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GoFisch October Book Pick

If you read the September issue of my e-newsletter, GoFisch, you already have a jump start on this month’s book club pick! Head to your library, your e-reader, or favorite local bookstore and pick up a copy of My Father’s Wake, by Kevin Toolis. Toolis is a profound storyteller, which is evident not just from his writings but from his award-nominated films.

Death is an enmeshed component of estate planning. This can be difficult to dwell on at times, but there’s also some comfort in knowing that death will reach us all. No one is exempt from this destiny, which is what makes life, so incredibly vibrant in comparison. What we can control is how our loved ones will be provided for. Really, at it’s core, making an estate plan is deciding who you want to inherit the property you own (everything from your home to your art to your car), when you want that to happen, and how after you pass from this world.

My Father's Wake

This is why this book resonates so strongly. Our perception of death is shaped by the customs of our respective cultures and how we honor our deceased. From this book, it’s evident that we can learn a great deal from how the Irish deal with death.

While I’m not Irish myself, as the son of German immigrants, I identified strongly with the author’s drive to connect with and participate in the culture and customs of his heritage. For instance, the book teaches us that a meitheal is an old Irish word for a gathering together for a communal task. An Irish wake can be considered a meitheal of sorts—a communing of mortal souls to aid the deceased in bridging the ephemeral space between life and death and aid.

I lost my own father earlier this year and would recommend this book in particular to anyone who has lost someone they love.

The Importance of Discussing Your Estate with Your Family

I would like to hear your thoughts about this book in the comments below! What stuck with you? What would you like to learn more about? Do you have any recommendations of books (fiction or non) related to Gordon Fischer Law Firm’s core services of estate planning; nonprofit formation and guidance; nonprofit employment law; or donations and complex gifts? Let me know in the comments or contact me by email or phone!

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Read GoFisch: September 2018 Edition of GFLF’s Newsletter

woman reading on phone

The September edition of GoFisch is live! This month’s edition features:

Like what you read? Don’t forget to subscribe to GoFisch and tell your friends. Here at GFLF we like to think of it as the least boring law firm newsletter you could hope to read.

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Back to School: Political Science- How Changes to Legislation Impact Your Estate Plan

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legislative building

On the GFLF blog this month, we’re going “back to school” with some fun legal lessons like last-minute gifts of personal property, nonprofit operation, and what planned giving actually means. Happy learning! 

If you have an estate plan already, give yourself a high-five! You’re well on your way to establishing a worthy legacy; effectively and efficiently transferring your hard-earned property; and saving your loved ones time, money, and emotional turmoil. Plus, you’re ahead of the more than half of Americans who haven’t done any estate planning!

Even though estate plans never expire there are many reasons you might need to revise or at least double-check your documents. Some common life events that could impact your documents and/or estate planning goals include: the birth of a child/grandchild; death of a beneficiary; marriage; divorce; moving across state lines; receipt of an inheritance; and other major financial status changes.

5 Scenarios for Estate Planning Revisions

I recommend my clients review their plans at least annually and if there’s any question if a life change would require an estate plan revision, it’s better to just ask! (Reminder, I offer a free one-hour consult! Even if I didn’t draft your current estate plan, I’m happy to discuss your situation to determine if an updated estate plan is in order.)

It can be easy to forget or overlook changes that occur outside the realm of your personal life that may impact your estate. For instance, changes in federal or state legislation could render your current estate plan provisions ineffective and irrelevant. A recent example that had a major impact was the Tax Cuts and Job Act of 2017.

Legislative Changes

The Tax Cuts and Job Act doubled the estate tax exemption, meaning the law massively increased the total amount of assets you can own before you are subject to estate taxes. For an individual to be subject to estate tax, your estate must exceed $11.2 million. For a married couple, the estate tax has no effect until total estate is worth more than $22.4 million. In short, the federal estate tax really only applies only to the richest of the rich.

What the New Tax Law Means for Your Estate Plan

Blast From the Past

But in 2017, before passage of the TCJA, the estate tax exemption was half of what it is now. Even more relevant, in 2001, the estate tax exemption was much, much smaller, just $675,000. From 2002-09, the estate tax ranged from $1 million to $3.5 million. Back in those days, even middle-class and certainly upper middle-class Iowans had to have some concern about the estate tax. After all, if you add up all your assets–real estate, vehicles, retirement benefit plans, insurance, etc.–you can reach that threshold surprisingly quickly.

Tax Talk: If You Die in Iowa is There a State Estate Tax?

