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T&E TALK: Unleash the Benefits of a Nonspringing Power of Attorney

Posted by Scott T. Ditman, CPA/PFS on Dec 3, 2018 7:00:00 AM

Estate planning typically focuses on what happens to your children and your assets when you die. But it’s equally important to have a plan for making critical 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) — specifically, a nonspringing POA.

POA Defined

A POA is a document under which you, as “principal,” authorize a representative to be your “agent” or “attorney-in-fact” to act on your behalf. Typically, separate POAs are executed for health care and property.

A POA for health care authorizes your agent — often, a spouse, child, or other family member — to make medical decisions on your behalf or consent to or discontinue medical treatment when you’re unable to do so.

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Topics: T&E TALK

T&E TALK: Should you Name a Trust as IRA Beneficiary?

Posted by Scott T. Ditman, CPA/PFS on Nov 26, 2018 10:20:00 AM

An IRA is a popular vehicle to save for retirement, and it can also be a powerful estate planning tool. Some people designate a trust as beneficiary of their IRAs, but is that a good idea? The answer: possibly.

IRA Benefits

The benefit of an IRA is that your contributions can grow and compound on a tax-deferred basis for many years. The longer you leave the funds in the IRA, the greater the potential growth, because taxes aren’t taking a bite out of the account. If you don’t need to tap your IRA funds during your life — other than required minimum distributions (RMDs) — you can stretch out its benefits even longer by designating your spouse or child as beneficiary.

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Topics: T&E TALK

T&E TALK: Revise Your Estate Plan to Reflect Life Changes During the Past Year

Posted by Scott T. Ditman, CPA/PFS on Nov 19, 2018 7:00:00 AM

Your estate plan shouldn’t be a static document. It needs to change as your life changes. Year end is the perfect time to check whether any life events have taken place in the past 12 months or so that affect your estate plan.

And the plan should be reviewed periodically anyway to ensure that it still meets your main objectives and is up to date.

When Revisions Might be Needed

What life events might require you to update or modify estate planning documents? The following list isn’t all-inclusive by any means, but it can give you a good idea of when revisions may be needed:

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Topics: T&E TALK

T&E TALK: Intellectual Property Requires Careful Estate Planning

Posted by Scott T. Ditman, CPA/PFS on Nov 12, 2018 7:00:00 AM

If your estate includes forms of intellectual property (IP), such as patents and copyrights, it’s important to know how to address them in your estate plan. Although these intangible assets can have great value, in many ways they’re treated differently from other property types.

2 Estate Planning Questions

For estate planning purposes, IP raises two important questions:

  1. What’s it worth? and
  2. How should it be transferred?

Valuing IP is a complex process, so it’s best to obtain an appraisal from an experienced professional.

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Topics: T&E TALK

T&E TALK: Be Cautious when including Employees in your Estate Plan

Posted by Scott T. Ditman, CPA/PFS on Nov 5, 2018 12:09:23 PM

If you’re the owner of a small business, you may think of your tight-knit group of employees as a family. If you wish to include them as beneficiaries in your estate plan, it’s critical to be aware of possible unintended tax consequences.

Unraveling the (tax) Code

Generally, money or other property received by gift or inheritance is excluded from the recipient’s income for federal tax purposes. But there’s an exception for gifts or bequests to employees: Under Internal Revenue Code Section 102(c), the exclusion doesn’t apply to “any amount transferred by or for an employer to, or for the benefit of, an employee.”

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Topics: T&E TALK

T&E TALK: Tenancy-in-Common - A Valuable Tool for Real Estate Investments

Posted by Scott T. Ditman, CPA/PFS on Oct 29, 2018 7:00:00 AM

If you hold significant real estate investments, tenancy-in-common (TIC) ownership can be a powerful and versatile estate planning tool. A TIC interest is an undivided fractional interest in property. The property isn’t split into separate parcels. Rather, each TIC owner has the right to use and enjoy the entire property.

TIC in Action

An individual TIC can’t sell or lease the underlying property, or take other actions with respect to the property as a whole, without the other owners’ consent. But each owner has the right to sell, mortgage, or transfer the TIC interest. This includes the right to transfer the interest, either directly or in trust, to heirs or other beneficiaries.

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Topics: T&E TALK

T&E TALK: A Qualified Disclaimer Lets Assets Bypass Your Estate

Posted by Scott T. Ditman, CPA/PFS on Oct 22, 2018 7:00:00 AM

If you are about to receive an inheritance from a family member, you can use a qualified disclaimer to refuse the bequest. The assets will then bypass your estate and go directly to the next beneficiary in line. It’s as if the successor beneficiary, not you, had been named as the beneficiary in the first place.

But why would you ever look this proverbial gift horse in the mouth? For beneficiaries who already have large estates themselves, using a legally valid disclaimer can save gift and estate taxes, often while redirecting funds to where they ultimately would have gone anyway.

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Topics: T&E TALK

T&E TALK: Educate your Children on Wealth Management

Posted by Scott T. Ditman, CPA/PFS on Oct 15, 2018 9:20:00 AM

If you’ve worked a lifetime to build a large estate, you undoubtedly would like to leave a lasting legacy to your children and future generations. Educating your children about saving, investing and other money management skills can help keep your legacy alive.

Teaching Approaches

There’s no one right way to teach your children about money. The best way depends on your circumstances, their personalities and your comfort level.

If your kids are old enough, consider sending them to a money management class. For younger children, you might start by simply giving them an allowance in exchange for doing household chores. This helps teach them the value of work. Opening a savings account or a CD, or buying bonds, can help teach kids about investing and the power of compounding.

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Topics: T&E TALK

T&E TALK: Retiring Abroad? Review your Estate Plan in Advance

Posted by Scott T. Ditman, CPA/PFS on Oct 8, 2018 7:00:00 AM

If you dream of spending your golden years in a tropical paradise, a culture-rich European city or another foreign locale, it’s important to understand the potential tax and estate planning implications. If you don’t, you could be hit with some unpleasant surprises.

Avoiding the Pitfalls

If you’re a citizen of the United States, U.S. taxes will apply even after you move to another country. So, if your estate is large, you might be subject to gift and estate taxes in your new country and in the United States (possibly including state taxes if you maintain a residence in a U.S. state). You also could be subject to estate taxes abroad even if your estate isn’t large enough to be subject to U.S. estate taxes. In some cases, you can claim a credit against U.S. taxes for taxes you pay to another country, but these credits aren’t always available.

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Topics: T&E TALK

T&E TALK: For Unmarried Couples, Estate Planning is Indispensable

Posted by Scott T. Ditman, CPA/PFS on Oct 1, 2018 7:00:00 AM

When married couples neglect to prepare an estate plan, state intestacy laws step in to help provide financial security for the surviving spouse. It may not be the plan they would have designed, but at least it offers some measure of financial security. Unmarried couples, however, have no such backup plan. Unless they carefully spell out how they wish to distribute their wealth, a surviving life partner may end up with nothing.

Marital Advantages

Because intestacy laws offer no protection to an unmarried person who wishes to provide for his or her partner, it’s essential for unmarried couples at minimum to employ a will or living trust. But marriage offers several additional estate planning advantages that unmarried couples must plan around, such as:

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Topics: T&E TALK

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