Post By: Dana Sunderlin
Wednesday, February 25, 2009
Post By: Dana Sunderlin
Estate planning is designed to control the use, conservation, and transference of wealth. By implementing an estate, upon the transference of wealth, estate taxes will be help to a minimum. In addition, provisions will be put in place to take case of the spouse and family of the deceased. However, the structuring of the estate ultimately depends on the goals of estate (ranging from taking care of a spouse, children , or grandchildren). Once the goal has been determined, the proper tools will be implemented to structure that specific estate.
Upon death, there are four primary methods in which wealth is transferred:
1. Will - A will is a written document that takes effect at the death of the person signing it (the "testator")
2. Living Trust - A living trust (sometimes called an "inter-vivos" trust) is a document that is revocable at any time by the person signing it ("grantor")
3. Joint tenancy - Joint tenancy is a method of holding title to property when two or more people own property together, but the last survivor will own the property outright.
4. Community property - California is a community property state which means that any earnings and assets acquired during the marriage belong equally to both spouses, regardless of who actually earned the income
More specifically, there are other trusts that are designed to help ensure the wishes of the trustee are met. These tools include:
1. Credit-shelter trust - You’ll write a will bequeathing an amount equal to the estate-tax exemption to the trust, specify how you want the trust to use those assets and pass the rest of your estate to your spouse. This effectively doubles the amount of your estate that is shielded from taxes—since when your spouse dies, his or her estate will also be able to use the exemption.
2. Generation skipping trust - allow you to transfer up to $3.5 million in 2009 ($7 million with your spouse) to beneficiaries who are at least two generations your junior.
3. Qualified personal residence trust - allows you to give away your home, generally to your children, while you keep control of it over a period that you stipulate, typically five to 15 years.
4. Irrevocable life insurance trust - allow you to shield the proceeds of your life insurance from estate taxes. When you place your policy in this type of trust, you surrender your ownership rights, meaning you can no longer borrow against the policy or change your beneficiaries.
5. Qualified terminable interest property trust - enables you to direct your assets to certain relatives. Essentially, when you put assets into a QTIP trust, your spouse will receive income from it after you die—and then the beneficiaries you specify will get its principal after she dies.
By Ron Lieber
Copied and posted by Jennifer Ng
You’ve probably heard about the bumper sticker, even if you haven’t seen it. It’s the one on Cadillacs in Florida and Lexuses in Arizona that says “I’m spending my children’s inheritance.”
We’ve laughed at that for years. But the truth is, retirees have a lot of demands on their savings. Out-of-pocket health care costs, for one, are rising fast. At the same time, many people are not waiting until they die to help their children and grandchildren financially. And some are finding creative ways to draw on money that would otherwise be part of their estate.
For all these reasons and many more (I’ve ticked off eight below), it would be a bad idea to plan on getting any inheritance from your older relatives.
Many people have figured this out, though not all. An AARP analysis of the Federal Reserve Board’s 2004 Survey of Consumer Finances noted that 21 percent of people born after 1964 thought they would inherit some money someday. After all, most of them still have living parents or grandparents.
But with each passing year, the pressures on the nest eggs of those older people will only grow. The truly rich will be fine, as they usually are. But a lot of other people, even retirees with net worths well into the seven figures, could end up spending every dime before they die.
There is nothing wrong with that, by the way. This is a judgment-free column on that front. There is no moral obligation to leave a cent to the next generation. And there are some people who struggle each day to make ends meet who only wish they could leave an inheritance.
Click here to read more
By Jennifer Ng
It can be tough deciding how to divide your assets among your loved ones. Sometimes the easiest way to avoid conflicts is to divide it equally. However, if everyone receives an equal share but each has different financial circumstances then it won’t be fair. Therefore, one should always explain why those decisions were made. Free Advice offers several ways to reduce confusion among your beneficiaries.
