(Photo courtesy of The Guardian)

A typical Thursday night finds me meeting with other lawyers and discussing ideas useful in our respective practices.  Although always trying to find new ideas to help clients, these meetings, reminiscent of old style writer’s salons, are particularly useful because of the opportunity to exchange views in an open setting.  No idea is too simple or outlandish and all opinions are welcome.  It is a refreshing opportunity to be the one asking the stupid question and being amply rewarded with a wealth of knowledge and experience.  The food and drink is usually good, but no match for the companionship.

Recently we were discussing provisions for naming and removing successor trustees and the differences between granting the right to trustees, protectors, and beneficiaries.  I was particularly interested in what powers could be used in what situations with or without running afoul of grantor trust rules that cause assets in an irrevocable trust to be included in the taxable estate of the grantor or beneficiary.

These are important discussions, but often buried in the “black box” of our trusts because the clients lose interest after answering the questions of control, use, and taxes.  My role is to understand the client’s intentions and providing the most flexible rules that still meet the client’s objectives.

Our discussions frequently involve the relatively new “decanting” power under Arizona law, which allows a trustee of an irrevocable trust to make a new trust and add or exclude beneficiaries under certain circumstances.

This evening the point was made that for asset protection purposes attorneys should ensure that there is a power to exclude beneficiaries, and the discussion then quickly turned to whether that was a power best granted to a trustee or a protector in the context of which office could best wield the power in conjunction with a beneficiary’s right to remove and replace the trustee or protector without inadvertently creating a general power of appointment—which would cause estate tax inclusion in the estate of the person wielding the power.

The flash of knowledge that struck me was that although the power to exclude beneficiaries was crucial to a thoughtful asset protection trust, it would almost certainly not sit well with most of my clients that their successor trustee could exclude their chosen beneficiaries, except under very limited circumstances.

That in turn led to the idea of how to design a trust which would grant the power, but include adequate guidelines as to when the power could be exercised, so as to enhance the protection beneficiaries will have from their creditors yet reassure the grantor that the power will not be used to subvert the client’s intentions.

The trusts I create contain many instances of this type of analysis to ensure that my clients are always on the leading edge of what is possible.

If you found this article interesting, please share it with a friend or make a comment.  If you would like to find out more about purposeful planning, please call me.

Sandy and I recently took a rare weekend off and spent a couple of days in Del Mar where we spent some time attending an estate planning conference, but mostly we enjoyed the sunsets and the good food at Jake’s on the beach (probably our favorite place to have good food and people-watch) near downtown Del Mar.   A wonderful eclectic mix of old and young California families were picnicking and surfing.  There truly was something for everyone—as typified by Sandy wearing both a jacket and a sweater as protection against the cool ocean breezes while I reveled in my shorts, tee, and sandals thinking of the 115 degrees back in the Valley.

Watching families in Del Mar—an old established community that remains vibrant with people of every age—playing, shopping, eating, and just enjoying themselves, always reminds me of the importance of the generations and the estate planning that I do.  Although adherence to technical standards may be the sine qua non of my practice, it is the assurance of family legacies and their accumulated wealth that is the reason for what I do.

On the return trip Sunday, we took a scenic inland route up to Indio through horse and farm country far different than the opulence of the coastal communities.  The sense of hard work emanating from the scenery, the small businesses, the communities dedicated to ranching and farming reinforced my own dedication to making sure that I remember why I do what I do.  It was every bit as intoxicating as the cool ocean breezes.  Two lane country roads running through a different California than viewed from the freeway, yet co-existing with the bustle just a few miles away, is a metaphor for life and the differences each of us bring to our relationships.

I returned to work refreshed and ready to tackle the problems of the day with a renewed vigor and a fresh perspective.  Our trip was a much needed holiday for which I am truly grateful.

As a former consumer debtor lawyer who represented many good families through bankruptcy proceedings in the 1980s and 1990s, I have an intense dislike for the predators preying on the most vulnerable members of our economy – those who have lost their jobs and their hope for the future, and who will try anything to avoid further soiling their already shattered self image.  The article describes the feeding frenzy of entrepreneurs taking advantage of this class of consumers desperate for a solution out of their current travails.  It brings to mind the late night television infomercials promising get rich quick schemes where the only ones getting rich are the ones selling the schemes.

What does all this have to do with estate planning?

A competent estate planner likes inquisitive clients, and especially likes clients who question credentials, experience, and pricing.  It helps the lawyer “sharpen the saw,” identify what is important to the client, and to remain relevant in an ever changing world.

