We’ve noticed a really unusual real estate trend lately as families look for ways to increase their cash reserves by selling off long-held properties.

They’re not selling vacation cabins or those condos they bought as investments. Frankly, the residential real estate market has not recovered enough for anyone to make decent money doing that.

Instead, some clients are raising quick cash by selling off family burial plots.

A Really Grave Decision

According to a recent article in the Wall Street Journal, “Selling the Family Plot” (http://digg.com/u1DU4w), cemetery and funeral property web sites are reporting a burgeoning marketplace for the sale of burial plots. As the recent economic meltdown got worse, people started liquidating these assets to make ends meet – or simply to make a profit.

For instance: A couple bought a double plot in 1990 for $1,500. Today, a cemetery might sell the same plot for $4,500. If the couple unloads those plots on the secondary market, they could raise as much as $2,800.

That might be enough for cash-strapped families to decide heaven can wait if they can get back money that they can use for bills they need to pay now. This is one possible strategy to consider if your family needs to raise some quick cash.

Many plots have been held by the families for decades and can be sold for a great deal more than was originally paid. The WSJ article said plots sell quickest and cost the most in places where people tend to retire – such as Florida, Arizona, Texas and Southern California.

Some sellers have been known to offer previously occupied plots that are near or next to the resting places of celebrities. The crypt above Marilyn Monroe went up for auction on Aug. 14 and resulted in a final bid of $4.6 million, though the offer, from Japan, was later rescinded.

Existing Tenants

Is it too late to take advantage of this strategy if your family owns a multi-plot property that was partially used? In most instances, you can still move those remains to another single burial location and then be free to sell the larger family plot.

I caution you that that this isn’t as easy as posting a Craiglist ad or putting a “for sale” sign on the plot. You need to check with the cemetery to find out what the rules are.

Most allow owners to sell plots on the secondary market, but sometimes a cemetery will buy it back. Many cemetery operators reported their buybacks increased exponentially over the last year.

Flipping ‘Plot-perties’

On the other hand, now could be a great time for investors to buy burial plots for future sale and profit. With so many plots coming onto the market, sellers may be more willing to negotiate on prices.

Buyers need to ask what’s included in the price. Some properties will include burial costs and headstones. Just because you buy the land, doesn’t mean you won’t have to also buy an underground crypt.

As always, I hope this article has helped you and your family. If you have any concerns or want to talk about a specific case, please contact our office.

When we die or become incapacitated, the strategic planning we’ve put in place to provide for loved ones goes to work. The important things will be taken care of.

Our bills continue to get paid, out investments continue to grow for future generations, and any minor children are cared for by loving guardians.
It seems like we’ve thought of everything, but some of us risk forgetting about our very dependant four-legged family members.

What Happens to Fluffy and Spot?

Some pet owners never consider who will care for their furry companions after they die or if they become disabled or seriously ill. Many assume a relative or good friend will step up to the task.

That’s an unwise assumption on the owner’s part and one I’m sure Fluffy and Spot might especially take issue with.

Every year, the Society for the Prevention of Cruelty to Animals (SPCA) takes in a number of animals whose owners passed away. Usually a family member or neighbor drops the animals off. Most apologize and say that their loved one or friend made no plans.

Once cared for and loved, these animals have no home. Many will likely be euthanized.

Even Pedigrees Won’t Protect Them

Here’s one vivid example from an SPCA brochure that illustrates the need to make better plans:

One day a group of seven pedigreed dogs were dropped off at an SPCA: two Whippets, two Irish Setters, two Toy Fox Terriers and a Chihuahua. They came with AKC papers, newspaper clippings from when they were purchased, complete family trees and a thick file of medical records.
It was obvious their owner loved and treasured them, but when she was diagnosed with cancer she did not make plans for their care after her death. There was no chance that all these dogs that were raised together would be adopted to the same home.

A little planning today can help your pets avoid a similar fate.

