Alabama Estate Planning Lawyer Blog

What is a power of attorney?

Thu, 17 May 2012 20:42:40 -0600

If you've begun thinking about the importance of estate planning to safeguard the future of yourself and the family members who rely on you, a critical component of any plan is a power of attorney.

A power of attorney is a legal document you can use to give someone else the authority to take specific actions on your behalf, such as signing your checks to pay your bills or selling a particular piece of real estate for you. The principal (you) determines the amount of power given to the attorney-in-fact (the person acting in your stead), and this individual can be given the authority to deal with only one particular issue (a specific power of attorney), or to handle most of the principal's personal and financial matters (a general power of attorney).

Durability is something encountered when discussing the subject. If a power of attorney is durable, it remains valid and in effect even if you become incapacitated and unable to make decisions for yourself. A durable power of attorney does become void at death. It's important to note that if a power of attorney document does not explicitly say that the power is durable, it ends if you become incapacitated.

There are three kinds of powers of attorney:

1. Durable Power of Attorney: The Durable Power of Attorney is effective upon signing and remains effective until death. The Durable Power of Attorney is effective whether you are competent or incompetent.
2. Power of Attorney (not Durable): The Power of Attorney is effective upon signing, but is not effective should you become mentally incompetent. This Power of Attorney is commonly used for people that need someone to take care of a single task, such as the sale of the home or paying bills while they are out of town. This Power of Attorney does not allow the designated agent to continue acting on your behalf if you become incapacitated.
3. "Springing" Durable Power of Attorney: The Springing Durable Power of Attorney is effective at incapacity, not at the time of signing. This document is used when you do not want anyone involved while you are mentally able to handle your own financial affairs. Therefore, it "springs" into effect at incapacity.

It's good to remember that having a health care power of attorney does not cancel your right to give medical direction to physicians and other health care providers when you're able to do so. A health care power of attorney only becomes effective when you don't have the capacity to give, withdraw, or withhold informed consent regarding your health care.

The attorney-in-fact can be a spouse, adult child, relative, or trusted friend of the principal, as long as he or she acts in good faith on behalf of the principal at all times. It should be noted that the actions of an attorney-in-fact are legally considered those of the principal, so the principal should always choose a trustworthy individual.

An experienced Huntsville estate-planning attorney can help with the designing and creation of a power of attorney. Preparation of such a document, along with a will and a health care directive, ensures that your health and financial matters will stay in the hands of those you trust. The local expertise of the estate planning attorneys at Martinson & Beason, P.C. will help you craft a sound plan to secure your family's future.

Source: "What is Power of Attorney?," published at CareGiversLibrary.org.

See Our Related Blog Posts:
May is Elder Law Month in Alabama
Why You Need a Will

May is Elder Law Month in Alabama

Wed, 09 May 2012 14:14:19 -0600

NAELA, the National Academy of Elder Law Attorneys, Inc. established May as Elder Law Month as a way to educate seniors and their families about their legal options in dealing with elder abuse and fraud, long-term and health care planning, Medicaid, Medicare, estate planning, and other important issues that effect the senior population.

"With the elderly population growing each day, driven in large part by the graying of the Baby Boomer generation, it is crucial to assist older Americans and their families in finding legal services and resources to improve their quality of life," said NAELA President Edwin Boyer.

Far too often we wait to deal with these issues until times of crisis, rather than working with a skilled attorney familiar with elder law before the crisis is upon us. By planning ahead and looking to the future, seniors can ensure a better quality of life and that they have the services and support they need as they get older.

As we age, we face complex legal concerns that are often different from when we were younger. Our actions may have unintended legal effects. That's why it's important to work with an attorney who is an expert in elder law.

What exactly is elder law you may be asking? First, elder law is no one thing. It encompasses many different fields of law. An Alabama elder law attorney specializes in using their legal knowledge to fit the needs of older clients. Some of the fields most often seen in elder law include:

• Durable powers of attorney, living trusts and living wills
• Conservatorships and guardianships
• Estate planning
• Probate
• Nursing Home Negligence
• Administration and management of trusts and estates
• Retirement, including public and private retirement benefits, survivor benefits, and pension benefits
• Social Security Disability Claims

Most elder law attorneys do not specialize in every one of these areas; so seek out a lawyer with a background in the practice area you are specifically interested in. You will want to hire an attorney who regularly handles matters in the area of concern in your particular case and who will know enough about the other fields to question whether the action being taken might be affected by laws in any of the other areas of law. For example, if you are going to rewrite your will and your spouse is ill, the estate planner needs to know enough about Medicaid to know whether it is an issue with regard to your spouse's inheritance.

