Click here to read the SJ-R article quoting Joshua Becker

Beginning in 2011 (unless Congress does something different), the estate tax exemption will be $1 million per person.  Experts have been speculating for years about what Congress will do.  But Congress has done nothing so far.

What does this mean? It means that you need to add up your savings, real estate, life insurance, IRA’s, and other assets.  For most people, all of those assets will be counted in calculating estate tax.  Any asset value above the $1 million exemption (our “coupon” as we call it) will be subject to upwards of 50% tax rate.

So, if someone has $200,000 in savings, a house worth $250,000, an IRA worth $300,000, and life insurance of $500,000, they suddenly have an estate tax risk.  Add in a business, farm or other non-liquid asset, and the estate tax is tragic.

Will Congress change this prior to January 1st?  Well, let’s look at the facts:

• Congress has not passed any permanent estate tax changes in the past 10 years, although numerous bills have been introduced.
• The government certainly needs the money from the extra tax, based on current deficits and future spending plans.
• If Congress does nothing (which some people would say they are good at doing!), then the coupon amount will be $1 million next year.  This is not speculation, it’s a certainty unless Congress takes action.

I’ll leave you to your own conclusions.  Watch for upcoming estate tax workshops with David Edwards to learn more about how to protect your family’s wealth.

We can’t plan for what we think.  We can only plan for what we know.  And what we know is that, as of now, January 1st will expose many to estate tax risks.

1.  To get your thoughts together. Sometimes just getting started is overwhelming.  Maybe one meeting with the attorney will help set you off in the right direction.

2.  You need legal help. Sometimes there needs to be court action through probate or addressing a legal dispute.  In these cases, you do need an attorney, unless you want to wade into the legal system on your own.

3.  To reduce your stress. When someone passes, there is business to take care of.  I just mean personal business, the kind we all deal with in our lives.  Paying bills, getting income, investing money, filing tax returns, etc.  Some of these you could take care of on your own.  But sometimes you may want to delegate them.  At Edwards Group, we deal everyday with banks, investments, life insurance companies, and real estate questions.  We know how to maneuver through all the asset transfers.  We understand what those companies need, how their forms need to be filled out, how to get past a difficult customer service representative.  Maybe you want to delegate some of that to us.

4.  To get the job done right. Many people own annuities and IRA’s.  Those are potential potholes for the family.  Many times we have seen a family try to handle an estate on their own, only to pay tens of thousands of dollars in extra income tax that could have been avoided or delayed with some good legal advice.  That’s just one example.  In many families, the attorney’s fee will pay for itself in avoided legal, financial, or tax mess ups that could haunt you later.  In addition, if you are the executor or trustee and you mess up something, the liability could come back on you later to repay the lost funds.

5.  To reduce conflict. Even the closest families will have a potential for conflict after losing a loved one.  The grieving combined with the stress in an unknown situation often results in siblings butting heads.  In those cases, an attorney who can help guide the process and talk straight to a family member with unreasonable expectations is a big help.

If you have lost a loved one, please contact Lynn Hanson, Client Coordinator, at (217) 726-9200 or lynn@edwardsgroupllc.com to discuss your situation and see how we can help your family.

As I sit down with clients to review the draft of their living trust, they may think the trust is much thicker than they expected.  Before we review the trust, I tell them a story.

I’m terrible at packing for trips.  I pack way too much.  I always think I need everything – all kinds of extra clothes, books, all kinds of stuff.  Of course, with each trip ot of town, I don’t use half the stuff I take.  So, what happens when I take the next trip?  Same thing.  I still pack way too much because, you know, I just might need it.  Doesn’t matter that I usually don’t need all that because this next trip I just MIGHT need it!

What does this have to do with a living trust document? As we look through the trust documents, there are various paragraphs, pages, even entire sections that are “extra sweaters in the suitcase”.  It’s there if we need it, even if we probably won’t need it.

Since our estate planning clients don’t pay us by the word or by the page or even by the hour (they pay flat fees), then we make sure our living trust documents have all the “extra sweaters” that may be needed in the future to carry out their plan.

