All About Estate Planning Life Insurance

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Update August 21 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-08-20T09:51:00.000-07:00

Estate planning is the process of accumulating and disposing of wealth before death of individual or a group of owner known as estate owner including married couple. It aims is to maximize the wealth of the estate owner. The most important goal of estate planning is to make sure that the greatest amount of the estate passes to the estate owner's intended beneficiaries while paying the least amount of taxes ( By Kyle J. Norton)

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How to Avoid Probate Through Estate Planning and Assignment of Beneficiaries
By Simon Volkov

Learning how to avoid probate can save heirs' time and money, prevent family disputes, and allow easy transfer of inheritance property upon death. Many people are not even familiar with probate let alone how to prevent it from occurring. Probate is required within all states of the U.S. to ensure decedent estates are settled according to inheritance laws. It is a time-consuming process that can take several months to complete.
Becoming educated about how to avoid probate is as simple as conducting research on the Internet or consulting with a family law attorney or estate planner. Many banks, credit unions, and financial advisors offer estate planning services for a nominal fee.
The only way to completely avoid the probate process is to transfer assets into a trust. However, trusts are generally reserved for individuals with assets valued over $100,000. Individuals with smaller estates can take measures to keep certain assets from undergoing the probate process.
One of the most important aspects of estate planning is executing a last will and testament, along with healthcare directives and designating Power of Attorney rights. POA allows a person to make decisions on your behalf if you are incapacitated and unable to make important decisions. Power of attorney rights also allow individuals to pay bills from your checking account, transfer titled property, and make legal decisions. Therefore, the person granted these powers should be someone whom can be trusted to make decisions based on your best interests.
Healthcare directives allow you to state what type of medical care you do or do not want. These can include being placed on life support, receiving nutritional support, organ donation, and do not rescesitate orders.
The Will is used to designate an estate administrator to handle all facets of estate management. Required duties vary depending on estate value, inheritance property, and family dynamics. Small probated estates can settle in three to six months. If heirs contest the Will, estate settlement can be prolonged until attorneys can work out acceptable agreements. Legal fees from contested Wills often bankrupt estates and leave nothing for heirs to inherit.
If people die without executing a legal will, the probate process takes longer. An estate administrator must be appointed through the court and additional work is required to locate heirs, inventory property, and other details which are normally included in the last will.
Individuals who hold bank accounts, retirement accounts, financial portfolios, and life insurance policies can assign beneficiaries to receive proceeds upon death. Beneficiary forms can be obtained through the financial institution where the account is held. Account holders can assign multiple beneficiaries and state the percentage of funds they will receive.
Beneficiaries must abide by each financial institution's policy regarding distribution of inheritance funds. Most states require beneficiaries to submit date-of-death value forms to the county tax assessor's office. As long as decedents are current with taxes, the Assessor's off will stamp the form so proceeds can be distributed.
Titled property can be kept out of probate by establishing joint ownership. When real estate or motor vehicles have joint titles, the property automatically transfers to the co-owner. When joint ownership is with a person other than your spouse, you might need to establish Joint Tenancy with Rights of Survivorship.
A lesser known way to avoid probate is through gifting inheritance property while you're still alive. The Internal Revenue Service allows gifting up to $12,000 per individual or $20,000 per married couple per year. If gifting limits exceed maximum level, recipients are required to file a federal gift tax return and pay appropriate inheritance taxes.
Implementing strategies to avoid probate is one of the best gifts you can leave loved ones. Regardless of how little or how much you own, it is important to put your affairs in order and execute a last will. Probate is not a fun process, so take measures to protect inheritance property and minimize the time required to settle your estate.
Simon Volkov is a California real estate investor and probate liquidator who shares information about the probate process, estate planning, and resources for learning how to avoid probate. Learn how easy it is to protect inheritance property and provide your family with peace of mind by visiting www.SimonVolkov.com.

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Update August 03 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-08-02T16:02:00.000-07:00

What estate planning issues may arise from your life insurance? Any asset under your name will be treated as your estate, that includes your life insurance proceeds upon your death. The basic of the life insurance policy is the death benefits. It may be hundreds of thousands of dollars, which may increase the estate tax considerably.

Inheritance of huge amount of money may not be a sole good news to your heirs as they may not get used to managing the sudden windfall. If your heirs are young adults, it could be more challenging to them when it comes to important financial decisions. Moreover, you should also be careful as the minors (children below 18 years of age) could not inherit the proceeds outright. The money may have to be held in trust and managed by an adult.

You may need to be cautious when your beneficiary is under special aid from the government program such as supplemental security income (SSI) and Medicaid. Without a proper planning, the proceeds may result the benefits to be forfeited. Your beloved heir may have to use the proceeds to fund his basic needs until they are depleted, then only the special government program may resume.

For beneficiaries of this type, you may need a special plan, which will be used to control the proceeds ownership and how, when and on what they would be spent. For instance, if your heir is currently under SSI and Medicaid, you should not allocate the proceeds to fund his basic needs, but rather use it for his education, transportation, utilities, entertainment etcetera which the SSI and Medicaid do not cover. In this case, you may find setting up a irrevocable life insurance trust a handy solution.

To know more about How Does an Irrevocable Life Insurance Trust Benefit You, visit my site http://www.101lifeplanning.com/estate-planning/how-does-an-irrevocable-life-insurance-trust-ilit-benefit-you.php

You can also learn more about How to Set Up a Special Needs Trust for a Disabled Heir in http://www.101lifeplanning.com/estate-planning/how-to-set-up-a-special-needs-trust-for-a-disabled-heir.php

Article Source: http://EzineArticles.com/?expert=Jim_Torres

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Update July 18- 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-07-17T16:04:00.000-07:00

Estate Planning and the Forgotten Right to Recapture Copyrights

By Leslie Burgk

If your client's estate plan overlooks the right to terminate contracts and recapture copyrights, it could cost your client's heirs significant future income. Let's take for example that you have a client who wrote a children's book and signed a publishing contract in 1965. The copyright was secured that same year and your client transferred all his interest in the copyright to the publisher. For estate purposes, you may be thinking there is nothing there of value except for any income that your client is receiving and may continue to receive after his death pursuant to the contract terms. If the thought crossed your mind, you are likely overlooking a very important right that could be costly to your client and his heirs.

Under the Copyright Act of 1976, the author, or if deceased, the author's widow or widower and children or grandchildren may terminate all transfers or licenses of the renewal copyright or any right under it (for pre-1978 copyrights) at the end of 56 years from the date the copyright was originally secured and recapture the last 39 years of copyright protection (*provided the contract was executed prior to January 1, 1978 and timely notice of termination is provided*). Congress made the right of termination inalienable. Therefore, any contract terms to the contrary have no effect.

In your client's case, the 56th year is 2021 and the copyright in his work extends until 2060. Therefore, there is the possibility that his heirs may acquire the right to terminate the contract and recapture the copyright. If the estate documents are silent regarding this right, the heirs may miss the opportunity. If they are aware of the right, they could renegotiate the contract or take back the copyright and the exploit the work themselves or enter into more lucrative contracts thereby taking advantage of the termination right to derive more income from the work's copyright.

If the opportunity to terminate and recapture is missed, there is another chance to recapture the copyright for the last 20 years of protection (* if timely notice is provided*); however, your client or his heirs will lose the benefit of potential income derived from exploiting the copyright in the work during those 19 years between the 56th year and the 75th year of protection.

Also Beware of Traps: There is a limited window of opportunity to terminate and the *notice* requirements are highly technical. There are also traps, such as the right to terminate does not apply to works-for-hire and the right of termination for post-1977 works is different. Therefore, if you are dealing with this issue with regard to any works protected by copyright (not just pre-1978 literary works as described above) make sure that you have thoroughly researched all the requirements, including the notice requirements and have planned accordingly, or contact an attorney who is familiar with this area of law.

