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Estate Planning Lawyers
Wednesday, 27 July 2016
Change of Plans: The Evolution of Law Firm Office Space
April 7, 2016By

Change of Plans

Like all other sectors, the legal industry is faced with changing demands around how it conducts business, interacts with clients and attracts and retains talent. More than 100 law firm leaders joined JLL this morning at Rustle & Roux to discuss what law firms need to do to stay competitive and how that is reflected in their real estate estate planning law firm.

JLL research guru Christian Beaudoin set the stage, reinforcing the importance of law firms in the downtown office landscape. Law firms represent 42 percent of pre-leased space in Chicago’s new office towers under development, highlighting a subtle shift in tenant demand to the north and west. While 75 percent of JLL corporate clients have adopted open plan workspaces, what’s really going on inside law offices?

Change of Plans

Flanked by JLL’s Steve Steinmeyer and Bill Rogers, our panelists included: NELSON’s Marty Festenstein, Gary Lee Partners’ David Grout and Gensler’s Jim Prendergast.

One Size Doesn’t Fit All

The issue of competitiveness is paramount when law firms consider relocation or renovation, NELSON’s MartyFestenstein said. He’s seeing firms realize the greatest financial impact through thoughtful space reductions, ranging from 15 percent on the low end to as high as 25 percent reduction in occupancy. Flexibility to modify space in real time, branding and accommodation of varying work styles are key in law office design, but most critical is a solution unique to the office culture.

Law Office Trends

Gensler’s Jim Prendergast said law firm clients ask him two big questions:

  1. Is universal size office viable and what size should it be?
  2. How much glass are we going to have?

Spurred by the tech sector, these trends represent both physical and metaphorical transparency in a law office, Jim said, which needs to be balanced with the 65 percent of lawyers’ days spent in heads-down private time. While market conditions move faster than drywall, offices have become organisms that need to breathe organically with changing business dynamics.

Happenstance Collaboration

Planned meeting scenarios are easy to find in law offices. But how to facilitate chance, fruitful and frequently revenue-generating encounters? It’s about observing the way law firm employees interact and reflecting the culture and brand in the space design. A relocation or renovation is a good time to take a hard look at company culture and ensure your law office is a place that makes people want to come in and work together, Gary Lee Partners’ DavidGrout said.

Tech. The New Millwork and Marble.

As the costs of virtual presence technology continue to decline, tech-forward collaboration tools have become a major differentiator for law firms. Technology, with a dash of hospitality, helps law firms keep hard-working employees comfortable, clients in the office longer (i.e. come for a 10am meeting but stay to work remotely with state-of-the-art business amenities) and demonstrates company investments in productivity and efficiency.

Looking ahead, robotic applications, artificial intelligence and virtual meeting technology will disrupt and profoundly restructure the legal industry. Approximately 35 percent of law firm leaders believe supercomputers will one day be used for work law associates do today, Jim joked, which begs the real question – How will we train them? The associates, that is.

The Takeaway

As real estate footprints rightsize to gain efficiencies, law firms are taking a hard look at buzzwords like “collaboration” and “Millennials” and how to incorporate them into their uniquely private and paper-centric business. Successful law offices of the future will leverage modernized space plans and technology, empowering lawyers to be more engaged and responsive with the people that matter most—their clients.

A To-Do List for Estate Planning in St Johns County, Florida

Posted in Estate Planning News

Family Estate Planning St Johns County

At the Preddy Law Firm, P.A. our goal is to help families in St. Johns County, Florida and the Jacksonville area avoid frustration and fear when it comes to estate planning. By being proactive instead of reactive, a family can save time, anxiety, and money in the case of a loved one’s death. Estate planning is important to help families make better decisions, reduce conflict and have peace of mind while dealing with estate matters. This type of planning is important for all families no matter your net worth.

A TO-DO list for Estate Planning:

Take an Inventory of Intangible Assets

Creating a list of your intangible assets with contact information is critical in assisting families to determine what you owned at your death. Identifying assets that would pass by beneficiary designation is immensely helpful to the family. If there is no record of your ownership in property, the family will not be able to collect the proceeds. Such items include life insurance policies, IRAs, 401-k or other retirement plans, bank accounts, stock certificates, and bonds, and the like.

Keep an Inventory of Deeds, Titles, and Business Agreements

Documents showing ownership in real estate, various types of vehicles, and business ownership interests are an important part of your inventory. Typically, a family will spend months trying to piece together what type of ownership you may have had in various properties or businesses. By keeping these documents in one place, they can be assured they will likely not miss anything to pass on to the family. 

Take an Inventory of Tangible Assets

Document all important items you own worth over $1,000 as well as items that have sentimental value to you, located both in and outside of the home. This includes vehicles, jewelry, antiques, guns, and collectibles in the home or stored away from the home. This makes it easier for anyone to keep track of property in the estate. Florida law allows you to create a list of gifts as long as you itemize the item to be gifted, name the beneficiary and sign at the end of the list. This would be an ideal time to prepare that list.