The Huntsville elder law attorneys at Martinson & Beason, P.C. will take into account and empathize with the unique challenges that often accompany the aging process. Their understanding of the real-life problems of people as they age allows them to serve as more effective legal representatives.

Four frequent estate-planning mistakes

Sat, 28 Apr 2012 17:02:46 -0600

While there are many mistakes people can make while planning their estates, a recent column on Forbes.com, lists some of the errors most frequently encountered.

1. Not having a plan

Not having a will means that at your death the distribution of your assets will be dictated by the inheritance laws of the state where you were domiciled, likely Alabama. These "intestacy laws" leave a percentage of assets to various members of your family. While there's a small chance that the laws will accomplish what you wanted, that's unlikely. Your will applies to the disposition of your "probate assets," those things that are not following a beneficiary designation. Non-probate assets will pass by operation of law or contract. For example, whoever the beneficiary designation was when you originally began your 401(k) or IRA will override either your will or the laws of intestacy. This could easily lead to distribution of your assets to people you may not anticipate.

2. Failure to Take Advantage of the Estate Tax Exemption in 2012

As every good Alabama estate planning attorney will tell you, making lifetime gifts is a simple and effective estate tax minimization strategy. Giving away assets at no gift tax cost will allow the corpus of the trust and any future appreciation to avoid estate tax upon the death of the donor. Using the exemption equivalent amount during your life is better than leaving it till your death. The reason to act now is that the current estate tax structure is set to expire at the end of 2012. Beyond the annual exclusion gift limit of $13,000, the federal exemption amount for transfers during life and death has increased to $5,120,000 per person for 2012, far and away higher than it has ever been. If you're able and willing to do so making such gifts before the end of the year is a good idea.

3. Leaving assets outright to Adult Children

There's a growing consensus that among those with the means assets should remain in trust even for adult children as long as possible to serve the goal of asset protection. The question of a trust often does not hinge on legal capacity or maturity, though they can sometimes be factors. The question is instead how do I protect the people I leave my assets to from creditors, potential creditors and ex-spouses. Whether or not to leave assets in trust for adult children depends on many factors; not the least of which is personal preference. However, in our incredibly litigious society, leaving some assets in trust with easy access is certainly an idea worth considering.

4. DIY planning rather than professionals

While many people are increasingly turning to the internet to help prepare their wills and trusts and dozens of websites cater to such customers, doing so can be a recipe for disaster. Proper estate planning is complicated and cumbersome and requires a well thought out plan. Websites can provide you with documents but no actual advice that fits you in the context of your specific personal and financial circumstances. An experienced Huntsville estate-planning attorney can help with the designing and creation of trusts and wills, whether complicated or commonplace. A good attorney can also ensure that your estate plan complies with federal and state legal requirements. The local expertise of the estate planning attorneys at Martinson & Beason, P.C. will help you craft a sound plan to secure your family's future.

Source: "7 Major Errors In Estate Planning," by Rob Clarfeld, published at Forbes.com.

See Our Related Blog Posts:
Why You Need a Will
Estate-planning tips for Alabama families

A proper estate plan requires putting it all on the table

Thu, 26 Apr 2012 20:34:32 -0600

The Huffington Post recently published an article explaining to its readers the importance of a properly constructed estate plan. While there are some who believe that they should not leave anything to the next generation, it is entirely possible that even those people may die unexpectedly leaving assets that have to be distributed to rest of the family. That means that it is never too early to begin making preparation for which family members will get the things that you leave behind.

The first thing that must happen to put together a proper estate plan is to have a conversation with the entire family. Although the conversation will not be easy, and it may even be painful, it is completely necessary. The failure to have this conversation will cause more pain and difficulty than actually having the conversation. You need to be realistic about those in your family who you would or would not trust with your assets. "There are remarriages, step-children, adult kids who can't handle money or are married to dolts. There are children with special needs, grandchildren with college worries, surviving spouses who remarry and nobody likes the new wife. Our lives are messy . . . but an honest conversation now can pre-empt problems later on."