Making Better Plans for Pets

Here’s a checklist to help you plan for your pets:

• Identify and designate someone (and at least one alternative) to assume ownership for the pets.
• Keep in touch with this person to ensure they are still willing, especially if a pet has special needs.
• Carry a “pet alert” wallet card listing names and phone numbers of the pet’s emergency caregivers.
• Authorize payments to provide food, veterinary care, grooming, exercise, socialization, etc.
• Use language in any documents that refers to “pets” rather than names to ensure no newly added pets will be left out and there is no need to update documents.
• Name a Trust Protector to oversee a pet’s new owner and any funds set aside for the pet’s care.
• Ask an attorney how to include language that will protect the pet in estate planning documents.

There are additional considerations to make, including deciding the criteria to be used to determine when it’s time to euthanize a sick pet, who will make the difficult decision and how that pet’s remains should be disposed.

I hope this article helps you and your family. As always, if you have any concerns or a specific case you’d like to discuss, call our office.

IIf you are a business owner, then you understand the importance of earning a client’s trust. They want a sense of your integrity and experience level. They want to know your motives are not just about making a buck and that you will look out for their best interests.

When you create a Revocable Living Trust, you must choose someone to assume the role of Trustee after you die or if you were to become incapacitated. Of course, this decision is not as simple as picking a favorite uncle or your eldest child. Choosing can be difficult.

What advice can I give you to help you pick an after-death or disability Trustee?

Roles and Responsibilities of a Trustee

First, understand the fiduciary duties of the Trustee. The Trustee manages the assets in the Trust in the best interests of the beneficiaries and makes decisions regarding how assets are invested or released.

You need assurances that your chosen Trustee is a responsible person who will carry out your wishes, make sound judgments and seek out professional advice when necessary.

Typically, this role is assigned to a spouse, relative, close friend, business associate, professional advisor, a corporate fiduciary. Sometimes, co-trustees are chosen from a combination of these candidates.

You Can Keep It in the Family

A relative can be a good choice as Trustee if he or she:

1. Is competent to handle the finances and will follow the Trust’s instructions
2. Has adequate time and a genuine interest to take on the role.
3. Will avoid family conflicts by being unbiased and unemotional when making decisions.

Corporate Fiduciaries as Trustee

Some Trusts are complex or may be designed to benefit heirs for many, many years to come. Banks and trust companies are regulated by the government and can manage Trusts for decades. Their advantages include:

1. They don’t die or become incapacitated.
2. They act objectively in following a Trust’s instructions.
3. They keep good records and have estate administration, tax and investment expertise.

Considering a Professional Advisor

Sometimes a family member, friend or a trust company will not be the right choice for you. They might be unavailable, unreliable or simply too expensive.

This can make choosing a professional familiar with your plans a good choice, providing there is no conflict of interest. The Trustee could be a financial advisor, an estate planning attorney, a tax professional, or a combination of these professionals.

Regardless of who you choose, the basic qualities of a good Trustee are the same: integrity, good judgment, and objectivity.

I hope this article has helped you and your family. As always, if you have a specific concern or case, please contact our offices. We are happy to help.

Many of my clients have spent decades building businesses right alongside raising families. They’re entrepreneurs, and I love that about them.

For as much calculating thought as they put into running successful businesses, many have never put any into who’s going to run the place after they are gone – whether by retirement or death.

They haven’t asked themselves how much money they might need in order to exit the business (retire) or under what terms they would transfer the business (sell). If they plan to sell, will the buyer be a relative, an employee or someone outside the picture?

It behooves me to help entrepreneurs realize the critical importance of proper succession planning.

“I Thought Junior Would Take Over”

Many mistakenly fall into a common trap of assuming one of their children will step in and carry on the family business. But let’s face it; sometimes our kids think our jobs are boring and want no part of it.

I know an optometrist, David, who wants to retire soon and regularly prods his adult daughter to take over managing his successful practice of three offices. He wants to hire another eye doctor to serve his patients and to receive income from the business during his retirement.

However, his daughter has never expressed any interest in running the business. She’s got a graduate degree in literature and enjoys teaching. Eventually, David, who is in his early 70s, will have to stop working. He’ll be forced to sell his practice for less than it’s worth or shut it down and miss out on any retirement income because he didn’t do any reasonable succession planning.