Leslie A. Burgk is admitted to practice law in the State of Florida and before the United States' District Court for the Southern District of Florida. Mrs. Burgk's practice areas include intellectual property and bankruptcy. For more information, visit http://www.BankruptcyAttorneyWestPalmBeach.com.

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Update June 28 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-06-28T09:03:00.000-07:00

By Bret A. Telmonti

Let's get one thing straight right off the bat - estate planning is not about death. If you look at it like that, you'll be putting it off forever. Thinking about death is dwelling on the negatives when estate planning is all about dwelling on the positives: financial security and surety for your family.

In order to plan for your estate, you must first take inventory. Keep account of every piece of real estate, every bank account, every investment, and every large expense. These should be divided up in your will or living trust. However, they are the only important things.

Remember to keep track of the small things as well. While your attorney will counsel you about the larger things, the small items might be the ones your family cares about the most. It's the happy memories associated with them that make them so important, so keep a watchful eye. If your daughter plays your piano each time she visits, leave it to her. If your son watches you each time you smoke a cigar, leave him your cigars. If your spouse's favorite getaway location is your cabin by the lake, then make sure that no one can take it away from them. Are you getting the picture? Good. On to the next thing.

Taxes can often times cripple your good intentions. That's right; everything you leave your friends and family members in your will is going to be taxed. However, there are ways to lower the taxes for your family's benefit. A trust is a document that is usually preferred to a will. With a trust, you can decide how and by whom your assets will be divided and lower the estate and gift taxes associated with that division. Also, with a trust your family can avoid probate court, a drawn-out and costly process that leaves many bitter and aggrieved.

Finally, discuss these things with your family before the documents are finalized. See what matters most to them and will it to them if you can or place those things in a trust. Inheritance is a touchy subject, but it pays to know what your family expects, especially if they will not be receiving exactly what they expect. Communication about such things only improves matters. Not only will foreknowledge erase the potential confusion and animosity between family members during the final will and testament divisions, but it will allow you to have frank discussions with those closest to you before it's too late.

Remember, estate planning is not something to be avoided. There is no law that says a person who plans for their estate will die soon after. In fact, there are those who institute living trusts when they are in their 30s, updating them throughout the years, and living to the ripe old age of 93. It happens all the time. So don't put this off - it is this positive thinking that will ensure your family's well-being.

Bret A. Telmonti received good Los Angeles estate planning information from Julia C. McBride. For help with Los Angeles conservatorship, estate planning or wills, Bret recommends contacting the estate litigation attorneys at JCMcBridelaw.com.

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Update June 08 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-06-08T06:38:00.000-07:00

By David S. Robinson

Creating an effective estate plan can occasionally feel daunting, but it doesn't have to be. Taking a few simple steps today can help ensure that you and your family gain the maximum benefit from your hard work and hard-earned assets. By making the right estate-planning decisions in your working years, you're more likely to enjoy a successful retirement in the future while protecting your assets for generations to come. Here are some basic strategies for starting, fine-tuning or updating your estate plan.

1) Create a Will
A surprising number of successful people-including doctors, executives and business owners-lack a basic will. Others forget to sign their wills or update them regularly. Make sure you have a basic will and that your document is up to date, has been signed and notarized. In addition, make sure that your executor has a copy that can be easily found in the event of your death. Without a signed will, your estate will be settled according to state laws in your state of residence, which may or may not reflect your personal wishes.

2) Write a Letter of Instruction for Personal Belongings
A will typically covers major assets, such as financial accounts and real property. It's also a good idea to write a letter of instruction about smaller personal belongings, such as jewelry, furniture or family heirlooms. A letter of instruction isn't necessarily legally binding in all states, but it can help your family better understand your wishes and resolve potential disagreements among surviving family members.

3) Establish a Living Trust
A living trust provides several important benefits. First, if you become incapacitated for any reason, having a living trust in place allows you to retain full control of your estate. Without a living trust, your state of residence could potentially appoint a guardian for you according to state law if aren't able to make decisions for yourself. Second, a living trust offers privacy. Wills are public documents once they have been filed with your state of residence. In contrast, the contents of a living trust can always remain private and out of the public domain. Finally, a living trust can help your estate avoid probate, saving your heirs time, money and unnecessary hassles after your death.

4) Assume the Estate Tax Is Here to Stay
No one can predict with absolute certainty what Congress will do with the estate tax. However, many industry experts believe that the estate tax is here to stay. If Congress takes no action in 2010, the standard estate-tax exemption will revert to $1 million per individual in 2011 and beyond. Building the estate tax into your legacy planning will help you heirs keep more of what they are legally entitled to.

5) Don't Leave Everything to Your Spouse
If the estate tax exemption reverts to $1 million per individual in 2011 and beyond, it's a big mistake to leave everything you own to your spouse. Here's why. You and your spouse can each leave $1 million to your heirs free from the estate tax, creating a combined $2 million exemption for you as a couple. However, if you if leave everything to your spouse, your entire estate will eventually be held in one person's name, so your effective estate tax exemption as a couple is only $1 million. Your wealth manager can help you develop strategies to maximize your estate tax exemption as a married couple, which may include an A/B trust, which typically consists of an "A" trust (sometimes known as a marital trust) and a "B" trust (sometimes known as a bypass trust).

6) Pay Special Attention to Titles in Community Property States
Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In community property states, the most advantageous way to title assets for married couples is typically as community property with rights of survivorship. The advantage is that when one spouse dies, the other will get a 100% step-up in cost basis. In contrast, if your assets are jointly titled in a community property state and one spouse dies, the surviving spouse only gets a 50% step-up in cost basis, which can increase the surviving spouse's capital gains tax liability down the road when it comes time to sell your house or other assets.

7) Make Annual Gifts to Family Members
Rather than leaving your entire legacy when you die, consider making some gifts now to family members, while you're still living. In 2010, you can gift up to $13,000 a year to as many people as you want. As a married couple, you and your spouse can gift up to $26,000 to the same individual if you both make the gift. This is a great way to get money out of your estate while helping a child make a down payment on a house, funding a grandchild's education or supporting a family member in need.

8) Enjoy the Tax Benefits of Charitable Donations
Fulfilling your philanthropic goals can offer many tax benefits. Today, there are a number of tax-advantaged charitable vehicles designed to help individuals reduce the value of their taxable estate. These may include donor advised funds, charitable lead trusts and charitable remainder trusts. Charitable donations are also often a great way to remove highly appreciated assets from your estate, reducing your exposure to both the estate tax and long-term capital gains taxes. Highly appreciated assets could include both securities and real property.

9) Keep Life Insurance Outside of Your Taxable Estate
Life insurance benefits can sometimes unintentionally expose your heirs to the estate tax. To prevent this from happening, consider buying your life insurance policy within an irrevocable life insurance trust-this will keep your life insurance benefits entirely outside of your estate. By doing so, you can help ensure that your life insurance benefits are both income-tax free and estate-tax free for your beneficiaries.

10) Review Your Estate Plan Regularly
Once you create your estate plan, review it with your wealth manager, tax professional and/or attorney every 3 to 5 years. It's crucial to keep up with changes in tax laws, making sure that your plan reflects both your wishes and any new tax laws.

If you're feeling overwhelmed by estate planning, consider tackling this list of suggestions above one item at a time. Set a goal of completing a few tasks each quarter. Keep in mind that this list is only a starting point. There may be other estate planning strategies that your wealth manager will recommend based on your personal needs and goals. Asking for help and guidance from your wealth manager and other trusted advisors can help streamline the estate planning process and improve your chances of leaving the legacy you imagine for future generations.

About the Author: David Robinson, a Certified Financial Planner, is the president of Robinson, Tigue, Sponcil & Associates, L.L.C. The firm is an independent Registered Investment Advisor, providing clients with fiduciary wealth management and retirement planning services. You can contact David by phone at (602) 224-7850

Update May 19 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-05-19T04:28:00.000-07:00

By Jeff Pennington

Some people feel that they are either too young for estate planning or they believe that estate planning is only for wealthy families.

