Estate Planning Archives - Page 8 of 22

Life Insurance Can Be Part of Your Estate Plan

01/08/2015 by Report from Counsel

Even if you have a relatively modest estate, life insurance can be an important aspect of estate planning for the obvious reason that it can substantially increase the value of your estate. Where the death of a person is premature and a young family is in need of support, life insurance may be the primary means for the family’s financial survival.

Even in larger estates, life insurance can be useful by providing the liquidity necessary to pay estate taxes and expenses without the necessity of selling off assets that a family would prefer to keep intact. Additionally, life insurance, unlike many other assets, does not have to go through a time‑consuming administrative process before it becomes available to beneficiaries. Therefore, life insurance can be an immediate source of funds for a surviving family.

Estate Taxes and Life Insurance

As is true of any aspect of estate planning, one objective is to minimize the federal estate tax effect that life insurance can have. The primary tax issue that arises is whether the insurance proceeds are included in the estate for federal estate tax purposes. Including the proceeds could generate additional estate tax liability and reduce the amount of the proceeds that are available to the decedent’s heirs.

The Marital Deduction: A Valuable Estate Planning Tool

11/20/2014 by Report from Counsel

The federal estate tax marital deduction is one of the most important estate planning tools available to a married couple. The basic marital deduction rule is that, upon the death of the first spouse, the value of any interest in property passing to the surviving spouse is deducted from the decedent spouse’s gross estate. This means that the amount passing to the surviving spouse escapes taxation in the decedent spouse’s estate.

How to Protect Inherited IRAs After the Clark v. Rameker Decision

08/17/202007/08/2014 by Report from Counsel

Volume 9, Issue 7

In a landmark, unanimous 9-0 decision handed down on June 12, 2014, the United States Supreme Court held that inherited IRAs are not “retirement funds” within the meaning of federal bankruptcy law. This means they are therefore available to satisfy creditors’ claims. (See Clark, et ux v. Rameker, 573 U.S. ______ (2014))

The Court reached its conclusion based on three factors that differentiate an inherited IRA from a participant-owned IRA:

Estate Planning—Powers of Appointment

04/10/201404/06/2014 by Report from Counsel

A power of appointment is the power given to someone to allow that person to designate who will receive property or an interest in property. The creator of the power is called the donor, the individual having the power is the powerholder, and the possible recipients of the property are permissible appointees.
Powers of appointment used for estate planning have many variable forms. The powerholder may hold the power in a fiduciary capacity (such as the trustee for a trust) or nonfiduciary capacity. The power may be presently exercisable by the powerholder or may be exercisable only in the future, such as by the powerholder’s will. The powerholder may or may not be the creator of the power. There may be multiple powerholders who must act jointly or a single powerholder. The persons in whose favor the power may be exercised may be unlimited, including the powerholder (sometimes called a general power of appointment), or may be limited. The beneficial interests that may be created in the appointees in whose favor the power may be exercised may be unlimited or limited. Various legal consequences in regard to powers of appointment will be affected by the restrictions imposed on the powerholder.

Trusts Solve Client Needs and Add Value to Wealth Plans

08/17/202011/15/2013 by Report from Counsel

Some think that trusts are used only for end-of-life planning. Trusts, however, are like wrenches: they come in a wide variety of shapes and sizes, each particularly suited to a particular need. Some are for wealth accumulation while others are for wealth preservation, and still others are designed to protect future generations. In this edition of The Wealth Counselor, we look at some of the kinds of trusts that can be employed to deal with particular client concerns and needs and how they fit into a client’s overall wealth accumulation and preservation plan.

Planning for Blended Families: Part I – Intake Process

08/17/202008/15/2013 by Report from Counsel

The “blended family” comprises a fast-growing segment of US households. Whether an attorney or investment advisor, fine-tune your intake or initial interview process to determine the desirability of representing a blended-family client, assess the accepted client to determine your counseling strategy, and hit the ground running with the information you need to begin strategy planning.

As noted, attorneys face different client engagement issues than advisors and CPAs. This content seeks to illuminate the client-discussion topics but not to precisely define the boundaries between the planning perspectives.

Take The Time To Update Your Will

08/17/202005/20/2013 by Report from Counsel

By some accounts, 70% of adult Americans do not have a will. If you have at least gone to the trouble of making a will, consider yourself ahead of the curve and pat yourself on the back. Then come back to earth and understand that your work is not completely done. A will is not a static instrument. To serve its purposes, it must keep current with life changes, including an individual’s financial circumstances, and with some external factors, such as tax laws. With the help of a professional, you should periodically review your will, staying alert to new or different circumstances that might call for updates.

Financial Fraud Against The Elderly

08/17/202003/15/2013 by Report from Counsel

It is a sad and sobering reality that scam artists intent on committing financial fraud or the outright stealing of money, property, or valuable information prey upon vulnerable senior citizens. The threats can take many forms, but the elderly and those watching out for them can have some measure of protection by taking a few … Read more

American Taxpayer Relief Act of 2012

08/17/202002/25/2013 by Report from Counsel

At the eleventh hour, Congress averted the tax side of the ominous “Fiscal Cliff” that it faced as 2012 drew to a close. The end result of the intense negotiations was the American Taxpayer Relief Act of 2012 (ATRA).

The most publicized part of ATRA prevented scheduled federal tax rate hikes from going into effect for most taxpayers in 2013, while raising taxes on America’s highest earners. ATRA also keeps in place many expiring income tax breaks and revives some tax increases that had expired over the past several years.

Individual Tax Rates

For tax years beginning after 2012, ATRA makes permanent almost all of the federal income tax rates first put into place in 2001. Those rates otherwise would have increased in 2013. For high‑income taxpayers,

Pitfalls Of Being An Executor

03/24/201301/24/2013 by Report from Counsel

As a general rule, the executor of an estate does not have personal liability for the debts and obligations of a decedent. Lest executors become complacent, however, they should be aware of an important exception to that rule, which was illustrated by a recent federal court case between executors and the Internal Revenue Service (IRS).