The next thing to do is to write the will. It is essential that everyone have a last will and testament. The will should not only explain who gets what, but also how they are to receive it. It may also be necessary to establish a trust to make sure that your specific directions are carried out. When preparing the will, you have to think of all possibilities and all scenarios. The article provides the following example of the kind of forward thinking you must utilize when preparing the will:

Many married couples want to set things up so that the surviving spouse gets everything and then when the surviving spouse dies, it all gets left to their children. But what if Dad remarries after Mom dies and then is outlived by his new wife? Should that new wife be allowed to live in the family house until her death -- thus delaying when the adult children can realize it as an asset? What if Wife 2 devoted herself to caring for Dad, keeping him out of a nursing home and protecting the family's other cash assets by doing so? Still ready to put her in the street?

You should be honest about who you think is the most responsible and dole out the assets accordingly. If you think one child is more responsible than another, maybe you give her access to her inheritance outright, while you set up a trust for the other, less responsible child. Also consider more assets that just the money and the house. Think about other things that may mean something to one or more members of the family. What about your antique pearl necklace that your grandmother gave you? Which of your children will receive that? Most people do not think to provide for the disposition of such property in their wills.

Finally, it is always important to contact an attorney. There are tax implications and other legal matters involved when planning your estate. If you have any questions about planning your estate, contact the Huntsville estate planning attorneys at Martinson & Beason, P.C.

Source: "Estate Planning: What You Don't Say Can Hurt You," by Ann Brenoff, published at HuffingtonPost.com.

How to decide if you should get your own attorney or work with your spouse for estate-planning purposes

Mon, 16 Apr 2012 08:47:36 -0600

According to a recent post on Forbes.com, the importance of estate planning for married couples cannot be stressed enough. The seriousness of such forward thinking is even more critical in blended families which tend to present more opportunities for volatility following the death of a parent.

The first issue for all couples to resolve is whether to be represented jointly by the same estate planner or for you each to go it alone. While joint representation can be more cost-effective, it can mean that both parities don't have the freedom to speak up about their individual concerns. Unless there is healthy communication between the spouses joint representation can be a recipe for disaster.

The following are some good rules of thumbs to consider when deciding whether you need your own or joint representation:

• Only one of you has children. Most people want to leave their estate to their children but if the other spouse has no children of their own then the parent may fear dying first and leaving their kids with nothing.

• Rich spouse, poor spouse. A large disparity in income between spouses can effect joint planning and may be a good reason to go your own way.

• One of you does all of the talking. If one party dominates the other in the planning phase this could be a sign of communication problems to come. As a result the one spouse may not feel happy with the final deal and an estate planner should recognize this discrepancy in power between the parties and consider pursuing separate representation.

• Length of the relationship. The shorter the relationship, the greater reason to get separate attorneys.

• The number of past relationships. Another pretty solid rule of thumb is that the greater the number of past relationships one, or both of you, have had, the greater the chance that you need separate estate-planning representation.

• Large age difference. The greater the age difference between you, the greater the need to consider separate representation as you both are in very different places in your lives and face unique concerns.

The decision to get separate lawyers seems like an exclusively financial one but hits on many relationship issues between the parties. Estate planning can be a stressful process which is why you should consult with an experienced Huntsville estate-planning attorney to help you fashion a plan you can be happy with. If you have questions or concerns contact the attorneys at Martinson & Beason, P.C. today.

Source: "Estate Planning For Couples: Should It Be A Solo Or A Duet?," by Deborah L. Jacobs, published at Forbes.com.

Kony 2012: How Charitable Giving Affects Alabama Estate Planning

Fri, 06 Apr 2012 21:33:55 -0600

According a recent article in Forbes, the recent online film "Kony 2012" has sparked an international crusade for the capture of reputed war criminal Joseph Kony. In addition to the film's attempt to raise awareness about Kony's war crimes in Uganda, it also raises a significantly important question with regard to estate planning, i.e., charitable giving. It can make a sizeable impact on the tax consequences of any Alabama estate.

Kony 2012 documents the crimes of Joseph Kony and the filmmaker's desire to make Kony famous in order to bring him to justice. At the end of the 29-minute piece, the filmmaker encourages the viewer that he or she can get involved in the movement by doing a few simple things, one of those being make a donation to the Invisible Children non-profit organization. The film and the organization, however, are not without their critics. Several people have accused the organization of using the tragedy in Uganda to make money.

It is this aspect of charitable giving that can be difficult to put into perspective. Over the years there has been an increase in the number of people who are bold enough to take advantage of needy people and good causes. There have been reports of charities that have stolen money from those who have donated and have not used any of the funds to the causes they claim to advocate. This has led to organizations like CharityNavigator.org and GuideStar.org, that keep track of how much of a charity's donation money is being used for those in need and how much of the donation money is used for administrative costs and expenses.