1. Have an estate lawyer review your will.
2. Have a witness (not your beneficiaries)
3. Assign a will executor to distribute the assets
4. Your will may still be valid if you move to another state; if not have a lawyer review it
5. Keep your beneficiary designations (assets that do not pass under a will) updated
6. Create a folder called “Open in Case of Death” to organize important information
7. Make healthy estate planning choices
Copied and Pasted by Rie Umano
LEAVING LOTS OF money to grandchildren, and skipping the generation in between, used to be a nifty way to beat estate taxes. That way, the money was subject to estate tax just once, when the grandparent left it to the grandchild. Otherwise, it would have been taxed when the grandparent left it to his child, and then again if that child preserved the money to pass along to his own children.
But eventually Uncle Sam realized he was getting cheated out of his second bite of the apple. And in 1986, the generation skipping transfer tax, or GST, was created. It makes sure the Internal Revenue Service gets that second bite after all.
So even after you've set things up to take advantage of the various gift and estate tax loopholes, your job isn't quite finished. You still have to take a step back and make sure you've successfully dodged the GST tax as well.
GST Tax Basics
If you have no intention of ever leaving any money or assets to your grandchildren, great-grandchildren or generations after, you can probably quit reading this article. The GST tax only hits wealth transfers to individuals more than one generation beyond you. But beware, that includes any primary or contingent beneficiaries to any trusts you create.
Click here to read more
Posted by Rie Umano
No matter how rich or poor you are, you cannot avoid death. It is very important to start planning you estate as early as possible. Many states impose their own taxes when residents die. Those taxes can hurt family-owned business, or can be minimized by some strategies by planning correctly. Here is six steps to estate planning.
Step 1: financial plan and your estate
Establish how much you own (assets), how you much you owe (liability), tax commitment at death and the amount of life assurance.
Step 2: Drawing up a will
Your will ensures that your assets will be divided among your relatives that you want to give. Your will have to be revised when your personal circumstances changes, such as marriage, having a child or your spouse dies. In addition, your income and new tax legislation and amendments to existing laws will affect your will.
Step 3: Liquidity of your estate
The liquidity of your estate is important because your spouse needs enough cash to support themselves until your estate are settled. Cash can be used for your funeral fee, bank charges, or transfer costs on houses and other property.
Step 4: Taxation at death
Some states have their own tax system that is different from the federal estate tax system. Your estate may also be liable for income tax. There are also some exemption and deduction and retirement fund benefits.
Step 5: Structuring your estate
As mentioned above, there are ways to minimize death tax such as donations, balancing an estate, limited interest structures, and massing.
Also, you should consider the fact that life insurance that you purchased increase inheritance taxes depending on the amount of liquid assets you own. It is more important to keep sufficient assets to pay death taxes.
Step 6: Getting it all together
Organize all your documents and store them in a place where your heirs and executors will be able to access.
By Ryan Dennin
Just about everyone now a day’s should have some sort of a will in the unfortunate circumstance that something someday will happen to you. Now days it doesn’t always need to involve trips to a lawyer, as many people have taken the route of completing wills online. Most experts say that do it yourself wills are suitable for anyone that has net worth under 2million dollars (US News). On average a trip to an attorney could cost you $300- $1000 but gives you the peace of mind that all the legal obligations for each state are adhered too. Once the method is chosen to complete the will there are few key tips when preparing it.
First and foremost you should know all of your assets. Take the time out and write down everything that you own that is worth passing down to others. Things like real estate, vehicles, and even TV’s and computers are considered assets that should be calculated. Next is to pick the beneficiaries that will receive part of your estate when you die. An article in US News, says you’re most important assets are your children, so pay close attention to the decisions you make as to who is going to take care of them if your spouse and you were to both die. Third, you should choose an executor of the will. This is someone that will carry out the will if you die and can possibly be someone that gets some of your assets. Lastly, it is important to keep your will in a safe place where your children and executor of the will know where to find it. Sometimes this could be a fire proof box, or a safe depository.
Tuesday, February 24, 2009
Feel free to view the original article here:
Monday, February 23, 2009
Posted by Brian Redhead
CAUTION: Reading this article may provoke self-inflicted slaps to the head and utterances of "Why didn't I do this five years ago?"
