Maintaining Control – It’s Your Money

Many people have made the mistake of giving loved ones electronic access to bank accounts and other financial files. It’s smarter, and gives you more control, if you don’t grant access by sharing your password. Instead, you should exercise your power to choose the right people in your estate plan to serve you when you become incapacitated, choose to resign, or pass away. This way, when the time comes, you are actually granting proper legal authority. Not only will this person, your successor trustee, be responsible for paying your bills, they will also have to account for whatever they spend, per your trust instructions.

When I became Trustee for a 93-year-old, “Doreen” had created her estate plan with her attorney and specifically chose to have a professional trustee, rather than select one of her daughters, Mary, who had been “helping” her for years.

Doreen was having trouble balancing her checkbook, and when she discussed the trouble with her other daughter, Betty, Doreen realized that Mary might have been taking advantage of her. Sure enough, when I marshaled the account, and I asked for the last twelve months of statements, I could see that Doreen had been in the habit of writing a monthly check to Mary for $2000, and there was a monthly electronic transfer of $2000 from Doreen’s account directly to Mary’s account.

Doreen let me know that she had given Mary the UserID and Password to make getting the bills paid “easier”. Doreen was no longer able to track the details. It appears that Mary set up the electronic transfers while sitting next to Doreen at the computer, and then relied on Doreen’s poor memory to double dip into Doreen’s accounts.

When confronted by Doreen’s attorney, Mary said that she thought her Mom had plenty and wouldn’t miss it. Doreen was always generous with her kids, but there is a big difference between making gifts and having money taken from you, right under your nose. Please talk with your estate planning attorney about the best ways to control your funds, and to stay in control.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

Potential Tax Increases and Gift and Estate Tax Exemption Decrease

From time to time we get great summaries from Financial Advisors that we work with that preserve and grow our client’s assets. Here is one form Chris Radici, Financial Advisor at UBS, that we thought was really good:

The House Ways and Means Committee has released the initial draft of the budget reconciliation bill Democrats hope to pass in the coming weeks.  While the bill contains many material changes in tax provisions, it is important to note that Senate democrats will be drafting their own separate bill that is likely to have significant differences from the House version.  These differences will need to be reconciled prior to creation and passage of a final bill.

We are closely monitoring new developments as they occur and are mindful of the effects that changes in tax policy may have on your personal situation.  As always, we maintain a focus on tax-efficiency in our portfolio management and seek to identify beneficial estate planning strategies for you and your family.  An article from the UBS Advanced Planning Group detailing some of the most impactful potential changes is attached to this email.  We’ve highlighted some of the most notable proposals below: 

  • Top individual income tax bracket rate (effective 1/1/2022):
    • Reverts to 39.6% from the current rate of 37%.
  • Top individual income tax bracket thresholds (effective 1/1/2022):
    • Lowered to $450,000 (from $628,301 in 2021) for married individuals filing jointly.
    • Lowered to $400,000 (from $523,601 in 2021) for unmarried individuals.
  • Top capital gains tax rate (effective 9/13/2021):
    • Increases to 25% from 20% (3.8% net investment income surcharge continues to apply).
  • Additional 3% tax on adjusted gross income above $2.5 million for married individual filing separately, trusts or estates with income above $100,000, and $5 million for any other taxpayer.
  • The gift and estate tax exemption will be reduced from $11.7 million to roughly $5.5 million beginning (effective 1/1/2022).
  • Corporate Tax Rate Rates & Structure (effective 1/1/2022):
    • Transition from flat 21% rate to graduated rate.
    • 18% on first $400,000 of income, 21% on next $400,000 to $5 million of income, 26.5% on $5 million+.
    • Additional tax of 3% or $287,000 (whichever is less) on income greater than $10 million.
  • Expanding wash sale rules to apply to commodities, currencies, and digital assets.

