Should You Retitle Your Cemetery Plots?

For today’s posting I thought I would pursue a holiday theme. All Hallows’ Eve is just around the corner. It is the night which precedes All Saints Day. All Saints Day is a Christian holiday in which Christian Saints, martyrs and departed family and friends are remembered. Also, to reinforce the interactive nature of the blog postings I thought I would include an adviser’s question. Here is what came across my desk on Monday:

Ok, I had to ask you this because I thought it might be a question you have never considered before.  I have a client who has pre-paid cemetery plots, and she wonders if they should be retitled into the name of the RLT. Is that possible and have you ever heard of such a thing? Thanks for thinking this over.

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DOMA Update & The Department of Defense

I have selected to review the Department of Defense (DoD) and the Department of Veterans Affairs (DoVA) response to the Supreme Court’s (SCOTUS) ruling (June 26, 2013) on the Defense of Marriage Act (DOMA) first, because the DoD was an early riser and was the first department with a response to the DOMA ruling. As a matter of fact, it was on February 11, 2013, that the then Secretary Defense, Leon E. Panetta, first issued a memorandum on extending benefits to same-sex domestic partners of military members—predating the SCOTUS ruling.

The memorandum reviewed 20 programs available to military members in which they could designate benefits to someone other than a spouse. These programs cover education, survivor, travel and transportation benefits. The memorandum then identified additional benefits that would be provided “to same-sex domestic partners of Military Service members and their children through changes in Department of Defense policies and regulations.” The memorandum ended with a list of benefits which could not be made available to same-sex spouses because of statute. Health care and housing allowances are examples of two of those benefits.

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IDGT: The Multi-purpose Tool for an Integrated Financial Plan

In my previous post I provided a brief history of IDGTs, the applicable exclusion amount and the need for a trust to be the owner and beneficiary of a life insurance policy on the life of the grantor. The primary reason for trust ownership was to remove the death benefit from the taxable estate. However, as a result of American Taxpayer Relief Act (ATRA) of 2013, this reason was eliminated due to the applicable exclusion amount being raised to $5,250,000. An additional benefit of a properly drafted IDGT is asset protection for the trust corpus.

The trust may hold assets used to pay the insurance premiums on a life insurance policy, which insures the life of the grantor. This is one of the requirements necessary for a trust to be considered intentionally defective. A properly drafted IDGT allows the grantor access to the trust assets either through themselves or a non-donor spouse (spousal lifetime access). Having these assets inside of the IDGT trust provide asset protection for the beneficiaries and the grantor!

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Estate Planning with Intentionally Defective Grantor Trusts

As you may have noticed, both of last week’s blogs discussed Intentionally Defective Grantor Trusts (IDGTs). This began our month of focusing on IDGTs. Each month I will have a theme and focus the majority of the blogs on that topic. In addition, beginning this month, I will conclude each month’s theme with a one-hour CE/CPE event. I will host this month’s CE/CPE Webcast: Diamonds in the Rough – Estate Planning with Intentionally Defective Grantor Trusts (IDGTs) on Friday September 27, 2013 at 1:30PM EST.

Daily, I receive questions from advisors on topics ranging from Asset Protection to Life Insurance and my response always begins with the question: Is there an Intentionally Defective Grantor Trust (IDGT) for us to use in the estate plan?

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Revocable Living Trusts – “All is fair in love and war”

The quote used in the title of this blog entry is often incorrectly attributed to William Shakespeare.  However, it is John Lyly, an English dramatist and writer who first coined the phrase. It means that in matters of war and love, there are ‘no holds barred,’ and that an individual should not be blamed for acting in their own interest. Their actions, no matter how deceitful or morally wrong, are justified as a means to an end.

“All is fair in love and war” is how I begin my conversations with clients regarding their estate planning. Family members, once amenable to one another become hostile antagonists. The system of probate court, established to protect the creditors and the heirs of an estate, becomes a party to an industry which preys upon individuals at their weakest moments.

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Estate Planning Tips for CPAs

Challenge: Shifting From Estate Tax Planning to Estate Planning

The American Taxpayer Relief Act of 2012 (ATRA) has changed the complexion of estate planning for CPAs and how they provide services in this area. So how do CPAs offer clients value in estate planning if it’s not tax planning related?

Solution: Start with your client’s tax returns.

When I meet with a client for the first time, the most important documents I examine are their last two years of tax returns. As I review them, I mentally go through The Checklist for Using the Tax Return to Identify Personal Financial Planning Opportunities. I am then able to identify and analyze the key financial and estate planning issues. Imagine, using a tax return to help clients in the areas that matter most to them—financial and estate planning!

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Smoke and Mirrors: Life Expectancy and Financial Planning

In writing a financial plan there are many factors to consider. Key factors to be considered are: inflation rate— CPI, CPI-U: rate of return on investments— historic and projected; income needs and life expectancy. Lately, I have become convinced that life expectancy is the most critical of all the variables and the one most likely to derail a financial plan.

Recently, I spoke at a major financial planning conference. The attendees of the conference were the brightest and the best in the financial planning field. My topic for the conference was how to model health care expenses for retirees in a financial plan. When I shared with the audience that our firm models all of our plans to age 100 the ‘Twitter-verse’ erupted.

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Financial Planning for Same-Sex Married Couples

Author’s note: While this article is longer than I normally post, the material is very timely and needs to be presented in its entirety. It is scheduled to be published in the September 2013 issue of The Tax Adviser. For further discussion and information, you can contact me at

According to the 2010 U.S. Census, there are more than 130,000 married, same-sex couples in the United States. Presently, they have the right to marry in 13 states and the District of Columbia. Up to now planning for our clients in same-sex marriages has been a “belt and suspenders” approach.

We addressed their issues with “layers” of planning: revocable living trusts, limited liability companies, management trusts, grantor retained income trusts (GRITs), IRA trusts, and the like. Though these same-sex couples did not have the same benefits as traditional married couples, we were able to come reasonably close to those benefits with appropriate planning. This column will provide practitioners with an overview of the the impact of the recent decision by the Supreme Court striking down the Defense of Marriage Act (DOMA), P.L. 104-199; a preliminary checklist of areas to be addressed with same-sex clients; and a listing of additional resources.

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Small Things Count!

Today, we are going to start with a word study. A little etymology always livens up a party. According to West’s Encyclopedia of American Law, “De minimis” is an abbreviated form of the Latin phrase maxim de minimis non curat lex, which means, “the law cares not for small things.” This is a legal doctrine by which a court refuses to consider trivial matters.

While De minimis fringe benefits are excluded from an employee´s income and wages, they are deductible by the employer. But the value of the de minimus benefit is not subject to withholding of income, FICA or FUTA taxes.

As you might expect, the IRS is hesitant to specifically classify an item as a de minimis fringe benefit. In the current economic environment, this classification is becoming increasingly relevant as employers think of new and interesting ways to keep employees happy without incurring the costs of raising salaries.

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A Critical Question — A Surprising Answer

A question that I’m often asked, particularly by other advisors, has to do with retirement income analysis. People want to know if I will recommend a financial planning program for this area that is unbiased, objective, and not product-driven.

Before I answer, I want to offer an observation on software used in financial planning. No software is a ‘be all and end all’ for financial planners. The software used in financial planning is not yet at the place where an advisor is able to input the data, push go, and have the results displayed.

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