This article by the New York Times focuses most of its analysis on the impact of the estate tax repeal and the timing of this death.  In my educational seminars, I spend a few minutes telling folks tongue-in-cheek that Choosing The Wrong Year To Die is a “common estate planning mistake.”  My point, besides making a joke, is that the law is ever-changing.  The estate plan that is right on target today may be obsolete or rendered ineffective by changes in the law in the future.  That’s why it is so essential to engage a lawyer who has a consistent and deliberate formal updating process as an integral part of their practice.  Some estate planning attorney call these “client maintenance” or “client care” programs – whatever the name, make sure your attorney has one.  

However, timing is just one element of an effective estate plan.  The other part is finding a professional who understands the law and the rules who can work them to your benefit.  There’s a saying that there are two tax systems in this country.  No, not one for the rich and one for the poor – rather, it’s one for the informed, and another for the uninformed.  Without the proper planning, couples with an estate of $2MM could pay $550,000 in federal estate tax if they both passed away next year (2011).  With proper planning, the total federal estate tax due by that same couple drops to zero ($0).

As with income taxes, there are some people who (legally) pay much less than folks who make the same amount per year.  The difference is that the couple who paid less income tax engaged the services of a profession who understood the rules and how the system works, identifying opportunities and benefits that are not self-evident – and which would never occur to the lay person.

The value of a professional is not in the documents he creates. It’s in the knowledge and experience that enable him to tell you what you should do.

No matter what you year you may die.

Posted by Victor Medina, Medina Law Group, LLC

The Power of Story-based Planning Part 2

For at least the last decade, the hottest buzzword in the planning professions has been “values-based.” You couldn’t turn around without running into “values-based” selling, financial planning, estate planning, you name it. But what in the world is “values-based planning” anyway?

Looking under the label and behind the question is helpful, I believe. In truth, all planning is based on someone’s values, so the question behind the question is whose values? To acknowledge our professions’ dirty little secret, the truth of the matter is that in the “pre-values-based planning era” nearly all planning was based on the professional’s values or, at best, on the values we assumed the clients held.

If the professional was selling life insurance, lo and behold, one of the key values was “tax-free liquidity at death.” If the professional was selling living trusts, it was generally assumed the clients valued “avoiding probate,” “reducing estate taxes,” and “distributing the assets” in some orderly fashion, usually in a way consistent with the drafter’s trust templates. If the professional was selling investments, every financial plan was based on the premise that the client wanted to pay for his kids’ college and then retire comfortably a few years before he turned 65.

Not surprisingly, every plan a planner created looked strikingly similar to every other plan he created: they were all based on the planner’s values and assumptions, not the client’s.

What the term “values-based planning” was trying to communicate was the notion that each client has a personal set of values that ought to be ascertained early on in the planning process and then used to fashion a financial plan or estate plan that was unique – truly unique – to that client. The real question then became, for those planners actually trying to create plans based on client values, “how do you ascertain the client’s values?” At least now the issue was correctly framed.

This breakthrough led to the advent of what I call “questionnaire-based planning.” Client values, the planning professions assume, can be ascertained through a cleverly designed multi-page questionnaire. But while “questionnaire-based planning” is far better than its predecessors, it still fails in its primary objective: to develop for the planner and the client a clear understanding of what’s in the client’s heart – the client’s deepest purposes for planning. For that you need story-based planning.

In the next installment I’ll outline why “questionnaire-based planning” is merely masquerading as genuine values-based planning. It looks good on the outside, but inside it has no real power to get to the heart of the matter.

Original post by Scott Farnsworth. Published on February 24, 2010 on New Jersey Estate Planning by Victor Medina, Medina Law Group.

In all seriousness, people are slowly coming to grips with how different this world is than one just 10 years ago. One of the professional associations to which I belong spent a few days debating back and forth the merits of planning for this type of “wealth” transfer in estate planning. I’m not sure there was a consensus, but I remain committed to helping him my clients with this problem by saving that information for them. From my perspective, estate planning is about transferring ALL of your wealth, not just your finances — such as your Spiritual, Emotional and Intellectual assets that you’ve acquired over your lifetime. For many people, information that is on the Internet, passwords, etc. is also included in that list.

