What are the Odds
This article examines the need to plan for the unexpected. It gives statistics for the odds of disability and of death from various likely and unlikely causes. It shows the importance to plan for the one certainty in life, i.e., death.
Your Most Important Choice
The article discusses the importance of selecting appropriate agents and guardians. It specifically examines the different roles and focuses on guardians. It looks at a case in which the guardian nominated was not chosen by the court.
To Roth or Not to Roth, That is the Question
The article examines the Roth IRA and recent developments that have expanded the concept, such as the Roth 401(k) and the ability to convert from a regular IRA in 2010.
Anna Nicole Smith Can Teach Us a Few Things
The article examines the life of Anna Nicole Smith, her marriage, and the will dispute controversy. It encourages readers to be open about their wishes to family members and instructs on the use of a no contest clause.
New Flexibilities for Partners, Children, and Others
The article examines the new "non-spousal rollover" provisions of th Pension Protection Act of 2006.
Smart People Do Estate Planning
The article examines the statistics of who does estate planning. It shows that people who are more educated are more likely to do estate planning. It recites reasons that you want to plan. Basically, the article is a call to action to the reader to take control of his or her life by planning.
Planning With Retirement Assets
The article looks at retirement planning and looks at a few strategies such as ROTH conversion, paying the tax, giving to charity, etc.
Preserving the Ranch for the Next Generation
The article examines a typical ranch family, the problems they face, and solutions. It touches on problems of joint tenancy, incapacity, and succession. It offers an RLT, a second to die ILIT, and a buy-sell as solutions.
Dealing with Aging Parents
The article examines how the parents took care of the kids and how the kids then take care of the parents. It looks at the need to plan in advance for wealthy parents (estate tax reduction), not so wealthy parents (Medicaid planning), and any parents (powers of attorney, etc.).
How Do Millionaires Do It?
The article examines the five different types of millionaires and what makes them tick. It asserts that planning is at the core for all of them and that estate planning is necessary to avoid problems down the road.
Medicaid Changes Make Pre-Planning Essential
This article discusses how long-term care costs can be a major financial drain. It examines Medicaid as a possible way to pay for long-term care. It looks at how the changes in Medicaid law could make it much more difficult to plan. It stresses the need for pre-planning.
Privacy in Life and Death
The article examines many ways in which privacy can be obtained including: using donor advised funds to keep the name of the charity private, RLT to keep things private at death, and the do not call registry and decedent do not contact registry to avoid nuisance calls.
I Just Inherited Money! Now What Do I Do?
This article examines what a beneficiary should consider when they find out they are receiving an inheritance. It touches on basis step-up, disclaimer, non-inclusion in income, etc.
Planning: Just Do It!
This article looks at what happens if no planning is done. It looks at the problems of probate if no trust is done and of intestacy if no will is done.
Protecting Your Assets
This provides an overview of asset protection strategies.
Preserve Your Wealth with Medicare Part D
The article provides a basic overview of Medicare Part D and why it is important from an estate planning perspective.
You May Be Worth More Than You Think
The article examines the Millionaire Next Door and their characteristics. It recites statistics about millionaires and their increasing numbers in the United States. It finds that one characteristic of millionaires is that they plan. The article discusses the need to do estate planning.
Trustee: His Brother’s Keeper?
eing a trustee is an honor and a responsibility. Someone that trusts you has given you the duty and the privilege of managing their assets. They have entrusted you to carry out their wishes. Whether a parent, sibling, or close friend, they have chosen you for this very important task. But, what happens if they appointed someone else to serve with you? Do you have the same duties?
Wills and Trusts are Not Interchangeable
eople often assume that wills and trusts are somewhat interchangeable. While both can be effective to transfer assets to loved ones after your death, they have important differences.
IRA and 401k Beneficiary Designations: Not to Be Taken Lightly
If you are like most Americans, you have money taken out of each paycheck for your IRA, 401k, or other retirement plan. Those deductions add up over time. Over the past twenty years, IRAs and 401k plans have become an increasingly important part of our lives. According to statistics from the Investment Company Institute and the Federal Reserve Board, retirement plans account for nearly $11 trillion in American wealth. For many Americans, this becomes their largest asset.