Your estate planner should have good answers to all your questions including how much will it cost, how long will it take, why he or she should hire you, and what the client should do if you are not around when they need you.  If you are going to share personal and financial details with your lawyer you need to have confidence and trust in that person, and a good estate planner knows this.

A skeptical client should want to know about the lawyer sitting across the table from him or her before divulging personal information.  In today’s electronic age, a prospective client can a have a wealth of information before the meeting even begins: the lawyer’s web site and other public information such as Martindale Hubbell listing and rating, State Bar information, reported cases, and other commercial listings.  All of these let the prospective client garner a lot of information, but there is no substitute for asking questions and observing the lawyer’s verbal and non-verbal communication skills.  You must like and trust the lawyer in whom you will repose trust – trust in the lawyer’s skill, knowledge, experience, talent, honesty, and demeanor.  Hiring an estate planner is an important personal decision.

I recently had a conversation with a financial advisor. The purpose of the meeting in her words was for her to find out about my practice.  Near the end of the conversation I asked her to tell me some of her most common frustrations with the lawyers she worked with and how I could improve on their performance if we were to work together.  She was taken aback by my candor and thought talking about her relationships with other lawyers was improper, but I think bluntness is essential for good communication.  Unless I found out why she was looking for more lawyers to work with, I might repeat the same mistakes.  I ask all my clients who come to me with documents drawn by other local lawyers the same question – I want to find out up front if I can do better or if the best advice is to go back or keep looking.

A good estate plan is a living plan.  It is not documents.  A good estate plan is one that sparks a thoughtful discussion of ideas centered on the client’s values, assets, family, desires, and intentions.  An estate plan is a priceless investment and you deserve an estate planner that has spent the time to understand the importance of that process and can communicate ideas that address your innermost concerns in a manner that comforts you.

What does all this have to do with the debt relief firms that cost a lot of money but end up leaving their customers worse off than before they started?  Simply that it brought home to me that estate planners don’t have customers, they have clients, and an attorney-client relationship must be built on trust.

If you want an estate planner who welcomes your questions and takes into consideration your family and your values as well as your assets, call our firm.  As an additional incentive—mention this post to Lisa, my experienced client coordinator, and I will waive the customary $500.00 initial meeting fee.

Is your estate planner a trusted advisor or a guerilla problem solver? Does he see you as a person or merely a bank account?

All too often lawyers or others billing themselves as “estate planners” perceive that you want the lowest cost, lowest maintenance product available so you can feel comforted that you have an estate plan.

This attitude has developed over time because many people believe an estate plan is a simple document to prevent the government from taking money that rightfully belongs to their children, when actually—if done correctly—it can be a comprehensive tool for passing on values and leaving a legacy for future generations.

I believe this is what estate planning has always been, but recently the advent of word processing and the internet has made it too easy for non-lawyers to peddle slick material by the ream, instead of providing you with personal attention and actual content and value.  The internet is great for disseminating information on a wide variety of topics, but it is also the domain of predators who will sell you a boiler plate documents without any input from you other than your names.  These documents may not even adhere to Arizona laws, and they come with voluminous instructions on what to do to make your plan effective.

If you have specialized legal training that qualifies you to understand what you are buying, how to make it work, and how to fix it if it doesn’t work, then the “estate plan in a box” may be for you; but if you have worked a lifetime gaining knowledge and experience in a different chosen field then you can appreciate the importance of using professionals to help you through what could be, if not the most important, certainly the longest lasting decision you will ever make.

Thus my leading question:  Does your estate planner really know you?

In my practice I begin with a list of 20 important concerns and ask you to prioritize them so that your estate plan reflects your personal intentions.

I continue with 18 specific questions about your family to help me become familiar with your unique situation.

And if the situation calls for it, I follow up with a detailed fact finder that allows you to describe your values and explain how you developed the attitudes and values you have and how to pass these along to your descendants.

I use the information I have gathered to weave a rich tapestry of an estate plan, with a trust that will be a tax efficient and purposeful.  My staff will work with you to re-title assets and confirm that all your assets are integrated into your plan so that the administration of your estate proceeds in an orderly and compassionate fashion.

I have more than 30 years experience as a lawyer and am well versed on estate tax planning, treatment of IRAs and other qualified retirement plans, and I study emerging strategies that may or may not use life insurance depending on your needs.  I can help sharpen your focus on how best to employ your resources to accomplish your hopes, dreams, and aspirations.

