Category: Wisdoms

Estate Planning Mirrors Life

As a member of ACTEC, I am privileged to learn from and exchange ideas with some of the most skilled and dedicated trust and estate lawyers in Hawai‘i. I often wonder why most of our discussions focus on probate and litigation issues rather than on how we can help plan to mitigate family conflict and avoid probate.

As professionals, we must continue to fight against the inclination to treat estate planning as “the preparation of documents.” Rather, we ought to consider ourselves more as counselors of law” who guide their clients through a process that considers all factors — understanding clients’ intentions and hopes, first and foremost — as well as convenience, probate avoidance, minimization of tax, family relationships, liability and fashioning a plan well-suited to their unique needs. This includes proper counseling and assistance in the funding of a trust, and engaging in meetings with family members and professionals to communicate intentions and the plan so that everyone — family, client and professional — are working together seamlessly with common goals.

Estate planning is not a commodity of different pieces of documents put into a three-ring binder. Estate planning mirrors life, where change is constant and communication is key.

STEPHEN B. YIM, ATTORNEY AT LAW
2054 S. Beretania St., Honolulu, HI 96826
808-524-0251 | www.stephenyimestateplanning.com

As a member of ACTEC, I am privileged to learn from and exchange ideas with some of the most skilled and dedicated trust and estate lawyers in Hawai‘i. I often wonder why most of our discussions focus on probate and litigation issues rather than on how we can help plan to mitigate family conflict and…
The Time to Plan is NOW

When I was in elementary school in the 1960s, my family’s set of encyclopedias claimed that I could expect to live to the ripe old age of 70. That seemed incredibly old to me. Fast-forward to 2020, and the current consensus is that I will live into my 80s, barring a catastrophic illness or an accident. Advances in medical science are probably the primary reason for this difference, but now, when 80 seems pretty young to me, I have to ask, is a longer life necessarily a good thing? It is not that difficult to think of compelling reasons in order to answer that question in the negative.

Although science has stretched our lifespans, it has not yet perfected a way to keep us mentally and physically competent until the ends of our lives. The net result is that we live longer, but our quality of life in the extra years that science has granted us may not be what we would desire. In our grandparents’ day, senility was not unknown, but back then, most people died before they had a chance to plumb the depths of Alzheimer’s. Each person reading these words must recognize that he or she has about a 70 percent chance of being incapacitated to the point of needing long-term care for some period of time before the final bell.

Planning for the likelihood of eventual incapacity can make our final years much more bearable for ourselves and our loved ones than will otherwise be the case. So each of us needs to include in our estate planning arsenals against the inevitable — not only clear instructions about passing on our things, but also clear chains of authority and clear instructions about how decisions will be made on our behalf if we lose the ability to make those decisions.

Most of us would prefer not to think about these things and most of our children (the good ones, anyway) want to think about them even less. But that is a poor excuse for leaving our loved ones in a haze of difficult decisions that could have been considered, analyzed and planned for in advance. Seeing how our minds and bodies are unlikely to improve over time, a plan delayed may very well end up being a wishful thought and the source of deep regret.

Gather your loved ones and your trusted advisors and document the path that you will follow if time and health take you where you do not want to go. This process requires honesty, courage and wise counsel. Ultimately, it will be a source of tremendous peace.

SCOTT MAKUAKANE, Counselor at Law
Focusing exclusively on estate planning and trust law.
www.est8planning.com
808-587-8227 | maku@est8planning.com

When I was in elementary school in the 1960s, my family’s set of encyclopedias claimed that I could expect to live to the ripe old age of 70. That seemed incredibly old to me. Fast-forward to 2020, and the current consensus is that I will live into my 80s, barring a catastrophic illness or an…
Now’s the Time: Charities Need Our Help

In these challenging economic times, many worthwhile charitable organizations find themselves in a precarious financial position. Meanwhile, they are experiencing unprecedented demand, especially those charities that provide basic needs like food and shelter.

