South Florida Estate Planning Law : Florida Estate Planning Lawyer & Attorney : David Shulman Law Firm : South FL Wills & Trusts

I don't think I've taken a posistion on this blog pro or con as to whether the estate tax should be repealed. I have clients who have taxable estates and I have clients without taxable estates. As planning for the estate tax is only a part of what I do, I'll be able to continue to help my clients protect and provide for their loved ones after their deaths, whether the estate tax exists or not. As to the politics of it, well, because of what I do, I can certainly see both sides of the issue.

As I write this, today is November 30, and we still don't know what is happening with the estate tax next year. If you are unfamiliar with the status of the Estate Tax, check out my August 26 post. However, here are the CliffsNotes:

The Lifetime Exemption, that is the amount that you can own when you die without being subject to the estate tax is currently $3.5 million. Any amount over that is taxed at a rate of 45%. Pursuant to a law passed in 2001, on January 1, 2010 the estate tax goes away for one year only.

Pursuant to that same law (passed by a majority Republican Congress and Republican President Bush), on January 1, 2011, the lifetime exemption, that is the amount you can own before you are subject to the estate tax goes to $1 million, and the rate goes to 55%. All of this -- the one year only repeal, and the reinstating of the estate tax at a much lower threshold with a much higher rate happens automatically.

If Congress does nothing it will happen.

Naturally, a situation in which there is no estate tax for one year only, and the following year in which there is a significantly higher estate tax is untenable. Congress is --finally-- working on a solution. The solution that might be voted on this week was submitted by Congressman Earl Pomeroy (D- North Dakota) which would permanantly set the exemption at $3.5 million and the rate at 45%.

Which brings me to the Heritage Foundation.
On their blog, known as The Foundry, author Curtis Dubay writes the following story:

"House Votes to Raise Estate Tax This Week."

In his post he writes, "The bill it will consider, sponsored by Rep. Earl Pomeroy (D-North Dakota), would extend permanently the death tax at its current 45 percent rate and $3.5 million exemption. This extension would be a drastic tax increase since the death tax expires on January 1, 2010." (emphasis added).

That's just wrong. I would like to give Mr. Dubay the benefit of the doubt, but if you go to his post, and click in the link in his post to the Dow Jones Newswires Story on the subject, the very article he links to says "The Pomeroy legislation, backed by President Obama, would cost $233 billion over the next 10 years since it represents a tax cut when compared to current law" (emphasis added by me).

Read that again. Despite the "one year repeal," the House will be voting to lower the estate tax and not raise it.

Of course, I wonder how many of the Foundry readers will actually investigate these facts themselves. I'm all for a healthy debate, but let's keep it honest please.

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As the Festivus shopping season begins this Cyber Monday, I'd like to remind my readers of a few facts about gifting.

First, the "annual exclusion" for 2009 is $13,000.  That means any person can give any other person a minimum of $13,000 without having to worry about the gift tax.  A married couple can give a combined total of $26,000 to any one person free of the gift tax.  The couple does not have to play any silly games in which the husband gives the wife money and then the wife makes the gift.  Generally, either the husband or the wife can give the full $26,000 to any person.

In larger families, this allows a tremendous amount of wealth transfer, tax free from the older generation to the younger generation.  A married couple can give $26,000 to each of their adult children, their adult children's spouses, their grandchildren, etc., without having to file a gift tax return.

Second, there are certain types of "gifts" that don't even count towards that $13,000 annual limit. For example, a person can pay the tuition and medical expenses of any other person, and that amount is not deducted from the $13,000.  The tuition or medical expenses have to be paid directly. A grandparent can pay the private school tuition, whether grade school or college of their grandchild.  Plus, they can still give each of that grandchild and her parents $13,000 (or $26,000 if married) in that same year.

Finally, a gift does not have to be in cash.  Gifts of stock or other property can be a wonderful way to transfer not just the stock out of your estate, but the appreciation on the stock too.  A gift of $10,000 worth of stock in Apple Computer on January 1, 2000 would be worth $71,807 today.  

Not bad.

If you can do that for your children and grandchildren, then they'll have nothing to say during the "Airing of Grievances." 

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I am a bit of an internet nerd, as far as attorneys go.  You may or may not realize this, but attorneys are incredibly slow to adapt to new technology.  They tend to like things the way that they are, and don't want to take the time and effort to learn a new way of doing things, if the old way of doing things already works.

