In This Issue:• What You Need to Know About the Estate Tax• Protect Your Inheritance Before You

Walk Down the Aisle• We’ve Relocated Our Office

Volume 3, Issue 2 June 2015

$5.43 million is the 2015 estate tax exemption established by Congress, meaning your estate will not be taxed on assets up to that amount. If you think you are anywhere close to the limit, you should...

What You Need to Know About the Estate Tax If you do not know anything else about the federal estate tax, remember this number: $5.43 million.

The MendenFreiMan A Report on Legal Issues Affecting Privately Held Businesses and Personal Wealth

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The MendenFreiMan advisorpage 2

Continued from page 1 look at estate planning strategies that preserve wealth for your family and other beneficiaries. Assets left to a spouse can defer estate tax, and assets left to an IRS-recognized charity are not subject to the estate tax; but assets left to children or other beneficiaries do not receive those benefits.

We are constantly surprised at clients who are very good at building wealth and minimizing current taxes but have given little thought to protecting their assets when they are gone.

Do not make the mistake of underestimating your wealthMany people make the mistake of underestimating their wealth, particularly the value of real estate or businesses, as well as the growth of stock and bond portfolios. A vacation home that has been in the family for generations may have experienced surprising appreciation, and entrepreneurs can easily exceed the wealth limit when a business is valued on the open market. Assets may be included in the estate tax calculation even if they do not pass under your will, such as the proceeds of life insurance policies or the value of IRAs and other retirement plans. When nonliquid assets exceed the estate tax limits, survivors may have no choice but to sell them in order to pay the tax. This has resulted in the sale of many businesses, vacation homes and farms that children wanted to keep in the family. As a result, the estate planning process should begin by obtaining values for

everything you own or control. Accountants and financial advisers should be part of this process, which should then continue with a lawyer experienced in trusts and estates, as well as tax matters. Your attorney will also have one eye trained on Congress. Tax laws are constantly in flux; and although there does not appear to be any serious attempt at present to change the estate tax, that could change with the stroke of a pen. Your attor-ney can also advise you about state estate taxes. Georgia does not have an estate tax, but more than a dozen states have a form of this tax and your planning should take this into account.

Trusts almost always are the best optionSo far, Congress has made the exemption fairly easy to use, especially with a provision called portability, a rule that allows spouses to share each other’s $5.43 million exemption. If you die without using the full $5.43 million exemption, your surviving spouse can claim the unused portion of your exemption. Simplicity is the main value of using the

portability rule; but if you have enough wealth to need an exemption that big, you should consider a trust for tax and nontax reasons. Even if you are not close to the $5.43 million exemption limit, we recommend you talk to your attorney about setting up a trust, which allows you to safeguard your assets for your intended beneficiaries – protecting your wealth from lawsuits, divorces, and other creditors – and manage those assets for beneficiaries who may not otherwise be able or ready to do so themselves. We are constantly surprised at clients who are very good at building wealth and minimizing current taxes but have given little thought to protecting their assets when they are gone. Do not postpone this conversation. Call the attorneys at MendenFreiman today. If you have any questions regarding federal estate tax issues, please contact us at http://mendenfreiman.com/contact.php

MendenFreiMan 2015

We’ve Relocated Our Office*

We are pleased to announce that we have relocated to the Glenridge Highlands IIbuilding in the Central Perimeter area.

(p) 770-379-1450 | (f) 770-379-1455www.mendenfreiman.com *Phone, fax and website information remains the same.

Our new address is: MendenFreiman LLP 5565 Glenridge Connector, NESuite 850Atlanta, GA 30342Directions

As legal advisers and risk managers, however, we know that half of first marriages will end in divorce before the couple reaches their 20th anniversary. Broken marriages leave a trail of regrets, and not protecting the assets or inheritance you brought to the relationship is one of them. Studies show that only three to five percent of couples entering their first marriages have prenups.

