Massachusetts Estate Planning & Asset Protection Blog

Massachusetts Estate Planning Attorney | New Year Calls For Review

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Sun, Jan 13, 2013

When is the last time you have reviewed your Revocable trust, life insurance policy or other Estate Plans? With a new calender year it is a good time to remind families of the importance that revolves around estate planning. While knowing and understanding tax laws is important, taking advantage of non-tax considerations will increase likelyhood of success regardless of the tax prospective in this new year and beyond.

The first "non-tax" recommendation is not to ignore the lax laws completely. Protecting your assests from possible estate tax is the issue at hand.

According to Stuart B. Dorsett is a member of the Business, Elder Law, Nonprofit Organizations, and Trusts and Estates.  He is a North Carolina State Bar Certified Specialist in Estate Planning and Probate Law and is a Fellow of the American College of Trust and Estate Counsel.

Even though Congress has acted acts to stave off "Fiscal Cliff," uncertainty about the future of the gift and estate tax laws will continue. Despite this uncertainty, meaningful estate planning goals can be achieved. Estate planning is only partly, and only sometimes, about tax.  Optimizing your estate plan requires careful attention to the following "non tax" considerations:

1. Plan For The Possibility Of Estate Tax: Given the recent fluctuations in the estate tax exemption, it is wise to create a plan that allows future flexibility for your spouse and other beneficiaries.

2. Reassess Existing Life Insurance Policies: While most people follow the performance of their stocks, bonds, and mutual funds assiduously, they frequently ignore the economic performance of their life insurance policies. A life insurance policy with cash value is an investment and should be reviewed periodically to ensure that the policy will remain in effect through the insured's death and that it is performing competitively with the currently available insurance products.

3. Incorporate Asset Protection Planning Into Estate Plans: One of the great "missed opportunities" in estate planning is structuring a child's inheritance in a way that protects the assets from unforeseen circumstances. Often assets are left outright to an adult beneficiary, but outright ownership exposes those assets to any third-party claims against that beneficiary such as lawsuits, bankruptcy, and divorce. This exposure can be avoided.  Such a design allows the beneficiary to retain all of the "good" aspects of ownership without any of the "bad."

Click Here to Learn More About How to Avoid the Top Mistakes in Estate & Asset Protection Planning

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops. Call 800-964-4295 to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

 

 

 

 

Tags: Estate Planning, asset protection, life insurance, plans, Estate Planning Recommendations, Non-tax tips

Massachusetts Estate Planning Tips | 3 Estate Planning New Year's Resolutions

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Thu, Jan 10, 2013

The New Year is filled with resolutions: lose weight, save money or plan a vacation, but in the thick of things it is easy to forget about planning ahead as you get a little older.

In this article, we review 3 Estate Planning Resolutions that should be part of everyone's 2013.

You Could Lose Everything  Unless You Act Now

1. Review your beneficiary designations.

While the terms of your Will control the distribution
of your probate property, beneficiary designations determine who will inherit your non-probate
assets. Non-probate assets include brokerage or bank accounts with TOD (“Transfer on Death”) or POD (“Payable on Death”) beneficiaries, life insurance proceeds, assets held in a living trust, property held in joint tenancy with a right of survivorship, etc. The beneficiary designations on these assets are just as important to your estate plan as the naming of beneficiaries in your Will because these beneficiaries will also inherit from your estate.

estate plan, 2013, new year

To conduct your review, identify the beneficiaries you have designated for each asset. If you have married, divorced, had children, or experienced any other significant change in family circumstances, you may wish to alter certain designations. If your current designations leave property outright to a minor or an individual with special needs, you may want to consider protecting those assets for your beneficiaries.  For more information on protecting your beneficiaries' inheritances, call our office at (781) 237-2815.

2. Plan for the disposition of your digital assets.

Sure, you know who will inherit your house and your IRA after you are gone, but what will happen to your emails? The tax records stored on your hard drive? Your Facebook page? The family photos in your Flickr galleries?

If your estate plan fails to address these and other digital assets, your loved ones may have trouble accessing financial accounts or lose precious family memories. Furthermore, failing to close online financial accounts may even expose your estate to the risk of identity theft.

Start by making an inventory of your digital assets then give your loved ones or executor instructions regarding what you would like to happen to each asset. For example, are any of your bills on auto-pay? Should your Facebook page be taken down?

