MEDIA/PRESS

T&E TALK: Your Will – Understand the Basics

Posted by Scott T. Ditman, CPA/PFS on Aug 19, 2019 7:00:00 AM

You probably don’t have to be told about the need for a will. But do you know what provisions should be included and what’s best to leave out? The answers to those questions depend on your situation and may depend on state law.

Basic Provisions

Typically, a will begins with an introductory clause, identifying yourself along with where you reside (city, state, county, etc.). It should also state that this is your official will and replaces any previous wills.

After the introductory clause, a will generally explains how your debts and funeral expenses are to be paid. The provisions for repaying debt generally reflect applicable state laws.

Don’t include specific instructions for funeral arrangements. It’s likely that your will won’t be accessed in time. Spell out your wishes in a letter of instructions, which is an informal letter to your family.

Read More

Topics: T&E TALK

T&E TALK: Power of Attorney – Understand the Two Types

Posted by Scott T. Ditman, CPA/PFS on Aug 12, 2019 7:00:00 AM

When drafting your estate plan, you and your attorney must account for what happens to your children and your assets after you die. But your plan must also spell out your wishes for making financial and medical decisions if you’re unable to make those decisions yourself. A crucial component of this plan is the power of attorney (POA).

ABCs of a POA

A POA appoints a trusted representative to make medical or financial decisions on your behalf in the event an accident or illness renders you unconscious or mentally incapacitated. Without it, your loved ones would have to petition a court for guardianship or conservatorship, a costly process that can delay urgent decisions.

Read More

Topics: T&E TALK

T&E TALK: Naming a Trustee — A Pivotal Decision

Posted by Scott T. Ditman, CPA/PFS on Aug 5, 2019 7:00:00 AM

One of the major decisions you’ll need to make when establishing a trust is who will act as your trustee. As the name implies, this individual or financial institution must be above reproach. But that’s just one quality of many that your trustee requires.

Trustees Have Both Mundane and Significant Duties

Trustees have significant legal responsibilities, primarily related to administering the trust for the benefit of beneficiaries according to the terms of the trust document. But the role can require many different types of tasks. For example, even if a tax expert is engaged to prepare tax returns, the trustee is responsible for ensuring that they’re completed and filed correctly and on time.

Read More

Topics: T&E TALK

T&E TALK: A Buy-sell Can Provide Liquidity to Cover Estate Taxes

Posted by Scott T. Ditman, CPA/PFS on Jul 29, 2019 7:00:00 AM

If you own an interest in a closely held business, it’s critical to have a well-designed, properly funded buy-sell agreement. Without one, an owner’s death can have a negative effect on the surviving owners.

If one of your co-owners dies, for example, you may be forced to go into business with his or her family or other heirs. And if you die, your family’s financial security may depend on your co-owners’ ability to continue operating the business successfully.

Buy-sell Agreement and Estate Taxes

There’s also the question of estate taxes. With the federal gift and estate tax exemption currently at $11.4 million, estate taxes affect fewer people than they once did. But estate taxes can bring about a forced sale of the business if your estate is large enough and your family lacks liquid assets to satisfy the tax liability.

Read More

Topics: T&E TALK

T&E TALK: This May be an Ideal Time for a Roth IRA Conversion

Posted by Scott T. Ditman, CPA/PFS on Jul 22, 2019 7:00:00 AM

Roth IRAs offer significant estate planning and financial benefits. If you have a substantial balance in a traditional IRA and are considering converting it to a Roth IRA, there may be no better time than now. The Tax Cuts and Jobs Act (TCJA) reduced individual income tax rates through 2025. By making the conversion now, the TCJA enhances the benefits of a Roth IRA.

Estate Planning Benefits

The main difference between traditional and Roth IRAs is the timing of income taxes. With a traditional IRA, your eligible contributions are deductible on your tax returns but distributions of both contributions and earnings are taxable when you receive them. With a Roth IRA, on the other hand, your contributions are nondeductible — that is, they’re made with after-tax dollars — but qualified distributions of both contributions and earnings are tax-free if you meet certain requirements. As a general rule, from a tax perspective, you’re better off with a Roth IRA if you expect your tax rate to be higher when it comes time to withdraw the funds. That’s because you pay the tax up front, when your tax rate is lower.

Read More

Topics: T&E TALK

T&E TALK: Assets with Sentimental Value Require Extra Planning

Posted by Scott T. Ditman, CPA/PFS on Jul 15, 2019 7:00:00 AM

When planning your estate, you’re likely to be focused on major assets, such as real estate, investments, and retirement plans. But it’s also important to “sweat the small stuff” — your tangible personal property such as jewelry, antiques, and photographs.

