Phone: (517) 886-7176
Fax: (517) 886-1080
Email: Info@Hubbardlaw.com

Estate Planning and Probate

Kristin Arnett Presents on The Importance of Estate Planning

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Estate planning attorney Kristin D. Arnett will present on The Importance of Estate Planning to the Jackson County Compassion Club (JCCC) on September 9, 2010.  The JCCC is an affiliate of the Michigan Medical Marijuana Association and a registered non-profit organization comprised of patients, caregivers, health and legal professionals, and the general public.

 

Estate Planning and Investment Update

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Concerned that your investment portfolio has taken a turn for the worse and that your estate plan may no longer reflect your current economic situation?  If so, click here for tips and suggestions on how you can modify your estate plan to meet your estate planning objectives.
 

Estate Tax Repeal: What Does it Mean?

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ESTATE TAX REPEAL

WHAT DOES IT MEAN?

 

 

In 2001 changes to the federal estate tax, generation skipping transfer tax, and gift tax were passed by Congress.  These changes were scheduled to take effect, and did take effect, in 2010.  So what are the changes and how might they affect you? 

In 2009 an estate valued up to $3.5 million was exempt from federal estate and generation skipping transfer taxes upon a person’s death.  In other words, a person who passed away in 2009 could transfer assets up to $3.5 million without having to pay federal estate taxes or generation skipping transfer taxes.  For an estate greater than $3.5 million the tax rate was 45%.  There is also a gift tax exemption of $1 million.  If a person used the $1 million gift tax exemption during his or her life then the $3.5 million exemption for estate and generation skipping transfer taxes was reduced to an exemption of $2.5 million.  The Estate Tax is currently repealed (if Congress does not act retroactively), meaning that for the year 2010 no estate is subject to estate or generation skipping transfer taxes.  There is still the $1 million gift tax exemption. 

Another major change, that will probably affect many more people, is the change to the rules regarding a step up in basis.   In 2010, instead of a beneficiary receiving an estate asset with a basis equal to the estate tax value, the beneficiary takes the asset with a carry-over basis, i.e. the same basis the decedent had in the asset.  Thus, a sale of the asset may result in capital gains tax on the amount in excess of the carry-over basis.  However, the personal representative of the estate can allocate up to $1.3 million to the beneficiaries to step up the basis for assets passing to the beneficiaries.  In addition, up to a $3 million adjustment can be allocated to property that is Qualified Spousal Property.

If Congress does nothing, in 2011 the federal estate tax and generation skipping transfer tax are scheduled to return at $1 million with a 55% tax rate.  This means that for individuals with an estate valued at over $1 million their estate would owe federal estate tax at a rate of 55%.  It is surprising how easy it is for an estate to reach, and perhaps surpass, $1 million.  Should the exemption be limited to $1 million, many people will need to review, and likely update, their estate planning strategy to attempt to reduce or even avoid estate taxes.  As we do not know what Congress will do at this point, all we can do is wait for Congress to take action.  Additionally, in 2011 the carry-over basis is scheduled to be repealed and the step up in basis to return. 

So what can you do now?  It is very important to review the distribution sections of all wills and/or trusts to be sure that they continue to reflect the Testator’s (or Settlor’s in the event of a trust) intent.  Be particularly cautious if the estate plan depends upon a formula (as opposed to a specified dollar amount) to determine a beneficiary’s share.  If you have any concerns it is wise to speak to an attorney.  However, with the future being so uncertain, even changes made to an estate plan now, may need to be reviewed again after Congress has taken action, if it decides to take action at all, regarding the estate and generation skipping transfer taxes. 

We understand that this is confusing and may be frustrating.  If you have any questions regarding the above information or if you need assistance with your own estate plan, please feel free to contact our law firm at 517/886-7176.

Kristin D. Arnett, Attorney

THE HUBBARD LAW FIRM, P.C.

 

 

Time to Update Your Estate Plan?

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Wills & Trusts Must Keep Up With Life Changes


A will, and in many cases, a trust, are essential parts of planning for the future. But don't think creating a will or a trust is a one-time proposition. Even if you have a valid document, it may need to be updated for a variety of reasons. For example:

1. Deaths - If individuals named (as heirs, executors or trustees) have died or they become incapacitated, your documents should be changed.

