the probate court before the one year anniversary of someone’s date of death.  Missouri law prohibits someone from filing a will, becoming executor or opening a probate estate more than one year from a Missouri resident’s date of death.  Other states allow a longer time to submit a will to probate.   But in Missouri, a last will and testament that is not admitted to probate within the one-year period is never recognized as the true last will and testament of the deceased.

This time limit is designed to provide certainty and closure for the families and heirs.  There are, however, other legal methods to transfer or re-title assets of someone who has died, after the one year anniversary has elapsed — these include a statutory Small Estate by Affidavit and a Petition for the Determination of Heirship.

If you have a loved one who has passed away and you need assistance with life insurance, probate, transferring their property, Mo HealthNet or other creditor claims, or winding up their affairs, we can help.  Call us at 573-441-9000 or email us at [email protected].  We can help you get through this difficult time efficiently and with compassion.

A recent article from The Trust Advisor highlights a new breed of debt collectors.  These collection companies specialize in collecting debts from the estates of people who were in debt, especially credit card debt, at the time of their death.

Many survivors, including widows, parents and children, receive calls from these collectors attempting to collect from the estate.  The Trust Advisor article suggests that these debt collectors are using a new tactic: they are convincing grieving family members that they need to pay off their loved one’s debt, even though there may be no legal obligation to do so!

If you are receiving these types of phone calls, you should contact a probate attorney who can help you with your loved one’s estate and let you know your rights.  Additionally, if an attorney is representing the estate, the debt collectors cannot call you anymore.  They have to direct all communication to the attorney.

If you need help wrapping up your loved one’s affairs or have questions about your rights or obligations as an executor or heir, do not hesitate to contact us and schedule an appointment.