Economics Finance

The farm succession planning process, and it is indeed a process, generally begins when someone has convinced a member of the family to have that first family meeting. The idea, at least in the minds of a few is that this meeting will set in motion, like a snowball rolling down hill, the succession planning process with enough momentum to sweep aside any detractors.

The sad truth is that so much effort went into getting people in the same room at the same time that first time, it gets harder and harder to get them to repeat the process. If things went smoothly they’re likely to feel that “they don’t need me” and if there was a room full of yelling and disagreement many will want to avoid a repeat performance.

Often those in favor of the status quo are the folks with the power, so when they finally agree to the first meeting they want to have it at the coffee shop. They’ll say it’s so they won’t be interrupted but it’s really so they can control the agenda, walking out because they “have to get back” to the farm.

Or they’ll insist that the family meeting take place at the end of the usual Monday morning meeting. The help will be hanging around wondering what’s going on and everybody will be anxious to get back to work – so that should cut the meeting short and stifle a any potential enthusiasm for a follow up. Continue reading ‘Farm Succession Planning – Schedule Regular Meetings to Review Your Progress’ »

Estate planning allows you to get your affairs in order in the event you become incapacitated or die. A will, which is the most basic estate planning tool, contains a written set of instructions to your loved ones as to how you want your estate to be distributed after your death.

So, what happens to your property if you don’t have a Will or estate plan?

If you die without a Will or any type of estate plan, your state’s intestacy laws will determine who will inherit your property. Intestacy laws may also determine who will act as guardian of your minor children. These laws do not consider personal circumstances or personalities, so your property and/or minor children can end up with a relative who you never would have chosen if you had the opportunity to establish an estate plan. In certain circumstances and in certain states, the state may benefit from the intestacy laws to a greater degree than your heirs. Continue reading ‘Why Every Adult Needs an Estate Plan’ »

Before one dies it is highly recommended that they have left behind a will and testament. A will and testament is a legal statement that shows how you want your belongings handled when you are deceased. It will show exactly who should be given what you own and the terms under which they will receive it. The wills requirements will vary from one state to another all across America. Wills are varied for all states including Texas.

The Texas wills recognized by law as valid and legit are three in number. The first and probably one of the oldest types of wills is the nuncupative will. This will just requires the maker to speak out exactly how his property should be handled. The other two types of Texas wills agreed by law are written. One is called the holographic and this is totally in the maker’s handwriting. The other kind is the type written will. Continue reading ‘Getting Started With Estate Planning – A Few Tips About Wills’ »

Asset Protection as well as estate planning and trusts, in general, can be viewed similar to a poker match. In some cases, you need a simple hand and sometimes only a full house will win. This is a unique way to look at asset protection, estate planning, and trusts. There is no shame in winning with just a pair of deuces. Sometimes, that low pair can win hands. However, in many cases, the pair of deuces may not cut it when you are on the World Series of Poker Tour. You might need a more powerful hand. The same is true with estate planning and trusts. Often, an expert on asset protection planning will tell you that a simple pair will suffice, while other times, you will need that full house.

This is the simplest form of a trust. For example, this type of trust is when a parent sets up a trust for their child and names an independent trustee. As long as the assets from the trust remain in the trust, they will be protected from impudence on behalf of the child, divorce or other possible problems. The parents have the ability to select a trustee that will manage the trust. Through distributions from the trust, the trustee can guide the child in the right direction. In most cases, the trust will include an annual demand power. This assures that any gifts that are given to the trust will qualify for the annual gift-tax exclusion. This will preserve the parent’s exemption of $1 million.

This is where a little more planning comes into play. Let’s say that the trust is to last a long time, maybe forever if it is allowed by the state. As long as the assets associated with the trust remain in the trust, the assets can be protected. However, seeing as the trust will last forever, the parent can allocate some of their generation skipping transfer-tax exemption. In this case, all growth in the assets of the trust will be removed from the transfer-tax system forever. Continue reading ‘Types of Asset Protection & Trusts’ »

This is another rung on the ladder of estate planning and trusts. Keep in mind that one misstep could send you down to the bottom of the board again – Similar to the children’s game of Chutes and Ladders. If properly planned, the DAPT can turn into something called a beneficiary defective inheritor’s trust, or a BDIT. This is how it works: Someone other than the doctor will set up the trust. When this is done and no gifts are made to the trust by the doctor, many of the rules associated with estate taxes will not apply. For example, if assets are given to the trust and the client retains the right to enjoy the assets that are transferred, the entire amount of those assets will be added to the estate.

Let’s say that the doctor has set up his trust in a state that allows self-settled trusts. If the doctor is not the grantor setting the trust up, the BDIT does not have to be in any particular state. So, this means that the trust can continue for as long as state laws allow. Now, there is a little twist to this. If someone else sets up the trust, how will it then be a grantor trust that will allow the doctor to avoid capital gains on the sale of any of the assets? Like the trust with the pair of deuces, there is a technique that can be used to create some income-tax magic. The designer of BDIT, states,”The tax law provides that if a person other than the grantor can vest all of the principal of the trust in himself, then he’ll be treated as the owner of the trust for income tax purposes.” In simple terms, if someone else puts annual gifts into the trust and the doctor retains the power to pull out those gifts, the trust will then be a grantor trust to the doctor, even though he did not set it up himself. The great benefit to this is that the doctor can sell valuable assets to the trust without triggering capital gains!

