The most significant action of Congress in 2019 relating to retirement and estate planning was the late December passage of the “Setting Every Community Up for Retirement Enhancement Act of 2019”, commonly known as the “Secure Act”. It was signed into law shortly thereafter and is effective January 1, 2020, for most purposes. In this and future newsletters, we will look into the provisions of the Secure Act and also some strategies to maximize benefits and minimize problems created by this … [Read more...]
Ins and Outs of Inheriting an IRA
What are the tax implications of an inheriting an IRA? The answer depends on several factors: Is it a traditional IRA or a Roth IRA? The funds in a traditional IRA have never been taxed and will be taxed as they are withdrawn. Roth IRAs contain post-tax dollars and are not again taxed upon their withdrawal. Is the beneficiary of the IRA a spouse, a non-spouse person, or a charity? When the beneficiary of an IRA is the spouse of the IRA owner, the spouse will have a number of … [Read more...]
Do I Need A Separate Tax ID Number For My Trust?
A common question we get from clients is: What is the Tax ID number for my trust? The question is often prompted when our clients attempt to open an account under the name of their trust. For most of our clients, the type of trust we create is known as a grantor trust which is amendable and revocable. These are commonly referred to as “living trusts”. You can determine whether you have such a trust by reading Article One of your trust document. In such cases, the Tax ID number for the … [Read more...]
Don’t Cross Over the Line Between Tax Avoidance and Tax Evasion
What is tax avoidance? It is the employment of lawful tactics to legally avoid or lower taxes. This includes various estate planning strategies, legitimate charitable deductions and charitable trusts or foundations, accelerating tax deductions, deferring income, and creating legal entities, to name a few. What is tax evasion? It is any plan to reduce taxes through illegal means. The IRS often refers to them as abusive tax shelters. There is a long history of hucksters and grifters who … [Read more...]
Taxes and Inheritances: Planning and Coping
When someone passes on, his or her assets are typically left behind to a beneficiary. If you find yourself the recipient of money, you may have a big question on your mind: will I have to pay taxes? Before we go any further, remember this: it is a good idea to speak with a qualified estate planning attorney to ensure that you are paying all necessary taxes. Whether or not you are required to pay inheritance tax depends on how much money you are receiving, the state in which you live, and … [Read more...]
Asset Protection Planning: Should You Be Worried?
Common goals of many folks is to build up their estate assets so that they can live comfortably during the Golden Years and – hopefully — have a nest egg left to pass down to their children, grandchildren, and/or other loved ones. These goals could be threatened, however, if the hard earned assets are put at risk – and they could be at risk without you even realizing it. The best way to protect your assets, your future, and your loved ones is to include asset protection planning as a component … [Read more...]
Understanding the Annual Gift Exclusion
One part of overall estate planning is considering how to minimize taxes as much as possible. This includes not only estate taxes but also gift taxes. When you transfer ownership of property, even as a gift, the IRS will impose a tax. There are some exceptions or exclusions to the gift tax that is typically imposed. Here is what you need to know. First, what is considered a gift? According to our federal government, a gift is “any transfer to an individual, either directly or indirectly, … [Read more...]
4 Myths About Wills and Trusts
Estate planning means preparing for possible incapacity and inevitable death. An estate plan can include many different types of documents, including wills and trusts. The variety of tools available will allow for a customized and comprehensive estate plan. There are many benefits to estate planning and there are some myths as well. Here we will dispel 4 common myths about wills and trusts. MYTH #1: Trusts are only for the rich and elderly One common misconception is that, if you are young … [Read more...]
Answers to Five Inheritance Tax Questions
You just found out that you will inherit from a loved one's estate. While this might be exciting news, it may also cause some concern. Most people know that estate taxes are typically imposed. Whether or not an heir has to pay any inheritance tax depends entirely on your state. Since state laws are constantly changing, it would be wise to consult with your estate planning attorney if you are receiving an inheritance. Here are the answers to five common inheritance tax questions. No. 1 – … [Read more...]
Trusts Can Satisfy Many Different Objectives
The importance of trusts in estate planning is seen in their ability to minimize estate taxes and hopefully avoid probate. A trust is basically a fiduciary agreement, one based on trust and confidence, between the person making the trust (grantor) and the trustee. This agreement gives the trustee the authority to manage the assets of the trust and distribute those assets to the beneficiaries as specified in the trust agreement. There are several different types of trusts with their own … [Read more...]
