By Edwin P. Morrow III, J.D., LL.M.(Tax), CFP®, RFC® For many taxpayers, the traditional trust design for married couples is now obsolete. Traditional AB trust designs risk incurring higher income taxes after the first death, and reduced basis increase at the second death. New trust designs can not only mitigate against this risk, but create income tax advantages over outright bequests. Some practitioners advocate using a marital deduction trust, even if there is no need for the federal marital deduction, to allow the family to achieve a second step-up in basis with the asset protection and control of a trust….
Is Financial Planning Different for Women?
By Michelle A. Fait, MBA, CFP®, EA With the financial advisory industry turning its focus towards the 51% of the population that is female, many of whom will be directly responsible for an increasingly large portion of the nation’s personal wealth, there has been much discussion about the financial planning needs of women. There are some obvious differences in demographics, including women’s statistically longer average life spans, the greater likelihood that they will take time out of the work force for care-giving (of children or parents or both), and that they will on average be paid less than men for…
Is It Time to Reevaluate Your Clients’ Trust-Owned Life Insurance Policy?
By Michael W. Halloran, CFP®, AEP®, ChFC®, CLU® Whether owned in a revocable or irrevocable trust, many practitioners have used life insurance over the years. Depending upon the type of policy as well as current economic conditions, some problems could arise with many existing Trust Owned Life Insurance (TOLI) policies. The majority of problems with TOLI policies lie in irrevocable trusts. Many times the trustee places the policy in the trust without checking with the company to see if the policy is sustainable for the intended purpose of the trust. The coverage needs to stay in-force until the death of…
Beneficiary Designation Problems with IRAs: More Than Just the RMD Rules!
By Kristen M. Lynch, J.D., AEP, CISP, CTFA with Robert S. Keebler, CPA, MST, AEP (Distinguished) In the world of estate and retirement planning, I have been fortunate enough to have been cross-trained as both a trust officer and an attorney. As a trust officer, I was charged with being the divisional manager and administrator for all of the IRAs within a large regional bank’s trust department. In that role, I was responsible for ensuring that the bank’s IRA clients took their required minimum distributions (“RMD’s”), coordinated estate planning and post-mortem issues with the IRA client’s legal and tax…
How “Electronically” Organized Are You?
By Kristina Schneider, Practice Success Coach In last month’s newsletter, we discussed the top tips to get yourself more organized in your office space and through your daily workload, but your organization isn’t just about what’s on the outside. How about your electronic files on the computer? If you’ve ever spent more than five minutes looking for a file or trying to find an e-mail to respond to, then you might not be as electronically organized as you should be in order to be an effective and efficient assistant. As a follow-up to last month’s article, here are some tips about…
Five Simple Tips for Being a More Organized Assistant
By Kristina Schneider, Practice Success Coach Being an organized assistant is important when supporting a busy professional advisor or attorney, especially one that may be meeting with multiple clients and managing multiple projects and priorities (like most professionals are doing). Organization isn’t just about how your office looks, but it is also how you manage yourself and ultimately what can become your thoughts and actions. However, sometimes just the act of organizing your surrounding environment is enough to help organize some of the rest of your chaos. Staying organized with your paperwork, your desk or office space and your to-do…
Advise Clients to “Shift” Opportunities Rather than Grab It Themselves
By Jeremy Spackman, Esq. Opportunity Shifting is a technique where a client’s parent, grandparent or other person sets up a beneficiary controlled Dynasty Trust for the benefit of the client and the client’s descendants. The client, as trustee of the Dynasty Trust, uses the gift made by the parent or grandparent to invest in a hot business or investment opportunity inside the Dynasty Trust, thereby protecting the opportunity from estate taxes, creditors and divorcing spouses for the duration of the trust. BENEFICIARY CONTROLLED DYNASTY TRUST Before explaining the steps involved in an opportunity shifting transaction, it is important to understand a beneficiary…
“Contextualizing” Life Insurance
By Jason Oshins, Financial Advisor, MBA Context is everything, and an important component of a financial advisor’s job is to contextualize the decision-making process to enable clients to make more effective decisions with a greater likelihood of long-term success. When planning for a couple’s retirement, I frequently begin by reviewing a life expectancy chart, emphasizing two components: (1) the potential gap between the first and second deaths and (2) the potential length of time before the second death is likely to occur. Assuming a healthy 40-something couple, the gap can be 10, 15, or 20 years, if not more, and…
“Green Book” Proposals and Income Tax Planning
By Robert S. Keebler, CPA, MST, AEP (Distinguished) On April 13, the Treasury Department issued its annual Revenue Raising Proposals, commonly referred to as the“Green Book”. In this column we will summarize the key income tax proposals and suggest some planning ideas. These proposals include: (1) Implementing the Buffett Rule by imposing a new “Fair Share Tax;” (2) Reducing the value of certain income tax deductions and exclusions; (3) Limiting the total amount a taxpayer can accrue in tax favored retirement plans; (4) Shortening the deferral period for inherited IRAs; and (5) Taxing carried interests as ordinary income. INCOME TAX…
Tax Planning for 2013 Under the New Laws
By Robert S. Keebler, CPA, MST, AEP (Distinguished) As you probably know all too well, tax rates increase substantially in 2013 and later years for high income taxpayers. Not only did the top income tax rate increase from 35% to 39.6%, but a 3.8% Medicare surtax is now imposed on net investment income (NII). The 39.6% rate now applies to taxable income over $450,000 for married taxpayers and $400,000 for single taxpayers. In addition, net investment income is subject to a new 3.8% Medicare surtax to the extent modified adjusted gross income exceeds $250,000 for married taxpayers and $200,000 for…