Newlywed Estate Planning
August 6, 2014
While there is a great deal to celebrate getting ready for your wedding, don’t neglect this excellent opportunity to delve into your estate planning as well. Unfortunately, as you may already know, accidents can happen at any time. Of course we all hope that nothing impacts your new family and celebrations, but it is critical that you discuss your plans with your new spouse and outline your plans early. Remember that it will be much easier to update them later on once you have decided on the proper documents, but that you should never neglect putting your plan together entirely.
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You can begin with small steps, like changing your account beneficiaries. This is one of the easiest things to do in your overall estate plan, but there are big ramifications if you’re adding on your new spouse. Do it early. Make sure you update your life insurance, IRA, and 401k accounts, including any others that may have beneficiaries listed in the event that something happens to you.
Your next step should be to look over any wills that both of you have and to ensure that each individual has a solid will reflecting his or her current wishes. Powers of attorney and medical directives are also crucial for new spouses who may be updating their information from the past to reflect their new marriage. For more ideas about transitioning your estate planning to married life, contact us through email at firstname.lastname@example.org or contact us via phone at 732-521-9455 to get started.
Do I Need a Trust?
August 5, 2014
As trusts have gotten more popular and evolved in type to appeal to a lot of people, so now you might be under the impression that you must have a trust. While it’s not for everyone, there are so many trusts out there that it’s very likely you could find one that will help you to meet your goals, including to protect your assets and minimize taxes.
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Major liquid assets, setting up care for a child with special needs, and a variety of real estate ownership are a few of the reasons that people might initially turn to trusts. If you’re a resident of a state with a high state estate tax, income tax or probate costs, you’re likely to be concerned about the hit of taxes, too. This refers to situations where a federal estate tax is factored into your asset value, but an additional taxable event occurs at the state level. Without proper planning, you could find that the value of the assets you have worked so hard to build is extremely vulnerable to these taxes and costs.
Contact our offices today to learn more about how these trusts can help you. Send us a message at email@example.com or call us 732-521-9455.
What is a Self-Settled Trust? Asset Protection & Tax Savings.
August 4, 2014
Right now, gift and generation skipping transfer tax exemptions, set at $5.34 million each, have caused a resurgence in interest regarding self-settled trust. As of now, only fifteen states allow for these types of trusts: Alaska, Delaware, Hawaii, Mississippi, Missouri, Nevada, New Hampshire, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Virginia and Wyoming. Several of these states, including Delaware and Nevada, tend to be popular locations for DING/NING trust establishment when the trust creator lives in a high state income-tax and capital gains tax environment.
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Under a self-settled trust, grantors may even be a beneficiary of an irrevocable trust that is established for their own family. As long as no assets are transferred fraudulently, no exception creditors, and no pre-existing arrangement between the trustee and grantor, a trust grantor can establish himself or herself as a beneficiary.
These trusts are most often used for domestic asset protection in four separate ways: a self-settled trust, spendthrift protection, modern discretionary trust protection, and the establishment of a limited liability company to shield and own trust property. In their most common form, self-settled trusts are used as an alternative to off-shore trusts. To learn more about trust creation and management that maximizes protection, email us at firstname.lastname@example.org or contact us via phone at 732-521-9455.
Indian HSBC Client Found Guilty of Hiding Offshore Accounts
August 1, 2014
Offshore account taxpayer Ashvin Desai was recently sentenced to six months in prison in addition to six months of home confinement for not reporting foreign bank accounts on tax returns and FBAR filings. The medical device manufacturer had previously been convicted of hiding more than $8 million in foreign bank accounts.
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In addition to being charged with tax evasion and tax perjury, he also pleaded guilty to failing to file an FBAR. The money from his offshore accounts were used to invest in CODs, where he earned interest rates up to nine percent. In addition to all the other charges and penalties for the efforts he took to hide the assets, he was also assessed a $14,229, 744.00 FBAR penalty. While these penalties may seem severe, he was actually very lucky in the sentencing, as he could have been facing 552 months in prison.
