NEWSLETTERS

Over the years, we’ve discovered that many people make a BIG mistake, catapulting their assets and loved ones right into the court system.  Most of our clients want to avoid probate because it has a reputation for being expensive, time consuming, stressful - and public, meaning anyone anywhere can see who got what and how to contact them. Beneficiaries may become victims to nosey neighbors, predators, and unscrupulous “charities.”

Q:  What’s the one mistake that causes all these problems? 

A:  An unfunded trust.

In this issue you will learn:

• What it means to fund your trust
• What happens to assets left out of your trust
• Which assets should, and should not, be funded into your trust
• How funding your trust will ensure your final wishes are carried out and save your loved ones valuable time, money, and the frustration of going to court – while preserving privacy

As the federal estate tax exemption has ballooned from $1.5 million ten years ago to $5.43 million today, the need for estate tax planning has drastically decreased.  Instead, higher income tax rates that were ushered in under the American Taxpayer Relief Act of 2012 (ATRA) have shifted the focus of estate planning to a new frontier:  income tax basis planning.

In this issue you will learn what income tax basis is, how older estate plans have been deliberately designed to include an income tax time bomb, and the options you have to update your plan so that your heirs will receive the maximum basis.

It’s counterintuitive, we know: irrevocable trusts are revocable (and amendable). Unfortunately, irrevocability is a malicious myth. The uninformed could spend years relying on an old, out-of-date trust that could be updated and improved without too much effort. Yes, the so-called “irrevocable trusts” absolutely can be, and, often, should be, modified. 

In this issue, we’ll identify:

• 10 reasons you may want to modify your irrevocable trust
• 5 ways to modify your irrevocable trust
• 3 circumstances when trust modification should be considered
• When to contact our office to have your trust reviewed for potential modification

Income tax basis may not be the most exciting topic to read about.  However, it is a critically important topic to anyone who owns significant assets.  Gaining an understanding of the basics of basis is a way to avoid costly mistakes.

The Real Meaning of Basis

According to IRS Tax Topic 703, your basis “is generally the amount of your capital investment in a property for tax purposes. Use your basis to figure depreciation, amortization, depletion, casualty losses, and any gain or loss on the sale, exchange or other disposition of the property.

Estate planning has truly evolved over the past 20 years. Gone is the uncertainty about federal estate taxes and the absolute requirement for married couples to use complex trusts to minimize these taxes. But also gone is planning for the “traditional” family.

Studies have shown that 70% of family wealth is lost by the end of the second generation and 90% by the end of the third.  Don’t let your loved ones become part of these statistics. You need to understand, and work to overcome, the disconnect that occurs between generations regarding the transfer of wealth.  In this issue you will learn:

• The main factors that contribute to family wealth loss over the generations.
• How you can overcome your reluctance to discuss your wealth with your loved ones.

Estate planning for couples in a second or later marriage can be tricky, particularly when one spouse is significantly wealthier than the other. One solution for allowing the well-to-do spouse to maintain control of his or her assets but keep the other spouse happy is the Lifetime QTIP Trust. In this issue, you will learn what a Lifetime QTIP is and the multiple benefits this special type of trust can provide to you and your spouse if you have lopsided estates.

Your estate plan undoubtedly includes trusts that will continue for the benefit of your spouse’s lifetime and then for the benefit of several generations of your family.  Implementing and maintaining trusts that will cover the administration, investment, and distribution of trust property over the span of multiple decades is challenging and generally requires you to have flexibility in your trust agreements.  In this issue you will learn five ways that flexibility can be incorporated into your trust agreement.

1. Carefully select your trustees.
2. Define your trust beneficiaries.

Farming or ranching is more than a means of livelihood – it is about preserving a legacy and unique way of life.  Unfortunately, many farmers and ranchers don’t fully protect their legacy with an up to date estate plan. An out of date or inadequate estate plan could result in a farm or ranch that has been passed down for generations ending up being sold and converted into non-agricultural use.

Sadly, farmers and ranchers are not the only ones who avoid making or updating an estate plan – many others, including business owners and parents, also avoid planning, which can cut their legacy short.  In this issue you will learn about three common estate planning mistakes farmers, ranchers, and others make and how you can avoid them.

The practice of medicine is a profession fraught with liability.  It’s not just medical malpractice claims either – employment related issues (wrongful termination, sexual harassment, and discrimination), careless business partners and employees, and contractual obligations (personal guarantees, leases, business agreements, etc.), coupled with personal liabilities (divorce, vehicular accidents, rental real estate), add to the increased risk assumed by a physician in private practice.  Unfortunately, in our litigious society, these liability risks are not unique to physicians.  A broad range of people, including business owners, board members, real estate investors, and retirees, need to protect their hard earned assets from a variety of liabilities too.

Your estate plan was written to reflect your situation at a specific point in time –  and – as we all know – our lives continually change, unfolding in ways we might not have anticipated. Just like you meet with your doctor, financial advisor, or CPA on a regular basis, you need to meet with us on a regular basis as well.

In this issue, we:

• Identify and provide examples of life changes which typically trigger a need to update your plan
• Examine how often you should “check in” with our office

The goal? To make sure that your estate plan achieves your goals and works for your family.

Update Your Estate Plan if Any of These 6 Circumstances Apply to You

• Marriage, divorce, or death of a spouse
• Changes in financial status – good or bad
• The launch or wind down of a business
• Birth, adoption, or death of a child or grandchild
• Change in personal or family circumstances – including the need to replace trustees, address disabilities or addictions, moving to a new state, and more
• Change in your goals – such as changing amounts of inheritances, adding or removing a charity, and more

It’s not just changes in your life you need to think about - Congress, the courts, and the legislatures are constantly changing the rulebook. If you haven’t had your will, trust, or estate plan reviewed since 2012 or if any of these 6 circumstances apply to you, it is essential to contact us, so we can get you back on track.