Estate planning is important for everyone regardless of your age or income level. Unfortunately, many breadwinners are not prepared for their death.

There are several families that are not financially equipped to take on the expenses following a loved one's death. Many families are left scrounging around for money just to pay for funeral expenses.

There is one important question every person should ask themselves, "Will my family be able to support themselves financially if I die tomorrow?" No one can predict how much time they have left on earth. However, you can plan for the financial future of your family today.

The Importance of Life Insurance & Estate Planning

When it comes to estate planning, life insurance plays center state. Life insurance can be compared to a safety net because it provides your family with financial support when you pass away. It will provide your family with immediate financial support to pay off funeral expenses, medical bills and other important expenses.

Give Your Family 'Peace of Mind'

One major benefit of life insurance is that it provides your family with peace of mind. If you should experience a sudden death, peace of mind allows your family to conduct business upon your death without worrying about not having enough financially. Your family's focus should be on handling the grieving process of your death and not finances.

You Assets

Many people leave their loved ones their assets upon their death. However, some people fail to realize that their loved ones will be responsible for paying estate and income taxes.

Your family can use your life insurance policy to pay for debts or obligations. In addition to funeral and burial costs, an insurance policy can be pay for college tuition and other financial needs.

Hello, I'm Jeff Pennington. In late 2002, I decided to create a business that would improve the way people buy term life insurance. I wanted to combine the friendliness and personal service that comes from a small insurance company, with the effectiveness of an online insurance business.

I also work with physicians and small business owners to help them buy disability insurance that will provide income if they ever suffer an injury that prevents them from working.

My technology based system is able to communicate electronically with our insurance carrier partners, enabling us to offer you a simpler, more streamlined insurance application process.

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Update April 29 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-04-29T05:56:00.000-07:00

By Roman Mosqueda, S. J.D.

If you have assets of $1,000,000 (or even less in certain circumstances) to contribute, and still retain other assets sufficient to support you for the remainder of your life, you may consider forming and operating a family limited partnership (FLP) among members of your family.

Yes, a FLP is only for wealthy persons, who have significant assets and can afford to pay thousands of attorney's fees to set it up, defray expert's valuation costs, as well as bankroll operating expenses to properly maintain it.

It can be as simple as husband and wife-donors creating a FLP with $1,000,000 or less worth of assets, whether real estate such as rental property (but not primary residence), cash, securities, business interests, etc.

As general partners in a FLP, the husband and wife may hold ten (10) percent general partnership interest and ninety (90) per cent limited liability interest.

The husband and wife, as general partners retaining general partnership interest, may then transfer limited partnership units, representing the remaining 90% of the partnership interests to their children.

I. Benefits Of A FLP:

A. Control Over Transferred Assets:

The FLP operating agreement governs the administration, management, investment, and distribution of income and assets upon termination. It can also restrict the transfer of partnership units or interests to others.

The general partners-parents would have management and investment control over the partnership assets to the exclusion of limited partners-children.

More importantly, the general partners decide when and how much of partnership income may be distributed to partners. They can also prohibit the transfer of partnership units or interests outside of the family.

The general partners may further form an irrevocable trust to which their general partnership interests would be transferred and administered by an independent trustee, or form an entity as the general partner managed by an independent fiduciary.

B. Discounted Valuation Of Gifts To Children:

Parents are allowed to give tax-free gifts to children or grandchildren valued at $12,000 (or $24,000 of split gift by both parents) each year.

These annual gifts may take the form of limited partnership units in a FLP, thereby taking advantage of the annual $12,000 gift-tax exclusion to lower estate taxes.

In the context of a FLP, the parents can further take advantage of gift and estate tax valuation rules on minority interests, resulting in lack of control, as well as lack of marketability (non-liquidity) to reduce transfer taxes.

A valuation expert may determine a 20 percent discount in value to a partnership unit given as a gift, due to lack of control, as well as another 20 percent discount due to lack or marketability. Such discounts cannot normally be done in a gift of similar value given outright to children.

The estate values of the partnership units belonging to the parents may also be reduced by aforesaid discounts, resulting in reduced estate taxes when they pass way.

C. Income-Tax Benefits:

A FLP, as a partnership, is a pass-through mechanism, whereby partnership deductions and incomes are charged directly to the partners, general and limited, and taxed at their individual tax rates.

Thus, a FLP allows the shifting of the proportionate share of the partnership's income from the parents' relatively higher tax rate to the lower income tax rates of the children with limited incomes.

Moreover, a FLP may make income distributions to limited partners-children to assist them in paying income taxes attributed to the FLP.

D. Asset Protection Benefits:

Another benefit of a FLP is asset protection of general and limited partners from their creditors, seeking to execute judgments against the underlying partnership assets. But the lack of business purpose of a FLP may cause the court to pierce its veil, and find it an alter-ego of the general partners.

Indeed, general and limited partners own only general or limited partnership units or interests (personal property) in a FLP. They do not own directly the (real or personal property) of the FLP.

Limited partnership interests may be gifted to minor children through irrevocable children's trust that would provide additional asset protection from the general partner-donor's and children's creditors.

II. RISKS OF A FLP:

A. Court Determination That Assets Transferred To A
FLP Are Includable In Parent's Gross Estate:

A FLP would not work as discussed above, if a court determines that a FLP is not created, implemented, and operated correctly, that is, an implied agreement existed that the parents-general partners would retain lifelong enjoyment and economic benefit of the FLP assets.

The Internal Revenue Service (IRS) seeks to show no discount in gift valuation, as well as to include in a parent-donor's gross estate assets transferred to a FLP, pursuant to Internal Revenue Code § 2036(a), which allows only a bona fide sale exemption.

Indeed, a FLP is vulnerable if it does not have a legitimate business purpose, not have business property as assets, nor a non-tax purpose. Avoidance of gift or reduction of estate and income taxes may be found to be insufficient rationale for its existence.

B. Lack Of Step-up In Cost Basis For Partnership
Asset At Death Of General Partner:

If an asset with low cost basis is transferred to a FLP, the owner-parent relinquishes the potential step-up in basis at the parent's death. If an asset has been fully depreciated and/or highly appreciated, a FLP may not be advantageous at all, even risky, because of the inability to use the original cost basis of the asset.

Indeed, transfers of assets to a FLP result in transfer taxes, which could have been avoided, as well as the resulting inability to pass on to heirs the asset with a full step-up cost basis.

III. Conclusion:

A Family Limited Partnership (FLP) presents complex issues and pitfalls of gift valuations, inclusions of transferred assets to donor's gross estate, tax burdens, and applications of the criteria for bona fide sale at fair market value.

As a vehicle for estate planning and asset protection, a FLP is meant for wealthy individuals, who are not faint at heart and willing to spend for their proper set up, funding, implementation, active management, and operation.

(The Author, Roman P. Mosqueda, has practiced partnership and family law for over 15 years in California.

This article is meant for information only, and is not legal advice. If the reader has specific issues on family limited partnership, he or she is well-advised to consult with a competent attorney and an accountant.)

Atty Roman P. Mosqueda is a graduate from Michigan Law School with both an SJD and LLM. Visit http://www.MosquedaLaw.com for more information about his offices located in Los Angeles, Riverside, and Long Beach.

Office Locations:
Los Angeles: 3055 Wilshire Blvd Suite 425., Los Angeles, CA 90010
(213)252-9481
Riverside: 3797 Tenth Street, Riverside, CA 92501
(951)683-6615
Long Beach: 1043 E.Anaheim St., Long Beach, CA 90813
(562)218-8600

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Update Mar. 30 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-03-30T05:59:00.000-07:00

By Julia McBride

When a loved one passes away, the time that follows can be full of both sadness and stress. The distribution of an estate is often a stressful process, one which can cause a great deal of dispute if the proper planning has not been done. This is also a great risk for mixed marriage families - proper estate planning can prevent future disputes and confusion from causing rifts between family members and fights from breaking out over inheritance.

