Fort Myers | Naples Estate Planning Lawyer Blog

Inequality or Unequality?

A great deal of current political discussion talks about inequality. It usually revolves around perceived injustices associated with “income inequality” and “wealth inequality.”

Democratic presidential candidate Senator Elizabeth Warren proposes an annual federal wealth tax, a balance sheet tax similar to the federal estate tax, which itself is a one-time balance sheet tax imposed at death. Taxpayers whose net worth exceeds $50 million would, under her platform proposal, pay an annual wealth tax.

Aside from a question whether a Warren Wealth Tax is unconstitutional (see Article One, Section 9), and the very tricky issues surrounding hard-to-value assets such as income producing real estate, closely held business interests, and intellectual property, it’s remarkable to consider the emotion and thought process behind the proposal’s attractiveness.

The language we use is powerful. Take a moment to compare “unequal” to “inequal,” which I acknowledge isn’t really a word but bear with me for a moment. If you Google “unequal” you’ll find references to “inequality.” Dan Sullivan of the Strategic Coach program, however, posits that the two words lead to two very different outcomes.

Except in the case of commodities, no two things are equal. In New York City, for example, the Empire State Building is unequal to the Freedom Tower. Yes, they have similarities in that they’re both very tall buildings located in Manhattan, yet they’re uniquely different and unequal.

Audi and Mercedes are not equal. Which is better? The answer is subjective, isn’t it? Einstein and Gershwin both used their exceptional intellect in completely different ways. They were unequal save the fact that they were both raised in the Jewish faith.

The thing about “unequality,” is that it’s an observation that has a neutral emotional outcome. Sullivan points out that we don’t expect things to be equal. If we constantly compare two things, we don’t appreciate their uniqueness. Uniqueness can lead to innovation. Uniqueness leads to a world of abundance.

“Inequality”, on the other hand, is rooted in envy and jealousy, which are synonyms that come from different angles. “Envy” typically can be defined as not wanting someone to have something that they currently possess, while the definition of “jealousy” is to want something someone else has.

When I was working my way through college and law school, I was jealous of my friends whose parents could take care of tuition payments and furnish them with reliable transportation. I didn’t begrudge my friends their family’s money, I simply wished that I had enough to get by without working two jobs while taking a full-time academic course load.

I wasn’t, however, envious. I didn’t want someone to take away their wealth and transfer it to me. When Bernie Sanders speaks of free college education, that’s what he proposes.

A free university education would be laudable if everyone wanted and needed a four-year degree. Some, however, aren’t academically inclined and would rather pursue a vocation. While college educations could be broadly defined to include vocational training, not all vocations require classrooms and instructors.

Is it fair to provide a secondary education to those that want it while not providing economic assistance of some kind to the young waiter, delivery driver or grounds maintenance worker? Would a “free” education entice those who simply want to goof around for a few years to take up classroom space?

Those, like Warren, who cry foul over America’s inequality speak of taking wealth away from the “haves” to give it to the “have nots.” The proposed solution to inequality could, if enacted in the wrong way, stifle the very uniqueness and innovation that economically sets our country apart.

The counter argument is worth considering as well. A recent New York Times opinion piece illustrated how the wealthiest few Americans have more than the bottom fifty percent combined.

This problem manifests itself most strikingly with health care. Most would agree that health care should be a basic right and not a privilege.

We feel so strongly about this at my firm that we continue to pay for each of our employees’ health coverage even though those costs have outpaced inflation at an alarming rate year after year, taking significant amounts away from our bottom line.

The well-being of those who put in a hard day’s work each and every day for us and for our clients outweighs the cost. But every small business will buckle at some point.

Returning to “inequality” and “unequality” let’s be mindful of the power of those words, and the solutions to which each leads. Inequality presumes a world of scarcity, meaning that our economic resources are a fixed pie for everyone to fight over. “Unequality,” on the other hand, presumes that we’re all uniquely capable to expand that pie. America is abundant, with a bright future.

The key question I therefore pose is whether there’s a different way to solve our big problems. Which services are truly necessary for our society to continue to thrive, and given those needs, how should our society view its unique talents and resources to provide those services?

Trust and Love

My favorite definition of love is “giving someone the power to destroy us and trusting they won’t use it.” It’s not a coincidence that the word trust also refers to a legal document created to hold and distribute one’s assets, and that the “trustee” is the one who holds all the trust powers.

When considering who should be a successor trustee to your revocable living trust, if you should become incapacitated for example, you are giving someone the power to destroy you financially. Your trustee has the power to invest the trust assets as he or she sees fit and has the power to make trust distributions.