While of course that is a generalization, I think it's a fairly accurate one.

When I left a larger firm to start my own estate planning practice, one thing that I was committed to was using computers and the internet to be more efficient -- both in the way that I serve my clients, and in the way that I market my practice to others.  I was convinced that through "social media" and "social media" alone, I would be able to quickly develop a thriving practice.

I was only part right.  Social media, whether Facebook, LinkedIn, Twitter, Blogs, Digg, and even old-school Listservs is about building relationships with other people.  "If you build it they will come" is not true.  But networking online is not that much different in networking "in the real world."  By communicating with other people, whether in person, through the phone, through email, twitter, of Facebook comments, you get to know them, and develop a mutual trust. 

Sometimes the question is, "how do you find the people that you would like to meet."  This is an important question for both meeting people online, and offline.  In this post I'll focus on online only.  One thing that I do is that I have  a constant search running on Twitter for certain topics, including "Estate Planning" and "Estate Tax."  I hope that I will be able to meet and communicate with people interested in Estate Planning not just here in Fort Lauderdale, but around the country.  In fact, I have already been referred a client from an estate planning attorney in Los Angeles and I have referred a client to an estate planning attorney in Michigan.  

None of this would have been possible without properly using social media.  Before I sent or received the referral, I had already built relationships with the other attorneys.  Which brings me to the subject of today's post.  One of my automatic ongoing searches came up with the following Tweet, "Florida Estate Planning Attorneys: Florida Estate Planning Attorneys, lawyers, lawfirms, real estate, http://bit.ly/7XooVi."  Curious, I clicked the link in the tweet which brought me to this page on Digg.  That page was also entitled "Florida Estate Planning Attorneys."  However, it didn't contain any information.  From there, there was yet another link to this page, which is nothing but a poorly formatted list of attorneys, along with some Google Ads for other attorneys that you can clickthrough.

What did I learn from this internet wild goose chase?  Nothing.  Someone thought it was a good idea to take the time to set up a webpage that is nothing but a list, then set up a Digg page that links to it, and then Tweet a link to the Digg page.  What's the point of that?  While I suspect that some "internet marketer" may be making a few dollars off of the Google internet ad links; or maybe some attorneys had to pay to be listed (I don't know if they did or not).  Either way this is not an effective way to use social media for attorney marketing.  It's just a series of links to a list.  There's no one to talk to; no one to communicate with.  In the end, it's just a billboard or yellow page listing. 

I wouldn't be surprised if some attorneys hired a marketer to do this, and when it doesn't work (it won't), they'll give up and go back to their old ways of doing things.

I'll keep doing things my way though, and I'm always looking forward to meeting new people, whether online or off.

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I admit it.

I'm a procrastinator. I put off things like going to the Dentist, getting my oil changed, or even hanging pictures on my walls. I know these are things I should get done, but I keep putting them off.

I find that many people are the same way with their estate planning. Most people have no documents at all in place. They don't want to think about their mortality, or they don't want to pay an attorney. Or, like me, they are just procrastinators.

They think they have time to get it done later.

While this is true for some people, it's not true for all of us. As you sit around the table at Thanksgiving with your loved ones, think about how important it will be to them that you were able to protect and provide for them in the case of your death. It could give them something truly to be thankful for for years to come.

One more thing, on a totally separate note. As a Miami Dolphins fan, I'd like to wish a very Happy Thanksgiving to leon Lett, wherever he may be.

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A recent Forbes Magazine article discusses that even though the Federal Estate Tax exemption is $3,500,000, and is scheduled to disappear next year, there are still 17 states and the District of Columbia that still have either an estate tax or an inheritance tax.

As I've written about before, one of the benefits of living in Florida is that there is no state estate tax. There is also no income tax.

It's not just the weather that brings the retirees down here.

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As you, loyal reader, may know, in February of 2009 I left the law firm that I was working at to start my own solo practice. Although my solo practice is new, I graduated George Washington University Law School in 1998 and worked for a number of years at the IRS in Washington, DC and for a firm in Fort Lauderdale.

Like anyone else who starts a law firm or any other business from scratch, marketing is an integral part of business development. Practicing law is easy. Finding people who are willing to pay me to do it is the tough part. But my practice is growing. I am getting new business through referrals from other clients and from other professionals in the area with whom I have established relationships.