There is more to estate planning than simply writing a will. Many individuals do not realize all that goes into such a process and their families are left to feel the consequences. Not only can proper estate planning reduce future tension and disputes among mixed marriage families, but it can also ensure that the heirs and beneficiaries receive exactly what they deserve and that the process does not become overly long and complicated.

A will, while it is not the only thing involved in state planning, it is very important. A will is a legal document which names the individuals or organizations who will receive assets either by gift or in a trust. An executor of the estate and guardians for any minor children will also be named in a will. A living trust, however, may partially substitute for a will. With this document, assets can be administered for the benefit of the individual while he or she is still alive, then they will be distributed to the beneficiaries upon death. A living trust ensures that the individual alone is responsible for managing the assets of the trust and he or she has the ability t revoke or change the terms.

In a mixed marriage family there are many factors which can lead to tension upon the death of a loved one. Different religious beliefs and cultural practices in addition to differences in personal background may be enough to cause disputes but proper estate planning can help to alleviate possible conflicts. When everything has been planned out and every asset is accounted for, it is not necessary for families to become competitive and to engage in disputes and inheritance - the passing of a loved one can be marked by shared memories rather than tension and stress.

For more information on estate planning for mixed marriage families contact JCMcBrideLaw.com today.

Article Source: http://EzineArticles.com/?expert=Julia_McBride

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Update Mar. 10 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-03-10T05:34:00.000-08:00

By Simon Volkov

An estate planning lawyer can help individuals create a last will or establish a trust to protect inheritance assets in the event of their death. It is important to select a probate law attorney who listens to your needs and provides sound advice for developing strategies which benefit designated beneficiaries.

Recently, a colleague hired an estate planning lawyer to assist with her terminally-ill mother's estate. Although her mother was not a wealthy woman, she owned a home, automobile and held financial portfolios and life insurance policies.

The estate attorney was referred through her mother's credit union. Considerable family strife existed within the family and her mother wanted to disinherit one of her sons. The estate planner executed a simple will and provided strategies to prevent assets from passing through probate.

Due to the nature of illness, the woman's daughter did not have time to consult with multiple probate law firms. Instead, she was forced to work with an asset protection attorney who had no prior knowledge of her mother, family dynamics, or how she intended to distribute inheritance assets.

The credit union closed their estate planning division due to budget cuts. The daughter was not informed of this and only discovered she no longer had a lawyer for probate after her mother passed away. This created chaos for the daughter who was designated as the probate executor.

To make matters worse, the estate administrator resided in another state. She was forced to locate a new probate litigation attorney just days before returning home. During their meeting, the man expressed no interest in her mother's estate and was unable to provide advice on how to protect her mother's Will from being contested by the disinherited son.

Fortunately, she was well-versed in estate planning and had taken steps to obtain asset protection. Because the remainder of the estate was small, the Administrator was able to avoid probate and settle her mother's estate within a few months.

This goes to show things can go dreadfully wrong when estate planning is put off until a person is terminally ill. Many unwanted issues can arise when trusts and estates are executed during the final weeks of a person's life.

This is of importance when executing a last will and testament and distributing assets amongst dysfunctional families. When probate estate planning is conducted in the final stages of life, disinherited heirs can contest the will by claiming the decedent was not of sound mine or under the influence of another's persuasion. When Wills are contested, estates can be suspended in probate for months or years and potentially bankrupt the estate.

Estate and trust planning should be initiated while you are in good health. Hiring an estate planning probate lawyer ensures your final wishes will be followed when you die. It also eliminates stress from the appointed probate personal representative.

To find estate planning probate lawyers visit the American Bar Association website, seek out lawyer referral networks, or browse local telephone directories. Interview a minimum of four lawyers. Ask for referrals and follow-up.

Simon Volkov is a California real estate investor who specializes in probate estate liquidation. He has published hundreds of probate articles to help people make informed decisions regarding estate planning and how to hire an estate planning lawyer. If you are an estate administrator and need to sell assets to settle an estate, contact Simon at http://www.SimonVolkov.com to determine available options.

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Update Feb. 17 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-02-17T03:37:00.000-08:00

By Julius Giarmarco

Whether of same-sex or opposite-sex unions, unmarried couples face many estate planning issues (and opportunities). Although unmarried couples clearly face challenges that married couples do not, most are challenges that can be overcome with planning. However, because many of the issues discussed in this article are state-specific, it is important that unmarried couples preparing an estate plan seek the counsel of an attorney familiar with the laws of their states of domicile.

Unmarried couples (whether same-sex or opposite sex) have the same estate planning objectives as do married couples. They want to: avoid the costs, delays and publicity associated with probate; eliminate or minimize estate taxes; make certain their assets will pass to whom they want, when they want, and how they want; and protect heir assets from their heirs' inabilities, disabilities, creditors and predators.

Unlike married couples, unmarried couples do not benefit from many of the legal presumptions and default provisions under state and federal law. For example, unmarried couples: are not entitled to the federal unlimited estate and gift tax marital deductions; cannot utilize the tax free "rollover" of retirement benefits in the same manner as a surviving spouse; are not covered under most state intestacy laws that determine who receives a decedent's property if there is no Will; and are not permitted, by most state laws, to elect against a partner's Will and thereby receive a portion of the deceased partner's property.

Same-sex couples have made some strides under the law toward qualifying for the same benefits that married couples enjoy. In Massachusetts, Connecticut, Iowa, Vermont, Maine and New Hampshire, marriages for same-sex couples are legal and currently performed. In New York and Rhode Island, same-sex marriages from other states or foreign countries are recognized, but they are not performed. The states of California, Hawaii, Nevada, New Jersey, Oregon and Washington, by way of laws regarding domestic partnerships and civil unions grant persons in same-sex unions a similar legal status to married couples. Still, 36 states have statutes on the books prohibiting same-sex marriage, including some that also have constitutional bans. Only 3 states - New York, Rhode Island and New Mexico - have taken no action in either direction.

Although the U.S. Constitution requires each state to give "full faith and credit" to the laws of other states, the 1996 federal Defense of Marriage Act ("DOMA") expressly undercuts the full faith and credit requirement in the case of same-sex marriage. As noted above, 36 states have passed their own DOMA laws. Thus, because of the conflict between the U.S. Constitution and DOMA, it may ultimately be left to the Supreme Court of the United States to decide the issue of same-sex marriage.

Avoiding State Default Laws

Most unmarried couples will want to avoid their state's intestacy laws. These are the laws that determine who receives a decedent's "probate" estate if he or she dies without a Will. Except for a few states, intestacy laws do not recognize "unrelated persons." However, assets passing to a surviving joint tenant, or payable by beneficiary designation to a person or trust, are not part of the decedent's probate estate and therefore avoid the intestacy laws. Same-sex couples will also want to avoid most states' default laws on matters such as burial desires and priority among persons to act as guardians, conservators, personal representatives, and patient advocates.

Accordingly, unmarried couples should use Wills; Will substitutes (i.e., joint property, beneficiary designations, and payable-upon-death accounts); Revocable Living Trusts; general powers of attorney for financial matters; living wills and health care powers of attorney; and burial directives to avoid any adverse state law. Moreover, when unmarried couples designate partners as beneficiaries in Wills or Revocable Living Trusts, it is possible that disapproving family members may contest the Will or Trust. By including an "In Terrorem" clause in the Will or Trust Agreement, any person contesting the Will or Trust would receive nothing. Such a clause is intended to discourage persons from challenging a Will or Trust in court since nothing material may be gained by the action.

