Changing Behaviors

Much is written about the role of estate planning and the “hand from the grave” – Trusts that “rule” after the death of the person establishing the Trust.

First, let’s review some legal terminology for the sake of this article:

The person establishing the Trust is known in legal parlance as Donor, Settlor, Trustor and in some cases also the Trustee.

The Trustee is the individual(s) or institution/entity administering the Trust. The Trustee is responsible for carrying out the terms of the Trust.

(Usually, the Trustor and the Trustee are different entities, but in some cases they can be the same entity.)

The Beneficiary is the person(s) who will receive ‘something’ from the trust (money, land/property, art work, etc.) In short, the Beneficiary ‘benefits’ from the Trust – now or into the future.

Now that we have some simplified legal terminology in place — what happens if a parent or grandparent wants to make a bequest to a child/grandchild, but that child/grandchild is not quite reliable?

The Beneficiary may suffer from conditions such as an addiction to alcohol, gambling, gaming, narcotics, etc. – or they may just be unprincipled  with money or have poor decision- making skills.

ENTER…the Incentive Trust… a trust that may encourage good habits; motivate in some way; prevent ‘misuse’ of inheritance funds; reward ‘good’ behavior (or at least behavior in line with the Trustor);  and assist loved ones to make better decisions for the long term.

But, and there is always a ‘but’…the Incentive Trust is ‘tricky’.

Money can sometimes be the means of destruction, particularly for those with addictive personalities.

But the withholding of funds is equally difficult.

Incentive Trusts, like all trusts, must be structured with great care if the Trustor is to obtain the outcome they anticipate. They should have the labeling – “Use With Care”

Take one simplest example of an Incentive Trust –

A grandparent establishes an Incentive Trust for their grandchild. The grandparent really wants the grandchild (the Beneficiary) to graduate college.  So they state that the grandchild, in order to receive his/her Trust funds, must graduate college. So far…simple.

But…what about grade point average? Which accredited college?  Does an On-line college qualify? Length of time to graduate (4 years or twenty years)? Will the type of degree matter?  Where are the funds to attend college coming from? Will payments for college be made to the Beneficiary or directly to the college?  How much discretion will be given to the Trustee (the person or institution administering the Trust)?  Will there be benchmarks?  How many different colleges can the Beneficiary attend (how often can they change colleges?)  How many courses must Beneficiary take each semester?  Can the Beneficiary marry and have children while attending college?

Well…You get the idea. Simply stating for Trust purposes that the Beneficiary must graduate college….is not nearly enough of a directive.  Such a lack of directive can leave much to the discretion of the Trustee.

Likewise; preventing bad behavior is equally fraught with serious questions.

An example: a child is addicted to drugs; to gambling;  or to alcohol.  The parent wants that child to be provided for (under the terms of a Trust.)

What precise behavioral changes will qualify for the child (the Beneficiary) to receive their funds from an Incentive Trust?

What if the child ‘substitutes’ one addiction for another?

Will child be required to submit to periodic drug testing? Help programs?

What specifically would ‘qualify’ as alcohol abuse or gambling?

How long will the child be required to remain drug free?

At what age, if any, will all Trust funds be given to the Beneficiary? Or should funds be administered as a monthly ‘stipend’?

If the child cannot keep to the terms of the Trust, what happens to the funds in the Trust?

Will the Trust provide for ‘intervention’ or help for the child to cope?


Is an Incentive Trust the best trust vehicle for every circumstance? As with many things…the devil is in the details.

A qualified Estate Planning attorney is probably the best ‘investment’ that you can make when establishing a Trust – if you want to achieve the outcome that you anticipate in the future.

Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”                 –Ayn Rand

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Family Talks and Bad Habits

Money is a stressor…trying to get it, grow it, save it, decide how to spend it, bequeath it and yes, even inheriting money… all can cause lots stress within families.

Consider also that talking about money with their kids, for certain generations, was taboo.

That’s why I was happy to see our friends at Squared Away tackling the subject of money habits in their article: Parents Pass (Bad) Money Habits to Kids. (October 27, 2016)

There are many terms related to issues of parents and kids, when it comes to their financial education (or lack of it). Terms like: financial enabling; financial enmeshment; financial dependency vs becoming financially independent; financial socialization are just a few.

