Estate Planning Articles

What to do if your child is a spendthrift?

Many people wonder about passing along their assets to a child who tends to overspend and hasn’t show an ability to manage money.  They worry that such a child will blow through an inheritance quickly and wont have the money to live on as he or she gets older. Fortunately, there are ways to provide for such children while at the same time protecting them from themselves. For instance, you can put assets into a trust

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How an executor can save taxes after someone dies

When a person dies, the value of his or her estate for tax purposes is its value at the date of death.  However, the tax isn’t due until nine months after death.  If the value of an estate plummets in the nine months after a person’s death, this can create very bad consequences for the heirs – namely, a large amount of tax is due but the assets that will be used to pay the tax

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Roth IRAs for estate planning get a big boost from Congress

Many people should consider converting a regular IRA or old 401(k) plan into a Roth IRA, as a result of a change that takes effect on January 1 of next year.  With a regular IRA, contributions are often tax-deductable, but you have to take a certain amount of money out of the account each year once you turn age 701/2, and you have to pay income tax on the withdrawals.  If you leave the IRA to

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Law that relaxes IRA distributions creates confusion

Ordinarily, people over 70½ are required to receive a minimum distribution from their retirement plan each year. But this minimum payout won’t be required in 2009, thanks to a law passed by Congress. However, this law is creating widespread confusion, and if you’re concerned, you might want to ask for advice quickly on how to handle your particular situation.

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Take advantage of the recession to lock in estate planning gains

Nobody likes a recession, but any time when real estate values, stock prices and interest rates are low is a great time to do estate planning.  You can transfer assets to your heirs now at a low value and save them a huge estate tax bite later. One way to do this is with a “grantor retained annuity trust” or GRAT.  The idea is that you create a trust and fund it with income producing assets,

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This is a good time to make family loans

With interest rates at historic lows, this can be a good time to make loans to your children so they can buy a home, start a business, or invest.  Giving your children an outright gift can subject you to the gift tax, but giving your children a loan doesn’t have any effect on estate or gift taxes as long as your children pay you back at an interest rate set by the IRS.  Right now, the

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Real Estate downturn creates an estate planning opportunity

Real estate prices have been falling all over the country.  While no one likes to think that their home is worth less than it used to be, the downturn has created an opportunity to give your home to your eventual heirs while saving a large amount of estate and gift taxes. This can be done with a “Qualified Personal Residence Trust”, or QPRT.  The idea is that you put your home into a trust for a

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Who should be your retirement plan beneficiary?

Picking a retirement plan beneficiary is a key step in estate planning.  Every year we hear about people who lost out on enormous tax savings by picking the wrong beneficiary.  So how do you decide whom to pick? Most married people will choose their spouse.  This is usually a good idea because the spouse can take distributions from the plan if he or she needs the money.  The spouse can also roll the account over into

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Why now is a good time for sophisticated estate planning

All of us are affected by the economic recession, but you should know that certain estate planning techniques become must more valuable when asset prices plunge – so this is a good time to take advantage of them. Some of the best estate planning ideas involve giving a partial interest in your assets to your heirs now, while retaining effective control over the assets.  The idea is to get these interests out of your estate now

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Smart ways to help adult children through troubled financial times

Many older people are watching their grown children struggling through difficult times, facing unemployment, investment losses, difficulty in keeping up with a mortgage and other issues.  These parents want to help their children financially – but they want to do so in a tax-smart way that’s consistent with their overall estate plan.  Here are some ideas to consider:  Annual gifts to children’s spouses: Suppose your daughter is doing well financially, but your son has lost his

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