Thankfully, new, unique provisions in the tax code have been implemented in response to the COVID-19 crisis, creating more incentives for giving. You may be able to better leverage your donations with tax-smart strategies. So, if you’re able to extend your generosity during this time of increased need, it may be an opportune year to make charitable contributions.

Everyone Can Claim a Deduction

In 2020, the standard deduction is $12,400 for a single tax filer or $24,800 for a married couple filing a joint return (even more for those age 65 or over). Your itemized deductions would need to exceed those levels to benefit from itemizing. Those who don’t typically itemize are not able to deduct charitable contributions from their taxes. However, on your 2020 tax return, you will be allowed to deduct up to $300 in cash contributions to qualified charities even if you choose the standard deduction.

A Higher Ceiling on Tax-Advantaged Giving

If you itemize deductions and plan on large gifts, the tax rules prevented you from claiming a deduction that exceeded 60 percent of your adjusted gross income (AGI) in a single year. In a unique provision for 2020, you can now claim a deduction valued at up to 100 percent of your AGI for charitable contributions. If your financial circumstances put you in a position to make substantial gifts, this will be the most favorable year, from a tax perspective, to do it.

A Tax-Efficient Distribution Strategy From Your IRA

A special provision for 2020 allows individuals subject to Required Minimum Distributions from IRAs and workplace retirement plans to forego those distributions. If you don’t need to draw from your IRA to meet your income needs for this year, you still have an opportunity to put the funds that would have been RMD dollars to use as a charitable contribution. The most tax-efficient way to do so is with a Qualified Charitable Distribution (QCD). Up to $100,000 per year can be contributed to charitable organizations in this way. With a QCD, if you are 70.5 or older, funds are distributed directly to the charity from your IRA so you don’t have to claim the income before making the contribution. That is a tax-saving strategy you can use whether you itemize deductions or claim the standard deduction.

Put a Giving Strategy in Place

Your circumstances today and your financial future may require careful reassessment given the current economic challenges. Incorporate your charitable giving strategy into your comprehensive financial plan review. Check with your financial advisor and tax professional as you consider your options for giving in 2020 and beyond.

MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
808-952-1222, ext. 1240 | michael.w.yee@ampf.com
Michael W. K. Yee, CFP,® CFS,® CLTC, CRPC,® is a Private Wealth Advisor, Certified Financial Planner™ practitioner with Ameriprise Financial Services Inc. in Honolulu, Hawai‘i. He specializes in fee-based financial planning and asset management strategies, and has been in practice for 36 years. Investment advisory products and services are made available through Ameriprise Financial Services LLC., a registered investment adviser. Ameriprise Financial Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Ameriprise Financial Services LLC. Member FINRA and SIPC. ©2020 Ameriprise Financial Inc. All rights reserved.

In these challenging economic times, many worthwhile charitable organizations find themselves in a precarious financial position. Meanwhile, they are experiencing unprecedented demand, especially those charities that provide basic needs like food and shelter. Thankfully, new, unique provisions in the tax code have been implemented in response to the COVID-19 crisis, creating more incentives for giving.
What Hawai‘i Law Requires Regarding Condos, Foreclosure & Mediation

By virtue of buying a condominium, each unit owner becomes a member of an association and agrees to share the costs of operating that association. For example, owners share the cost of community lighting, water and grounds-keeping, usually via a set monthly maintenance fee. Special assessments are extra charges unit owners pay to cover larger or unforeseen expenses. They are becoming more common because many condominium associations in Hawai‘i are comprised of aging buildings and infrastructure. Corroded iron pipes and old elevators are a common cause of special assessments.

Association boards have a fiduciary duty to collect funds from owners in order to pay the bills to maintain and make timely repairs to the property and its structures. Boards and associations may incur liability for failing to do so. In addition, the value of the condominium may decrease, and it may become uninsurable.

