In This Issue:• Celebrating Fifteen Years of Service• Attend Our October Workshop• Tax Planning Strategies for 2012• Estate Planning Today Must Include Digital

Assets and Social Media

Volume 1, Issue 1 2012 September 2012

Our story began when Larry Freiman and I first crossed paths profession-ally in 1993. He made such a strong impression on me that, four years later, when my solo practice had grown to the point where I wanted to add a partner, I immediately thought of Larry.continued page 2

The year 2012 is a milestone for our firm as we celebrate fifteen years of service representing closely-held businesses, and providing estate planning, estate administration and wealth transfer planning.

When a firm is established with the right people, principles and values, successful growth is the natural result of hard work.

CELEBRATING 15 YEARS

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

The MendenFreiMan advisorpage 2

15th Anniversary Celebration continued

I wanted a partner with the “right stuff”, someone with the right practice experi-ence, planning creativity, entrepreneurial spirit, leadership qualities and practice values. I found those qualities, and more, in Larry. At the same time, Larry was looking for an opportunity to build a firm that paid attention to the business itself as well as the practice of law and one that tapped into his entrepreneurial side. And so, together in 1997, we launched what would become MendenFreiMan llp. We have come a long way since it was just Larry, myself, a paralegal and a secretary. As the firm has grown (we are 17 strong now), our capabilities have increased. We have so much to celebrate.

• We have fulfilled our vision for providing excellence in all that we do.

• We are proud of our people, the quality of the work they do, and our collective expertise.

• We have participated in life-changing transactions, worked with clients and their advisors who have become our friends, and solved problems that seemed insurmountable.

• We see great accomplishments when we look back at the ground we have covered over 15 years.

• We see greater things in the future as we look ahead.

As we begin our sixteenth year, and on behalf of everyone at MendenFreiMan llp, we thank you for the opportunity you have given us to serve your business, your family and your future. We look forward to continuing to serve you in the years to come.

George MendenFounding Partner

The Ten Things I Wish I Had Asked My Lawyer Please join us for our next complimentary workshop where we will discuss how to identify and protect your legal blindspots.

tuesday, october 23, 2012 - the ravinia clubTwo Ravinia DriveSuite 100Atlanta, GA 30346

registration: 11:30 a.m. presentation and luncheon: 12:00 – 2:00 p.m.Limited Seating. Reserve your place now.rsvp: Please respond to Candice Wheeler at 770.559.5595 or register online at www.mendenfreiman.com/estate-planning-workshops.php

The next four months are an exceptional window of opportunity for you to make family wealth transfers. The federal gift and estate tax exemption is $5,120,000 and both income tax rates and interest rates are at the lowest point in a generation. With federal deficit spending also at record levels, tax and interest rates seem sure to rise. Unless the President, the Senate, and the House of Representatives all agree otherwise, income and estate taxes will increase dramatically on January 1, 2013. There is also the risk that long-used planning strategies such as charitable

deductions and valuation adjustments will soon be eliminated or limited. People who understand this situation will be well posi-tioned to take full advantage of this estate planning opportunity while it lasts. In this article, we will explore how the current deficit spending is making the case to increase taxes, what you can expect in 2013 unless the President, the Senate, and the House of Representatives all agree otherwise, and how you can use advanced irrevocable trusts now to take advantage of this opportunity and save income and estate taxes.

the case for new taxesThe U.S. government is spending a lot more money than it is taking in, creating the largest deficits in our history. The projection for 2012 is:

U.S. Tax Revenue .............................. $ 2,310,000,000,000U.S. Government Spending ............ $ 3,614,000,000,000New Debt .......................................... $ 1,303,000,000,000National Debt ................................... $15,114,000,000,000Recent Federal Budget Cuts .......... $ 385,000,000,000

These are staggeringly large numbers. It’s easy to lose sight of their meaning because there are so many zeros at the end of each one. But if you drop eight of the zeros and consider this to be the budget for a young family or single adult, the numbers take on real meaning:

Annual Income ........................................................ $23,100Money Spent............................................................. $36,140New Credit Card Debt ............................................$13,030Outstanding Credit Card Debt ............................ $151,140Total Budget Cuts...................................................... $3,850

Making 2012 Count: Now is an Extraordinary Time to Implement Tax Planning Strategies

RSVP Now for Our October Workshop!

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Both are train wrecks waiting to happen. Spending is more than 150% of income, yet budget cuts planned are less than 17% of income. Talk about “Another day older and deeper in debt”! For the federal government, it seems that either deeper budget cuts will have to be made or income…in the form of taxes …will have to increase. The federal gov-ernment can also print more money, which will eventually lead to inflation.

taxes…now and in four monthsIn 2012, the federal estate, gift, and genera-tion-skipping transfer tax (GSTT) exemp-tions are all $5,120,000 and the tax rate on any excess is 35%. Unless the President, the Senate, and the House of Representatives all agree otherwise, on January 1, the estate and gift exemptions will drop to $1,000,000 and the GSTT exemption will drop to $1,390,000 plus an adjustment for 2012 inflation and the tax rate on any excess will start at 45% and increase to a 55% maxi-mum rate, plus a 5% surcharge on estates/cumulative gifts between $10,000,000 and $17,184,000. In addition, the estate and gift tax “portability” provision will expire. Unless the President, the Senate, and the House of Representatives all agree otherwise, taxes on income, dividends, and long-term capital gains will also increase on January 1. In addition, a new 3.8% healthcare surcharge will go into effect for married taxpayers with adjusted gross income (AGI) of $250,000 or more ($200,000 or more for single taxpayers). Here’s a chart to show the income tax rate change:

Unless the President, the Senate, and the House of Representatives all agree otherwise, your favorable tax planning window will close in January:

• The most favorable estate/gift tax we have ever had will be gone ($5,120,000

exemption to $1,000,000; 35% rate to 55% rate).

