Media Blitz!

Lots going on here at Smith Barid, LLC this month!

First, Mike and Richard were interviewed by Lyndy Brannen on the Good Morning show (WJCL ABC-22) last Tuesday. If you missed all the fun at 6:30 that morning, catch up on what you missed by clicking here. You’ll find the video clip on the far, right column of the page. Just click play and it’ll be like you were there!

Next on the agenda, Richard and Mike will be teaming with local attorneys Howard Spiva and George Lewis to bring back the popular local radio talk show “Never Settle for Less”. The show has a broad format and will NOT be a “law talk” show.

We’ll be covering a wide range of subjects and welcoming many local and national guests. The idea behind the show is to bring you information and entertainment that helps make you (even more) healthy, wealthy, and wise. Tune in to WTKS AM 1290 in Savannah each Saturday from 10am to 12pm EST beginning 3/14/09. If you’re outside our broadcast area (or are just a technophile) you can listen online here.

Finally, word on the street is that Mike has yet another television appearance coming up later this month. More on that to come…

If you’ve not already, check out our newsletter for regular updates from Smith Barid, LLC here and you won’t miss a beat.

Hope, Change, and the Inauguration

Tomorrow marks an historic point in our nation’s history. Regardless of your politics, most will, in one way or another acknowledge and take part (at least in some, small way) this watershed event.

Whether you’re a news junkie, or just occasionally glance at the coverage of this event, it’s hard to miss the scope and scale of what’s happening in Washington, D.C. President Barack Obama’s inauguration tomorrow will be the most elaborate, secure, and expensive in history.

The theme of the inauguration is “A New Birth of Freedom”. We know that President Obama’s theme for his campaign and fledgling administration is “Hope and Change”. What does it take to deliver the opening of this new administration, this bridge to a place of hope and change? A massive undertaking, a show of powerful organization and funding to rival all inaugurations before.

According to news reports, “Obama will wear bullet-resistant clothing, speak behind a protective glass shield and ride in the parade in the armored Cadillac limousine, with doors and windows so thick that he probably would survive a bomb blast.” There will be 58 different agencies working on the project and the price tag to the Presidential Inaugural Committee alone will be around $45 million.

In order to create this event and set the stage for the new president to pass his legacy on to the country, it was required that his team plan not just for what’s probable, but for what’s possible.

The same is true for you as you contemplate what’s necessary to assure a smooth transition for those you love in the event you become incapacitated and when you, ultimately, pass away. It is critical that you leave as few things as possible to chance. A properly created estate plan will help you to create this kind of security for those you love.

At a bare minimum, a good basic estate plan will include a will and/or trust, a durable power of attorney, and an advance directive for health care. A carefully designed plan, set up for you by a qualified estate planning attorney, will go even further to anticipate (and smooth over) as many of life’s bumps in the road as possible.

So, whether you take time out of your day tomorrow to watch the inauguration live, or you catch the highlights on tomorrow’s evening news – let this ceremonial transition of power remind you of the responsibility you have to assure just such a seamless transition for those you love and may, someday, leave behind.

Protect Yourself and Your Family from the Costs of Long Term Care

The odds that you will end up in a nursing home before you pass away are high. Some studies show the probability of adults over the age of 65 needing a Long Term Care stay at some point during their lives nearing 50%.  Most folks, including many of the clients we meet with in our estate planning practice have no plan to minimize the burden on their estates and their families.  The truth is that people often avoid facing the reality of the Long Term Care threat, avoid taking action while they still can and avoid discussing their Long Term Care plan with their families.

The odds of falling prey to Long Term Care are staggering and the cost can be even more so.  A year in a Georgia Nursing Home averages more than $40,000.00 and promises to keep rising.  Many Americans hold the mistaken belief that Medicare and Medicare Supplemental Insurance will cover Long Term Care.  At best, Medicare covers only part or all of the first 100 days of care.  Most Long Term Care costs are paid out of your own pocket.  Once your assets have been spent down to the applicable poverty level ($2,000) you may qualify for Medicaid, a government Long Term Care program. Medicaid is a welfare program.