Complex Trusts

It used to be that estate planners would establish complicated trusts to make certain clients avoided the estate tax. One example (of many) of such a complex trust is the A-B marital trust.

The A-B trust was almost entirely designed to minimize estate taxes. It was one trust, but with two parts. Under the A-B trust, the “A” trust holds the portion of the estate designed to qualify for the martial deduction, while the “B” trust was designed to maximize any unused estate tax exemption for the surviving spouse.

Now, an A-B trust isn’t as necessary unless a single person’s estate is greater than the federal estate tax threshold. (It might be necessary in a state that had a state estate tax, but Iowa does NOT have a state estate tax; we need only worry about the federal estate tax).

Estate planning for Married Couples: Avoid Conflicts of Interest

Cut the Complications

The upshot of the recent legislative tax change is that some folks could do with a much more simple trust than what they currently have. Considering the new estate tax regime, a simple revocable living trust will much more neatly fill their needs, and also be more easily interpreted, explained, and more easily defended in case of challenge. Also, with a simple revocable living trust, less can go wrong. There need not be any legale “Rube Goldberg” contraptions designed to avoid a federal estate tax that won’t apply anyway.

Funding and Administering Your Living Trust

We’re Not Just Talking Taxes

It’s important to know that estate planning is not just about protecting your estate from taxes. The benefits of estate planning are many when compared to dying intestate (without a will), including but definitely not limited to:

Plus, a good estate plan should be written to fit with your personal goals. It can be hard to think about a world where you won’t be alive, but it’s also a reality we must all face. How we prepare for our death (or incapacitation) can mean a world of difference for the loved ones and favored causes we leave to carry our torch on into the future.

Trusted Consultation

Was your trust drafted when the federal estate tax was lower? For the good of your loved ones, let’s optimize your planning strategy. If you’re not sure what kind of trust you have, or whether it really fits your situation, don’t stress one second. I offer a free one-hour consultation! Truly, I would love to hear from you; email me at gordon@gordonfischerlawfirm.com or call me at 515-371-6077.

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Join GFLF at Falls Prevention Awareness, Health & Resource Fair

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I would love to meet you this Friday at the Falls Prevention Awareness, Health & Resource Fair where I’ll have a table full of valuable estate planning information and time to get to know you and hear your about your goals for the future! The Fair will start at 10 a.m. and go until 1 p.m. Friday, September 21 at the Radisson Hotel and Conference Center (1220 1st Avenue, Coralville, IA).

This event is sponsored by the University of Iowa Hospitals and Clinics Trauma Program, the Visiting Nurse Association, Johnson County Livable Communities, and partially funded by The Community Foundation of Johnson County.

The free event is open to the public and includes the chance to win one of five door prizes!

Fall Prevention Fair

Planning to attend? Tell me in the comments below! Can’t make it? Don’t worry! I’m always available to assist with your estate planning needs from start to finish. Contact me via email (gordon@gordonfischerlawfirm.com) or by phone (515-371-6077). Plus, I offer a free one-hour consultation!

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Back to School: Spelling Lesson Word of the Day

man reading newspaper

If spelling tests weren’t always your strong suit in school, fear not! Today’s legal word of the day is an easy one that’s having a momentary editorial heyday.

Ripped From the Headlines

As you probably heard, The New York Times took the highly unusual step of publishing an unsigned, anonymous op-ed entitled, “I am Part of the Resistance Inside the Trump Administration.” The person was identified only as follows:

“…. a senior official in the Trump administration whose identity is known to us and whose job would be jeopardized by its disclosure. We believe publishing this essay anonymously is the only way to deliver an important perspective to our readers.”

man with newspaper near train

Whodunnit?

The article led to a nationwide guessing game. Who is the senior official in the Trump administration who penned this “explosive” piece? Suspicion fell onto, of all people, Vice President Mike Pence. This is because the op-ed writer uses the word “lodestar,” and Pence has used this obscure word multiple times. (Pence vehemently denied he was the author, by the way.)

I don’t know who wrote the op-ed, and we may never know, but the real winner out of this news cycle is the word you never knew you needed in your vocabulary—lodestar!

So, What DOES Lodestar Mean?

Lodestar means “a star that leads or guides,” and is especially used in relation to the North Star.

timelapse of stars

Now, Let’s Talk About a Similar Kind of “Star”

At this point you’re like, “Gordon, this is a cool word I can def use in playing Scrabble, but what does it have to do with the law?”

