Author: Michael

How a Layoff Can Be the Start of a Dream Come True

There was a great article in the Grand Rapids Press this past Sunday talking about how layoffs are a driving force behind many recent business start-ups (read it here: http://www.mlive.com/business/west-michigan/index.ssf/2010/04/bad_economy_driving_more_worke.html).  The drive, determination, and creativity of the folks in the article is why I limit my business services to only entrepreneurs.  I believe entrepreneurs can benefit most from my approach and that I can bring the most to the table for these drivers of our economy.

This article provides encouragement to thousands who may consider starting their own business, as it shares the stories of folks who have.  Fear is the common barrier between idea and action . . . at least in my experience.  And knowing that others are in the same situation as you and have taken the same “leap” you’re considering, helps alleviate some of that fear.  The layoffs and overall job loss over the past couple of years has allowed the creative spark that lied dormant in so many individuals, to come out and be put into action.

So I ask . . . do you have a great idea for a business?  A new product?  A new service?  A new way of providing a product or service?  What’s holding you back from acting on that great idea and making it the catalyst to take your future into your own hands?  I look forward to comments on this post or via email.  Let’s work together to keep the entrepreneurial spirit strong!

As a side note, if you are curious about entrepreneurship, you should consider the Michigan Small Business Technology and Development Center’s many resources.  The hub just happens to be right here in West Michigan at Grand Valley State University’s downtown campus.  You can find out more here (http://www.gvsu.edu/misbtdc/).

I would be remiss if I didn’t remind everyone how important it is to have the proper legal, insurance, financial, and tax foundation when you start your business and as you continue to operate it.  I have a very unique approach to providing business formation and ongoing representation services that enables a start-up to spread out the associated fees and receive the guidance and services they need not only upon start-up, but throughout the critical first years.  Comment on this post, call me, or use our contact us page if you would like more information.

Why Every Business Needs a Lawyer (and What Type of Lawyer They Need!)

This will be a short one.  I just read a great blog post by my colleague Gina Madsen in Nevada on this very topic.  I recommend you read it here (http://www.madsenlawoffice.com/Blog/tabid/59/ID/25/Why-Every-Business-Needs-a-Lawyer.aspx).  Gina is very good at being short and to the point.  I won’t add much to her article other than a personal example.  I recently had a new client join one of my business membership programs, and boy is he glad he did.  The first matter I worked on for him was a negotiation that resulted in him saving $3,000!  And beyond that – and more importantly – he had the peace of mind of knowing I was taking care of the issue for him.  He expressed many times how he “just didn’t have to worry about it, or think about it . . . I have a business to run,” and “I just want it taken care of. ” And take care of it I did.

Gina also had a followup post on How to Choose the Right Lawyer for Your Business.  You can read it here (http://www.madsenlawoffice.com/Blog/tabid/59/ID/26/How-to-Choose-the-Right-Lawyer-for-Your-Business.aspx).  Gina and I have the same approach to serving our clients – a relationship model built on service.  A trusted adviser that you can turn to without having to worry about getting a bill in the mail every time you do.  Being proactive rather than reactive (and saving serious $$ by doing so).  And she brings up some very important additional considerations.  I particularly agree with her suggestion to work with a business lawyer who has practical business experience.  I think many business owners overlook the beneficial insight such a lawyer can bring to the table.  I know that my business degree and practical experience helping operate a commercial equipment leasing company help me be a legal adviser AND business adviser to my clients.  And their feedback let’s me know they appreciate that added benefit.

After reading those posts (and my comments) you likely find yourself looking for “that type” of lawyer.  Well, if you are in West Michigan, look no further and call our office for a Small Business Review to see if you qualify to work with our firm.  And if you are in Nevada, I recommend that you call Gina.

Dave Ramsey’s Misguided View of Estate Planning and How It May Hurt Your Family

Dave Ramsey is most widely known for helping people get out of debt, as heard on his daily radio program, and seen in his Total Money Makeover seminars and materials, and his Financial Peace University.  I’m a big fan of his advice on getting out of debt.

