Archive for the ‘Lifetime’ tag
Estate Planning – More Than Just A Legal Will no comments
Posted at 8:17 pm in Writing a Will
Andrew Stratton
When people think of Estate Planning, they generally think of legal wills. Estate planning is not just a will, although it does involve writing one. Rather, it’s a series of legal steps that involves allowing your beneficiaries to avoid probate and minimize the taxes incurred, and for you to write a living will in which you nominate trusted associates who would assume power of attorney and executor status should you be incapacitated or die. Estate planning also allows you more direct control over how your assets will be treated when you’re gone.
One of the most important parts of any estate plan are measures to avoid too much of the estate’s worth being lost to taxes. In the United State and abroad, dying can attract a number of specific taxes from both State and Federal governments, like death tax and estate tax. The simplest way to minimize estate tax is to name recipients of funds or assets from your estate in your legal will, specifying that a certain amount should be given as a gift. Provided your lifetime tax-free gift threshold of $1 million is not exceeded, these portions cannot attract any taxation.
An important part of any estate plan is the inclusion of a living will. A living will is not usually considered a legally binding document, however, it is given consideration if you are ever incapacitated and left unable to carry out your legal rights, or make decisions. While the living will itself may not carry much weight, you can nominate someone to assume your enduring power of attorney (EPA). If you are unable to exercise the living will as a legally binding decision, your enduring power of attorney can only be challenged by a court.
The will itself is the most important part of any estate plan. If you should die without writing a will, the specific laws of your state will determine how your assets will be divided following probate. Additionally, with no prior planning of where the assets should go on the event of your death, your estate is likely to be taxed the maximum possible amount. Where no will is present, the spouse is likely to keep one third of the value of the estate with the remainder to be distributed evenly among children.
An estate plan enables you to stipulate, for instance, that if your children receive an inheritance, the property is given to them personally and not, for example, to the child’s spouse. Should your child ever divorce, then the value of any inheritance received would not have to be shared in any divorce settlement, as it would not be a shared asset of that marriage.
One of the more important aspects of estate planning is the protection it can provide your assets. Typically, after a person passes away their family sells the assets that were left to them and divides the proceeds among themselves. If, however, you have a company or significant property holdings, you may wish to prevent the breakup of any of these assets, judging them to have more value whole compared with their value after being broken up.
Estate planning allows very specific instructions for how such assets should be treated if you wish to prevent this asset division from happening. For example, you can specify in your will that you require that your business be run by a family trust whose members and membership requirements you specify. It is not uncommon for people to wish to leave behind some legacy when they’ve gone, and the establishment of a family trust to ensure your assets are managed properly by a family member is a good way of ensuring it.
Another common request made is for a trust fund to be established as a scholarship fund or similar. Again, with a proper estate plan, it is possible for a benefactor to specify who a scholarship fund is for, and who is allowed to sit on any board or committee it relies on to pick a recipient.
Estate planning is the method by which specific instructions may be given in advance on how to manage your affairs should you become incapacitated or die. Estate planning represents the best way of protecting your assets from the whims of financially irresponsible relatives, excessive government taxation, and dissolution of your assets by the normal laws of succession in the state or country concerned.
When people think of Estate Planning, they generally think of legal wills. Estate planning is not just a will, although it does involve writing one. Rather, it’s a series of legal steps that involves allowing your beneficiaries to avoid probate and minimize the taxes incurred, and for you to write a living will in which you nominate trusted associates who would assume power of attorney and executor status should you be incapacitated or die. Estate planning also allows you more direct control over how your assets will be treated when you’re gone.
One of the most important parts of any estate plan are measures to avoid too much of the estate’s worth being lost to taxes. In the United State and abroad, dying can attract a number of specific taxes from both State and Federal governments, like death tax and estate tax. The simplest way to minimize estate tax is to name recipients of funds or assets from your estate in your legal will, specifying that a certain amount should be given as a gift. Provided your lifetime tax-free gift threshold of $1 million is not exceeded, these portions cannot attract any taxation.
An important part of any estate plan is the inclusion of a living will. A living will is not usually considered a legally binding document, however, it is given consideration if you are ever incapacitated and left unable to carry out your legal rights, or make decisions. While the living will itself may not carry much weight, you can nominate someone to assume your enduring power of attorney (EPA). If you are unable to exercise the living will as a legally binding decision, your enduring power of attorney can only be challenged by a court.
The will itself is the most important part of any estate plan. If you should die without writing a will, the specific laws of your state will determine how your assets will be divided following probate. Additionally, with no prior planning of where the assets should go on the event of your death, your estate is likely to be taxed the maximum possible amount. Where no will is present, the spouse is likely to keep one third of the value of the estate with the remainder to be distributed evenly among children.
An estate plan enables you to stipulate, for instance, that if your children receive an inheritance, the property is given to them personally and not, for example, to the child’s spouse. Should your child ever divorce, then the value of any inheritance received would not have to be shared in any divorce settlement, as it would not be a shared asset of that marriage.