Charitable giving, however, is much more than a financial consideration. It involves considering those things that one believes in and how best to support that particular cause. It is not just about the tax deduction, but a commitment to a certain set of values. Since much of charitable giving is based on emotional convictions, financial advisers do not have one concrete set of rules that guide how one can give to charitable organizations. However, one thing is clear. It is always important to do some background investigation on the organizations before you give to make sure that your money is being used for the right purposes.

An experienced Alabama estate-planning attorney can help you work through the estate-planning implications of charitable giving. The expertise of the estate planning lawyers at Martinson & Beason, P.C. will help you craft a sound plan to secure your family's future.

Source: "Should Kony 2012 Be Part of Your Retirement or Estate Plans?" by Robert Laura, published at Forbes.com.

Why You Need a Will

Wed, 04 Apr 2012 21:23:45 -0600

Here's a shocking fact: approximately 70% of Americans don't have a will. A will is a fairly simple legal document to create so why do so many people avoid it? Just a few reasons might include: I don't have anything to leave to my heirs; I've got plenty of time to write my will; bad things don't happen to good people; I can't afford it, etc.

After all, no one really wants to think about their own death, let alone prepare for it. In reality, though, preparing by creating a will is exactly what we should all be doing. Protecting the people you love most is the main reason to consider drafting a will and to not waste any time in doing so.

Despite not wanting to think about death, the reality of it is inevitable. If you have not prepared by writing a will, then you are risking both your own wishes and the outcome for those you love. This is especially important for parents.

If you haven't put together your will, then your children's future can be in serious jeopardy. For example, you may assume that your property would simply pass on to your kids, but the courts may have other ideas. Additionally, other family members (such as a new spouse) may step in and take things that you always assumed would be given to your children.

The most extreme example, however, likely comes along with guardianship. In order to ensure that your children are raised in the fashion you deem appropriate, you need to specify their guardians. This is done through the will, and the best way to make sure your wishes are known is to work with a skilled Alabama wills and trusts lawyer now, before the issue is completely out of your hands.

Some Alabama residents feel that they don't need a will simply because they are married. They assume that if they were to die, their assets, property, children, etc. would automatically pass to the spouse. In some rare cases, this may not be true, as others may have a legitimate claim to an inheritance when a will hasn't been written.

Though it's terrifying to imagine, there is also the possibility of both spouses being killed at one time. In situations like that, there is no surviving spouse to speak up for the children or to have a say in the distribution of assets. Again, the courts will have a much bigger say in the outcome of your estate than you would probably be comfortable with.

Creating a will doesn't have to be an overly complicated process. By consulting with a talented Huntsville wills and estate attorney to ensure you are covering the basics and fulfilling any legal requirements applicable to Alabama residents. While it's certainly not ideal to spend time imagining what would happen to your family and assets after your death, doing so now can make a profound difference later. If you have questions or concerns contact the attorneys at Martinson & Beason, P.C. today.

Source: "Tell Your Family You Love Them -- Write Your Will," by Marcia Brixey, published at Forbes.com.

Alabama Residents Prepare for Possible Estate-Planning Changes: Part II

Mon, 27 Feb 2012 19:42:00 -0600

As a follow up to our last post, we now continue discussing the possible estate-planning changes contained in the President's recent budget proposal.

• The low-risk grantor retained annuity trust or GRAT

This estate-planning tool permits someone to put assets into an irrevocable trust and retain the right to receive distributions for the life of the trust. The annuity is equal to the value of what's been contributed plus interest.

For the moment, it is possible to form what's called a zeroed-out GRAT, in which the remainder is theoretically worth nothing so that there is no taxable gift. The President's proposal would do away with zeroed-out GRATs. It would also require that a GRAT have a minimum term of 10 years, compared with the current two-year minimum.

Obama's proposal would greatly increase the "mortality risk" of a GRAT. This exists when the grantor dies during the trust term and all or part of the trust assets are then included in her estate for estate tax purposes. The current two-year window is shorter than the President's proposal and offers less chance of a person dying during the term of the trust.

• Using family entities to achieve discounts

Some people use closely held enterprises, such as family limited partnerships, or FLPs, and limited liability companies, or LLCs, to discount assets before transferring them to family members or their trusts.