Document Debts and Credit Cards

Prepare a list of debts for which you currently are indebted. While your family may not be personally liable for your debts, it must be documented if probate proceedings are needed. Secured creditors will also maintain their right to take property, so keeping your family informed as they make legal decisions will be a significant help to them. Debts include existing mortgages, auto loans, home credit lines, bank loans, and any other debts you may owe others. Moreover, include open credit cards. Use this time to close out any credits cards that are not in use.

Execute Advanced Directives

Advanced Directives allow a person to step into your shoes and make decisions for you in case of your absence or incapacity. A durable power of attorney gives another the authority to manage all your financial affairs. A Health Care Surrogate names one to handle your medical decisions when you cannot. A Living Will is used to give guidance to your Health Care Surrogate as to your wishes if you are in an end-state condition. Finally, a Preneed Guardian names the one who you would want to serve as guardian if court appointment of a guardian was ever needed. Choosing a trusted person in advance avoids infighting or questions as to who would be the best person to serve in that role. Further, by choosing to name your agent and surrogate, thousands of dollars will be saved by avoiding a court supervised guardianship in case of your incapacity. Because of the scope of their roles, careful consideration must be made when selecting a person.

Execute Your Last Will

It is important to have a last will in place. No one likes to think of the inevitable. However, estate planning is not for you, but for your loved ones. Your last will governs the division and distribution of assets and other valuables in the estate. It will also be used in naming a guardian in the case of minor children. A last will which clearly lays out your intentions should bring peace of mind to your family. Trusts should also be established in the last will for various reasons, including the case of property passing to a minor, incapacitated or one who has substance abuse issues. Depending on the nature of the assets you own, revocable or irrevocable trusts may also need to be executed to avoid probate and estate taxes.

Ensure Safekeeping of the Estate Planning Documents

It is important to keep all documents ready and have them kept safely until the time they would be needed. There are organizations that keep such valuable documents safely. However, your agent or personal representative must be given access to the documents when the owner will be incapacitated or deceased. Leaving passwords is an important part of helping them access your property. Ideally, your estate planning attorney should hold your original estate planning documents to avoid loss or destruction of the documents.

Discuss Your Estate Plans with Your Heirs

Inheritance matters can be emotional and complicated issues. Avoidance is not a strategy for a smooth transition upon your passing. Having a discussion with your heirs in advance about any concerns or questions, outline your plans with the above techniques, and seek legal counsel to be fully informed of all of the possible options and outcomes. These steps will prevent confusion and are beneficial to conveying to your family exactly what you intend to happen after your death.

Rose Marie K. Preddy, Esquire, owns the Preddy Law Firm, P.A. in Jacksonville, Florida. Ms. Preddy has over 20 years’ experience representing families and other clients in estate planning, guardianship and probate matters. Please do not hesitate to contact Rose Marie with any questions.

The Preddy Law Firm, P.A. website is intended to inform firm clients and friends about legal developments and news in Florida estate, trusts, guardianship and probate matters. 

Posted by tomnoel754 at 6:12 AM EDT
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Thursday, 21 July 2016
Chicago Planning and Development Leader Joins Nonprofit IFF as VP of Real Estate Services
Community Contributor draftery
Jul 21, 2015 
Chicago-based nonprofit IFF welcomes Chicago planning and development leader Terri Haymaker as its vice president of Real Estate Services. Haymaker brings to the role 15 years' experience in planning and launching redevelopment efforts at the municipal level, including over 120 city construction projects that created over 4 million square feet of new civic facilities in Chicago since 2008.
Replacing Terry Pieniazek, who retired in April after three successful years at IFF, Haymaker will oversee the strategic direction, expansion, and operation of over 20 real estate and housing professionals. Formed in 1997, IFF's Real Estate Services department offers nonprofits such consulting and owner's representative services as on-site project oversight, facility assessments, site searches, and financial packaging assistance in Illinois, Indiana, Michigan, Minnesota, Missouri, and Wisconsin. The team has completed over 600 projects totaling $305 million and 2 million square feet of constructed or renovated space estate planning services.
"Terri Haymaker joins IFF with a strong commitment to our mission, a deep understanding of real estate, and keen leadership skills that will boost an already terrific team," IFF CEO Joe Neri said. "She values relationships as much as we do, with a background in collaborating well with stakeholders at all levels, and will quickly contribute to our mission of transforming neighborhoods for public good as we expand further throughout the Midwest."
For 20 years, Haymaker has worked for the city of Chicago, most recently as chief planning officer for the Public Building Commission. She also has been deputy commissioner of the Chicago Department of Planning and Development, overseeing the redevelopment of the Central Region; and executive director of the Greater Northwest Development Corporation, where she played a key role in community redevelopment activities.
Haymaker's community involvement includes serving on committees for the American Planning Association, Lambda Alpha International - Chicago Chapter Board, Urban Land Institute's Building Re-Use Task Force, and Women in Planning and Development. Her efforts have been recognized by the Urban Land Institute, which in 2012 awarded her the ULI Women's Leadership Scholarship. She holds a master's degree in urban planning and policy from the University of Illinois at Chicago.

"I have always admired the impact that mission-driven organizations have on communities and I am honored to lead IFF's Real Estate Services team," Haymaker said. "I look forward to enriching the expertise and resources that we offer to growing nonprofits through our Chicago and regional teams."