The government was forced to prove their case in court, but what sealed the deal was email proof that Desai was making efforts to conceal the money and how it was being transferred. While there are obvious lessons here about using email to share any kind of sensitive information, it’s also an opportunity to highlight the importance of proper FBAR filing. To ensure the proper compliance with FBAR, contact us today at email@example.com or via phone at 732-521-9455.
Supreme Court Decision: Inherited IRA NOT Protected
July 31, 2014
A recent decision from the Supreme Court means there’s no better time than now to review your estate plans and ensure that you have identified the best possible solution for passing down assets to another generation. This new ruling states that inherited IRA funds DO NOT QUALIFY under the category of “retirement funds” under bankruptcy exemption guidelines. Previously, these kinds of funds might have been considered “bulletproof” from creditors, but this new ruling means it could be time to re-evaluate how you’re transferring your assets down to children and other beneficiaries. Is a Standalone Retirement Trust or IRA Trust right for me?
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According to the Supreme Court, the members of which conducted reviews of the Bankruptcy Code to get more specifics on the situation, inherited IRAs should not count as retirement funds because the individual inheriting the assets cannot contribute to the funds or invest more money into them. Since the IRA also requires that the accountholder draw money from the account, the Supreme Court argued that this would “undermine the purpose of the Bankruptcy Code”.
Each client wishing to establish plans for the future transfer of assets to beneficiaries has their own concerns and situations, which is why it’s so critical that you work with a team of experienced planning attorneys to meet your goals and increase the chances that those assets will be protected and meaningful for the beneficiary. To review trusts and other options for asset transfer, email firstname.lastname@example.org or contact us via phone at 732-521-9455
How Did Shelly Sterling Control the Clippers Sale Decision?
July 23, 2014
The Los Angeles Clippers sale recently seemed to go ahead just the way that most players, fans, and the NBA commission wanted it, leading to an agreement that sold the team to former Microsoft CEO Steve Ballmer for $2 billion. The control behind the sale, however, went to Donald Sterling’s wife, Shelly, causing many to wonder just how she managed it.
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Shelly made her move with a boilerplate provision included in the Sterling family trust, which maintained ownership over the Sterling’s interest in the Clippers. Since both Shelly and Donald were co-trustees holding equal authority over that trust, she was eligible to make the decision based on another standard trust provision regarding mental competency.
Shelly had already had Donald evaluated for mental competency. Under the trust’s guidelines, if either Shelly or Donald were found by two qualified physicians to have “an inability to conduct business affairs in a reasonable and normal manner”, that individual could be removed as co-trustee. As a result, Shelly would have become the sole trustee with the decision making power and authority to sell or manage the business how she saw fit and that is her strategy.
Whether planning for your family’s assets or for those of an NBA team owner, when in generating trusts’ planning attorneys may recommend that provisions like the one above are put into the language for the protection of both individuals. If not included, the co-trustee (or business partner, as it may be) could be exposed to serious risk in the event of some form of incapacity. If not planned at all, it could all be left up to a court to decide. Get more details about trust planning today by contacting us at email@example.com or at 732-521-9455.
Estate Planning Tips for the Blended Family
July 22, 2014
Second or third marriages can be very fulfilling, but they also bring their own set of challenges when it comes to estate planning. There could be children from previous relationships and children that have been born into the new marriage. If both parties were previously divorced, this can complicate property and other assets that have been brought into the marriage.
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You want to approach this issue by thinking about your individual estate planning goals first. Your assets, like investments, retirement plans, brokerage accounts, jewelry, cars, and houses, should all be considered. If you have not recently updated your beneficiary designations, you will want to consider whether your goals have changed as a result of a new marriage. Frequently people forget to update the beneficiaries on these important accounts after getting remarried, so it’s important to schedule an annual review with your estate planning specialist so that your documents always reflect your most current goals.