Beneficiary Designations: the Hidden Trap
More and more of us recognize the need for careful, methodical estate planning. We prepare our wills and trusts. We labor over who should be guardians for our children and who should be trustees and executors. We decide how and when our children or other loved ones should get what we leave behind. However, all too often people who thought they had it all planned fall into a hidden trap: improper beneficiary designations.
Planning It Right the Second Time Around
Increasingly, Americans do not remain with their first spouse for life. According to a 2001 study by the National Center for Health Statistics of the U.S. Department of Health and Human Services, twenty percent of first marriages face "disruption" (defined as separation or divorce) within the first five years. One-half of all first marriages face disruption within the first twenty years of marriage.
How to Help [Insert Charity Name]
There are many ways each of us can help [charity]. However, some ways are better suited to certain donors while other methods make more sense for other donors. Following just a few of the many ways that you can use to help [charity] thrive.
Can I deduct my charitable contribution even if it wasn't cash?
Countless people make charitable contributions each year. Some people give cash. Some people give their old car, others the very shirts off their backs. Some give shares of stock, and others give their time.
Saving for Retirement: But What If I Need It?
Tax-deferred Leveraging of Savings
We all know the importance of saving for retirement. Saving through a tax-deferred vehicle like an IRA or 401(k) can be a great way to leverage those retirement dollars. If you defer tax on $10,000 and invest it at 7% for 30 years and then pay tax on the entire amount, you would have approximately $53,000 after taxes (assuming a 30% tax rate at all times). On the other hand, if you paid the tax on the $10,000 and paid tax on the 7% earnings each year, you would have only $29,000 after 30 years. Tax-deferred retirement plans are extremely popular. According to the Investment Company Institute (2000), Americans have $11.5 trillion in retirement plan assets. Most people focus on how to maximize retirement plan contributions and minimize required distributions from retirement plans. From a tax perspective, that makes a great deal of sense.
Ignorance of the Law is No Excuse in Estate Planning
It is often said that "ignorance of the law is no excuse." This expression dates back at least four centuries. The expression is attributed to 17th century British jurist John Selden. He is quoted as saying: "Ignorance of the law excuses no man; not that all men know the law, but because 'tis an excuse every man will plead, and no man can tell how to confute him."
A Tale of Two Tragedies
On January 11, 1983, Nancy Cruzan was a healthy 25-year old woman driving along an icy road in rural southwestern Missouri. She slid off the road and her vehicle was found overturned. Nancy was found face down in a ditch, unconscious and not breathing for twelve to fourteen minutes. Emergency personnel worked valiantly and were able to resuscitate her. However, Nancy remained unconscious, being fed through a tube into her stomach.
I'm a Trustee, Now What Do I Do?
We've all heard of trusts. Trusts are used as an estate planning tool to avoid probate and to provide flexible planning to accomplish personal and tax goals. But where does a trustee fit into the picture?
How Does Moving Affect My Estate Planning?
Moving can be a difficult and disruptive process. We sort through our belongings and reassess our needs. We pack up our dishes, our clothes, and our lives. Moving is an ideal time to plan for the future and to adjust plans we've already made. Moving across town can be difficult. Moving to another state adds another level of complexity.
How to Make Gifts Count
One of the time-tested strategies in estate planning is reducing the overall size of your estate by gifting. However, and you gift can be just as important as you gift.
Estate Planning Savoir-faire: The International Client
.S. estate and gift taxes apply differently to Americans than to non-Americans. So, when planning, it is important to keep these differences in mind.
I Have Some Property Overseas, What Do I Do?
Many Americans have assets outside the United States. In fact, according to a study by the U.S. Department of Commerce, Bureau of Economic Analysis, direct investment abroad by Americans in 1999 exceeded $1.13 trillion. Whether it is a tract of land in the ancestral homeland or a vacation property in a tropical climate, great care must be exercised in planning for these assets.
How to Give to Charity and Get Something in Return
Giving to charity leaves the donor with a special feeling of having helped others. You feel good for having helped your church, your alma mater, or your community. Wouldn't it be nice if you could help your favorite charity and get something in return?
If You Really Love Me, Don't Leave Me Anything!