The Tax Deferral and Financial Services Juggernaut, Estate Planning Team, Inc., Lands with Centaurus Financial®, One of the Fastest Growing Independent Broker/Dealers in the Country

November 19, 2015 04:59 PM Eastern Standard Time

ANAHEIM, Calif. & INDIAN WELLS, Calif.--(BUSINESS WIRE)--Centaurus Financial, Inc.® (“Centaurus”) and Robert Binkele and Estate Planning Team, Inc. (“EPT”) are pleased to announce that EPT has selected top independent broker/dealer,Centaurus Financial, Inc., as their new broker/dealer and registered investment advisory firm. Robert Binkele, founder and CEO of Estate Planning Team, Inc., and one of the nation’s most successful financial advisors, carefully considered several prominent broker dealers from a large number of interested companies, to select the organization that could best serve the interests of his many clients and affiliated members throughout the country.

Robert Binkele was one of the top Registered Principals at J P Turner & Company and, before that, a top producer with Raymond James Financial. A unique figure in the financial services industry, Robert founded and developed Estate Planning Team to help meet the planning needs of his high-net worth clientele. Robert’s dream has been to develop a platform that enables financial advisors to better serve their clients by offering unique and effective capital gains tax deferral solutions to financial services professionals as a complement to their traditional investment and financial planning services. He believes that doing so enables them to deliver superior options to their clients, giving them a significant competitive advantage in the financial services marketplace.

According to Centaurus Financial, Inc. CEO, Ron King, “We are very excited to bring Robert on board with Centaurus. Robert is an innovator in our industry who has devoted a great deal of his career to developing the right team and the right program to assist financial professionals in managing and preserving wealth for clients. At Centaurus, it is our mission to provide advisors and their clients access to all of the tools they need to succeed and we think that Robert and his work with Estate Planning Team do just that.”

The growth of Estate Planning Team over the past nineteen years has been phenomenal. Robert Binkele successfully tapped into the growing demand for comprehensive tax and financial solutions by owners of highly appreciated real estate and businesses throughout the country who didn’t want their hard earned wealth to be depleted by onerous capital gains and estate taxes. According to Robert Binkele, “Trust and integrity are critical to the success of Estate Planning Team and it was crucial to find a broker-dealer affiliation that shared our values and vision. There were many high quality broker/dealers to choose from but, to me, Centaurus Financial, Inc.® was the clear choice. As a privately-held legacy broker-dealer, with a focus on outstanding customer service, a broad platform of products and services offered to its customers, recognition by its peers, and its approval and support of Estate Planning Team and the Deferred Sales Trust™, Centaurus Financial, Inc.® stood out as the best of the best for me and our team.”

Headquartered in Anaheim, California, Centaurus Financial, Inc.® was formed in 1992 as an independent broker/dealer and registered investment advisor (RIA) to provide a platform for independent financial advice and services. Throughout its 23 year history, Centaurus has enjoyed consistent growth as a premier service provider to independent financial advisors and the clients they serve. Centaurus is ranked as one of the top 50 independent broker/dealers, based on gross revenue, for the twelfth consecutive year, according to InvestmentNews. In 2015, Centaurus moved up in the survey to #39 with $134 million in total revenues. This impressive revenue growth firmly establishes Centaurus as one of the fastest-growing independent broker/dealers in the country. For registered representatives, insurance agents or financial advisors interested in joining one of the best independent broker-dealers in the country, please visit Centaurus’s website for financial professionals or contact Tesh Lokumal at (800) 880-4234.

Estate Planning Team is the exclusive licensor of the Deferred Sales Trust® (“DST”). The DST utilizes IRC § 453 (installment sales) to allow owners of highly appreciated real estate, businesses and other highly appreciated assets to defer the payment of capital gains taxes upon the sale of those assets. In short, the pre-tax sales proceeds are placed into a Deferred Sales Trust® and, in return, the taxpayer receives a note, specifying a predefined, annual interest rate (for income or growth). The original asset is sold to a third party buyer and is replaced in the trust with a portfolio of diversified investments that are approved as collateral by the taxpayer and the trustee. Unlike a 1031 Exchange, the taxpayer is not required to acquire like-kind replacement property.

For more information or to register for a free webinar on the Deferred Sales Trust™, please contact Kari Smith (866) 779-5339. To learn more about the Estate Planning Team visit the company website at To read more about the Deferred Sales Trust™ go to

Securities and advisory services offered through Centaurus Financial, Inc., Member FINRA/SIPC, a registered broker/dealer and registered investment adviser. These services are offered to residents of the United States of America in certain states.Please contact us so we may verify we are registered in your state. Estate Planning Team, Inc. and Centaurus Financial, Inc. are not affiliated companies. 

Posted by tomnoel754 at 6:05 AM EDT
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Friday, 15 July 2016
The Top 6 Books for Estate Planning

By Warren Cassell | February 8, 2016 — 10:25 AM EST

Whether we like it or not, death is one of the few guarantees in life. Despite this immutable truth, too many people have not taken the time to spell out who they would like to inherit their assets after their passing. Findings from a 2014 survey found that roughly 51% of persons between the ages of 55 and 64 have not written a will. Probably the most startling thing of all is that for the most part creating a will is just a small component of comprehensive estate planning.

