My name is David Alig, a Leawood, Kansas lawyer practicing at the Alig Law Firm. I help clients design & maintain estate plans and businesses that endure as they prepare for some of the inevitable and profound transitions of life. My clients are entrepreneurs and professionals, traditional and non-traditional families, trusts, estates, corporations & limited liability companies.

For specific information about my law firm, visit our website at Alig Law Firm.

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A Durable Power of Attorney (POA) allows the person creating the document (the "principal") to name a trusted agent to act on his or her behalf in many situations. But because of the real and perceived risk of abuse, many banks scrutinize a presented POA with special care and and often a reluctance to act. I generally advise clients that while they have absolute authority to create such a power, a financial institution also has absolute authority to reject the implementation of the power by the agent. It is not particularly unusual for a bank to refuse to honor a power of attorney for a host of its own reasons. In a recent Florida case, for example, Bank of America refused to comply with an agent's request that funds be withdrawn from the principal's account. The agent challenged the refusal in court under state law and won a $64,000 judgment against the bank.

Clarence Smith, Sr. named his son, Clarence Smith, Jr. as his agent under a POA. The senior Mr. Smith was elderly and had come to a point in his life where he no longer wanted to manage his own business and financial affairs. His son carefully reviewed Mr. Smith's account activity and became suspicious about some significant withdrawals from a bank account owned jointly with a friend from Mr. Smith's retirement/assisted living community.

So, properly acting as his father's agent pursuant to the POA, Clarence Jr. requested that the bank transfer $65,000 from the account to a new one owned solely by his father. Prior to acting, Bank of America contacted the other person named on the account as a joint owner. She told the Bank representative not to transfer the funds and accused Clarence Jr. of stealing his father's savings. Hence, for understandable reasons, Bank of America refused to honor the agent's transfer request. The friendly joint owner of the account then rapidly withdrew all of the funds and deposited them into her own personal account, effectively preventing Mr. Smith Sr. of accessing his own money. Mr. Smith died several weeks later.

Clarence Jr. sued Bank of America under a specific Florida statute that imposes penalties on financial institutions that refuse to honor reasonable requests from agents named in properly executed POAs. Late in 2009, after a week long trial, a Florida jury returned a verdict against the bank and awarded damages to Mr. Smith's estate.

Bank of America plans to appeal the verdict, stating "We believe that neither the facts nor the law support the verdict." We will monitor the progress of this appeal and post the result on this blog when it becomes available.

It is important to know that Kansas does not presently have a statute similar to the one referenced in Florida. Frankly, the bank was placed in something of an impossible situation. This case illustrates the conflicts that often arise through the use of POAs, often between family members. But, just as importantly, it also raises the issue of the proper use of joint bank accounts for convenience in estate planning. Under most estate laws, including Kansas, when two or more people own "joint" bank accounts, each of them has the right to the entire account balance, no matter whose money is actually in the account. While joint accounts may sometimes be useful, it is important to understand that sometimes joint owners (or one of their agents) can disagree about the proper use of the funds. When that happens, the party who makes it to the bank first - or simply lives the longest - often wins.

A good estate planning attorney should be consulted about creating such a deceptively simple account to explain a variety of pros and cons of joint ownership, and for assistance in drafting an effective and protective POA, as well as to assist when disputes and suspicions arise.

Returning to the most recent stream of this blog, there is currently no federal estate tax, there is a limited $1 million gift tax exemption (note the disconnect), a gift tax rate of 35%, and a carryover basis on high value inherited property. While it may be today's conventional wisdom that the estate tax law will be reinstated retroactively, keep in mind that it was the consensus of the entire past decade that we would never be in the position we are now on this subject. So what does this mean in terms of how estate planning needs are managed?

Probably the major issue with regard to existing wills and trusts relates to all the many documents designed around formula bequests, such as leaving an amount equal to the estate tax marital deduction to the surviving spouse and any excess to a credit shelter trust or outright to the next generation. These commonly used and historically solid formulas have become uncertainly ticking time bombs for some estates. Since - for the moment - there is no estate tax and hence, the estate tax marital deduction does not exist, how will such bequests actually be funded on the death of the first spouse? Will this be interpreted literally so that the surviving spouse will receive nothing, even though the original intent can easily be discerned? (Strict constructionism.) Or might a court interpret this type of standard language by applying the law as it existed at the time of the document's creation and execution?

Furthermore, the tax law now provides that the original capital gains basis of the deceased person's assets will "carryover" to the persons who inherit the property. This will unpleasantly surprise many heirs. The decedent's executor does have the power to allocate up to $1.3 million to increase the value of the property's future basis, but in no event higher than the market value as of the decedent's date of death.