Yet, like many well-known people, Mr. Ramsey gives his opinion on a wide range of topics . . . and people listen and follow his advice – whether it is best for them or not.  You see, the problem with giving your opinion on an area that is not your forte, is that people will listen to – and follow – your advice, even to their detriment . . . not realizing that the advice is not proper for their particular situation.

Which brings me to Mr. Ramsey’s question and answer column in the Business section of the 3/22/10 Grand Rapids Press, in which a reader asks him “can you please explain the difference between a will and a Trust? Which do you recommend?”  I’ve been told by several other estate planners that Mr. Ramsey’s views of estate planning are misguided, but this is the first time I’ve seen it myself . . . in print!

He does make some great statements, like “everyone needs a will, but not everyone needs a trust.”  Agreed.  And, “a will . . . tells everyone what to do with your stuff when you die.”  And that, in my opinion is where the accuracy and the good advice stops (abruptly).

First, one factual inaccuracy – he defines a trust as “something you put money into after your death by virtue of your will.”  Not entirely correct.  There are living trusts (which he mentions later) and testamentary trusts.  What he is referring to in this case is a testamentary trust – a trust the terms of which are contained in your will and which does not become effective until you die and your will is probated (note: it does NOT bypass probate).

Second, he alludes to a will being the way to tell your loved ones what to do with your stuff when you die, yet fails to mention that this is accomplished by trusts as well – and a trust can do so for a MUCH longer period of time and with quicker access to the money or property that the trust contains.  A trust can ensure that your hard-earned assets benefit your family for generations to come – a will cannot.

Third, he clearly is not a fan of a living trust – a trust you create (and transfer assets to) while you are alive.  His blanket statement that they are overdone in the estate planning world is misguided, although I will agree that they are overdone by some practitioners. Just like everything else, your estate plan should be based on YOUR most important goals and objectives.  And if those goals and objectives don’t suggest a trust, then you don’t need one.  I have done several non-trust plans for my clients. And he doesn’t stop there.

He goes on by saying that living trusts “are not needed nearly as much as some people think.”  Who are these “some people?”  Maybe Mr. Ramsey doesn’t think they need a living trust, but he is not an estate planning attorney, so how would he know what questions to ask to make that determination?  I approach what my clients need from the context of their most important goals and objectives.  If those goals and objectives can be best met by a living trust (or only met by a living trust), then I recommend one.  I actually think living trusts are needed for more people.  Of course, I see the increased costs – in fees and taxes – that are paid by the family that doesn’t bypass probate and doesn’t plan to avoid estate taxes.  I also see the heirs burn through their inheritance in remarkably short periods of time – something very few families I work with would like to see happen.  Does Mr. Ramsey see this?  It sure doesn’t seem like it based on his comments.

He then says that living trusts are “more of a gimmick than anything else.”  Really?  How so?  That’s a strong statement to make without some support to back it up.  He gets the basic idea behind a trust when he says “the idea is that you put everything you own in trust now and, when you die, you save on probate taxes.”  Slight correction – you save on probate costs, fees, time delay, it being public, AND estate taxes.  Much bigger correction – you also can make sure your estate is there to benefit generations to come, make sure it is protected from their creditors, ex-spouses, and not taxed in their own estate, just to name a few benefits.  A trust can also provide a much quicker means of accessing your money if you become incapacitated.  As you can see, there are many benefits beyond Mr. Ramsey’s very basic statement.

Finally, he says “it’s a good theory, but the downside is . . . you have to operate your life in a trust.  And that’s a real pain in the butt.”  Again, really?  The most important part of having a living trust is to make sure your assets are “funded” (transferred) into the living trust.  A trust can only control what it owns.  So you make the transfer – it’s just like buying or selling anything else, except the trust is the one receiving it, not an actual person.  Going forward, you buy and sell from the trust.  How is that any more difficult that buying or selling in your own name?  I don’t think it is.  It could be more difficult if you can’t remember the name/phrase used to represent the trust, which is why I provide trust ID cards to all my clients so they don’t have to remember it.