Proper estate planning also entails purchasing sufficient life insurance coverage, naming transfer on death beneficiaries for retirement and other investment accounts, setting up trusts for your heirs and even allocating funds for different charitable organizations.

Although creating a well-constructed estate plan requires a lot of work, it is worth it. It allows you to have the last say on what you would like to do with the wealth that you worked hard to accumulate. These below six books will help to give you an idea on how exactly to move forward with your estate planning estate planning books.

“The Legacy Journey: A Radical View of Biblical Wealth and Generosity” (2014) by Dave Ramsey

Over the last 23 years in the United States, the name Dave Ramsey has been synonymous with the act of getting out of debt. Having had filed for personal bankruptcy in his late 20s, Ramsey built a multimillion dollar financial coaching empire that focuses on helping middle class families live a completely debt free life.

Unlike his other books, The Legacy Journey puts little emphasis on money management practices for everyday people. Instead, it focuses on how to invest, spend and gift a portion of your wealth after amassing it. Evangelical Christian, Ramsey uses The Legacy Journey to talk about wealth from a biblical perspective. The book also provides readers with an inside look on how Ramsey constructed his estate plan. He shares some of the ways he structured trusts for his children when they were minors as well as how he and his wife choose the charitable organizations they give to. (For more, see: How Dave Ramsey Made His Fortune.)

“A Passion for Giving: Tools and Inspiration for Creating a Charitable Foundation” (2012) by Peter Klein and Angelica Berrie

As a way to continue their legacy, many people wish to leave a portion of their wealth to various non-profit organizations and other special causes when they die. A Passion for Giving serves as a guide for anyone looking to make charitable giving an important component in their estate plan. In addition to sharing case studies of how wealthy philanthropist go about donating their money, the book shares a step-by-step guide to starting and managing a private family foundation, as well as how to properly invest the foundation's assets for it to grow over time. (For more, see5 Steps To Forming A Tax-Exempt Nonprofit Corporation.)

“Beyond the Grave, Revised and Updated Edition: The Right Way and the Wrong Way of Leaving Money to Your Children (and Others)” (2014) by Jeffrey Condon

Written by an attorney with several decades of experience practicing estate law, Beyond the Grave is a comprehensive handbook that explains the basics of estate planning. The book explains common terms and mentions strategies that can be used to minimize tax liabilities for heirs of an estate. It also shares tips on how estate owners can avoid leaving an inheritance that would divide their families. (For more, see: 'I Just Inherited Money' Now What?)

“Family Trusts: A Guide for Beneficiaries, Trustees, Trust Protectors, and Trust Creators” (2015) by Hartley Goldstone, James Hughes, and Keith Whitaker

Trusts are instruments that are commonly used in estate planning. They help to minimize estate taxes and prevent creditors from seizing certain assets. Family Trusts provides all parties involved in a trust, grantorstrustees, and beneficiaries, with basic information on what a trust is and how it works. The book also gives grantors suggestions on how exactly to structure a trust. (For more, seeEstate Planning: Introduction Estate Planning.)

“8 Ways to Avoid Probate” (2014) by Mary Randolph

After someone passes away, their entire estate goes into a legal process to validate his or her will, appoint an executor to distribute the estate’s assets to its heirs and pay off the final debts and taxes owed by that estate. This is known as probate, and it often takes months and sometimes even years for it to be complete. As such, many families incur large legal fees and have their inheritance delayed as a result of probate. As the name implies, 8 Ways to Avoid Probate shares eight different strategies that estate owners can use to immediately transfer assets to their beneficiaries upon debt and, therefore, reduce what goes to probate.(For more, see: Skipping-Out on Probate Costs.)

“Get It Together: Organize Your Records So Your Family Won't Have To” (2014) by Melanie Cullen and Shae Irving

Get It Together gives readers practical tips for organizing and securing all of their important documents. It is a great resource for persons who are concerned about their family having trouble with finding their these documents should they die. These might include a list of passwords, bank statements, insurance policies and information on retirement accounts.(For more, see:6 Ways To Lose Your Estate.)

The Bottom Line

Although you might find thinking about your eventual death hard to stomach, it is very important to invest time, energy and money into constructing a comprehensive estate plan. Despite common beliefs, every adult, not just the wealthy, should spell out who they would want to inherit their assets. Without possessing a last will and testament, you run the risk of having a judge determine how to distribute your assets, among your family and friends, following your passing. This is a problem because a court’s decision may not necessarily reflect what your wishes for your estate would have been if you had prepared a will. Furthermore, proper estate planning can help to significantly reduce your estate’s overall tax liability which will result in a larger inheritance for your heirs. While writing a will and setting up trusts, might require assistance from professionals, the above six books can provide a great start for anyone who is looking to create an estate plan.

Plan the Retirement of Your Dreams

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Posted by tomnoel754 at 5:55 AM EDT
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Saturday, 9 July 2016
By Sarah Fazendin

Planning for retirement can take years. From dreaming of how you’ll fill your days to finding the ideal home base, there are a range of decisions to be made. Thanks to several online real estate websites, researching real estate is now easier than ever before, particularly for retirees. If you’re in the process of deciding where to live in retirement, be sure to check out these easy to use real estate websites.