More on this topic over the next few days and weeks. But this is a reminder that estate planning documents containing this type of provision should meet with counsel to consider the alternatives and options to take into account. There is no guarantee in our bizarre political climate that this still uncertain scenario will be promptly fixed.

"Happy New Year. Your tax bill just went up." So begins an article in today's Wall Street Journal.

Other excerpts from the same entry:

"When the clock hit midnight on January 1, some 70 new taxes on the middle class and small businesses went into effect, thanks to Congress's failure to prevent the expiration of popular and economically vital tax breaks on time. So some 25 million middle class Americans are now slated to get hit with the alternative minimum tax (AMT) this year. Remember: this is the tax that was originally supposed to only hit the richest 100 Americans. This year, the alternative minimum tax will gather $63 billion from American families with an income of as little as $75,000, according to the Senate Finance Committee. The AMT may now hit tax filers who are school teachers, construction workers, and bus drivers."

"But the biggest debacle is the estate tax. On January 1 it fell to zero for the year, and then in 2011 it goes back up to 55%. Estate tax attorneys are full of stories of wealthy heirs with living wills that asked their dependents to take account of the estate tax when determining whether to pull the plug on the life support system. Don't be surprised if death rates of wealthy Americans rises substantially this year.

"Senator Max Baucus has vowed to raise the estate tax back to between 35% and 55% this year, and to make the change retroactive to January 1. But this will be of questionable constitutionality. Can Congress impose a new estate tax, say in April, on someone who was already dead and buried in February? Let's hope not."

Most people who know me well will recall that I was never a fan of the last president. I often expressed my opinion that the 2001 tax act -- especially its estate tax provisions -- was a political fraud. The reasons are now inevitably coming home to roost. The Wall Street Journal article does not even mention one of the worst aspects of the Bush estate tax law, which is that the estate tax is replaced by a potentially much more onerous capital gains income tax as beneficiaries and heirs begin to take control of property passed on to them.

On November 9, 2009 the IRS published Rev. Proc. 2009-50. This Revenue Procedure establishes the annual gift tax exclusion amount for 2010 at the same level as the 2009 exclusion -- $13,000. The lifetime gift tax exclusion remains at $1,000,000.

Keep in mind the importance of a spouse's citizenship. Only the first $134,000 of gifts to a spouse who is not a citizen of the United States will not be included in the total amount of taxable gifts for the year. This contrasts with the situation in which both spouses are US citizens: the gift tax exclusion then is unlimited.

For estates of persons who die between now and 11:59 pm on December 31, 2009, the estate tax "applicable exclusion" (or value threshold) is $3,500,000. Thereafter, during 2010 the applicable exclusion amount will be unlimited. Watch this space early in 2010 for likely developments to amend the 2010 law.

A 35% income tax bracket applies for both trusts and estates relative to income in excess of $11,200.

Interest rates established by the IRS ("AFR" Rates) are at historic lows. These rates make certain estate planning techniques, such as charitable lead trusts and GRATs, particularly effective.

Many of my clients and I have had conversations about valid techniques for the protection and favorable income tax treatment of inherited IRAs as they plan their estates for loved ones. Nearly all of them have already been aware that their IRA accounts are protected from creditors by both state and federal law. In addition, I have generally been able to assure them that the protection continues for their surviving spouse who inherits the IRA from them at their death. But, I have had to also alert them that some state courts have begun to find that such protection does not necessarily continue for other beneficiaries -- including for their children who inherit from them.

A recently decided case by a state court in Florida continues to peel away the sense of IRA creditor/predator protection when the IRA is inherited by some one other than a surviving spouse. The decision was based on Florida specific law; but drew heavily from other sources, including federal bankruptcy law -- even though the IRA owner was not in bankruptcy.

Florida law, similarly to provisions in both Missouri and Kansas, and nearly every place else, provided that "money or other assets payable to an owner, a participant or beneficiary" are exempt from "all claims of creditors" if held in a "fund or account" maintained as an IRA exempt from taxation". The Florida court, however, found that this APPLIED ONLY TO THE ORIGINAL ACCOUNT, AND NOT TO AN INHERITED ACCOUNT, stating that the "tax consequences of inherited IRAs render them completely separate funds or accounts." This seems to be disturbing reasoning for the reason that monies held in either the original IRA or subsequently inherited IRAs are not actually subject to income taxation until distributed from the IRA.

In fact, this is one of the key reasons that senior family members are interested in helping to assure inherited IRA status -- so their loved ones may benefit from the potentially phenomenal benefits of "stretching" tax deferred distributions from the IRA over the lifetimes of their beneficiaries. Part of the appeal in so doing is the sense that the creditor/predator protections will also be passed on to the next generation.

The state court, however, reasoned to the contrary that whereas the original IRA owner could have been penalized 10% for certain withdrawals prior to the age of 59 1/2, federal tax law would allow heirs, regardless of age, to take immediate distributions without penalty at their own discretion.