Sometimes owners are not able to pay these shared expenses and dispute the charges. Failure to remit in a timely fashion can result in penalties, fines, late fees, lien filing fees, attorneys’ fees and costs, liens, and possibly, foreclosure.

The Hawai‘i State legislature decided that it was important to have clear and effective rules relating to condominium foreclosures and wanted to encourage the use of mediation for penalties and other charges, so it changed both foreclosure and condominium law.

Condo Foreclosure

Under the nonjudicial foreclosure law (chapter 667, Hawai‘i Revised Statutes (HRS)), if the parties have agreed on a payment plan to stop a foreclosure from continuing, unpaid fines assessed by the association are not a default under the plan. (See section 667-94(c), HRS.) As long as the owner is not in default in any other manner under the plan, the association must notify the unit owner in writing of the right to mediation and cannot deduct any fines or attorney fees from the owner’s plan payments. The parties then can attempt to resolve any dispute over fines and attorneys’ fees through mediation within 30 days of the association’s written notice. If, however, the owner refuses to mediate or the parties cannot reach an agreement or the owner defaults under the plan, then the association can start foreclosure proceedings. Different rules allowing for payment plans in judicial foreclosures are set forth under section 667-19, HRS.

Foreclosure Mediation

Under the condominium law (chapter 514B, HRS), any notice of default and intention to foreclose nonjudicially (under section 667-92(a), HRS) must be specifically worded and additionally state that the owner may request mediation by delivering a written request for mediation to the association by certified mail, return receipt requested or hand delivery within 30 days after service of the notice. (See section 514B-146.5, HRS.) If the association does not receive a timely request, it may go ahead with nonjudicial or power of sale foreclosure. If the association receives a timely request, it must agree to mediate and cannot proceed with nonjudicial or power of sale foreclosure until it has participated in mediation or the time for completion has elapsed. The completion of the mediation is time-sensitive (usually 60 days). If the association is using the power of sale provision provided in the condominium law, the power cannot be used in certain situations, for example deployed military outside of the State of Hawai‘i or certain liens based solely on fines, penalties, or legal or late fees. (See section 514B-146.5, HRS.)

Owners should always promptly check with their attorney regarding foreclosure matters and issues.

Condominium Law

Outside of foreclosure law, under the condominium law, there is also a “pay first, dispute later” provision to protect the integrity of the condominium and in fairness to other owners that everyone pays their share. This provision, however, applies only to common expense assessments which are expenses assessed to all owners in proportion to their interests. It does not apply to other expenses of the association. (See section 514B-146(f), HRS.)

Any payment by an owner must first be applied to outstanding common expenses. Then the payment can be applied to other association charges in a list of priorities (assessed charges such as utility sub-metering and cable then unpaid late and legal fees, fines and interest — by board policy.) If, however, an owner designates that any payment is meant for a specific charge that is not a common expense, the payment may be applied as directed by the owner — even if the common expense remains unpaid. (See section 514B-105(c), HRS.)

Condominium law allows an owner who disputes the amount of assessment to request a written statement about the assessment from the association. (See section 514B-146, HRS.) If the owner disputes the information in the association’s written statement, the owner may request another written statement which states that the owner has no right to withhold common expense assessments, the owner has a right to demand mediation or arbitration regarding the validity of the common expense assessment (provided it is paid in full and current), payment of the common expense assessment shall not prevent the owner from contesting common expense assessment, and if the owner contests any penalty, fine, late or lien filing fee, or other non-common expense assessment, the owner may demand mediation prior to paying those charges. The owner has 30 days from the date of the written statement to file a demand for mediation on the other charges. If the owner does not do so, the association may proceed with collection of the charges. If the owner requests mediation within 30 days, the association cannot collect any of the disputed other charges until it has participated in mediation which must be completed within 60 days of the owner’s request. Only if the mediation is not completed within 60 days or the parties cannot resolve the dispute by mediation may the association proceed with collection of any amounts due for attorneys’ fees and costs, penalties or fines, late or lien filing fees, or any other charge that are not a common expense of all unit owners.