Zillow’s online real estate search is built around map-based search capabilities for home value estimates. These accurate home values are derived from a proprietary formula that includes public records of home sales, tax assessors, and some MLS services. In certain markets, Zillow’s data on homes that are in pre-foreclosure status can also be helpful online estate planning.


Trulia also pulls data from a range of sources. Many people find their heat maps valuable when researching specific neighborhoods. Using these maps you can look at crime rates, schools, commute times, and amenities such as banks and grocery stores in this area. It’s simple to set up and save search criteria. Trulia can send you suggested homes, as well as alerts on new listings or homes you have followed.


While Zillow and Trulia are most useful for researching neighborhoods and keeping an eye on specific listings, Redfin is actually an online real estate brokerage and has real estate agents as employees. Redfin offers dedicated service, while making the most of technology to enable largely online real estate transactions. Enjoy lower commissions, fewer fees, and in some cases rebates when you work with Redfin. is the online real estate site run by the National Association of Realtors. Head here for the most up-to-date information on listings directly from the MLS, but don’t expect the fancy graphics and maps available on the other sites listed above.

If you’re considering a move in retirement, enjoy browsing these fun and easy to use online real estate websites.

What's Mom's password? Online accounts and estate-planning headaches

Special to The Globe and Mail

Last updated Wednesday, Dec. 02, 2015 8:08AM EST

Last year in Britain, brothers Josh and Patrick Grant made the news when their spat with tech giant Apple Inc. went public. Patrick Grant had inherited his late mother’s iPad – but not its password. Neither a death certificate, a copy of the will, nor a lawyer’s letter stating he was co-executor of the will would make the firm budge. A court order would have cost him hundreds of pounds.

While Apple finally relented, the Grants’s case highlights the increasingly complicated issue of digital legacies. Online banking, investing and other activities are convenient, but they can cause headaches for heirs when not included in estate planning.

“The issue of managing finances that have been stored electronically is much more common than 10, or even five, years ago,” said Suzana Popovic-Montag, managing partner at Hull & Hull LLP, a Toronto-based firm that specializes in estate and trust planning.

As the executor of a will, she added, “if you don’t know the password, or the user ID, you can’t get into it.”

Without such information, she said, “we are going to have delays. We are going to have situations where individuals may insist on probate to prove that you have access to these accounts. Or you might have to get a court order.”

Online bank accounts are only one aspect of the problem, said Leanne Kaufman, head of Royal Bank of Canada Estate and Trust Services and a member of the Society of Trust and Estate Practitioners. “It could include intellectual property that is only on someone’s hard drive, or if they were a writer, or had photographs that they consider intellectual property.

“It could also include, believe it or not, avatars in online worlds and games that may actually have inherent value, that can be sold or traded, and that may be an asset of the estate, if it has sufficient value.”

Estate planners should create a list, says Ms. Popovic-Montag. “Here’s what I have, and here’s how you access it. It means sitting down and thinking of every single thing that you do on the computer, that you do remotely or somehow access through social media.”

The problem, however, is that users frequently update their passwords or switch accounts. “It’s not static information,” said Ms. Kaufman. “It’s dynamic information.”

Not surprisingly, a slew of new companies have set up shop offering to store passwords or sell software allowing users to do so on their own.

Joe Henderson co-founded Minneapolis-based Estate Map, in 2013 together with Chris Huber, a software engineer with a masters from MIT. The company, which “helps you create a comprehensive map of your most important information, assets, and wishes,” was inspired, he said, by the realization that he had photos of his children on a half-dozen websites and devices, many of which his wife could not access.

As an estate attorney, he said, he has watched families “scramble and pull their hair out about their inability to access really basic information. … Real money is left on the table.”

The amounts of money in unclaimed assets is considerable. In the United States, state governments, to which by law unclaimed bank accounts and safe deposit boxes are turned over, are sitting on more than $58-billion worth of assets, Mr. Henderson said. The Bank of Canada reported last year that it was holding nearly a billion dollars in unclaimed bank accounts and unredeemed bonds.

According to Ms. Kaufman, RBC includes “triggers around digital assets” in its planning materials for clients.

People who are planning their estate should be seeking advice about online accounts and digital assets from a lawyer or financial adviser, said Ms. Popovic-Montag.

“We have seen a trend toward people who are doing estate planning also talking about a digital will,” she said, “and creating an infrastructure to deal with that. Like saying, ‘I want a digital executor, someone who is computer savvy to be able to deal with my accounts.’”

Mr. Henderson says, “We are just now as a society beginning to realize that this is a growing problem. I think 10 years from now it is going to be a rule,” he said, “and people will think of this even before they think of doing a will.” 