Taking all this into account, clients and friends will understand why I so often encourage them to establish separate IRA Inheritance Trusts for their descendant loved ones to become the beneficiary of IRA accounts. If such trusts are properly and carefully designed, their beneficiaries are likely to benefit from both "stretching out" the distributions (thus deferring income taxation until the distribution is actually made or required)AND also preserving the creditor protections enjoyed by the original owner. Of course, it is also critically important even with such a trust in place, that the beneficiary designation also be carefully crafted to comply with Treasury Department guidelines.

For clients with reasonably comfortable IRA account balances, this type of planning is often an incredibly important part of achieving their goals for their family and the protection of their hard earned and carefully protected net worth. Helping to assure that this type of asset is inherited in as protected a form as legitimately possible is a heartfelt mission in my office, in part because it is so often left to chance. This recent Florida case reinforces my belief that a patchwork of state reviews creates too much uncertainty for us to rely on standard planning expectations. After all IRAs are often a sizable percentage of an estate these days. Even if a client's home state maintains solid creditor protections for non-spouse beneficiaries, it is impossible to know what jurisdiction any descendant might reside in later on. Establishment and proper administration of the specialized trust is the most protected legal technique available to many IRA owners.

Today I was privileged to be among 30 or so advisers at lunch sponsored by the Greater Kansas City Community Foundation's Johnson County affiliate -- a local organization that provides valuable community services. I have long recommended its ability to facilitate flexible family involvement in tax advantaged worthy causes to clients as part of their estate planning legacy.

I did not remember that the GKCCF is rated among the top 10 in the country by independent reviewers, even when grouped with much older community foundations from much larger metropolitan areas.

Also I learned that Kansas City generally has a strong reputation as a charitable giving community. The percentage of residents who give to some charity is very similar to the national average. But, those who give do so at a rate 50% more than the national average. Furthermore, the number of local individuals who gave to non-profit organization during the last 10 years increased by 128%. Nationally the number increased during the same period of time by 30%.

The financial assets of the Greater Kansas City Community Foundation, which is only 30 years old, now total approximately one billion dollars!

I attended two terrific seminar presentations yesterday. The subject of one focused on potential advantages and disadvantages of converting traditional IRAs to Roth IRAs in 2010. The other focused on techniques to preserve wealth in the current financial and economic environment. The two presentations included at least one overlapping theme: It is likely that tax rates will increase in the foreseeable future.

As most of my clients know, the 2001 Bush tax reduction plan was designed on an inherently unstable foundation. The federal estate tax, specifically, evaporates in 2010. Then it reappears automatically in 2011 - but at its 2001 level. ($1,000,000 per person exemption, with the excess being taxed at 45% or so.) The short sighted political gamble in all of this was that the cost at the ballot box would "for sure" cause a "fix" of the system prior to the 2011 reversion. From the beginning, I did not know many experienced estate planning lawyers who believed it would play out according to plan. But 2011 was a really long time in the future.

Since the 2001 Act was passed, we have endured 9/11 and its aftermath, the Iraq War, the Afghanistan War, the war on terror, the crisis brought on by sub-prime mortgage lending practices, the collapse of the financial markets and investment banking system, the TARP bailout, the bailout of auto companies, the stimulus package, the outlines of health care insurance reform, and other major developments - every one of which has separately strained, or threatens to strain, the federal budget.

Now we come to the end of the Bush system of tax reduction. Who really believes that that system will actually be fixed in accord with the original design? My Dad used to tell me that "you get what you pay for", and conventional wisdom is always free. (Remember the Clinton years - during the "tech boom" of the 1990s? The conventional wisdom then said that the "new economy" would never again be subject to the risks and fluctuations of history. Hah!) Well now, the conventional wisdom seems to be grounded more securely.

The CW among my sober sources is that the current $3,500,000 per person exemption for federal estate taxes will be extended into 2010, rather than the tax evaporating. And the exemption will be allowed to automatically fall back to the $1,000,000 level in 2011. The deficit simply must be attended to. Permitting the Bush "slight of hand" illusions and reversion provisions to take hold (by doing nothing) will help raise desperately needed revenue in a relatively painless and anonymous way. Of course, I humbly remind my patient listeners that this has been my own conventional wisdom since passage of the 2001 tax reduction act.

This subject is far from settled - and some of my opinions have been controversial among my friends. I invite comments and discussion to this entry as this major political, economic, legal, and tax subject goes forward.

Professor Paul L. Caron of the University of Cinncinnati College of Law reports on his tax blog this morning that, "A deeply divided Tax Court (yesterday) handed the IRS a significant setback in allowing the taxpayer to claim substantial discounts for lack of marketability and control on the transfer of cash and marketable securities to a single member LLC followed by transfers from the LLC to trusts established for the benefit of her son and granddaughter."