STATE DEPT. OF COMMERCE & CONSUMER AFFAIRS — REAL ESTATE BRANCH
808-586-2644 | www.hawaii.gov/hirec
This information is for educational and informational purposes only. Owners and associations should consult their attorneys for legal advice and assistance.

By virtue of buying a condominium, each unit owner becomes a member of an association and agrees to share the costs of operating that association. For example, owners share the cost of community lighting, water and grounds-keeping, usually via a set monthly maintenance fee.
Donating with Care
Hawai‘i’s residences are often targeted by door-to-door solicitors asking for donations. Here in Hawai‘i, we are a generous people. We take pride in living the Aloha Spirit, but we must exercise caution as well. We must know the basic things about charitable giving in the event that anyone tries to take advantage of our good nature. Hawai‘i’s Better Business Bureau (BBB) suggests that you:

Find out how your charitable contributions are being used.

Beware of appeals that bring tears to your eyes but tell you little about what the charity is doing about the problem it describes so well.

Watch out for statements such as “all proceeds will go to the charity.” This can mean that only the money left after expenses, such as the cost of written materials and fund raising efforts, will go to the charity. These expenses can be high, so check carefully.

Check with Hawai‘i’s BBB for information on local charities and solicitors operating in Hawai‘i. Let the BBB’s resources work for you. Check out a business or charity at www.hawaii.bbb.org

Give with the knowledge that those soliciting have an obligation to be transparent to the public. Be assured that you are making informed decisions, and have the confidence that every donation you make is positively impacting lives. When in doubt about any charity or organization, contact Hawai‘i’s Better Business Bureau for more information.

Bonnie Horibata is vice-president of Hawai‘i’s Better Business Bureau. BBB provides objective advice, business and charity reports, and information about topics affecting marketplace trust at www.bbb.org
Hawai‘i’s residences are often targeted by door-to-door solicitors asking for donations. Here in Hawai‘i, we are a generous people. We take pride in living the Aloha Spirit, but we must exercise caution as well. We must know the basic things about charitable giving in the event that anyone tries to take advantage of our good…
Meaningful Legacies
What are you leaving behind? This is a question that all too many of us fail to address before it’s too late. It’s not just a question about money, but about the entire heritage that you want to pass on to future generations—to those in your family and even to society as a whole.

When mapping out your legacy plan, there are many things to think about: your current assets and debts, tax implications, income, expenses … and the list goes on. While it might seem like a lot to sort through—especially once you tack on the emotional aspect of planning for your own end of life—the reward of proper planning is knowing you’ve done all you can to enhance the well being of your beneficiaries.

Here are a few issues to consider:

Taxes: The federal estate tax has been eliminated for individuals who passed away in 2010 (barring action from Congress to reverse the situation), but this was just a temporary change to the law. The estate tax is scheduled to reappear by 2011, possibly affecting estates as small as $1 million (compared to the previous law with a $3.5 million tax exemption level). Even now, estate and inheritance taxes may still affect many on a state level.

In addition, beneficiaries may not escape income taxes. Those who inherit a traditional IRA, for example, will have to pay applicable income tax on distributions. An alternative is to convert a traditional IRA to a Roth IRA, which requires that the income tax be paid currently. This will allow beneficiaries to enjoy tax-free distributions for years to come.

Managing the Estate: Will anybody manage your money with the care and conviction that you practice today? Not likely, unless you make your wishes clear. A will allows you to specify who will administer your estate, and how your property will be distributed. If you have minor children, a will can also identify to whom their guardianship will be transferred. Be sure to put a comprehensive will in place and revisit it on a routine basis, or whenever major life events occur.

Depending on your situation, you may also want to consider setting up a trust, or other type of ownership arrangement, to provide some structure to the management and disposition of assets.

Careful planning is all the more crucial for small business owners who need to determine the future of their company, including who will take charge and the financial implications of business succession. If your business provides products or services that others have come to rely on, it is important to plan ahead to maintain normal business activity in your absence.

