Posts Tagged ‘Add new tag’

Funeral Plans

Thursday, August 27th, 2009

If you have not already made your funeral arrangements, you might want to sign on to eBay and place a bid for the crypt directly above Marilyn Moore’s crypt.  According to an article on MSN.com, the winning bid of $4.6 million for this crypt was cancelled, meaning that this is back on the auction block.

While you mighted not be interested in bidding on this space for your eternal rest, it does remind us that part of our planning should include funeral arrangements.  Consider prepayment of your funeral expenses.  This will not only alleviate the financial burden for your family, but it will also allow you to give instructions for your funeral.

Do you want to be buried or cremated?  Do you want a formal service?  Do you want a reception/party afterwards?  Do you have certain songs that you wanted played during the service or reception?  By giving your family some concrete ideas of your wishes for your funeral, you will be helping them at a very challenging time in their lives. 

One word of advice – do not write these wishes in your Will.  Your Will is probably not going to be reviewed until after your funeral.  Plus, your wishes are likely to change over time, and the proper way to change your Will is to formally amend it by Codicil.   I suggest that you write out your wishes and keep them with your other important documents.  If you are comfortable, you might also consider giving this writing to your family.  After all, if they cannot find your wishes, they are worth a whole lot!

Trusts to Pass Real Estate to your Family

Thursday, August 20th, 2009

On occasion, our clients wish to explore ways to transfer a personal residence to their children in a tax efficient manner.  One tool that ought to be considered is a Qualified Personal Residence Trust (“QPRT”).  A QPRT is a gift of a residence to your family using a trust in which you retain the use of the residence for a certain period of time.

At the end of this period, the QPRT terminates, and your residence passes to the beneficiaries of the trust.  At that point, if you wish to continue to occupy the residence, you must pay fair market value rent to the trustee or the beneficiaries of the QPRT depending on how the trust is structured. The value of this gift at the time it is originally made to your beneficiaries and transferred into the QPRT is discounted by the value of the use of the residence retained by you.  However, if you die before the end of the retained use, the entire value of the QPRT will be included in your estate for estate tax purposes.

What makes this structure particularly interesting is the possiblity of having to pay rent after the trust term.  You might think that it seems strange to pay rent for the use of your property.  However, if your estate will be subject to estate tax, you can actually work towards reducing your tax exposure by 45% by paying rent.  For example, if you pay rent to the QPRT of $1000 per month, your estate has been reduced by that amount, and your future estate tax has been reduced by $450.  The QPRT will have an income tax liability, perhaps as much as $350, which is less then the estate tax that would have been imposed had you not paid rent.

Medical Surrogates for Minor Children

Friday, August 14th, 2009

Our daughter is starting pre-kindergarten next week, which means that my wife and I are learning about all of the things that need to taken care of when the “school year” starts.  One of those things included providing emergency contact information for our daughter.  I assume that all schools require this, but it did prompt me to think about a bigger issue for our children – who can make medical decisions for them if we are not available to do so (even if only temporarily)?

To avoid confusion and delays in medical care, it may be wise to execute a Health Care Power of Attorney that provides for your children’s medical care if you are unable to make decisions for them.  This might apply if you are out of town on vacation or business, or perhaps if you are incapacitated at any time. 

When executing this type of Power of Attorney, of course, great care should be taken to name someone whom you have the highest level of trust.  Also, depending on the situation, you may want to include a termination date so that the Power of Attorney end automatically.  For example, your Power of Attorney could end on the date you return from your vacation.  That way, there will not be any confusion over grants of authoriy when you return.