When problems arise in an estate plan, often the source is a lack of clarity.Tom Petty died in 2017 and left a fortune estimated by Newsweek to be around $38 million. Petty did some things right, but he could have done better.What did Tom Petty do right? First, he planned. Most people just let nature take its course and fail to plan. There’s an old adage: when you fail to plan, you are planning to fail. That’s usually as true in estate planning as with most things. Each state has a … [Read more...] about Clarity is Key to Planning
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What is a GST Trust?
What if you could give your children assets in a trust and they could use them and yet they’d avoid estate taxation at their deaths? That’s what a “Generation-Skipping Transfer” Trust, or “GST” trust does. It is a trust which is designed to avoid estate taxation at the death of the beneficiary.How “GST”s WorkDuring the life of the beneficiaries, the assets in the trust are used for their health, education, maintenance, and support. After the beneficiary’s death, the assets go to his … [Read more...] about What is a GST Trust?
Planning is Critical
58% of American adults have no will, no trust, and no estate plan at all, according to a recent study by Caring.com. Unfortunately, whether you plan for it or not, death is inevitable.Laws of IntestacyIf you have no plan, your state of residence has a plan for you, it’s called “intestacy.” With intestacy, your assets go to those the state has pre-determined. They may or may not be the people whom you love and who love you. Each state’s intestacy laws are slightly different. But, … [Read more...] about Planning is Critical
New Tax Proposals
There are two new tax proposals being floated. One is an income tax proposal and the other is a wealth tax proposal.Income TaxRepresentative Alexandria Ocasio-Cortez (D-NY), one of the new class of legislators in the House of Representatives has suggested the rate of income taxation for high-earners be raised. She is suggesting a top rate for those making over $10 million per year be increased to 60% or 70%. She’s suggesting the proceeds could be used for a “Green New Deal” or other … [Read more...] about New Tax Proposals
Beneficiary Designations, etc., Aren’t a True Substitute for a Trust
TOD (Transfer on Death) designations, POD (Pay on Death) designations, and beneficiary designations can be useful in the right circumstances. Each of these tools allows for an automatic transfer to the named beneficiary at the death of the owner. But these tools can have a few shortfalls. First, if the named person predeceases the owner, typically it will not be effective to transfer the assets. Sometimes, you could name a contingent beneficiary and then it would go to that person. But, if there … [Read more...] about Beneficiary Designations, etc., Aren’t a True Substitute for a Trust
Turning the Page on 2018 and Looking Forward to 2019
As we turn the page and bid farewell to 2018, we look forward to 2019. There are a few changes for 2019. Going into 2018, there were many changes because of a new tax law, commonly known as the Tax Cuts and Jobs Act, which impacted both the estate tax and the income tax. But there are few changes heading into 2019. It appears things are relatively stable, taxwise, at least for now. Of course, the estate and personal income tax portions of the Tax Cuts and Jobs Act still are set to sunset, but … [Read more...] about Turning the Page on 2018 and Looking Forward to 2019
Naming a Trust as Beneficiary of an IRA
With IRAs and Qualified Plans, after the death of the “Participant” (the lifetime owner), there are required minimum distributions based on the life expectancy of the beneficiary. Often, people think that an individual must be named as the beneficiary of the retirement assets in order to use the beneficiary’s life expectancy and to prevent a forced faster distribution. But that isn’t the case. A trust may be designated as the beneficiary. As long as the trust meets a few technical requirements, … [Read more...] about Naming a Trust as Beneficiary of an IRA
Estate Planning is About More Than Taxes
Estate Planning addresses many concerns, not just taxes. It can protect beneficiaries from their own creditors, provide divorce and remarriage protection, and protect the benefits of children with special needs.The new tax law doubled the amount that can be passed free of federal estate taxation, at least through 2025. In 2018, an individual can pass $11.18 million free from federal estate taxation. But estate planning was never just about estate taxation. The core of estate planning has … [Read more...] about Estate Planning is About More Than Taxes
Aretha Franklin Died Intestate: What Does It Mean for Her Family?
Aretha Franklin was known as the “Queen of Soul.” She was a singer, songwriter, civil rights activist, and so much more. Aretha was a great recording artist, with a career spanning many decades. She received honorary degrees from many prestigious universities, like NYU, Princeton, and Yale. She received the Presidential Medal of Freedom in 2005. In fact, we all owe her much “R-E-S-P-E-C-T,” just like the song for which she’s most famous.Aretha died on August 13, 2018, at age 76, without any … [Read more...] about Aretha Franklin Died Intestate: What Does It Mean for Her Family?
Special Accounts for People with Special Needs
Those with special needs have unique challenges in life. But, there are special accounts available to individuals who were disabled before age 26. The Achieving a Better Life Experience or “ABLE” Act created ABLE accounts under section 529A.As discussed in a previous blog, 529 accounts give preferential tax treatment when the accounts are used for educational expenses. ABLE accounts are similar in structure to the 529 educational accounts. The income earned on the assets in ABLE accounts is … [Read more...] about Special Accounts for People with Special Needs
