Call Us: 626-283-5093
Now, what do you do?
“Nothing great in the world has ever been accomplished without passion.”
- Georg W. Hegel
I’m writing this on Monday morning, and last night the House of Representatives approved the Senate version of Health Care Reform…and it will soon be law. It’s been a drawn-out fight, and it hasn’t been very pretty–but all of us will now have to adjust to these laws. Keep it here (so to speak), and over the next few weeks and months, we’ll deliver insight as to what this means for YOU, your family, your job–and, of course, any estate planning implications.
There are so many different provisions in this bill, that my advice right now is to ‘wait and see’.
As the details become more clear, we’ll walk alongside you to ensure you’re informed…and that our clients take the most advantageous position possible in this new landscape. One thing *is* clear: the IRS will have even more power than before, as many of the proposed regulations are tied into the tax code. And that will have significant implications for setting up your assets properly.
Again…we’ll stay on top of this, so you don’t have to. It’s part of the service we provide our clients and our community through these weekly blogs.
And, this week, I thought I’d deliver a few anecdotes and examples about why it really is so critical to ensure you’ve planned ahead for whatever kinds of curveballs which life might throw your way…
“Straight Talk” Personal Strategy
Good Estate Planning (and Bad)
I often take the time, in these blog posts, to pass along advice not directly-related to our primary area of expertise. But this week, I’d like to give you some examples of why it’s so important to be prepared–for the sake of your family’s future.
You see, when it comes to transferring real wealth to children, many otherwise-successful parents never get around to it. They’re just too busy running their businesses or performing their work duties to think about planning for the proper way to pass along their assets. This kind of thinking, unfortunately, can have devastating tax consequences if a well-conceived estate plan is not put in place.
Here’s a story passed to me from someone I know: a New York businessman in his late 40′s, who owned a thriving manufacturing business, was tragically taken from us because of a heart attack — leaving a wife and three young kids. At that point, the IRS valued the business at $6 million, far more than the $1.5 million the business owner had told his financial adviser he thought it was worth.
Further, because the manufacturer hadn’t gotten around to moving his life insurance policy into a trust for his kids, the policy was considered part of the couple’s taxable estate. By signing a single piece of paper, the manufacturer could have spared his kids from paying federal estate taxes of as much as 45 percent on $3 million in insurance proceeds.
Tragedy upon tragedy: with a little planning, he could have easily transferred that money to his heirs tax-free.
There are a variety of simple moves which could have been made. For example, by transferring a minority interest in your business to a trust for your children early on, you can take advantage of favorable tax treatment that lets you value that minority stake at a deep discount.
Make annual gifts. Under current IRS rules, you and your spouse can give each of your children as much as $13,000 a year tax-free ($26,000 total). Any gifts that you make to your kids while you’re alive count towards the “unified credit” that eliminates federal estate tax on the first $3.5 million of your assets. Make sure your assets are titled correctly: Holding assets in your own name can trigger unwanted tax consequences. Re-titling real estate and other assets so that they’re wholly or partially owned by a trust for your children is a fairly simple process that can be done without triggering capital gains taxes. Update your will. Again, horror stories abound of mistakes which could have been avoided with the right advice–and some simple paperwork. I know of a woman who had remarried and neglected to update her will. After she died, her second husband and her son from her first marriage ended up in a nasty fight over her $500,000 life insurance policy.
How can you avoid problems like these? Good estate planning will require an investment of time and money, but it may very well be the best investment you ever made. Your family will forever thank you.
|
Fill out this form to grab our
Free Exclusive Report: “Six All-Too-Common Mistakes Made By Families When Choosing An Estate Planning Lawyer” We'll also add you to our popular, weekly Straight Talk Strategy Notes 
IMPORTANT NOTE:We take your privacy very
seriously! All information you provide is kept strictly
confidential, never shared with anyone else, and you may
easily remove yourself at any time.
|