1. What is a grantor retained annuity trust (“GRAT”)? A GRAT is an estate planning technique that allows someone to make large financial gifts to family members, retain an income stream from the trust, and avoid the U.S. gift tax. 2. How does a GRAT work? To begin with, the creator/grantor of the trust makes an irrevocable gift to a trust and, at the same time, keeps an annuity interest that provides the grantor with an income stream for either a set number of years or for life, whichever … [Read more...] about Four Questions Regarding Grantor Retained Annuity Trusts
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Getting Aging Parents to Warm to Estate Planning
As more and more baby boomers develop estate plans some are coming to the realization that their elderly parents have made no plans at all. While no one is legally obligated to create any type of estate plan, not having one can impose serious hardships for your family. Yet even if your elderly parents are aware of this fact they may still be hesitant to begin their own planning efforts. If you are having trouble speaking to them about it or convincing them to begin planning, there are a couple … [Read more...] about Getting Aging Parents to Warm to Estate Planning
Living Trusts: The Basics
Over the coming weeks we’re going to look at various types of trusts and why they are important in estate planning. To begin with, let’s take a look at living trusts. Living trusts are one of the most commonly employed trusts for estate planning purposes, serving a variety of needs. Here’s what you need to know. Probate Avoidance One of the primary benefits of a living trust is that the property the trust owns does not have to go through probate. You can think of the trust like a corporation. … [Read more...] about Living Trusts: The Basics
What You Need To Discuss With Your Aging Parents
If you haven’t spoken with your parents about their retirement funds, estate plans, and wishes regarding medical treatment, you should. The Department of Health and Human Services has data showing that around 70-percent of senior citizens will require some form of long-term care during their life. What this means is that your parents may be getting ready to retire, or already are retired, but any major problems they have will likely become your problems, too, so it behooves you to sit down and … [Read more...] about What You Need To Discuss With Your Aging Parents
3 Practical Effects the Fiscal Cliff Deal Has on Estate Planning
Congress and the President were able to come together at the last minute and avoid the fiscal cliff on January 1st. By passing the American Taxpayer Relief Act of 2012, the government has not only made changes to the tax code but also changes to several provisions that could affect your estate plan. If you have already created an estate plan you may wish to speak to your state planning attorney and ask if any of the changes affect you. Exemptions Under the terms of the agreement the federal … [Read more...] about 3 Practical Effects the Fiscal Cliff Deal Has on Estate Planning
New Year is a Chance to Look at Changing Face of Estate Planning
Years ago estate planning consisted of creating a will and maybe a trust to protect your child’s inheritance. Today, however, estate planning has become far more complicated, with even the simplest plan containing several different elements. It’s always a good idea to take the time every year to review your estate plan and consider what, if anything, you should add. Digital Estate Planning As computers and the Internet become more and more enmeshed in our day-to-day lives, many people find … [Read more...] about New Year is a Chance to Look at Changing Face of Estate Planning
No CLASS: Long Term Care Component of Obamacare Cut By New Tax Law
The new tax law passed by Congress on January 1st, the American Tax Relief Act of 2012 (ATRA), includes a provision that repeals a long-term care insurance program that had been included in the Affordable Care Act (ACA), commonly known as Obamacare, that would have helped keep the elderly and disabled purchase long term care insurance even with pre-existing conditions. Instead, ATRA establishes a commission to come up with an alternative plan to make long-term care available for those who need … [Read more...] about No CLASS: Long Term Care Component of Obamacare Cut By New Tax Law
Lessons from the Death of General Norman Schwarzkopf
In December 2012, retired General Norman Schwarzkopf, one of our nation’s most brilliant military minds of the past century died of complications from pneumonia. General Schwarzkopf, nicknamed Stormin' Norman, was the commander of coalition forces during Operations Desert Storm and Desert Shield, which were the codenames for the international response to Iraq’s invasion of Kuwait in 1990. When the ground campaign ended in victory after only having commenced 100 hours earlier, Schwarzkopf became … [Read more...] about Lessons from the Death of General Norman Schwarzkopf
Intentionally Defective Trusts: 3 Common Questions
Question 1: What is an intentionally defective trust? An intentionally defective trust, sometimes known as an intentionally defective grantor trust, is a special kind of irrevocable trust some people use to minimize their exposure to certain federal taxes. When you create an intentionally defective trust you, the grantor, are still considered the owner of the trust property for income tax purposes. However, for estate and gift tax purposes, it is considered to be an irrevocable trust that would … [Read more...] about Intentionally Defective Trusts: 3 Common Questions
How Does Fiscal Cliff Deal Impact Estate Tax?
We have some clarity now with regard to the estate tax parameters for 2013. The lawmakers in Washington were able to reach an 11th hour agreement, and we did not fall over the dreaded "fiscal cliff" after all. This deal did in fact impact the federal estate tax. Under the laws as they existed throughout last year in 2013 the estate tax exclusion was scheduled to go down to $1 million, and the top rate of the tax was set to rise to 55%. This would have been the scenario if we would have fallen … [Read more...] about How Does Fiscal Cliff Deal Impact Estate Tax?