Want an example of an “extra sweater” in the trust?   Well, we have an entire section that talks about what happens if we can’t find a beneficiary.  If we leave money to a long lost cousin and don’t know where the cousin is when it’s time to distribute, we have a process laid out clearly in the document so it doesn’t hold up the rest of the trust plan.

That’s just one example of the various “extra sweaters” we include in our legal documents to better protect our clients and their families.

P.S.  I am writing this sitting in a hotel in Denver, Colorado at a conference.  And yes, I again packed way too much stuff!   But it’s here if I need it…

Do you have a family member facing a nursing home in the near future?  If so, you urgently need to download and read this report.

CLICK FOR IMMEDIATE DOWNLOAD

The Consumer’s Guide to Medicaid:2010

Check out the current schedule of our Long-Term Care Essentials Workshop to hear more.

Attend our next Long-Term Care Essentials Workshop, with Attorney Joshua Becker and learn:

• How to plan for nursing home care
• 3 Big Myths of Medicaid Qualification
• How to Protect Your Assets and Income

You should attend if you have a loved one paying privately in a nursing home now or you are concerned about the impact nursing home care could have on you, your parents, or other friends or relatives.

UPCOMING WORKSHOPS

Thursday, October 14, 6:30 to 8:30 p.m.

Tuesday, October 19, 9:30 to 11:30 a.m.

Thursday, October 28, 6:30 to 8:30 p.m.

Workshops held in the Community Room at Edwards Group LLC, 4340 Acer Grove, Springfield, Illinois.

Want to hear more?     CLICK TO DOWNLOAD FLYER

RSVP required, space is limited.

To reserve your spot, call Lynn Hanson, Client Coordinator at (217) 726-9200.

Check out Joshua Becker’s 2010 Consumer’s Guide to Medicaid.

1. We like to be organized.
2. We usually don’t get organized on our own.
3. When we do get organized, it doesn’t take us long to slip back into disorganization.

You’ll be glad to hear we have discovered a full proof method for organizing your financial life, and keeping it that way.  Let us help you!  There is no doubt that estate planning (as well as peace of mind and happy relationships) rest on good financial decisions and organization.  Here is how we help clients in our Dynasty membership program:

1. Store documents. We keep copies of deeds, bank statements, insurance policies, etc. for us to refer to, but also if the client needs it.
2. Identify Problems. We help clients identify problems in their financial life.  A good estate plan will not accomplish much if the person’s wealth is poorly invested, incurring extra income taxes, exposed to risks, or confusing to deal with after their death.
3. Summary Reports. Assets can be scattered everywhere, without any one report to pull them all together.  We maintain updated client financial info, and send out an Asset Review Report on a regular basis, asking the client to review.
4. Reminders. Asset titling and beneficiary designations may seem boring, but they are key to making an estate plan work.  We regularly remind and teach our clients what to look for in coordinating their assets.
5. Warranty. After a client has titled a new asset based on what they learned from us, they send us the written proof.  We double check it to see if the asset is properly organized with their estate plan.  If not, we help fix it.  Once we give it our blessing, they can rest with peace of mind.
6. Objective advice on important decisions. I don’t invest assets for clients or sell financial products.  But I see firsthand the work of dozens of financial advisors as well as the results of our “do it yourself” clients.  I am always glad to give feedback on my client’s financial or business decisions.  Often, I support the good advice coming from the financial advisor, and help the client understand how it fits into the bigger picture.  Once in a while, I protect a client who is being threatened by poor service or advice from another professional.

RSVP today for our Truth about Estate Planning Workshop and hear more about our planning process and ongoing client membership program.

After (or I should probably say “during”)

Here is the view into what used to be my office. Now part of my office is a hallway!

Before

Pic from Feb. 2009 open house. To the left, that is my office door. You can see my diplomas, etc. on the wall.

Dave’s office – before and after

Here's my old, bigger office. This photo was taken from what is now the hallway.

Now a glimpse of my new office.

