The Fiddler on the Roof Effect

Most American's live paycheck to paycheck. In 2010 the Kansas City Business Journal reported that as many as seventy-seven percent of American's are stuck in that rut. So if you're waiting for payday before you can go to the grocery store again, you can gain some comfort from knowing that you're not alone.

It stands to reason then that most American's are of the belief that they will never fall into the category we think of as being, “wealthy.”

There's the rub. Because lottery tickets fly off the shelves of your local store at a dizzying pace, and while you may not have hit that big number yet – somebody has. In fact, somebody becomes a lottery millionaire on an astoundingly frequent basis. More than 40 states allow lottery's within their borders, which means that almost every state is producing multiple millionaires each year.

I'll call this the Fiddler on the Roof Effect. Like Tevye, most of us dream of our own personal rags to riches story. “If I were a rich man,” was a hit for a reason. It appeals to our fantasies, and for at least a few of us, it actually happens.

Surprisingly enough, waking up one morning to find you have a whopper of a bank account balance is not always a good thing. Not on a personal level, anyway. While we may wish for riches, most of us don't have a very good handle on how we would deal with a sudden, massive infusion of cash. Whether it comes from a lottery win, a lucky trip to Las Vegas, or being the last contestant standing on a reality television show, handling your money well is a whole lot harder than most people think.

Remember Richard Hatch, the million dollar winner from the first season of, Survivor? Tax troubles introduced Mr. Hatch to a less than first-class tour of prison facilities in Massachusetts, Oklahoma, and West Virginia.

Imagine! You can go from rags, to riches, to prison, all based on good luck, bad luck, and a lack of good financial planning. It's happened before and it will almost certainly happen again.

Might there be a hit song someday called, “I wish I hadn't won that,” taken from an alternate version of Fiddler on the Roof? Maybe. Let's just hope you get the help you need, should you ever be so lucky to be holding a winning ticket.

Big numbers big problem

In September of 2010 the General Accounting Office issued a study that warned about the continuing problem of guardians taking advantage of the elderly they are responsible for protecting. It's an old story. Grandma or grandpa becomes feeble with age, they put their trust in a relative, or a friend, or a professional who they choose to rely on for their well being for the remainder of their lives – and the decision turns out to be a bad one.

Their health, their finances, and their peace-of-mind are all vulnerable, and where the is vulnerability, there are opportunists. When the relationship goes bad, the result can be tragic.

Guardianship and conservatorship are not legal relationships most of us put much thought into as we go through the day-to-day activities of our lives. Truthfully, most people have no real understanding of the benefits or risks of either option. Yet with an increasingly gray haired population, the issue of who we will turn to in our old age is becoming more important, and of greater interest, to a broader segment of our society every year.

Speaking of years, current estimates suggest that by 2030 there will be more than seventy million American's who are sixty-five years old, or older. Although many of us may be counting on a vibrant and healthy retirement that lasts for decades, that will not be the case for all of us. That reality has legal professionals, state legislators, and individuals increasingly wary, and worried about what harm may befall the elderly who rely on others to care for them in their golden years.

How you deal with your own future, or that of your parents, or in-laws, is a deeply personal decision. As time marches on and those decisions become more pressing, it is good to know that you are not all alone. There is help available. But there is risk, too. So often, that is the double-edged sword of life.

For an interesting look at how South Carolina is struggling with this issue, you can read Doug Pardue's story from the Post and Courier, published last year.

Estate Planning For Women (And the Men Who Love Them)

While important to both sexes, estate planning often affects women more profoundly. Women live longer on average and tend to marry older spouses, making them three times as likely as men to be widowed at 65. So for women, estate planning is a crucial part of retirement planning. And since they usually survive their spouses, women more often have the last word about how much wealth goes to family, charity or the taxman.

A fellow attorney (and award winning journalist) Deborah Jacobs recently authored an article in Forbes titled “Estate Planning for Women (And the Men who Love Them)” she indicated the below question is one every financially savvy woman should be able to answer. 

