The business section of Sunday's Los Angeles Times featured an article called "Time to prepare your will". Discussing the importance of estate planning, the article included quotes from both of us. Here's a few selections from the article:
If you're rich, the best estate planning advice would be to die quickly. If you're not, the best advice is to either review or rewrite your estate planning documents to make sure your heirs aren't left high and dry if you die.
FOR THE RECORD: The Personal Finance column about estate planning in Sunday's Business section misidentified the book "Trial & Heirs: Famous Fortune Fights!" by Andrew W. Mayoras and Danielle B. Mayoras as "Trial & Errors: Famous Fortune Fights."
That's because estate taxes that could allow Uncle Sam to nab up to 45% of your bequeathed assets are currently -- and very temporarily -- kaput.
A decade-long phase-out of the estate tax eliminated the tax completely as of January. The catch: If nothing's done, estate taxes will boomerang back to historic levels in 2011. That means any bequest of more than $1 million would be hit with a heavy levy on any amount above that limit after December.
But estate planning isn't just about taxes, and it's not just for the rich.
The legal vacuum that was created by the temporary elimination of the estate tax has created potential pitfalls even for people with modest estates.
For example, if you were to die this year and had an old "by-pass" trust, the elimination of the estate tax could cause you to accidentally disinherit your spouse, said Clay Stevens, director of strategic planning for Aspiriant, a wealth management firm in Los Angeles.
These trusts, aimed at reducing estate taxes, often have boilerplate provisions for bequeathing children an amount equivalent to the estate tax "exclusion." This year, that exclusion is unlimited, so everything goes to your kids and unintentionally there would be nothing left for a spouse, he said.
Then, too, as long as the estate tax is phased out, so is something called the "step-up" that reduced capital gains taxes on your appreciated assets after you died.
You can still get that break if you make a few strategic fixes to your estate plan this year, Stevens said. But, if you do nothing, your heirs could face capital gains taxes on all but a pittance of your appreciated property.
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What if you have no documents? Then get cracking.
Studies indicate that the vast majority of Americans don't have wills, trusts or powers of attorney. That can leave heirs in a rough spot, said Danielle Mayoras, coauthor with her husband, Andy, of "Trial & [Heirs]: Famous Fortune Fights."
Act now, avoid trouble later
Ignoring your estate plan can land your children with ill-suited guardians or give them a pile of cash that they're too young to handle, she said.
If you become incapacitated before you die, it can mean that your care could be dictated by a stranger -- or even an enemy. And, doing nothing can cause your heirs to bicker and battle in court -- sometimes for decades.
"People never think their family is going to end up fighting," Andy Mayoras said. "But, especially in this economy, families are fighting over money more and more."
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Both Nass and the Mayorases wrote books about what celebrities have done wrong with estate planning. They say they did so to give parents and their children a way of bringing up the topic to explore how they could do it better.
"It's a way to get the dialogue started," Andy Mayoras said.
Danielle Mayoras adds that entertainer Ray Charles' estate plan provides a blueprint of how to do it right. He got his 12 children and their nine respective mothers in a room to talk about what he was planning, which was to give most of his money to charity. But everyone was provided for in some way, she said.
"The beauty of doing that is that everything is out in the open," she said. "It gives the family some comfort and the ability to talk about it."
Here's the link to the full LA Times article. (It's too bad they got the name of our book wrong, but at least they issued a correction.)
Posted by: Andrew W. Mayoras & Danielle B. Mayoras, co-authors of Trial & Heirs: Famous Fortune Fights! and co-founders of The Center for Probate Litigation and The Center for Elder Law in metro-Detroit, Michigan, which concentrate in probate litigation, estate planning, and elder law. Andrew & Danielle are husband and wife attorneys, professional speakers and consultants across the country.Follow us on Google+