While the trustee is supposed to follow the terms of the trust, no court of law, no judge, no government regulatory authority monitors your trustee’s actions. If the trustee should make a distribution that is outside of the scope of his or her authority, the trust beneficiary’s recourse is to bring a lawsuit. They can’t stop him so much as they try to recover damages that he caused.

Therefore the selection of the successor trustee is so important.

During client conferences when discussing who should serve as trustee, I often have conversations that go something like this:

“If both you and your spouse should both be unable or unwilling to serve as your own trustee to your trust, who do you want to serve?”

“I want my oldest son, Robert,” client answers.

“Tell me about Robert,” I ask.

“Oh he’s not the most responsible one in the family. He’s been through several divorces and even had to declare bankruptcy a couple of years ago. He’s always behind in his alimony and financial support so he’s hauled into court by his ex-wife frequently.”

My eyes open wide, “Really?! This is who you want to entrust with your financial security?”

“Yes,” client says, “if we don’t name Robert, he’ll be offended as he is our oldest son. He should be the one named to act for us. Besides, he’ll take direction from Jim, our financial planner.”

“What if Robert fires Jim and decides to invest your trust funds as an online day trader?” I ask.

Clients look at each other with surprise registering on their faces, “He can’t do that can he?”

“You bet he can!” I answer. “He’s the trustee, so his decisions as to the investments inside of your trust, and which firm he uses to get financial advice is up to him.”

“Well, if he loses all our money could we recover against the online internet trading company?”

“No, they didn’t do anything wrong. You would have a legal action against your son for failing to act as a prudent investor, which he has a duty to under the law. My guess is that you probably wouldn’t bring a lawsuit against your own son, and if you did he likely doesn’t have any assets against which you could recover. If he was acting as your trustee, you would likely be incapacitated anyway or you’d be serving as your own trustee. So if Robert did all these terrible things you wouldn’t even likely realize what was happening.”

Perhaps now you can see how important the word trust is inside of a revocable living trust and naming a trustee. There are many options to avoid potential disasters. The best option is to select a hyper-responsible individual who is responsive to your legal, tax and financial advisors and would never put their own interests above yours.

Another good idea is to name a bank, trust company or financial firm as a trustee or as a co-trustee. This way, you have built in money-management, as well as an independent authority to act as a check and balance against anything that the individual trustee does. The corporate trustee has a fiduciary duty to follow the trust directions and has malpractice insurance that you or your beneficiaries may recover against should the corporate trustee act wrongly.

There’s a lot to consider when putting your trust in someone else’s hands. (For more information, visit estateprograms.com/selectingyourtrustee for a free guide!) While the ones you love always have the power to destroy you emotionally, when you give them the power to also destroy you financially you better be sure that they won’t use that power either.

Stress Can Kill

Dr. Rangan Chatterjee authored a new book, “The Stress Solution” offering advice on countering the damaging effects of chronic stress. In it he details patients who, despite following intense diet and exercise programs, struggle with serious health issues like heart disease and Type 2 diabetes.

Dr. Chatterjee counseled one 53-year-old businessman patient to focus on the root cause of his problem: chronic stress. The patient was putting in long hours and skipping sleep. Dr. Chattterjee told him that constant stress can wreak havoc on blood sugar levels, urged him to practice meditation and yoga, and to shut off his screens 90 minutes before bed each night. Six months later, the businessman’s blood sugar levels improved almost to normal.

I could have been a poster boy for Dr. Chatterjee. Regular readers of this column know that I recently had to undergo open heart triple bypass surgery despite my healthy diet and passion for exercise. My doctors told me that stress and genetics played a huge role in my condition.

A typical day for me began at 6:00am and often stretched to 11:00pm. Even when I ate dinner with my family, I’d retire to my home study to log into my work system to finish projects, answer emails and delegate work to my team.

I enjoy my work, and everyone’s career has some element of stress. What I didn’t realize is that I was pushing my body beyond its limits. I’m back at the office now, having made internal changes to better deal with day to day life.

“A lot of people are oblivious to the effects of stress,” Dr. Chatterjee said in one of his Feel Better, Live More podcasts which tops the iTunes rankings.

When one of my law school classmates, Mark Stein, now a Miami intellectual property attorney, learned of my surgery, he called with well-wishes. During our conversation he asked if I meditated. I told him this was something that I had planned to do but never got around to.

The next day I received a package from Amazon with a book entitled Practicing Mindfulness – 75 Essential Meditations to Reduce Stress, Improve Health, and Find Peace in Everyday by Matthew Sockolov. Mark later explained to me this is an excellent book for beginners, as he’s used the techniques for more than 25 years.

I’ve seen clients who suffer from stress, even retired ones. One of my retired law partners, John Sheppard, once told me, “I’m busier and more stressed in retirement than I ever was in my law practice!”