Nobody Wants a Family Feud

On the flip side, more than one child might want to take over a client’s business and a the conflict could tear the family apart.
For example: Tim ran a successful manufacturing company that makes pneumatic tubes. After he died, he left the business to his wife, Sue, with a small percentage of shares also left to each of their three children.

Sue is ready to retire. Their oldest child, Rick, has worked in the business since college and managed it alongside his mother since Tim’s death. Rick wants to buy out his two sisters to run the factory on his own. While she’s never managed any part of the business, his sister Kelly decided she wants the same thing. Unfortunately, they have no desire to run it together and Kelly refuses to sell her shares for less than a grossly inflated price.

Sue wants to keep the business in the family but has been unable to broker a decision that either side sees as fair. A legal battle is looming.

Don’t Put It Off, Do It Now

In the two examples I’ve shared, we have a father who is putting off succession planning to his own financial detriment and a mother too afraid of hurting anybody’s feelings to make a decision that’s best for the business.

Both situations could have been avoided through proper planning. I encourage you to make some decisions about what you want to happen to your businesses after you are gone. Consider what might happen if you don’t start to make some choices now.

As always, I hope this article has helped you and your families. If there is a specific case or concern you’d like to discuss, please contact our office.

One of the greatest challenges many of my clients face is how to protect their families from the rising cost of long term care – both for themselves when they reach retirement and for elderly parents.

For example, the average cost of staying in a Florida nursing home is between $5,000 to $6,500 per month, or about $60,000 to $78,000 per year. Since the average length of stay in a nursing home is three years, this quickly totals nearly a quarter million dollars. A family with a loved one in a nursing home would need about $3 million in income-producing assets to avoid drawing on the principal.

That’s why it is important to start strategizing now to determine how you plan to pay for long term care.

Three Ways to Pay

Typically, there are three ways to pay for long term care:

1. Self Pay – The patient will pay for the expenses out of pocket.
2. Long Term Care Insurance – This is essentially a wager between you and an insurance company. You pay premiums and betting that you will eventually need nursing home care. The insurance company is betting you won’t need the coverage and that it can keep all the premiums.
3. Medicaid – This government entitlement program assists low-income seniors who need nursing care. However, medical costs have risen so dramatically that even middle class patients can’t afford to pay. About seven out of ten nursing home patients receive Medicaid benefits.

Not Poor, Not Rich Either

If you are more likely to choose Option 3, then you should understand how Medicaid eligibility works. The rules are strict, but they are not impossible to meet.

Income limits are an issue, as well. This varies from state to state, but typically the limit is about $2,000 per month. In addition, Medicaid reviews an applicant’s financial records for the five years previous to their application. The government searches for uncompensated transfers – money or assets given away for free.

What if you earn $2,500 per month or $3,500, or $4,500? These amounts are not enough to pay for care but will disqualify someone from eligibility.

State by state, there are strategies that can help you with the dilemma of having too much income to qualify for Medicaid but not enough to pay for care. Sometimes these are called a Qualified Income Trust or a Miller Trust.

There are a variety of tools available for preplanning to cover the costs of long term care, and I encourage you to act now rather than wait.

I hope this article helps you and your family. As always, should you have a question or concern about a specific case, contact our office.

This is an idea that should have been brought to fruition a long time ago. The federal government has a tool consumers can use to evaluate nursing homes: medicare.gov/NHCompare

According to an article in the Wall Street Journal, the Centers for Medicare and Medicaid Services, or CMS,  started ranking facilities in December based on government inspection results, staffing data and quality measures. The “Nursing Home Compare” system reviewed 16,000 facilities and ranked them with 1 to 5 stars.

Visitors to the site can locate ratings for the facilities by searching for the name of the home or by entering a zip code, city, county or state.

The Wall Street Journal has published an excellent analysis of the effectiveness of Intentionally Defective Grantor Trusts during an economic recession. Unusual Trusts Gain Appeal in Unusual Time – WSJ.com.

While these trusts carry risks and are often scrutinized by the IRS, estate planning lawyers are seeing an increased interest in them this year. With proper structure, an IDGT can yield better returns for heirs than other strategies.

I recently wrote about IDGTs as part of a series of wealth protection articles I published for my firm’s clients last year.