If you believe you are more than the money you have, we should meet.

Contact me today (or leave a comment with your e-mail address) and I will send you, without any further obligation, my list of 20 concerns, my 18 family questions, and my “You’re More Than Money” questionnaire.

Who would you like to have with you when you are ill or injured in the hospital?  Most likely you would hope to have your partner of many years there with you to hold your hand when things get rough.  Although many of us take for granted that we would be allowed that luxury, until just recently unmarried couples had no assurance that their partner would be allowed to visit them in the hospital—especially if a “recognized” family member such as a parent or sibling chose to refuse access.

In February 2009, Phoenix passed an important milestone when the City Council adopted an ordinance that gives domestic partners, same sex or not, the right to register as domestic partners and establish the right to hospital visitation until the registration is officially revoked.

Before this ordinance, and in other parts of the state, even if the domestic partners had executed health care powers of attorney and HIPAA releases, the family could still exclude the partner from visitation.  Now however, if the domestic partners reside in Phoenix and have registered, they will have established a paramount right to visitation.  Area hospitals outside Phoenix are not bound by the registration and as of now the only other Arizona city with a domestic partners registry is Tucson.  Mesa’s city council is trying to adopt a similar provision, but opposition forces are organizing against the effort.

The registration conveys no other rights, but might be useful in establishing the credentials necessary to obtain benefits where such benefits are offered.

It appears more opposite sex couples than same sex couples are taking advantage of Phoenix’ ordinance, but the ordinance is hailed as a progressive step toward the recognition of human rights across sexual preference boundaries.

Estate planning for unmarried couples is crucial if property rights are to be inherited and disruption to the survivor’s lifestyle is to be avoided.  Traditional tools such as rights of survivorship, POD/TOD, beneficiary deeds, Wills, trusts, and powers of attorney can all effectively be used to provide an estate plan, but the impact on the decedent’s family and the survivor must be carefully considered.  Even small estates must be carefully planned if disputes are to be avoided.

1. No creditor protection is available when property passes by joint tenancy.  Creditors come in many shapes and sizes these days.  Jury verdicts in even the most common accidents easily exceed insurance limits.  Aging survivors are more susceptible to lapses of concentration while driving or otherwise.  All of the survivor’s assets are exposed to creditors when assets are in joint tenancy.  A trust based plan can provide creditor protection to your spouse or your descendants.  This valuable protection can not be purchased at any price if you miss this planning opportunity.
2. Defeats an Estate Plan. Property in joint tenancy passes to the joint tenant even if your Will indicates a different result.  Heirs other than the joint tenant get nothing.  If the joint tenant tries to distribute property to other heirs there will be a gift tax consequence.
3. No estate tax protection for post-death appreciation is available if joint tenancy is used.  Although the asset will pass to your spouse estate tax free; upon the death of the survivor the entire estate is exposed to estate taxes and the tax exemption normally available to the first decedent will be lost.  If your estate (including life insurance) is likely to exceed the Applicable Exclusion Amount (scheduled to return to only $1,000,000 in 2011) then you have unnecessarily benefitted the government at the expense of your descendants.  However, if a “credit shelter” trust plan is utilized, the decedent’s estate, will escape taxation no matter how much it appreciates before the death of the surviving spouse.
4. Reduced protection from accumulated capital gains. Individually owned or community property receives a “step up” basis to fair value at the date of death and your heirs can sell the property and pay no capital gains.  If property is held as joint tenants, the joint tenant avoids probate, but receives the favorable “step up” basis treatment on only one-half of the property.
5. Lack of control. A joint tenant has no control over what happens to the property after death.  A surviving joint tenant can sell or transfer the property, or can pass it to the survivor’s choice of heirs, including subsequent spouses.  Joint tenancy deprives you of the assurance that your property stays in your bloodline.  Without any further planning, property owned by a surviving joint tenant will pass automatically to the heirs of the survivor.  If the survivor’s heirs are not the same as the decedent’s heirs, an undesirable result may occur.
6. Guarantees public probate proceedings. Although there will be no probate administration when the first joint tenant dies, then (unless the survivor creates a new plan) a public probate proceeding will be necessary to complete the transfer of the property upon the death of the survivor.
7. May subject you to expensive and potentially devastating results. Joint tenancy property is fair game for your joint tenant’s creditors.  Although you may have an opportunity to prove your property was placed into joint tenancy for convenience and that the property really does not belong to the debtor, you are exposed to the expense and uncertainty of litigation.