Well, “lodestar” is a synonym and practically interchangeable with the word “polestar,” which is defined as a “directing principle; a guide.”

A court will use the term polestar like so: In this case, our polestar must be this principle . . .

Basically the court will use such-and-such as its guiding principle.

direction sign on a mountain

For example, in the law of wills, the Iowa Supreme Court stated In the Estate of Twedt that “the testator’s [maker of the will’s] intent is the polestar and if expressed must prevail.” You’ll see the same in the law of trusts, the intent of the settlor of a trust must be the polestar.

The word is also used in the law of charitable giving. The intent of the donor is the polestar which courts must follow if there are any issues. For example, suppose a donor posthumously donates $100,000 to a nonprofit, but the nonprofit no longer exists. What was the donor’s intent? Is it stated anywhere what the donor wanted to happen to the charitable funds if the nonprofit was no more? If not written, did the donor discuss the matter with anyone? To resolve any dispute involving a charitable gift, the guiding principle–the polestar–must be the donor’s intent.

Practical application of the Word Polestar

A major reason to have an estate plan is that YOU get to control your own future, rather than being controlled by outside forces or outside events. Through proper estate planning, you can be in total control of the answers to the following questions:

And if there are any questions or issues regarding your estate plan, lawyers and judges looking at your estate plan will make decisions based on YOUR intent. Your intent will be the polestar!

Top 10 Estate Planning Goals

Don’t delay any longer – thank your lucky (North) stars you still have time to make a proper estate plan. I’d be happy to talk with you about your estate plan any time, or you can get started on organizing your important info in my free Estate Plan Questionnaire. I can be reached via email (gordon@gordonfischerlawfirm.com) or by cell (515-371-6077). I’d truly love to hear from you.

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Tax Talk: Iowa’s Inheritance Tax

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money in wallet

We talk about taxes and fees a lot in estate planning because if you don’t have a quality plan in place your estate will likely be hit with taxes and fees to a varying degree. Actual figures depend on the gross value of your estate, what state you lived in, and what strategies you employed (such as a living revocable trust) that help to reduce or even eliminate taxes and fees.

Recently I wrote about one specific tax that only applies to states—the state estate tax. If you don’t have time to read the full post and live in Iowa, the bottom line is that generally you won’t need to worry about it. Unlike places like Minnesota and Illinois, Iowa does not have a state estate tax. However, Iowa DOES have a special “death tax” that only six states in the U.S. have.

Tax Talk: If You Die in Iowa is There a State Estate Tax?

What is an Inheritance Tax and how is Different than an Estate Tax?

At first glance the inheritance tax seems mighty similar to the estate tax (both state and federal). Indeed, both are collected after someone’s death. However, an estate tax is assessed by the overall gross value of a person’s estate. This figure totals up all assets passed to all beneficiaries, regardless of their relationship to to the decedent (the person who passed away).

Any estate taxes owed are paid out of the estate assets before beneficiaries receive their distributions. And, the estate executor is responsible for making certain any state or federal estate taxes owed are fulfilled.

The inheritance tax, instead, is a tax levied on assets and property certain beneficiaries have inherited from someone who has died. I say “certain” because in most states the relationship of the beneficiary to the person who died determines if inheritance tax is owed or not. Amount of tax owed is calculated on each eligible beneficiary’s share of the estate and the beneficiary’s relationship to the decedent.

The beneficiary subject to estate taxes is personally responsible for filing the tax. In Iowa this means filling out Form 706 and filing before the due date on the last day of ninth month after death.

What the New Tax Law Means for Your Estate Plan

Iowa’s Inheritance Tax

The good news in light of all this tax talk is that Iowa’s inheritance tax only applies in certain situations. Not every Iowan who passes away will render their heirs subject to more taxes. For instance, Iowa’s inheritance tax does not apply if the estate is valued at $25,000 or less.

The following, among others, are exempt from Iowa’s inheritance tax:

  • Spouses
  • Beneficiaries who are descendants including children (biological and legally adopted), stepchildren, grandchildren, and great-grand-children.
  • Beneficiaries who are lineal ascendants such as parents, grandparents, and great-grandparents.
  • Life insurance
  • Annuities purchased under a retirement or employee pension plan
  • Assets left to U.S. charitable, religious, and educational organizations

As you can see, most people won’t ever have to deal with Iowa’s inheritance tax. So, who isn’t exempt as a beneficiary? Domestic partners, friends, and non-lineal relatives such as nieces, nephews, siblings, aunts, uncles, and cousins are all subject to the inheritance tax on the assets they inherit. Assets bequest to corporations or social/fraternal organizations don’t fit the qualifications as “educational, religious, or charitable” and are therefore not exempt.

