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Estate Planning

Estate Planning: Tales for the Wary
Estate Planning is the most misunderstood area of our service strategies. As a general statement, individuals spend 40,000 hours of their life working and six hours planning their retirement and estate goals. We say emphatically, Estate Planning is more than just consulting an attorney, filling out an Estate Planning questionnaire and signing Trust documents naming beneficiaries. Here is the latest “tales of woe'”from one of America’s most prominent families, to individuals like us:

NEW YORK TIMES July 18th, 2009
For more than two months, the trial of Brooke Astor’s son has cast a spotlight on how decisions to change wills, especially those made in the twilight of life, can be subject to bitter fights and even criminal charges.

But the Astor case is hardly unique: a review of recent court cases shows that similar disputes have erupted over estates large and small. And as in many such cases, the one witness who might be able to clear things up — the person whose will is being disputed — is dead.

Most are battled in surrogate’s or civil courts, with criminal prosecutions rare because of significant legal hurdles that can hinder the prosecution of these cases, legal experts say. Victims often lack the ability to realize and articulate that they have been wronged, and the laws are not always clear cut. Accusations are sometimes hazy and are made by family members with a financial interest in the outcome.

Estate Planning the Right Way

For those of us at a certain age, as we grew up we always thought the words “Trusts” and “Estate Planning” were concepts that only applied to celebrities and the rich. We read of family inheritance wars which were played out in the newspapers, not in our family’s living rooms. Smart people at least had a will and all assets upon death went to the surviving spouse and then to the children and grandchildren.

Times have certainly changed. California and the western states, where many new trends develope, became the leaders in providing Living Trusts and LLCs to the middle class in place of the standard will. This trend has spread eastward with the last bastion of traditional will based planning still dominant in the Northeastern states as attorneys there were trained to draft a will for any client in the hope their firm’s will be retained for the probate process that MUST ensue when one only leaves a will.

THE NEW PARADIGM: The Rise of the Trust as a Tool for Wealth Management

The explosion in the United States of the use of a Trust to actively preserve capital and assets during the life of an individual or couple while they are alive and after their passing is the single most development in Estate Planning since the end of World War 11 ( when Congress enacted the Unlimited Marital Deduction).

Trusts can be Revocable or Irrevocable. They can manage monies while the person is alive (GRITS, GRATS etc.). They can protect a home (QPRTs) and provide for a surviving spouse while minimizing estate taxes ( QTIPs, ILITs). They can fend off creditors domestically (DAPTs) and internationally ( FAPTs). They can be created off shore or in the state where you may or may not reside.

The Cornell Group realizes the above trusts and their acronyms are confusing and complex. In fact, it can be said the average attorney who is not a specialist in estate planning will usually refer a client to a firm such as ours (or do a “free” will in the hopes of probating the estate and receiving hefty legal fees). As such, we are here to advise and assist you in forming the right trust for your family’s needs.

From a simple Living Trust Package (includes a POA, Pour Over Will, Living Will etc.) to more complex strategies, we are dedicated to providing a comprehensive estate plan that will meet your intent and minimize Federal and State Taxes ( if applicable) so your loved ones can enjoy the fruits of your labors.

Roth IRA and Your Choices

You’ll be hearing a lot in the next six months about Roth Individual Retirement Accounts — but not as much as you should about a long-term threat that hangs over them.

Starting Jan. 1, you’ll be able to take a regular I.R.A., say, one that you have in a brokerage account after having rolled an old 401(k) into it, and turn it into a Roth. You’ll be able to do this no matter how much money you make, though you’ll have to pay income taxes at your current rate on whatever you move. Currently, you can’t make the conversion at all if your household has more than $100,000 in modified adjusted gross income. (That’s a technical Internal Revenue Service term, which it defines in Publication 590, available on its Web site).

Why would you want to make such a swap? Because you think you or your heirs could end up with more money over the long haul by investing in a Roth instead of a regular I.R.A.

With a Roth I.R.A., you pay no taxes on your earnings in most instances when you take money out; distributions from regular I.R.A.’s are taxable the same way that income is, though the basic I.R.A. does offer a tax deduction when you first deposit money into the account. The Roth offers no such deduction when you contribute money to it.

So if you think your tax rate will be higher during retirement than it is now, say if you’re fairly young for instance, making the conversion early in 2010 looks sensible.

It all seems pretty simple, until you consider this: The tax laws might change substantially, throwing all of your careful planning into utter disarray. We’re currently staring down years of federal budget deficits and decades of looming Medicare and Social Security obligations. If wealthy people convert their retirement funds to Roth I.R.A.’s in large numbers, won’t all of that newly tax-shielded money look tempting to government officials years from now?