This is a potentially important case for families who have estates greater than the basic estate tax "exemption" ($3,500,000 in 2009/$1,000,000 in 2011). The ability to use family partnerships and family limited liability companies to take advantage of very real and substantial discounts in value has been under urgent challenge by the IRS. The sense of this case is that the strategy - if thoughtfully and properly structured and used - will continue to be viable. This August 24, 2009 case is Pierre vs. Commissioner.

Mrs. Pierre created a limited liability company under her state law, and transferred cash and publicly traded securities to it in exchange for 100% ownership. Then she created protective trusts for her son and granddaughter and by a combination of gift and sale transferred shares in the new company to the trusts. When her advisers calculated the amount of federal gift tax they applied substantial discounts for "lack of marketability" and "lack of control" - and paid no gift tax on the transfers. The IRS assessed a gift tax deficiency of $1,130,216.11 (yikes!), arguing that the transfers should be treated as transfers of the underlying cash and securities at fair market value rather than of the discounted shares of the LLC.

The Tax Court stated, "A fundamental premise of transfer taxation [e.g. gift and estate tax] is that State law creates property rights and interests, and Federal tax law then defines the tax treatment of those property rights." Since Mrs. Pierre, under the law of her state, validly transferred ownership of the cash and securities to the new LLC, she "did not have a property interest in the underlying assets of Pierre LLC, which is recognized under [state] law as am entity separate and apart from its members." (The same basic property concept, incidentally, applies in Kansas and Missouri.) The Court then held that Mrs. Pierre's "gift tax liability is determined by the [discounted] value" of the transferred shares of the LLC, "not by a hypothetical transfer of the underlying assets of Pierre LLC."

This well executed estate planning strategy saved Mrs. Pierre and her family over $1,000,000. In addition, note an additional wisdom of Mrs. Pierre's planning: Rather than making the transfers of LLC shares directly to her son and grandchild her gifts were carefully made to protective trusts for their benefit.

The Courts have generally not been kind to repeated IRS challenges to this type of advanced planning. Successful assaults have generally focused on sloppy or incomplete execution of the strategy. Properly conducted valuation appraisals are important - in advance of transfers. Precise observance of state business and property laws is critical, as are federal tax regulations. Timing is important. And an eye will have to be kept on our elected representatives, as well. This area of planning may be considered by some as a "loop hole" for the wealthy and showy Congressional efforts made to close the opportunity in future legislation. Keep in mind, though, that Mrs. Pierre was not necessarily a wealthy person. The assets she sought to protect as part of her family's legacy had fairly recently come to her by means of an unexpected gift from a wealthy friend. Mrs. Pierre was "gifted" both by her friendship and by the good fortune of her own care and thoughtfulness in seeking - and following - superior counsel.

Family members referred to as having "special needs" are often persons born with cerebral palsy, autism, Fragile X syndrome, Down syndrome, and mental impairment. In addition to the usual hurdles parents face when preparing their estate plan, the parents of a special needs child -- even if he or she is over the age of majority -- are confronted with at least 6 unique challenges:

1. How do they provide for all of their children or loved ones without jeopardizing the special needs child's potential eligibility for government benefits such as SSI and Medicaid?

2. Can they design their estate plan to supplement the basic government benefits to which their child may be entitled, as a way to enhance his or her quality of life?

3. While accomplishing the first two goals, what do they need to do to also treat other children or loved ones fairly and equitably?

4. What steps can be taken to assure that sufficient funds are available at the right time to care for the special needs of their child -- and also of their other children or loved ones?

5. How can they provide for the proper supervision, management, and distribution of a special needs inheritance through "third party" created and funded special needs trusts.

6. Who can they rely on as Trustee in the child's geographic vicinity who is both experienced with special needs trusts and affordable?

In upcoming postings in this space, we will discuss some of these issues. If any readers have actually had either good or bad experiences, comments and discussion are encouraged.

Tracking the estates of celebrities and the rich and famous is educational and entertaining: Even the most basic recommendations we routinely give to more down-to-earth clients are often ignored or left "incomplete" by the mega-wattage stars. Today's raw reporting cites "insiders" to Jackson's business affairs as saying that he "might" have a will, but that it might also be many years old. If that is true, it will be amazing. This is another reminder to us all that wills and trusts, both very basic planning [like nominating guardians for minor children] as well as more sophisticated techniques, must be reviewed and updated with regularity. An out of date estate plan, or one that is thoughtfully prepared but kept secret from the people who will have to administer it, is often a mess. The better you are at what you do, the bigger the hole when you are no longer there to do it yourself. One of the worst examples of recent years, interestingly, was U.S. Supreme Court Chief Justice Warren Burger -- a competent lawyer who had no estate planning experience. He did his planning for himself and became a legendary example of the proverb that a lawyer representing himself has a fool for a client. We will use this space to keep track of developments in the Michael Jackson estate. I hope it turns out to be an example of how to do things right. But don't count on it.