Basically it comes down to this.  You need the estate plan that best meets your goals and objectives.  Not what Mr. Ramsey thinks is good or bad, not what I think is good or bad.  If a living trust best meets your goals/objectives, then you need one . . . if not, then you don’t.  Whatever you do, you should talk with a dedicated estate planning attorney to fully understand the benefits and costs to you and your family of NOT planning and of the various options you have for planning.  It is my fear that many families who read Mr. Ramsey’s article will not do that and will not look at the option of a living trust, simply because of his comments.  I think that is sad, and that Mr. Ramsey should know better.

Please share your thoughts.  What do you think?

Estate Planning for Entrepreneurs – Business Succession

I just read a great article on the topic at Inc. Magazine (http://www.inc.com/guides/estate-planning.html#).  I think the article brings up some great considerations.  Here’s some of my thoughts/comments on it:

  • VERY important to have a good professional team to work with in order to have the best plan for your situation – attorney, accountant, financial advisor, insurance, and valuation companies are key.
  • I have found that many business owners do not want to go through the necessary conversations that need to be had to have the best buy/sell for them.  Best to have them when everyone is getting along than to have them during conflict, or worse – litigation.
  • There is also hesitancy with many business owners regarding formal valuations.  Common reasons given are cost of the valuation, not wanting to know what the value is (may be higher or lower than they hope), not wanting to provide all the financial and operational information necessary for a proper valuation, and the list goes on.
  • I agree with the suggestion to go with a smaller, local firm that focuses on estate planning and/or business succession.  This helps develop a relationship with a trusted advisor that will pay great dividends for the business owner.  It’s like having a personal family lawyer.
  • I don’t entirely agree with the suggestion to check Avvo.com to find an attorney.  Yes, it can help locate an attorney, but so can google.  I’m not a believer in their rating system as it there are many reasons a given attorney could have a high or low ranking that have nothing to do with how knowledgeable the attorney is aorhow well they provide their service

What do you the business owners out there think?  You have a business to run, so what would cause you to consider addressing the issues presented in the article?

Stuck Between Fear and Excitement – The Business Owner’s Daily Experience

This thought came to me during a recent conversation with a good friend.  He mentioned how he currently was in a real struggle in his business yet could see the amazing potential of what could be in the very near future.  He wasn’t fully fearful and he wasn’t fully excited.  He was somewhere in between . . . actually a rapid seesaw back and forth between the two.

This “in between” area seems to be a common hang out for many small business owners and entrepreneurs that I know and work with.  It is a place that every small business owner has visited and likely will visit, however briefly, throughout the growing life of their business.  I’ve been there myself and can relate to what an “odd” feeling it is to be gripped by fear – whether financial, time constraints, marketing, work-life balance, health, etc. – and excited by the continued growth and success of the business . . . all at the same time!  What an emotional ride.

And that is the key!  The emotion is what I see keeping business owners in the “stuck” phase.  Fear . . . excitement . . . they are emotions, and as such they can swing wildly one way or the other and cause irrationality.  I’m not saying to completely take the emotion out of being a business owner . . . no way!  That’s what makes “the ride” so fun.  I believe the key is to temper both sides, be more “even keeled,” or whatever other cliche phrase you feel fits best.  It is key to recognize the emotion, what is causing the emotion, and to address what is causing it in a level-headed and pragmatic way.  People who know me well know that a constant gripe of mine is how “the law” (politics, court decisions, etc.) is a pendulum that seems to always swing too far one way or the other – it never settles in the middle ground.  Fear and excitement are the same way.  The oddity with these emotions is that you can have both at the same time!

In addition to my faith (the most important factor!), I found several books to be helpful in guiding me through recognizing the situation and dealing with it appropriately (eventually).