Also I have been active online. I have this blog; I post on a number of different listservs; and I try to maintain relationships on Facebook and LinkedIn (as opposed to just randomly adding everyone).

Have I made a few missteps? Of course. I'm human. The point is, I think I have a fairly decent idea of what works and what doesn't work. And what doesn't work is this: fax spam otherwise known as "junk faxes" or unsolicited faxes. In short, it's sending a fax to someone you don't know and don't have an existing business or other relationship with, in which you offer to sell something.

Today, I received fax spam from another attorney. Note. I have never met this person, never heard of this person, have no working relationship with this person. This was spam pure and simple.

This faxer informed me that he is writing because he is "pleased to inform you that I am available to provide coverage for your Foreclosure Motion Calendar hearings in Miami-Dade counties for 99 per hearing. . "

Let's ignore the fact that unsolicited faxes are generally illegal. This is 2009. I don't even own a fax machine. My faxes are converted into email and sent to my inbox. To send a fax I scan it and send it via email too. And this wasn't a fax just to me, but it was obvious that he was mass faxing or "fax blasting" as the case may be.

If you want to build a relationship with someone, pick up the phone, send them a personalized email or a letter.

As attorneys, we are all trying to sell our services, which means that we are trying to sell ourselves. Our potential clients need to be able to trust us before they hire us. Potential referral sources need to be comfortable referring us business.

So the question is, why would I ever send clients to someone who thinks it's proper to blast out fax spam?

And of course, if he would have taken a second to do the slightest bit of research he would have known that I don't have Foreclosure Motion Calendar hearings. But if anyone asks, I now know someone not to send them to.

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 I've been thinking about my blog for the past couple of weeks, and I think that I've come to a crossroads.  My intention in starting this blog was for the most part to write about estate planning news and updates for both the practitioner and for the consumer.  And I will still do that.

But I think we've gotten to a point where there really isn't that much news developing.  Sure, there is the impending expiration of the estate tax in 2010 and its coming back in 2011.  And when there's real developments I'll be writing about them in detail.  But for now, there is just talk.  So there's not much to write about on the Congressional front.

Nor have there been very many interesting cases lately.  There have been a couple, but nothing really worth waxing philosophical about.

So I figure that I can go in one of two ways on my blog.  

In the first way, I'll write post after post about whether or not you should have a Will (hint: you should) and whether or not I think online or Do It Yourself wills are a good thing (hint: I don't).  I'll send emails to every legal blogger (or is that blawgger) that I can find, along to every listserv, telling people that I'll link to them if they link to me, because that's the way things are done, and if we link to each other we can trick "the Google" into ranking us higher.  It won't matter that I don't read the other blogs, or when I did read them I thought they we subpar.  I'll follow every single person I can find on twitter in the hopes that they follow me back.  I'll friend the world on Facebook and then spam my friends incessantly for them to join my firm's fan page.  I'll put aside my integrity and personally vouch for blogs that have nothing to do with my geographic or substantive area and be "fans" of people I don't even know.  Then I'll write some treacly posts about puppies and flowers and babies and how much they'll thank you for doing your estate planning.  

Maybe I'll even sign all of my posts, "Love, David."

Blech.

I can't do that.  

I actually started writing another post about why you need a will and I titled it "So it has come to this -- My Why You Need a Will post."  Look.  You, yes you need to have your estate planning done.  It can provide for and protect your family after you are gone, save lots of taxes, help charities, and stop global warming.  And subject to the Florida Bar's rules on advertising, I think I can do a pretty darn good job at doing it for you.  But I'm not going to convince anyone of that with yet another "why intestacy is bad" post.

Why do I blog?  Is it to market my practice? Sure.  But I blog because I like to write and I like to write about things that interest me.  One thing that interests me is estate planning, and I will certainly write about that here.  In fact, I hope that it will be the primary focus of my blog. However, I'll be expanding the focus too.  I'll be writing about. . . well, whatever I feel like writing about  --life as a lawyer, technology, South Florida, and of course estate planning, probate, tax, and the like.  I'll do my best to keep it semi-relevant and occasionally entertaining, but no promises.

I will promise however, to write.  I will not let the blog go weeks without a post.