Now here is a view from the back (new part) of the office. You get a glimpse of my office thru the door on the left. The 1st photo above was taken from the counter with the coffee pot, looking back this way.

[originally appeared in the Prairie Farmer magazine - reprinted with author's permission]

“We worked hard to pay for and build up the farm to what it’s worth today.  We couldn’t have done it without the help of our son (or daughter).   As we do our estate planning, how can we be fair to all of our children?”

So begins the conversation these days between farm couple and professional advisor. While some may think of estate planning as merely estate tax planning, taxes are just one issue. The most difficult and important matters may have little to do with taxes. Creating and carrying out plans that will assure fair—while not necessarily equal—treatment of your loved ones is such a matter.

Fairness Is Essential

Taking responsibility for this fairness issue is critical to the long-term health of your family and your legacy. Fail in this regard, and there might never again be a complete family reunion. Stick your head in the sand and you can count on the family farm becoming part of the holdings of the highest bidding neighbor.

We have to face the facts: our society has changed. Children used to stay in the area, marry neighbors, and continue the family farming traditions. Daughters became farm wives and sons became farmers. Now families have at most one or two children still in the farming operation. The others have moved on and away to different careers. The child who is heavily invested—in time, energy and dedication—may very well depend on this farm for a livelihood. To some degree he or she has earned the “right” to keep it, considering that the others moved on to often more lucrative careers and less risky futures.

Despite the changes in society, however, our core values remain unchanged. We want to treat our children fairly. Farming is “in our blood” and we want to see it—this farm—go on. We want to know someone in the next generation who shares our love of farming will carry on the tradition.

You Must Take Responsibility

The hopeful but naive person says, “I just can’t figure it out for them. My kids all get along, they’ll be fair with each other. They’ll divide the property agreeably.” Don’t do that to your kids! Johann Kaspar Lavater provided timeless wisdom when he wrote: “Say not you know another entirely, till you have divided an inheritance with him.” The wonderful kids today will become competitors, easily persuaded—by their spouses?—that they are entitled to their full-value, equal share.

A friend told me recently after suffering through an ugly family farm estate settlement that his parents would have done much better planning and it wouldn’t have been so stressful to them if they had started when they were younger. They waited to do serious planning until around age 80, and the plan did not work as they had intended.

It could have, and yours can if you start soon, look with experienced professionals for carefully tailored solutions, and then follow through. Focus on the results you want to see; let the attorney worry about what legal papers—wills, trusts, buy-sell agreements, partnerships, etc.—will be needed.

Where To Begin

If you commit yourself to a proactive planning process it is possible to achieve fair results that the family will understand and accept. In this extraordinarily complex arena you will need professional counsel.

It’s easy to find attorneys who say they “do estate planning”—but much harder to find one who knows farming and will help you develop and implement the solutions that will fit your unique goals for your family. To see if an attorney can help design a plan to fit your particular circumstances, ask some questions:

• What percentage of your business is devoted to estate planning for farmers?
• Have you seen those plans play out completely and work well?
• How will you assure that my plan stays current with the law?

If you begin now to ask the right questions you will be able to develop the right plan for your family, and assure that what you have goes to whom you want, when and the way you want, transferring your traditions—not just your net worth.

- – - – - – - – - – - – -

Article authored by Curt W. Ferguson and originally published in the Prairie Farmer magazine, December 2005 issue.  See the article on Curt’s web site, click HERE.

Since downloading the kit, Greg and Gina have talked about guardianship issues together and found the kit very useful in guiding their discussions about the sensitive issues that everyone faces when making such difficult decisions. They especially found that the Child Raising Priorities Checklist, included in the free kit, gave them important information to think about in deciding who could best raise their children should the unthinkable happen.

The kit is completely free and provides practical information about the four types of guardianship you should be aware of as a parent, gives guidance through the difficult decision of choosing a permanent guardian and other tips regarding unique situations such as those of divorced parents. There are no strings attached to this offer. It is just great information that can help you make one of the most important decisions you will make as a parent. Don’t put it off any longer! Get started today by downloading the Kids Guardianship Kit!