Have you been there?  Know someone who has?  Have useful advice for other blog readers?  I would love to hear from you!

Why On Earth Would I Need A Trust?! I’m Retired (or nearing retirement) and My Kids Will Take Care of Everything!

Another great question!  This post is a continuation of my post about how trusts can benefit families with young children.  I’ve also been asked several times why someone in their later years should have a trust.  In many cases the folks expect their children to take care of everything.

I’ve seen this scenario all too often – estate taxes (or higher estate taxes), probate costs, children or grandchildren spending their inheritance in a short period of time, infighting over who gets what, being unprepared for incapacity, and the list goes on.  As I mentioned previously, trusts are increasingly being used as a way to avoid probate and “substitute” for a will.  So, the first benefit is that all the assets titled in the name of the trust will bypass probate.  Emphasis on titled in the name of the trust.  This means you can save yourself the 6- to 9-month (or longer) probate process and the accompanying fees and costs – I’ve seen them average 3-5% of the probate estate (and some much higher).

Avoid estate taxes completely.  With 2011 quickly approaching and Congress focusing solely on healthcare, the odds of the estate tax exemption going back to only $1 million are starting to look more like a reality (as much as I hope that doesn’t happen).  The amount over $1 million will be taxed at up to a 55% rate!  And remember that life insurance is included in your estate for purposes of computing your estate tax.  Wouldn’t you rather that money go to your family or a charity?

Control how and when your children/grandchildren receive their inheritance.  Do you want your children/grandchildren receiving potentially hundreds of thousands (or millions) of dollars within a few months of you passing away?  Do you think they would save it or spend it wisely?  Or would they waste it on expensive “toys,” vacations, etc.?  Trusts allow you to keep the assets “in trust” for a long period of time – they can benefit from it in the ways and at the times YOU determine rather than needlessly squandering it.

Protect your hard-earned assets from your children’s/grandchildren’s creditors, ex-spouses, and lawsuits.  You can not only determine when and how they get access to the trust assets . . . you can set the trust up in a way that it can benefit them while being unreachable by their creditors, ex-spouses, and people or companies who may sue them.

Provide for immediate management of your assets if you are disabled. As many are aware, you are far more likely to become disabled/incapacitated at any given moment than you are to die.  Having your assets in a trust allows for the successor (back-up) trustee to quickly take over managing the assets for your and your family’s benefit, ensuring you receive the best possible care and your family is taken care of during your disability/incapacity.

These are just some of the benefits a trust can provide families later in life.  If you have questions or would like more information on any specific item, please contact us.  We are always happy to help parents and grandparents make the best decisions for their family throughout their lives and beyond.

Why On Earth Would I Need A Trust?! I’m Young and Don’t Have Many “Assets!”

What a great question!  I’ve received many questions about trusts recently from different folks, at different stages of life, and with different goals.  So, I’m going to share my thoughts on why a trust is beneficial for someone at any stage of life . . . and I’m going to to it as a series of posts, specifically addressing two of the more common stages – married with young children, and retired (or nearing retirement) with an empty nest.  Before reading on, I would first suggest you read my post on what a trust is.

Married With Young Children
If there was only one common misconception about trusts (there are many more!), it would be that they are only beneficial for “wealthy” or “rich” people and those are the only people who can afford them.  That  couldn’t be farther from the truth.  Trusts are increasingly being used as a way to avoid probate and “substitute” for a will (more on that later).