* Update 3:30 pm * Unbelievably, it seems to have happened yet again. According to this afternoon's edition of the Los Angeles Times, Michael Jackson's family believes he died without a valid will. Is the type of circus/garage sale we all want to avoid beginning to come together? Frankly, it is also unusual for this information to have been filed with the probate court before there are even any funeral plans.

* Update June 30, 2009 * Within hours following my first update posting on this subject, an attorney for Michael Jackson allegedly confirmed the existence of a valid will after all. So, this seems to indeed be an example of the type of confusion that can happen if information is not communicated to loved ones. But, will the document be "valid" so it can be admitted to probate and enforced? The recent discussion of the Leavey case in Kansas in this journal illustrates the type of simple error that might prevent a document from being a "valid" will. Ir seems reasonable to think in the Jackson estate that somebody will want to suppress the document if possible.

"A document is not a will [in Kansas] unless it meets the requirements of Kansas statute 59-606." In other words, sometimes form is as important as subtance. This particular Kansas statute relating to witnesses and the execution of wills will be strictly construed even if the intent of the creator of the will may be frustrated in the process.

Some people might refer to the provision as a "technicality", but on March 6 of this year the Kansas Court of Appeals said that failure to comply with the statute "did not constitute a slight or trifling departure... Instead, there was a complete failure to comply with the requirements...that the will be attested and subscribed in the testator's presence by two or more competent witnesses who saw the testator subscribe or heard the testator acknowledge the will."

This ruling should be of concern to purchasers of commercially produced forms, "will kits", and "estate planning software". More than those cost-cutting programs can provide is critically important to determine whether a person's will or trust will be effective to carry out their desires. In the recently decided Leavey case, apparently the provisions of the will identifying beneficiaries were adequate. But, the will was not properly signed by one of the witnesses. As a result, the entire document was thrown out and certain family members were inadvertently disinherited. This is not an unusual case.

The court stated, "While it is unfortunate in this case that [the testator's niece] must suffer from the lack of legal ability and understanding of the scrivener who sought to perform a legal act of great importance and solemnity, that of drafting a will and purporting to supervise the execution thereof, it is better that she be denied her would-be beneficial interests in the will than to open the door and set a pattern, by those not vested in the law of wills and in utter disregard of the plain provisions of the statute, for the drafting of future wills, so as to permit fraud, undue influence, overreaching and bad faith which might in some other instances be practiced on the weak, aged, or infirm testators in the disposition of their worldly goods."

Unfortunately, in this case the testator had actually retained and relied on the professional services of a duly licensed attorney. It was the attorney who failed to observe the clear and plain statutory requirements. But, it is also a very real concern that the intended beneficiaries of many testators who believe they have "taken care of their affairs" without the need to hire an attorney will be surprised by the accidental failure to observe important formalities. And it is a truism that the person who creates the will is never around to know if it actually works or whether loved ones are hurt. Sometimes, it is important to remember that you get what you pay for and that you can be penny wise and pound foolish. The money spent on legal fees for trial attorneys and appellate attorneys certainly was significantly greater than the original cost of the will in this case, not even taking into account the loss to the testator's niece after his death.

June is National Gay Pride Month, a good time for committed same sex couples to focus on their estate planning priorities. This is perhaps especially important in Kansas, which does not have a system of domestic partner registration, let alone legal marriage for such couples.

I recently heard a speaker point out that the average American works 80,000 hours in a lifetime, amounting to a cumulative work time of 40 - 55 years. I have not attempted to compute the resulting average value of assets, investments, and property that that effort ultimately reflects. But, it is often reported that somewhere around 80% of us die or become disabled without a will or other "estate" planning. My guess is that the proportion is not dissimilar for non-traditional families, whether they be gay/lesbian couples or same-sex unmarried couples.

During this particular month of recognition, and in the shadow of so much national conversation on the topic these days, I am reminded of one of the very first probate/death disputes I ever witnessed as a young attorney 25 or so years ago: The senior partner in the law firm for which I worked was the lawyer for two financially successful gay gentlemen of advanced age. Together, over time, they carefully accumulated a healthy and interesting estate, including valuable and interesting collections and a business partnership. In my presence several times, the senior partner urged them to take care of their basic estate planning goals and needs. Needless to say, they did not. One of them died, leaving his partner alone to fend for himself.

