Clients are still asking me about estate taxes. Temporarily, the Federal estate taxes are only applied to estates over $11.58 million, per individual. Wisconsin has no estate tax or inheritance tax. Thus, for now most of my clients do not have to worry about estate taxes. The things to worry about is just having a viable plan in place for your loved ones be it human ones or furry one. But this is another reason to check in with your attorney every 3 years or so to see what changes are happening with the estate tax.
I have always offered clients the service of placing their will in the courthouse vault of the county where they reside. The cost to keep your will in the courthouse vault is $10.00 forever and ever. If of course you have a new will, it will be another $10.00 to put the new one in and we pull out the old one and shred it. So many attorneys don't know that this option exists or don't tell their clients. Two weeks ago I was at a Milwaukee County probate meeting and the question of lost wills came up. I replied, "What lost wills? My clients have theirs in the vault." All the commissioners and probate court personal were busy nodding and smiling. Of course the next week I took on a probate case where we couldn't find the original will. The deceased client did have a copy. His attorney says he doesn't have the original. So we had start a special administration in probate court to hire a locksmith to get into his bank box. Of course there was no will there. So now we are starting a formal probate to prove up the copy of the will. The expenses for this are adding up quickly. Probably an extra $1,500. Make sure your wills are safe and accessible to your loved one. Not only will it save time and aggravation it will save money.
This week an old client I hadn't seen or heard from in 9 years called and sheepishly told me he went to see another attorney some years ago and begged me to allow him to return to me for his estate planning. He didn't have to beg, of course I am pleased to see him and told him that repeatedly. He feels he was conned into seeing this other attorney by a financial planner who was after his business. The planner offered a free review of his financials and then insisted on him getting new estate documents with the planner's attorney referral.
Please don't ever allow yourself to feel pressured by any of your advisors. You have the right and the power to ask questions, take your time to consider matters, do your homework and really investigate who you are working with. Ask the advisor if there is a relationship and what the relationship is with any of the referrals made.
As to his "new" documents they aren't bad, but they aren't good either. They contain a lot of boiler plate that is not applicable to him or his situation. The "new" attorney did get him to execute a financial power of attorney which I was never able to get him to create, (good for them) but they also created a revocable trust that was totally unnecessary and serves no legitimate purpose in his plan. I am going to fix things up for him and hopefully the next time he feels pressure to do something, even from me, he asks questions and gets answers.
My mother sends me emails everyday sent to her by others. Some are funny, some are charming and others are just plain wrong. Today's email was about the current tax rates and how someone can send out such erroneous information is beyond me. So if there is any misconception out there about the current (2014) tax rates let me clarify.
The Federal estate tax rate maximum is 40%. That is the rate applied to estates or to gifts in excess of $5,350,000 and only to transfers to someone other than a spouse. The amount of $5,350,000 is adjusted each year in accordance with inflation. Transfers to a spouse have no transfer tax applied to such a transfer. The top Federal capital gains rate is 20%, however an additional tax maybe applied to high income earners of an additional 3.8% for a total tax rate of 23.8%. Collectibles are taxed at 28%. The top Federal income tax rate is 39.6% and also may have the additional 3.8% tax applied for high income earners. Social security tax on wages is an additional 15.3% - one half is paid by the employer and one half is paid by the employee. Social security tax is a combination of social security and medicare tax.
Knowing the tax rates is just as important as paying attention to your investments. So work with your accountant or your tax advisor to understand your particular tax situation.
I know you are all wondering what in the world is a gamete. Well that is your reproductive material - either sperm or ova. Why the heck would I, an estate planning attorney, be writing about that. Well I will tell you. In this wonderful world of modern medicine, reproductive technology has a tremendous impact on estate planning. The freezing of ova and sperm for later usage is no longer the story line from a science fiction book or movie, it is now almost a common place practice and rapidly expanding. Today - in the U.S. alone there are over 6 million children conceived using some type of reproductive technology. Sometimes these children are born long after a parent/grandparent's death. These posthumously conceived children are real possibilities and planning for such a possible eventuality - whether it is for your children or grandchildren - is an important component of an estate plan. So in the interest of being thorough I am going to ask you about your feelings and thoughts with regards whether you would like such children to inherit or not when discussing your estate plan. It is also important to plan for the eventual disposition of remaining gametes in an estate plan. Thus, I am going to be a bit nosy, and ask you if you are storing genetic material, or if your children are. I prefer to be proactive and not leave such an important consideration to chance, particularly when there is so little judicial precedent. I am going to guess that you have some definite opinions as well and would like to see your desires with regards to inheritances for these children set forth in writing. Of course having an estate plan is even more important for you to create if you are using medical reproductive technologies as there may not be a right under Wisconsin law for posthumously conceived children to inherit if there is no Will. Thus, if you want to provide for such children you must have a testamentary document in place.
I love a website with a blog. Now I have a platform to write about all the fun things I get to do as an attorney. So look for more posts and feel free to ask me to write about various topics that are of interest to you.