Qualified Retirement Plans

Although not technically a state default law issue, unmarried couples usually do not fare as well as their married counterparts when it comes to qualified retirement plans. Many 401(k) plans and pension plans provide that, upon a participant's death, his or her retirement account is to be distributed in a lump sum. As such, the distribution is fully taxable (as ordinary income) in the year of the participant's death. However, when the participant's spouse is the named beneficiary, the spouse can roll over the distribution into an IRA. Thus, the income tax on the distribution can be deferred until the surviving spouse attains age 70 1⁄2, at which time the spouse can "stretch" the distribution over 27.4 years.

Until recently, a non-spousal beneficiary would have been forced to take distributions of the entire qualified retirement plan within five years after the participant's death or, in some plans, immediately following the participant's death. Under the Pension Protection Act of 2006 (PPA), beginning in 2007, a non-spouse beneficiary of a qualified retirement plan can roll over, via a trustee-to -trustee transfer, the benefits into an "inherited" IRA. The inherited IRA must be titled in the participant's name for the benefit of the non-spousal beneficiary (e.g., "Mary Smith, Deceased IRA f/b/o Alice Jones"). The PPA also permits the post-mortem transfer of qualified retirement plans to inherited IRAs held by trusts for the benefit of non-spousal beneficiaries. Once the benefits are in the inherited IRA, the beneficiary may stretch the benefits over his or her life expectancy.

Domestic Partnership Agreements

As mentioned above, some states have enacted laws allowing domestic partners to register as such. By doing so, unmarried couples will have many of the rights and responsibilities afforded to married couples. However, in the vast majority of states, domestic partners are not recognized. Therefore, it may be beneficial for unmarried couples to define the terms of their relationship in a written Domestic Partnership Agreement (DPA). A DPA works much like a prenuptial agreement for couples planning to marry.

Basically, a DPA is a legally enforceable contract between two unmarried persons that clarifies the rights and obligations of each person in the relationship. Following are some of the provisions typically found in a DPA: A statement of the relative rights in property acquired before the date of the DPA (for example, such property could belong to the person who earned or acquired it); how income earned by the partners will be divided; how living expenses will be shared; how inherited property will be divided, if at all; whether jointly titled assets are to be created and, if so, how they are to be divided in case of separation; how assets will be divided in the event of separation, and whether post-separation support will be provided by one partner to the other; and how assets will be distributed in the event of death.

Beyond addressing financial concerns, a DPA can help set forth other parameters in the relationship thereby helping to clarify and strengthen the relationship. A DPA can also help to avoid potential disputes and misunderstandings by specifying a dispute resolution mechanism such as arbitration. Because some states do not recognize the validity of DPAs, it is important to consult a local attorney.

Basic Gifting Strategies

Like everyone else, unmarried couples having taxable estates will need more than a Will or Revocable Living Trust to reduce the federal estate tax. They will also need to implement a gifting program. While there is a present lapse in the estate and generation-skipping transfer taxes, it's likely that Congress will reinstate both taxes (perhaps even retroactively) some time during 2010. If not, on January 1, 2011, the estate tax exemption (which was $3.5 million in 2009) becomes $1 million, and the top estate tax rate (which was 45% in 2009) becomes 55%.

Federal estate tax law provides an unlimited marital deduction. Assets left to a surviving spouse through a Will, Trust or Will substitute are estate and gift tax free (if the surviving spouse is a U.S. citizen). In other words, a married couple can defer the estate tax until the death of the surviving spouse. Because of the Defense of Marriage Act (DOMA), unmarried couples are not afforded this opportunity - even in those states that recognize same-sex marriages, civil unions and domestic partners. Therefore, unmarried couples whose assets exceed the estate tax exemption will incur federal estate taxes upon the first partner's death, and possibly state death taxes depending on the state of domicile.

Following are some tax saving techniques available to unmarried couples:

Annual Gift Tax Exclusion. This exclusion allows the donor to make tax free gifts of up to $13,000 per donee per year, with no limit on the number of donees or the donees' relationships to the donor. This exclusion is scheduled to increase in amount, as it is now indexed to the rate of inflation. Lifetime annual gifts under this exclusion do not reduce the donor's $1 million lifetime gift tax exemption. (See below) Moreover, a gift tax return (Form 709) need not be filed for such gifts.

In addition, unlimited direct payments of the donee's tuition or medical bills are not subject to gift tax, nor do they count towards the donor's $1 million lifetime gift tax exemption or to the $13,000 annual gift tax exclusion. However, the funds must be paid directly to a qualified educational institution or medical provider. Education costs do not include room and board, books or supplies. Medical costs do not include amounts reimbursed by insurance companies.

Unmarried partners may earn substantially different incomes or have accumulated different amounts of wealth. The gift tax annual exclusion and the exclusion for tuition and medical costs allow the wealthier partner to transfer assets to the less wealthy partner during his or her lifetime. This strategy will be particularly beneficial when the wealthier partner's estate is over the estate tax exemption, the less wealthy partner's estate is below that amount, and they wish to benefit the same persons at the surviving partner's death.

Lifetime Gift Tax Exemption. In addition to the annual gift tax exclusion, a donor can gift a cumulative total of up to $1 million to anyone during his or her lifetime without any gift tax. This is the so-called "gift tax exemption." Gifts in excess of the $13,000 annual gift tax exclusion reduce the gift tax exemption dollar for dollar. Unlike the estate tax exemption, however, the gift tax exemption does not increase.

Any gift tax exemption used decreases, dollar for dollar, the estate tax exemption available at the donor's death. However, the income and appreciation on the gifted property is removed from the donor's estate, thereby reducing the estate tax. Thus, an unmarried couple can use the wealthier partner's gift tax exemption to make gifts to the less wealthy partner so that the overall estate tax of both partners is reduced.

Gifts to Irrevocable Trusts. Unmarried couples are often reluctant to make outright gifts to partners because the donor loses control over the gifted property. By making gifts to an irrevocable trust, the wealthier partner (grantor) can provide the less wealthy partner (beneficiary) with trust income and/or principal as needed, but can also determine where the remaining trust property will pass upon the beneficiary's death or dissolution of the relationship. Moreover, if it's properly drafted, the assets remaining in the trust can pass, estate tax free, to the "remaindermen" named in the trust agreement upon the beneficiary's death.

To be effective for estate reduction purposes, the trust must be irrevocable and the grantor should not be a trustee or beneficiary of the trust. However, the grantor can, within limits, retain the right to remove and replace trustees and, as noted above, the trust can be designed so that the beneficiary-partner is replaced by another beneficiary already named in the trust if the relationship is terminated.

To qualify for the $13,000 annual gift tax exclusion, irrevocable trusts usually contain a provision giving the trust's beneficiary a temporary right to withdraw gifts made to the trust, at least in part. This withdrawal right is often called a "Crummey" power, named after the Federal Court case that validated this technique.

Irrevocable Life Insurance Trusts. Unmarried couples often purchase life insurance for the benefit of the surviving partner to help supplement future income lost from the inability to do a spousal rollover, and the inability to receive pension survivor benefits. Life insurance can also be used to create an estate to provide financial security for the surviving partner, or to create the liquidity with which to pay estate taxes.

While life insurance proceeds are generally income tax free to the beneficiary, they are still part of the insured's gross estate and are subject to estate taxes. Accordingly, if the insured has a taxable estate (after including the face amount of life insurance), it may be advisable to transfer his or her life insurance policies to an Irrevocable Life Insurance Trust (ILIT).

If the life insurance policy is owned by and payable to an ILIT, the insurance proceeds will be both income and estate tax free. However, if an existing policy is transferred to an ILIT and the grantor-insured dies within three years of the transfer, the death proceeds are brought back into the grantor-insured's estate. This problem can be avoided if the ILIT is the initial owner and beneficiary of a new policy.