When most of you bought your first home, you probably signed a deed as a joint tenant next to your spouse’s signature. That’s the way your parents and grandparents did it, and the real estate agent told you it would to protect the surviving spouse from probate court after one of you dies.

It’s not unusual for the surviving spouse to assume that, because joint tenancy worked well to avoid probate the first time, it will work just as well twice. In thinking this way, the surviving spouse adds an adult child to the deed.

But there’s a trap in joint ownership with a child that you might not know.

Dad’s Dutiful Daughter

Here’s a hypothetical to consider:

Five years ago, Edward became a widower and sole owner of a home and three rental properties he bought with his wife. Edward has two adult daughters, Gwen and Stacy. Stacy has three minor children.

Edward is disabled. Gwen visits daily to do light housekeeping and processes his bills and the bookkeeping for the rental properties. Edward assigns her as joint tenant on deeds to his home and co-owner of the rental properties. Stacy lives in another state and isn’t involved in the upkeep of the properties.

Edward’s will indicates he wants both daughters to benefit equally from his estate and for a portion of its value to be set aside for his grandchildren. Despite this, Gwen will legally own the properties upon his death. The joint tenancy could cause Edward’s other daughter and grandchildren to be unintentionally disinherited.

Disaster Strikes, Estate Targeted

However, while Edward is still alive Gwen causes an automobile crash. She is unable to pay her medical bills and her debt goes into collections. The other driver in the crash was seriously injured and sues Gwen for damages. In the midst of this lawsuit, Gwen’s husband files for divorce, seeking half of his wife’s assets.

Any property she owns, including assets she shares with her father, is in jeopardy of being seized.

The Joint Tenancy Trap

Wanting to protect his estate, Edward decides to remove Gwen from the joint tenancy and then sell the properties. However, Gwen refuses, saying she deserves half the assets as payment for her caretaker duties. Edward must seek a court order to remove her from the deeds.

Even if Gwen had never faced debt problems, a nasty divorce or lawsuits, Edward’s final wishes for his estate might still have remained in jeopardy.

As you can see from this extreme example, the downsides of joint tenancy far outweigh any upsides. I urge you to consider these risks carefully before holding property in joint tenancy with an adult child.

I hope this information helps you and your family. As always, if you have a question or concern about a specific case or issue, contact our office.

Most of our clients have Living Wills establishing instructions that mechanical life support should not be used if they have a terminal condition. However, many clients also have a desire to donate organs upon death.

There are distinctions to understand regarding these complex issues.

Recently, a client told us about a relative who received a kidney transplant. Hospital staff told her that a Living Will prohibiting the use of life-prolonging machines can sometimes trump a person’s wish to become an organ donor.

That’s not necessarily true – but it’s not entirely false, either.

People die of organ failure every day and there is a shortage of donors. Last year, 27,958 people in the United States received organ transplants from 14,199 donors, according to the Organ Procurement and Transportation Network. As of March 19, more than 101,283 people remained on recipient candidate lists.

In most states, a patient’s family is consulted and will be asked for final consent, even if the patient signed a donor card, had indicated a desire to donate on a driver’s license or was listed with a donor registry.

Only a small percentage of patients will meet the criteria to become donors. The typical donor suffered a brain injury due to an accident or a medical condition that deprived the brain of oxygen, such as a stroke. Life-saving efforts have failed and the patient has become clinically brain dead, but the body’s organs are still functioning.

It is at this point a narrow window for organ donation opens and when a conflict can potentially arise between a patient’s Living Will instructions and his or her desire to donate organs.

Once the body dies, the organs are no longer viable for transplants. There are other forms of tissue, such as bone, cornea, and heart valves that can be removed up to 24 hours after the person dies.

It’s not difficult to avoid a conflict between your wish to not be placed on mechanical life support and your desire to donate organs. It involves some simple planning and a conversation with your loved ones.

We recommend you do more than sign documents with an attorney. Living Wills, advanced medical directives and organ donation are things you should talk about with your family. Make your wishes known in advance and put it in writing.

For more information about organ donation, visit OrganDonor.gov and LifeLinkFound.org.