Estate Planning, Probate & Elder Law Attorneys

» 2008 Year-End Gifting Made Easy

One of my most well-received posts was this one, on "year-end gifting made easy."

Evidently the Federal Taxes Weekly Alert has calculated that the gift tax annual exclusion will go from $12,000 (right now) to $13,000 in 2009. Based on this, it seems like time for an update:

Next year the annual gift tax exclusion will increase from $12,000 to $13,000. The gift tax exclusion is the amount that you can give to as many people as you wish, per year, without paying gift tax or even needing to file a gift tax return.

If you are in a situation where you'd like to make gifts, the end of the year (and the start of the next year) is a good time to do it. Three quick, easy scenarios:

1. You and your spouse have three grown children. (Each child is married and has one child of his or her own.) You and your spouse each give $12,000 to each child on December 31, 2008 and $13,000 to each child on January 1, 2009. You have just given away $150,000 without having to pay gift tax or even file a return.

2. Same facts as in 1., but you also make the same gifts to each child's spouse. That's another $150,000 that you've given away without having to pay gift tax or even file a return.

3. Same facts as in 2., but you also make the same gifts to your three grandchildren. That's another $150,000 that you've given away without having to pay gift tax or even file a return.

» Heir Property and The Gridlock Economy

I wrote recently about the issue of "heir property" here. Next week I start my second business school class, Advanced Economic Analysis with Professor Kevin Murphy. This is supposed to be a VERY intense class, so during my month break between quarters, I've been reading all of the economics information I can get my hands on (which includes trying to educate myself about our current financial crisis). The book I'm currently reading is entitled The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives, by Michael Heller. Professor Heller is a law professor at Columbia (he actually taught at the University of Michigan Law School while I was there, although I never had a class with him). His book is about what he refers to as the "tragedy of the anti-commons," meaning the problems that arise (underuse, mostly) when property is owned by too many different people or entities.

I'm only about half-way through the book, most of which has focused on drugs, and the inability of researchers to move forward with new discoveries because such discoveries may involve many different patents. If just one of the patent holders holds out, the research can be derailed -- hence the gridlock of the title. On pages 121-5, Professor Heller actually brings up the issue of heir property, and how the gridlock as a result of multiple owners has caused farm ownership by black families to drop from about 1 million (in 1920) to 19,000 today.

» Adviser under suspicion found dead

» Powers of Attorney: Do You Want to Act as Agent?

My prediction is that, as more and more baby boomers become fiduciaries for their parents, we're going to get a lot more articles like the very good one by Helen W. Gunnarsson in last month's Illinois Bar Journal (available for members here).

Powers of attorney were created in response to a very real problem: if you are disabled, who can make decisions for you? The "old school" way to proceed was with a guardianship -- that's very expensive and very time-consuming. But there are also problems with powers of attorney, which give the agent acting under them a LOT of power. Also, there are a lot of gaps in the law, which the article mentions. For instance, we just don't know whether an agent under a health care power of attorney is eligible to receive compensation.

All of this creates a lot of uncertainty for individuals named as agents. The solution is to get your own representation, to negotiate the terms of the power of attorney and to explain the agen'ts duties, but that's rarely done. It seems to me that we are seeing an attempt to turn law into a commodity. "Why should I spend the money to do X?" when X is, in this case, the legal equivalent of preventive medicine. Of course, when things go wrong, costs and aggravation can skyrocket, and THEN people want to (or have to) bring in the lawyers.

» Ethics and the Estate Planner

The Second Annual ACTEC/ALI-ABA Live Telephone Seminar/Audio Webcast entitled Top Ten Ethical Challenges Facing Estate Planners will be held on Thursday, October 16, 2008 at the following times: Eastern 12 noon ...