In 1999, Farhad Aghdami, a trust lawyer in Richmond, Va., suggested to Jim and Yolonda Roberts that they put their home in a Qualified Personal Residence Trust to shelter it fromlooming estate taxes.
Piedmont Lodge, the Robertses' white clapboard house with six portico columns sitting on 53 acres near Keswick, Va., was worth about $1.6 million back then. The trust lets them give the property to their four children for about a third of what it was valued at in 1999. The couple, now 75 years old, can live in the home for the 10-year term of the trust. When the trust expires in three years, the house belongs to the children.
Here's where you slap yourself. The home is probably worth close to $4 million now. All of that appreciation was removed from the Roberts estate. "We are very happy with how it worked out," said Mr. Roberts, a retired Exxon executive. "We love the house and wanted to keep it in the family."
You keep hearing how your home is your primary financial asset. As home prices have climbed sharply in most areas of the country, many older Americans are finding themselves living in an asset worth $1 million or more. Some also own vacation homes that have increased in value.
Add that real estate to stocks, bonds, life insurance and other property and suddenly people who thought they were just average folks could expect to have those assets subject to estate taxes after they die. Congress has set the exemption from estate tax at $2 million, but as Carrie C. Simchuk, a trust and estates lawyer at Perkins & Coie in Seattle, said, "It doesn't take all that long to get to $2 million."
That's what makes the QPRT, pronounced "cue-pert" by the experts skilled in setting up these tax-reducing vehicles, so attractive these days. During the Clinton administration, Congress made noises about limiting the trusts, but in recent years no legislator has crusaded for their abolition.
Certainly a lot of people have put aside worrying about estate taxes. After all, Internal Revenue Service statistics show that the federal estate tax was paid by only 1.17 percent of estates of those who died in 2002, the last year with published figures. That could be because few people amass appreciable estates or because so many who did accumulate wealth had hired excellent tax planners. Either way you look at it, it might seem even more irrelevant because Congress has raised the exemption to $3.5 million in 2009 and then removed the estate tax entirely in 2010. Click here to read more
Sunday, February 22, 2009
Article By: DEBORAH L. JACOBS
Posted By: Ryan Dennin
UNCERTAINTY about future tax rates is complicating estate planning at a time when the economic downturn offers significant opportunities.
Most methods of saving estate taxes reduce a person’s net worth through irrevocable lifetime transfers. Yet even the very wealthy are sometimes reluctant to take this step, because they worry that it will leave them short of money, said Lloyd Leva Plaine, a lawyer with Sutherland, the Washington-based firm. Market turbulence and changing political tides exacerbate those fears. Click here for rest of article.
By Steven Muller
Many people go through their entire lives trying to build up wealth for when they retire. It’s an important financial decision that a person or couple needs to make and one that is wise to endeavor in. Taking the next step in planning for your future includes deciding how their estate will be taken care of after death. No one wants their lifetime of work to be taxed and charged fees on and ones heirs receive less than they should. There are ways in which people can avoid having this happen to them. One of these solutions is creating a living trust.
A living trust does not save you any money while you are alive, but they do get rid of probate fees and they can reduce or eliminate federal estate taxes after death. In a basic living trust you transfer the ownership of your property to the living trust. You become the trustee and you don’t give up control of your property that you just put in trust. In the document written is who will inherit the trust property after your death. When that does happen the person that is set to receive the trust is transferred ownership of the property. This saves cost on probate fees and lawyer fees in dealing with property after death. If the net worth of the deceased is worth over $650,000 than a living trust can also help with tax-savings. A living trust is a great way to avoid unnecessary costs to your loved ones on your estate and an option that all should consider.
By Steven Muller
Many people believe that when they die, their personal belongings and all of their worldly possessions will automatically go to their next of kin - even if they don't have a will. Unfortunately, they're wrong. In fact, if an individual dies intestate (without a will) the probate courts will determine how to distribute that person's assets. And although the court system may ultimately decide to distribute the individual's assets in a manner that is consistent with the deceased's wishes, there is no guarantee that this will occur.