Many folks with young children don’t feel like a trust could benefit them because they don’t “have much stuff.”  And usually they mean valuable house, cars, money in the bank, retirement accounts, brokerage accounts, etc.  One of the items they commonly overlook is life insurance.  I highly recommend that every parent of a minor child have life insurance as a means of providing for their children if something happened to the parents.  Many people have a much larger estate if they take their life insurance into consideration.  With that understanding of what you have, consider these benefits of a trust for parents with minor children:

  • Avoid probate – the court process your assets must go through to the extent you pass away with any assets titled in your name.  Probate is public, can take a long amount of time (many months to over a year), and can be costly.
  • Manage the funds for the children’s benefit on your terms not the terms of a court appointed guardianship estate
  • Have your children receive what you’ve provided for them when and how you determine.  You can set it up so they have access to it for only certain items, that they get access to more of it at stated ages, have it benefit them during their entire lifetime and then on to your grandchildren, and protect it from creditors, divorce, and lawsuits.  You can set whatever conditions or lack of conditions you want (subject to public policy considerations).
  • Provide for immediate management of your assets if you are disabled.  By naming  a successor (back-up) trustee, you can ensure there is someone to immediately take over providing financial assistance to your family if you are disabled or incapacitated
  • Provide for the care of a pet.  Michigan recognized “pet trusts,” as a way to ensure your pets are taken care of as well.

These are just some of the benefits a trust can provide a family with young children.  If you have questions or would like more information on any specific item, please contact us.  We are always happy to help parents make the best decisions for their family throughout their lives.

What Is A Trust?

I was recently asked this question by a friend and thought . . . you know, that’s a good question.  There are many, many misconceptions about trusts (more on that topic in a future post).  I think a lot of the misconceptions result from not truly knowing what a trust is, what you can do with them, and how they can benefit in almost any situation.  So here we go . . .

A trust is an agreement – a contract – between the creator of the trust (often referred to as the Grantor or Settlor) and the trustee (an individual, group of people, or company).  What do they agree?  They agree that that the trustee will hold title to the creator’s assets for the benefit of the beneficiaries.  Simple enough, right?  The creator and the trustee agree that the trustee will hold title to the assets for the benefit of the beneficiaries.

There are a couple of major categories of trusts.  The first major category is based on when the trust comes into existence.  In this category there are living trusts and testamentary trusts.  A living trust is created while you are living (wow – a term in the law that actually makes sense!), whereas a testamentary trust is contained in, and created by, the terms of your will (so it becomes effective after you are dead).  When considering a testamentary trust, keep in mind that you give up one of the main benefits of a trust – bypassing probate – by choosing a testamentary trust.  Because it is contained in your will and does not become effective until your will is probated, it reasons that your assets will still go through the probate (court) process.

The second major category deals with the ability to change the trust after you create it.  In this category there are revocable trusts and irrevocable trusts.  Simply put, a revocable trust is one that can be revoked by the creator of the trust (typically while he or she is still living), and an irrevocable trust is one that cannot be revoked.  A revocable trust typically allows the creator to change the trust as well (rather than completely revoking it).  One additional misconception to note – you do not give up control of your assets in the typical revocable living trust arrangement.  Why?  Because you are the creator, the trustee, and the beneficiary.  In that case, having all the roles means that you aren’t giving up the control.

These different types of trusts are not mutually exclusive of each other, so for example, you could have a revocable living trust, or an irrevocable living trust, or a revocable living trust that later becomes irrevocable (usually when the creator of the trust dies).  The only one that would really tough to have is a revocable testamentary trust . . . it’s awfully tough to revoke something if you are dead. The most important thing to remember is to have the appropriate assets properly titled in the name of your trust, no matter what type of trust you have.

So there you have it – a brief explanation of trusts.  You likely are wondering why you should chose a trust over a will – or as I typically get asked, a “simple will.”  I will answer that question in my next couple of posts.  Please let me know if you have any questions!

The Creative Business Lawyer™ and How You Can Use it to Grow Your Business

In my previous post I shared how, as a Creative Business Lawyer™, my approach to practicing law is different from the traditional experience.  And now I want to share how the “rubber meets the road.”  So I have a different approach, but what does it mean to you, the business owner?  I think the Creative Business Lawyer™ Client Pledge sums it up nicely.  Let me know your thoughts!

