Is estate planning still needed?

Last year Congress passed the Tax Cuts and Jobs Act of 2017 which pretty much killed the aptly named death tax. It didn’t actually kill it just exempted those who leave less than $11 million to their heirs.

Since the idea of no leaving a federal tax burden to their heirs, many people are questioning the need for estate planning since one of the main reasons to estate plan is to lessen the tax burden. But there is more to estate planning than tax issues.

Kiplinger.com has a very useful piece by Tracy Craig. Craig is a Fellow at the American College of Trust and Estate Counsel.  She has some useful info on estate planning beyond taxes.

To read more click on the links below:

State Estate and Inheritance Taxes Exist for Many

Probate Can be Costly

Many Beneficiaries Have Issues

Blended Families are Common and Can Be Complicated

 

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Including collectibles in you estate plan

What are collectibles?

According to the IRS, collectibles includes works of art, rugs, antiques, any metal or gem (with exceptions), any stamp or coin (with exceptions), valuable alcoholic beverages or “any other tangible personal property that the IRS determines is a “collectible” under IRC Section 408(m)”.

Quite often people don’t have any idea how much their collections are worth which is why when you are doing your estate planning it is in your and your heirs interests to find out. If you plan on bequeathing your collectibles, it is a necessity.

If you own any antiques or other collectibles you should decide how you want to distribute them after you die. You can either donate them to charity or leave them to heirs. The problem is collectibles fall into special laws separate from other assets. That is why you need to appoint someone who knows the value of your collectibles. Experts say you should contact at least two dealers or auction houses that deal in your type(s) of collectibles. They will come in handy for whoever settles your estate. They will know how much your collection is worth which can prevent any fighting among heirs, each of whom may have a different idea of their worth.

By having this information it will also prevent a clueless heir from selling any objects for less than their fair market value.  It is good to remember that even if your heirs decide to keep the assets rather than sell them, they will still need to know the value of your “objects” to establish the total value of your estate.

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Michigan Probate Court hires attorney under criminal investigation

Last year we wrote about the scandal in Michigan’s probate system; about how some attorneys and real estate brokers were working together to cheat heirs out their inheritances, legally. Now another scandal has emerged with the news that Oakland County Probate Judges in Michigan have hired an attorney who is under criminal investigation.

We posted the WXYZ video story about this scandal last year.  Probate public administrator in Michigan cashes in on other people’s estates…legally

Barbara Andruccioli was one of the lawyers exposed by Detriot’s WXYZ 7 News investigation into collusion between probate attorneys and estate brokers to cheat heirs. She was recently hired by the Oakland County Probate Court at a taxpayer cost of $102,000/year. Channel 7 investigator asked Anruccioli,  “How can the taxpayers have any confidence with you working here?” Andruccioli answered, “Really, I think you probably need to talk to the judges.”

Andruccioli was a partner at Kemp Klein law firm and an Attorney General-appointed Public Administrator:  a public official with the authority to open probate estates after someone dies if there are no heirs available.

WXYZ reports

Andruccioli was a partner at Kemp Klein law firm. She was also an Attorney General-appointed Public Administrator, a public official with the authority to open probate estates after someone dies if there are no heirs available.

Court records show Andruccioli teamed up with real estate broker Ralph Roberts and his companies to open those estates, sell the homes, and cash in.

WXYZ uncovered court filings showing “Andruccioli and one of Roberts’ companies, Probate Asset Recovery, were billing for thousands of dollars, while the actual heirs ended up with very little.”

After the station’s investigation, Attorney General Bill Schuette terminated Andruccioli as a Public Administrator and the FBI and Oakland County Sheriff’s detectives raided Ralph Roberts offices, and launched a criminal probe into the Public Administrators.

Oakland County Clerk Lisa Brown told the station that her reaction when she first heard of the hiring was “Shock, absolute shock and bewilderment…  So out of having a wonderful pool of applicants, why would you choose this person who has a cloud over them?”

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Ultra rich and Dynasty trusts

The new tax law doubles the amount that can be passed to heirs without them having to worry about estate and gift taxes. The amount works out to about $22 million for a married couple, but is only in place until 2025. Due to this, the uber-rich are turning to what are called dynasty trusts, which secures inheritances of their grandchildren, great-grandchildren and beyond.

 Joan Antoniello, of Mazurs USA Wealth Advisors told Bloomberg News, ““For the mega wealthy, it’s really a window of opportunity that’s limited.”
Dynasty trusts let the richest Americans protect and preserve wealth for generations, while minimizing tax bills. Treasury Secretary Steven Mnuchin appears to have used one prior to assuming his government role. They can be funded tax-free with assets up to the exemption limit, which was $10.98 million in 2017 for couples, even though complex tax-planning techniques can get around that threshold.
  

Blloomberg reports that about a dozen of the nation’s top wealth planners say they’re seeing “increased interest in the trusts as clients look to capitalize on the additional $11 million they can now easily shift over. Some families want to transfer money out of their estates into the trusts in case Democrats take back control of Congress and pull the limits back down before 2025, while others say it’s best to move assets before they appreciate even more.”

Estimates are the new rules affect fewer than 2,000 families per year, but billions of dollars are at stake. A University of California, Berkeley study found that 0.1% of families control a growing share of U.S. wealth, from an estimated 7 percent in 1978 to 22 percent in 2012. The net worth of the wealthy has zoomed even higher in recent years as values of stocks, real estate and private businesses have climbed.

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Can you bequeath your digital music files?

At the dawn of the digital world, something happened that most didn’t notice. Computer software that you paid money for was no longer yours. You didn’t own it, you only licensed it from the company and they had limitations as to what you could do with it. Now that concept has spread to all aspects of the digital world. We no longer own what we buy.

In your will, you can bequeath your hardcover book collection and your vinyl records, but your digital music and books are a different matter. The big difference is a rights issue. In this new digital economy, most companies don’t grant you ownership, but rather simply a license to use the product.

It’s not like buying a physical book which you own outright and most people don’t read the “Terms of Use” on their digital purchases.

For example, Amazon and Apple grant non-transferable right right which means you can bequeath any bought music in your iTunes library or Kindle.  Amazon’s Terms of Use says, “You do not acquire any ownership rights in the software or music content.”

So, it looks like your e-music and books die with you? Maybe yes. Maybe no. One easy legal way around this conundrum might be to continue to listen/read the digital content on the deceased’s devices. As long as you have the passwords and login info, no harm, no foul. Another way is to pay and get an online safe deposit box that stores digital information like passwords and login information.

Until the law catches up with the digital culture, people will need to come up with various ways to own what they paid money for.

 

 

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