Unless I run out of ideas, of course.

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I keep seeing stories about various estate tax reform bills that have been introduced in Congress. They range from repealing it, to extending the exemption, to raising the exemption to lowering it, etc.

I'm not going to waste time and effort reading the various bills and the tea leaves.  When Congress actually does something, I'll report on it.  Until then, we're still in limbo.

 

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 Ok, this has nothing at all to do with estate planning.  But after yesterday's rant, I thought I'd post something a little different.  The Oasis of the Seas, the world's largest cruise ship arrived in Fort Lauderdale Today.  Here are a few picture of it that I took from my balcony.  The first is with optical zoom and the next is with digital zoom.

 

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I can't believe it.

I have long admired the Wall Street Journal and considered them a paragon of straightforward and relatively high level journalism.  Sure the editorial page leans conservative, and there has always been a general pro-corporate tinge to its stories.  But I've always considered it more respectable than most other news sources.

Not anymore.

Today, the Wall Street Journal has led their readers horribly astray in such a manner that may cause untold pain and suffering (along with substantial costs) to God knows how many people.

I'm talking about their "review" of do-it-yourself estate planning.  Apparently, there is a recurring column in the WSJ entitled "Cranky Consumer".  It should be titled "Idiot Consumer."

In today's column, "Before It's Too Late: A Test of Online Wills", the author Jane Hodges (who I assume is the Idiot Consumer) decides to "test" two online will-writing websites "to see if we could knock out a coherent set of documents capable of organizing our end-of-life affairs."

She talks about how she tested various products including LegalZoom and Suze Orman's Will and Trust kit and describes the various documents that the website provides.  According to the Idiot Consumer, "Suze Orman bundled a will (which states what you want done with your assets and your remains after death), a revocable, or changeable, trust (which provides for management of your assets in the event you are incapacitated), and power-of-attorney documents."  

First, the description of what a revocable trust is and does is incomplete and inaccurate.  Not only can a revocable trust provide for management of your assets in the event of your incapacity (as does power-of attorney documents), but it also can govern the disposition of your assets upon your death outside of probate. 

Of course, nowhere in the article does the word "probate" appear.

The article continues, "Our needs, we figured, were simple. We're a childless married couple; we co-own a house but mostly keep our money separate. Each of us has a life insurance policy, general savings and multiple retirement savings accounts."  Um.. OK.  If I woke up in the morning and had a searing pain in my stomach, should I just figure it's simple and gas, or should I let an actual doctor examine me to make the determination as to whether or not I have appendicitis. 

She then writes, "Any other assets beyond the house would be split between the surviving partner and nieces and nephews, who could use the funds for college or other future expenses."  The problem is that the proceeds from life insurance policies and the disposition of retirement accounts are not governed by a person's will!  They are controlled by the beneficiary designations on the accounts.  Unless the designated beneficiary of those accounts is her estate or is blank (which is a huge mistake in itself), those online documents she reviewed are useless when it comes to life insurance or retirement accounts.

Furthermore, does she really want to give the money to her young nieces and nephews outright?  Will that require a costly and intrusive Guardianship to be established to monitor the accounting of the money? In some states it might.  Does she want them to be able to blow the money at 18, or is it a better idea to establish a trust to hold the money until the child is older?  Do you think the website asked?  If so, do you think the $13.50 (for real!) Suze Orman Program structured the trust correctly?

Then, "with the revocable trust, we weren't sure how to earmark our share of real estate for our spouse, then divide the rest of our assets so that the surviving partner would get 50% and nieces and nephews would divide the remainder."  I do not know where she lives, but generally, if she and her spouse own the home jointly, then the survivor automatically inherits the entire property on the death of the first spouse.  Furthermore, in Florida, where I practice, it is a terrible idea to take a homestead that is jointly owned by a husband and wife and put it in a revocable trust.

The entire article spoke about how "easy" it was to draft various provisions and frankly, how cheap they were.  

But there should be one and only one relevant question, and this is "Do the documents work?"  In the event of her death, do the documents accomplish what she wants them to do, while minimizing taxes, protecting her heirs from creditors, and keeping administrative expenses and time and headaches to a minimum? 

What's the idiot consumer's answer to that question?

"We didn't hire a lawyer to review them."

That's some mighty fine journalism there, WSJ.

 

 

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