Roth IRAs have gained popularity over the past few years, and for good. However, one thing most media commentators fail to address is that sometimes the people who could benefit most from a Roth conversion are the ones for whom such a conversion could carry the highest tax liability. Peter McDougall takes stock of the issue in a recent Wall Street Journal posting, and offers the potentially powerful cocnept of a one-two punch with defined benefit plans and Roth conversions that can help take the sting out of such conversions. If you are wealthy and planning your estate, a traditional…
With a will can you name the Executor / Personal Representative (“PR”) you would prefer to handle your estate after your gone. The PR gathers and protects all your assets, pays all your debts, and distributes your property in accordance with your wishes as set forth in the will. If you have no will, someone has to file with the Probate Court to get the legal authority to deal with your property and do the same tasks as the PR. However, a Probate Court Judge decides who the PR is. Consequently, a family battle could ensue. Therefore, a will solves…
National Health Care Decisions Day is set for April 16. According to their website, this initiative is a collaborative effort of national, state and community organizations committed to ensuring that all adults with decision-making capacity in the United States have the information and opportunity to communicate and document their healthcare decisions. You also can learn more on their Facebook Page. You can learn more about medical and advance directives or health care agents – on our website.
According to recent research from The Center for Retirement Research at Boston College, 70% of baby-boomer households will receive inheritances worth a total of $8.4 Trillion. With an average of $300,000 for most inheriting households, and an average of $1.5 million for the wealthiest inheritors, the better part of a generation is expected to see a nice bump in their assets. The question, then, is what to do about it. Ashlea Ebeling of Forbes recently approached the topic with a number of considerations, from warnings to ideas. Consider Keeping it Separate. The first thing to take stock of is how…
The Wall Street Journal Online article introduces and discusses the possibilities of QPRTs or “qualified personal residence trusts” as vehicles for transferring ownership of residential houses. The article discusses the growing popularity of QPRTs as estate planning vehicles that can take advantage of low market prices on houses to maximize value against gift tax exclusions, and mentions some complications that might arise.
An article discussing the complexities of late-in-life divorces (noting that divorce is increasingly common in these age groups) by centering on three mistakes that must be avoided. The article is tax and social security sensitive, discussing 401(k)’s and advising trusts and other estate planning techniques. The three mistakes they relate, by their titles, are “ignoring taxes on retirement funds”, “overvaluing alimony, undervaluing Social Security”, and “forgetting about the kids” states SmartMoney.
It would be an understatement to say that the federal estate tax is in a state of flux. The current rules, with the generous $5 million individual exemption ($10 million for a couple), expire at the end of 2012. Last month, the Treasure Department released the “General Explanations of the Administrations’ Fiscal Year 2012 Revenue Proposals,” also known as the “Greenbook.” Perusal of the Greenbook reveals that the Obama Administration will be seeking to make some big estate tax changes. Return the Gift, Estate, and Generation-Skipping Transfer (GST) taxes to 2009 levels. The Greenbook proposes that in 2013 the exemptions…
If you made a Roth IRA conversions last year (when all the media were encouraging you to do so), you may rue your decision now that tax time has arrived. Forbes recently ran a reminder that it’s not too late to undo your conversion decision. You can still “re-characterize” the conversion and put the money back in your traditional IRA, as if nothing had ever happened. But why re-characterize? Here is the example Forbes used: Let’s say you converted $100,000 to a Roth IRA in 2010 and you are ready to pay the tax on your 2010 return (you elected…
Purchasing life insurance in an amount sufficient to cover an estate tax liability has long been a staple of estate planning strategy. But with so many escaping federal estate taxes under the new tax law, families are starting to re-examine their need for life insurance obtained to help heirs pay the tax. Faced with continuing premium payments, many are asking whether they need to keep the insurance. You should think twice, though (and get some professional advice) before giving up your policy. The Wall Street Journal recently advised readers to consider keeping life insurance. First – realize that the “death…
As budget debates continue to escalate, yet another estate planning tool has come under fire, reports The Wall Street Journal. If you’re interested in a “Dynasty Trust” you may want to act sooner rather than later. The main objective of a Dynasty Trust is to continue for as long as possible, benefiting several succeeding generations. Usually, beneficiaries are allowed access to income only, so the trust’s principal assets remain intact to provide an income stream for future generations. Dynasty trusts have become increasingly popular since the 1986 tax overhaul and the current version of the “generation-skipping tax.” (GST). The GST…
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