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Friday, July 30, 2010 Press Coverage of Estate Planning this Week (July 30, 2010)
Mary Pilon of the Wall Street Journal discusses the problems of passing art, jewelry and other family heirlooms to children this year when the federal estate tax has been replaced by the modified carryover basis regime. Under the carryover basis rules, children inherit items at their original cost basis, rather than a stepped-up cost basis, and are subject to capital gains taxes if they later sell the item. One silver lining: estates qualify for at least $1.3 million of basis step-up. Nonetheless, inheriting items from decedents dying in 2010 is far more complicated than it was last year. See Looking a Gift Horse in the Mouth (July 23, 2010).
Kelly Greene of the Wall Street Journal reviews what to consider when contemplating a trust for IRA accounts. The benefits include being able to pass on large IRA accounts and limit a child’s distributions so that the child will have a lifetime of income, rather than a one-time cash windfall. However, creditor protection and whether to use an accumulation trust or a conduit trust are issues to be discussed with an estate planning attorney. See When Trusts Meet Retirement Accounts (July 24, 2010). Friday, July 23, 2010 Press Coverage of Estate Planning this Week (July 23, 2010)
Conrad de Aenlle of the New York Times discusses estate planning in the context of people who live in more than one country, noting that sometimes two wills are necessary to cover both local law, and the laws of the country of permanent residence. He also stresses coming to grips with the last step you will ever take, death, and having at least some basic instructions in place. See Estate Planning Step 1: Recognize You Are Going to Die (July 15, 2010).
Sandra Block of USA Today contrasts the fate of George Steinbrenner’s heirs with what could happen to heirs of decedents in 2011 and beyond. Because Steinbrenner died in 2010, his estimated $1.15 billion estate escaped approximately $500 million in federal estate taxes; beginning in 2011, under current law, decedents will face taxes of up to 55 percent on estates over $1 million. Block also discusses the current status of estate tax reform in Congress. See Estate Tax to Return in 2011, And It Could Hurt Ordinary Folks (July 22, 2010). Friday, June 25, 2010 Press Coverage of Estate Planning this Week (June 25, 2010)
Deborah L. Jacobs of Forbes points out that estate planning is usually more important for women than for men, in part because women live longer and tend to marry older mates. In addition, because women typically have lower lifetime earnings, they will be more likely suffer the consequences of poor money management in later years if proper estate planning isn’t accomplished before their husband dies. She offers six issues for women to consider regarding estate planning. See Six Estate Planning Questions for Women (June 22, 2010).
Liz Davidson contributed two articles to Forbes, the first providing some tips on how to leave a legacy during your lifetime and at death. It begins with defining your values, encourages teaching life’s lessons, and identifying a charitable organization you wish to support after your death. See Estate Planning, As Told By Clint Eastwood in ‘Gran Torino’ (June 21, 2010).
In the second of Davidson’s contributions, she discusses issues to consider when leaving an inheritance to beneficiaries who may not be old enough or financially savvy enough to use it wisely. Actions to consider include educating your heirs and giving them some assets now to build their experience in managing money, limiting access to principal through use of trusts, and maintaining flexibility through the use of trustees who can oversee asset distributions after you die. See Giving and Inheritance the Right Way (June 24, 2010).
Laura Saunders of the Wall Street Journal raises the question of whether the federal government could reverse course and later tax Roth IRAs. If that were a valid fear, then converting a traditional IRA to a Roth IRA could end up being a big mistake. Her conclusion is that while possible, a later tax on Roth IRAs is highly unlikely, and today's risk may be outweighed by the benefits of Roth IRAs, which can be substantial. See Is a Roth IRA Safe From Taxes? (June 18, 2010). Friday, June 18, 2010 Press Coverage of Estate Planning this Week (June 18, 2010)
Daisy Maxey of the Wall Street Journal offers some reasons why college students ought to have wills, including ensuring that their parent’s estate planning is not disrupted. Absent a will, intestacy laws in most states would pass assets back to the parents where the son or daughter is not married and has no children. Passing money up a generation may lead to its being needlessly taxed when the parents pass on. See Planning for the Unthinkable (June 14, 2010).
David Kocieniewski of the New York Times questions the real impact of a return to the estate tax threshold of $1 million in 2011, suggesting estate planning and favorable tax provisions for small businesses make fewer estates liable for estate taxes. Furthermore, even with the low estate tax threshold, the number of affected estates would be low by historical standards. See What An Estate Tax Looks Like to the Taxman (June 11, 2010).