These personal items — which often have modest monetary value but significant sentimental value — may be more difficult to deal with, and more likely to result in disputes, than big-ticket items. Squabbling over these items can lead to emotionally charged disputes and even litigation. In some cases, the legal fees and court costs can eclipse the monetary value of the property itself.

Prepare a Personal Property Memorandum

Spelling out every gift of personal property in your will or trust can be cumbersome. Perhaps you want to leave your son a painting he’s always enjoyed and give your daughter your prized first-edition copy of a favorite book. You may want to leave your coin collection, which has never interested your children, to an old friend. And so on.

Read More

Topics: T&E TALK

T&E TALK: Jointly Owning Property Can Have Negative Outcomes

Posted by Scott T. Ditman, CPA/PFS on Jul 8, 2019 7:00:00 AM

A common estate planning mistake is to own property jointly with an adult child or other family member. True, adding a loved one to the title of your home, bank account, or other property can be a simple technique for leaving property to that person without the need for probate. But any convenience gained is usually outweighed by a variety of negative consequences. Here are four:

  1. Higher Gift and Estate Taxes. Depending on the size of your estate, joint ownership may trigger gift and estate taxes. When you add a family member’s name to an asset’s title as joint owner, for example, it’s considered a taxable gift of half the asset’s value. And your interest in the asset — including any future appreciation — remains in your taxable estate. These taxes usually can be minimized or even eliminated by transferring the asset to an irrevocable trust.
Read More

Topics: T&E TALK

T&E TALK: Getting Divorced? Time to Review Your Estate Plan

Posted by Scott T. Ditman, CPA/PFS on Jul 1, 2019 7:00:00 AM

If you’re divorcing, it’s important to review your estate plan as early as possible, for two reasons: First, you may wish to revise your plan immediately to prevent your spouse from inheriting or gaining control over your assets if you die or become incapacitated before the divorce is final. Second, although a divorce judgment or settlement automatically extinguishes certain of your former spouse’s rights, some documents must be modified to ensure that he or she doesn’t receive unintended benefits.

Consider revising your will and any revocable trusts to exclude your spouse. Note that, in many states, your spouse will retain elective share or community property rights to a portion of your estate until the marriage ends.

Read More

Topics: T&E TALK

T&E TALK: Weigh Your Options When Addressing Life Insurance in Your Estate Plan

Posted by Scott T. Ditman, CPA/PFS on Jun 24, 2019 7:00:00 AM

Life insurance has long provided a source of liquidity to pay estate taxes and other expenses. But, with the estate tax exemption currently set at $11.40 million for 2019, estate taxes may no longer a concern for many families. Nonetheless, life insurance offers many benefits for nontaxable estates.

If you own life insurance policies at your death, the proceeds will be included in your taxable estate. Ownership is usually determined by several factors, including who has the right to name the beneficiaries of the proceeds. If estate taxes are a concern, the way around this problem is to not own the policies when you die. However, don’t automatically rule out your ownership, either.

Read More

Topics: T&E TALK

T&E TALK: Proposed “Secure Act” May Impact Your Estate Planning

Posted by Scott T. Ditman, CPA/PFS on Jun 17, 2019 7:00:00 AM

The House of Representatives has acted to address our longer life spans and a growing crisis for retirees.  It has issued "The Setting Every Community Up for Retirement Enhancement Act of 2019," or “The Secure Act” for brevity.  Should the legislation be passed by the Senate and signed by the president, it may have important implications for your estate planning.

Increase the RMD Age – More Time to Grow Your Wealth 

The Act proposes to increase the age from 70½ to 72 when required minimum distributions (RMDs) must begin from retirement plans. Those planning their estates will be able to factor into their planning this additional time to grow their retirement savings.

Read More

Topics: T&E TALK

About Berdon Blogs

Our experts examine the latest trends, economics, business conditions and industry issues to provide timely information you need to maximize your tax advantages and meet your financial goals.

SALT TALK: Hear an insider’s perspective on the business issues, legislative updates in state and local tax, and tax aspects behind today’s headlines.

T&E TALK: Gain insights into how changes in tax laws, shifts in the financial markets, and regulatory concerns will impact assets and affect preserving and transferring wealth.

TAX TALK: Get an all-inclusive perspective on regulatory changes, industry issues, and trends from our team of multidisciplinary tax professionals – many of whom also hold J.D. and LL.M degrees.

Subscribe to Berdon Blogs

Recent Posts