There are other downsides to the probate process (and dying without a will) as well. For example, it could take many weeks or months for the courts to compile an accurate list of an individual's assets. It could also take a prolonged period of time to identify and locate potential beneficiaries. Unfortunately, until this process is complete, money may not be distributed, even to legitimate and known beneficiaries!
Tuesday, February 17, 2009
There are numerous reasons why making an estate plan sooner than later is a wise decision. For one, with a plan, you can ensure that the things that you own go to whom you want and how you want. If you were to die without a will or some form of trust, a court would have the power to decide the future of your assets. Another reason is that if you became disabled in some way and no longer able to manage your own affairs, you are guaranteed to be protected. Planning ahead will also protect your heirs from having to deal with large legal fees and taxes, and will send a powerful message to them after you are gone; that you loved them enough to take the time to meaningfully divide up your assets. Most importantly, taking on the challenge of estate planning early on in life will give you a certain peace of mind. You will know that if something happens to you, your possessions and loved ones that are left behind will be taken care of. Is that something you would really want to leave to chance?
Monday, February 16, 2009
by Gina M. Barry
posted by Greg Lipinski
Recently, there have been many news stories about the duty of an adult child to provide support for an aging parent. This support may be in the form of providing personal care or financial support. An adult child could become liable for supporting a parent in several ways, including (1) voluntarily; (2) contractually; (3) being required to return gifts made by the parent to the child, and (4) statutorily.
To continue reading this article, click here.
While preparing your will, also inventory and list major assets, including bank accounts, investments, property and insurance policies. Make sure that your family knows where to find that information should you become incapacitated.
By Ryan Dennin
It seems there is quite a bit of talk in the world about where to put your money. 401k, investment bonds, the stock market etc. What very few people talk about, or plan for is who is going to happen to their estate when they die. It is not secret that you will die, and it is something you need to be prepared for. The perfect candidate for someone that needs to spend the money, or the time to do estate planning is… EVERYONE! Whether your number 1 concern is who will take care of your kids if you die, who will get your house, or who will get the $25k you have in cash savings it is worth taking the time out and planning properly for this. A will is a good first step in planning for your estate. Wills can be drawn up by an attorney, or there are plenty of online sites that can draw a simple one for you. The other big miss by people is oversight. Whether it is your will, or the name of the beneficiary of your life insurance plan, it is important to update them as things change in your life. If you get a job at 20 and keep the job till 50 chances are you might have something happen that the beneficiary information should change. All in all, the lesson is that proper planning will ensure that your loved ones are taken care of after you pass, and you have control over the decisions you would want to make despite not being here any longer.
What kind of financial legacy do you want to leave? Chances are you've got some ideas. Maybe creating a foundation in your name. Helping your favorite charity. Or leaving it all to family.
One thing's certain — you probably don't want to let Uncle Sam decide. Rather than allowing your hard-earned money get consumed by taxes or misdirected, make sure your wishes will be met by preparing a proper estate plan.
If you haven't already worked out the details of your estate plan, here are a few things to consider.
Ask yourself, "What is most important to me?" Is it assuring loved ones' financial security? Supporting higher education, or your community? Protecting the environment? Your estate plan will ensure your money goes where you intend, and allow you to benefit the people and causes close to your heart.
Next, ask yourself, "Will my current financial situation allow me to accomplish these goals?" Now could be a good time to review your investments and insurance, including your retirement plan assets and employee benefits. You'll want to make sure your assets are growing to maximize your financial legacy.
Sunday, February 15, 2009
1. No matter your net worth, it's important to have a basic estate plan in place.
Such a plan ensures that your family and financial goals are met after you die.
2. An estate plan has several elements.
They include: a will; assignment of power of attorney; and aliving will or healthcare proxy (medical power of attorney). For some people, a trust may also make sense. When putting together a plan, you must be mindful of both federal and state laws governing estates.