Protection: Keeping assets protected from potential creditors or the impact of future lawsuits is another important aspect of legacy planning. In some states IRAs, annuities and insurance can be useful tools to help minimize the potential exposure. This is an issue regardless of the size of the estate but should only be done in consultation with your legal advisor.

Organization: One of the greatest gifts you can leave behind is a set of well-organized records. Good documentation of all assets and debts, where everything important can be found and key contact names will go a long way toward the proper disposition of your estate. You can also leave a letter, separate from a formal will, outlining specific wishes regarding matters like organ donations or the conduct of your funeral, as well as how specific items you own should be distributed to others—but the rules on this vary state to state.

Seek the advice of tax, legal and financial advisors to protect the legacy you’ve been working to build.

Michael W. Yee is a financial advisory practice of Ameriprise Financial Services, Inc. As a financial advisor, Yee’s customized advice is anchored in a solid understanding of client needs and expectations. For more information, please contact Michael W. Yee at (808) 952-1240. Advisor is licensed/registered to do business with U.S. residents only in the states of Hawaii. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.© 2010 Ameriprise Financial, Inc. All rights reserved.
What are you leaving behind? This is a question that all too many of us fail to address before it’s too late. It’s not just a question about money, but about the entire heritage that you want to pass on to future generations—to those in your family and even to society as a whole.
Internet-Drafted Estate Plans Don’t Save Money

If you want to, you can devise your own estate plan without the benefit of lawyers or other trained advisors. All you need is a credit card, a computer, a printer, and access to the Internet. With those tools, you can come up with a set of documents that may or may not accomplish your goal. The problem is that you will never know. The ultimate success or the failure of an estate plan is rarely revealed during the lifetime of the “planmaker.” (No, planmaker is not a real word, but you know what I mean.)

You have seen the commercials. You have heard the radio ads. But before you go to a website to have your estate plan constructed by a computer program, be sure to ask yourself this: Do I really believe that a brilliant lawyer, or a highly-paid radio personality who hawks these kinds of programs, would trust a website to come up with an estate plan for himself and his family? If it’s not good enough for them, why would it be good enough for you?

You may not have as large of an estate as Mr. Fancy Shmancy lawyer or Mr. Radiobucks, but everything you own is everything you own, and it makes a difference to you whether it goes where you want it to go after you are gone. It also makes a difference to you who will make decisions on your behalf if there is ever a time when you can’t make them yourself. Do you want your hand-picked decision-maker talking with your doctor when you’re unable to speak, or are you willing to leave it to chance as to who steps up to the plate?

The problem with computer-driven estate plans is that in the real world, more often than not, they don’t work. An effective estate plan involves far more than a set of documents, even very well drawn documents, that would stand up in any court in the land. For one thing, wouldn’t it be better to have an estate plan that will help you and your family stay out of court altogether? Going to court is not the end of the world, but it can be a royal pain. It would be better for you and your loved ones if you get your plan right the first time. It should also continue to work according to your wishes in light of changes in your health, your “stuff,” the law, and the list of people you like and trust.

Bottom line: There is a lot of really good information on the Internet. There is also a lot of misinformation. Do you have the training and background to tell one from the other when it comes to putting your estate plan in order? If so, knock yourself out, Professor. If not, there is something to be said for working with live professionals instead of an impersonal website that cares more about your credit card authorization than about what happens to you and your family. For more information about creating an estate plan that works, check out www.est8planning.com.

SCOTT MAKUAKANE is a lawyer whose practice has emphasized estate planning and trust law since 1983. He hosts Est8Planning Essentials, a weekly TV talk show which airs on KWHE (Oceanic channel 11) at 8:30 p.m. on Sunday evenings. For more information about Scott and his law firm, Est8Planning Counsel LLLC, visit www.est8planning.com.

