Economics Finance

Estate planning is a process involving the counsel of professional advisors who are familiar with your goals and concerns, your assets and how they are owned, and your family structure. It can involve the services of a variety of professionals, including your lawyer, accountant, financial planner, life insurance advisor, banker and broker. Estate planning covers the transfer of property at death as well as a variety of other personal matters and may or may not involve tax planning. There are many questions that you must ask yourself before beginning your estate planning.

First, what is involved in estate planning? There are many issues to consider in creating an estate plan. First of all, ask yourself the following questions:

• What are my assets and what is their approximate value?
• Whom do I want to receive those assets-and when?
• Who should manage those assets if I cannot-either during my lifetime or after my death?
• Who should be responsible for taking care of my minor children if I become unable to care for them myself?
• Who should make decisions on my behalf concerning my care and welfare if I become unable to care for myself?

Second, who needs estate planning? You do-whether your estate is large or small. Either way, you should designate someone to manage your assets and make health care and personal care decisions for you if you ever become unable to do so for yourself. If your estate is small, you may simply focus on who will receive your assets after your death, and who should manage your estate, pay your last debts and handle the distribution of your assets. If your estate is large, your lawyer will also discuss various ways of preserving your assets for your beneficiaries and of reducing or postponing the amount of estate tax which otherwise might be payable after your death. Continue reading ‘Are You Leaving Your Estate Planning to Chance?’ »

Estate Planning is an item that may not concern the younger readers. But, for the older folks this can be of some concern.

An Estate Planner will have you list the contents of your home. So as to be able to either auction off or who gets what from your estate. Depending upon your wishes. Planning ahead will prevent headaches between family members when your time comes. Continue reading ‘Estate Planning’ »

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)’ »

A slow market is a good time to tidy up your personal affairs. In the past 6 months, five long time subscribers have died without any warning to speak of or long illness. Some of their lucky widows had no difficulty settling their estates because they had taken the time to up the Real Property into Land Trusts and their Personal Property, including Land Trust shares, stocks, bonds, and valuables into Personal Property Trusts. All Trusts funneled down through their Living Trusts to their designated heirs without the need for the delay and expense of Probate.

In contrast, a couple of people had held title to their property in their individual names and had done nothing to arrange for the passage of their estate. In their mid-50s they reasoned that they had plenty of time to do their estate planning later. As a consequence, their widows and families are destitute because they can’t prove that they have any right to the property.

Continue reading ‘Why You Need to Set Up a Living Trust Now’ »

Pre-Need Funeral Planning

For survivors, the hours and days following a loved one’s death is no time for weighty decisions. For many Americans, however, this will be the first time they think about preparations for the loved one’s funeral. Given the expense and painful emotions often involved, survivors may be in no condition to make choices for themselves or their loved one.

According to a survey of its membership by the National Funeral Directors Association, the average cost of a funeral today is $6,500. That’s an expense that can quickly escalate as survivors confront a bewildering range of options on everything from the kind and quantity of flowers to the quality of their loved one’s casket. A premium casket alone, for example, can exceed $15,000. Add in the expense of roses over carnations and live music over recorded, and survivors can end up paying triple or quadruple the average funeral’s cost. Yet, without advanced planning to guide them, survivors may feel guilty about saying anything but “yes” to the best for their loved one.

Leaving these emotionally charged decisions to grieving family and friends can pose an unfair burden on them in their time of loss. That’s why a growing number of Americans are choosing to take matters into their own hands with pre-need funeral arrangements. According to the American Association of Re-tired Persons, over 21 million U.S. consumers age 50 and over have made pre-arrangements for their own or a loved one’s funeral, representing a total of over $25 billion in prepaid funeral expenses. The National Funeral Directors Association reports that nearly 98% of all funeral homes have instituted some kind of pre-need planning program, making it easier than ever for Americans to plan their funeral well in advance. Today, most funeral homes offer several pre-need planning options. Generally, the process begins when individuals sit down with a funeral director to discuss the plans available to them. Once they’ve reviewed their plans with their spouse and their loved ones, they purchase a funeral package that reflects their wishes down to every possible detail. Consumers have several alternatives for pre-payment for their funeral plans. One is to purchase a life insurance policy with the funeral home named as beneficiary. Or consumers can make payments in installments over months or years. With yet another alternative, they may work with a licensed funeral director to establish a regulated Trust which will pay their funeral expenses. Lastly, consumers may prepay for their funeral in an account which earns interest, and which can be designated “payable on death” to the funeral home. After death, if there’s more money in their fund than required to pay for their funeral, the family will receive a refund.

The benefits of a prepaid funeral package go beyond cost savings, however. For many families, it provides an important opportunity to talk about sensitive issues and concerns that might otherwise have gone unspoken, and it allows the family to decide together which funeral options will be most meaningful to them. In many ways, prepaid funeral arrangements allow families to lay the foundation for a faster process in the future. For many Americans, the discussion of their own funerals conjures up unwelcome thoughts of death. But once they overcome their initial resistance, most will find more peace of mind than discomfort in knowing that all the details of this important task have been handled as they want them to be. Continue reading ‘Seniors Overcome Fear, Obtain Peace of Mind Through Estate Planning’ »