Iowa’s max inheritance tax rate is 15%. (Which is better than our neighboring state of Nebraska, which has the highest top inheritance tax rate of 18%.)

In case you were wondering, there is no federal inheritance tax to worry about.

How do I Know if my Estate or Beneficiaries will owe Taxes?

pyramid on a US bill

Consult with an experienced estate planner and other professional advisors so that may they thoroughly evaluate if your estate will be subject to estate or inheritance taxes. Regardless, it’s a good idea to start looking into strategies and estate planning tools to reduce the burden of (all) taxes on your beneficiaries.

One way to do that during your lifetime is to gift (cash or non-cash) assets during your lifetime. The gift tax rate is currently at $15,000. Meaning the IRS will allow you to give away up to that amount, per donee (person receiving the gift), every year, without facing a gift tax.

I also highly recommend consulting an estate planner and other related trusted professional advisors to review your estate planning goals, financial situation, and assets. There are all sorts of unique considerations people face in that demand a thorough review and thoughtful solutions.

Have any questions or owe inheritance taxes yourself? Don’t hesitate to contact me at gordon@gordonfischerlawfirm.com or by phone at 515-371-6077.

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Estate Planning Event at Iowa State Bar Association

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red chairs in conference room

Undoubtedly knowledge is power when it comes to understanding how different laws directly affect you. Indeed, living in a modern society mean that an interplay of laws govern pretty much every aspect of our lives in one way or another—even when it comes to death. That’s why I’m dedicated to breaking down terms (like in my “legal word of the day” series) and explaining processes (like how to form a 501(c)(3) in Iowa) related to GFLF’s core services. Because even if you’re not an attorney, that doesn’t mean you shouldn’t/can’t learn about the interplay of different laws  Similarly, I think it’s important to get the word out about events in the community that can help grow knowledge on important topics like estate planning.

The Iowa State Bar Association (ISBA) announced they’re producing a seminar series called the “People’s Law School.” The first public information event will focus on three super important estate planning elements:

While the seminar is being billed as one for “older Iowan issues,” I have to remind that everyone needs an estate plan! Even young professionals and definitely married couples. Definitely people with kids and people with pets! Even college students can benefit from putting a power of attorney in place. And, especially working and middle-class folks need a up-to-date estate plan.

What We Talk About When We Talk About Estate Planning

At the seminar, attendees can have a living will or medical power of attorney form notarized at the event if they bring their completed documents.

The session will be held 5:30-7 p.m. on September 19 at the ISBA Headquarters in Des Moines. Interested? You can register online here.

According to their website, the ISBA will “identify other topics of public interest and host similar seminars in the future,” so be on the look out for other upcoming opportunities to learn more about the law as a part of your life.

If you’ve dropped all the excuses and committed to making your estate plan happen, that’s great! It’s easy to get started with my free Estate Plan Questionnaire. Questions or want to discuss your estate? Don’t hesitate to contact me via email or by phone at 515-371-6077.

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Read GoFisch: July 2018 Edition of GFLF’s Newsletter

woman reading on phone with red nails

The July edition of GoFisch is live! This month’s edition features:

Spotify playlist cover art

 

  • A rundown on the website’s new features and fresh look
  • A curated Spotify playlist for when you’re working hard, but want to feel like you’re on summer vacation
  • Iowa-based nonprofit & philanthropy news
  • Must-read blog post highlights
  • Facebook Live video featuring me and the subject of estate planning

Like what you read? Don’t forget to subscribe to GoFisch and tell your friends. Here at GFLF we like to think of it as the least boring law firm newsletter you could hope to read.

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What the Queen of England can Teach us about Trusts

Buckingham Palace with gate

Britain’s Royal Family has been very much in the news lately. There was the recent wedding of Prince Harry and Meghan Markle. There’s also the hit Netflix series The Crown. (Who else can’t wait for season 3?!) Trump broke royal protocol multiple times on his recent trip. Prince George just turned five. And, earlier this summer (June 2 to be precise), Queen Elizabeth II marked the 65th anniversary of her 1953 coronation ceremony.

In front of more than 8,000 guests, including prime ministers and international heads of state, she took the Coronation Oath to serve her people. She was handed four symbols of authority—the Sovereign’s Orb, royal sceptre, Rod of Equity and Mercy, and the royal ring of sapphire and rubies. The Archbishop of Canterbury, Dr. Geoffrey Fisher, then placed St Edward’s Crown on her head to complete the ceremony.

