Posted on March 16, 2009 by David Shulman

Review (and revise) Your Estate Plan After a Signficiant Change in your Finances

There was a short article yesterday in the Bristol (CT) Press by Connecticut Attorney Daniel O. Tully pointing out that "If your finances have changed markedly since you wrote your will, you should check your estate plan to see if you need to make any changes."  This is especially true if your plan includes "specific bequests" which are gifts of specific property upon your death.

For example, your Will might currently state, "I give, devise, and bequeath my 10,000 shares of my Citibank stock to my son Barack, and the rest, residue, and remainder of my estate to my daughter Michelle" 

Assume you executed your Will on March 16, 2004.  On that date, 10,000 shares of Citibank was worth close to $500,000. Today, after the perceptions decline in the stock market,10,000 shares of Citibank is worth about $17,000.  If you died today with those provisions in place, this could create an inequity that you hadn't intended.  Therefore, it is a good idea to review your documents to see if you made any specific bequests, and contact your estate planning attorney to discuss whether or not a change is necessary.

Also, as I have written about before, I believe that this decline in the world economy provides the greatest opportunity for gift and estate tax planning in years, possibly ever.  Note that I am not talking about Citibank, or any specific stock or asset in particular, but just assets in general.

Currently -- and I am simplifying this -- the US imposes a gift tax on the value of assets that you give away during life, and on the value of assets that you own upon your death.  One of the benefits of giving away assets now is that you are only subject to tax on the current value of the asset, and all of the future appreciation is removed from your estate and not subject to the gift or estate tax.  If you are relatively young and healthy, and you believe that in the long term that the value of the assets you own will appreciate, you should evaluate whether it makes sense to give some property to your children or even grandchildren now, so if the value of that property comes back up, it will be out of your estate and not subject to the estate and gift tax.  Even after the current stock market decline, $10,000 invested in Microsoft in early 1990 would be worth $282,200 today.  A gift of Microsoft stock in 1990 would have removed all of that appreciation from your estate.

I realize that many people are concerned about giving away assets now -- either because they do not believe that their children are ready to handle large amounts of money or they are afraid that they themselves will need the money to live later in life.  Depending on your individual circumstance, there may be solutions to each of these problems, which your estate planning attorney can discuss with you.

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Posted on February 13, 2009 by David Shulman

Estate Planning in a Down Economy

With the stock market significantly done from its all time high, many people are putting of doing their estate planning.  So the question is, is now a good time to engage in estate planning transactions?

Of course!

First, if you don't have a will or other testamentary documents, then when you die, all of your property that is not jointly owned passess by what's known as intestacy.  That means the State decides based on a pretermined formula where your property goes, and not you.

Wealthier individuals probably already have their estate planning documents in place (I hope).  But now, with a depressed economy and a down market, now is a great time to look into transerring assets to the next generation.

One thing you can do is make what's known as annual exclusion gifts.  The annual exclusion this year is $13,000.  That means you can give $13,000 to as many people as you want, tax free.  If you are married, you can give $26,000 to each of your children, their spouses, your grandchildren, etc.  Most importantly, it doesn't have to be cash.  You can give stock in companies that have declined in value but are still good solid companies.  That way, you not only remove the asset from your estate, but all of the future appreciation.

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