Against this backdrop, Long Term Care Insurance (LTCI) has become one of the fastest growing insurance products in the country. Fortunately LTCI can be designed to fit almost any budget. Most LTCI policies share some common features you should know and should be looking for:

1.  Benefit Amount: How much will the policy pay?

2.  Benefit Triggers:  When will the policy pay benefits?

3.  Inflation Protection:  Will the purchasing power increase?

4.  Level of Care: Are Custodial and Intermediate Care covered, along with Skilled Nursing Care? Is Home Health Care covered?

As with any form of insurance, the policy is only as good as the ability of the insurance company to pay your claim.  Check out the financial strength and reputation of the insurance company and seek competent legal counsel to interpret the contractual provisions of any LTCI policy before you sign on the dotted line.  As always, when considering these types of planning strategies, talking with a competent estate planning attorney before you sign any contract is a must.

How Will You Be Remembered

As estate planning attorneys, we spend a great deal of time helping people to write the final chapter of their own lives, as opposed to letting the government or others write it for them. In many cases, this involves the precise use of wills, trusts, directives, and other estate planning tools to be sure a person’s assets and medical wishes are seen to exactly as that person wishes.

Another aspect of creating that final chapter, however, is giving thought to how you’d like to be remembered very soon after your passing. Do you want an elaborate service with certain music, flowers, poetry and the like? Would you prefer a more sedate memorial in a modest setting with just close friends and family? Like all other aspects of your planning, you should pay attention to these details in order to best smooth the way for those you leave behind.

I’m thinking about this today because, recently, I attended two funerals. The services played out in stark contrast to each other.

In the first case, the woman who passed had been ill for some time and had given time and attention to what she wanted her memorial service to look like. She was well-loved and the chapel was standing room only. A friend had created a beautiful slide show for her, a montage depicting all stages of her life. That show was played on a digital screen while another close friend played and sang a favorite song of hers.

There were beautiful flowers but most of the money that would have gone towards flowers was directed toward a favorite charity of the woman who passed. She’d made those wishes known to her family ahead of time.

I don’t know the family well enough to have asked about the preparations and what sort of effort it took to create such a beautiful memorial. However, I can tell you that no one was rushing around frantically, the whole service was beautifully presented, and the entire service felt like it had been custom-created for this particular woman.

The other memorial service was actually very nice as well. It was much simpler and there were fewer people in attendance – though this person was also well-loved and had many friends. An aspect of this service which struck me as particularly moving was that each attendee (since the attendance was relatively small) was given an opportunity to say something about the dearly departed. Some people talked about his many fine qualities as a family member and friend. Others had wonderful (sometimes tearful, sometimes very funny) stories to tell about him. At the end, everyone felt a part of the service and a little closer to the deceased and his family.

In this case, I do know the family well. Though I did not ask, the person on whom the duties fell to put the service together was quite candid with many in attendance about how difficult the service was to put together in such a short period of time.

The man who passed had, like the woman in the first service, been ill for quite some time. However, he did not make his wishes known as clearly to his friends and family.

As it turned out, the service was beautiful and meaningful. That, however, was due to the herculean efforts of the family member who took charge. The family member lived out of town, making his task even more challenging.

So, in the end, the difference was not in the extent to which the services were meaningful or moving – both were. The difference was in the burden placed on the family members left to make the final arrangements.

We all mourn in our own way. Each of us wants to be remembered in our own way. None of us wants to leave a burden for our family or friends to carry in the difficult days following our passing.

Take some time very soon to give your wishes careful thought. Then put those wishes down on paper so that those you love will know where to find them. A qualified estate planning attorney can help you to get this process started.

Paul Newman’s Will

Paul Newman’s will showed up on the internet over the weekend.  Here’s a link http://tinyurl.com/5at7eq.  The will has been filed in the probate court in his hometown of Westport, Connecticut.  The will contains all of the details of Cool Hand Luke’s estate including the fact that he left his Academy Awards from The Color of Money to his Newman’s Own Foundation and that the bulk of his estate including his production companies to his wife Joanne.  The will designates that some property be distributed to the Trustee of the Paul Newman Living Trust Number One.  I’m curious as to why the assets mentioned in the Will were not funded into the Living Trust.