Gifts to an ILIT can be made with the grantor-insured's $13,000 annual gift tax exclusion using "Crummey" powers (See above) and/or with the grantor-insured's $1 million gift tax exemption. As mentioned above in connection with gifts to irrevocable trusts, the grantor-insured should not be a trustee or beneficiary of the ILIT. Besides keeping the insurance proceeds out of the grantor-insured's estate, the ILIT allows the grantor-insured to set the parameters upon which his or her partner (as the beneficiary of the ILIT) will receive trust income and principal. The ILIT should also be drafted so that, if the beneficiary is no longer in a relationship with the grantor-insured, another person (already named in the ILIT) automatically becomes the new beneficiary.

Before transferring a policy to an ILIT, applicable state law must be examined to determine if the ILIT has an "insurable interest" in the grantor-insured. If not, the insurance company might not be required to pay the death benefit. It may be possible to avoid this problem by having the insured purchase the policy and subsequently assign it to the ILIT. Under most state laws, the insurable interest requirement applies only to the initial owner and not to a subsequent assignee. As mentioned above, however, if a policy is assigned to an ILIT and the insured dies within three years of the assignment, the death proceeds are still includable in the insured's gross estate. One possible technique to avoid the three-year rule would be for the insured to sell the policy to an ILIT that is designed as a grantor trust.

Advanced Gifting Strategies

For unmarried couples with very large estates, fully utilizing the $13,000 annual gift tax exclusion and $1 million gift tax exemption may not be enough to significantly reduce the overall estate tax. Gifts in excess of the $1 million gift tax exemption are taxed at the same rates as estate transfers. In light of possible estate tax repeal or reform, many people are reluctant to make taxable gifts to reduce estate taxes. Therefore, effective estate planning for persons with large estates must involve strategies that help freeze or reduce the value of assets at minimal gift tax cost. Following are some strategies the wealthier partner can use to shift future appreciation to the less wealthy partner while minimizing taxable gifts to the maximum extent possible:

Low Interest Rate Loans. One simple way to shift potential appreciation from the wealthier partner to the less wealthy partner, without incurring a gift tax, is to make an interest-only loan. The loan must bear interest at the Applicable Federal Rate (AFR) published monthly by the IRS. The less wealthy partner reinvests the loan proceeds, and the appreciation in excess of the AFR will pass to the borrower free of gift tax and will also be excluded from the lender's estate. For the last several years, the AFR has been at all-time lows, making this strategy particularly beneficial. The loan should be documented with a promissory note.

Family Limited Partnerships or LLCs. A Family Limited Partnership (FLP) or Family Limited Liability Company (FLLC) allows the wealthier partner to make gifts to the less wealthy partner on a "discounted" basis while retaining some measure of control over the gifted partnership/membership interest. For example, the wealthier partner could transfer property to an FLLC in exchange for a 1% voting interest and a 99% non-voting interest. The nonvoting interests are then gifted to the less wealthy partner (either outright or in trust). The wealthier partner maintains control over the FLLC's assets through the voting interests by naming him- or herself as the manager of the FLLC. Moreover, the gift tax value of the non-voting interests may be discounted because they lack control and marketability.

Besides the tax reasons for creating an FLP or FLLC (i.e., discounting the value of the property for gift tax purposes and removing the income and appreciation on the gifted property from the donor's estate), there is also a variety of non-tax reasons for using an FLP or FLLC. As mentioned above, the donor can retain control over the management of the entity's property and the distribution of its profits. Assets in an FLP or FLLC are protected (to a degree) from creditors, and FLPs and FLLCs facilitate the making of gifts in much more efficient ways than direct gifts of property, particularly when real estate is involved.

The substantial benefits of using FLPS and FLLCs have subjected their use to increased scrutiny and challenge by the IRS. A recent line of case law has complicated the task of estate planners in advising clients on the use of FLPs and FLLCs. Thus, the proper structuring, administering and defending of the FLP or FLLC must be placed in the hands of a knowledgeable attorney.

Grantor Retained Income Trusts. A Grantor Retained Income Trust (GRIT) is an estate planning tool that has been around for many years. However, the Revenue Reconciliation Act of 1990 effectively eliminated the GRIT as a wealth transfer technique among "family" members. But GRITs are still a viable tool for unmarried couples - one of the few areas of the tax laws where an unmarried couple has an advantage over a married couple.

A GRIT is an irrevocable trust whereby the grantor (the wealthier partner) transfers assets to a trust while retaining the right to receive all of the net income from the trust assets for a fixed term of years. The net income must be paid at least as frequently as annually. At the expiration of the fixed term of years, the remaining trust principal is either distributed to the remainder beneficiary (the less wealthy partner) or held in further trust for the benefit of such beneficiary. However, if the grantor does not survive the fixed term, the assets in the GRIT are included in his or her estate, but any gift tax exemption used in establishing the GRIT is restored. Thus, the grantor is no worse off than if no GRIT had been created. In many cases, it might be advisable for the grantor to create an Irrevocable Life Insurance Trust to own a policy on his or her life to provide the liquidity - both income and estate tax free -to pay the increased estate tax that will be owed if the grantor fails to survive the GRIT's term.

The gift tax value with a GRIT will be only the value of the remainder interest (i.e., the difference between the full value of the property transferred to the GRIT and the present value of the grantor's income interest). The idea is to select a term that will give the present value of the grantor's income interest a substantial value (using the IRS's monthly published discount rate), but that the grantor is likely to outlive.

A big advantage of a GRIT is that if the assets transferred to the GRIT generate income at a rate lower than the IRS's discount rate for the month of the transaction, the net effect is to undervalue the gift to the remainder beneficiary. In contrast, where the remainder beneficiary is a family member, the Internal Revenue Code requires the payout to be a fixed annuity, a so-called Grantor Retained Annuity Trust, or GRAT.

The gift tax value can be further reduced if the assets transferred to the GRIT qualify for valuation discounts (such as an interest in a family limited partnership). It is possible, with a long enough term and a large enough valuation discount, that the gift tax value will be nominal. Appreciation of the asset's value during the fixed term thus escapes estate taxation. The GRIT should be drafted so that, if the grantor and the beneficiary are no longer in a relationship, then another person already named in the GRIT automatically becomes the new beneficiary.

SUMMARY

The laws affecting unmarried couples are changing rapidly. Certainly more changes are likely, even challenges in the federal courts to the Defense of Marriage Act. The different rules concerning property rights from state to state add complexity to the situation, particularly for same -sex couples who move from a state recognizing civil unions or same-sex marriages to a state that does not. For unmarried couples it is important to have some form of estate planning to prevent state default laws from disinheriting their partners. Finally, because unmarried couples with large estates do not have the benefit of the unlimited marital deduction and other advantages that married persons enjoy, they need to aggressively seek out alternative solutions to maximize assets, reduce estate taxes and make use of powerful techniques not available to married couples.

TO THE EXTENT THIS ARTICLE CONTAINS TAX MATTERS, IT IS NOT INTENDED OR WRITTEN TO BE USED AND CANNOT BE USED BY A TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER, ACCORDING TO CIRCULAR 230.

Julius Giarmarco, J.D., LL.M, is the Chair of the Estate Planning Group of Giarmarco, Mullins & Horton, P.C., Troy, Michigan.

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Update Jan. 29 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-01-29T04:05:00.000-08:00

By Julius Giarmarco

The five levels of estate planning is a systematic approach for explaining estate planning in a way that you can easily follow. Which of the five levels you need to complete is based on your particular objectives and circumstances.

Level One: The Basic Plan

The situation for level one planning is that you have no will or living trust in place, or your existing will or living trust is outdated or inadequate. The objectives for this type of planning are to:

• reduce or eliminate estate taxes;
• avoid the cost, delays and publicity associated with probate in the event of death or incapacity; and
• protect heirs from their inability, their disability, their creditors and their predators, including ex-spouses.

To accomplish these objectives, you would use a pour-over will, a revocable living trust that allocates a married person's estate between a credit shelter trust and a marital trust, general powers of attorney for financial matters and durable powers of attorney for health care and living wills.