Question #1  

What key deadlines apply when a spouse dies?

Starting in 2011, a surviving spouse can add any unused estate tax exclusion of the just deceased spouse to her own $5 million exclusion--this is called portability. So a widow can pass on as much as $10 million, untaxed, through either lifetime gifts or her will. But portability is not automatic. To get it, the executor of the estate of the first spouse to die must file an estate tax return, even if no tax is due. Surviving spouses should see to it that the form is filed even if they have nowhere near $5 million of their own, because who knows what the future holds?

Nine months is also the deadline if you plan to disclaim (turn down) any portion of what you inherited from a spouse so that it can go directly to your children or other family members or into a trust for their benefit. The new tax law makes it more likely that spouses will leave everything to each other outright. Other couples may want to give the survivor the right to disclaim at least some money and have it go into a family trust or bypass trust, as it is also called.  This allows the survivor to make an informed decision based on her own financial resources and federal and state estate laws at that time. If you want to use this postmortem tax planning strategy, you need to keep an eye on the calendar.

Questions like this one can often trigger even more questions in your mind.  Please accept my invitation to schedule a meeting where we can discuss this topic and others that might be relevant to your estate planning.  Give my office a call to set a meeting.

 

Fuzzy math and big money go to court

How would you like it if a book that suggested you were worth somewhere in the neighborhood of $150 million to $250 million, hit the sales racks? Most of us would be flattered, or entertained, I suspect. Many of us would be left scratching our heads wondering how the figures got so inflated. But if you're Donald Trump and the book is about you, and your public position is that you're net worth is north of $7 billion, you just might be miffed. In fact, you might sue.

When the dollar values get this big, it can be quite a process to get to the bottom line and establish a real value of the exact wealth in question. There's no surprise there. But mix in some emotion, maybe a little bruised ego, and a potentially incendiary book title, and things can get litigious in a hurry.

The Wall Street Journal's blog page explains the particulars of this case reasonably well. You might want to take a peek at the post titled, “Donald Trump Loses Lawsuit Appeal.” It's a fair bet that Mr. Trump was no more excited about that headline than he was the original suggestion that his wealth was substantially less than he'd preferred the public assume it to be. But there you have it. Being a celebrity isn't all caviar and champagne.

Amy Winehouse got her will right

This commentary is taken from an article authored by Karen Datko in MSN Money on July 27, 2011.  It gets right to the core of a will and its potential importance for your estate. I wanted to share this with you.

The late soulstress reportedly wrote a will that excluded her ne'er-do-well ex-husband.

The late Amy Winehouse was many things to many folks -- fabulous talent, an inspiration to Lady Gaga, an addict who couldn't quite shed her demons all come to mind. Add to that list: wise estate planner.

Winehouse's revised will reportedly prevents any of her fortune, estimated at $16 million and most assuredly growing, from going to her ex-husband, Blake Fielder-Civil, widely regarded as the person who introduced her to hard drugs. Instead, her millions will be divided among her father, Mitch; mother, Janis; and older brother, Alex.

 "Let this be a lesson to both the famous and the obscure: A will is a good idea at any adult age," Ron Dicker wrote at DailyFinance.

Fielder-Civil, now serving a sentence for burglary and possession of an imitation firearm, might have inherited everything had Winehouse not put a new will in place. Tim Worstall wrote at Forbes:

However, the one thing, under English law, that divorce does not do is undo the presumption that the natural inheritor is the spouse. In the absence of a will the surviving spouse will inherit at least the bulk of any estate.

Even in the presence of a will written pre-marriage which states otherwise the surviving spouse, or ex-spouse, will again be the natural inheritor.

How would it work in the United States? It varies from state to state, but generally if you die intestate, your estate will go to spouse and kids, or parents or siblings if you are single and don't have children.