Paul Sullivan of the New York Times finds that the one-year repeal of the estate tax is making this a busy time for estate planners, both to fix older estate planning documents that didn't anticipate repeal of the estate tax, and to take advantage of estate planning methods that will likely soon be less appealing because of new legislation. See Confusion Over the Dormant Estate Tax Keeps Advisors Busy (June 11, 2010).
Annie Gasparro of the Wall Street Journal recounts some of the reasons that converting a traditional IRA to a Roth IRA may not make sense. She lists large near-term tax increases, owners too close to retirement, and potentially higher tax brackets during retirement. See Why You Shouldn’t Convert to a Roth IRA (June 14, 2010).
Kristen McNamara of the Wall Street Journal reviews actions taken by various states to attract trusts, including relaxing or voiding limits on how long a trust can last, eliminating income taxes for trusts, and enhancing asset protection features. See States Want Your Trust (June 14, 2010). Friday, June 11, 2010 Press Coverage of Estate Planning this Week (June 11, 2010)
David Kocieniewski of the New York Times reports that Dan L. Duncan may be the first American billionaire able to pass his fortune to his heirs estate tax free. The estate, estimated at $9 billion, will likely give Congress pause in attempting to reinstate the estate tax retroactive to January 1, 2010, as the Duncan heirs would have ample means to fight such a law in the courts. See Legacy for One Billionaire: Death, but No Taxes (June 8, 2010).
Deborah L. Jacobs of Forbes suggests taking some steps now in preparation for the return of the estate tax in 2011, including reviewing life insurance policies, ensuring not all assets are jointly owned with your spouse, considering annual gifts, funding college savings plans, and converting to a Roth IRA. See Prepare For the Return of the Estate Tax (June 9, 2010).
Ashlea Ebeling of Forbes reviews the status of state-imposed estate and inheritance taxes for 2010. Currently, 19 states impose an estate and/or inheritance tax. That could change abruptly in 2011, depending on what happens to the federal estate tax. See The State Estate Grab, 2010 Edition (June 9, 2010).
Stephanie Fitch of Forbes discusses Qualified Personal Residence Trusts as a means for protecting the family vacation home so that your children and grandchildren can enjoy it as much as you do. These trusts, informally known as QPRTs, make sense when property valuations are low both to pass along sizable assets and reduce final estate taxes. See How to Pass Down Your Family Vacation Retreat (June 9, 2010).
Mark Maremont and Leslie Scism of the Wall Street Journal tell the story of an elderly wealthy investor who purchased $56 million of life insurance and then assigned or sold the rights to the death proceeds to investors. The decedent’s spouse claims this violates public policy and New York laws, and thus she should be named the beneficiary. The case will likely impact the viability of what is known as “stranger owned life insurance.” See Lawyer’s Heirs Fight Insurers in $56 Million Policy Intrigue (June 11, 2010). Friday, June 04, 2010 Press Coverage of Estate Planning this Week (June 4, 2010)
Jerry Gleeson of RegisteredRep.com writes that tax rules for Grantor Retained Annuity Trusts (GRAT) are likely to change soon. The changes include new minimum terms of 10 years, a mandated remainder interest at the conclusion of the term, and that annuity payments may not decrease during the first 10 years of the GRAT. The proposed changes have spurred an increase in the use of GRATs before the proposed rules become law. See Rats! GRATs Benefits Could Be Axed (June 3, 2010).
Radon Stancil and Rick Parkes write in The Apex Herald (Fuquay-Varina, N.C.) about “stretch” IRAs and how by carefully managing an inherited IRA you can increase its benefits substantially. But the rules are tricky, and both the person setting up the IRA and the beneficiary have to make the right moves to make the stretch IRA work. See Maximizing Your Money Through Stretched IRAs (June 2, 2010). Wednesday, June 02, 2010 Report on Status of the Federal Estate Tax
The Tax Foundation, which calls itself a "nonprofit, nonpartisal research and public education organization," has issued a brief overview of the federal estate tax, its recent history, and arguments for and against resurrecting the estate tax in 2011 or sooner. While opinionated at times, the report nonetheless provides some good context to today's confusing estate tax situation. See The Federal Estate Tax: Will it Rise From the Grave in 2011 or Sooner? (May 2010). Friday, May 28, 2010 Press Coverage of Estate Planning this Week (May 28, 2010)
Robert Frank of the Wall Street Journal notes a proposal to “prepay” estate taxes through “prepayment trusts” is being discussed in Congress as talks to re-instate the federal estate tax continue. Although details are scarce, one proposal would allow people to put assets into a prepayment trust for five years, pay a 35 percent capital gains tax on appreciation, then the trust assets would pass to the owner’s beneficiaries estate tax free. See Proposed Estate Tax: Pay Now, Die Later (May 21, 2010).