2. Assets. Revisions may be needed if the value of assets has increased or decreased significantly, or they are no longer owned. For example, if you specifically leave your home to one of your children, and later sell it, you may want to change the distribution of your other assets.

3. Marriage -
 Wedding bells usually signal the need to review a will. Which assets should pass to your spouse? Are step-children involved? If this is not spelled out in a will, the state will decide. In a community property state, a spouse automatically inherits half of all community property. In most other states, a spouse may receive one?third to one?half of the estate, absent any other directions. A trust may alter the result from these changes  occurring with a will.

 

Where is It?

    Before it's too late, people should let someone know where their original will is stored. If one can't be found after a person dies, a court may decide it was destroyed. While a safe deposit box is a good option, any safe place, including leaving it on deposit with your attorney or filed with the Probate Court will also work. It is a good idea to only have one executed (signed) copy of the Will to avoid questions about the potential revocation of a will if not all executed copies can be accounted for.  It is also a good idea to mark on photocopies of your will where the original executed copy of the will is located.
    Other options include:

  • Store an original will in the office of the county Clerk of the Probate Court. (It must be retrieved if the person moves.)
  • Have your attorney retain the original will. Ask them what will happen to the document if they die, move, or quit practicing.
  • Store the will at home. Of course, it could be lost, inadvertently destroyed or discovered by an interested party who could deliberately destroy, conceal, or alter it.

Also, keep in mind that an unmarried couple living together may want to leave assets to each other but in order to make an inheritance happen, it must generally be spelled out in a will.

4. Divorce - In many states, a divorce automatically revokes a will or those provisions concerning an ex?spouse but not those same type of provisions in a trust, unless so stated. As a result, if you get divorced, it's best to have a new will drafted. For instance, you might have your former spouse removed as a primary beneficiary. In addition, you may want to change the beneficiary of your life insurance, pension or any existing IRAs. You will want to consider the use of a trust if children from a previous marriage are involved.

You may also want to change your will or trust if one of your children gets divorced.

5. Births - Once parents have children, their wills should be amended immediately to include the names of guardians to care for the children in the event the parents die prematurely. Also, parents or grandparents might wish to restructure their wills concerning distribution of assets after children are born. Again, the use of a trust may be recommended.

6. Retirement - This event may also trigger the need to make changes to an existing will. For example, many retirees sell their homes and move to other states. But state laws can vary widely. This may also suggest that a trust would be useful to bring predictability to the results in the event of a death.  In addition, while all persons should consider the use of durable powers of attorney for health care and for general purposes. Individuals nearing or entering retirement should have these types of documents in place to protect them from their own incapacity or simply for use for convenience.

7. Tax law revisions - The Internal Revenue Code is regularly changed. In fact, many aspects of estate tax planning are in flux right now. A will and or a trust that is designed to take advantage of maximum tax benefits that exist today may have to be updated as tax laws change.

You don't have to tackle this problem on your own. If you need to update a will or a trust, please contact us as your estate planning advisers to guide you.


 

 

 

 

Kris Arnett Publishes Third Article in City Pulse

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Hubbard Attorney Kris Arnett publishes the last article of her three part series in the City Pulse.  The third article entitled "Transfering Property and Reducing Taxes" discusses ways for individuals to shift wealth, tax consequences, and Inherited IRA's.  Click here to read the article in full. 
 

Kristin Arnett publishes second article in City Pulse

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The Lansing City Pulse has published the second article of a three part series written by Attorney Kris Arnett.  The Article, rather than focusing on the reasons for having an estate plan (see the first article), focuses on different types of estate planning documents.  Click here to read the article

 

Hubbard Attorney writes for City Pulse

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Hubbard Attorney Kristin Arnett discusses the importance of an Estate Plan in her first of a three part series for City Pulse. Click here to access the article. 
 

Supreme Court Eyes Trust Code: Possible Court Rule Modification

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On December 15, 2009, the Michigan Supreme Court introduced amendments for Section five entitled "Trust Proceedings" of the Michigan Court Rules.  The proposed rule changes modify the manner and method of service permitting parties to agree to service via e-mail.  The Supreme Court also proposes substantial changes

Read more... [Supreme Court Eyes Trust Code: Possible Court Rule Modification]
 


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