Over my years of practice, I’ve seen an increase in the number of women looking to create an estate plan.

Estate planning is important for women because they have a greater likelihood of ending up alone later in life. Women have a longer life expectancy than men and tend to marry older men often making them the final word on disposition of family assets.

In my own case, I had the good fortune to convince my wife Patricia to marry me, despite the fact that I am six years older. As a bonus for me, she loves to cook and bought me my first order of “Grecian Formula” which “restores lost color to graying hair naturally.”

Deborah Jacobs, writing for Forbes Magazine, suggests that women ask themselves a few important questions to help them craft their best estate plan, inclusive of powers of attorney, guardianship, life insurance, wills, and trusts.

1. Whom can you trust? You should have a durable power of attorney giving a trusted family member or close friend the legal authority to make decisions for you should you become incapacitated due to mental illness, medical emergency, or accident.

2. Who would raise your children? It’s often the hardest question to ask because the thought of orphaning your children is so painful.  But not asking the hard questions can leave your children at the mercy of the court.  If you haven’t named a guardian, the court will need to name one.  This can lead to a custody battle between relatives wanting to take the children, or, the reverse, no one may want to take them.

3. Do you have life insurance? Life insurance can help replace lost income when a spouse dies, or it may cover state or federal estate taxes.  If you have life insurance through your employer or a pension plan, be sure to keep your beneficiary forms updated.  You may want to designate a family member as the owner of the policy to avoid the proceeds being taxed as part of your estate.

4.  Do you have assets of your own? The estate tax applies to each person individually.  California is a community property state, so property that is used jointly in the marriage (e.g., the marital home or a joint bank account) is presumed to be community property.  If you are trying to balance the tax burden, you may need to transfer title to one spouse individually.  Otherwise, you may be rebutting the community property presumption in court.

5. Is there money in the bank? If your spouse dies, you will not have access right away to his individual bank accounts.  You want to be sure that there is enough money in joint accounts or separate accounts to which you have access to cover immediate expenses until the spouse’s estate is settled.

6. Should you shed assets to save taxes? Before you start giving away the farm, you need to make sure you have enough money for yourself to live and pay emergency or final expenses.  You can give away as much as $13,000 individually per year tax free, $1 million over your lifetime.  This year is an anomaly in estate taxation (0% on estates, 35% on gifts), but starting Jan. 1, 2011, unless Congress acts, you will be paying the death tax and the gift tax at a rate of 55%.

There are a great number of estate planning and financial planning vehicles you can employ to transfer assets prior to and after death and to lower your tax bill.  Take stock of your goals and your financial reality, and then talk to your estate planning attorney.

James D. Perry

We never read about a perfect celebrity estate plan. An estate plan that can smoothly transfer assets is not newsworthy, and happy relatives rarely sue.

From what I have read, esteemed film actor Dennis Hopper made every attempt to create a solid estate plan. Unfortunately, his name and estate plan have been in the papers because of a singular unforeseen problem: one angry widow.

Early this year, Hopper filed for divorce from his wife of 18 years, Victoria Duffy. She responded by filing a complaint in court claiming Hopper had cut her out of his will at the behest of other family members. She claimed he lacked the mental capacity to change his will, a charge his doctors emphatically denied despite his declining health due to inoperable and terminal prostate cancer.

Because Duffy and Hopper were still married at his death, she stands to inherit a quarter of his sizeable estate and a $250,000 life insurance property, but a clause in their prenuptial agreement may strip her of all inheritance. According to the document, the couple must have been “married and living together” on the date of Hopper’s death.

The prenuptial agreement categorized any property purchased or acquired by Hopper during the marriage as separate property. Just prior to his death in May, Hopper signed an affidavit under oath accusing Duffy of stealing more than $1.5 million in valuable artwork from him – artwork that was considered his separate property.

Hopper had created a revocable living trust and funded it with assets including works from his art collection. Now his trust is suing Duffy, asking a court to compel her to return the property so it can be properly distributed to his named beneficiaries.

Hopper took the responsible steps executing a will, creating a trust and funding his trust. But, all the planning in the world won’t deter a person with enough money for a lawyer and a nasty grudge.

James D. Perry

2010 is not only the year to die; it’s also the year to give.

As it stands now, an individual can give away up to $13,000 tax free this year as part of his or her $1 million lifetime maximum.  But anything over that $13,000 will only be taxed at a rate of 35% — an historic low.

There is still some trepidation among estate planning attorneys as to how to advise their clients to prepare for the 2011 estate tax.  Congress hasn’t made any moves to reinstate the estate tax for this year or to write new laws governing the tax rates for the coming years, and with the 111th session coming to a close, it’s looking less and less likely that they will.

Until new laws are passed, or until Jan. 1 when the old laws return, millions of Americans are set to enjoy the benefit of a 0% estate tax rate for 2010.

But, on Jan. 1, the estate tax rate and the gift tax rate will jump to 55%.  Traditionally, the estate tax and the gift tax rates have matched because Congress didn’t want people ducking the IRS by giving away their entire estates prior to their death.

Christmas is only 63 days away.  This year, at least, giving away some of your fortune may also end up being a gift to yourself.

James D. Perry