One of the things that stresses out clients is not having a plan in place in case they get sick or die. Thinking about one’s own mortality can be stressful by itself, so people put it off. Rather than relieving anxiety, it appears that hiding from it only makes it worse.

Other clients appear to believe that once they’ve signed their estate planning documents, they’ve somehow set in motion a sequence leading to their own demise! I can’t tell you the number of times that I’ve sent drafts out to clients, but they hesitate for months or even years before reviewing those documents with me and actually signing them to put them into effect.

Given Dr. Chatterjee’s findings, it isn’t a wild assumption to believe that the buildup of stress in not planning for the inevitable would somehow make the inevitable more imminent, rather than the other way around. Our clients almost always feel an overwhelming sense of satisfaction and calm after signing their documents, as they know they now have peace of mind over their affairs.

In any event, you have a sympathetic ear when discussing these issues with me now. While I don’t wish open heart surgery on anyone, the experience has broadened my understanding of what many of my clients have been through, and opened my eyes to the fears and stresses associated with taking care of your loved ones, planning for a future that you may not be a part of.

Hopefully, of course, all of us live a long and healthy life. My doctors have assured me that I’m expected to live a normal life, and that my new pathways to my heart will likely improve my vitality for many years going forward.

If you’re under a lot of stress, check out the books and other resources I suggest here. Others can’t remove the stress from your life, but you can certainly take steps to become more resilient and take action to increase the pleasure in your life going forward.

Your Family’s Story

Howard Gardner, professor of education and psychology at Harvard University, writes many books on leadership and creativity. One book, Leading Minds, demonstrates how a leader can develop a mindset to pass on values to loved ones.

Gardner argues that what makes a leader is the ability to tell a kind of story — one that explains ourselves to ourselves and gives power and resonance to a collective vision. Churchill told the story of Britain’s indomitable courage in the fight for freedom. Kennedy inspired America’s innovative culture in its quest to send a man to the moon. Gandhi spoke about Indian dignity and non-violent protest. And Martin Luther King Jr. told of how a great nation is racially equal.

Stories give a group a shared identity and sense of purpose.

Philosopher Alasdair MacIntyre also emphasized the importance of narrative to the moral life. “Man,” he writes, “is, in his actions and practice as well as in his fictions, essentially a story-telling animal.” It is through narratives that we learn who we are and how we are called to behave. Take the Bible, for instance.

In Deuteronomy, Moses, when instructing the Israelites of their duties and responsibilities before entering the Promised Land, warns the people no less than fourteen times not to forget. If they forget the past, they will lose their identity and sense of direction and disaster will follow. Not only are the people commanded to remember, but they are also commanded to hand that memory on to their children.

You may find it interesting to note that there is no biblical Hebrew word for history. The closest equivalent is divrei hayamim, “chronicles”. Deuteronomy uses the root zachor, meaning memory.

History refers to others who acted before us. Memory invokes our own involvement in the story. Biblical Hebrew, therefore, asserts that believers collectively participated in the story. Jewish families who read the Passover Haggadah are familiar with this concept through one of the passages. In the passage, a wicked son does not consider himself part of the story and is admonished accordingly. “God brought us forth from Egypt,” he is told.

The greatest of leaders therefore create a collective memory so that the entire group feels like a part of the historical narrative. You can still see the power of this biblical idea today. If you visit the Washington DC Presidential memorials, you will see that each one carries an inscription taken from their words: Jefferson’s “We hold these truths to be self-evident…” Roosevelt’s “The only thing we have to fear is fear itself.” Lincoln’s Gettysburg address “With malice toward none; with charity for all…” Each memorial tells a story.

In contrast, many London monuments have no narrative, no inscription, simply a name — like Churchill. England does not have the same kind of sweeping national narrative because it is largely based not on a covenant but on hierarchy and tradition.

So how do we apply these lessons to your family and loved ones? What made you into the you you are now? What are your family’s covenants, the principals and attributes that you believe most important? How can we fashion a system to pass these values down to future generations?

So many of my clients, when discussing their estate plans, voice a common concern: “I don’t want my wealth to somehow weaken my children’s drive and ambition.”

This concern has merit. The old saying, “shirt-sleeves to shirt-sleeves in three generations” is found in many different cultures. In Japan, the expression goes, “rice paddies to rice paddies in three generations.” The Scottish say, “The father buys, the son builds, the grandchild sells, and his son begs.”

Family wealth can only survive through a family narrative, passed down from generation to generation. Each generation needs to feel like a part of the original narrative and have an obligation to continue its journey. I believe that we can amend our estate plans to tell our stories and build our narrative for all our loved ones.

Here, I intentionally broaden the definition of wealth. One need not be monetarily wealthy to have those things most important in life, including dignity, respect, honesty, friendship and loyalty.