If you want to, you can devise your own estate plan without the benefit of lawyers or other trained advisors. All you need is a credit card, a computer, a printer, and access to the Internet. With those tools, you can come up with a set of documents that may or may not accomplish your…
Crisis Communication
If a parent suddenly fell unconscious or required emergency medical attention, would you know what do? Would you know what paperwork, insurance cards and medical records to bring with you to the hospital?

Once a medical crisis occurs, it’s too late to prepare for the large amount of information that is needed by doctors, hospital staff, family and relatives. The solution? A medical organizer.

With a medical organizer, you can log prescriptions, appointment times, treatment instructions and important contacts, plus track medical records, medical histories and vital stats.

There are many different types of organizers on the market. Many of them feature tabbed dividers, storage pockets and useful medical charts. It is a great communication tool. And, it can help you make important medical decisions.

Top 5 Reasons Why You Need A Medical Organizer

More control: If a parent suddenly becomes unconscious or incapacitated, a medical organizer speaks on his/her behalf. It provides the hospital and emergency staff with the most recent health information.

Peace of mind: One parent usually manages the finances, health records or housekeeping duties. Ask this parent to establish a medical organizer for both parents to avoid the burden of starting one from scratch when he or she is gone.

Lessen the guilt: Eliminate the guilt adult children experience with end-of-life decisions because a parent did not establish the proper legal documents related to health issues. Studies found that siblings do not always agree with end-of-life decisions for a parent and this can break up the best of families or instill longstanding resentment.

Minimize delays: Reduce delays with medical attention because important information was unavailable. You will also save time from having to search for information in safe deposit boxes, file cabinets or computer files.

Proactive approach to care: Preparing now can save time and grief for family members who will make important decisions on behalf of a sick parent. Doctors appreciate when adult children take a proactive approach to their parent’s health, especially as geriatric progression worsens over time. Your parents will appreciate you too!

Sandra J. Yorong is a financial advisor and author of the ‘Lifetime Medical Organizer’ and sold at retai bookstores and online at Amazon.com and www.lifemedorganizer.com
If a parent suddenly fell unconscious or required emergency medical attention, would you know what do? Would you know what paperwork, insurance cards and medical records to bring with you to the hospital? Once a medical crisis occurs, it’s too late to prepare for the large amount of information that is needed by doctors, hospital…
Let the IRS Take a Bath for Change

Nobody likes to pay taxes, but most of us like to take baths. Unless the bath is the kind where money flows out of your pocket and down the drain. If you feel like paying taxes is a lot like seeing your money go down the drain, you will be glad to know about an exciting estate planning opportunity that can help make the IRS take a bath after your death instead of your loved ones.

When you die, the IRS will want your loved ones to pay a tax on the value of everything you owned. The estate tax reaches all of your assets, unless some exclusion or deduction applies. The law gives each of us an exclusion (I like to call it the “coupon”) from the estate tax. You can pass the coupon amount to whomever you want, tax-free. In addition to the coupon, the law gives married couples an unlimited marital deduction so estate tax can be postponed until both Mom and Pop are gone. The marital deduction doesn’t get rid of the tax—it just postpones it. The coupon does get rid of the estate tax to some extent, but it is not enough to eliminate all of the estate tax for many families.

The law also allows an unlimited estate tax charitable deduction. So if you would rather have your money go to charity than to the IRS, you can bequeath all of the assets that would have been taxed at your death (everything over the coupon amount) to charity. But what if you want to give your descendants more than the coupon amount? Imagine sitting in a leaky bathtub. If you do nothing, eventually you and your rubber ducky will be the only things left in the tub. In order to maintain the water level, you will need to add water as fast as it is leaking out. If you add water faster than it is leaking out, the water level will rise, and eventually the tub will overflow.

Imagine the flood that would result if you took a nice long bath (say 25 years) with hot water filling the tub faster than it is leaking out. Now imagine that instead of an overflow of water, you had an overflow of money. This is exactly how CLTs work.