How to Find the Right Estate Planning Attorney for You

The relationship you develop with the estate planning attorney will be critical to the efficacy of the resulting plan, and you will want to be able to update your documents over time, as your life grows and changes. You are the creator, or Trustor, of the trust, so it is up to you to select someone you will enjoy and trust.

Ask for Referrals

Your loved ones, work colleagues, other professionals (like your CPA, or Banker) and friends, may already know an estate planning attorney you would like. Ask them. Be prepared to interview at least three attorneys. Take notes during the initial phone calls, and if you are married, ask your spouse to participate in the interviewing process. There is usually one member of the couple who manages the household finances (sometimes couples do this together), and having you both ask your questions will allow the attorney to get to know you both, too.

Please work with a qualified estate planning attorney. You will want to check out their website, see if they have other lawyers in their office who practice in different areas of law. Their site should give you some idea of how they work; meetings are conducted virtually, by phone, in-person, at your home, or at their office. If the website is not clear, it’s ok to ask. You are the client and the one paying for their services.

Make the Appointment

Many worry about the expense of hiring an estate planning attorney without having interviewed one. When I got my first estate plan done, I was referred by someone dear to me. When I called the attorney to get acquainted, and decided I liked this attorney, I asked the attorney about setting up a payment plan. Most attorneys will allow you a free initial phone call. To be ready, look for my article, Questions for the Estate Planning Attorney.

I was a single mom with two little boys, and I was driving on the local highways daily for work, so I wanted to be sure that if anything happened to me, they would be ok. The attorney asked me about my assets, and suggested a payment amount I could afford. My appointment was scheduled for three weeks out, and now I had to organize some paperwork.

Virtual meetings are great, and rather easy. You may be more comfortable having the first meeting with a new professional. Ask for what you want. Your estate plan is an incredible tool to inventory your all you have and all you love. You are the only one who can create this plan for yourself, and you should do it with the right kind of help.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

Why Does Anybody Need an Estate Plan?

At some point during everyone’s Life, we will become vulnerable. This vulnerability could be temporary; recovery from surgery or accident, extended travel, etc. Or this vulnerability could be permanent; dementia, mental or physical disability, or death.

You may think that you don’t have much, so who cares? Here’s the thing some don’t know until it is too late: An Estate Plan only works if you have it in place before you need it. Like auto insurance, you must have it in place before the accident, or it does nothing for you. When will you need it? No one knows, so get started now. You are never too young to have a plan!

Another secret many don’t know, “estate” just means everything you own, and has little to do with wealth. If you have a body, you need a planTM!!

Have you noticed that lots of wealthy celebrities die and leave a mess for their families? A good estate plan often costs less than $5000, so why would a wealthy celebrity not get their plan done? For the very same reasons 2/3 of American adults have no written plan. Some of the decisions which need to be made may be uncomfortable. No one likes to think about their mortality. Finding someone to trust is challenging. Want to learn more about how to have a successful estate plan? Check out the little book, Ethics for Trustees 2.0.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

So Many People Miss This Detail in Their Estate Planning Process

Whether you have $10 million plus, or $10,000 in the bank, when the estate plan is completed, some of the work just begins. As an example, if assets are not properly titled in the name of your trust, your plan will not work the way you hoped.

Another important detail is “Beneficiary Designations”. Some financial institutions give you the opportunity to list who you want to receive an asset if you fill out their Beneficiary Designation Form.

Once you have a trust, which specifies your beneficiaries and what they will receive, it makes sense to review the assets you have and make sure that the beneficiary designation form lists your trust as the beneficiary. When in doubt, please consult with your attorney. It is up to you to make sure that your plan matches up with your decisions on your assets.

