A New Year Offers Opportunities
For Change
The New Year is ap-
proaching—definitely
time to celebrate. But once
you’re done eating, drink-
ing and making merry, re-
member that there are im-
portant tasks that require
your attention.
Lots of people change
out the batteries in their
smoke detectors at the turn
of the year. That’s also the
Joseph S. Karp,
C.E.L.A.
perfect time to check out
your estate plan. After all, your estate
plan is as important to your family
and financial safety as your smoke
detector is to your physical safety.
First, take a look at your powers
of attorney and your trustees. Are these
people still willing, and/or able to do
the job? I have seen powers of attor-
ney where the primary agent is some-
one who has died, been diagnosed
with Alzheimer’s, or moved to Hawaii.
If your power of attorney for health,
or property, or any of your trustees
can no longer serve, it’s time to pick
new people for these jobs and to mod-
ify your documents accordingly.
Fortune smiled on the stock mar-
ket this year, and many people’s port-
folios regained ground lost when the
dot com bubble burst. As a result, your
once-nontaxable estate may now be
taxable, even factoring in the current
$2 million estate tax exclusion. If you
wish to pass as much tax-free money
as possible to your heirs, you may
wish to start a gifting program. Cur-
rently, you may give away as much
as $12,000 per year per individual, to
as many individuals as you wish, with-
out reporting the gift. If you have a
spouse, that means together you may
give away as much as $24,000 to each
child or other loved one.
When the estate tax exemption re-
verts back to $1 million in 2011—as
it is scheduled to unless Congress
acts—your taxable estate may revert
back to being nontaxable.
Keeping your estate plan
updated in light of the es-
tate tax law can be a bit like
keeping your eye on a fast-
moving yoyo. If you’re
married, one way to pro-
tect yourself regardless of
the law is by creating a
spousal option trust. This
document allows you the
option—not the legal ob-
ligation—to set up a cred-
it shelter trust IF your estate is tax-
able at the time of the first spouse’s
death.
You also should examine your IRA
withdrawals in light of your current
income tax situation. You may need
to increase the amount of your with-
drawals.
If you do not have long-term care
insurance and lack the funds to pay
out of pocket should you need such
care, the new year should be your call
to action. The President signed The
Deficit Reduction Act on Feb. 8, 2006.
Although Florida is still working out
its interpretation of the law, it is cer-
tain that qualifying for Medicaid ben-
efits will become much more diffi-
cult. Lookback periods will probably
be lengthened, and the rules regard-
ing types and amount of exempt trans-
fers will become more restrictive. The
time to plan is now, so see a certified
elder law/estate planning attorney
without delay.
Enjoy the New Year, and here’s to
a healthy, happy 2007.
Joseph S. Karp is a nationally certified
and Florida Bar-certified elder law attorney
(C.E.L.A.) specializing in the practice of Trusts,
Estates and Elder Law. His offices are locat-
ed at 2500 Quantum Lakes Drive, Boynton
Beach; 2875 PGA Blvd., Palm Beach Gar-
dens; and 1100 SW St. Lucie W. Blvd., Port
St. Lucie. Call him at 561-752-4550 (Boyn-
ton); 561-625-1100 (Palm Beach Gardens);
or 772-343-8411 (Port St. Lucie). Toll-free
from anywhere: 800-893-9911. E-mail: KLF@
Karplaw.com. or website www.karplaw.com