Sell More Life Insurance by Showing Prospects How to Avoid Income Tax

  By Philip J. Kavesh, CFP®, ChFC, J.D., LL.M. (Taxation) The 2012 American Taxpayer Relief Act (“ATRA”) may have reduced the need for life insurance in estate tax planning, but it has opened numerous opportunities to utilize life insurance as an income tax planning tool. A big concern for taxpayers who may want to sell their home, stocks, rental property or business is the huge jump in capital gains taxes.  The top federal rate bracket has moved from 15% to 20%, but when you add in the combined effect of the 3.8% Net Investment Income (“Obamacare”) Surtax, the itemized deduction phaseout or…

Year-End Roth Conversion Planning

  By Robert S. Keebler, CPA, MST, AEP (Distinguished) Roth IRA conversions are an important part of bracket management and can be used to avoid the 3.8% net investment income tax (NIIT) and the higher income tax brackets. While some of the benefits of Roth IRA conversions may require a longer period of time to produce, these conversions are still an important strategy to consider at year-end. Advantages of a Roth IRA Roth IRAs have a number of advantages over traditional IRAs: Lower overall taxable income long-term; Tax-free, rather than tax-deferred growth; No required minimum distributions (RMDs) at age 70½;…

8 Year-End Practice Building Tips to Implement RIGHT NOW

By Philip J. Kavesh, J.D., LL.M. (Taxation), CFP®, ChFC, California State Bar Certified Specialist in Estate Planning, Trust & Probate Law As your business winds down near year-end (unlike 2012, when everyone was doing last-minute wealth transfer planning because of anticipated changes in the estate tax laws), it’s a good time to work on your business – – rather than in your business, as we practitioners are often trapped doing throughout the year. Hopefully, this article will serve as a brief checklist of action steps you can take now to assure a more effective, profitable and enjoyable 2014.  By the way, this…

It’s Raining Cats and Dogs (and Llamas and Birds and Horses)

              By Eden Rose Brown, Esq. The statistics are compelling:  Over 90 million American households own companion animals – a total of more than 218 million pets of all shapes and sizes!  These pet owners spend an average of $500 on each pet, totaling more than $12 billion annually, and that does not include toys, grooming and food.  Of these pet owners, over 63% say that they consider their pets to be family members and 79% allow their pets to sleep with them. The strength of the human-animal bond is powerful. Through the years I have found that…

The Dynasty Trust: Jurisdictional Choices

By Steven J. Oshins, J.D., AEP (Distinguished) Most trusts are designed as Staggered Distribution Trusts which are trusts that make mandatory distributions to the beneficiaries upon reaching certain ages.   For example, many trusts pay out one-third of the assets upon the beneficiary reaching age 25, one-half of the balance upon the beneficiary reaching age 30 and the balance upon the beneficiary reaching age 35.  The philosophy used by the scriveners of these types of trusts is that the beneficiaries have multiple opportunities to learn from their mistakes. Those who recommend Staggered Distribution Trusts fail to properly consider the estate tax…

7 Tips for Making More Appointments – – Right at a Seminar!

By Philip J. Kavesh, J.D., LL.M. (Taxation), CFP®, ChFC, California State Bar Certified Specialist in Estate Planning, Trust & Probate Law Many seminar speakers forget (or don’t realize) that the main goal of a seminar is not to educate, but to motivate the attendees to make appointments with you before they leave the seminar! Our goal is always to make appointments with a minimum of 80% of the “units” attending (husband and wife equal one unit).  That may be a lofty goal for you to begin with, but you should at least shoot for an initial appointment rate of 50%. …

Year-End Gain Harvesting May Create Impressive Tax Savings, But Be Careful!

By Robert S. Keebler, CPA, MST, AEP (Distinguished) Bracket management has always been an important part of income tax planning. As we noted in our May newsletter, however, the 3.8% Medicare Surtax and higher tax rates make it even more important in 2013. We listed the following strategies that taxpayers can use to avoid the surtax and stay out of the higher tax brackets: (1) Income smoothing CRTs; (2) income shifting CRTs; (3) using NIMCRUTS as a substitute for or supplement to a retirement plan; (4) CLATs; (5) Life Insurance; (6) deferred annuities; (7) installment sales; (8) managing IRA distributions;…

New Tax Haven: Puerto Rico

By Jeffrey M. Verdon, Esq., Travor Moses, Esq. & Fernando Goyco-Covas, Esq. Puerto Rico’s politicians have aimed to spur investment and economic activity in Puerto Rico by changing their tax code.  These series of reforms, including the Individual Investors Act (Act 22-2012 and 138-2012), now mean that Puerto Rico offers the potential for exceptionally advantageous United States and Puerto Rican income tax exemptions which, as long as certain requirements are met within the United States Internal Revenue Code of 1986, as amended (the “IRC”),[i] can provide remarkable income tax relief to a wide universe of US citizens, residents, and even…

New Trustee Liability: Failure to Review Trust-Owned Life Insurance

By Richard Gilman, CFP® and Philip J. Kavesh, J.D., LL.M. (Taxation), CFP®, ChFC, California State Bar Certified Specialist in Estate Planning, Trust & Probate Law The Uniform Prudent Investor Act (UPIA) requires trustees of Irrevocable Life Insurance Trusts (ILIT) to evaluate the appropriateness of the Trust Owned Life Insurance (TOLI) and to manage ILIT assets in a manner that minimizes costs and maximizes benefits to trust beneficiaries. This equates to a duty to not only acquire the right policy, but to review it periodically to be sure it still is in the best interests of the beneficiaries.  (Be aware that…

PLR Opens Door to Post-Death Exchanges of Non-Qualified Annuities Tax-Free!

By Robert S. Keebler, CPA, MST, AEP (Distinguished) & Michael E. Kitces, MSFS, MTAX, CFP®, CLU, ChFC, RHU, REBC, CASL IRC § 1035 generally allows taxpayers to make a tax-free exchange of one annuity for another better suited to the taxpayer’s needs. Until recently, however, this benefit was not available to taxpayers who inherited non-qualified annuities. Such taxpayers were stuck with the annuity selected by the decedent no matter how unfavorable it may have been for them. Recently issued PLR 201330016 now gives a green light to tax-free exchanges of such annuities, however, provided that certain requirements are satisfied.  This…