Don’t let any of these fatal problems befall your family.  Call our office today to discuss other, more reliable options for passing on your assets.

It happened again.  After telling the audience at a recent seminar that trusts really are living documents that need to be updated periodically, I was approached by several attendees afterward asking if I really meant their trust needed to be updated. After all, they only want to make minor changes; they don’t need anything big; their trust was created by a very good attorney.

That’s when I told them that any trust needs to be reviewed regularly, no matter how good the attorney or the trust. People change, lives change, and laws change—and any of these changes could affect your trust. In fact, I recommend that my own clients review their trusts annually and update their trusts every 2 to 3 years, if for no other reason than because I am a better attorney today than I was yesterday and can do more to protect them and their families.

People are often surprised when I tell them that the cost of updating their trust can be as much as they paid for their entire trust several years ago. They don’t understand why an “update” is so involved and expensive.  This reaction led me to an epiphany.

These folks understand “update” differently.  When a client hears “update,” they think minor modifications: changes to the people named, the trustees, or distributions. These “modifications” are like getting the oil changed and the tires rotated on your car.  They are items that need regular maintenance.

An “update”, however, is much more comprehensive; it includes changes that take into consideration:

• Tax law changes,
• State law and asset protection changes,
• Changes affecting how the trustees manage and distribute your money,
• Incorporation of new ideas,
• Plugging holes in old legal thinking that plagued older documents, and
• The most current thinking of over 1,000 lawyers

An “update” is trading in your worn out used car for a newer model that performs better.  The standard provisions have been re-engineered to perform better.  “Updating” your trust in my office means you are getting the best protection for your family, and your hopes, dreams, and aspirations.

As a trust based estate planner I aspire to show you the benefits of making modifications when necessary, and updating when the benefits of using modern language insure the result you desire and deserve.

If you are happy with your old car and just need an oil change or new tires, don’t buy a new car; but if a new car appeals to you, it will be a good value. Is the cost too much?  Absolutely not, but sticker shock is a powerful emotion.

Can I “sell” a Chevrolet for the same price as a Cadillac?  No, and I don’t want to; a Chevrolet might be right for your family and your budget – it will provide a reliable result if you have no special circumstances, hopes, or aspirations.  However, I don’t often advocate in favor of a Chevrolet because experience teaches me that in an alarming number of cases the Chevy will fail when you need it most—after you die.  No one wants an out of warranty repair bill.

My personal satisfaction and passion comes from making sure you understand the choice you are making.  As long as you see both the Chevrolet and the Cadillac for what they are and choose the one that provides you the best value, we will both be happy.

In my next post I’ll give some concrete examples describing why my constantly improving Cadillac trust is a better value than your current vintage Chevrolet trust.

Does your estate plan include a digital Will?

Last night while I was having dinner with a friend who also works in the legal world, talk turned to the digital age, and one of our dinner partners remarked about how interesting it was that our friend had recently moved and had acquired modern technology like digital cable TV.  The punch line was that when asked if he was online, he replied he had something better, a secretary who was online.

Not many people I meet in my practice have personal secretaries any more.  Almost all of them are “online.”  Whether you use the internet for email, online banking, bill paying, photo or data storage, medical information, or social networking, it is likely that you have a myriad of usernames and passwords that ought to be regularly changed.

What happens to those online accounts when you die?

Andrea Coombes recently wrote an interesting article Don’t Take Your Passwords to the Grave that describes some of the common risks associated with estate plans that do not adequately address internet accounts.

A somewhat more well known problem was documented in 2005 in A Corporal’s Death on Law.com which described the problems the parents of a deceased soldier had accessing their son’s email account to retrieve his son’s contacts and preserve a record of his correspondence.

To add to the mix, social networking sites such as Twitter, Facebook, MySpace, LinkedIn, etc, sometimes have their own policies regarding what happens to a user account when the owner passes away.

You can protect against the loss of the electronic paper trail as a result of your death by leaving behind a list of accounts, usernames and passwords.  You can download my suggested form for this purpose at www.bregmanandburt.com.  But because of the confusing privacy rules, this may not be enough.  Your trust, Will, and powers of attorney should all include provisions addressing who owns or can access your online accounts after your death.  You also have the option of creating an “online will” to deal with your online assets such as accounts and passwords.

If you use the internet and your estate plan does not contain these important provisions, seek the help of a competent estate planner who understands the digital world.  I welcome your call to review your estate plan or discuss these issues with you.