These family entities work when one family member puts assets into the entity, typically an FLP though on occasion a LLC. The individual then sells or gives away shares in the entity that holds the assets but not the assets themselves. Since these shares cannot be easily sold outside the family, their value is discounted due to this lack of marketability and lack of control, usually by as much as 20 or 30%. Reducing the value of the shares enables you to minimize the tax cost of transferring these assets to future generations.

The President is seeking to scale back the use of these valuation discounts, though just how he will do that is not entirely clear. Whatever restrictions are rolled out will apply retroactively to October 8, 1990.

For years now constantly changing estate tax rates and the political battles surrounding them have left many taxpayers unable to securely plan for the future transfer of their assets. An experienced Alabama estate-planning attorney can help make sense out of a constantly changing legal atmosphere. The expertise of the estate planning lawyers at Martinson & Beason, P.C. will help you craft a sound plan to secure your family's future.

Source: "Obama Declares War On Rich Folks And Wealth Advisors," by Deborah Jacobs, published at Forbes.com.

Alabama Residents Prepare for Possible Estate-Planning Changes: Part I

Tue, 21 Feb 2012 17:48:16 -0600

If President Obama is successful in passing his proposed budget, beginning next year it will become much harder for Alabama estate planning attorneys to help individuals pass along money to their children and grandchildren without the government tacking a heftier fee. According to a recent article on Forbes.com, the President's recently proposed budget for 2013 would permanently restore the estate tax rates to those that were in effect in 2009 and limit several popular methods for shifting assets to future generations. Click here for a copy of Obama's budge proposal.

Currently, individuals are allowed to transfer up to $5.12 million tax-free during life or at death without incurring a tax of up to 35%. This is referred to as the basic exclusion amount. Furthermore, widows and widowers are permitted to add any unused exclusion of the spouse who died most recently to their own. This enables couples to collectively transfer up to $10.24 million tax-free.

The President has proposed decreasing this number, suggesting that the basic exclusion amount be capped at $3.5 million. The tax-free amount for lifetime gifts would also decline to $1 million and the top tax rate would rise to 45% for transfers during life or death that exceed the limits.

The President's proposed budget also takes aim at several estate planning strategies that are designed to increase the lifetime exemption amount and minimize any gift taxes. The following is a quick rundown of what's being considered.

• Grantor trusts

The term refers to the fact that the person who creates the trust, known as the grantor, is able to retain certain rights to the contents of the trust. The trust is thus not treated as a separate entity and it is the grantor who must pay tax on any earnings of the trust.

It was determined that paying tax on trust earnings is not considered a gift to trust beneficiaries. The tax serves the purpose of shrinking the grantors total estate while allowing the assets inside the trust to appreciate without being depleted by income taxes.

Another good feature of this trust is that assets placed in the trust are removed from the grantor's estate. This means that from a tax perspective the transfer is seen as a completed gift. The value of the assets are frozen at the moment of transfer so that any future appreciation is not subject to estate tax or further gift tax.

Obama's proposal would get rid of this feature of these trusts. His plan would eliminate an important tax-saving tool used by many families. The President wants these trusts to be taxable as part of the grantor's estate and would like distributions from the trust to beneficiaries during the grantor's life to be subject to gift tax.

• Dynasty trusts

A handful of states allow trusts to continue in perpetuity and pass wealth through multiple generations without incurring estate or gift taxes. These trusts are allowed to continue only in states that have abolished the rule against perpetuities. Such states include Alaska, Delaware, South Dakota and Wisconsin but residents of other states can choose to locate their trusts in the states, provided that some connection to the state exists and certain other conditions apply. The President's proposal would do away with dynasty trusts, limiting the generation-skipping transfer tax exemption to 90 years.

There are several more proposed changes contained in the President's budget and we'll discuss them in more detail in our next post. In the meantime, if you need help managing your financial affairs, turn to the trusted Huntsville estate planning attorneys at Martinson & Beason, P.C. who will help you craft a sound plan to secure your family's future.

Source: "Obama Declares War On Rich Folks And Wealth Advisors," by Deborah Jacobs, published at Forbes.com.

Estate-planning tips for Alabama families

Fri, 10 Feb 2012 15:06:28 -0600

Alabama families need to make sure that their affairs are in order, regardless of the size of the estate, to ensure that the right people inherit your assets. Developing a sound estate plan early can help minimize taxes for your beneficiaries down the road. The following pieces of advice can help anyone; even those who have already begun to prepare their estate plan.