3. Taking inventory of your assets is a good place to start.
Your assets include your investments, retirement savings, insurance policies, and real estate or business interests. Ask yourself three questions: Whom do you want to inherit your assets? Whom do you want handling your financial affairs if you're ever incapacitated? Whom do you want making medical decisions for you if you become unable to make them for yourself?
4. Everybody needs a will.
A will tells the world exactly where you want your assets distributed when you die. It's also the best place to name guardians for your children. Dying without a will - also known as dying "intestate" - can be costly to your heirs and leaves you no say over who gets your assets. Even if you have a trust, you still need a will to take care of any holdings outside of that trust when you die.
To continue reading click here.
By: Steven Muller
No one wants to acknowledge their own mortality, especially in writing. This is probably why avoiding doing so is the favored estate plan for many Americans. It has been estimated that 70 percent of all adults — many of whom are parents of minor children — do not have wills. Even among the affluent a dread of estate planning had 37 percent going without according to a 2004 survey conducted for PNC Financial Services Group.
Dying without a will (or intestate) leaves the division and distribution of one’s assets up to the state. “Basically, if you don’t write a will, the state will write one for you,” explains Thomas J. Dwyer, a Chicago attorney. “However, the way the state does it probably wouldn’t be how most of us would like it done,” he says.
Wednesday, February 11, 2009
by Rob Wildhack
Throughout my current research on Estate Planning, it is evident that this topic pertains to anyone and everyone. No matter your social status, estate planning is important. Especially in hard economic times of today, leaving assets to your loved ones can make a difference. Creating a will may be a situation you may never want to be in, or are scared of, but estate planning can ensure that your money and assets are used in ways you wish. Creating a will is important not only for yourself, but extremely important to love ones. As this being my last time blogging on Estate Planning, I have learned that no matter the person or situation, Estate Planning can provide a positive influence in their life, as well as the lives of their close family members. Listed below is a great article that lists important facts that people must know about Estate Planning.
Syd Leibovitch knows a lot when it comes to real estate. He has been in the business for almost twenty-five years, and twenty-two years of owning his own real estate firm, Rodeo Real Estate in
According to Syd Leibovitch, today is a great time to buy real estate. However, in the economy of today people have to be able to understand what they truly can afford. Leibovitch coaches the agents at Rodeo Realty to help their clients determine what they can truly afford. He encourages people to consider the cost of the mortgage, property taxes and money for unexpected repairs before deciding to purchase a home. "If you don't buy now you're going to wish you did," Leibovitch says. "The market already hit bottom and is on its way back up, except for the high end, which always lags behind." But with the banks refusing to give out loans, only the most qualified buyers would be able to get the mortgage they needed in order to purchase a house and the rest will just have to wait until they become more qualified or it becomes easier to get a loan.
After someone passes away, the contents of his or her will are automatically transferred to the beneficiaries. Many times, the will must go through a legal process known as probate. This process includes proving in court that a deceased person's will is valid, identifying and inventorying the deceased person's property, having the property appraised, paying debts and taxes, and distributing the remaining property as the will. Generally, however, it is only beneficial to avoid probate if you are 50+ years old, in bad health, and own a significant amount of property.
Probate does not benefit the beneficiaries mainly because it costs them money and time. The whole process can tie up property for several months, possibly up to one year, and attorney and court fees can take up to 5% of an estate's value. The whole process is basically clerical and rarely calls for legal research, drafting, or a lawyer's adversarial skills. The probate attorney fills in a huge number of forms and keeps track of deadlines and other procedural technicalities. Some probate fees include executor fees, attorneys' fees, court costs, appraiser's fees, and other expenses. Due to all of these fees and the amount of time that this would all take, it would be better to try to avoid probate altogether. If you can't, however, try to reduce the amount of property subject to probate. By doing so, it will reduce probate fees and allow the beneficiaries to get their inheritance much faster.
Tuesday, February 10, 2009
I thought it would be a good idea to put something about how to write a will on the estate planning blog, considering I don’t really know how it’s done.