This sounds like an odd statement, but it may be very accurate. Leaving assets directly to children or other beneficiaries may cause them problems which could be easily avoided or reduced by leaving them the assets in trust rather than outright. Even if the child is a very capable adult, it is often better to leave the assets in trust. The child can receive the assets in trust and could be trustee of that trust. As trustee, the child could invest the assets as desired, could purchase a home with trust assets and live in it, and could even start a small business. All of this can be done while leaving the assets in the trust. Further, as trustee, the child could make distributions needed for his or her health, education, maintenance and support, or that of his or her own children. Finally, the child can be given a power to determine who should get any remaining assets at his or her own death.
Estate Planning in a Low Interest Rate Environment
When interest rates are low, everyone knows it may be a good time to take out a loan or refinance their home. But, low interest rates also affect some techniques in estate planning. The basic elements of an estate plan remain the same: A Revocable Living Trust, a Pourover Will, a General Durable Power of Attorney, and a Health Care Power of Attorney. But, some of the advanced techniques in estate planning become more or less desirable when interest rates are low. Let's take a look at some of the techniques and how interest rates impact their utility.
Income Tax Treatment of Gifts and Inheritances
At some point in our lives, most of us expect to give or receive gifts or inheritances. The circumstances surrounding the gifts or inheritances may be positive or negative. But the income tax treatment is the same.
Do You Know IRA? Shattering Some Misconceptions Surrounding the Individual Retirement Account
These days, traditional Individual Retirement Accounts ("IRAs") are common retirement savings vehicles. They provide individuals with a means to finance their retirement whereby the amounts set aside, as well as the growth, are not taxed until its withdrawal at the owner's retirement or other date. But even though many people utilize this beneficial form of investment, many misconceptions still remain regarding the rules that govern IRAs. Once these misconceptions are corrected, it's possible to reap the full benefits of an IRA.
Year-End IRA Checklist
The government requires that, for most people, mandatory distributions from IRAs (traditional IRAs, not Roth IRAs) begin no later than April 1 of the year after turning age 70½, and continue every year thereafter as provided under the Treasury Regulations. These mandatory distributions are known as Minimum Required Distributions, or MRDs. Knowing the rules governing MRDs can protect your nest egg from IRS penalties.
How Will Your Assets Pass Upon Your Death?
Have you ever wondered what happens to a person's assets when they pass away? Just about everyone knows about a Will, and the fact that it includes instructions on how to dispose of a decedent's assets upon his or her death. But did you know there are other ways of transferring assets to your loved ones upon your death? You can easily remember three methods by recognizing the acronym C.O.P. - Contract, Operation of Law, and Probate.
Providing for Your Children in Your Revocable Living Trust: Don't Overlook Special Needs Planning
If you're a parent who has taken the time and energy to create a Revocable Living Trust ("RLT") you should be commended for your initiative and perseverance for ensuring your children and grandchildren are properly cared for when you are gone. If you have not yet created an estate plan, doing so could be one of the most important actions you can take on behalf of your children's future well being. A properly drafted estate plan designates who will care for your minor children upon your death, as well as providing for the smooth transfer of wealth to your children. Many parents assume that making sure a child is financially secure after they are gone means leaving the assets outright to the children. For many reasons, such as a child's inability to manage finances, outright distribution of your assets to your children may not be the most prudent option. This becomes especially true if any of the beneficiaries of your trust estate have, or develop in the future, special needs and require the assistance of government aid.
Who Is Your Personal Representative?
When a person dies, his or her estate, (the assets owned at death) will transfer to loved ones through one of three ways: 1) by contract; 2) by Will; or, 3) by the laws of intestacy of the State of the deceased person's residence at death. Only through the first two ways of transferring assets does the deceased person get to choose who receives his or her assets. Under the laws of intestacy, the State chooses who gets the deceased person's assets.
An Executor's Duty: Valuing the Estate's Assets
The responsibilities of an Executor (also called a Personal Representative in some states) can be very time consuming and potentially difficult. Besides having to locate all of the decedent's assets, the executor has the responsibility of determining the value of all of the decedent's assets. This determination serves two valuable purposes. First, it establishes the amount that will be taxed by the state and federal governments upon the decedent's death. Second, it establishes the basis of the assets in the hands of the beneficiaries of the estate.