An Unavoidable Unknown: Life Expectancy

I doubt very few of those dignitaries present would have guessed that Queen Elizabeth would reign for 65 years (and counting). In fact, I’ll bet if you told folks present at the ceremony that she would continue as Queen for well more than six decades, they would have thought you were, in English parlance, “crackers!”

But, one never knows about any one person’s life expectancy. Queen Elizabeth’s reigning longevity is surprising, but so, in reverse, is life of both celebrities and our family/friends alike cut too short.

There is a macabre and unfunny joke among estate planners: “Not everyone dies when they are supposed to.”  We all hope to live to be a ripe old age, like Queen Elizabeth II, and look back on a happy, fulfilling life. But it doesn’t always happen.

Ultimately Queen Elizabeth will pass away too. Everyone does. That’s why everyone needs an estate plan, even though you’re not the Queen of England and even if you’re not wealthy; even if you’re single; and even if you’re young.

Be prepared for the best, or be prepared for . . . less than the best. Have an estate plan in place so that your loved ones will not have to deal with the stress, ambiguity, and heartache of struggling with the confusion that comes with of intestate succession and not knowing your wishes or wants.

queen's crown

Royal Benefits of Revocable Living Trusts

A revocable living trust may make sense for many folks, not just royally wealth. The benefits of trusts are many, but one of the main ones is that assets avoid probate. This saves time and means distribution of assets to heirs more quickly and easily. Trusts avoiding probate generally mean less costs at death—less attorneys’ fees, less court costs, and, typically, less taxes. Living revocable trusts are also super flexible; in a single trust instrument you can name guardians for your minor children; protect assets from creditors; give to your favorite charities; and set up an endowment.

Along with a living revocable trust, you’ll also want several other legal documents: a power of attorney for health care; a power of attorney for financial matters; and a disposition of final remains, to name a few.

You don’t have to be a royal to know that estate planning is a smart, strategic, crowning achievement you can be proud of. Just like Queen Elizabeth’s longstanding legacy, you too can cement your place in history (if even just within your immediate family and with the charitable causes you care for). If you don’t have an estate plan yet, the best way to get started is by filling out GFLF’s free Estate Plan Questionnaire, or contact Gordon. If you already have an estate plan and want to invest in the benefits of a living revocable trust, don’t hesitate to reach out via email or by phone (515) 371-6077.

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July GoFisch Book Club Read: The Nest

Wraparound bookshelf

Last month’s GoFisch book club pick was a real life soap opera-esque story of estate planning, inheritance, and complex affairs tied to extreme wealth. This month’s read is also about estate planning, but is a fiction story with the quick pacing of a comedy and dialogue of a melodrama. I bet you could fly though this one while lounging poolside or swinging in the backyard hammock!

The Nest book

The Nest, by Cynthia D’Aprix Sweeney, follows the dysfunctional Plumb Family siblings around New York City as they deal with the unexpected fallout from the eldest Plumb’s major, costly mistake. All the while, the four adult siblings are the beneficiaries to a trust fund they have deemed “the nest” (like a nest egg, so to speak). The “nest,” thanks to sound investing and a generous market, grew larger than the grantor (the Plumb’s father) ever expected. Indeed, he intended for it to be helpful, but not a pot of gold to depend upon.

Leo’s accident (the oldest brother) and the unintended consequences that follow, puts a “crack” in the nest egg all had come to count on. (All four siblings had to wait to have access to their share of the funds until the youngest child turned 40.) Tensions flare, grudges are dredged up, and each of the Plumb siblings will have to reckon with their own poor financial decisions. Indeed, they were all depending on the trust fund in different ways to help bail them out of their own missteps.

This New York Times bestseller masterfully sets an engaging domestic drama filled with familial love and letdowns midst important estate planning elements. The Nest (at least for me) naturally leads its readers to want to learn more about different types of trusts, explore why estate planning is super important, and to whom they’re leaving their money to and how. It also reminds us that it’s super important to honestly discuss estate planning decisions and intentions with your loved ones who are named in the estate plan, so everyone is on the same page.

I would love to hear your thoughts about this book in the comments below! Did you love this book or not so much? Do you have any recommendations of books (fiction or non) related to Gordon Fischer Law Firm’s core services of estate planning; nonprofit formation and guidance; nonprofit employment law; or donations and complex gifts? Let me know in the comments or contact me by email or phone.

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