Posted by tomnoel754 at 5:50 AM EDT
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Sunday, 3 July 2016
Clinton's Estate-Tax Plan Doesn't Address Her Own Tax Planning

January 13, 2016 — 4:00 PM ALMT
 Democratic presidential candidate Hillary Clinton’s call Tuesday to increase taxes on the wealthy and close “loopholes” didn’t address the candidate’s own moves to shield at least part of the value of her New York home from the estate tax.
Bloomberg News reported in 2014 that Hillary and Bill Clinton created residence trusts in 2010 and shifted ownership of their Chappaqua, New York, house into them in 2011, according to federal financial disclosures and local property records. Such trusts offer tax advantages, in which any increase in the house’s value can be excluded from the Clinton’s taxable estate. The trust could save the couple hundreds of thousands of dollars in future estate taxes, a tax specialist told Bloomberg News in 2014.
The trusts, as well as the “loopholes” she proposed closing in other areas on Tuesday, are legal under current tax rules. Brian Fallon, a Hillary Clinton spokesman, said, “Their tax rate was over 35 percent in 2013, and she is proposing policies that would raise their taxes further.”
The minimum value of the Clintons’ financial assets is $11 million, according to Hillary Clinton’s most recent campaign disclosure, which requires reporting within broad ranges of value. The couple has earned at least $30 million since January 2014, according to the disclosure. That income places them among the top .01 percent of American taxpayers, based on Internal Revenue Service data. Campaign disclosures show that the Clintons also own life insurance trusts, which can also reduce estate-tax bills estate tax planning.
Under current law, estates worth less than $5.45 million per person, or $10.9 million per married couple, are exempt from the 40 percent estate tax. Clinton on Tuesday proposed making more estates taxable -- those worth more than $3.5 million per person or $7 million per couple. She also wants to raise the rate to 45 percent. The increased tax would apply to four out of every 1,000 estates in the country and raise $200 billion over 10 years, according to a Clinton campaign aide who asked not to be named.
 On Monday, Clinton proposed creating a 4 percent tax surcharge for people with annual incomes of $5 million or more, a measure that would target just .02 percent of U.S. taxpayers and raise $150 billion over 10 years, the aide said. Clinton also said Tuesday she wants to close “loopholes” that create tax benefits for hedge-fund managers and the wealthy. Specifically, she wants to make it more difficult to build multi million-dollar individual retirement accounts, and prevent hedge funds from getting tax benefits by investing through Bermuda-based reinsurance companies.
After Clinton’s estate-tax announcement Tuesday, Michael C. Short, a Republican National Committee spokesman, tweeted a link to Bloomberg’s previous reporting on the Clintons’ residence trusts.

Jeb Bush Tax Plan Could Disrupt Real Estate And Small Business 

SEP 13, 2015 @ 06:58 PM 5,680 VIEWS 


Whatever the long-term effect of the Bush 2016 tax plan, there is one provision that may create something of a shock to both real estate and the financing of small business. In the “Backgrounder” for the Reform and Growth Plan, we read – “Generally, businesses would no longer be able to deduct interest payments.” The provision is seen as a corollary to another proposal

Under the proposal, businesses could fully expense all new capital investments, an approach that seeks to remove taxes on marginal investment returns. This would simplify the tax code and significantly increase incentives to invest in new machines, equipment, buildings, and other structures.

Devil In The Details

Now there are a host of devilish details that I would like to clarify about these proposals.  For example there is that word “generally” which can cover a multitude of sins and what exactly does “new” mean?  Is is it something I just bought for my business making it new to me or something that is really brandy new?  Makes a big difference when you are talking about real estate.  Also does the expensing apply to capital investments that would not be depreciable under current law such as land and does it apply to intangibles?

Hopefully more details will be forthcoming.


MIAMI, FL – SEPTEMBER 12: Republican presidential candidate and former Florida Governor Jeb Bush greets people during a Miami field office opening on September 12, 2015 in Miami, Floria. Bush continues to campaign for the Republican nomination. (Photo by Joe Raedle/Getty Images)  


Economists Think It Is A Great Idea


If you poke around you will find that many economists approve of changes of this sort.  A recent article in the Economist refers to the deduction for business interest as a “A Senseless Subsidy”.


In The Not So Long Run Though?


The economists may be right in the long run, but in my mind it seems that regardless of the ultimate benefit, the transition would be wrenching. The Tax Reform Act of 1986, sensible as it reforms may have been, was a shock to real estate values.  In a 1991 article in the CPA Journal  Roy Cordato wrote:





 The Tax Reform Act of 1986 has contributed to the decline of the real estate industry. The changes that have contributed to the decline of the industry include the elimination of the capital gains tax differential, the increase in the period for writing off taxes for depreciable real property, and the limitation of the deductions of passive investment losses. These changes have reduced the market value of real property, created an incentive for divesting real property, increased the difficulty of divesting real estate, and reduced the attractiveness of investing in new housing and construction.

The elimination of the deduction for business interest threatens firms that are reliant on debt financing.  It seems like it would make starting up very challenging and that when businesses hit a rough patch it would be equivalent to kicking them when they are down.

An Oversimplified Example

I’ve constructed a simple example to illustrate how the current system works and the effect that the change might have. My example sacrifices realism for easy math, but I think it shows the principles that are at work.

Joe inherited a bit of land from his uncle and has decided to build some housing on it.  The equity in the land allows him to take a mortgage to fund the construction cost – $275,000 (You can make it $2.75 million if that sounds too chintzy and scale the rest of the numbers up by a factor of 10).  Joe expects the net operating income (NOI) to be $24,000.  NOI is the rental income offset by the actual expenses of running the property including taxes, insurance and repairs, but not interest or depreciation.  A more hip term in some circle is EBITDA.