While we do not want to tread on the turf of relationship advice columnists, we think it is reasonable for parties to a marriage to want to protect inherited wealth or property in a breakup. Your parents or other family members who may have worked hard to accumulate wealth they want to pass on to you likely will bristle at the thought of a disaffected spouse laying claim to half of those assets, to say nothing of getting your great-grandmother’s ring. The safest, air-tight strategy is to place assets in a trust. Divorcing spouses will find it near impossible to lay claim to assets in a properly constructed trust, which also has the advantage of allowing a benefactor to customize it to fit individual circumstances. If a trust can not be set up before the wedding or an existing trust does not cover everything you want to protect, a prenuptial agreement is the next best option. This is a difficult conversation for the love struck, but we suggest it as something you should consider if you are, or expect to be, the beneficiary of a substantial inheritance. Here are things to consider in prenups.

Do not waitWe know it is a conversation that is easy to postpone; but a prenup signed on the eve of a wedding may prove worthless in court. Some states actually require prenups to be signed a certain number of days before a wedding in order to be valid. Although Georgia does not have such a requirement, we recommend that the prenup be signed five or six months before the wedding. Courts are less likely to uphold a prenup agreement signed days before a wedding because it will support a spouse’s contention that he or she signed under duress. “I signed it because his/her family pressured me to do so,” is common testimony when these agreements are challenged years later; and a jury may be sympathetic to such a predicament.

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voluMe 3, issue 1 page 3

Protect Your Inheritance Before You Walk Down the Aisle It is hard to imagine anything less romantic than a prenup agreement, a legal document that suggests you may not live happily together “until death do you part.”

*Phone, fax and website information remains the same.

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Be careful of doing anything that could support the idea that the prenup was not entered into knowingly and willingly. We have seen prenups challenged because parties claimed their judgment was clouded by alcohol or drugs. Formal witnesses are a big help in this situation.

Get counsel on both sides. If one party to the agreement does not have assets or an inheritance to protect, it is fairly common for that person to sign without the benefit of legal advice since they may not want to pay for the services of an attorney. This is a bad idea for two reasons. One, no one should ever sign any legal agreement without an attorney’s review. In the case of prenup, the spouse with

less wealth may want to add provisions that provide for maintenance after a divorce and set standards for the support of children. Protection goes both ways, and a prenup does not have to be a one-sided agreement. Second, it will be easier to defend an agreement if both sides entered into it with legal counsel.

Know what you have. Many young people do not know exactly what they are in line to receive from their families, so this is time for a frank talk. You also must disclose in the prenup all assets it will cover. A spouse who later says, “I did not know what I was giving up when I signed,” may have a valid argument to overturn the agreement.

Keep it separate. Once you comingle your assets with those

of your spouse, you have given up the right to keep it separate in the future. Laws governing comingling are complex, but if you place funds in a joint bank account or use them to buy or improve a home or pay bills, then you have effectively made them marital property. A pending marriage is a good time to review all of your estate planning, including wills, life insurance beneficiaries and trusts. Even if you are not concerned with protecting an inheritance, you will want to update your planning to reflect your changed circumstances. As with most aspects of a relationship, transparency and long-range planning in the beginning will get you off to a good start.

MendenFreiMan 2015

Business can be complicated. Life can be complicated. Simplifying the “complicated” is what makes MendenFreiMan distinctively different. Our attorneys have strong tax, accounting and financial backgrounds which create an opportunity to analyze each client situation from a number of points of view. We not only relish the opportunity to apply what we know to solving complex client problems, but to do that in a caring and supportive way. Services include Business Representation and Transactions, Mergers and Acquisitions, Estate Planning, Wills and Trusts, and Estate Administration.

5565 Glenridge Connector, NE, Suite 850, Atlanta, GA 30342 www.mendenfreiman.comPhone: (770) 379-1450 | Fax: (770) 379-1455

WEA

LTH MANAGER

GeorgiaTrendLEGAL ELITE

Cocktail On Friday, July 31, 2015, MendenFreiman will sponsor the evening cocktail reception at The Georgia Society of CPAs Estate Planning Conference being held at The Ritz-Carlton Lodge at Reynolds Plantation. This annual event features sessions and updates led by national experts on the hottest topics in estate planning including foreign assets or beneficiaries, state taxation of trusts, special needs planning and estate planning for non-traditional families.

RISING STAR

MendenFreiman To Sponsor

at GSCPA Estate Planning Conference

IF YOU ARE PLANNING TO ATTEND, WE LOOK FORWARD TO SEEING YOU THERE.

Reception