But, the reality is that: parents should start age-appropriate financial conversations with their children; instill good financial practices early on; and educate by example- thereby creating good ‘money habits’ that can last a lifetime.

I have written several articles about parents, young adults and finances: Our Future Millionaires; Catching Your Student on the Fly and Inheritance and Your Financial Legacy – (available on my website

Giving a gift or inheritance to your offspring is not enough, unless you have instilled the ability to manage money wisely.

An example from the Squared Away blog: “… college students who remember that their parents had healthy credit card practices, such as living within their means, are more successful at keeping their college debt under control.”

Your estate planning attorney can help you decide when and how much financial information you might want to share with your beneficiaries.

Meanwhile, continue to share good ‘money practices’ with your children.

“You must gain control over your money or the lack of it will forever control you.”  –Dave Ramsey

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Tax Freedom Day 2017

I had written that last year, Tax Freedom Day in the United States passed relatively unheralded. Tax Freedom Day is the day that Americans had earned enough to pay the $4.99 trillion 2016 tax bill.

With our 2017 tax bills looming, it was a good time to look at the pain other countries suffer during their tax time.

According to the Tax Foundation, a tax research organization, Tax Freedom Day in the United States fell on April 24 in 2016. But I was interested to learn that this is not true in every state.

Yes, Tax Freedom Day can depend on the state where you reside. For those people in New York and New Jersey, they must wait the longest for their “freedom”.

New York’s Tax Freedom Day fell on May 11, 2016 and New Jersey’s fell on May 12, 2016 (the longest wait of all the states).

There is another interesting website:

According to that site, in 2017 the United States Tax Freedom Day fell on April 9, 2017.

Other countries also keep track of their ‘tax freedom’ (some countries call it Tax Liberation Day).

A quick perusal of the website showed me that Norway, having July 29 as their ‘freedom day’, would have to wait the longest of any country to cover their tax debt collections.

A word about the Tax Foundation ( – their website produces a collection of interesting data about taxes and their variations by State. This includes state sales tax; cigarette tax; gasoline tax; tax on alcohol; wireless taxes, and property taxes– all of which can vary greatly.

For example, the highest state tax on cigarettes is in New York, at $4.35 per 20 pack (2016).

So if you are curious about how your state tax compares with other states, the tax foundation site has some interesting data and also some historical perspectives.

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Don’t Lose Out…IRA Contributions

There is still time to make that IRA contribution!

(Visit my website: for more articles)

Here is a very general breakdown: (Consult with your financial advisor/institution or attorney for all the rules).

If you have a Roth IRA or traditional IRA and you are over 50 you can contribute $6,500 per year into the IRA. Don’t miss the opportunity to contribute – up to the maximum.

Remember:  If you reach 70 ½ in 2017…withdrawals from a traditional IRA are mandatory (or there will be penalties.)  The financial institution where you have the IRA can assist you with specific questions and guidance.

At 70 1/2 years of age,  there is no withdrawal requirement for Roth IRA, but again, consult with your financial institution for all the rules of the Roth IRA.

Special Note: Alimony is considered income.  Not only do you have to claim it on your taxes, but since it is income – even if you are not working and receive alimony…alimony income can be used to fund an IRA. Again, check with a financial advisor/attorney in your specific situation.

Hint: Making automatic deposits into your IRA throughout the year can be a great way to ‘grow’ the IRA funds with less financial ‘pain.’

Final Note: IRA’s and other financial instruments are often a mainstay of Estate Planning.  Make sure you know the beneficiary designations of each financial instrument and review them annually.

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Employee Retention and the Small Business

Finding and keeping good employees is always a challenge and more so for the small business person. Small business competes with conglomerates for the best, most talented, the most motivated and the brightest employees.  But smaller businesses do have some advantages. Indeed, some people choose never to work for a large conglomerate, but rather to develop their careers solely within the small business community.

For those of you reading my blogs you know that I am the product of a small family- owned business. My legal clients now are often family business owners of small and medium- sized firms.  Thus, I am always eager to share articles and information to help them.   And the area of employee retention takes the spotlight today.

According to the Bureau of Labor Statistics, the average worker may hold ten different jobs before age forty.