 Do you have a will? There's a good possibility you don't, even if you're well past 27. "According to an AARP survey, more than one third of Americans over 50 lack a will, living trust, or power of attorney," Kimberly Palmer wrote at U.S. News & World Report.

If you're a parent of minor children, consider yourself negligent if you don't have one. Liz Weston of MSN Money wrote: "No matter how icky you feel about planning for your own demise, you owe it to your kids to spare them the potentially ugly and drawn-out custody battle that could ensue if you don't make these decisions now."

Whether you are older than 27 or younger than 27, it may be worth meeting to discuss a will.  After all, it was a very smart move by Amy Winehouse and it could be equally beneficial to you. I’m available to schedule a meeting.

 

Behave yourself, or else

Anyone who has seen a legal drama on television, from a classic like Perry Mason to one of the new generation, such as Suits, knows that the spectre of disbarment is a guaranteed method of grabbing a lawyer's attention. The audience seems to become more interested in the story when something important hangs in the balance, too.

That risk of punitive action isn't an idle threat, either. Everyone who works in the legal profession is aware that there can be serious consequences for not maintaining a certain level of decorum in the courtroom, or for acting up in a public place.

Anthony Peters, a former Catoosa County Magistrate from Georgia knows this all too well. As reported in the Rome News-Tribune this week, Peters was removed from the bench, and barred from ever holding a judicial office in the state again.

Sometimes, truth really is stranger than fiction.

It could have been worse

Irene came to town last week and has left a lasting impression on hundreds of thousands in the process. No, this wasn't the famed actress, Irene Dunne. Accomplished and heralded as she was, Irene Dunne has gone the way of her contemporaries and is no longer with us. Similarly, Irene Cara the singer and actress who skyrocketed to fame with, ironically enough, a part in the movie, “Fame,” has faded from the spotlight. Her work is no longer in heavy rotation on the radio, or on HBO. This was another Irene. One that will be remembered for many years to come, I have no doubt.

Hurricane Irene gave North Carolinians, Virginians, Delawarians, New Jerseyans, New Yorkers, and New Englanders a rough time. Like our family and friends in Florida, Louisiana, and Texas, we are now personally acquainted with the realities of life in hurricane alley. The wind, the rain, the flooding, the loss of electrical power, mass transit systems being shut down, and even the inability to simply run out to simply grab a paper, or a cup of coffee, or a pancake breakfast all become spectacularly clear when it happens to you, personally.

With all the pain and suffering this story caused us, and the monumental expense of the clean up and repairs, it's worth remembering this – as hurricanes go, Irene was a weakling. Sure, she was big. From edge to edge the storm covered hundreds of miles. But when she came ashore in New York City she had weakened to very nearly tropical storm strength. Wind speeds of 74 miles per hour or more constitute a hurricane. Irene's winds were clocked at 75, just one mile per hour above the minimum standard.

That fact doesn't belittle the pain and suffering a storm of this size brings with it. And it certainly won't bring back any of the poor unfortunate men, women, and children who lost their lives to Irene. But it does give us some context to consider when the next storm marches across the Atlantic and takes aim at Puerto Rico, the Bahamas, Florida, or any other landmass that is populated by people who are very much like us.

Hurricane Andrew came ashore in southern Florida in 1992 with winds 100 miles per hour faster than Irene brought us. It wiped entire towns off the map as it moved over land. Hurricane Charlie zigged when it was expected to zag, and carried 150 mile per hour winds right into the heart of the Sunshine State. While Katrina matched Andrew's wind speed, even as it approximated Irene's size. The the detriment of the Gulf Coast.

The moral of the story is, we are not alone. Many of us, from Texas to the east, from Florida to the north, have experienced savage storms that have done considerable damage and caused millions of us us tremendous inconvenience. But as cliché as it may sound, it could have been worse for those of us who personally experienced, Irene.

Perhaps that is the silver lining to this big, black cloud, that has thankfully died of natural causes as it meandered north toward Canada only days ago. It really could have been worse – for so many of us.