Creative Business Lawyer™ Client Pledge

As your Creative Business Lawyer, I pledge to:

  • Learn as much about you, as a person, as you are willing to share.
  • Encourage and support your greater good.
  • Never surprise you with an invoice.
  • Tell you if I don’t know the answer to your question and then find the answer you need.
  • Bring in help if and when I need it.
  • Return calls and emails promptly and proactively keep you informed on issues relevant to our relationship.
  • Recognize we are all human and can make mistakes.
  • Introduce you to people I think might be able to help you.
  • Have your back if you’re ever threatened.
  • Celebrate your successes as if they were my own.
  • Love you like a member of the family.

See the difference?  And there’s so much more.  I’m excited about this new approach and I enjoy any opportunity I get to share more about it and learn more about business owners.  If you would like to learn more, contact us to setup a LIFT Small Business Review.

What Is a Creative Business Lawyer™ and What Does it Mean to MY Business

As you may have read in my previous post here, I recently received the designation of Creative Business Lawyer™.  You may be wondering “what does that mean” and “why should I care?”  Well, I think you should care a LOT if you are a business owner or are looking to start a business – or if you know someone in either of those positions  Why?  Because it’s an approach to business formation and counsel that walks alongside you as the business owner to help you make the best decisions for your company – to help, not hinder, in a proactive way.  And, contrary to the typical relationship with a business lawyer, this relationship is not based on time.  No “billable hour.”  Hard to believe?  It shouldn’t be.  Why shouldn’t you get the same type of service from your lawyer as you get from suppliers and your other service providers?

In this post I’ll share what drives a Creative Business Lawyer’s™ passion for what we do.  And the best way to understand it is to share with you the Creative Business Lawyer™ manifesto.  I encourage you to share your thoughts here or email me and let me know if you have questions, comments, or suggestions.  The next post will explain the Creative Business Lawyer™ Client Pledge – a radical, and improved, way of viewing the lawyer-client relationship.

CREATIVE BUSINESS LAWYER™ MANIFESTO

Creative Business Lawyers™ believe:

  1. Our job is to help business owners reach their goals, not stand in the way.
  2. Our job is to help business owners understand and manage risk, not eliminate it.  Risk is what makes life and business fun and worth living.
  3. People and relationships are ultimately more important to the success of a business than documents and numbers, but magic is made when they all work together.
  4. Hourly fees impair relationships, service, and trust.
  5. We must strive to earn the honored description of “Trusted Advisor.” It is better to be a “Trusted Advisor” than a “Hired Gun.”
  6. People were not meant to live/work in cubicles.
  7. The spark of creativity and entrepreneurism exists in every human.
  8. Everyone is worthy of respect.
  9. Our clients know more about themselves and their companies than we do.
  10. The right Trusted Advisor can see and help people move through entrepreneurial and personal blocks.
  11. People generally have a positive motivation for their actions and actions taken from this perspective add to the world.
  12. There is more value in problem definition than in problem solution.
  13. Creative micro-businesses are the future of the world.
  14. Simple solutions are better than complex strategies.
  15. All disputes and conflicts can be solved with creativity.

Probate, Movies, Priorities, and Tax Season

How on earth am I going to make this blog post concise with THAT kind of a title!  Rather than write a series of posts, I thought it would be beneficial to share with you some recent occurrences and how they all seem to tie together.

A friend recently received a document from the probate court and asked me what it was all about.  It was a notice of intent to close the estate for failure to file the continued administration forms  What does that mean?  Basically, if a probate goes on for more than a year you are supposed to file a continuation statement with the probate court.  If you don’t, the clerk of the court may close it with notice to the interested persons followed by a waiting period.  Why, I wonder, had it come that far?  It turns out that there are c0-Personal Representatives and they are not talking to each other.  Because of that and their unwillingness to hire an attorney to handle the matter, nothing is getting done and nobody is getting anything from the estate.  She then shared with me that, “during her life, mom always said, ‘equal shares for everyone, a third, a third, and a third.’  Now my one sister (co-Personal Representative) wants it all and she’s not talking terms with me or my other sister (the other co-Personal Representative).”  Here is the statement that cut to the heart for me . . . “I just don’t understand.  Things were fine while she was alive – now that she passed away (over a year ago) and there’s money at stake, nobody gets along.”  Sadly, this is not the first time I’ve heard or witnessed this type of situation.