According to CNN.Money article: “The new normal: 4 job changes by the time you’re 32”by Heather Long   @byHeatherLong   April 12, 2016

Change is the new norm:  Top employers accept that an interviewee on their resume will show a job change as often as every three years!

Total lifetime job changes:  Forrester Research ( predicts that today’s youngest workers will hold twelve to fifteen jobs in their lifetime!

Training new employees is expensive and even more of a challenge for the small business owner. Training takes time, and often TIME is something the small business owner lacks.

One idea coming from is information as to why employees are likely to leave a job. With such information, the small business owner can tailor their unique work environment toward the retention of good employees.

Shift of priorities:  It appears that, rather than big salaries, workers are now interested in keeping a good Work/Life Balance. When that balance between work time and family/leisure time gets seriously unbalanced, then the employee is more likely to leave their job and seek a job with better balance.

The final word: Offer your employees a fair salary;  provide reasonable opportunity for advancement with relevant job training;  manage a decent benefits package; develop a healthy work environment without undue stress and with meaningful work assignments; practice a good management style; and a situation offering good work/life balance – and you just might be able to retain your best employees and compete for the best and brightest out there.

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A Lot You Did Not Know…About Property Sales

Two excellent articles landed in my inbox, and they will be particularly useful to first- time home buyers/sellers and others.

Both articles are from * and they offer detailed information in clear and precise language. The first article is about quit claim deeds; the second is about contingency clauses.

If you are ever faced with the purchase of a property with a quit claim deed, you may want to be informed about the risks and guarantees of such a deed.

Top Five Things to Know About Quitclaim Deeds By Jean Folger (Updated March 2, 2017) – the article does an excellent job in explaining the basics of quit claim deeds.

The second article by Jean Folger is:

Contingency Clauses In Home Purchase Contracts by Jean Folger (Updated March 3, 2017) – an excellent review of the use of contingency clauses.

When in doubt, have the property purchase or property transfer documents reviewed by a qualified professional. A review could save you problems later when you want to sell the property.

* Investopedia is also on Facebook

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Why You Should Care…if Your Lawyer Attends Conferences (excerpt)

If you are a professional, you attend conferences. That’s what you do.  Some conferences are for team building, some educational, some are just for the fun of it.  So, why should anyone care if their attorney attends any legal conferences?

One reason is…Continuing Legal Education, better known as CLE’s. Yes, lawyers need continuing education credentials for licensing requirements, like many other professionals.

To practice law in the State of Colorado: A lawyer must obtain Continuing Legal Education credits (CLE’s).   This is in accordance with RULE 260 OF THE COLORADO RULES OF CIVIL PROCEDURE (Colorado Supreme Court)   Unless an attorney files for inactive status, they must comply with the requirements of Rule 260 (Colorado). If an attorney takes inactive status, CLE requirements are suspended for the time they are inactive. HOWEVER,  an attorney may not practice law in Colorado if the license is inactive.

A lawyer in Colorado must earn forty-five general credits over a compliance period of three calendar years. Seven of these credits must be in legal ethics. Credits are units of value assigned to a qualifying activity usually on the basis of the time a lawyer is involved in the activity. The CLE credit requirements vary from state to state.

According to the Colorado Supreme Court: “Continuing legal education (CLE) credits are earned by taking part in certain organized legal educational activities. To receive credit for the activity, its primary focus must be the increase of professional competence of registered attorneys and judges, and it must deal with subject matter directly related to the practice of law or the performance of judicial duties.”

Most lawyers attend several conferences each year (and I can assure you, they are not free). Each discipline of law holds conferences.  For Estate Planning lawyers there are the ACTEC (American College of Trust and Estate Counsel) conferences (among others.)

But I have not answered the question posed…why should you care about legal conferences? Let’s take the example of an estate planning lawyer.  Besides knowing that your lawyer has the credentials to practice law in your state you would want a lawyer who is on the cutting edge of information – one who keeps abreast of the hot topics that would affect your estate plan. Your lawyer should have intimate knowledge of changes in tax laws that affect your future and those of your heirs. You would not want a lawyer who is using ten year old law books as sources of reference material!