Keeping it in the Family

You may be hearing daily from family, friends, financial advisors, and the talking heads of every cable news station about the turbulence of our current economy. You may feel by turns worried, confused, and uncertain.

However, with the right team on your side, you and your family will weather this storm. Instead of keeping constant vigil with the 24-hour news and financial networks – talk with you advisors. You’ll get a realistic assessment of your situation, helpful ideas about what to do right now, and a welcome respite from many in the media who look for ways to boost your tension and, thus, their ratings.

Most of the factors contributing to our current economic situation are beyond our control. There are, however, things you can do to assure that you, your family, and your assets are protected now and in the future. At Smith Barid, we find that helping people take control of the things they can control creates true peace of mind.

One of the important things you can control is what happens with the legacy you’ve worked so hard to create once it passes to your children and grandchildren. We all acknowledge that the divorce rate in our country is staggeringly high. If one of the loved ones you leave behind finds themselves in the middle of a divorce, will some or all of your hard-earned assets leave the family along with the soon-to-be ex?

Divorce (a major part of what many call Family Law) is a complex, and often difficult, process. One of our local Superior Courts (the courts in GA which handle divorce matters) just released an attorneys’ guide to property division in divorce. The memo is 14 pages, single-spaced, with 8 footnotes. This isn’t simple stuff. It is important to know, however, that the only assets divided by a judge or jury (Yes, GA still allows juries in divorce cases!) in a divorce are marital assets.

Proper planning done now can prevent your hard-earned assets from becoming marital assets of your children. That is to say, the right kind of revocable living trust or testamentary trusts will allow you to pass your legacy to the next generation without those assets being subject to division in a future divorce.

A qualified estate planning attorney will help you to seize the reins of your legacy, control what you can control, and find your bearings in this transient maelstrom of anxiety-ridden news stories.

What Everyone Should Know About Protecting Themselves in a Recession

Six Steps You Can Take to Minimize Your Risk in Uncertain Times

1 – Control What you Can Control

The tremendous turmoil in financial markets and financial institutions has caused a great deal of concern for many of us. It’s important to realize that, while we cannot control what happens in the stock market, we can control what we do with respect to our estate planning. Now, more than ever, it is vital to have a plan in place that will protect your assets, provide for your family and spare them the burden and expense of probate. These are things over which you have control. By taking control over the things in your life that you can control, you will be left with a wonderful sense of empowerment that will make the uncertainties of the world seem less scary.

2 – Turn Off the Television

This piece of advice goes along with number one. What is happening on Wall Street as the markets correct themselves is something which is out of your control. Other than doing your civic duty and voting when it comes time to, neither you nor I can do much to affect what happens in the global economy. So, why worry about it. Stressing out over whether Congress passes a bailout bill and what happens in the stock market is not going to help you make any decisions about what you need to do and adds stress unnecessarily. So do yourself a favor and turn off the TV.

3 – Insurance

Based on your age, your income and your asset level, make sure you have enough insurance in place to protect you and your family in the event of death, disability, or a long term medical condition. This is one of the most important things you can do to protect your family. This also falls under the heading of things WE CAN CONTROL. By having an appropriate amount of insurance in place, you can make sure that your family will be taken care of if something unexpected happens to you. And oh, by the way, it’s far more likely that you will suffer a disability than death anytime soon, so make sure that you have adequate disability insurance in place to maintain your lifestyle if you can’t work any longer. Almost as important for those over fifty is to make sure you have long term care insurance in place. As time goes by rates for long term care insurance will rise and now is the time when you can lock in a premium.

4 – Business Succession

If you own your own business, now is the time to make sure that there are plans in place to transition your business to the next generation. Seventy per cent (70%) of family businesses in the United States do not survive past one generation and only three per cent (3%) make it to the fourth generation. Having the right plans in place and establishing the right relationship between your family and your business are keys to long term success.

5 – Savings

Now is the time to focus on frugal living. If you do not work with a financial advisor currently, sit down with one today. The real value you can get from working with a financial planner it to take a serious look at what you are spending money on and what you can cut to increase your savings. Also, if you have any lingering differences with your spouse over money, this is the best way to get those issues out in the open and discuss them with an unbiased and neutral third party.