It is often forgotten how much of a confidant attorneys were for their clients in the past. It’s our job to keep secrets, our client’s secrets, and the best of us do that very well. It stands to reason then that attorneys should be a natural repository for the type of secure information that needs to remain secure during a client’s lifetime and be transferred safely to the next generation when necessary. We need to get back to the idea that your lawyer is your counselor, not just during crisis moments, but during your lifetime.

My biggest problem with these companies and the services that they offer is that none of them has any professional license on the line if they mess up. There are also no barriers to entry to do this work. (Whereas an attorney needs a degree (most of the time), pass a bar exam, and has their license subject to review and revocation if they screw up.) Therefore, for these businesses, there is no incentive (beyond a business incentive) to act correctly in a situation. As we have seen in the past, online information is less than secure and there is no guarantee that even the best companies won’t have information taken from them, or be somewhat “negligent” in securing that information in-house. It has happened to the largest credit card companies; why should we think that small startups claiming to be able to hold your information secret should be any different?

What I liked about the Wall Street Journal article was the way it highlighted how being in the 21st century means that there may be assets which have no physical presence in the world. Follow me on this one for a moment, nowadays people are very accustomed to doing their banking online, creating an investment account online, and choosing to go paperless when it comes to statements. It is very easy to imagine a rather significant investment account that no one knows about or can discover after the person dies.

Just to show that I don’t hold grudges, here is the link to the Wall Street Journal article–http://is.gd/1FHFY

Posted by Victor Medina,
Medina, Martinez & Castroll, LLC

Before I get to my take on the whole thing, I just want to comment how amusing I find the names of the companies. LegacyLocker,
AssetLock (formerly YouDeparted.com),
DeathSwitch,
SlightlyMorbid,
EternalSpace and
FindAGrave.

I’m not sure any of those inspire a lot of confidence, except for AssetLock — but then again, they were formerly known as YouDeparted.com).

Okay, with that out of the way, I actually think that the mission of these companies is laudable. As my clients know, I believe that proper estate planning contemplates the transfer of your entire wealth, not just your financial assets. This includes your “online” assets as well. For many people, a lot of time goes into developing an online presence and so much of our lives revolve around the use of social networking.

And while I think that an outside service is a reasonable way to pass those things on, I honestly believe that it should be part of a comprehensive estate plan that you do with your attorney. Beyond the ego-centric reasons for taking on this roll, attorneys have a much higher duty to safeguard this information than a third-party, for-profit entity.

Our firm focuses on establishing lifetime relationships with our clients that serve as the foundation for an effective and efficient transfer of wealth (financial or otherwise). With that as a backdrop, I think that your information is likely safer (because it’s not as big a target as a company that safeguard’s passwords) and the transition made easier (because of the closer interaction between your lawyer and your loved ones) using your attorney as a conduit than an outside company.

Some of these companies are doing exactly what I do in my practice — which is to help client capture their stories as part of their overall wealth. Every one of my clients has a Priceless Conversation as part of their comprehensive estate plan. The concept of Priceless Conversations deserves a blog post of its own, but suffice it to say that I believe that capturing, preserving, and passing on your stories is an essential part of an effective and complete estate plan.

Posted by Victor J. Medina
Medina, Martinez & Castroll

Chances are, most times people will go to 4 or 5 different attorneys for those things and not come back to their own personal family lawyer to assist them along the way. Our law firm is doing things different. Our goal is to be your lawyer for life. Whether you come to us in a crisis, or as part of your proactive planning in life, we will be here for you for the long haul. You won’t have to worry about looking for references or taking a chance on a lawyer you hardly know. If we’ve been doing our job correctly, we’ll be with you every step of your life and as the needs arises, we’ll be by your side to help you when you need a lawyer.

This blog is primarily about estate planning, and we’ll get back to that subject in a minute, but I thought it was important to discuss this firm’s guiding principles. One of them is being your lawyer for life.

If you have a need to see an attorney, whether for a real estate purchase, family wealth planning, or some other matter, schedule your appointment today to meet with your Personal Family Lawyer and begin the relationship of a lifetime.

We only have 10 spots open every month for new clients and we’re already booking into August — don’t let this month go by without starting that lifetime relationship.

Visit the Medina, Martinez & Castroll, LLC Website and call our Client Services Director Tiffany Lauritsen to reserve your spot.

Posted by Victor J. Medina,
Medina, Martinez & Castroll, LLC