The first important aspect of a good will is to realize what you have. That means that the first step is to take inventory of all the important things you have and would like to leave to your friends and family. Then, you actually have to decide who to leave it to. This is probably the hardest part, as you are forced to make decisions between loved ones that could cause some problems. It is imperative not to limit your will to objects. Parents with young children need to specify who will care for their children, and the same is true for pets. The most important part is getting a couple of witnesses and having them sign the will, which will make it valid. It is a good idea to review your will about every five years. This way, you will be able to make changes if you have moved, had more children, or adjust for any life changing events that may have occurred. Obviously, this is a very brief overview and in no way is complete. The best way to write a will is to sit down with an attorney and have he/she walk you through the steps. Other more affordable options include using online templates or will-writing software.
The following sites offer good overviews on will writing
Link 1 click here
Link 2 click here
Link 3 click here
by Rob Wildhack
Monday, February 9, 2009
There are some steps guide can help you to make your first estate plan. The first step is to ensure your current custody and guardianship agreements and all associated court orders of all children are filed with a governing body. Then second step is you need to decide who will care for your children in the event of your death.
Your condition and the terms of your directive also will be subject to interpretation. Different institutions and doctors may come to different conclusions.
As a result, in some instances a living will may not be followed. Nevertheless, a patient's wishes are taken very seriously, and an advance medical directive is one of the best ways to have a say in your medical care when you can't express yourself otherwise.
Posted By, Ken Smith
Written By, Byron Moore
The greatest part of America's wealth lies with family-owned businesses. Family businesses are responsible for 78 percent of new jobs created. Yet according to the University of Vermont Family Business Initiative, only 12 percent of family businesses will still be viable into the third generation, with 3 percent of all family businesses operating at fourth-generation level and beyond.
If you think about the way most "tax-only" estate planning is done, the focus could be summarized as The Four Ds of traditional estate planning:
Slice the estate into as many pieces as possible, so as to maximize gift and estate transfer techniques. If your only goal is to avoid taxes, this makes some sense. If you have a goal of keeping a family or a business together, this approach loses some of its appeal.
Through complex trusts and generational skipping techniques, defer wealth as far into the future as possible. This avoids taxes today. It also ignores the need to teach the next generation how to use the wealth they are going to one day inherit.
At some point in time, the money gets dropped on the doorstep of the next generation. What careful planning did to avoid taxes, careless planning fails to avoid — the wealth eroding effects of immaturity and a lack of wisdom by inheritors.
Too often, inherited wealth is greeted with an "I've won the lottery!" mentality. Untrained in the true stewardship of wealth, the downstream, untrained next generation(s) fritter away what should have been a sustainable source of family wealth for generations.
So great is the aversion of most wealthy people to that final tax — which can be as high as 45 percent — they employ legions of trust and estate lawyers to try to reduce it. But at a certain point, they end up paying a sizable chunk of their fortune in taxes. One simulation from J.P. Morgan Private Bank showed the tax bill on a $123 million estate, even with a basic level of planning, as $51.5 million. It is no wonder that trust and estate lawyers have such job security.
Still, for all the planning, there can be one significant glitch: mistakes. And sometimes the mistakes are not found until it’s too late. These errors can not only cost an estate tens of millions of dollars, they can also give the assets to the wrong person — like a former spouse.
“The aha! moment is not what the estate tax is — the math is simple,” said Janine Racanelli, managing director and head of the Advice Lab at J.P. Morgan Private Bank. “It’s when they see that number, they want to do something about it.”
The knowledge that we will eventually die is one of the things that seems to distinguish humans from other living beings. At the same time, no one likes to dwell on the prospect of his or her own death. But if you postpone planning for your demise until it is too late, you run the risk that your intended beneficiaries -- those you love the most -- may not receive what you would want them to receive whether due to extra administration costs, unnecessary taxes or squabbling among your heirs.
This is why estate planning is so important, no matter how small your estate may be. It allows you, while you are still living, to ensure that your property will go to the people you want, in the way you want, and when you want. It permits you to save as much as possible on taxes, court costs and attorneys' fees; and it affords the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion.
BY: LEE RUTH