Another benefit for you is that, during the conference your lawyer is exposed to a range of presenters, each a specialist and recognized in their field. Attendance gives your lawyer a perspective they might not have by just reading legal articles or talking to their partners. Often global legal firms are represented at conferences as speakers.  This is important for anyone with an estate that is ‘international’, holdings in other countries or residences in countries outside of the United States. Attendance at conferences overcomes any ‘local bias.’  A legal conference draws attendees from across the nation (and from other countries) and as such a lawyer gets a broader perspective than just their own state’s legal issues.  Changes happening in one state might very well quickly become legal issues in YOUR state.

So, the bottom line is – Yes, it is important to you, the client, for your attorney to attend legal conferences on a regular basis.

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Tidbits From a Conference

Those of you who have read my bio and webpage know that I attend a number of legal conferences throughout the year. What I listed is only a small selection of seminars, sessions, programs and conferences.

See the excerpt of my posting (to follow) : Why Should You Care if Your Attorney Attends Conferences  that sums up why legal conferences are important to you, the client.  In short, you want your attorney to attend legal conferences to stay “at the top of their game” on topics and issues in their field of law.

The most recent conference that I attended in March, had several interesting hot topics, legal issues and professional programs. It was physically impossible to attend them all, but I did my best.

A few of my top picks were –

Member of the Fiduciary Income Tax Committee (my background in tax law);

Asset Protection Committee;

Estate and Gift Tax Committee;

International Estate Planning Committee (critical information for clients with international interests and holdings) ;

Employee Benefits Committee (for my small business owners);

State Laws Committee (for clients with assets in other states) and

Business Planning Committee (business clients with estate planning concerns)

No wonder I did not have much time to luxuriate in the hotel accommodations!

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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Reaching Milestones – 175 blogs and Counting

I have been writing my blogs and articles since 2013, a total of 175 of them so far (many others posted to my website, and I felt it was time to celebrate that milestone.

Over the past years, the topics I posted have been wide-ranging, just like the many matters of estate planning.  I have found my ideas from past case issues; through clients; from colleagues; from interesting websites and many topics have simply landed in my inbox.

The one thing that the ideas, topics and articles have in common is that they were something I wanted to share with my followers; an issue that would interest them; possibly offer a new perspective, insight or solution to a problem. Some might feel that milestones are simply goals that we set ourselves.  I prefer to think of them as highpoints and indicators of achievements yet to be accomplished.

We all have milestones in our lives, some of them loom large and others quite small. Life’s milestones are sometimes uplifting, they are challenges well- met and conquered.  The thing milestones have in common is that we can look back and feel that we have accomplished something;  whether that has been a great goal or a minor objective  in our lives.

Everything we do, every accomplishment we have, every milestone we pass has come in part because of the efforts of others.”― John C. Maxwell

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Do You Own Property in Another State?

Having a property in another state is often a great pleasure. Often the property is a vacation get- a- way  and it offers the opportunity to enjoy a different part of the country, enjoy the snow (or a warmer climate) and create new experiences.

But, what happens when the owner(s) of the property dies and the property becomes part of the probate system?

The answer in many cases is …ancillary estate. Yes, there is a process where the property might become part of the probate system of another state – in short, going through probate twice. To put it simply, states and their probate courts do not necessarily have legal authority in another state.

There are ways to avoid this situation, and setting up your estate plan to include out-of-state property could be the best advice you read today.

Here in Colorado there is a process – ancillary filing. Below is just a small portion of the information required if you have property within the state of Colorado (and do not live in Colorado) and are going through the probate process in another state; for example the deceased resided in Florida and had a mountain retreat in Colorado.

A portion of the ancillary estate documents of the Colorado court:

“There must be a probate case open in another state. Through an ancillary filing, the Colorado court acknowledges an appointment by another state and gives that person the authority to act in Colorado.”

The person who was actually appointed as Personal Representative/Executor/Administrator by the other state must be the same person asking to be given authority to act in Colorado.

If you are opening an ancillary estate in Colorado in order to transfer real property, you should know that you will need to file an ancillary estate proceeding in the court for every county where you need to transfer property.

The court will need certified, authenticated, or exemplified copies of the documents from the court in the state where the original probate was filed, including the will, if there is one.”

The above is just the start of the process.

If you have questions about ‘ancillary estate’ or other property issues, please feel free to contact me via the contact information on my website.

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