Why not include, on the opening pages of a will or trust then, how your family’s wealth was acquired? Describe the trials and tribulations it took to accumulate and distribute this inheritance, and what you hope subsequent generations will not only understand but build upon. Enunciate your family’s core covenants. Build your legacy.

It’s always best to discuss these important topics with your loved ones during life. Memorializing your family legacy, however, can certainly be accomplished in your estate planning documents. I’m working on a way to systemize this process in the coming months as part of our unique process, The Family Estate & Legacy Program®.

In the meantime, my suggestion for those of you who this speaks to, is to take the time to write down your thoughts. You probably recall important lessons that your parents and grandparents taught you, probably using a story. Don’t let those valuable insights die with you!

A true leader tells the family story to pass on a shared sense of value and purpose. The families that prosper tend to be the ones that, from generation to generation, become part of a shared narrative. How are you going to create that narrative for your family?

How to Show Support

I’m back at work after undergoing a surprise triple bypass open heart surgery at the beginning of September, which I wrote about a couple of weeks ago in this column. When you suffer from a serious illness or undergo a life-changing, intimidating surgery as I have, you learn how scary and life changing going through such a procedure can be.

You also learn a lot about your friends and relatives. Who you can count on and who you can’t. For me, some of the answers were surprising.

Unless you’ve had or someone close to you has had a similar experience, it’s difficult to understand the emotional journey the patient must travel. You otherwise have no frame of reference.

Top that off with busy lives, and a general uncomfortableness with what to do or say while in the presence of (or far away from) someone going through a difficult time, and you have a recipe for crushed expectations and hurt feelings.

So what should you do when a friend or family member falls ill? In my tradition, visiting the sick (bikur cholim) is known as a mitzvah, a good deed. What should you say? How should you act? Here are a few guidelines to go by:

There is no limit to the amount of times that one can fulfill this good deed or to the level of its fulfillment, provided that one does not become too bothersome for the sick person. Most of the time, a short visit is preferable.
If there are two sick patients, one who has many visitors and the other a few or none, one should preferably visit the latter person.
Not all patients are in a position to receive visitors. Under such circumstances, one should inquire of the relatives whether it is okay to visit; and even then, try to keep the visit short. It is also necessary to have a sixth sense and realize when one is overstaying. In a situation where a patient is not ready for visitors, visiting can still be accomplished by staying in the foyer or hallway and helping out family members.
Although most aspects of visiting the sick can be fulfilled only with a personal visit, if one is not able to do a personal visit, he can fulfill the good deed with a phone call.
Enter the room of the sick person in a positive mood. Do not display any moods of sadness or melancholy, as this could affect the welfare of the patient.
Rather than ask if there’s generally anything you can do, or say “let me know if there’s something I can do for you,” offer to do something specific. “May I bring you a lunch tomorrow? How about I pick up your children from school next week.”

Thankfully, I was overwhelmed with the love and support from my many friends who visited me in the hospital both before and after the surgery. I had such a constant stream of visitors that my wife and my nurses politely asked some to give me time to rest.

Those from my workplace showered me with concern and attention as well. I’ve always been proud of the family atmosphere within my firm, and that was clearly evident from the time that I entered the hospital. When my doctors instructed that I was not to work for a period of thirty days following the surgery to avoid stress, my team cut off my access to the firm’s emails and server, kept files moving, and answered clients’ questions in my absence.

I was both surprised and touched by the many clients who sent emails and cards. Most didn’t know of the surgery, but those that discovered my situation couldn’t have been more loving and supportive. The same could be said of my professional colleagues, from fellow attorneys to CPAs, trust officers, financial planners, and others.

My sister and my brother-in-law drove across Alligator Alley twice to provide comfort and just be there for me – which, frankly, is what I needed most.

Of course, my wife was a bedrock through the entire ordeal. The chief caregiver usually goes through more than the patient himself. Patti slept in my hospital room with me, except for the night I was in ICU, when she tried to sleep in the brightly lit waiting room. I begged her to go home, but she wouldn’t.

Our three daughters were all there for me too. They were terrified but did their best to hide their fears, giving me lots of hugs and kisses. They also cooked dinners at home and brought them to the hospital for me and Patti.

I received so many flower bouquets, Harry & David fruit packages, and edible arrangements that I didn’t know where to put everything. The gifts and baskets were extremely thoughtful and much appreciated. They also lead me to an important point.

What a hospital patient needs the most is your time and your attention. For me at least, it was uplifting to be with others who cared.

Depression is also a common byproduct of my particular surgery, and I was no exception. My condition and the need for surgery came as a total shock to me. Those who know me well knew that just before I had completed my normal weekly exercise regimen that includes 100 miles on my bicycle, twice weekly triathlon swim sessions of 3000 yards, and thrice weekly circuit training sessions my trainer puts my wife and I through.

