Even though most estates won’t owe Uncle Sam, estate planning is essential for protecting you and your loved ones.

1. Provide for minor children.  Your will should name both a guardian and a financial trustee for your kids in case you and your spouse die.

2. Designate beneficiaries.   Your will should include a simultaneous death clause to pass your estate to your children or designated beneficiaries should your spouse die shortly after you.  If you don’t write a will, the state will split your estate according to its laws of intestacy and your estate will have to pay for the administration.

3. You can’t disinherit your spouse.  If you write a will, you spouse can elect to take what you give them or their elective share entitled to them under the statute.  If you don’t write a will, your spouse can elect to take their intestate share or their elective share entitle to them under the statute.

4. Provide for all your children.  If you leave everything to your spouse, your children that are not of the marriage will not inherit from you.  You will need to create a bypass trust agreement if you want them to inherit.

5. You may not be able to avoid probate.  Unless your entire estate is in your trust, you may still need to rely on probating your will.  The process will be shorter and less expensive.

6. You can disinherit your children.  Or anyone else for that matter, but only if you spell it out in your will and/or trust.

7. Avoid having subjective conditions on inheritance.  If you’re worried about responsibility, a spendthrift trust can control how money is distributed so an irresponsible heir can’t blow it all at once.

8. Keep designated beneficiaries on retirement and life insurance policies current.  These assets pass outside of the estate by contract law only if they are kept updated.

9. Consider reducing your estate tax liability by giving away assets before you die, holding them in joint tenancy or transferring ownership to a trust. You can gift as much as $12,000 annually to as many people as you want, and you can pay someone’s education and medical expenses directly to the providing institution, without triggering federal gift tax.

10. Review your will — and life insurance — after major life changes.   If you remarry, consider a prenuptial agreement. If you move, remember that estate laws vary from state to state.

11. Estate state tax obligations can be minimized if you plan for them. In 2007 and 2008, only the portion of an estate over $2 million is subject to federal estate tax. The threshold rises to $3.5 million in 2009 before the tax disappears in 2010. It will return in 2011 with a $1 million threshold unless Congress decides otherwise.   In Tennessee, the threshold is $1 million.

12. Prepare a durable power of attorney for finances, a living will and, because living wills aren’t always enforceable, a proxy for health care.   Also consider a living trust.

It’s important to see an attorney to determine which of the above applies to you and which estate planning tool best suits your ultimate goals.   Avoid do it yourself programs and cheap documents prepared by paralegals.   Make sure that your final wishes are fulfilled and that you do so in the most efficient manner possible with the right estate planning tool.

Source: California Estate Planning Blog

The Memphis Estate Planning and Probate Lawyers of Ferrell Law Firm have posted the third installment of a podcast series on Estate Planning originally posted on the Death and Taxes Blog

A discussion of Illinois health-related directives such as powers of attorney and living wills.

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     Ms. Sills wanted her story told.  If you have any wishes you would like to insure are completed for your estate planning please contact the Memphis Probate and Estate LAwyers at the Ferrell Firm.

To read the obituary please follow this link ;

http://www.commercialappeal.com/news/2008/apr/13/ida-mae-russell-sills/

To read other articles about the life of Ms. Sills follow these links;

http://www.memphisflyer.com/memphis/Content?oid=oid%3A41925

http://www.commercialappeal.com/news/2008/apr/18/colorful-death-notice-takes-on-life-of-its-own/

     While everyone may not have an art collection at home many people have special family heirlooms or other objects that have a profound significance in their lives.  These are among the most treasured and irreplaceable of your personal effects and your wishes for these heirlooms are an important part of complete estate planning.  Whether you wish to donate your personal property to a museum or charity; or want to insure that these items go to the intended friend or family member.  Our Memphis Estate Lawyers can guide you through the estate planning process to make sure that your wishes are ca are carried out for your most precious posessions.                                                                                                                                                                                                                                                             Read the full article at ; http://lawprofessors.typepad.com/property/2008/05/property-and-pr.html

This time the topic is living trusts.

The music is #40 (In Yugoslav Style) from Mikrokosmos, by Bela Bartok.

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If you pass without a will or Intestate…

Your children will share equally or per stirpes, whatever part of your estate that does not pass to your surviving spouse.  Your spouse is entitled 1] share equal to the children OR 2] 1/3 of the net estate, whichever is greater.  If your child is deceased, then their children shall share that share equally.

