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.
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…
Whether you are caring for your loved one in the home, scrambling to make arrangements for nursing home care or trying to make sure nothing goes wrong in the nursing home, you know how difficult, time-consuming and isolating caregiving can be. Imagine what life would be like if you had a team of advisors helping you get the right care, preserve family resources and make difficult decisions. That’s what life is like when you have a Life Care Plan. A Life Care Plan helps you respond to every challenge created by the long-term illness or disability of your elderly loved…
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…
It certainly is understandable that no one enjoys a conversation about death – especially their own! And, with the estate tax exemption now set at $5 million for an individual and $10 million for a couple, many people may believe they have no reason to consult an attorney about their estate planning. But avoiding the topic of estate planning can mean unnecessary expense, confusion and conflict. SmartBusiness last week highlighted the fundamentals of a “well-thought-out estate plan,” with topics that everyone should consider – whether prince or pauper. Why do you need an estate plan? A comprehensive estate plan ensures…
A reader wrote recently to the business columnist at NWI with a common question: “My will says that my son’s share is held in trust until he is 25. What if he is married by 23 and has a baby? Does he still have to wait until he is 25 to get the money?” The reply was somewhat simplistic, I thought, explaining that perhaps it would be good to give the trustee wide discretion to distribute funds out of and terminate a trust established for your children. Certainly, a testamentary trust of this sort that distributes funds outright to the…
The 2010 Tax Relief Act brought significant changes to the estate and gift tax rules – and an excellent opportunity for you to review your estate planning goals, and the legal documents to achieve them. The new law is complex, and the rules are only in place for two years – this year and next. SmartBusiness recently ran an article highlighting some of the more important provisions: Estate Taxes. The estate tax exemption will be $5 million ($10 for a married couple), with a maximum tax rate of 35 percent. The new law also provides a “portability” feature of the…
SmartMoney recently ran a reminder to all possible victims of the estate tax. The fact is that you could have a taxable estate, and not even realize it. Most people assume that since they don’t “feel” wealthy, they don’t have to worry about estate taxes — but they don’t actually do the math. Your “taxable estate” includes (minus liabilities): proceeds from life insurance policies; your primary residence and any vacation and/or rental properties; retirement accounts, investment accounts; cars, furniture, collectibles, and the rest of your “stuff.” Plus any private business ownership interests (such as shares in a family business or…
If you have substantial assets in an IRA – whether a Roth or a traditional IRA – you’re wise to pay attention to how those assets might pass to your spouse or other heirs in the event of your death. Christine Benz of Morningstar Advisors last week wrote a small cache of common wisdom on the subject in the forms of “do’s and don’ts.” What should you do with your IRA? Check with your estate planning attorney before naming your beneficiaries. Remember, your beneficiary designation(s) trump whatever might be in your will, so make sure your estate planning documents and…
As a recent Wall Street Journal Article points out, taking advantage of the low gift tax levels (while you still can) could save your family business a hefty amount in potential estate taxes. But transferring ownership can raise complicated succession and estate planning issues that you should consider carefully before giving away any stock. The recent tax law changes brought the gift tax threshold up to $5 million for an individual and to $10 million for couples in 2011 and 2012. Yes, that means you can give away that much now, without incurring a penny in gift tax. But, since…
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