I thought I was the poster boy for middle-age physical health! Upon discovering my advanced heart disease while groggily awakening from my heart catheterization, I had a rather difficult time wrapping my mind around the fact that I would soon undergo a triple bypass surgery at age 55.

It meant a great deal to be able to talk through my concerns and feelings with anyone who would listen.

You don’t have to offer advice, although I received many great suggestions. One of my law school classmates called and patiently listened to my concerns about anxiety and depression. The next day an Amazon package arrived at my door, including a meditation book for beginners! It’s something I thought about taking up, and now I have his go-to resource.

The great news is that modern medicine is wonderful, I’m on the road to complete recovery. My surgeon, Dr. Randall Buss, and cardiologist, Dr. Ken Towe, tell me not only should I return to the activities I enjoyed prior to the discovery of my illness, with increased blood-flow, my performance should improve!

It’s inevitable that all of us will have a loved one experience a significant medical issue. My best advice is to be there, in the present, (whether in person or on the telephone) for your friend or family member. It is the greatest gift you can give.

Sharing Your Wisdom

Have you ever noticed how the older you get the less intelligent those around you seem to be? You look at some of their actions or statements and just shake your head. But when you open your mouth to offer advice what happens? Usually you’re ignored at best, or, at worst, you’re shut down.

There’s actually something to this phenomenon.

As we age, we accumulate valuable lessons. Life experience. Some call it “The School of Hard Knocks” which is more difficult and valuable than anything taught at the university. Looking back, I’d venture to say that the most valuable lessons occurred, at least for me, when I failed.

I tried something and it didn’t work.

At the time, I may have been upset with myself or sometimes I became angry with others, or at the circumstances. Reflecting on those occasions my anger was directed elsewhere, I realize that I was often the true culprit. Despite the blame game, I still picked up golden nuggets that would become useful at some point in the future.

I’m sure this resonates with you too, doesn’t it?

My children are now at the ages where they’re invincible. My three daughters are 25, 23 and 19. The oldest is out of college having earned her master’s degree and is in the workforce. The middle is in the physical therapy doctorate program at the University of Florida while the youngest is a college sophomore.

They know it all.

Except they don’t.

They haven’t been through some of the trials and tribulations that my wife and I have experienced. We hope that they avoid some of our most challenging obstacles. The problem is, when we shield our children from those same challenges, we deny them the very life lessons, the wisdom earned, that enabled our success.

How does one therefore share one’s wisdom in such a manner that our loved ones will openly listen, yet not try to overly manage their lives? The most effective strategy I’ve come up with is to share my life experiences as they happen. Including the failures. Patti and I have shared our ups and downs around the dinner table since the kids were young.

We were careful not to share stories or events that weren’t age appropriate. I believe over the years, our open communication helped. I’ve noticed how our daughters, when describing their current challenges to us, often analogize those same dinner time conversations to their situations.

But what to do when they leave the nest? Does this end our opportunity to share wisdom?

It certainly gets more difficult. Yet, have you noticed that as your loved ones age, and they get knocked around a little bit by life, don’t they seem more open to your suggestions?

How does all of this fit into your estate plan? You knew since I write this estate planning column, I had to bring it back here at some point, right? Let’s discuss managing the inheritance that you leave your loved ones.

First, realize that your estate plan is dynamic, not only because tax laws change, and the estate and trust laws change.

No, an estate plan is dynamic mostly because your loved ones change!

If your children are close in age to mine, you probably want to impose a third-party trustee like a bank or trust company to help manage the money and investments if your loved ones inherit while still young. They might be the most honest, smart and careful young adults, but they still don’t have the life experience that you have.

Don’t get caught in the “curse of knowledge” trap. In other words, just because you learned something as a life lesson doesn’t mean that your adult children have.

For example, is it possible that your children make bad investments with a friend who states that he has the next big software app that will earn millions? All he needs is $100,000 of the inheritance your daughter just received, and they’ll both become the next Bill Gates.

It’s better to impose a wise, learned hand for a few years. Your will or trust can be drafted so that at some point, say, for example, when each beneficiary reaches age 40, your adult children can take full control over their own investments. It can also be drafted so that they can change who the trust company is, so they’re not trapped with an underperforming, overly expensive institution.

There are many options available to you and your loved ones. This goes to the skill that your attorney has not only with his own practice experience, but in translating your life experience to your plan.

This is far from boilerplate.

Having a third-party trustee isn’t a bad idea for some of your older beneficiaries as well. Those who don’t ever seem to make wise life choices, are spendthrifts, or who have dependency problems all are candidates to have a helping hand once you aren’t around anymore.

This should all come out in your initial client interview.