EXAMPLE: You pass and are survived by your spouse, 2 of your 3 children, and the pre-deceased child has 2 children (your grandchildren)

• Your spouse can take 1/4 OR 1/3 share, FIRST
• Your surviving children will each take 1/4 share of remaining estate
• Your surviving grandchildren of your pre-deceased child will each take 1/8 of remaining estate

If you pass with a will or Testate…

Your children will take whatever share you chose to give them.  You may specifically disinherit them.  If you accidentally omit them, by either forgetting to update your will or just not updating your will in time, they can inherit their intestate share.  This means unless you intentionally remove leave them out of the will by: 1] omitting them intentionally to disinherit or 2] making a gift or transfer during your life which was intended to replace receiving anything by will, your children will take whatever share they would have gotten had you not had a will, regardless of what other provisions you made for other children.  

They are not entitled to the same elective share benefits of your surviving spouse. 

EXAMPLE:

1. Child was born after you had written your will, but you forgot to update it or passed away too soon to update… child may take intestate share
2. You gave a family heirloom or paid a significant espense and made the clear and witnessed statements or actually wrote it into the will, that this was their “inheritance” and they would not received anything in the will, … child will NOT received intestate share.

This benefit does not apply to grandchildren.  So if you omitted a child by mistake, and they predeceased you, their children will NOT be able to inherit the intestate share, and will inherit nothing from you.

How we can help to make your wishes clear…

While there are limited laws on the drafting of provisions of your will, without a complete understanding of how all these laws work together and without continual updates, your will may fall short of your wishes.  Count on our Memphis Estate Planning Lawyers to guide you through all the ramifications of your drafting decisions and to suggest provisions that can allow for relief from mistakes and prevent misinterpretations of your final testament. 

Source of post: California Estate Planning Blog and Tenn. Code Ann. §31-2-101 , §32-3-103 , and §31-4-101

Kathleen Ford Bay(Attorney at Law, Blazier, Christensen, Bigelow, and Virr, P.C.) has recently published her article entitled Untying the Knot– Until Death and Taxes Do Us Part, RPPT eREPORT (Feb. 2008).

 To be cautious and practical, unmarried couples the following should meet with one of our Memphis Estate Planning Lawyers to discuss such issues as:

1. Wills (avoid testamentary libel);
2. Financial powers of attorney;
3. Health or medical powers of attorney;
4. Advanced Directives (Living Wills);
5. Revocable trusts and transfer of assets to such trusts (consider the mortgage company; insurance on assets; title insurance on home);
6. Declaration or nomination of guardian or conservator and stating who can never be a guardian;
7. Beneficiary designations (insurable interest) and non-probate property;
8. Providing for children (adoption and other issues); and
9. Funeral Directive.***  

Source of post: Wills, Trusts, Estates Law Prof Blog

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  AOL

  Taxing Times

  Celebrities and famous folks usually crave the spotlight. But some well-known people have attracted a lot of attention they didn’t want — from the IRS.

  Check out our gallery of 19 infamous tax trouble cases — the faces you see may surprise you.

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  Sophia Loren

  The Academy Award winning Italian actress and beauty made headlines in 1982 when she served an 18-day sentence for tax evasion in an Italian prison.

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  Wesley Snipes

  The actor ran into trouble in 2006 when the government accused Snipes of failing to file tax returns for the years 1999 through 2004.

  He pleaded not guilty by saying he is not actually required to pay taxes. Snipes was acquitted of the most serious charges against him on February 1, but was convicted on three others. He faces up to three years in prison.

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  Richard Hatch

  Famous for being the first winner of the popular reality TV show ‘Survivor,’ Hatch neglected to pay taxes on his $1 million grand prize.

  The Rhode Island native was convicted in 2006 of tax evasion and sentenced to 51 months in prison, plus three years of supervised release after serving his sentence.

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  Leona Helmsley

  After claiming some $2.6 million worth of phony business expenses, the ‘Queen of Mean’ was found guilty of tax fraud in 1992 and spent four years in prison.

  At her trial, one witness testified that Helmsley had boasted: “We don’t pay taxes. Only the little people pay taxes.”

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  Sony

  Marc Anthony

  Jennifer Lopez’s husband and latin singing superstar Marc Anthony agreed to pay $2.5 million in back taxes, interest and penalties for his failure to file returns for five years between 2000 and 2004.

  Anthony was not prosecuted because he thought his accountant had filed them.

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  Richard Pryor

  The actor/comedian served 10 days in a Los Angeles county jail in 1974 for tax evasion following a tax investigation.

  According to Pryor, he told the judge he forgot to pay. The judge told Pryor he’d remember to pay the next year.

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  Luciano Pavarotti

  The world-famous Italian opera singer was twice the subject of a tax investigation and accused of tax evasion: once in 1999 and again in 2001. The second time he was acquitted, but in ‘99, he did have to pay nearly $11 million to the Italian government.

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  Library of Congress

  Spiro Agnew

  The former vice-president to Richard Nixon pleaded no contest to charges of tax evasion and money laundering in 1973. Agnew agreed to resign, received three years’ probation and paid a $10,000 fine.

