We are already half-way into the Year! This is our first Newsletter that we have prepared for our clients. The intent of this Newsletter is to keep our clients up to date with laws that may affect your estate plan as well as provide you with information about our practice. This newsletter addresses a couple of significant changes in our State and Federal Laws as well as some Frequently Asked Questions (FAQs) to help you with keeping your estate plan current.
The New “Old” Tax Law
We all can breathe a sigh of relief with regard to the estate and gift tax law as President Obama recently signed into law the current Estate and Gift Tax law. Essentially, we get to keep the Gift and Estate Exclusion of 5 million (indexed for inflation) dollars per spouse. Also left intact is what is referred to as “portability” which means that a surviving spouse can elect to take a deceased spouse’s unused exclusion. About the only significant change in this area is that the tax rate for estates above 5 million dollars increased to 40%.
The New State of Hawaii Creditor-Protection Deed
In July of last year, the State of Hawaii gave us a new law that extends creditor-protection for real property held jointly as tenants by the entirety (husband and wife or reciprocal partners) transferred into Trust.
This means the property is protected from a lawsuit against one spouse, even when the property is held in Trust.
The New Joint Legacy Trust - Learn how to Save tax, Simplify your estate plan, and Secure creditor-protection.
The new estate tax law and the creditor-protection deed law favor married couples, and these new favorable laws provide married couples who consider most of their assets as jointly-owned a never-seen-before opportunity to (1) save thousands of dollars in potential capital gains tax; (2) simplify their estate plans; and (3) secure creditor-protection for their Hawaii real estate. Please call my office to come in for a free consultation to see if this Joint Legacy Trust is right for you.
My Heartfelt Will – Coloring in your plan.
I am very excited about our “second generation My Heartfelt Will” which I copyrighted and provide to each of my clients to add their touch to their estate plan. My Heartfelt Will offers each client to reach into their past to write their personal stories and experiences that shaped their lives. It also allows for a place to write instruction and guidance to trustees and family members as to how they hope the inheritance is used to provide benefit and meaning to the lives of their beneficiaries. The importance of this cannot be understated. A recent study by Allianz Insurance Company revealed that 86% of baby boomers preferred family stories as opposed to receiving cash as their legacy from their parents. And 65% of baby boomers said in the study that they felt it was very important that they receive instruction on how their parents’ wishes about their family, death, and estate should be fulfilled. My Heartfelt Will is intended to add this meaning to one’s estate plan. If you haven’t been in for a review in a couple of years, please schedule an appointment to review your plan and receive My Heartfelt Will as a gift from me.
Frequently Asked Questions (FAQs)
Q: How often do you suggest that we review our estate plan and what is the anticipated cost of reviewing a plan?
A: Estate planning should be viewed as a process rather than a static, one-time event because our lives are not static. Change is always occurring, in the law, in your lives, in the community, everything is ever-changing. Because our lives change, we want to review our estate plans to accommodate change. It’s kind of like going to the doctor. Because our bodies change as we get older, we see our doctors to accommodate these changes, whether through medication, surgery, or recommended life-style change, all in order to stay as healthy as possible. With regard to the cost of reviewing the estate plan, the changes will vary depending on the work involved. Usually, the review meeting is at no charge. And you can always decide how much work you would like me to do for you after the consultation. The process for reviewing a plan includes the following:
- Call our office to schedule a review meeting, about every three years after you establish your plan;
- Meet with me for about 45 minutes to go over your plan;
- After the meeting, our office will send you a letter to reiterate what we talked about in the meeting and to provide a quote for the anticipated work;
- You would then confirm that you would like to proceed with the work.
Q: How can we prepare for this review meeting?
A: The review meeting is a very important step in the estate planning process. Not only can we discuss any changes in your life and any new laws, we can examine your plan with a better understanding of estate planning to ensure that your wishes are clearly spelled out. The following suggested steps help to prepare for a meaningful review meeting:
- Take a look through your plan. Pay close attention to who you named to make decisions for you and determine if you’d like to make any changes;
- Take a look at who your beneficiaries are and the timing and manner of distributions;
- Prepare an inventory of your assets;
- Check the title of your real estate and the beneficiary designations of annuities, retirement accounts, and life insurance;
- Give some thought to your beneficiaries, how are they managing money? How are their relationships with each other or their spouses? How are their careers? Are there any concerns for any of them?
- How are you doing? Are you planning to make any significant changes in your life such as moving? How are you managing your affairs? Do you feel you need more help in this area?
The Benefit of a Family Meeting
One key element of ensuring a successful estate plan and transition of assets is to engage in a family meeting with the lawyer, when appropriate, once the estate plan has been executed. These meetings may not be appropriate when children are minors or family friction exists. The benefit of the meeting is for parents to clearly state in their own words, their intention and meaning behind the estate plan, and for the children to meet the estate planning attorney and other advisors. While there is a cost associated with this meeting (about $500.00), I believe it is a critical step in the estate planning process.