Joe has decided that he would really like his taxable income to match his cash flow.  In order to achieve this he will pay $10,000 of principal on his mortgage each year for 27 years and $5,000 in the final year. Under that scenario cash flow after debt service and taxable income will be $250 in Year 1 gradually increasing til it reaches $24,000 after the mortgage is paid off.  Joe will recover the principal payments through depreciation deductions.  In real life, they would not match on a year to year basis, but they will ultimately line up.  Over the 28 years in my simplistic scenario Joe would collect $672,000 in net operating income, pay $196,000 in interest (at 5%), $275,000 in principal and have taxable income and pre-tax cash flow of $201,000.

Under the Bush plan, things are different.  Joe gets to immediately deduct the entire $275,000 which is really cool if he has a lot of other income to shelter, but not so great if he doesn’t.  It would however turn into a net operating loss, which he would probably get to mostly deduct over the next several years.  Conceivably that could shelter Joe’s net operating income for the first twelve years or so.  It gets hard after that though, since neither the interest nor the principal is deductible.  Over the life of the scenario Joe has $672,000 in NOI and an upfront deduction of $275,000 for total taxable income of $397,000 and the same pre-tax cash flow of $201,000.

When Things Don’t Go So Well

A much more disturbing thought, one for which I will not try to construct examples is what happens with firms that borrow to finance receivables, inventories and to deal with irregular cash flow.  During periods in which inventory and receivables are stable there might be a pretty good match between taxable income and after-tax cash flow.  The notion that you could run into a rough patch during which there is barely enough operating income to cover your interest expense, but you are still generating taxable income because the interest is not deductible is frightening. The Economist article actually notes that eliminating interest deductibility could be quite disruptive.

But outside the public markets, taxing interest would bash a cohort of firms with low margins or that have over 75% of their balance-sheet funded by debt. In America the obvious victims are utilities, cable-TV firms and commercial real-estate firms. Many leveraged buy-outs would be in trouble. One private-equity chief warns, “You’re opening up a Pandora’s box…It would cause massive disruption and market turmoil.” Firms might rush to list their shares and issue new equity, causing the overall stockmarket to fall in the face of the extra supply of shares.

Taxing interest would hurt bits of Main Street, too. Small firms find it hard to raise equity. Farmers would find it more expensive to get loans to smooth the seasonality of their incomes. In Europe and Asia indebted holding companies are often used to control corporate empires: some of these structures would wobble.

My observations are of course anecdotal and perhaps not good evidence, but it seems to me that the entrepreneurs who pull themselves up by their bootstraps do it with debt more than equity. One of the big differences is that equity returns don’t have to be paid during dry spells, but interest keeps ticking and must be paid.  If operating income just covers interest where is the money to pay taxes, which would be required under the new system going to come from?

The Other Changes Affecting Real Estate

Bush’s plan eliminates the deduction for state and local taxes.  With the local taxes goes one of the subsidies to home ownership.  The other, the home mortgage interest deduction is not directly attacked, but there is an indirect assault.  Itemized deductions other than charity are subject to a cap.

The cap would limit the tax value of itemized deductions to two percent of a filer’s adjusted gross income. Since it is dependent on a progressive tax schedule, a filer in a lower bracket will be able to have more deductions as a share of their incomes. Low- and middle- income filers in the 10 percent tax bracket could deduct up to 20 percent of their income, while high-income filers in the top bracket could only deduct about 7 percent.

Someone with the maximum deductible mortgage balance of $1.1 million might be paying between $40,000 and $50,0000.  If their adjusted gross income is $400,000 the cap would limit them to about $28,000 total non-charitable  deductions.  If they have large medical bills or gambling losses, there might be no benefit at all from the mortgage interest.

 Winners And Losers

The Tax Foundation has done its analysis of the Jeb Bush plan and finds that all income groups are winners whether you score it statically or dynamically.  The plan, scored statically reduces federal revenue by $3.66 trillion over 10 years.  Dynamic scoring more than halves the revenue loss bringing it to $1.6 trillion. If that $1.6 trillion is covered by benefit cuts, the tax savings might look a lot less exciting to the lower portions of the 99%.

Putting that aside though the really big rate savings under the plan go to families with joint income over $151,200 which is where the 33% bracket kicks in under current law.  Even above that though those who live in high tax states, have large mortgages or use significant leverage in their businesses might find themselves far behind.

Of course  the economists will tell us that this will be good for us in the long run.  As John Maynard Keynes noted in the long run we are all dead and that

Economists set themselves too easy, too useless a task, if in tempestuous seasons they can only tell us, that when the storm is long past, the ocean is flat again

I’m thinking that the transition to non-deductible business interest might well be quite tempestuous.

Posted by tomnoel754 at 5:35 AM EDT
Updated: Monday, 27 June 2016 5:49 AM EDT
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Monday, 27 June 2016
A Guide to Helping Clients Complete Their Estate Plans

Apr 28, 2016

Too many people focus on their current financial circumstances and don’t think about the future until it’s too late.