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  Martha Stewart

  Before her recent jail time for insider trading, the queen of domesticity found herself in trouble when a judge ruled her claim of not spending a lot of time at her East Hampton, N.Y., home wasn’t a good excuse for failing to pay $220,000 in state taxes.

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  Willie Nelson

  In 1990, the country music legend was hit with a bill for $16.7 million in back taxes from the IRS. To help him pay it, the IRS confiscated and auctioned off his assets. Fortunately for Nelson, many of them were bought by fans and given back to him.

  Nelson later made fun of his tax troubles with ads for H&R Block.

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  Martin Luther King, Jr.

  On Feb. 17, 1960, a warrant was issued for Dr. King’s arrest on charges he had falsified his 1956 and 1958 Alabama state income tax returns. An all-white jury acquitted him in May.

  Supporters have noted such charges were often used to discredit leaders of the U.S. civil-rights movement.

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  Chuck Berry

  The rock and roll legend famous for ‘Johnny B. Goode’ and other rock classics spent the 1970s touring and getting paid in cash … something the IRS noted. He pleaded guilty in 1979 and was ordered to perform 1,000 hours of benefit shows after serving four months in prison.

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  Nicholas Cage

  The Academy Award-winning actor used his company, Saturn Productions, “to wrongly write off $3.3 million in personal expenses,” reports Forbes.

  Cage’s business manager says the spending, which included “limos, meals, gifts, travel” and a Gulfstream jet, are all “security needs.” Cage has gone to tax court to dispute $814,000 in taxes and penalties.

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  Dennis Kozlowski

  The former Tyco CEO’s tax woes began in 2002 when he bought $13 million worth of paintings to grace his Manhattan apartment. He tried to avoid paying sales taxes by making it appear as if they were shipped out of state. Kozlowski stepped down after the indictment and is currently serving a 25-year sentence for his other dubious business practices.

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  AP

  Al Capone

  The granddaddy of ‘em all. Legend has it that the notorious gangster once remarked that tax laws were a joke because “the government can’t collect legal taxes on illegal money.”

  The IRS charged the infamous Chicago mob boss with failure to pay four years’ worth of taxes. Capone was sentenced to 11 years in jail and an $80,000 fine in 1931.

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  Boris Becker

  The German tennis great avoided jail in 2002 when he was convicted of tax evasion. He admitted he lived in Germany while claiming to reside in Monte Carlo. He was given two years’ probation and fined $500,000.

  He decided he didn’t want to pay any more taxes in Germany, and moved to tax heaven in Switzerland.

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  Don King

  The boxing promoter who promoted major fights for Muhammad Ali, Mike Tyson and Evander Holyfield was charged with 29 counts of tax evasion and fraud charges in 1985. Prosecutors alleged he and a partner had conspired to divert over $1 million in corporate receipts to their personal use, but King was acquitted of all charges.

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  Heidi Fleiss

  The “Hollywood madam” ran one of the most successful escort services in the business and apparently failed to report her ill-gotten income to the IRS.
  She was convicted in 1997 for pandering, tax evasion and money laundering and sentenced to three years. When she got out, Fleiss wrote about it all in her memoir, ‘Pandering’.

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  Joseph Nunan

  The most ironic is probably someone you never heard of. His name is Joseph Nunan. He was the IRS commissioner from 1944-47.

  In 1952, he was busted for evading taxes. It turned out that Nunan had won a $1,800 bet that Harry Truman would win the presidential election but failed to report his winnings to the IRS.

There are quite a few benefits to having a living trust over just a simple will. These benefits include saving time, money and having the ability for your wishes to continued long after your death.

The first big benefit is time. Estates in Memphis that are governed by a will must have the will validated through the court system. This means you must submit the will to the Memphis probate court to have it approved before any assets can pass to the beneficiaries. Doing this can take anywhere from six months all the way to two years. And while this time is passing the ownership of the property and assets is in limbo and can’t be sold or transferred.

Because the property can’t be transferred or sold a hardship could occur if the property has a mortgage on it. This means that the beneficiaries could be stuck paying the mortgage for quite some time until the will is fully probated.

The second benefit of a living trust is it can save lots of money in probate fees. Probating an estate is not cheap. Memphis probate fees can run anywhere from 2% to 5% of the total gross value of the estate and are the first fees that are paid by the estate

The third benefit of a Memphis living trust is that you don’t have to worry about it being contested. A simple will can be contested by anyone who thinks her or she should receive something from the estate of the deceased.  All they have to do is go down to Adams Street and petition the Memphis Probate court for the item. Once this occurs the judge decides whether they should have it or not. Almost anything in a will can be contested, even the guardianship of minor children can be contested.

The topic this time is Wills.

The music is Le Petit Rien (The Little Nothing), by Francois Couperin.

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