The Connecticut Elder Law Blog

When Does My Estate Planning Need to Get Complicated?

The most complex aspect of estate planning is establishing a plan that will either minimize or eliminate any estate tax liability that would occur upon death.  But it's worth the effort since the estate tax is one of the steepest taxes on the books.

In the case of a married couple, as long as the surviving spouse inherits the estate of the dead spouse and he/she is a U.S. citizen then there is never any estate tax upon the death of the first spouse regardless of how large the estate is thanks to the "unlimited marital exemption" (obviously, there is no such tax advantage for a single decedent).  You could have a $10 billion estate, but there will be no tax due when one spouse dies. 

The estate tax concerns arise when the second spouse dies and has not re-married, or if both spouses die simultaneously.  If the size of the estate is over the $2 million mark, then the children will pay a whopping 45% federal estate tax on the overage!

This type of tax liability can be addressed in your wills or living trusts with complicated "AB Trust" or similar "credit shelter" planning (a good topic for a future post).

Please remember something that most of my clients forget or don't even realize: any proceeds on life insurance that you own are included in the calculation of your goss taxable estate!

Elderly Drivers May Not Be As Bad As You Think

The issue of whether mom or dad should stop driving due to their age, and how, exactly, to get the keys away from them is an enormous issue for a lot of my clients (a topic that is certainly worthy of a future post). 

But a recent Irish study indicates that this issue is, in general, not quite as pressing as most people think.  In fact, the study determined that the accident rate for dementia patients is "acceptably low" for up to three years after the diagnosis.

You can read the full article at RedOrbit.

Happy Fourth of July!

I hope everyone enjoys the holiday today and gives a little thought as to how wonderful this country is and how lucky we are to live here.

And for anyone looking for a healthy BBQ alternative I offer the following turkey burger recipe from my sister who is actually a bigger health nut than I am!

Happy Fourth of July and enjoy the burgers!

GARDEN FRESH TURKEY BURGERS
1 lb. ground turkey
1 egg (or 2 egg whites)
1 c. old fashion oats, uncooked
3/4 c. finely chopped onion
3/4 c. finely chopped red or green pepper
1/2 c. shredded zucchini (about 1 sm.)
1/4 c. catsup
2 cloves garlic, crushed

Combine ingredients; mix well. Shape into 6 burgers. Grill.

Lawyer Joke!

What is the difference between jumping on a trampoline and jumping on a lawyer?

You take your shoes off before you jump on the trampoline.

Vital "Step #2" of the Living Trust Process

I've published posts on the overall scheme in regards to revocable living trusts (Part I and Part II), but the issue of funding your living trust is so important that it warrants a post of it's own.

It's essential to remember that setting up your living trust is a two-step process. Step #1 is having the document prepared and formally executing it.  Step #2 is funding it.  Too many clients complete Step #1 and think that the process is over when they are really only halfway done.  If you do not complete Step #2 then your estate will have to go through probate, which would obviously be a shame since the main reason for setting up a living trust is to avoid probate.

In regards to your real estate, your attorney should prepare a "quitclaim deed to trust" for you to sign which will transfer ownership of your real estate to your living trust, thereby funding the trust with your real estate.  This normally takes place at the same time that you execute the trust itself.

As far a bank and investments accounts go, you will usually just need to fill out and sign a one-page document.  Again, just like with the real estate, you are changing the title to the account so that the records of the financial institution indicate that your trust is now, technically, the owner of the account.

Please note that anything that has a designated beneficiary (life insurance, qualified retirement accounts, annuities, etc.) are already set up to avoid probate, regardless of whether you have a living trust.  But it is generally a good idea to name your trust as the beneficiary of these assets, especially if you are a married couple and your attorney has set up credit shelter planning in your trusts to address estate tax concerns or if you have set up trusts for children in your living trust.  Be sure to check with your attorney.  Again, remember that this would be a change of beneficiary, not a change of ownership.  Closing one of these accounts out and opening a new one in the name of your trust might trigger unnecessary penalties and taxes.