Attorney & Mediator
Attorney & Mediator

End of Life Choices – not the same for everyone


Estate Planning:  End of Life Choices – not the same for everyone.


When we complete an estate plan – one of the components is a Power of Attorney for Health Care.  While we may need an advocate to assist us in getting better from a severe illness or accident, it may also involve the end of life.

Not everyone makes the same choice.  Some would like to live as long as possible and use every medical available.  Others do not choose that road.

The following is an article about Norma – a 90 year old woman who decided to forego cancer treatment in order to go on the trip of a lifetime around the United States.

The end of her life will come more quickly – but it will be lived with gusto.



Federal Gift and Estate Taxes – Do You Need to Worry?


In the past, the federal estate tax was levied on estates over $600,000.  Therefore, sophisticated trusts were required to preserve the full $1.2 Million exempt amount for married couples.

In 2013, Congress made the exempt amount $5 Million per person, as adjusted for inflation.  Therefore, for 2016, each of us gets to give away up to $5.45 Million before any tax is imposed.  There are no sunset provisions for this law any longer and it will continue to adjust upward as the rate of inflation increases it.

Additionally, the current law allows for spouses to combine their estate tax exemptions without the need for complex trust language in separate trusts.  When the first spouse dies, his or her estate only uses up that portion of the exemption necessary to cover the assets being given away.  When the second spouse dies, he or she not only has the benefit of the individual exempt amount, but can use the portion of the deceased spouses exemption not already used.  Therefore, if a couple died in 2016, no federal estate tax would be imposed until the estate exceeded $10.9 Million.

This use of the deceased spouse’s exempt amount is called “portability”.  In order to preserve the unused portion of the first spouse’s exemption, an estate tax return must be prepared event though no tax will be due.

While any law can change, it is unlikely that Congress will try to change this law in the near future.  While $5.45 Million is a generous amount, changing this amount downward would not simply affect the wealthy.  Without a generous exempt amount, small family owned businesses and family farms would be affected.  In the past, it was not unusual to see family businesses and farms sold because the family inheriting the business could not afford to pay the estate tax.  It is unlikely that Congress would return to that system as it would thwart

entrepreneurship, the small business and farming.

While high asset families should keep abreast of any changes in the federal gift and estate tax law, it should not be an issue to worry about.

When your primary wealth is in IRA’s

IRA piggybank

Estate planning addresses the varying wealth of the client together with his or her desires in passing on this wealth.  For those with cash assets and land as their primary financial holding, a revocable trust may be the right answer to control those assets for the benefit of future generations.  But, what if the primary assets are held in IRA’s?

First, IRA’s cannot be a part of your revocable trust.  To transfer them during your lifetime into your trust (as you would your home and bank accounts) would be a distribution of the assets, subjecting them to income tax.  Most individuals, therefore, simply name beneficiaries on their IRA’s to receive the balance of the funds when the individual dies.

The so-call “stretch” provisions allow for a calculation or re-calculation of a Required Minimum Distribution (RMD) for each of the beneficiaries based upon each of their life expectancies.  They each must take this RMD annually, or be subject to a 50% penalty.  The distribution of the small RMD’s is usually in line with the wishes of the individual who has died.

Many clients desire a plan where the child withdraws only the RMD, gradually over his or her lifetime.  What if the child decides to withdraw 100% of the principal and pay the tax in one year?  He or she can do this as there is no prohibition on doing so.

How can the distribution of an IRA be controlled in the same way as the assets in a revocable trust so that the wishes of the client are honored?  By establishing a separate Conduit Trust.  These IRA trusts are specially drawn to comply with the requirements set forth by the IRS so that the money is able to pass through the conduit trust in the specific manner desired without being subject to the large tax penalties that would result if the entire amount were distributed in one year.

This type of trust is ideal for the client that has a revocable trust and desires to set up a mechanism to control the distribution of his or her IRA so that it stretches over the lifetime of the child.  It is a free-standing trust and requires a trustee.  It can protect the large IRA from being wasted by children who are not mature enough to handle the large principal amount that would otherwise be available.  It also provides an income stream to that child, gradually, over his or her lifetime.

While a Conduit IRA Trust is not for every client, it is the right estate planning tool for individuals with considerable wealth in IRAs who is concerned about limiting the distribution of the principal upon death.

What happens if you die while on vacation in a foreign country?

vacation map

When we think of traveling abroad, we plan for the fun.  Our packing list includes the camera, sunscreen and the right clothes.  But, what happens if the unexpected occurs and a family member dies while on vacation?  It doesn’t happen often, but it can happen.  Whether due to a traffic accident or illness, Americans do die while on vacation in foreign countries.

First, the local authorities will need to identify the body for issuance of a death certificate.  This may be complicated by the language barriers.  While it may seem that everyone overseas speaks English, this might not be the case if you are in a remote or rural area.

Arrangements will need to be made for the transportation of the body home.  This can be very costly as the body will need to be embalmed and sealed in a casket prior to transport.  Cremation may be a very good option at this point as it will eliminate much of this cost and red-tape.  Whatever the family decides to do, it is the family’s responsibility to shoulder the cost of this transportation. If the family decides to have the body transported home, it may be a good idea to contact the local funeral home, which will be skilled in making these type of arrangements.

While the U.S. State Department through the local embassy or consulate will assist the family in finding navigating this procedure, it is not up to the State Department to shoulder the cost.

Upon issuance of the death certificate by the local jurisdiction, the Consular Office can issue a Consular Report of the Death of an American Abroad.  This can be used by the next of kin and/or Estate representatives in the U.S. courts.

Since some of us travel solo, it is important to remember to carry identification on your person at all time when abroad.  In that way, if you are to become ill, or to die, the local authorities will be able to identify you and to notify the U.S. State Department, which will in turn notify your relatives.

While worrying about this issue should not put a damper on your plans, a little advance planning is always a good idea.  Remember to carry identification and to have a list of contacts with you including next of kin.