The key, just as what my wife and I did around the dinnertime table, is to share your wisdom with your loved ones and to share your concerns with your estate planning attorney.

In my firm’s Elite Client Care Program, for example, we offer our clients the opportunity to meet with us and their children (over video conferencing if the children aren’t all local) to discuss these important issues together. I’ve found that having the attorney translate how the plan works once constructed, provides a level of clarity and comfort that otherwise might be unattainable, and the plan is consequently more readily accepted.

Share your wisdom. Help guide, but don’t overdo it. And make sure your estate plan keeps up with the changes that constantly occur within your own family.

Now that’s wise.

Other Side of the Desk

Throughout my more than thirty years of practice, there’ve been times that have illuminated my understanding as to what it feels like to be “on the other side” of my desk.

I’ve written before, for example, about my mother’s battle with leukemia, and the resulting (and surprising) difficulty when acting as my parents’ trustee during their time of need. See the preface to my book, Selecting Your Trustee, for that story.

I’ve also written about my experience when I was nearly killed by a hit and run driver while bicycling, leading to my firm’s Client Care Program that makes your health care surrogate, living will and other important directives available 24/7.

Very recently, in fact, I received another important lesson. On my 30^th wedding anniversary date at age 55 I underwent a triple bypass open heart surgery. All this despite my normal weekly workouts consisting of 100+ miles bicycling, 6000 yards+ swimming and three separate one-hour circuit training sessions.

Three years ago, I even underwent a complete cardiac check-up including a nuclear stress test prior to competing in an Ironman distance triathlon race. “You have the heart of a 35 year old,” I was then told.

Luckily, I heeded warning symptoms and got to the ER before suffering a heart attack. So all of my heart tissue is fine, and my prognosis is great. I’m off work for another couple of weeks but will be back soon.

I frequently lecture others how important it is not only to have an estate plan, but to keep it up to date. There are too many individuals who consider themselves young (isn’t 55 still young?!) but who have never completed their estate plan. An equal number of individuals signed a simple will 20 years ago when their children were young but haven’t updated since.

Bad idea. The doctors tell me that I’m lucky I didn’t have a major incident from my condition before it was discovered and corrected. Apparently, God didn’t think it was my time yet. We’ve all heard of luminary figures like Jim Fixx, the marathon runner, who appeared to be in perfect health yet dropped dead from undiagnosed heart disease.

Worse, I’ve had clients come to me even after suffering a major illness or setback, only to let drafts sit on their desks for weeks or months before coming in to review and sign the documents. A new estate plan isn’t valid until it’s been properly signed and funded, even if you’ve clearly expressed your wishes to your estate planning attorney.

Know also that Florida does not generally recognize handwritten wills as valid testamentary documents, or notes written in the margins or your will or trust as valid. There are definite rules Florida law imposes upon any document that contains a testamentary (after death) disposition of assets or property.

A final thought on ignoring symptoms related to heart attacks. For weeks during my workouts I experienced short periods of tightness in my chest and/or shortness of breath. “I’m just out of shape,” I’d explain to myself or, “I’ve been traveling a lot,” were common self-justifications.

The day I finally went to the ER something completely different occurred. First, I had an incident during my morning work-out. Then, for the first time, I experienced chest tightness and pain in my left jaw while working in the office, and not exerting myself. That was the day I finally made it to the ER and discovered a life-threatening condition.

At the first sign of something odd, get it checked out.

As I said earlier, the great news is that I’m fine, recovering completely and the docs expect me to enjoy a full life expectancy. I have many more years to work and to serve my clients, which I am very much looking forward to.

Take care of yourselves and God Bless.

Sin Taxes We Could Have

We all know the government taxes everything that it can – and even imposes additional taxes on those indulgences that aren’t good for us. Common examples of such taxes – known as “sin taxes” are the Mafioso-style usurious tariffs on cigarettes and alcohol.

The government searches for more and more revenue given the state of our current economic climate. So I thought that I might suggest (tongue in cheek, mind you) several other sin taxes that, as far as I know, haven’t been imposed…yet.

Over Procreation Tax – The biblical adage to “be fruitful and multiply” can be taken too far. Case in point – the Duggar family (those of 19 kids or is it 21?) who lead me to wonder – when in the world is Michelle Duggar finally going to go through menopause? Or another question – how in the world can one couple give the requisite love and attention to that many kids? So to discourage such behavior I suggest the imposition of an “Over Procreation Tax.” For each child over four – starting with the fifth child a couple has – the government imposes an annual tax equal to the cost of that child’s public education – currently around $6,500 annually. (Disclosure – this columnist has three children! In true Congressional form – set oneself outside the boundaries of any new tax that one suggests…)

Crying Baby in Restaurant Tax – For those parents who don’t get the idea to remove their lovely bundle of joy from the restaurant within five minutes of it hitting 140 decibels (equal to the sound of a jet engine taking off) a tax equal to the cost of all other restaurant patrons’ meals is imposed. This is similar to the age old golfer requirement that whoever hits a hole-in-one must buy a round of drinks for everyone in the bar – but without the joy of accomplishment.

