By Jason Oshins, Financial Advisor, MBA Given the financial condition of many families today, we’d be remiss not to explore whether more powerful retirement strategies exist than the ones typically employed. The traditional retirement strategy involves funding various financial vehicles during working years and then living off the income generated by these assets during retirement. As a result, each year retirees spend only the interest earned on their assets because they fear running out of money or preserving adequate legacy. At some point, they either sacrifice principal to maintain lifestyle or sacrifice lifestyle to maintain principal. Either way, they must…
The End of the Great Migration Into Bonds (Part 1 of 3)
A Once in 30-Year Opportunity to Build Your Practice in 2014 By Jeffrey Dunham, Financial Advisor | Volume 2, Issue 1 (January 2014) As The End of the Great Migration into BondsSM continues, it is presenting financial advisors with a unique opportunity to build their practice while simultaneously helping investors avoid a destruction of wealth that we feel may rival the 2008/2009 financial crisis. This opportunity exists because of two very simple yet crucial facts. The recognition of these facts can be the difference between a financial advisor having an average year or making 2014 a career year. First, is the vast…
The Net Investment Income Tax (NIIT)—After the Final Regulations
By Robert S. Keebler, CPA, MST, AEP (Distinguished) | Volume 2, Issue 1 (January 2014) The Final Regulations for Section 1411 and the NIIT were released on December 2, 2013. Along with the release of the Final Regulations, new 2013 Proposed Regulations were also released. While the Final Regulations generally made the 2012 Proposed Regulations final, there were some very interesting changes and additions made in both the Final Regulations and the 2013 Proposed Regulations. This article will point out some of the more interesting aspects of the Regulations. Properly Allocable Deductions Although the Final Regulations retained the requirement…
Top Ten Reasons Why People with Even Modest Estates Need Estate Planning
By Heidi C. Freeman, J.D. | Volume 2, Issue 1 (January 2014) The American Taxpayer Relief Act of 2012 (actually passed on January 1, 2013), permanently increased the gift, estate and generation-skipping transfer tax exemptions to $5 million per person. In 2014, adjusted for inflation, the amount is actually $5.34 million per person ($10.68 million for a married couple). Due to the increased exemption amounts and the addition of portability, significantly fewer clients are in need of transfer tax planning. This article provides ten reasons why clients who do not have a transfer tax concern still have compelling estate planning…
2013 Year-End Tax Planning Ideas (Part 3)
By Robert S. Keebler, CPA, MST, AEP (Distinguished) As we near the end of 2013, year-end tax planning again takes center stage. In the last two newsletters we covered two of the most important year-end planning strategies in detail—loss harvesting and Roth IRA conversions. In this newsletter we summarize a number of other strategies that may produce substantial tax savings. Making Trust Distributions The tax brackets for trusts are much more compressed than the tax brackets for individuals. Trusts begin being taxed at the top rate of 39.6% when income rises above $11,950. By contrast, individuals filing joint returns don’t…
Top Ten Reasons to Decant an Irrevocable Trust
By Steven J. Oshins, J.D., AEP (Distinguished) Trust decanting is the act of distributing assets from one trust to a new trust with different terms. Just as one can decant wine by pouring it from its original bottle into a new bottle, leaving the unwanted sediment in the original bottle, one can pour the assets from one trust into a new trust, leaving the unwanted terms in the original trust. For many years, practitioners have struggled to find ways to change the terms of an irrevocable trust. However, through common law and through the decanting statutes that have been enacted…
Estate Planning for Same-Sex Couples
By Alma Soongi Beck, J.D., LL.M. (Taxation), California State Bar Certified Specialist in Estate Planning, Trust & Probate Law After the historic rulings in United States v. Windsor and Rev. Ruling 2013-17, the playing field for same-sex couples has equalized dramatically. When married, same-sex couples are finally eligible for the same kinds of planning benefits that practitioners have leveraged with opposite sex married couples for years: Bypass trust planning, gift splitting, leveraging of the double step-up in basis for community property, joint tax return filings, among others. Moreover, under Rev. Ruling 2013-17, federal tax recognition now applies regardless of where the…
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…