The result was sad to witness. Neither of their families, in the early or mid-1980s, approved of their relationship. The men, by the time of the first partner's death, were not in any communication with families which had essentially disowned them. Yet, families are families regardless of sexual and gender orientation. And so, the usual scenario began to play out: Blood kin suddenly found time honored reasons to care and to become involved: Money. Assets. Economic value.

The results were that the surviving partner was excluded from medical decisions, visitation to the ill man's death bed, a voice in funeral arrangements, and the like. Moreover, in the absence of any estate planning, the business was forced into liquidation, the valuable collections disbanded and sold, and other assets which they had mutually nurtured and accumulated were partitioned and distributed. I actually have no idea what eventually happened to the surviving partner. But, the usual horrible emotions and readjustments required of surviving spouses must have been quadrupled.

Even last century, in the 1980's, the described result was completely unnecessary. Basic estate planning would have at least improved this couple's circumstances. It may even be argued that men or women in gay or lesbian relationships need properly drafted wills, powers of attorney, trusts, and business arrangements more than others. In the absence of intentional structuring, in Kansas and most other jurisdictions, health care surrogate decisions, property inheritance, and similar matters will automatically revert to traditional family members and next of kin. With the exception of a small handful of states, statutory definitions of family are still restricted to: parents, spouse (presumably taking into account DOMA in states that have yet to recognize same-sex marriages), siblings, descendants, and so forth. So, it is possible that the default "deciders" will be the very people most ill suited to the fiduciary positions that must be filled.

So, at this time of focus on same gender relationships, it is important to carefully prepare legally enforceable documents related to HIPAA, health care surrogates and other powers of attorney, beneficiary designations for IRAs and insurance proceeds, trusts, and so forth. I have spoken in other contexts about the importance of readily available health care documents through the services of organizations such as DocuBank, which is linked from my law office website. DocuBank includes a separate focus on such matters for gay and lesbian couples and individuals and is a site I recommend for information and consideration. I have also recommended books on my law firm website (davidalig.squarespace.com) for those who would like to read more on this topic.

The state of Kansas has happily been mentioned in national news reports an unusual number of times in recent days. A young Lenexa girl won an amazing national competition sponsored by NASA to name the Mars Rover. Her words as reported by the Kansas City Star were extraordinarily articulate. Then a couple of days later an Olathe girl won the National Spelling Bee by spelling a word I never heard of, still can't pronounce, and have no idea what it is supposed to mean. And the University of Kansas made its own history by appointing the first woman and African-American as Chancellor. Each of these announcements - for me -- was fun and also led to some pride. Interestingly, the use of language was prominent in each of the events.

Last evening, however, I was stunned to learn of the murder of George Tiller in Wichita -- in the foyer of the church where he was actively on duty in service to his community of faith, while his wife was preparing for her own regular service as part of the choir in the same building. This violent life taking makes me want to scream "What is wrong with people?" I have to admit I do not know much about Dr. Tiller's medical practice. I do not know anything about late term abortion. I only know that he was hounded and vilified improperly by Phill Kline during his ill fated time as a Kansas Attorney General and District Attorney. (The point about his behavior being improper is not mine, but rather the Court's.) None of that actually matters in terms of a response to yesterday's outrage. Surely, where-ever people may stand on the whole issue of abortion, a woman's right-to-choose, a fetus's right-to-life, or however it is identified, this type of calculated murder should make them all stop and take stock about the kinds of things that can happen when language becomes intemperate, whether by elected officials of the state, religious leaders, writers of pamphlets and tracts, on-line commentaries, or families in their own private homes.

Just as language inspires children to be creative and articulate, so language can also inspire evil and death. There cannot possibly be justification.

The May 19, 2009 Wall Street Journal reported that "For more and more group-insurers, death benefits are moving well beyond just a lump sum.

"Legal help for probate and professional help for funeral planning are among the services being bundled into group-coverage packages by a growing number of companies. Hartford Financial Services Group Inc.; Prudential Financial Inc.; ING Employee Benefits; and MetLife, Inc. are among those joining the trend.

"Insurers say that the so-called end-of-life benefits, offered through companies' group-life policies, are designed to more fully meet the needs of those affected by a death. They take into account the legal, financial and even emotional impact of a death and can save surviving relatives money on death related services.

"Insurers offer these add-ons to employers as part of standard life-insurance packages, adding extra costs to employer plans starting for a few cents a month per employee at Prudential to a $1 a year per employee at ING. Group-life customers at the Hartford currently don't incur additional costs.

"Prudential recently rolled out emotional counseling and bereavement services, in addition to online financial counseling, for beneficiaries of employer-sponsored life-insurance plans. Prudential also offers will-preparation services with its employer-sponsored life insured plans.