Level Two: The Irrevocable Life Insurance Trust (ILIT)

The situation for level two planning is that your estate is projected to be greater than the estate-tax exemption. While there is a present lapse in the estate and generation-skipping transfer taxes, it's likely that Congress will reinstate both taxes (perhaps even retroactively) some time this year. If not, on January 1, 2011, the estate tax exemption (which was $3.5 million in 2009) becomes $1 million, and the top estate tax rate (which was 45% in 2009) becomes 55%. In any event, you can make cash gifts to an ILIT using your $13,000/$26,000 annual gift-tax exclusion per beneficiary.

Level Three: Family Limited Partnerships

The situation for level three planning is that you have a projected estate-tax liability that exceeds the life insurance purchased in level two. If your $1 million gift-tax exemption ($2 million for married couples) is used to make lifetime gifts, the gifted property and all future appreciation and income on that property are removed from your estate.

More people would be willing to make gifts to their children if they could continue to manage the gifted property. A family limited partnership (FLP) or a family limited liability company (FLLC) can play a valuable role in this situation. You would typically be the general partner or manager and in that capacity, continue to manage the FLP or FLLC's assets. You can even take a reasonable management fee for your services as the general partner or manager. Moreover, by gifting FLP or FLLC interests to an ILIT, the FLP or FLLC's income can be used to pay premiums, thereby freeing up your $13,000 / $26,000 annual gift-tax exclusion for other types of gifts.

Level Four: Qualified Personal Residence Trusts and Grantor Retained Annuity Trusts

The situation for level four planning is the additional need to reduce your estate after your $1 million/$2 million gift-tax exemption has been used. Although paying gift taxes is less expensive than paying estate taxes, most people do not want to pay gift taxes. There are several techniques to make substantial gifts to children and grandchildren without paying significant gift taxes.

One technique is a qualified personal residence trust (QPRT). A QPRT allows you to transfer a residence or vacation home to a trust for the benefit of your children, while retaining the right to use the residence for a term of years. By retaining the right to occupy the residence, the value of the remainder interest is reduced, along with the taxable gift.

Another technique is a grantor retained annuity (GRAT). A GRAT is similar to a QPRT. The typical GRAT is funded with income-producing property such as subchapter S stock or FLP or FLLC interests. The GRAT pays you a fixed annuity for a specified term of years. Because of the retained annuity, the gift to the remaindermen (your children) is substantially less than the current value of the property.

Both QPRTs and GRATs can be designed with terms long enough to reduce the value of the remainder interest passing to your children to a nominal amount or even to zero. However, if you do not survive the stated term, the property is included in your estate. Therefore, it is recommended that an ILIT be funded as a "hedge" against your death prior to the end of the stated term.

Level Five: The Zero Estate-Tax Plan

Level five planning is a desire to "disinherit" the IRS. The strategy combines gifts of life insurance with gifts to charity. For example, take a married couple, both age 55, with a $20 million estate. Assume that there is neither growth nor depletion of the assets and that both spouses die in a year when the estate-tax exemption is $3.5 million, and the top estate-tax rate is 45%.

With the typical marital credit shelter trust, when the first spouse dies, $3.5 million is allocated to the credit shelter trust and $16.5 million to the marital trust. No federal estate tax is due. However, at the surviving spouse's death, the estate tax due is $5.85 million. The net result is that the children inherit only $14.15 million.

With the zero estate-tax plan, the ILIT (with generation-skipping provisions) is funded with a $13 million second-to-die life insurance policy. These gifts reduce the estate value to $18 million. In addition, the couple's living trusts each leave $3.5 million (the amount exempt from estate taxes) to their children upon the surviving spouse's death. The balance of their estate ($11 million) passes to a public charity or private foundation-estate-tax free. To summarize, the zero estate-tax plan delivers $20 million (i.e., $13 million from the ILIT and $7 million from the living trusts) to the children instead of $14.15 million; the charity receives $11 million instead of nothing; and the IRS receives nothing, instead of $5.85 million.

In summary, with some advanced planning, it is possible to reduce estate taxes, avoid probate, set forth your wishes, and protect your heirs from creditors, ex-spouses and estate taxes.

Julius H. Giarmarco, J.D., LL.M, is the Chair of the Estate Planning Group of Giarmarco, Mullins & Horton, P.C., Troy, Michigan.

Estate Planning - Living Trusts - Post Mortem Administration

By Steven R. Bennett

Initial Considerations

The Trustee is obligated to administer the trust assets in accordance with the terms of the written trust documents. You should obtain a copy of the trust documents, including any amendments, and study them carefully.

You should identify exactly who is the trustee of the Living Trust. It is the prerogative of the person named as trustee to accept or reject the nomination. If he accepts, the Trustee should certify this by signing certificates before a public notary. See the forms posted below. Copies may then be provided to any party needing proof of the trustee's authority.

If it becomes necessary to admit the decedent's will to probate, confirm that it nominates you as the first choice to serve as personal representative (i.e. executor). It is common in estate planning to name the same person as trustee and personal representative. Of course, there will be no personal representative if there is no need for probate.

Overview of Trustee Responsibilities

Under the terms of the trust, generally the trustee is to: 1) account for trust property, 2) ensure the payment of the debts and taxes of the decedent's estate, and 3) separate and administer the assets of the trust in accordance with the terms of the trust. Most trusts provide for compensation for services rendered as trustee, unless you voluntarily waive such compensation. Such compensation is paid from the assets of the trust. If you are the sole beneficiary of the trust, you should waive any compensation for serving as trustee.

You should identify what is held by the trust. The assets of the trust consist of only those assets which either (i) were transferred to the trust before the decedent's death, or (ii) go through probate after decedent's death. Any assets in the decedent's name alone, or which were otherwise left out of the trust, may pass into the trust only by going through probate. There are some exceptions to this, such as life insurance proceeds, and jointly owned bank accounts.

As trustee, you are entitled to engage an attorney to advise and assist you with trust administration. The fees charged by such attorney are paid from the assets of the trust.

Unless there is a legal challenge to the validity or interpretation of the trust, the trust is not subject to the review of the probate court. The trustee must, however, make sure that all of the debts and taxes of the estate are paid. The trustee may be personally liable for any failure to pay debts or taxes.

Some Common Trustee Duties

The trustee's duties typically include the following:

a. Power of Attorney. Obtain and hold the original of any Power of Attorney forms signed by the decedent. By law, a Power of Attorney is no longer valid after the death of the party granting the power. Thus, you are no longer entitled to rely on any Power of Attorney granted by the decedent.

b. Death Certificate. Verify all information contained on the decedent's death certificate, including social security number, date of birth, date of death, and address.

c. Life Insurance. Evaluate all possible life insurance, and assert claims for death benefits where applicable.

d. Assets. Prepare a comprehensive inventory, listing all assets in which the decedent or the decedent's trust owned an interest, including approximate values as of date of death, and indicating whether or not such assets were placed in the Trust. Jointly owned assets should be listed separately. Be careful to not overlook anything of value. Even if a probate is not necessary, a complete list of all assets will be critical, for income tax reporting (including basis calculations), and estate tax reporting. Assets which have a readily ascertainable value, such as bank accounts, marketable securities, etc., need not be appraised. However, all material assets not having a readily ascertainable value should be appraised right away, to establish values as of date of death.

e. Safe Deposit Box. Promptly inventory the contents of the safe deposit box, if any, noting the approximate value of each item as of the date of death.

f. Benefit Payments to Decedent. Promptly give written notice of decedent's death to all parties from whom the decedent received benefit payments such as social security, annuities, pensions, etc. Payments received for post-death periods must be returned to the payor.

g. Decedent's Debts. Promptly list and pay all debts and expenses which are uncontested, including expenses of last illness and burial/funeral expenses. You should also pay all legitimate charges on credit cards and credit accounts, all of which should be promptly closed. The trustee should also ascertain whether there are any disputed claims against the estate, and engage an attorney to help resolve the disputed amounts.

