This past Friday I was interviewed on the Rocketlawyer podcast, in which I discussed estate planning, asset protection, probate, real estate, and the rules regarding Florida Homestead.
The link to a summary of the episode is here.
If you want to download the MP3 directly, click here or pick it up through iTunes here.
The whole podcast is interesting to listen to, but I come on at about the 9:00 mark.
Let me know what you think.
Sometimes, posts on law blaws can get a little bit esoteric. Every now and then I think it's useful to go back to the beginning, and set forth the documents that comprise a basic estate plan. Every single adult should have these in place, regardless of age, marital status, wealth, and whether or not they have children. These documents are:
Some estate planning professionals will state that every single person should have a revocable trust. As I've written in the past, while they are good for some people, not everyone needs them.
Now that I've been nominated by LexisNexis to be one of the top 25 Estate Planning Blogs, I'd like to introduce myself to new readers, and possibly re-introduce myself to old ones. I am an attorney in Fort Lauderdale, Florida, with a practice focused on estate planning, asset protection, probate, guardianship, and tax planning. I grew up in a suburb of Fort Lauderdale, known as Plantation, in Broward County.
After graduating South Plantation High School in 1991, I attended Brandeis University, in Waltham, MA for my undergraduate degree, and then I went to George Washington University, in Washington, DC, for law school. Going into law school, I never imagined that I would end up a tax lawyer some day. In fact, it was furthest from my mind. But during the summer between my first and second year of law school, I landed an internship with the Tax Division of the Department of Justice, in a Civil Section. That means that they didn't prosecute criminals who evaded taxes, but instead sued to collect taxes owed. While I didn't necessarily like the litigation side of it, the technical tax side, with its talmudic like detail, fascinated me.
Starting with my second year of law school, I began to take as many tax classes as I could. My basic Federal Income Tax class was taught by Judge James Halpern of the US Tax Court. Having a sitting Judge teach the class is one of those experiences that you can only get in DC, and the real world knowledge that he brought to the class made for a great experience.
After law school I was hired by the Internal Revenue Service Office of Chief Counsel, in the Passthroughs and Special Industries division. There, I specialized in the income taxation of partnerships, subchapter S corporations, and trusts. At the IRS I wrote Private Letter Rulings, Revenue Procedures, Notices, and Regulations. I also worked on the IRS's war against abusive tax shelters, including being the primary docket attorney on Notice 2000-44, the "Son of BOSS" Notice. Although I was in the division that was focused on the income tax of those entities, I worked closely with the division that specialized in the estate and gift tax, and that area always appealed to me.
I stayed at the IRS for seven years. After a while, I got tired of the snow and being cold, and I missed my family and the South Florida community. In 2005, I moved back to South Florida, where I received my Masters in Law (LLM) in Estate Planning at the University of Miami Law School. To me, Estate Planning allowed me the opportunity to be a tax attorney, but also to work with "every day" people. After I finished the LLM program, I then was an associate with a large South Florida law firm for almost three years, at which point I decided to leave and start my own practice.
Which brings us to the present.
I love being a solo practitioner, because it allows me to run my practice the way I want to, and can devote the individual attention to my clients that they deserve.
Thanks for reading, and there is plenty more to come.
Miami criminal defense attorney Brian Tannebaum recently wrote a post on his blog entitled, "Do People Who Aren't Hungry Go to Restaurants?" In his post he states that clients are often shopping for the cheapest lawyer, and recently, people have been contacting him and telling him that they aren't even sure if they want to hire an attorney (even though of course by the time that they contact him, they almost always need a criminal defense attorney).
In the estate planning field, the code word that I often hear is "simple." Potential clients will call and before giving me any information, tell me that they just want a "simple" will and how much will a "simple" will cost them? When someone on the phone says that they are looking for estate planning and want something "simple" they almost always mean "cheap." They'll call around asking multiple attorneys how much each charges for a simple will, and then without asking whether or not that attorney focuses their practice on wills, trusts, and estates, or is someone who does wills, criminal law, personal injury, and a smattering of other areas, will then go with whoever gave them the lowest price on the phone.
Unfortunately, too many attorneys are more than happy, or at least willing to play that game.
First of all, I'm not Walmart.
I'm not interested in offering the absolute lowest price to the highest volume of clients, because it will not allow me to give each client the attention that they need. That's not to say that I overcharge because I don't, but like any professional I charge a fair price for my services.
But more importantly, I don't sell wills. I sell advice. My job isn't to have the client tell me that they need a simple will and then provide it to them. That's what Legal Zoom does with their fill in the blank forms. If the client knew what they needed, they wouldn't have to hire me. I see it like going to the doctor with a searing stomach ache, and telling the doctor "I only want you to give me an antacid. Do not check me for appendicitis."