Since the doctor did not set up the trust, but it was done by someone else, he will be given more control over the trust and will have a much less tax and asset protection risk than if he had done all the work and set up the trust himself. In addition, Dr. Smith may also be given the right to appoint the trust assets that remain when he dies in any manner or fashion he wishes. Continue reading ‘Beneficiary Defective Inheritor’s Trust (BDIT)’ »

Different assets like possessions, property and money, which belong to a deceased person at the time of his/her death are included to value the estate of a deceased one. Similarly, certain assets that were given away by them within seven years before their death are also included. This valuation must precisely show what these assets would value for in the open market at the time of death.

If you are a personal representative, valuing the estate of the deceased’s estate is the first thing that you will need to do. Normally, you cannot take over as the manager of their estate as long as some due inheritance tax is not paid. However, you must also keep this fact in mind that inheritance tax is paid if the value is over £312,000. Continue reading ‘How to Evaluate the Estate of Someone Who Has Died’ »

The reasons for needing an estate plan are as varied as the individuals involved and, it seems, the many myths surrounding the subject do quite a bit of harm. For example, do you have to be “rich” in order to need an estate plan? The answer is, “No”, one does not need to be rich to need an estate plan. All you need is the desire to pass on to your heirs the greatest amount of the wealth possible that you have preserved during your lifetime.

Among the major benefits of a well-drafted estate plan are minimizing the expense of passing your estate to beneficiaries, decreasing the administrative complexities and ensuring to the extent possible that your distribution wishes are followed.

For example, if you own a home, have minor children or grandchildren, grown children in their own marriages, have been divorced, own a business, or expect to receive an inheritance of your own, you need to seriously consider the benefits of properly planning your estate. Instead of passing problems on to your heirs, you can instead elect to pass on the greatest amount of wealth with the least amount of problems through estate planning.

The largest hurdle, oftentimes, is building a lasting relationship with an attorney who specializes in estate planning. Going through the Yellow Pages, or asking friends for referrals or using the internet is often a haphazard process without much guarantee of success. Continue reading ‘Should You Create an Estate Plan?’ »

Though it may seem impossible, there are ways to plan ahead for Medicaid. Most people believe they have to rid themselves of all income and assets in order to receive benefits, but this is not always true. These strategies will help you plan for the future so your medical care expenses will be covered.

It is said that the average stay in a nursing home is 30 months. The cost can range between $3,000 and $5,000 per month or $90,000 to $150,000 in total. This is why it is so important to plan ahead. The financial burden can be massive if proper planning is not done. The eligibility requirements are based on the need for medical care as well as the individual’s financial situation. Since the program is controlled by the state government, each state may have different eligibility guidelines. Assets and income will always be the most important eligibility factors. In most cases, almost all of your savings and assets will have to be depleted to become eligible. Continue reading ‘Medicaid Planning Strategies’ »

When you retire it is more than likely you will be attempting to live on income that is as much as half of what you had while you were working. Even if you have a pension very few employers today offer a cost of living increase that comes anywhere near the actual increase in the cost of living-many companies don’t even offer increases to their retirees. This leaves those who are retired struggling to make ends meet as the cost of even basic necessities such as food, clothing, utilities, insurance, heat and gas go through the roof. This forces many people to continue working into their 70s and even 80s in order to keep a roof over their heads. Others are forced to sell their beloved homes and move in with their children because they can no longer afford the cost of living on their own.

While it may seem feasible for some to return to work if only part-time there is an important issue to remember-the money you make working is taxable and will have an effect on the amount of Social Security income that is taxable. In addition the money from a job is taxable as well. This is where a reverse mortgage is advantageous-the funds you withdraw from your reverse mortgage loan are not taxable! Whether you use the funds to supplement your monthly income, take a trip, pay for a child or grandchild to go to college or make home repairs the funds are still not taxable. You will pay interest on the funds but the interest you pay may indeed be less than you would pay in taxes if you were to obtain the same funds from a taxable source. Even the distributions from a 401K Plan are taxable when you make withdrawals. Continue reading ‘Use a Reverse Mortgage As a Financial Tool’ »

A trust is a legal arrangement through which a person gives control of capital or property to a trustee for the benefit of a third person. A beneficiary is a person for whom the trust fund is created. A beneficiary can be a person like, a child, a grandchild or a spouse, and can also be organizations and entities. Beneficiaries can be minors or even unborn children.

Beneficiaries can be divided into two categories. First are the fixed beneficiaries who are entitled to receive a fixed amount from the trust. Second are the discretionary beneficiaries for whom the trustees must decide as to how much capital they will receive in what time period. In the case of the fixed trust, the beneficiaries can be considered the owners of the capital held under the trust. But in case of discretionary trusts, the trustees have control over the funds and can make decisions as they see fit.

Nowadays, beneficiary trust funds are an important part of any legal system. Most wealthy families create trust funds for their children that they get benefited from at a certain age, which is usually 21 years. One can say that it is an elite concept created for safeguarding wealth and passing it on through generations. Trust funds are created to ensure that the offspring will live a comfortable life, and can be created for many purposes such as education or living. Trusts can also ensure that property and funds are handled according to your wishes after your death. Trust property or capital can include land, buildings, money, investments or valuables.

The period of time for the trust is different across countries. There are some countries that have laws against perpetual trusts. The time period has to be specified in the wording of the trust document. For example, beneficiaries can receive regular income from bank accounts over a certain period of time, or they can become owners of a particular sum of money or property when they are of the specified age. Continue reading ‘Beneficiary Trusts and Their Characteristics’ »