HOW TAX LAW CHANGES COULD AFFECT YOUR ESTATE PLANS DOWN THE ROAD
With tax season well behind many residents in Texas, most people have long put out of their minds the financial information they needed to gather during tax preparation time. But while most people won’t think about their assets until next year, many estate planners suggest that now is the perfect time to start planning-and they’re not just talking about planning for tax season either.
Many estate planners are suggesting that people start considering how the new tax code will affect their financial plans for the future. Though a majority of people will not be affected by the largest tax law change, the increase of estate tax, subtle changes to the tax code could actually have a considerable impact on a majority of people down the road.
Looking over financial assets such as insurance policies and retirement funds now before they go back into a filing cabinet is a suggestion many planners are making to their clients. It might be advantageous to check contributions to retirement funds now versus closer to tax season. Because of the recession, people may have wanted to protect their money by taking smaller risks last year. With the market on the rebound, it may be time to change things around to maximize assets in the end.
During the hectic panic of the fiscal cliff, many wealthy people made decisions about their estates that they may regret next year. With the fear of rising estate taxes and reduction of exemptions for gift tax, many people rushed to turn portions of their estates into trusts. While still protected, forgetting about it could prove ominous if the tax code does not shift the way people were previously predicting.
Although the process might seem long and cumbersome to undertake at this time, failing to do so now could become regretful down the road. The question we pose to you then is why not take the time to protect your assets now while you still can?
Source: The New York Times, “Estate Planning Remains a Moving Target Under the New Tax Law,” Paul Sullivan, April 26, 2013
Continue reading: HOW TAX LAW CHANGES COULD AFFECT YOUR ESTATE PLANS DOWN THE ROAD
Tags: estate planning, estate tax, financial assets
HOW GOING PAPERLESS IS CHANGING ESTATE PLANNING FOR THE FUTURE
We’re moving away from a paper driven society. Now, this may not be a new statement, but it’s surprising to find out how many people take this information for granted and an increasingly digital society would raise a few concerns than it is. Case in point: what happens to your digital assets after you pass?
Estate planning has seen this question come up time and time again in the past few years as more and more people are beginning to realize that a majority of their information and assets could be lost to cyber space if they were suddenly to kick the proverbial bucket tomorrow.
So what are experts suggesting people do as far as planning when it comes to their digital assets?
Although a majority of your digital assets may only hold personal or sentimental value-like family photos or the recording of your daughter’s first ballet recital-some of your more valuable assets, such as bank account and other financial assets, may be stored digitally. Automatic bill pay, though convenient now, could pose a problem down the road when it comes to dividing your assets to beneficiaries.
To avoid a lot of problems in the future, many experts suggest writing down any usernames and passwords and including them in your will; that way, in the event of your passing, your loved ones can have access to the same information that you were privy to in life. Be sure to also discuss with your estate planning attorney what can and cannot be included in your will when it comes to your digital assets. Though some states may have small laws that cover digital assets, others may not.
As our society pushes further away from the use of paper, we open ourselves up to a plethora of issues. And without the legal system on par with our advances, this can often times leave us wondering what we’re able to pass on to future generations or not.
Source: Investing Daily, “Securing Your Digital Assets,” Bob Carlson, Jan. 15, 2013
Questions about estate planning and wills? Check out our firm site for answers to these questions and more.
Continue reading: HOW GOING PAPERLESS IS CHANGING ESTATE PLANNING FOR THE FUTURE
Tags: beneficiaries, digital assets, estate planning, financial assets, Wills
HOW DID THE FISCAL CLIFF AFFECT OUR TAXES FOR 2013?
When talks of the fiscal cliff began, a majority of people across Texas, including just about everyone else in the United States, worried about how the expiration of the Bush-administration tax cuts would affect their earnings in 2013.
For months, Congress has been in a headlock over how best to approach the new budget and with neither side budging, even hours before the ball drop, the world looked on with anticipation to see how it would all turn out.
But in the wee hours of the morning on Jan. 1, Congress and the president came to a tentative decision that could have considerable impacts on how much money a majority of people will see paid out in the upcoming year. This is especially true for those people who may have waited until after the fiscal cliff to do any sort of estate planning.
According to the federal government, taxpayers will continue to pay the current tax rates. However, it’s good to point out that although tax rates will be staying the same, take-home pay will likely be less than anticipated because of the expiration of the 2 percent reduction in Social Security tax.
With a series of other tax rates increasing by about 5 percent across the board, many Americans fear there may not be a silver lining when it comes to the amount of money they will be able to leave their beneficiaries after they pass. The good news may be that the estate tax exemption will continue to remain at $5 million-adjusted for 2013 inflation, of course, to just over $5 million. Even though the estate tax rate will be increased from 35 percent to 40 percent, this will only take affect after a person’s estate has surpassed the $5 million exemption. Though it may appear to be a small silver lining, this may actually be good news for people who expected much worse.
Source: Forbes, “Secrets Of The Fiscal Cliff Deal,” Tony Nitti, Jan. 2, 2013
Continue reading: HOW DID THE FISCAL CLIFF AFFECT OUR TAXES FOR 2013?
Tags: estate planning, estate tax, financial assets, taxes
ESTATE PLANNING MAY HELP MAXIMIZE THE SIZE OF THE ESTATE
Many Texas residents who are in or nearing retirement are probably considering estate planning, maybe even for the first time. As part of the estate planning process, they may be looking at investment decisions that maximize the amount of the estate without putting it at jeopardy. However, investments in financial assets that are traditionally viewed as safe also usually have a low return on investment.
A recent news report has highlighted one financial decision many parents are making that potentially offers a better return on investment. With so many unwilling to risk the stock market as of late and with the average return on a one-year certificate of deposit being only 0.4 percent, some parents are deciding to finance their adult child’s mortgage. Such a situation may offer a win-win as the parents get a return on investment they couldn’t otherwise and the child gets a mortgage at a lower rate than one offered by banks, without the red tape and attendant closing costs.
Although such parent-financed mortgages have always existed, their use has increased since banks tightened loan conditions following the housing crisis in 2008. Indeed, many in the housing market are unable to get a mortgage without having a nine-to-five job, even if they can make a 20 percent down payment. Likewise, having a full-time job may not be enough without the 20 percent down payment. This offers investment opportunities for parents who have grown children and may have a large financial portfolio.
Even parents of lesser means may consider financing the down payment for a child who is purchasing a home. By making these kinds of investments that potentially offer a better rate of return than other more traditional investments, parents may be able to maximize the size of the estate they leave behind.
Source: LoanSafe, “Some Home Buyers Bank on Their Parents,” Alex Ferreras, Oct. 8, 2011
Continue reading: ESTATE PLANNING MAY HELP MAXIMIZE THE SIZE OF THE ESTATE
Tags: downpayment, financial assets, investment, mortgage