My job is to examine each and every client's circumstances, including family, children, assets, age, health, citizenship, employment, etc. and after an examination of a multitude of variables, including intangible impressions that I get from a face to face meeting with the client, only then do I advise them what I think they need, and if they decide to follow my advice, begin drafting the documents.
So when someone calls me on the phone and the first thing they ask me is, "How much do you charge for a simple will?" I know that there is a 99% chance that they won't end up hiring me, which is fine. I much prefer the clients who call me and the first thing they say is, "I am interested in doing what I can to protect and provide for my family. How can you help me?"
Next week I will be attending the 44th annual Heckerling Institute on Estate Planning which is sponsored by the University of Miami Law School. Heckerling is a week-long conference on estate planning, administration, tax, and other related issues. This year should be especially interesting because of the current repeal of the estate tax.
I hope to post blog updates from the conference, especially if I gain any insights as to what is happening with the estate tax.
If you read the tabloids, or even the mainstream press, you may have come across the sad tale of Casey Johnson. Johnson was one of the great-great granddaughters of Robert Wood Johnson I, and an heiress to the Johnson & Johnson fortune. Her father, Woody Johnson, owns the New York Jets.
Johnson's life, to put it mildly, was a mess. A contemporary of Paris Hilton, she had a long history of alcohol and drug problems, public battles with family members, and a recent"engagement" to reality tv star Tila Tequila (if you don't know who that is, do your own internet search. But the images might not be safe for work). The thirty year old woman was found dead in her home on January 4, 2010, leaving behind an adopted four year old daughter. Police are saying that she could have been dead for several days.
I'm sure there are going to be criminal investigations, recriminations, lawsuits, and possibly a messy probate, which I may or may not write about as it happens. For now, I am only interested in one aspect of this: the estate tax.
I don't know what Johnson's financial situation was at her death, I hear that she was "cut off" and broke, but it's also quite possible that she had substantial assets in trust that would be includable in her estate for estate tax purposes, but was beyond her reach for her own protection. This amount could be several million or even tens of millions of dollars.
As I have been discussing, 2010 is currently the year without an estate tax. That means that if Johnson died in 2010, no matter how large her estate was, it will not be subject to the federal estate tax. If she died in 2009, then her estate is taxed at 45% of its value over $3.5 million . If she had a taxable estate of $10,000,000, then her estate will owe $2,925,000 in taxes to the federal government. . I believe (although I do not know for sure) that her death certificate shows the date of death as the date she was found, January 4, 2010. However, if the evidence shows that she died in 2009, then her estate is liable for the tax.
Let's take this one step further. Assume that she did die in 2010. Most people think that Congress is going to retroactively reinstate the estate tax back to January 1, 2010 at some level -- probably the 2009 exemption of $3.5 million. Most legal scholars also believe that it is constitutional for Congress to do so. If someone dies during that time and owes a minimal amount of tax, then it's likely their estate will just pay it, instead of challenging the constitutionality in court, which of course requires hiring attorneys. But if there is enough money at stake, then I wouldn't be surprised if Johnson's estate does challenge it. It would be worth the risk to see how the Roberts, Scalia, Thomas, Alito Court would rule.
Of course, none of this would be an issue if Congress weren't so deadlocked, so incompetent, so unable to get anything at all done. But that's for another day.
I honestly never believed that it would happen.
I never thought that Congress would actually be this irresponsible. After all, they've known that it was happening since 2001. But here we are. It is 2010 and there is no estate tax. For now.
What does this mean?
First, remember that in 2009, the estate tax only applied to a person who died owning assets in excess of $3.5 million. So for most people, it means absolutely nothing.
However, along with the temporary repeal of the estate tax, there is also a temporary repeal of what's known as step up in basis. Let me explain. Generally, when you inherit assets from someone, your basis in the asset is the value at the time of death. So that when you go to sell the 100 shares of IBM that you inherited from Grandma, you don't have to figure out how much she paid for it. You only have to figure out what it was worth at the time of her death.
With the repeal of the estate tax, there is also a repeal of the step up in basis rules. Instead there is "carry-over basis" and a decedent's estate will have $1.3 million of basis to spread around their various assets. How will this be done? I don't know. But the effect is actually a tax increase on estates valued between $1.3 million and $3.5 million.
Then, one year from now, the estate tax comes back to life with a $1 million exemption, and a 55% rate.
Of course Congress could change all of this. Most people agree that they can retroactively change the law to reinstate the estate tax. I'm sure there will be lawsuits if they do though.
What is going to happen? I have no idea and anyone who says they do is lying. I was so sure that they weren't going to let repeal happen, and I was wrong. So we'll just have to wait and see.
But don't throw momma from the train just yet.
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