Estate Planning in Light of a Remarriage: Ensuring the Care of Your Children
The staggering amount of divorces that occur in today's society is all too well known. Depending upon the circumstances that lead to the break-up of any marriage, one may think that getting into another such arrangement would be out of the question. However, this is not always the case. In fact, the Stepfamily Association of America reports that about 43% of all marriages are remarriages for at least one of the adults, and of these, about 65% involve children from a prior marriage.
New Rules Regarding IRAs and Qualified Retirement Plans: There's a Good Chance They Affect You
If you're like much of the adult population and you own an Individual Retirement Account ("IRA") or participate in a qualified retirement plan, take note. The Department of Treasury has changed the longstanding rules dealing with Minimum Required Distributions ("MRDs") from IRAs and qualified retirement plans. MRD refers to the amount which you are required to withdraw from your IRA or qualified plan annually once you reach your RBD (defined below). The failure to withdraw your MRD results in a hefty 50% penalty by the IRS on the shortfall. After almost fourteen years of inaction, the government has finally simplified the MRD rules that have been in place since 1987! The new rules are retroactive to January 1, 2001.
The Federal Gift Tax: Must You Always Pay?
Whether it is due to estate planning reasons or simply out of charitable inclination, the gifting of assets is a common occurrence. But be aware that your good deed may result in a tax bill. Federal gift taxes are levied on gratuitous transfers of assets. To be a gift, the transfer must be of a present interest, meaning the recipient must be given immediate use of the asset. The federal gift tax starts at 18% (although due to certain exemptions, it effectively starts at 37%) and rises incrementally to a maximum rate of 55%. However, there are certain "exceptions" provided by the government that exempt transfers from being subject to this tax, somewhat minimizing the sting of the gift tax on certain transfers.
Tax-Deferred Annuities: Who is Taxed Upon the Annuitant's Death?
Many people own tax-deferred fixed annuities these days. They provide a way to defer income taxation on the investment growth until distributions are taken. But most people who own tax-deferred annuities are unaware of how an annuity is taxed if no distributions are taken before the annuitant's death. This lack of knowledge can lead to unintended results.
Choosing a Payout Period for Your Pension Benefits: Door Number One or Door Number Two?
For many, thoughts of retirement bring to mind relaxation and financial stability. However, before retirement payments begin and these years can be enjoyed, certain decisions must be made regarding how distributions will be paid. Generally, there are two options for taking distributions from a pension plan:
1.) Take the benefit over the participant's life expectancy (single life payout), or
2.) Take the benefit over a combined life expectancy of the participant and the participant's spouse or other named beneficiary, if permitted (joint life payout).
The Many Faces of Life Insurance
Life insurance is a unique asset. Because of its tax-favored benefits, it can be used to solve some of life's perplexing financial problems. Most people regard life insurance as a "protective" asset, and it is indeed one of the very best assets to protect against potential losses. But life insurance is also a major planning asset to develop and implement your financial and estate plan.
After the Divorce: The Work's Not Over Yet
Unfortunately, it's common knowledge that divorce is on the rise in America. The statistics are astonishing, and it must be acknowledged as a possible reality for anyone contemplating or currently in a marriage. If it does occur, surviving the actual divorce process may seem difficult enough, but the hard work associated with returning your life to some semblance of normalcy doesn't end there. Divorce also affects your estate plan.
Why Gay and Lesbian Couples Need Estate Planning
Equality is something everyone wants and expects. Often though, equality is not an option for everyone. Gay and lesbian couples face discrimination at work, at school and in social settings. Their sexuality plays a role in how they are treated every day - by employers, family members, friends and even strangers. But it's how they are treated after one Partner dies that may be even more unsettling.
Planning After the Fact: The Benefits of Using Disclaimers
People are constantly being told to plan for the future. We experience this beginning at a very young age when our parents try to teach us to save money for a car or a trip. Throughout adulthood we are told to plan for our retirement. The same is true with your estate. Prudence suggests planning for your death so that your heirs experience minimal complications in settling your affairs.