And yet, it is still difficult to get people to plan for these situations.  In passing conversations many people tell me, “that won’t happen to MY family.”  How do you know?  I’ve been very surprised by some of the families I’ve seen torn apart after one or both of the parents pass away.  In many cases it was directly a result of poor (or no) planning.

So, what does that have to do with a movie, priorities, and tax season?  Well, I recently watched the movie “The Ultimate Gift,” in which a VERY wealth grandfather plans his estate in such a way that his grandson has to perform certain tasks to find out what, if anything, he gets from the estate.  The tasks are designed to teach him a lesson and give him an intangible gift (e.g., gift of work, gift of friends, etc.).  It was a great movie, (although some of the law wasn’t quite right).

And so with those two situations as a background, I come to the topic of priorities.  You may have read my previous post about priorities here.  Planning really comes down to priorities.  Although the mother in the first example put a basic estate plan in place, she did not place priority on planning for as many possible outcomes as she could have.  Maybe she didn’t think the family would have the problems they are now having, maybe her attorney didn’t talk about those issues, maybe, maybe, maybe.  There is no way to know.  What I DO know, is that you do the things that you place priority on.  I’m not saying one priority is right over another, just that I think we all (myself included) need to think a little bit more about our priorities in the grand scheme of things.  A great example is when you have children – your priorities better change or things will not go well.  I know mine changed for the better, and a cherish every moment I get with my kids.

And now tax season is upon us.  You either love it or hate it – you either get a rebate or have to pay.  And priorities come to the forefront.  How?  Well, the most common phrase I hear when someone I know gets a tax refund is, “wow, what should I do with it?”  I know folks who have bought cars, big-screen TVs, saved some of it, paid bills, took a vacation, and numerous other things.  Those may not be bad choices, but here’s one more for you to consider – get your estate plan in order.  Whether that means putting a plan in place based on YOUR most important objectives (rather than the one the government wrote for you), or having your existing plan reviewed to make sure it still works, you should consider this as an important option for those tax rebate dollars.  What better way to use the rebate than to plan for your family’s future and their protection – to know that if something happened to you or your spouse, your children would be taken care of by who you want in the way you want and that your financial planning would be used for their benefit.  Although cliche, I believe that is “priceless.”

Some Estate Planning Effects of the President’s Proposed Budget

I just read a really good article on some items in President Obama’s budget that may affect estate planning.  Better yet is the emphasis the article places on some incredible opportunities in your estate planning that you can take advantage of now. It’s at Yahoo! Finance and you can read it here: http://bit.ly/daQI3d.  When Steve Leimberg speaks on the topic, you know to listen.  He is an estate planning “institution” in this country.

Here is my “short version” of the article (for those who enjoy “cliff notes”):

  1. Requirement that the basis of property in the hands of the person who receives it can be no greater than the value of the property as determined for estate or gift tax purposes. The article gives a good explanation of basis, so I won’t rehash it here.  And you can look forward to more paperwork for you to do or for you to pay a CPA or Attorney to do, in an effort to ensure that the new rules are followed.
  2. A category of “disregarded restrictions” designed to curb the use of certain valuation discounts in planning. Watch this one closely because it could be a game changer for some very popular planning techniques, depending on how it is enacted.
  3. Grantor Retained Annuity Trusts (GRATs) would have to last a minimum of 10 years. Ouch!  Depending on the age of the person using this popular planning technique, the mortality risk may take this option off the table.

As pointed out by Mr. Leimberg, these are just proposed changes and they are a long way from being law.  Keep in mind, however, that with the current economic and budget situation, changes such as these that we didn’t think we would see may just have a chance of becoming reality.