• Clearly Declare Who Gets What

If you fail to properly draft a will, the laws that govern your domicile determine who inherits your assets. This includes nonfinancial assets, like the little sentimental items that you might care greatly about. The pieces of jewelry or paintings that family members have had their eyes on for years might be thrown into turmoil without a clearly laid out will.

• Choose How Your Money Should Be Spent

If you intend to have some of your assets allocated to cover specific expenses, you might need to create a special trust that includes such specific provisions. You may want to designate specific amounts to cover college and special needs expenses for certain individuals. By doing so, you ensure that the trustee of the trust would be legally bound to spend the money in the way you desire.

• Minimize Estate and Income Taxes

If you think that your beneficiaries will likely be left owing estate or income tax on the amounts they inherit then you might want to employ tax-efficient strategies from the beginning of the process. For instance, you can leave taxable assets to charities if while leaving your tax-free assets, such as Roth retirement accounts, life insurance and after-tax savings, to your other beneficiaries. You can also help to minimize your taxable estate by giving money to your beneficiaries while you are alive. So long as the gift remains under $13,000 for each recipient it would be tax-free.

• Offset Taxes with Insurance

Your beneficiaries might face losing a substantial amount of the assets they inherit to estate and income taxes. This can be offset with the proceeds from life insurance. For example, if your estate planner looked ahead and forecasted that one beneficiary stands to owe $500,000 in estate tax, you can go ahead and purchase a life insurance plan for that exact amount and name the affected party as the beneficiary. Since life-insurance proceeds paid to your beneficiaries are tax-free, the entire $500,000 would be available to pay the taxes owed.

• Work with a Skilled Alabama Estate Planning Attorney

An experienced Huntsville estate-planning attorney can help with the designing and creation of trusts and wills, whether complicated or commonplace. A good attorney can also ensure that your estate plan complies with cumbersome federal and state legal requirements. The local expertise of the estate planning attorneys at Martinson & Beason, P.C. will help you craft a sound plan to secure your family's future.

Source: "5 Estate Planning Tips," by Denise Appleby, published at SFGate.com.

Even a Millionaire Attorney Has Estate Planning Problems

Wed, 08 Feb 2012 16:03:24 -0600

Famous Houston trial lawyer John O'Quinn's estate is nearly at the end of its massive litigation battle, reported the Houston Chronicle. O'Quinn died in 2009 in a car accident. In his will he left his entire estate to the John O'Quinn Foundation.

However, his live-in girlfriend was not particularly pleased with his decision to donate his entire fortune to the foundation rather than to her. Darla Lexington claimed she was O'Quinn's common law wife and claimed that she was entitled to more than just the proceeds of the life insurance policy for which she was the sole beneficiary. As such, she filed a lawsuit against the estate.

This week, Lexington and the executor of the O'Quinn estate reached a confidential settlement agreement. Sources close to the case indicate that the probate judge may have placed a significant limit on the amount of money Lexington was to receive. Sources reveal that the judge, Mike Wood, refused to allow O'Quinn's income from his legal fees and other revenue to be declared community property. What is certain is that Lexington received some cars from O'Quinn's antique car collection. She also received considerable amount of money that would allow her to live a comfortable lifestyle. Lexington thus appears to not need to worry about being turned out on the street anytime soon.

Gerald Treece, the executor of the estate, has retained Dale Jefferson to settle the estate. Jefferson thinks that the entire estate should be resolved by the end of 2012. Once the estate has been settled, it is likely that the John O'Quinn Foundation will receive so much money that it will be named as one of Houston's top 10 philanthropic organizations. When O'Quinn passed, the Foundation used up its cash reserves to make its contributions. The president of the foundation, Rob Wilson III, is excited because once the estate is settled, the foundation's cash reserves will be replenished and it can continue its thriving philanthropic giving.

There is still much work to be done. O'Quinn's law firm is in the midst of winding itself up. Some 175 cars remain in his vintage automotive collection that still need to be sold. Once those things are addressed, the estate can be completely settled.

The estate planning attorneys at Martinson & Beason will provide you with the highest level representation and work tirelessly to ensure that your estate is not left in a similar mess as Mr. O'Quinn's. Please do not hesitate to contact Martinson & Beason if you find yourself need the assistance of a Huntsville probate lawyer.

Source: "John O'Quinn's Estate finally moves closer to resolution," by Mike Tolson, published at Chron.com.