Bonus info: Your bank account refers to beneficiary designation as “Pay On Death”, or POD accounts. When you update the title on your bank accounts, please ask to update the POD beneficiary as well.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

The Mystery of Estate Planning Revealed

For so many people, estate planning invokes fear of death, concern about disagreements, and worry about illness. If you haven’t yet gotten your plan into writing, this blog (series of articles) will help you understand more about the estate planning process, and how your estate plan might be implemented in the future. We are experts in the implementation of trusts and wills. Our firm has been in business since 1975, and we have served hundreds of families, just like yours.

Why does anybody need an estate plan?

At some point during everyone’s Life, we will become vulnerable. This vulnerability could be temporary; recovery from surgery or accident, extended travel, etc. Or this vulnerability could be permanent; dementia, mental or physical disability, or death.

You may think that you don’t have much, so who cares? Here’s the thing some don’t know until it is too late: An Estate Plan only works if you have it in place before you need it. Like auto insurance, you must have it in place before the accident, or it does nothing for you. When will you need it? No one knows, so get started now. You are never too young to have a plan!

Another secret many don’t know, “estate” just means everything you own, and has little to do with wealth. If you have a body, you need a planTM!!

Have you noticed that lots of wealthy celebrities die and leave a mess for their families? A good estate plan often costs less than $5000, so why would a wealthy celebrity not get their plan done? For the very same reasons 2/3 of American adults have no written plan. Some of the decisions which need to be made may be uncomfortable. No one likes to think about their mortality. Finding someone to trust is challenging. Want to learn more about how to have a successful estate plan? Check out the little book, Ethics for Trustees 2.0.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

Trouble Getting Your Ducks in a Row

From time to time, all of us feel like we are falling behind. Every year seems to move a little faster than the year before, and we have put off some chores for so long, they have fallen off the “to do” list. The Pandemic has added a layer of challenge, like doing chores while wearing lead shoes.

As a long time professional trustee, I understand daunting deadlines and that feeling of not being able to catch up. My team and I have achieved so much, in concert with the attorneys, and all the other professionals, whose services we need on virtually every matter, I thought I would share some ideas, so you can get your “ducks in a row”, too.

What is the Plan?

Understanding where you want to end up, like producing an accounting, or completing an estate settlement, is a good place to start. Many of us get overwhelmed when we see a long to do list. If you will be completing a big task like an estate administration, it is very helpful to break down the overall list into smaller tasks, which facilitates:

  • Organization – When we first enter a case, there is often chaos, and a lot of unknowns. Even the very people we are serving may not have the answers we need, at the beginning. Gathering all known paperwork, and reaching out to the various financial institutions to gain more information, is typical of the very beginning of a matter.
  • Delegation – Once we have sorted through all the documentation we can find, we can then use the organized documents to assign tasks. For instance, once we have identified where the bank accounts are, I then have to visit that institution and bring all relevant documents, so the legal department can see that I have authority over the asset held there. In the meantime, my team is finding out what forms certain institutions need completed (often notarized), so that we can begin the task of collecting all the assets, per the instructions in the trust document. It is wise to ask for expert help.
  • Reporting to Others – Within the first three to six months, we often have a much better idea of what is going on with the matter. We have identified the vendors to pay, where the money will come from to pay those bills, and much more. It is very helpful to provide a preliminary report to appropriate stakeholders (beneficiaries, and/or trustors) so that they too can see the progress we are making. Sometimes those who receive the initial update can provide additional information. Typically, a formal accounting is produced at the end of the first year of administration, and every year thereafter.

Even when there is no trust to administer, like serving as agent under a Durable Power of Attorney, there is still a requirement for documenting what assets have been discovered, the plan for how the assets are to be spent, along with their beginning balances, so that someday, when we are asked to account, this information will be readily available.

Everyone, family member, friend, or professional, who serve in a fiduciary capacity, should plan to account for their work by tracking all income and expenses, and be fully prepared to publish an accounting to those entitled to receive the information. You never know when the case you are working on might end up in court, or in dispute. Anyone who is interested in the matter may bring up questions which need answering, and being prepared for this helps you to organize more effectively, from the beginning.