If you're looking for some pearls of wisdom regarding the future of the federal estate tax, don't look here.  All we can do is report on the latest musings from our esteemed legislators, as reported by syndicators and bloggers alike.

So, here is the latest think, as  published on June 11th, 2010, by the Wall Street Journal.  It's a somewhat insightful, somewhat humerous, article written by David Kocieniewski entitled "What an Estate Looks Like to the Taxman."  Give it a read and drop a comment below so that others can gain your perspective.

Thanks to Attorney Joseph Hahn who brought this article to my attention via his blog entitled, "Hahn's Estate Planning Blog."

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The Better Business Bureau is again warning individuals, particularly senior citizens, to watch out for investment scams and schemes that seem too good to be true.

A common technique to lure people in, according to a report by the Better Business Bureau of Southeast Texas, is the offer of a free financial seminar over lunch.  In an article written by Jennifer Johnson and published in the Examiner, The Independent Voice of Southeast Texas, it was reported that the Securities and Exchange Commission had shut down a Ponzi scheme that stole $20 million from retirees in California and Illinois. The article stated that, "The scammers invited senior citizens to estate planning seminars and later coaxed their victims into buying promissory notes for purported Turkish investments."

You can read the entire article here.  But, be careful and pay attention to that old adage that goes something like - "If it sounds too good to be true, it probably is." 

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In a private letter ruling, the IRS has ruled that income earned by California registered domestic partners will be treated as community property for federal income tax purposes.  Apparently, this is the first time that the IRS has acknowledged same-sex couples as a single tax unit.

Although we have just received a copy of the private letter ruling and have not had an opportunity to study it in detail, the Wall Street Journal has published an article on it by Laura Meekler.  Attorney Joseph Hahn also wrote about it in "Hahn's Estate Planning Blog."

For a fairly good explanation of the practical implications of the IRS' new position on the application of the tax laws to same-sex couples, take a look at Attorney Hahn's article cited above.

The IRS ' Private Letter Ruling (Number: 201021048) was released on May 28, 2010.  To read the IRS' Private Letter Ruling in its entirety, please click here. 

If anyone has any further insight into this new development, we'd certainly appreciate a comment below.

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In today's post in Wills, Trusts & Estates Prof Blog, Prof. Gerry W. Beyer indicates that Oklahoma has become the 44th jurisdiction in the United States to have specific legislation authorizing pet trusts. 

The new law (60 Okla. Stat. § 199) will take effect on August 27, 2010.  However, Prof. Beyer has published it on his blog - and it's a lot more readable on his blog.  Just click on the link above to take you there.

For those who are interested in the pet trust laws of the various states, we will be developing a section detailing the pet trust statutes of each of the various states that have - or are considering - such statutes.  We'll let you know when that section is viewable.

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Attorney Julie Garber recently wrote an article entitled, "how to find an estate planning attorney, which appeared in About.com:Wills & Estate Planning.  Of course, once you've found an estate planning attorney, the next question she asked is "how will you know if he or she will be the right one for you?"

Good question.  And, naturally, Attorney Garber followed up with a list of six questions to ask a prospective estate planning attorney.  We've reproduced them right here, but you'd be well served if you took a look at Attorney Garber's article - and others that she's written on this and similar topics.

1. Is the attorney's primary focus on estate planning? Depending on the type of advice you're seeking, you may only need a general legal practitioner instead of a seasoned estate planning veteran.
2. How many years of experience does the attorney have? Estate planning documents prepared by a veteran attorney have withstood the tests of time.
3. Does the attorney assist clients with properly funding their assets into a revocable living trust? If not, then be fully prepared to take on this task yourself, otherwise your estate plan won't work the way you expect it to work.
4. Does the attorney have a formal updating and maintenance program? Putting your initial estate plan together is only part of the process. As time goes by your estate plan will need to be reviewed, tweaked, and possibly overhauled as your personal and financial circumstances change.
5. Does the attorney charge a flat fee or an hourly rate for providing estate planning and other services? Understanding how legal fees will be charged is one of the keys to being comfortable working with any attorney.
6. Ask yourself: "Can I see myself working closely with this attorney?" Even if the prospective attorney answers all of the other questions to your satisfaction, this is the most important question that you need to ask yourself. If you aren't comfortable with the attorney, then chances are you won't be happy with the attorney's work. But don't be alarmed - it's better determine this sooner rather than later. Simply move on until you find an attorney who you feel comfortable enough to trust with your personal and financial information.

