Salt Lake City Estate Planning

Estate Planning to Prevent Will Contests

"Ensuring a will is properly executed can severely limit the ability for a will contest to succeed. An experienced elder law or estate planning attorney can assist with this process and verify that a will is executed according to the law."

Forbes.com (May 10, 2011) “How To Prevent a Will Contest”

 We frequently read about the protracted, or particularly venomous will contests of celebrity families. But what about your will – and your family? Are you confident that you are leaving a family legacy of peace and harmony, and not a wake of destruction?  A recent article in Forbes talked about how to prevent will contest in your own family.

A will contest is a lawsuit challenging the validity of a last will and testament. A contest may ensue if an heir or family member perceives some inequity or unjustness in the distribution of money or possessions. They may contest that the willmaker lacked mental capacity to execute the will, was under the undue influence of another, or that there is some sort of fraud or improper execution of the will.

Proper drafting of the will can make these types of contests less likely to occur – or succeed. Your will may include a no contest clause, or an in terroreum clause, which is a provision that can be used to strip the inheritance from anyone who contests the will if that person loses the lawsuit. These types of clauses often dissuade disgruntled heirs from pursuing a contest.

Some other tips include:

• Explaining the will to your heirs, or leaving a related letter to be read after your death to help explain some of your decisions.
• You may consider videotaping the signing of the will to help show the court that you signed freely and with the requisite mental capacity to agree.
• To remove the possibility of allegations of undue influence, meet with your estate attorney independently, and without the presence of other family members.

If you want to ensure that your estate is distributed according to your desires, you may be well-advised to enlist an experienced elder law or estate planning attorney to assist you and ensure that your will is executed both according to the law and according to your wishes.

 

Automobile Tax Break for Businesses

Uncle Sam might have a deal on a car for your business.  You might be surprised to learn that the new tax law actually rewards business owners for purchasing large, gas-guzzling vehicles for business use. Surprised? Me, too. But, according to a recent article in the Wall Street Journal, that is the case. If you are a small business owner who uses a vehicle in your business – especially a large one – you should take note of this new tax break.

The new rules apply to vehicles purchased after Sept. 8, 2010 and before January 1, 2012. So, if you’re in the market to purchase a vehicle for your business, you’ll want to crunch some tax numbers first.

Here are some tips to consider:

• Business Use. Remember, unless the vehicle is used 100% for business, expenses are not fully deductible. The IRS is quick to question claims of 100% business use of a car.
• Depreciation deductions. This year Congress is running a large “bonus depreciation” on cars weighing more than 6,000 pounds, such as the Cadillac Escalade and Nissan Armada. Taxpayers may deduct 100% of the car’s cost in the first year – subject to the personal use disallowance, of course. Additionally, if this deduction creates a loss, the loss may be carried back to generate a refund. The new law also gives greater depreciation deductions in years two through six for cars costing more than $30,625.
• Tax Breaks for Fuel-Efficient Cars. There are still substantial tax breaks for purchasing a fuel-efficient car. Let’s not forget that all taxpayers (not just business owners) are eligible for a dollar-for-dollar tax credit up to $7,500 for “plug-in electric motor vehicles” like the Chevy Volt. If you are a business owner planning to purchase one of these vehicles, experts say you should take this credit first, and then figure depreciation based on the remaining purchase price.

As always, don’t let the “tax tail wag the dog,” when it comes to purchasing a car for your business. Consider your true business needs, costs, and then consult with qualified counsel to help you crunch the tax numbers. If a small, inexpensive, fuel-efficient car is what you really need, then purchasing something larger and more expensive just for the tax advantage probably will not make sense. However, if you need a heavier, more expensive vehicle to accomplish your business goals, then you won’t want to miss out on the tax breaks.

Whatever you decide, consult with your tax attorney or accountant before you make any final decisions to assure you will get the outcome you desire.  

Estate and Retirement Planning In Declining (or down) Real Estate Market

"With home prices falling for nearly five years, many Americans must consider what to do with their homes should prices continue to collapse and the equity in their homes, if they are still lucky enough to have any, disappears completely."

--SmartMoney (May 17, 2010) “For Retirees, a Real Estate Nightmare Looms”

If you were counting on tapping the equity in your home to help finance your retirement, you may have reason to worry.  A recent issue of SmartMoney points out, “With home prices falling for nearly five years, many American must consider what to do with their homes should prices continue to collapse and the equity in their homes, if they are still lucky enough to have any, disappears completely.”

If you are a Baby Boomer with an eye toward retirement, your plans may be taking quite a beating right now. Warnings about shortfalls in social security and Medicare, rising health care costs, and the prospect of higher taxes now combine with disappearing home equity. No wonder so many Boomers say they plan to work through their “retirement.”

So, what do the experts say you should do with your home? Should you stay put and wait it out, hoping that home prices will eventually recover? Or should you bail out now, before you lose even more, and downsize?

“The answer is that it depends on the individual situation,” says Nicholas Paleveda, an adjunct professor at the graduate tax program at Northeastern University. “If you have plenty of assets for retirement, there may be no reason to downsize. If you do not have sufficient assets for retirement, then selling your home to live in a smaller home may be appropriate.”

Some options to consider include:

• Multi-Generational Living. Think of The Waltons, with three generations living in one house. Multi-generational living was commonplace years ago, and is growing in popularity now. In fact the number of household comprising multiple generations jumped to 7.1 million, or 6.1% of all US households in 2010. Of course, things worked out well for The Waltons, but remember that was television … and even John Boy eventually moved out!
• Pay Down the Mortgage. Depending upon your circumstances, it may be wise to pay down, or pay off, your mortgage before retirement to reduce your monthly expenses.
• Downsize. In today’s market, it may actually make sense to sell your house, even if it is underwater, if you can purchase a smaller home at a particularly good price and low interest rate. The cost of paying off your current mortgage would effectively be added to the purchase price of your new, smaller home. In some instances, after the dust settles, you could still be money ahead in the long run.
• Buy a Second Home Now. That may seem counter-intuitive, but if you have the means and can find a good price on a second or vacation home that will mesh well with your retirement needs, then you could basically lock in that price (and interest rate) now, and sell your primary home when the market recovers.

Retirement planning and estate planning has never been simple, and is even more complex in today’s economy. You are well-advised to seek qualified counsel, from an attorney and from a qualified investment advisors, before making any major moves involving your home.