Martin Shenkman writes in Financial Planning that clients often defer updating their estate plans because “nothing has changed.” Shenkman points out the many life changes that occur, such as the birth, marriage or death of a family member, or a change in the client’s health or financial status. Additionally, he points out that federal and state laws are constantly changing. To say nothing has changed is “a dangerous excuse for clients to ignore vital changes that could completely undermine their intentions.” See “Nothing Has Changed” (June 1, 2010) Friday, May 21, 2010 Press Coverage of Estate Planning this Week (May 21, 2010)
Michaela Cavallaro of Dow Jones Newswires recounts how a financial planner’s rearranging a client’s assets shortly before his death led to a significantly larger inheritance for his children. Estate planning vehicles, including an irrevocable life insurance trust (ILIT), are reported to have quadrupled the amount of money, after taxes, his four daughters would receive. See Digging Deeper to Create a Healthy Inheritance (May 19, 2010).
William Forsyth Jr., a senior fiduciary counsel at Bessemer Trust, shares five rules of thumb for legacy planning, including making children wait until at least age 28 to receive a large inheritance, distributing unequal gifts to children during life, but not after death, and making gifts during your lifetime, even if they are taxable. See William Forsyth Jr., On Rules for Legacy Planning (May 14, 2010).
John R. Sloan writes in Local Tech Wire about the basic rules and tools of asset protection. Many asset protection methods are relatively simple and effective, and include retitling assets in your spouse’s name, placing money in accounts protected by state and federal laws, and setting up business entities to segregate asset ownership. See Asset Protection Planning: Shoot Before the Buzzer (May 12, 2010). Friday, May 07, 2010 Press Coverage of Estate Planning this Week (May 7, 2010)
Ashlea Eberling of Forbes discusses the uncertain future of the estate tax, and some measures you can take to remove some of that uncertainty, including having a contingency plan for this year in which no federal estate tax exists (yet), keeping records of the tax basis of your assets, reconsidering if your son or daughter should take on the potentially complicated role of executor in these uncertain times, and making gifts to charities and family members. See How to Protect Your Family From Estate Tax Uncertainty (May 4, 2010).
Ryan J. Foley of Bloomberg BusinessWeek reports on a Wisconsin Supreme Court case that allowed the recipient of a pay-on-death account to avoid a proportionate share of estate taxes when the deceased did not specify how the tax apportionment should occur. This case points out the need for carefully drafted wills and trusts to ensure estate taxes are apportioned as the client desires. See Court: Estate , Not Heirs, Responsible for Taxes (May 4, 2010).
Kelly Greene of the Wall Street Journal discusses the use of trusts with IRAs to ensure that children and grandchildren don’t blow the account if they inherit an IRA account while still young. These trusts must be closely integrated with specific beneficiary designations to work properly. See Leaving Your Roth IRA to the Kiddies (May 2, 2010).
Deborah L. Jacobs of Forbes sheds light on why stretching out IRA accounts makes sense, and some of the steps IRA owners can take to get the maximum value out of the their IRA for themselves and their children. See How to Stretch Out an IRA (May 4, 2010). | |
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Welcome to NorthEast Estates and Trusts, PLLC (NEET). NEET assists clients with Estate Planning, Probate and Estate Administration, Special Needs Planning and Advanced Estate Planning matters in Shelburne, Vermont (05482) as well as Charlotte (05445), South Burlington (05403, 05407), Burlington (05401, 05402, 05405, 05406), Hinesburg (05461), Essex (05451), Essex Junction (05452, 05453), Colchester (05439, 05446, 05449), Winooski (05404), Cambridge (05444), Huntington (05462), Richmond (05477), Williston (05495), Jericho (05465), Underhill (05489), Underhill Center (05490) and Fairfax (05454). NEET also serves clients in Chittenden County, Addison County, Washington County, Lamoille County, Franklin County and Grand Isle County.
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