A Time for Reflection by Lloyd McAlister

As that great philosopher Annette Funicello once said, “Life is forever going to change, you know?”

Major changes have occurred in recent years, and even in recent months, in the laws affecting wealth transfer tax (estate tax, gift tax, generation skipping tax, etc.), wealth preservation and liability protection , end of life decision-making through advance healthcare directives and powers of attorney , and private and public sources of financing long-term care costs .

We encourage our clients to review their personal planning at least once each year, suggesting a regular time of year, such as shortly after the new year, in order to establish planning review as a matter of habit and discipline. Historically, the review consisted of assessing whether any significant changes in personal circumstances had occurred since the last review (births, deaths, marriages, changes in income/wealth, etc.).

Now, however, given the rather significant changes which have occurred, we encourage you to pull out those old papers and files and review them with the following issues in mind:

Tax formula? Determine whether the disposition of your assets at your death, whether through a traditional Will or a revocable trust, is accomplished through the use of a tax formula. Look for clues such as a reference to trusts “A”, “B” or “C” or to a “Marital Trust” and a “Family Trust” or a “Bypass Trust.” Also notice any references to estate tax “exemptions,” “unified credit” amounts, “applicable exemption” amounts, etc. in determining the value of assets to be distributed to a beneficiary or to a trust for the benefit of a beneficiary as a result of your death.

Lifetime gifting plan? If you have been making regular gifts to friends and/or family members, with tax planning as part of your motivation, you should have your gifting reviewed in light of current federal gift tax rules and the corresponding state and federal estate tax (inheritance tax) laws which may affect the benefit of such gifting or the way in which it should now be done.

Asset protection strategies? If part of your personal planning in the past was motivated by asset protection, or liability avoidance strategies, and if that planning has not been reviewed as a regular, ongoing part of such planning, you should have the planning reviewed to confirm it remains necessary and effective to accomplish your original objectives.

Retirement accounts? Are your current beneficiary designations appropriate given the size of your account(s) and family circumstances? New charitable gifting options are available as well.

End of life decision-making? The recent case of Terri Schiavo in Florida reminded us all once again of the fragility of our human lives and the importance of documenting our wishes and instructions concerning end of life care. Determine whether you have an “advance directive for healthcare” including the so-called “living will” and the appointment of a healthcare proxy. Also, if you have an advance directive, determine whether its provisions conform to the most recent changes made by the Oklahoma legislature in 2006, especially with regard to documenting your wishes concerning an “end stage condition” which, prior to the 2006 change in the law, was not covered by Oklahoma’s statutory advance directives. " End - stage condition " means a condition caused by injury, disease, or illness, which results in severe and permanent deterioration indicated by incompetency and complete physical dependency for which, to a reasonable degree of medical certainty, treatment of the irreversible condition would be medically ineffective. The other two conditions which have traditionally been covered by Oklahoma’s statutory advance directive are the “terminal condition” and the “persistently unconscious condition.”

Long-term care? As we live longer, concerns persist not only about end of life decisions and quality of life but also about the great unknown of long term care costs. The federal funding of long-term care costs for eligible Americans under the Medicare and Medicaid programs continues to change, including changes concerning the eligibility for such assistance. Great care should be taken in evaluating this moving target, especially with regard to decisions affecting one’s own future financial security and independence.

The great inter-generational wealth transfer? Much has been written in the last decade about the vast amount of wealth which is expected to move between generations in the coming years. With the issues mentioned above in mind, profound uncertainty surrounds questions about when and how this transfer of wealth should occur and, when the time comes, who should benefit. Modern planning techniques, including the use of trusts and charitable foundations, makes it possible for the “common” man or woman to employ a complex wealth transfer strategy which reaches decades, even centuries, beyond his or her own lifetime. Such opportunities, and the philosophical issues they raise, were for centuries only the province of those of great wealth and position. Does your planning address all your goals and dreams for the stewardship of your wealth beyond your lifetime?

If you are an existing planning client of McAlister, McAlister, McKinnis & Tuggle, we will be pleased to retrieve your file(s), upon your request, and give your planning a cursory review for the purpose of identifying whether any of these issues are obviously in question in your own planning. If the review indicates updating of your planning is suggested, the review fee will be incorporated in our estimate of the time and expense required to do the necessary updating which, of course, can only be determined after discussion of the review findings with you. In most instances, additional information will be useful, if not necessary, for the review to serve its highest and best purpose (such as confirming your current family and financial circumstances, as well as your current planning objectives and preferences). This additional information can be obtained in most cases through the use of a planning questionnaire and a planning conference.

“When you are young and healthy, it never occurs to you that in a single second your whole life could change. ” Annette Funicello - the teen star of the Walt Disney studio in the 50's and one of the original “Mouseketeers” is 64 and has lived with multiple sclerosis for many years.