Speedo/Waist Ratio Tax – While Europeans might be disproportionately affected – I suggest a tax be imposed equal to $500 for every inch a man’s waist exceeds his Speedo swimsuit’s waist size. Proceeds used to supply those men with a government paid gym membership and board shorts swimwear of proper size.

Tattoo/Tooth Ratio Tax – If the ratio on any one person of tattoos to teeth exceeds 1:1 then a tax equal to the amount of laser tattoo removal surgery is imposed. The tax is imposed at the time the tattoo is applied, but the funds from the tax are then invested until the tattoo becomes an unrecognizable dark blue blob – at which time the government pays for its removal. Additional amounts may be imposed for proper dentures.

Thump Thump Thump Tax – Police would be encouraged to pull over and ticket those annoying drivers who blast their car stereos to the point that all nearby vehicles rattle to the bass beat. Fines of $500 per incident should quiet the roads a bit.

TMI Facebook Tax – For those who post their every move on Facebook – I suggest a “Too Much Information” Tax equal to $1 per post multiplied by that person’s number of Facebook “friends”. For some – many of whom friend everyone from all of their former third grade classmates to the waiter who served them at Perkins last Sunday morning – that could amount to thousands of dollars per day.

Too Long at Checkout Line Tax – This tax will be levied on those men and women who wait until after the clerk rings up ALL of the groceries before they realize that they actually have to pay – and only THEN do they begin to take out their checkbook (and who pays by check anymore?!). These people usually have unusually long names such as Mary Joyce Simpson McGuillicuddy – which they take great pride in signing neatly and clearly – and oh so very slowly – in perfect Palmer Method cursive.

Gullibility Tax – Speaking of grocery store checkout lines – a Gullibility Tax should be imposed on all of those checkout line “newspapers” such as the Enquirer and Globe – proportionately related to the number of times the words “Elvis” “Alien” “Abduction” and “Baby” appear in print.

The Often Misunderstood Nuptial Agreement

James and Roberta recently married, the second time for each. James has three adult children from his previous marriage, and Roberta has two adult children from hers. When they arrived at my office to discuss updating their estate plans, James and Roberta verbalized some very specific and defined goals.

“We keep our finances separate,” Roberta told me, “and we want to keep it that way. So no matter who dies first, then that person’s estate will immediately go to his or her children.”

It was apparent from their financial statements that they didn’t need each other’s money to survive during retirement.

“So what you want,” I asked, “is to keep your estates forever separate? So James’s will one day goes to James’s three children and Roberta’s will one day goes to Roberta’s two children?”

“Exactly!” they both affirmed.

“Do you have a nuptial agreement that affirms this understanding?” I asked.

“No we don’t, nor do we want one,” James replied. “We trust one another and didn’t want to throw water on our relationship by engaging lawyers to argue over a document that contemplates divorce.”

“I understand those feelings,” I began. “But you need to know that a nuptial agreement doesn’t necessarily need to address divorce issues. A nuptial agreement, however, might also be crucial to protect your estate planning intent and to make sure that what you want to have happen in your estate actually happens.”

“What do you mean?” Roberta asked.

“As married persons, when one of you dies, the other has certain rights conferred by the law in the other’s assets. If, for example, you haven’t updated your estate plan between the time of your marriage and the time of your death, then the surviving spouse is entitled to an ‘intestate share’ of your estate. In other words, there is a presumption that the decedent spouse would have left the surviving spouse a portion of his or her estate equal to what he or she would have received had the spouse died without a will. This may occur even if that presumption is untrue and can be rebutted by testimony. Under Florida law, that would mean that the survivor of you would be entitled to fifty percent of the deceased spouse’s estate, even if the will doesn’t provide the surviving spouse anything.”

“What happens if your plan has been updated? We are working now to update our estate plans, so we each plan to sign a new will which is obviously after our marriage.” James asked.

“Just because you have updated your estate plan doesn’t end it. The surviving spouse still has an ‘elective share’ available which would roughly give him or her thirty percent of the deceased spouse’s estate, even if the surviving spouse is excluded in the will.” I answered. “A nuptial agreement waiving these rights is the only legal way to foreclose this possibility.”

“It sounds like the survivor of us would actually have to do something proactive to take from the other’s estate,” Roberta pointed out. “And we trust each other not to do that. So is a nuptial agreement really necessary?”