Estate Planning and the Republican Presidential Primary

Mon, 06 Feb 2012 08:04:48 -0600

After the recent attention directed at Republican Presidential candidate Mitt Romney's tax bill, Alabamans may be curious to see the impact of the various Republican's tax plans, especially for those who are lucky enough to share Romney's tax bracket. Time Magazine ran the numbers and found that under his own plan, Romney would save $3.4 million a year given his $22 million income in 2010.

Romney's own plan would reduce his tax bill thanks largely to his proposal to permanently lower the tax on investment income to 15%. The vast majority of Romney's income (and that of many wealthy individuals) is derived from such investments and explains why he's able to keep his overall tax rate so shockingly low. Currently, taxes on investment income are set to rise in 2013 to nearly 39.6% on the wealthiest taxpayers, unless action is taken to keep rates in place. Capital gains rates are also set to jump up to 20%, but if Romney wins and they remain at 15%, Romney should save some $2.6 million each year.

Romney's plan would also do away with a planned 3.8% tax on investment income on wealthy Americans set to go into effect next year to offset the costs of health care reform. This would save Romney approximately $800,000 a year. Romney intends to lower the corporate tax rate to 25% from 35%; such a drop would increase his pre-tax income by $300,000.

All of these changes though are small potatoes compared to his most impactful proposal: killing the estate tax. The current scheme says that in 2013 Americans will be permitted to pass $1 million tax-free to their heirs. Any money beyond that would be taxed at 50%. Romney's idea is to eliminate the estate tax (or "death tax," as Republican's have dubbed it) completely. Such a move would save Romney's family, based on his estimated net worth of $260 million, as much as $130 million when he dies.

Gingrich's plan would call for a complete elimination of taxes on stock dividends and capital gains. Corporate tax rates would be slashed even further, down to 12.5%. Gingrich also wants to repeal the estate tax and the new health care tax. The result: Romney's tax bill would drop from an estimated $6.4 million in 2013 to just $75,000.

Santorum's tax plan would lower investment income taxes farther than Romney, but not quite so low as Gingrich. Under Santorum's plan, investment income would be taxed at 12%. Like the others, Santorum would also get rid of the estate tax, the new health care tax and the alternative minimum tax. Corporate taxes would fall to 17.5% for most companies, but would be eliminated completely for manufacturers. All in, Romney's tax bill in 2013 under Santorum would come to $2.5 million, a steal compared to President Obama's.

It's not all bad news under Obama. His plan would keep stock dividends tax rate at 20% rather than let them rise to 39.6% in 2013. Capital gains taxes and income tax rates would increase as scheduled. Most importantly, the estate tax would come to 35% for all inherited income above $3.5 million. Adding in everything, under President Obama's plan Romney would pay a total tax bill of just over $6.9 million in 2013. As such, don't be surprised if you don't see him campaigning too hard for the President should he lose the nomination battle.

Estate planning is a tricky business and one that requires attorneys stay up-to-date with the latest news. The skilled Alabama estate-planning attorneys at Martinson & Beason will provide you with the highest quality work and ensure your family's financial future remains secure even after you're gone. Please do not hesitate to contact Martinson & Beason if you find yourself needing the assistance of an experienced Huntsville estate-planning lawyer.

Alabama Estates and the Impact of the Estate Tax Portability Provision

Thu, 02 Feb 2012 06:55:48 -0600

The Christian Science Monitor reports that there will be a substantial increase in the number of estate tax returns filed with the IRS this year. This is despite the fact that there will be fewer than 3,300 estates that will be required to pay federal taxes. The current state of the law encourages estates to file returns even if they do not owe any taxes to the federal government. The result: increased costs and an increased number of returns for the IRS to process.

Why do these estates to continue to file returns? The answer lies in the details of the portability provision of the 2010 Tax Relief Unemployment Insurance Reauthorization and Job Creation Act. This provision allows surviving spouses to claim on their own estate tax returns any exemption not used by their deceased spouses.

The 2011 estate tax exemption is $5 million. If a husband dies this year and leaves an estate with a taxable value of $3 million, his estate owes no tax and his wife's estate may claim the unused $2 million exemption when she dies. Thus, if the $5 million exemption remains in effect, her estate could avoid tax on its first $7 million." However, and this is an important trick, in order to claim the portability exemption, the estate is required to file a tax return during the appropriate time. If the estate fails to do so, it is not possible for the estate to ever claim the unused exemption.

Couples who have estates of more than $10 million routinely file for such exemptions, but even couples with smaller estates can benefit from it. It is possible that Congress will lower the current $5 million exemption for large estates. It is also possible that Congress will disallow the exemption in future legislation, which most estates will likely challenge in the courts. It is uncertain what kind of impact this will have on the future of estate planning and attorneys must stay up-to-date regarding these important changes.