You put assets (hot water) into a CLT (bathtub). The trust agreement says that each year, 5% of the value of the assets will be paid to charity (5% of the water in the tub will leak out). Meanwhile, let’s say that the trust assets are earning income (the faucet is turned on and the tub is being filled) at the rate of 7%. The law allows us to pretend that the trust is earning only the applicable federal rate (AFR), which is set by the U. S. Treasury each month. If the AFR is 2% at the time we created the CLT, then we get to say that the trust will grow at a rate of only 2%. Net result? If payments are made to the charity monthly, the IRS will make believe that the trust will be completely exhausted in about 26 years, even though it will have far more in it at that time than when the trust was created. The best part is that all of the trust assets will go to charity and your loved ones, and not a cent will go to the IRS.

SCOTT MAKUAKANE is a lawyer whose practice has emphasized estate planning and trust law since 1983. He hosts Est8Planning Essentials, a weekly TV talk show which airs on KWHE (Oceanic channel 11) at 8:30 p.m. on Sunday evenings. For more information about Scott and his law firm, Est8Planning Counsel LLLC, check out www.est8planning.com.

By using a charitable lead trust (CLT), you can give assets to charity and your loved ones, without having to give anything to the IRS.

Nobody likes to pay taxes, but most of us like to take baths. Unless the bath is the kind where money flows out of your pocket and down the drain. If you feel like paying taxes is a lot like seeing your money go down the drain, you will be glad to know about an…
Savvy Shoppers: Find a Charity You Can Trust

The New Year is here and, because of the rough economy, it’s more important than ever to become a savvy shopper to both save money and prevent identity theft in 2011.

Being a knowledgeable consumer is ultimately about using money wisely and learning how to squeeze as much value as possible out of every dollar.

Charities seeking donations may tug at your heartstrings, but don’t succumb to pressure to give money on the spot. The Better Business Bureau (BBB) evaluates charities based on the use of funds, fundraising, governance, public accountability, solicitation and information materials.

Look for the BBB seal and always check a business or charity out with BBB before you buy or donate. Nationwide, nearly 400,000 businesses bear the BBB seal of accreditation and meet its standards. You can also find the seal on Web sites and at business locations. Check with the BBB to make sure that the charity or company that you are considering does not have a history of dissatisfied customers or unanswered complaints.

Check out a business or charity online at www.hawaii.bbb.org.

The New Year is here and, because of the rough economy, it’s more important than ever to become a savvy shopper to both save money and prevent identity theft in 2011.
Smart Advice; How to Choose a Financial Advisor

A financial advisor can offer valuable strategies and guidance to help you grow your savings and meet your financial goals and dreams. It’s important to select a qualified individual who is also a good match—personally and professionally.

How to find the right advisor for your financial future:

Ask for a preliminary meeting. Your first meeting should be complimentary and without any obligation on your part. Be wary if you are pressured to write a check or make any decisions at your initial consultation. During the meeting, listen carefully to what the advisor says. Does he or she ask questions to help clarify your financial circumstances and goals? Or are you listening to a canned speech? Be prepared to ask questions to determine how your advisor will work with you, including compensation (more on that later), frequency of meetings or calls and how your progress will be tracked. Look for someone who follows a process but is also flexible and responsive when your needs change.

Understand the compensation model. Advisors may charge a flat fee for services while others charge a percentage of assets under management. Still others may be paid commission on the sale of financial products. It’s not unusual for all three methods to contribute to an advisor’s earnings. It’s important to understand how commissions and fees will affect the growth of your portfolio and to be aware of potential conflicts of interest.

Compatibility matters. Your financial advisor should be someone who makes you feel at ease—enough so that you are comfortable sharing intimate financial details of your life. A successful advisory relationship can last for many years, so look for a person you can trust and with whom you enjoy spending time.

Review experience and training. Look for someone with a depth of knowledge and valuable experience in the field. Your advisor should be able to distill complex financial topics for you in a way that you clearly understand and apply to your situation.

