Good news for shareholders in closely-held corporations

Shareholders in closely-held corporations have won an important estate tax battle with the Internal Revenue Service.

The issue is how to place a value on a corporation that has a lot of “built-in” capital gains-meaning that if the company’s assets were liquidated, it would owe a hefty capital gains tax. 

In this case, a man named Frazier Jelke owned about 6 percent interest in an investment company.  The company had $188 million worth of assets.  However, if it sold those assets tomorrow, it would owe $51 million in capital gains tax. [Read more…]

Six Ways to accidentally disinherit your children

It’s hard to imagine that someone could accidentally disinherit their own children, but it happens all the time to people who don’t regularly update their estate plan.

It’s important to update your estate plan with a professional every few years, or whenever there is a significant change in your circumstances or in the tax laws. Below are six ways disinheritance can happen:

 1)      Harry wrote a will leaving his house and his business to his children, and anything left over to his nephew.  Many years later, he sold the house and the business.  When he died, there was no house or business to go to his children – and 100 percent of his assets went to his nephew. [Read more…]

Does your college student need a will?

When you send your son or daughter off to college, the last thing you’ll probably think of getting for him or her is a will.  But there are a few simple legal documents that any young adult should have.  Getting them takes a short time, and is definitely worth the effort. 

One such document is a medical power of attorney.  Once your student is a legal adult, you can no longer automatically make medical decisions for him or her.  You might still have a right to make those decisions for your children if they can’t make them for themselves, but a medical power of attorney makes it much easier to do so. [Read more…]

‘Identity Theft’ a growing problem after someone dies

The latest wrinkle in “identity theft” involves criminals opening accounts in the name of people who are recently deceased.  If a relative has recently died, you might want to take steps to avoid this problem.  For instance, you should immediately notify the Social Security Administration of the death, to prevent someone from using the deceased’s Social Security number.  You should also contact the three leading credit bureaus and report the death.  (Social Security will typically notify the credit bureaus, but this usually takes some time).  If you publish an obituary in the newspaper, its wise to avoid including the deceased’s address and date of birth.  Identity thieves can use this information to establish a fake account.  You can simply list the deceased’s age, without specifying a birthday.

Another note on obituaries:  Think twice about publishing the date and time of the funeral, because this tells thieves when you and your loves ones will not be at home.  If you do publish the funeral details, you might want to ask a neighbor to keep an eye on your house during that time.

Is it time to review your ‘power of attorney’?

A “power of attorney” is an important part of almost any estate plan.  This document allows someone else to take over your day-to-day financial affairs if you become incapacitated but like any element of an estate plan; a power of attorney needs to be reviewed occasionally to see if it still meets your needs.  If you signed such a document many years ago, it might be a good idea to check whether it needs to be updated.

Three things you might want to consider are:

1)      Who should be your agent (the person who will make decisions for you);

2)      What decisions should they make; and

3)      When should they start making decisions? [Read more…]