Estate Planning: Minimizing Taxes Is Only Part of the Equation
When our national or state law-making bodies begin talking about decreasing or increasing estate taxes, a flood of reaction pours out in anticipation. Throughout our history of legislation, there have been few moments of anticipation worth the hoopla. Estate taxation laws are rarely changed for the benefit of the taxed. Yet every time a change is proposed, many people delay, or entirely ignore proper estate planning in anticipation of what never happens.
Medicare: Not the Complete Answer for Long Term Care
Long Term Care produces the most out-of-pocket health care costs for the elderly. It can have a devastating effect on your retirement if you are not prepared. While government programs can help, they are not the complete solution. Long Term Care is a prospect we all must consider.
Insurance and Estate Taxes: Two Sides of the Coin
Life Insurance can be an integral part of proper estate planning in several ways.
An effective Estate Plan maximizes the value of the estate. Transferring life insurance policies from an estate may assist in reaching that goal. Life Insurance also can be used to pay the estate taxes that cannot otherwise be avoided. Life insurance becomes a two-sided coin in estate planning.
Don't Get Scammed . . . Get Smart
Estate planning has been in the news lately with stories on CNN and articles in Time, Money, and Fortune. Many of these stories have focused on the use of living trusts. It's important to remember that there are several types of trusts - some are legal, many are not. It is also important to know what those illegitimate trusts are and why you want to avoid them. Not only is using one of these trusts illegal, but you could end up losing your money and paying taxes, interest, and fees in addition to any civil or criminal penalties.
Use a Special Needs Trust to Protect Your Loved One with a Disability
Nearly one in ten people in the United States copes with special needs that exist as a result of a disability. In other words, approximately 25,000,000 people suffer from or care for someone suffering from a wide range of disabilities including Autism, Down syndrome, traumatic brain injury, and a variety of mental illnesses. All families should create estate plans to protect their loved ones from the expensive and often long process of probate, but for families dealing with special needs, it is even more important. Individuals who receive government and other restricted benefits and services may lose those benefits if they receive an inheritance. For this reason, proper planning is essential.
Protect Your Children: Choose a Guardian
Many parents suddenly find themselves considering estate planning because they want to ensure the care of their children. John and Anna Perry, a couple from Albuquerque, New Mexico recently adopted a newborn baby. Even though they are in their late twenties, they're concerned about who would care for their son if something happened to them. As a result, they have begun to look into estate planning and evaluate their current financial plans. They have a retirement plan (IRAs, pensions and 401(k) benefits), life insurance and other investments, but they recognize that those plans may not meet their new needs as parents. So, what should parents know about guardianship and conservatorship or "guardian of the estate?" And, how do you go about choosing the best person to care for your children's physical, mental and financial needs?
A Power of Attorney or the Powers That Be . . . Make the Right Choice
It’s likely that you’ve heard of the Power of Attorney (POA). Most people have. We generally assume it’s a way for someone else to take control of our assets if we become incapacitated or, as we often see in the movies, we are “declared incompetent.” This can be true, but there’s a lot more to it than that. The POA is a way for you (the principal) to give some control of your assets or your medical care to another person (the agent or attorney-in-fact).
You Might Not Have to Bite the Bullet: What to Do about Capital Gains Taxes
So, what are capital gains anyway? Capital gains are the profits from the sale of capital assets such as stocks, bonds or real estate. Your wages or other regular income (i.e. interest, dividends) are considered “ordinary” income and subject to different tax rates.
Get More for Your Giving with Community Foundations
Americans have been increasing their charitable giving an average of 7 percent a year over the last several years, and people are now looking for better ways to contribute to charitable organizations. Many want to find ways to make charitable giving part of their estate plan or create a legacy of giving for their heirs. The Community Foundation is an effective way to integrate financial planning, estate planning and charitable giving. The Foundation offers many advantages over outright gifts of cash or securities and it has few drawbacks. This makes the Community Foundation preferable to other charitable giving options.
Gifting: It's More than the Thought That Counts
Those Americans who know the high cost of estate taxes often fall back on the simplest taxsaings strategy: giving their wealth away before they die. Unfortunately, for gifting to be successful, it's more than the thought that counts. This article explores the do's and don'ts of effective gifting, as well as a review of our favorite gifting techniques.