Some advisors earn designations as part of their ongoing training. For example, a Certified Financial PlannerTM certification indicates completion of training in the financial planning process, with an understanding of insurance, investments, tax strategies and retirement and estate planning. Another designation, Chartered Financial Consultant (ChFC®), indicates the advisor has received training in personalized financial planning processes. Some financial planners also may be trained and experienced as Certified Public Accountants or attorneys.

Consider specialization, as needed. Look for an advisor who has special expertise to meet your specific needs, such as estate planning or succession planning for your business.

Check professional references. Take the time to call each reference. Ask specific questions to get an idea of the advisor’s strengths and weaknesses. If possible, talk to clients and professional associates. Credentials can also be verified by the organizations that award them.

Be a proactive client. Ask for what you need. If you aren’t satisfied with the level of service you receive, take your business elsewhere.

Michael W. Yee is a senior financial advisor with Michael W. Yee, a financial advisory practice of Ameriprise Financial Services, Inc. As a financial advisor, Yee provides customized financial advice that is anchored in a solid understanding of client needs and expectations, and provided in a one-on-one relationship with his clients. For more information, please contact Michael W.Yee at (808) 952-1240. Advisor is licensed/registered to do business with U.S. residents only in the states of Hawaii. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients. © 2010 Ameriprise Financial, Inc. All rights reserved.

A financial advisor can offer valuable strategies and guidance to help you grow your savings and meet your financial goals and dreams. It’s important to select a qualified individual who is also a good match—personally and professionally.
Beware: It’s the Return of the Estate Tax

The good news is that the federal estate tax took a vacation in 2010. The bad news is that it spent the whole year lifting weights and taking steroids. The estate tax is coming back in 2011, as big and bad as it has been in a long time. Now is the time to review your estate plan and make changes that could drastically affect how much of your estate goes to your loved ones, and how much goes to the IRS.

Between 2001 and 2009, Congress gradually reduced the maximum rate of the federal estate tax from 55% to 45%. It also gradually increased the “coupon” (the amount of property that you could pass tax-free) from $675,000 per person in 2001 to $3.5 million per person in 2009. That means that with basic estate planning, a married couple could pass up to $7 million free of federal estate tax, if they both died in 2009.

Then, in 2010 only, the estate tax was repealed. But like a horror film character who just won’t die, the estate tax returns again on January 1, 2011—only with a $1 million coupon and a 55% tax rate!

To pay for the 2010 estate tax vacation, Congress replaced the estate tax with an increased capital gain tax. Before 2010, any assets that passed to someone when you died would be valued at fair market value at the date of death. If your surviving spouse or heirs sold any assets that had increased in value during your lifetime, they would not have to pay capital gain tax on any of that growth. This is called a “step-up in basis.”

But in 2010, property that passes at death does not automatically receive this step-up in basis. Instead, each individual has a limited amount of property that can be “stepped-up” in value at the time of death. Property that does not receive this step-up value will be subject to tax on the increase in value from the date you first acquired the property. This means that the property could be exposed to huge capital gain tax liability if it is sold by your heirs!

Now is the time to look into how your estate will be affected by the return of the estate tax. Contact your trusted advisors to find out what changes should be made to your “rule book” —the set of documents that will say what happens to your stuff after you are gone. You may have some prime opportunities to make a huge difference in the amount of your estate that goes to your loved ones. You may even be able to “disinherit” the IRS entirely.

SCOTT MAKUAKANE is a lawyer whose practice has emphasized estate planning and trust law since 1983. He hosts Est8Planning Essentials, a weekly TV talk show which airs on KWHE (Oceanic channel 11) at 8:30 p.m. on Sunday evenings. For more information about Scott and his law firm, Est8Planning Counsel LLLC, check out www.est8planning.com.

The good news is that the federal estate tax took a vacation in 2010. The bad news is that it spent the whole year lifting weights and taking steroids. The estate tax is coming back in 2011, as big and bad as it has been in a long time. Now is the time to review…