"And last year MetLife began offering estate-resolution services as a standard feature to its supplemental-term life, group-universal-life and group-variable life-insurance coverage in a number of states"

I have not yet actually worked with any of these newly styled provisions for employees or family members who have died; but, the intent of the additional benefits is terrific. From now on, families and legal counsel need to be aware that inquiries about such benefits should always be engaged as soon as reasonably possible following a death.

At this time of year, many of us are proudly graduating high school students and preparing to send our beloved children on to college and the next exciting stage of life. But, as you carefully provide them with the right linens, computers, meal plans, and sage advice, you might also suffer from a subtle nagging worry about the handling of your "baby's" far away health care issues and accidents that might occur. How will you be notified of an emergency? How much can you be involved? Remember, your "child" is now legally an adult. He or she is protected by medical privacy laws. Before leaving for the fall semester, will your son or daughter have signed their own health care powers of attorney and privacy waivers? Even if they do so, who will have access to the documents in a crisis - or even know where to find them?

"HIPAA" - the federal Health Insurance Portability & Accountability Act - was established to help protect patient privacy; but it can also mean that you as the parent of an adult child may not be able to get important information about your 18 year old son or daughter in a medical emergency.

1. Now is the time to suggest to your newly adult child that he or she ought to consider signing a health care power of attorney, HIPAA privacy waiver, and similar legal documents this summer before they leave the nest. It may be an awkward conversation on both sides: I actually know this; As of last October both of my own children are in this category.

2. At the same time, consider also obtaining a DocuBank wallet card for your child to help assure these important legal documents will be quickly and easily accessible to hospital medical staff in an emergency - 24/7/365.

DocuBank's I.C.E. (In Case of Emergency) program, specifically designed for for college students, operates to send you an alert if your child's card is used to retrieve the information, so you can immediately call to follow up. And since I.C.E. will assure that the hospital has your child's HIPAA release, powers of attorney, and similar documents even before you call, there will likely not be an obstacle to you receiving the information you will need and urgently want.

To find our more about HIPAA, health care powers of attorney for college students, the DocuBank I.C.E. program, or to schedule an appointment for your child, please call me at 913-387-5522.

Are you an organized person by nature? My father was. I, unfortunately, have to really work at it. Some people have a gift for organizational sense and others simply do not. When my sister and I had the job of sorting through the estates of our deceased parents, we learned firsthand just how grateful a person can be if their loved one had that gift and discipline for organization and "taking care of business" -- especially if they also took the initiative to sort through and dispose of a lot of their accumulated "stuff" before death. Not an easy thing for most of us to do or even to think about.

I am pleased that many of our clients say that one of the best results of focusing on their estate planning, with our help, is that they became more organized. They were confident that the process put them in more control of their lives while they remained healthy and active, and then later when they had to depend on others to help during disability - and prospectively even after death. They actually recognized that that was a key part of their legacy to their family.

If, on the other hand, you have ever found yourself in a state of bewilderment as you sorted through the estate and private affairs of a less gifted or well intentioned family member or loved one, do not despair for your own legacy. Check out the April 13, 2009 edition of the Wall Street Journal in an article by Suzanne Barlyn: "The Mess They left" for some sound advice.


You may be an admirably organized person in many other respects and still - unknowingly - leave a mess for your beneficiaries and heirs as a result of just not knowing what will be important when you are not there to handle your affairs any more. For example, some of our estate administration clients have been the families of CPA's and lawyers who were terrific helping others to be organized, but for some reason did not do so for their own families.

Here are some simple tips that can make an enormous difference to the mental health of your family and executor:

1. Maintain all of your estate planning documents together in one place -- and make sure that your family and executor know the location. Estate Planning documents include your revocable trust, last will and testament, health care power of attorney and declaration about life support preferences, as well as copies of life, health, long term care, and property/casualty insurance policies and beneficiary designations for them and your retirement accounts. Prenuptial agreements, real estate deeds, information about investment accounts, and business buy-sell agreements and stock certificates all fit into this category. In our practice, we routinely provide our clients with bright red, green, or blue estate planning, retirement planning, or business planning portfolios for all this type of documentation. Do not forget that all this has to be regularly updated and maintained for the system to be truly helpful. One of the primary reasons that messes are left to our loved ones is that good estate plans are not kept current with changing times, developing laws, and evolving personal and financial circumstances. Do not put your carefully crafted estate planning in a drawer or safe and assume that you have taken care of every thing. Get them out at least once a year and re-consider the language in light of the events of the intervening year.

2. Along with your legal documents, be sure to include updated lists of bank and investment account locations and identification numbers, filed income tax returns, and contact information for your professional advisers - especially your accountant, investment advisers, and legal counsel.