3. Schedule a review of your estate plan.

Generally speaking, it is a good idea to review your estate plan every year. This is particularly
important if you have recently experienced a significant change in circumstances, such as a birth or death in the family, a marriage or divorce, or a change in financial circumstances.

As we move into 2013, it is critically important to schedule a time to have your estate plan reviewed by our team of professionals, to be sure that your spouse, home and life savings will be protected.

 

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops. Call 800-964-4295 to learn more about what you can do to enhance the security of your beneficiaries, digital assests, Estate Plan and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Estate Planning, Beneficiary, revocable living trust, assets, benefit, 2013, plans, New Year's Resolutions

Massachusetts Estate Planning Attorney | The Fiscal Cliff Deal and Your Estate Plan

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Jan 04, 2013

What Does Avoiding The Fiscal Cliff Mean for Your Estate Plan?

Nearly 2.5 million Americans die each year, and many haven’t signed the basic documents needed to protect loved ones.  (Click Here to Learn More About How to Avoid the Top Mistakes in Estate & Asset Protection Planning).

Now that the fiscal cliff has been averted there is widespread confusion about the effect on estate planning of the 11th hour tax law passed by the Senate on New Year’s Eve, and by the House of Representatives one day later.  What Congress did in this arena was to make permanent the system that has been in effect for the past two years.

That was an important achievement because without any action the tax-free amount would have automatically reverted to $1 million per person and the rate for most estates would have gone up to 55%.  At the end of the day the only thing the lawmakers actually changed is the gift- and estate-tax rate, which has gone up to a top rate of 40% from a maximum of 35%.

Here are questions and answers on the federal estate tax after the fiscal cliff deal.

Who has to pay federal estate tax?

Once you’re worth more than a certain amount, taxes shrink your estate. Under the 2010 tax law, we can each transfer up to $5 million tax-free during life or at death, but it was due to revert to $1 million effect January 1, 2013. Recent legislature increased the tax free amount for the federal estate tax only to 5.12 million per person. Caution: Massachusetts continues to tax all estates above $1 million.

Do spouses have to pay the tax when they inherit from each other?

The new law doesn’t change this either. There is an unlimited deduction from estate and gift tax that postpones the tax on assets inherited from each other until the second spouse dies. This marital deduction, as it is called, applies only if the inheriting spouse is a U.S. citizen.

How does this relate to lifetime gifts?

The lifetime gift tax exclusion and the estate tax exclusion are expressed as a total amount, currently $5.12 million per person, and it is possible to use this exclusion (sometimes called the “unified credit”) to transfer assets during life or at death, or a combination of the two.  If you exceed the limit however, you or your heirs will owe tax of up to 40%.

The IRS requires you to keep a running tally and report these gifts. For example, if you have used $1 million of the exclusion to make taxable lifetime gifts, the unused exclusion when you die will be $4.12 million, rather than $5.12 million.

Are there lifetime gifts that don’t count?

We can each give another person $14,000 per year without it counting against the lifetime exemption.  Spouses can combine this annual exclusion to double the size of the gift.

The simplest way to use the annual exclusion is to give cash or other assets each year to each of as many individuals as you want. Another possibility is to put money in Section 529 education savings plans. Establishing these plans for relatives could relieve siblings or children of the need to save for college at a time when they are overwhelmed with current expenses.

What Did Change? 

There were several changes made by the Fiscal Cliff Deal.  First, the top personal income tax rate will increase from 35% to 41% (when factoring in the various phase outs of certain deductions for high income individuals).  Additionally, the capital gains tax will increase to 20% for individuals making over $400,000 and couples making over $450,000.

Is it time to review your estate plan? (Click Here to Learn More About Our 19 Point Trust, Estate and Asset Protection Legal Guide)

You should revisit it if there have been changes in your finances or your personal life or if you considering a trust to protect your home, spouse and life savings.  It is essential to be sure your assets are properly coordinated and that everything is in place to protect your home, spouse and life savings.  This message is even more important, as the Congressional Budget Office is considering a proposal that would extend the Medicaid look-back period from 5 to 10 years. 

To learn more about a FREE comprehensive review of your estate planning and gain the peace of mind of knowing your spouse, home and life savings will be protected, register for an upcoming workshop by calling  (800) 964-4295(24/7) or register on line.

 describe the imageClick Here to Register For Our Trust, Estate & Asset  Protection Workshop

 

Tags: Estate Planning, IRS, Estate Planning Tip, seniors, estate tax, income, 2013, plans

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