Social capital is the money or time you contribute to worthy causes that improve society.  A favorite saying around charitable causes is the phrase “give or get” which means members can either contribute an amount of money toward the goal or they can go out and raise that sum of money from people they know.  The saying recognizes that the time expended raising money is often as important as contributing the money itself.

But the social capital I want to talk about in the context of estate planning emanates from my friend’s philosophy that “money is only a tool.”

Although it is often unexpected, when I initiate conversations with estate planning clients my goal is to begin each relationship by learning what each new client values.

Commonly, they are proud of the manner in which they have provided for their family and their intention to provide financial support after they die. However, they often worry that their descendants won’t use their inheritance wisely; and sometimes clients feel that their descendants don’t really need an inheritance anyway.

The concept of social capital solves many issues.  It allows you to contribute money to causes you believe in and set up your descendants to be caretakers of the capital for the future.  It benefits the descendant that doesn’t need your money by speaking from your heart to their own.  It benefits the spendthrift by substituting personal responsibility for temptation.

There are 2 schools of thought about the use of social capital.  Some clients are just not interested in the concept, believing they have supported their causes during their lifetime and it is their descendants’ turn to decide how to act.  Others see the use of social capital as a key tool to building a legacy through strength of character.  Depending on the client’s perspective there are different ways to use this tool.

One way is to purchase life insurance and name a favorite cause as the beneficiary.  This allows small amounts of premium dollars to blossom into a large gift that can provide major support for a favorite cause.  This works well in many situations, but it does not build responsibility in your descendants.

There are tax motivated strategies such as naming a charity as the beneficiary of a retirement account that has not yet been taxed.  Leaving the descendants post-tax assets and gifting the as of yet untaxed retirement plan can yield a good income tax and estate tax result.  Creating charitable remainder trusts as a technique to avoid capital gains on appreciated property is a good strategy when contemplating the sale of highly appreciated real estate or a business.  These strategies share the defect of providing social capital, but not involving your descendants.

A good way to speak to your descendants is to set aside a portion of your wealth in a donor advised fund and name your descendants as the advisors to the fund.  Your voice comes through because you leave your descendants the responsibility of making decisions about how, when, and to whom to give money.  It encourages them to honor your legacy by becoming involved in the causes they support.

However you choose to create a philanthropic legacy, you will be speaking in a clear voice to your descendants about your values and making a difference the way you decide best suits your own perspective.

(image courtesy of www.treasurechestproducts.com)

Back in December I blogged about estate planning not being about money and described the beginning of a journey to find the legacy you want to leave to your children, today I’m going to write about another part of that journey… finding your own voice.

Part of finding your legacy means looking for and putting your own voice into your documents.  Recently I blogged about George Washington’s Will and the way he breathed life into his estate plan by describing the importance of his swords bequeathed to his nephews and the even more important freedoms for which they stood.  Not all of us can be the father of our country, but all of us can bequeath the lessons of a lifetime and speak to our descendants through our estate plan.

Estate planning interviews that begin with how much money you have and to whom do you want to leave it are likely to end there as well.  Interviews that beginning by  listening to your own life’s story give you an opportunity to explore who you are, what you have done, and what is important to you.

When I was first starting out as an inexperienced estate planning attorney, I was often so in awe of my clients who were worth a lot of money that I couldn’t wait to try to impress them in return with the amount of knowledge I had and to use that knowledge to save them even more money.  I was so awe struck, that I neglected to appreciate the value of who they were.  If it was often a less than satisfying personal relationship for me, I slowly realized, it must have been mutually unsatisfactory for my clients as well.

I began to understand if I first learned who my clients were, I would soon appreciate what they valued, and it would become apparent how they had managed to accumulate the wealth and why they were now asking me to preserve it for their descendants.

Certainly passing along hard earned money is a priority for some clients, but poll after poll and personal experience say that what clients really want to deliver to the next generation is their own legacy.  Passing on the money is easy; passing on your legacy is harder.

I have experimented with various tools for getting my clients in touch with their values for estate planning purposes.  The best strategy is active listening.  The hard part is that it is so easy, it doesn’t seem like I am working, I am learning.  But as I learn from my clients, their voices ring in my head.  As I draft their documents, who they are becomes embedded within the corners of the document creating a monument that will live at least as long as the money.

What do you value?  Let me help you deliver those values to the next generation and maybe the generation after that.