The Huntsville estate planning attorneys at Martinson & Beason will provide you with the highest level representation and work tirelessly to ensure that your estate is well protected. Please do not hesitate to contact Martinson & Beason if you find yourself need the assistance of an Alabama estate planning lawyer.

Source: "Why the IRS will be flooded with estate tax returns this year." by Roberton Williams, published at CSMonitor.com.

Billionaire Skates on IRS Penalties

Thu, 22 Dec 2011 07:49:56 -0600

Forbes reports that Leon G. Cooper, the prominent New York billionaire hedge fund manager, has managed to get out of paying the IRS $5 million in penalties.

The IRS filed a complaint against Cooper when his personal private foundation was given a $43 million gift by one of his hedge funds. Cooper provided the start-up money for the fund, but did not personally manage the fund. His family wrote the gift off as a deduction in both 2005 and 2006. This kind of deduction, however, is not allowed by federal law.

Cooper and his lawyers conceded that the deduction was illegal and instead spent their time fighting the $5 million in penalties that the IRS assessed against Cooper. The courts ultimately found in favor of Cooper. He is still required to pay $14 million in fees, but only has to pay $29,191 in penalties. Pennies when compared to his original fines.

Cooper claimed that he followed bad advice from his advisers. Thus, he claims to have made a good faith mistake and argued that he should not be assessed the accuracy-related penalties that are common with the Internal Revenue Service. His advisers told him that he only needed an independent appraisal to deduct the charitable gift to his personal foundation. According to Forbes, his advisers claimed that they were not aware of the federal provision that forbids a tax deduction for non-publicly traded investments in one's own private foundation. When he realized that he had been given bad advice, he focused on trying to make his bill as low as possible.

This story proves that it is possible to receive bad advice from those you have trusted to protect your money and financial interests. Cooper's advisers were charged with being aware of the applicable tax provisions related to everything Cooper intended to do. Their failure ended up costing him millions of dollars. The Huntsville estate planning attorneys at Martinson & Beason will provide you with the highest level representation and will ensure that your interests are protected. Please do not hesitate to contact Martinson & Beason for all your estate planning needs from a simple will to trust, or full blown estate plan, the Alabama probate attorneys at M&B address all your estate planning needs.

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Socialite's Estate Facing Attack by IRS

Tue, 20 Dec 2011 16:32:36 -0600

Forbes.com reports that Brooke Astor's multi-million dollar estate is now facing an extensive tax bill from the Internal Revenue Service. The estate has recently filed multiple lawsuits in the United States Tax Court. The lawsuits challenge the IRS's demand that the executors of the Astor estate pay another $62 million in fees.

There is some discrepancy between the IRS and the estate about the total value of Astor's estate. The IRS claims that the estate is worth some $223 million and the federal government is entitled to $97 million in federal estate taxes. The Astor estate, on the other hand, claims that the estate is only worth $93 million and that the federal government is thus only entitled to $35 million in taxes and fees. Neither of these claims matches the $131 million estimate published in the New York Times that the public heard right before Mrs. Astor's death.

The IRS included in the value of the estate gifts worth about $20 million that Mrs. Astor gave away. The estate acknowledged that federal gift tax returns were not filed and the IRS has assessed $2 million in penalties for the estate's failure to file the returns. The estate also claims that $96 million comes from charitable bequests that should be deducted, but the IRS refuses to allow those to be used to reduce the amount of the tax debt because the IRS cannot be certain about those charitable bequests.

Astor's estate is still in the process of liquidation. Her apartment just recently sold for $21 million and her jewelry and art are expected to bring in about $5 million at auction. Brooke Astor acquired her enormous fortune when her husband, Vincent Astor died and left her his entire fortune. Vincent Astor was the son of the famous John Jacob Astor IV who died on the Titanic's famous maiden voyage. At the time of his death, John Jacob Astor left his son Vincent an estate worth an inflation adjusted $1.7 billion.

If you require the assistance of a Huntsvile estate planning attorney to keep you from falling in the same trap as the Astor estate, the estate planning lawyers at Martinson & Beason are here to assist you. Please call toll free at 1-800-255-6534 with any estate planning questions.

Source: "Brooke Astor's Estate Now Faces $62 Million Attack by IRS," by William P. Barrett, published at Forbes.com.