3. Make arrangements -- and even host a meeting -- for your family and loved ones to meet your estate planning legal counsel well in advance of the need for estate administration services and without yet having to simultaneously deal with the grief of your illness or death. Trust administration and probate are probably unknown subjects to your surviving family members and loved ones. Even with good and organized planning, this can be a complex and illogical world. Knowing your advisers -- especially your personal lawyer -- before the need is an emergency can be part of your helpful and comforting gift to your loved ones.

4. Try not to be too secretive. As said so well in the Hebrew Bible, "There is a time for everything under the sun." Certainly, there may be times through much of our lives when our business and financial affairs are not our family's (especially the younger generation's)business for a variety of reasons. The reason, for you, may simply be that you do a really good job taking care of it yourself. But, never forget that the better you are at what you do yourself, the bigger the hole is likely to be when you are not "there" to take care of it yourself. So having a good "succession plan" for your affairs is a key part of taking care of your family. More about this point later in a different entry.

President Obama's budget, which has essentially passed in both the U.S. House and Senate, calls for maintaining the federal estate tax exemption at its 2009 level of 3.5 million per person and taxing the rest at approximately 45%.

For what it is worth, yesterday the Senate voted 51-48 to include a provision in the budget bill to increase the exemption to $5 Million and reduce the highest marginal tax rate to 35%. But the measure is merely symbolic and is likely to be removed in its entirety during the conference process to align the House and Senate versions of the budget. Several Democrats joined with Republicans to support the language inclusion in the budget bill.

In the arcane processes of Congress, minutes later the Senate adopted a second amendment to the budget bill that would REQUIRE a 60 vote threshold to amend the current estate tax law unless some type of commensurate relief is also provided to persons who earn less than $100,000 - and will be among the 99.8% of Americans not subject to the estate tax in any event.

Check back in here from time to time for updates to the estate tax gamesmanship that will be played through this entire Congressional session. But, do not expect any definitive action until the last possible moment. My own sense of this issue is that not much can possibly be done to reduce this particular tax while the deficit is so high and the economic stimulus and military obligations are so significant. No one should delay planning their estate based on a lonely and unrealistic expectation that the estate tax will be legislated away or significantly reduced below its current level. In any event, an estate designed solely to avoid estate tax liability and not to thoughtfully and personally protect and prepare loved ones from predators and mistakes is likely to be short sighted and incomplete.

*MAY 12, 2009 UPDATE* Word coming out of Washington, D.C. these days is that the Obama administration is settling on continuation of the current $3,500,000 "estate tax exemption" and 45% highest marginal tax rate. Spokesmen state that a focus will be to close "loopholes", by which they apparently mean the legitimate use of valuation discount planning.

The current edition of the Kansas City Business Journal reports that a premier Kansas City organization known for assisting entrepreneurs (UMKC's Institute for Entrepreneurship & Innovation) is reaching out to also help military service veterans. According to the Journal report, when KCVetLink is fully implemented as many as 160 not-for-profit organizations "will give veterans a highly visible and reliable place to help them return to the work force or create their own businesses." The new resource will also provide information on personal matters such as housing, transportation, and family support. U.S. Representatives from Missouri and Kansas, Dennis Moore (D) and Emanuel Cleaver (D)secured almost $300,000 in federal funds to start the program. As of this posting, it does not appear that the new venture's website is yet active. The report in the Business Journal anticipates that happening at the end of April or the beginning of May. I will check periodically and include a link from both this journal and my website when that occurs.

The subject of a disturbing investigative article by Michael Kranish, published in this morning's Boston Globe does not seem to be getting adequate public attention. Mr. Kranish reports, "Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks." This sounds like a frightening variation of the last administration's proposal to "privatize" social security.

A Boston University finance professor, who had actually advised the agency against such a move, said "This has the potential to be another several hundred billion dollars. If the auto companies go under, they have huge underfunded liabilities" in pension plans that would be passed on to the agency.

"The Pension Benefit Guarantee Corporation may be little known to most Americans, but it serves as a lifeline for the 1.3 million people who receive retirement checks from it, and the 44 million others whose plans are backed by the Agency.

"The Agency was set up in 1974 out of concern that workers who had pensions at financially troubled or bankrupt companies would lose their retirement funds. The agency operates by assessing premiums on the private pension plans that they insure. It insures up to $54,000 annually for individuals who retire at 65."

"Despite its name, the agency does not necessarily guarantee the full value of a person's pension and is not backed by the full faith and credit of the government."

"The agency's board, which consists of the secretaries of Treasury, Labor, and Commerce - approved the new investment strategy in a meeting in February 2008"; but the board is "too small to meet the basic standards of corporate governance, according to an analysis of by the Government Accountability Office. 'The whole model of having three sitting Cabinet secretaries with day jobs overseeing a $60 billion investment portfolio and occasionally owning significant percentages of large American companies is fundamentally flawed, said [Bradley N.] Belt, the former agency director."