“Not if the survivor of you doesn’t make the election,” I confirmed. “But imagine a scenario where the survivor of you has dementia and that spouse’s adult child who holds a durable power of attorney makes the election on behalf of their parent. The adult child would have a vested interest to do so since he or she would inherit more.”

“Well I would tell my children not to make that election,” James said. “But I see where the trust that Roberta and I have with each other sometimes might not be enough.”

“I haven’t even discussed the Florida homestead issue,” I continued. “The home is in James’s name,” I said, “so where would Roberta reside if James predeceases her?”

“I want my will to give a life estate to Roberta and then at her death the house would go to my children. They’d probably sell it and divide the proceeds.”

“Unfortunately without a nuptial agreement waiving Florida’s ‘descent and devise’ rules that provision in your will would be considered invalid,” I counseled.

“Really? I can’t do what I want with my home?” James asked.

“What would happen when your will contains an invalid devise is one of two things. Roberta could elect to take one-half of the residence as her own as tenants in common with your children, or she could take the life estate.”

“So it could work out as we want?” Roberta asked.

“It could, but there are no guarantees. If you both didn’t want James’s children involved in decisions regarding the home before you both were deceased, having a nuptial agreement would go a long way to solving that problem. Many married couples also want more flexibility than Florida law provides, such as giving the surviving spouse the right to sell the home and move to a different home.”

So one can see that a nuptial agreement may actually serve to ensure a married couple’s wishes are carried out without having to rely on the goodwill of other family members. A nuptial agreement need not even contemplate divorce but instead could be used as a useful estate planning tool.

The Generational Finance Gap

I’ve been asked a lot throughout my career, and increasingly more lately, about how much a parent should gift to bail out a child who is in financial distress. This is a tough call for many retiree parents, who have accumulated some savings, but have to live off the income that those savings generate in a very low yield environment.

When an adult child cries out in financial distress, there’s that tug of war between the concern for what he or she may be facing against the worry about whether you’ll have enough to last for your own golden years. What do you tell your adult child who asks for money when they are facing a home foreclosure, or paying high medical bills or educational expenses for their own children as today’s tuition rates are sky high?

I would suggest that part of the problem lies in the very divergent ways that today’s group of retirees lived during their working and childrearing years compared to that of today’s childrearing generation. Without overgeneralizing, my take is that today’s retirees weren’t eager to take on debt – whether to finance the purchase of a home, a car, or even educational expenses for their children.

They lived in more modest, smaller homes than do today’s generation. When I was a child growing up my family of four resided in a small home where much of the common space was shared. Somehow, we all survived that while my sister and I were both teenagers.

Today’s retirees largely drove cars that were often fully paid for, and didn’t borrow money to drive expensive luxury models. When I was growing up there were only a few luxury automobile brands – Mercedes, Cadillac and BMW come to mind – as opposed to today’s ubiquitous luxury dealerships in almost every city and town.

I don’t remember my parents carrying balances on their credit cards. In fact, they wrote checks for most things. Today we swipe our cards without thinking twice.

In fairness to today’s generation, everything seems to cost a lot more now. While federal income tax rates are arguably the same or even lower – state, county, sales and property taxes take a much larger chunk than at any time in the past. For those of us living on the Florida coast, insuring our homes from windstorm and flooding is often as expensive or more expensive than the property taxes.

But when you compound the enormous levels of debt that seem so commonplace today, it’s no wonder that when a job is lost, illness happens or some other financial setback occurs, families are much closer to the line than they were a generation ago. There doesn’t appear to be a cushion of savings that prior generations amassed for the proverbial rainy day.

So what does today’s retiree do when they get that call? There’s no easy answer. The first thing that I would suggest is to meet with your financial advisor to determine if you have the ability to gift any money without suffering a lifestyle change of your own – or jeopardizing your own ability to meet your expenses. If you simply don’t have the resources, you can’t say yes. Honest communication about your abilities is important.

Your adult children also may have other options available to them. When asking for large gifts when in financial distress, I would think that an adult child has an obligation to disclose the big picture. How deep in debt are they? If you make the gift to them, will the gift only postpone the inevitable? If this is the case, I would think that the children have a duty to meet with a bankruptcy attorney to review all possible courses of action.

Other avenues might be explored. Would it be more helpful for the parent to help pay for health insurance premiums or some other means of support that ultimately bridge the gap from today’s problem to a more secure future?

Finally, I urge caution when a parent believes that a loan to the adult child is the answer. Promises to pay back loved ones are often neglected, leaving hard feelings and dashed expectations. Even if you decide to loan the money, you should be in a good enough financial position that if the dollars were never repaid it would not adversely affect your future financial security.

No one enjoys being in this situation – parent and adult child alike. But when confronted with these weighty issues, good communication between everyone involved is paramount to getting through it not only financially, but emotionally.

Previous 123 Next