6 – Living Trust – FDIC Protection

Because of the increased protection your assets can have from the FDIC in a Living Trust, now may be the perfect time to set up a Living Trust for the protection of yourself and your family. Under new FDIC rules, accounts held within a Living Trust have FDIC protection of $100,000 for each beneficiary of the trust. This can greatly increase your level of protection. For more info on this here’s a link to an article on Bloomberg.

The Silver Lining in Tough Economic Times

The economy is weaker than it was in the late 1990s. Interest rates have been rising. Food and energy prices have been skyrocketing. Home prices have been falling. It is getting to the point that we don’t even want to watch the news anymore.

However, there is a silver lining behind the dark economic outlook. As home prices fall and interest rates rise, one estate planning strategy for persons with taxable estates becomes particularly attractive. A Qualified Personal Residence Trust or “QPRT” is a great way to get the value of your home out of your estate for estate tax purposes at a discount. You transfer your home to an irrevocable trust you set up for that purpose. You retain all rights in the home for a period of years, which you select. After the expiration of the period, you can continue to live there by paying rent to the trust (which further helps diminish your taxable estate). The amount an individual can leave estate tax-free is $2 million, rising to $3.5 million in 2009, but then falling to only $1 million in 2011. If you have less than $1 million in assets, a QPRT may not be an appropriate estate planning strategy for you.

Let’s look at an example. In 2003, your home was worth $500,000. Today, it is worth $400,000. The interest rate used by the IRS was 3% in 2003. Let’s say that at the time of your transfer that interest rate has increased to 5%. Let’s further assume you are 70 years old and keep a retained interest for 8 years and then pay rent. The actuarial value of the remainder interest gifted to your kids in 2003 would have been approximately $292,000. If you did that same transaction in today’s environment with the home at $400,000 and the interest rate at 5%, the value of the gifted interest would be less than $200,000. That’s about a 31.5% reduction in the value of the gifted interest. Let’s say your home goes up in value to $800,000. You will have gotten the whole thing out of your estate for a value of less than $200,000! This preserves more of the amount that can pass estate tax-free to be used for your other assets.

As you can see, this is a great time to think about this strategy. The higher the interest rates and the lower the home values, the more powerful this strategy becomes. There may not be much to be thankful about in economic news nowadays. But, this can be a great time for certain estate planning strategies like this one. A qualified attorney who focuses his or her practice in estate planning can help you design and implement a strategy for these tough economic times that meets your unique needs.

Ashes to Ashes

What happens after a person’s remains are cremated? According to a recent AP story the answer is often – nothing at all.

Cremation has risen in popularity as a means for families to deal with a loved one’s mortal remains. There’s no real surprise there, considering concerns of cost, space, etc.

What is surprising is that many of those families wind up leaving their loved one’s cremated remains with the funeral parlors or crematories indefinitely.

Apart from a sort of morbid interest, of what value is this information? Well, it brings to light the importance of making clear your intentions for all parts of your estate (including your Earthly remains). Does your family know what your wishes/instructions are for your funeral, memorial, burial/cremation, and ultimate laying to rest?

The right estate plan, drafted by the right estate planning attorney, should give you the chance to make those wishes clear. Give careful thought to how you’d like things to go. Make sure you take the opportunity to put those wishes down on paper in a way, and a place, where the right people will be sure to discover and understand them.

A Reverse Mortgage Might Not be the Best Idea

This New York Times article points out some of the drawbacks to reverse mortgages.  These include high fees and pressure from salesmen to invest in high risk investments.  Not all reverse mortgage salesmen are charlatans, but it is important to fully understand what you are getting yourself into with a reverse mortgage.  The things to consider are what are the fees the mortgage company will charge, what is the interest rate and how much money are you going to be able to take out of your home.  Also important to consider is whether you want to leave the home to your heirs or beneficiaries.  If you do, a reverse mortgage can create a situation where the payoff is greater than the value of the property upon your death.  If you are considering a reverse mortgage transaction, talk with your estate planning attorney and your financial advisor first to see if the mortgage you are considering is a good deal and what your other options might be.

Here’s the link:

Tapping Into Homes Can Be Pitfall for the Elderly – New York Times