One of the more important aspects of estate planning is the protection it can provide your assets. Typically, after a person passes away their family sells the assets that were left to them and divides the proceeds among themselves. If, however, you have a company or significant property holdings, you may wish to prevent the breakup of any of these assets, judging them to have more value whole compared with their value after being broken up.
Estate planning allows very specific instructions for how such assets should be treated if you wish to prevent this asset division from happening. For example, you can specify in your will that you require that your business be run by a family trust whose members and membership requirements you specify. It is not uncommon for people to wish to leave behind some legacy when they’ve gone, and the establishment of a family trust to ensure your assets are managed properly by a family member is a good way of ensuring it.
Another common request made is for a trust fund to be established as a scholarship fund or similar. Again, with a proper estate plan, it is possible for a benefactor to specify who a scholarship fund is for, and who is allowed to sit on any board or committee it relies on to pick a recipient.
Estate planning is the method by which specific instructions may be given in advance on how to manage your affairs should you become incapacitated or die. Estate planning represents the best way of protecting your assets from the whims of financially irresponsible relatives, excessive government taxation, and dissolution of your assets by the normal laws of succession in the state or country concerned.
Estate Planning With Iras – Plan Now Before Its Too Late no comments
Posted at 3:47 am in Writing a Will
Robert Ruby
When estate planning with IRAs you really have to understand what it is that you are doing so that your decisions do not come back to haunt your family. There are a lot of things that you have to consider, because if you have a fairly sizeable account, then you have more to lose.
With accounts that are traditional you run the risk of losing large amounts of the money that you have put in over your lifetime due to the fact that your beneficiaries will have estate taxes. In some cases families lose as much as half of their inheritance because of this.
The best way to avoid this is to transfer your savings into a Roth account. This move will result in you being taxed in the beginning instead of at the end when the amount to be taxed is much larger. The amount of money you put in the account will be taxed as income for the year you put it in, and then you not have to worry about it later.
If you are someone that is seeking to make a smart move in estate planning with IRAs and your modified adjusted gross income is below $100,000 then you’re ready to make the switch at any time. If you make more than $100,000 however, you may have to wait until 2010 to roll over the family fortune.
The tax law that prevents anyone with over $100,000 in adjusted income to switch to a Roth account will be lifted that year. When the ban comes off you had better not dawdle, because there are already rumors floating about that you may have a short window of opportunity before the law reverts.
Now one of the things that you have got to fully understand when it comes to estate planning with IRAs not having to take on the burden of paying all of the tax money that I talked about earlier is a relief for the people who are inheriting the money. That is the whole purpose of this article.
Of course the problem with taxes really only comes up if in the end your total net worth including assets is two million dollars or over in 2008. That is because that is this year’s estate tax exclusion. In 2009 that exclusion will be raised to 3,500,000, and in 2010 there will be a one year repeal of the estate tax.
Another thing that you may want to think about when you are doing your estate planning with IRAs is the distinct possibility that you could be alive for a lot longer that you think. Many times people feel that they have collected far more money than they will ever need, and they begin to give away large sums of cash.
The key to estate planning with IRAs is to always make sure that you have enough of a cushion that there is no chance that you will run out of money before you run out of time.
When estate planning with IRAs you really have to understand what it is that you are doing so that your decisions do not come back to haunt your family. There are a lot of things that you have to consider, because if you have a fairly sizeable account, then you have more to lose.
With accounts that are traditional you run the risk of losing large amounts of the money that you have put in over your lifetime due to the fact that your beneficiaries will have estate taxes. In some cases families lose as much as half of their inheritance because of this.
The best way to avoid this is to transfer your savings into a Roth account. This move will result in you being taxed in the beginning instead of at the end when the amount to be taxed is much larger. The amount of money you put in the account will be taxed as income for the year you put it in, and then you not have to worry about it later.
If you are someone that is seeking to make a smart move in estate planning with IRAs and your modified adjusted gross income is below $100,000 then you’re ready to make the switch at any time. If you make more than $100,000 however, you may have to wait until 2010 to roll over the family fortune.
The tax law that prevents anyone with over $100,000 in adjusted income to switch to a Roth account will be lifted that year. When the ban comes off you had better not dawdle, because there are already rumors floating about that you may have a short window of opportunity before the law reverts.
Now one of the things that you have got to fully understand when it comes to estate planning with IRAs not having to take on the burden of paying all of the tax money that I talked about earlier is a relief for the people who are inheriting the money. That is the whole purpose of this article.
Of course the problem with taxes really only comes up if in the end your total net worth including assets is two million dollars or over in 2008. That is because that is this year’s estate tax exclusion. In 2009 that exclusion will be raised to 3,500,000, and in 2010 there will be a one year repeal of the estate tax.
Another thing that you may want to think about when you are doing your estate planning with IRAs is the distinct possibility that you could be alive for a lot longer that you think. Many times people feel that they have collected far more money than they will ever need, and they begin to give away large sums of cash.
The key to estate planning with IRAs is to always make sure that you have enough of a cushion that there is no chance that you will run out of money before you run out of time.