• The most favorable estate/gift tax we have ever had will be gone ($5,120,000 exemption to $1,000,000; 35% rate to 55% maximum rate, plus a 5% surcharge on estates/cumulative gifts between $10,000,000 and $17,184,000).

• Interest rates, now at lows not seen in our lifetimes (2% overall, 1.4% AFR for intra-family gifts), will almost surely increase.

• Charitable deductions, now fully deductible, may be limited to those in a 28% income tax bracket.

• Long-term capital gain rates will in-crease from 15% to 20%.

• Dividend rates will increase from 15% to ordinary income rates, which can be as high as 43.6%.

• Valuation adjustments for family control limited partnerships and limited liability companies may be legislated or regulated away.

Planning Tip: Complete your planning before the end of 2012 to take advantage of this unique planning window.

irrevocable trusts can helpThere are a wide variety of irrevocable trusts that you can use now to help save

income and estate taxes including the 2503(c) Minor’s Trust, Gifting Trust, Family Bank Trust, Health and Education Exclusion Trust (HEET), Intentionally Defective Grantor Trust (IDGT), Inheritor’s Trust, Life Insurance Trust, and Split-Interest Charitable Trusts as well as other irrevocable trusts that you can establish now that have purposes other than saving income and estate taxes. These include Special Needs Trusts and Retirement Trusts (Stand Alone). To learn more about these and other trust options including a variety of Grantor Trusts and wealth transfer strategies, visit the MendenFreiman website at www.mendenfreiman.com/estate-planning-resources.php and download the complete article.

conclusionOur very favorable planning time—with favorable interest rates, estate/gift taxes exemptions and rates, full charitable deductions, low capital gains and divi-dend rates, and available strategies — is very likely to end on December 31, 2012. The person who understands the various irrevocable trusts explained here and the urgency to implement their plans during the balance of 2012 is in a unique position to save substantial estate and income taxes.

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer’s particular circumstances.

voluMe 1, issue 1 page 3

Ordinary Income & Long-Term Gains Short-Term Gains

2012 2013 2012 2013

Top Federal Tax 15% 20.0% 35% 39.8%Healthcare Surcharge 0% 3.8% 0% 3.8% Total 15% 23.8% 35% 43.6%

It wasn’t very long ago that we had only paper for financial and tax records. We could simply point to a file cabinet or drawer and tell someone, “Everything is in there when the time comes.” But now we have computers and the Internet, and so much of our lives is online. Unless we include our digital assets and social media in our estate planning, our family or administrator may not be able to find critical documents. For example, if you scan documents or receive financial statements electronically, someone else may not even know these exist. If you use a program like Quicken or Quickbooks and tax preparation soft-ware, those records are on your computer. Facebook pages, blogs, email accounts and photos stored digitally on a computer or an online account would certainly have special meaning to your family. Much of this information is password protected. Unless we make arrangements in advance, family members or administra-tors may not be able to access these and the information could be lost forever. Estate planning for digital assets and social media accounts is similar to estate planning for other assets. You need to make a list of what you have and where it is located, name someone (with computer

and social media know-how) to step in for you, provide that person with access, and provide some direction for what you want to happen to these assets. Listing your digital assets by category (hardware, software, social media/online presence, online accounts) will help make the task less daunting. Next to each one, add user names, passwords, PIN numbers and the site’s domain name. Keep this list in a safe place and tell your successor where it is. (Do not store it unprotected on your computer; if it is stolen, the thief would have all of your passwords. If you store it on your computer, password protect the file and give that information to your successor.) Think about what you want to happen to these assets. For example, if you have a website or blog and you want it to continue, you need to leave instructions for keeping it up or having someone take it over and continue it. If a site is currently producing or could produce income (e-books, pho-tography, videos, blogs), make sure your successor knows this. If there are things on your computer or hard drive that you want to pass on (scanned family photos, ancestry research, a book you have been writing), put them in a “Do Not Delete” folder and include it on your inventory list.

Closing down accounts that are no longer needed will help to protect your family from identity theft after you are gone. The person you name as your successor will need a death certificate to do this. Consider naming this person as a co-trustee or co-executor with responsibilities limited to this area to give them legal authority to act for you. Yes, this will take some time and thought. But, just like “other” estate planning, the more we can do now to put things in order, the easier it will be for our families later.

MendenFreiMan llp 2012

Estate Planning Today Must Include Digital Assets and Social Media

Dedicated to the growth, protection and transfer of businesses and estates, MendenFreiManLLP has been providing a practical and cost-sensitive approach to estate tax and business legal problem-solving for fifteen years. Known for its compassion and creative solutions, the firm has an exceptional track record of successful results when dealing with some of life’s most difficult challenges. Services include Estate Planning, Wills and Trusts, Estate Administration and Business Formation, Representation and Transactions.

Two Ravinia Drive, Suite 1200, Atlanta, GA 30346 www.mendenfreiman.comPhone: (770) 379-1450 | Fax: (770) 379-1455

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