There are varied reasons people avoid estate planning or making a will. A 2015 survey by CNBC showed that 38 percent of individuals with investable assets of $1 million or more have not consulted with a financial professional to establish an estate plan. Among individuals with $5 million or more, 68 percent were more likely to have a plan, compared to 61 percent of those with $1 million to $5 million in assets estate planning guide.

According to the Financial Planning Association and other professionals, common reasons people avoid estate planning include:

  • They don’t want to think about death;
  • They’re too busy;
  • They believe their estate is not large enough to require an estate plan;
  • They’re unsure over elements of their plan, such as how to distribute assets or who should be named a guardian for children;
  • They have life insurance and expect to receive an inheritance, so they believe no further planning is needed; and
  • They believe an estate plan is expensive, complicated and must include complex elements, such as multiple trusts.

The first hurdle advisors must overcome in convincing clients to set up an estate plan is outlining the potential benefits, which include:

  • Assuring their affairs are handled the way they wish;

  • Allowing them to avoid probate court;
  • Reducing estate taxes by placing property and other assets in trusts;
  • Making provisions to care for and protect children and other beneficiaries; and
  • Protecting their assets from unforeseen creditors or lawsuits.

More complex estate plans can also address issues of succession for a family business or provide for a family member who lacks the ability to manage his or her financial affairs due to disability or poor judgment. Trusts can be designed so beneficiaries receive an inheritance in stages or can name a trustee to oversee the distributions over time.

Getting Started

Helping your clients to begin to seriously consider crafting an estate plan is just a starting point. There are a myriad of questions that need to be answered and concerns that need to be addressed before the plan can begin to take shape. This burden can be overwhelming for many clients if left to their own devices. Here are some tips to help guide the conversation and keep everything on track.

Consider Key Elements

Before meeting with an estate planning attorney, help your clients identify key elements of their plan. For example:

  • Who should inherit assets and should the assets be divided? 

  • Who should care for their children if they cannot, including how to provide for children’s education? 

  • Who should handle their finances if they become incapacitated? 

  •  Who should administer their estate plan and distribute their assets?

  • Who should be the executor of their wills? This person will ultimately be affirmed by the court and act as a fiduciary representing their best interests and those of their beneficiaries.

Take Inventory

Make a list of current assets and liabilities that will help an estate planning attorney calculate clients’ net worth and determine whether the estate is subject to taxes. The list should include homes and any other property, such as vehicles, jewelry, artwork and any other objects of value. Other elements of the inventory include financial statements from bank, brokerage and retirement accounts; safety deposit boxes or safes; insurance policies and liabilities, such as mortgages, lines of credit and all other debt.

Determine the Beneficiaries

In most states and the District of Columbia, you can disinherit anyone except your spouse (unless your spouse waived that right in a marital agreement). Your clients should also designate secondary beneficiaries in case an heir dies or a designated charitable organization no longer exists after they die.

Should a Client Establish a Trust?

Beneficiaries can receive assets directly or through a trust. The decision to create a trust will likely depend on multiple factors, such as a benefactor’s age, health and the family’s financial circumstances. There are multiple types of trusts, but a common choice is a revocable living trust that manages and distributes assets and avoids probate after a client dies. If your client establishes a trust, you will need to work with the attorney to determine when the beneficiaries will receive the assets, how long the trust will exist and what happens if the beneficiary dies before the assets are spent.

Creating the Estate Plan

A client may want to work with more than one professional expert on an estate plan. Here are some of the more common members of an estate planning team and their duties:

Estate planning team — It is not uncommon for estate planning teams to include an estate planning attorney, tax professional and financial advisor (presumably you).

  • Attorneys can craft or update wills and trusts as needed and make sure the plan meets all federal and state requirements.
  • Tax advisors help minimize taxes owed by beneficiaries on the assets they inherit. 

  • Financial advisors ensure assets are managed specific to the client’s needs, goals and risk tolerance.

Take inventory and prepare — Essential documents and information the team will need or should create for an estate plan include:

  • Most recent wills, or first ones if clients have not yet had them drawn;
  • Trusts, either a client’s own or those in which a client, spouse or other heirs are beneficiaries;
  • Financial powers of attorney;
  • Prenuptial or marital agreements, if applicable;
  • Business ownership documents and information, if applicable; 

  • Advance directives, such as health care powers of attorney or living wills. Typically, these documents are drafted at the same time to ensure a couple’s wishes regarding life-sustaining treatment are carried out if they become terminally ill.

Review and update — Once an estate plan is in place, you should plan to review and update every three to five years or whenever your clients experience a life-changing event, such as:

  • The death of a spouse;

  • The birth or death of a beneficiary or fiduciary;

  • Moving to another state or country; 

  • A significant change in your client’s financial situation;

  • The purchase or sale of a business; 

  • Divorce or remarriage; or 

  • The client, spouse or a beneficiary becomes physically or mentally disabled.

The value of an estate plan goes beyond the time and money it can save your clients’ loved ones once they’re gone. Having an estate plan in place gives loved ones the assurance they’re taken care of and can serve as a valuable link between advisors and clients’ subsequent generations. 

Posted by tomnoel754 at 5:30 AM EDT
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