To find out more about Attorney Garber, including her other publications, please click here.

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I previously wrote about the so-called "stretch" IRAs or, as some like to call them, "stretch and protection" IRAs.  Whatever the name, the importance of this type of IRA is that, upon your death, your children and/or other beneficiaries can take the money in your IRA over their lifetime rather than in a lump-sum.  This has the potential of greatly increasing the benefits to the beneficiaries because the tax deferral of investment earnings can continue during the lifetime of the beneficiaries and the overall income taxes can be substantially lowered.

Radon Stancil, CFP®, and Rick Parkes, LUTC® of Diversified Estate Services have written an article entitled, "Maximizing your money through stretched IRAs," which explains the benefits of a stretch IRA.  Because the article isn't too long, I'm reproducing it in its entirely right here:

"Since their introduction in 1974, Individual Retirement Accounts, or IRAs, have become a cornerstone of many investment portfolios, providing a road to financial security for millions of Americans. In setting up a will or trust, however, many people unknowingly miss the opportunity to maximize the value of their IRA or 401(k), which is often times the biggest asset left to heirs. As a result of this missed opportunity, most beneficiaries who inherit IRAs end up paying more taxes than what’s necessary.

The best way to maximize an IRA intended for an inheritance is to set up a 'stretch' by taking advantage of an important IRS tax code provision.

Before 2002, beneficiaries of an IRA, 401(k) or other type of retirement plan, had no other option than to receive their inheritance in a lump sum. This led to huge tax liabilities, especially in cases where these inherited IRAs were large.

For example, at that time if you had a household income of $100,000 per year and suddenly inherited an IRA of $200,000, your income tax rate would shoot up to the top tax bracket, and you would end up owing 40 percent of your annual income and inheritance to the government. The worst part was that there were very few options for getting out of this situation.

Fortunately, in 2002, a tax code provision came into effect allowing beneficiaries to defer taxes on the majority of inherited IRAs, making a huge difference in both immediate tax liabilities, as well as the lifetime value of the inherited account. In order to take advantage of this provision, investors in IRAs and their beneficiaries must correctly set up everything in a will or trust.

To effectively stretch an inherited IRA, you need to know a few things. Stretching IRAs can get complicated, and you’ll probably want to consult with a qualified estate planner or financial professional for more details, but here are the important points to keep in mind:

• The custodial document and beneficiary form must permit the IRA stretch    provision. • A non-spouse beneficiary cannot roll the account assets into his or her own account. • A living person must be named as the beneficiary of the IRA. • If multiple beneficiaries inherit the IRA and each wants to use their own life expectancy in setting up a stretch, the account must be split by December 31 of the year after the account owner’s death.

Unfortunately, many don’t know about the stretch provision and fail to use it. It doesn’t cost anything to set up a stretch, but, in order for it to work, not only must the account holder set up the stretch, but the beneficiary must also know how to implement it.

To make sure you don’t miss anything when setting up a stretch IRA or implementing a stretch, your best bet is to consult a professional, such as an estate planner or financial advisor who is experienced with IRAs and knowledgeable about the details regarding stretching the account."

Radon Stancil, CFP®, and Rick Parkes, LUTC® have 45 years of combined experience in the financial services industry and assist North Carolina residents with their comprehensive financial needs including IRA management, retirement income planning, investing, tax planning, risk reduction and estate planning. For more information please give them a call at (919) 787-8866 or visit their website at www.desllc.org. 

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