If there are certain items that you want your children to receive, make sure that you clearly note these items in your estate planning documents. Leaving all of the property to the surviving spouse may not be the best approach because it doesn’t ensure that those children will actually receive those benefits. In many cases, it’s most appropriate to use trusts to provide for the spouse while making separate plans for the children to receive the property. To learn more about our special planning for blended families, reach out to us through email at firstname.lastname@example.org or contact us via phone at 732-521-9455.
Hey Buddy? Questions to Ask Before Going Into Business With a Friend
July 21, 2014
It’s exciting to think about the prospect of going into business with someone you already know, but this step should be taken carefully or you might wind up with a difficult working relationship and an impaired friendship. Here are some of the most important questions you should review when thinking about whether a friend equals an ideal business partner.
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- How much trust do I have for this person? You’ll see that numerous experts compare business relationships with marriage. Are you willing to go through ups and downs, which are all part of running a business, alongside this individual?
- How does that partner improve and build on your brand?
- Does this person have a selling point or critical skill that you’re missing? It can be a good idea to work with someone who offers something that you don’t. If you’re missing executive experience, for example, perhaps look for someone who offers that.
- What is their life position? It could be difficult to work with someone as a partner who is not in a stable life location. Although this doesn’t meant that your partner has to have all his or her ducks in a row, someone just coming out of a bankruptcy might pose risks for your company.
- Would a pilot project work? Before committing to a full-on business together, maybe trying out a small version or pilot project will give you a sense of your strengths and weaknesses.
To talk more about concerns of a business at the startup stage, contact us through email at email@example.com or by phone at 732-521-9455 to get started.
When to Think About Charitable Remainder Unitrust Alternatives
July 18, 2014
For many individuals approaching estate planning, charitable giving is going to factor into the equation somehow. The most popular way of passing on assets currently is through a charitable remainder unitrust, but it’s not necessarily the best option for everyone, although last year nearly $90 billion was held in U.S. trusts of this type.
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Here are some of the most common reasons that you might want to use something other than this trust vehicle for your charitable giving:
- Tax Savings Today: You want maximize your current tax deduction. A charitable lead trust could be a better alternative for this situation, since you get an immediate federal income tax deduction when the gift is made. The tax deduction equals the present value of the future income stream.
- You want the gift to begin now: Under a charitable lead trust, the client will typically gift the assets directly to a charitable trust. That trust then makes regular payments for a specific number of years or for life. Under a remainder trust, though, the charity doesn’t get anything until the trust’s term is up.
- You want to see regular payouts: This is there’s a difference between a charitable remainder annuity trust and a unitrust. The annuity trust guarantees equal payouts throughout the length of the term (such as every year), which gives the person setting up the trust confidence that payments are being made at regular intervals.
When it comes to charitable giving, you have options. Contact us today to learn more via email firstname.lastname@example.org or 732-521-9455 to get started.
For The Ladies: Special Estate Planning Considerations for Women
July 17, 2014
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For the most part, financial planning and estate planning tools are very similar for men and for women, but there are several facts that result in special planning considerations for women as well. The root of these considerations is that in later years, women may face their own set of challenges.
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To start with, women tend to live longer than men do. A woman may overlook the fact that odds are in her favor for outliving her spouse. In fact, according to the Census Bureau, nearly 40 percent of women over the age of 65 are widowed. That longevity may also lead to higher medical bills. When your financial future is built on a husband’s pension or Social Security benefits, the woman can face major challenges as a widow.
Women are also much more likely to provide care to children and elderly parents. Many women tend to take on this role for older parents, which can be emotionally challenging and a financial adjustments.
Women looking at estate planning should seriously consider where their income will come from in the future and what, if any, benefits they will be eligible for. If women are looking at caring for their own elderly parents, it’s also worth a look into the parent’s planning to see whether they have made plans for long-term care or factored in the financial aspects already.
A little advance work can go a long way in helping women live long and comfortable lives. To learn more about estate planning, email email@example.com or contact us via phone at 732-521-9455 to get started.