h. Personal Income Taxes. The final state and federal joint income tax returns for the decedent and the decedent's spouse are due by April 15 of the year after the year of decedent's death. You should coordinate with decedent's accountant, for preparation of these returns. Such tax returns will be the final joint returns, and the surviving spouse will file under "single" status for future years.

i. Trust Income Taxes. There is often a requirement to file separate income tax returns for the trust itself, for the period of post-mortem trust administration. If the trust will have material income between the date of death and final distribution of trust assets, income tax returns are usually required. In order to file such tax returns, a federal tax identification number must be obtained. To obtain one, your attorney or accountant should prepare IRS Form SS-4, to apply for a federal tax identification number. You should sign and submit this form as soon as possible. Quarterly estimated income tax payments by the trust may also be required. Again, you may need to coordinate with your accountant for preparation of such returns.

j. Death Tax Returns. A federal estate tax return, and state inheritance tax return, must be prepared and filed within nine (9) months from the date of death. All state and federal death taxes owing by the estate must be paid within nine (9) months from the date of death. Return preparation should begin right away, even though no taxes may be owing. In many cases, there are numerous complicated steps which must be taken prior to the filing of such returns, including elections, disclaimers, and asset allocations. For more information on these issues, see the author's separate article: State and Federal Death Taxes.

k. Notice to Beneficiaries. Under the Uniform Trust Code, the Trustee is required to give notice of certain information to all qualified beneficiaries. See the sample Notice to Beneficiaries in our law resources section on our Web site (see link below).

l. Beneficiary Information. The Trustee must identify all beneficiaries, and obtain all pertinent information regarding each beneficiary including address, Tax ID number, and date of birth.

m. Prudent Manager. As Trustee, it is your obligation to manage all assets of the trust. You should immediately secure all tangible property. Residential property owned by the trust should be protected by functioning locks on all doors and a functioning alarm system if available. Property taxes, monetary encumbrances, and insurance premiums should be kept current. Personal items of significant value (jewelry, artwork, antiques, guns, tools, etc.) should be moved to a secure location pending distribution or other disposition. All financial resources must be prudently managed, and you should confer with qualified professional advisors regarding necessary adjustments to existing investments. You are legally obligated to do more than just maintain the status quo, whether or not the decedent or decedent's advisors engaged in active financial management in the past.

n. Record Keeping. You must be able to provide a detailed accounting of all income and expenses of the trust, and all financial resources of the trust. It is critical that you maintain one or more separate bank accounts in the name of the trust for receipt of income, and payment of expenses. You must never co-mingle trust monies with your own personal resources. It is often advisable to establish financial bookkeeping systems using popular computer software (i.e. Quicken, Quick Books, Peachtree, etc.). In any event, well-organized, detailed record-keeping is critical.

o. Preliminary Distributions. Early in the trust administrative process, the Trustee may begin distribution of specific trust assets. In particular, personal property items mentioned in the trust may usually be distributed right away. Be sure to check the trust for any mandatory waiting periods, as most trusts impose a 30 day survival requirement, or other time period beyond which a beneficiary must live in order to receive a trust distribution.

Additional Resources

The foregoing comments will address the majority of issues that initially arise in trust administration. However, there is no uniform procedure for trust administration because each trust is different, and holds different assets. Numerous other rules and procedures may come into play in the administration of a specific trust. For additional information on these issues and other rules and procedures, numerous articles and other information are available at various websites. For the most reliable advice, you should confer with an experienced estate planning attorney.

Steven R. Bennett has molded his practice in order to serve both individuals and business clients. With over 28 years of experience, he has developed considerable expertise in BUSINESS LAW, REAL ESTATE, PROBATE, AND ESTATE PLANNING. He draws on this experience in taking a positive approach to helping clients achieve their goals.

To learn more about estate planning, living trusts, and more please visit our Estate Planning Portland Oregon website and follow our blog at Estate Planning News

Copyright © 2010 Powers, McCulloch & Bennett. All Rights Reserved. The contents of this article are intended for general information only and should not be construed as legal advice or opinion on specific facts and circumstances.

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Update Jan. 10 - 2010 "Life Insurance and Estate Planning" By Insurance Experts

2010-01-10T05:01:00.000-08:00

By Nicole Kinsey White

Did you know that approximately 60% of American adults do not have a written estate plan? Estate planning is extremely important, but most adults do not fully understand what estate planning is and how it works. Adults also do not fully understand that without an estate plan, a judge, who does not know you, your family, or your wishes, will determine who gets your assets and who will care for your minor children.

What is estate planning?

Estate planning involves both planning for the possibility of mental incapacity and planning for death. It is one of the most important steps you can take to make sure your wishes regarding your assets and healthcare are honored, and that loved ones are provided for after you are gone. Though often overlooked or even put off, a comprehensive estate plan can answer a number of legal questions that often arise whenever anyone dies.

Through estate planning, you can determine:

how and to whom your assets will be distributed after your death;
how your assets are managed during your lifetime;
who should handle your finances if you become incapacitated;
who will manage your personal care and health care if you become unable to care for yourself;
if your beneficiaries get their inheritance all at once, or in incremental distributions over a period of time;
who will manage your estate after your are gone;
who will care for your minor children; and
how you can save taxes by using estate planning tools.

What Could Happen Without An Estate Plan

The following are true stories to illustrate the need for an estate plan and the need to review your estate plan regularly. Names have been changed or left out to protect privacy.

CASE STUDY 1: Jason never legally married his long-time partner, Cynthia, and mother of his daughter. In 2006, Jason died in a car accident and his Last Will and Testament left everything to his four children from a previous marriage. Cynthia, claiming to be David's common-law wife, sued for a share of Jason's estate.

Unfortunately, the probate judge found that she and David were not common law spouses. The court's decision left Cynthia and her daughter out in the cold. Was this what Jason wanted? No one will ever really know.

CONCLUSION: This story demonstrates not only the importance of basic foundational estate planning, but also the need to review your plan on a regular basis once it is in place to ensure it will work for your family when needed.

CASE STUDY 2: A couple, with a taxable estate valued at over $500,000, was advised to draft an estate plan, but they never followed through because they were just too busy. Months later, the husband was rushed to the hospital and his prognosis of recovery was grim. The wife was frantic and wondered what she could do now to get their affairs in order. Unfortunately, it was too late. If they had planned earlier while the husband was still competent, they would have had a solid foundational estate plan in place. Instead, the wife will be left to deal with the chaos resulting from not having an estate plan.

CONCLUSION: Plan now, while you are competent and can make decisions. Procrastination is your worst enemy.

I hope this information helped you better understand estate planning. As always, if you have any questions about any aspect of estate planning, I invite you to call anytime (888-495-7289) or visit our website.

Nicole K. White, Esq., an attorney and an identity theft consultant, established Kinsey Law Group, P.C. to help consumers resolve their financial matters in the areas of ESTATE & HEALTH PLANNING (wills, living wills and advance directives, burial directives, powers of attorney and trusts), GUARDIANSHIP PLANNING for minors and CONSUMER LAW (consumer disputes, credit report errors, debt collection abuse/harassment, debtor defense in debt collection suits, and identity theft).

To learn more about how you can protect your family and your finances, visit our website ( http://www.kinseylawgroup.com ) or our blog ( http://www.kinseylawgroup.com/blog ).

If you want to protect your family and assets but don't know where to begin, then visit our website for a FREE copy of our Estate Planning E-Book.

Article Source: http://EzineArticles.com/?expert=Nicole_Kinsey_White

Do I Need an Estate Planning Attorney?

By Simon Volkov

An estate planning attorney is an integral part of developing end-of-life strategies. Lawyers who specialize in this field help individuals execute a last will and testament, durable power of attorney, healthcare proxies, and revocable or irrevocable trusts.

Hiring an estate planning attorney is necessary when individuals want to keep inheritance assets out of probate. Probate is a legal requirement in all 50 states and is used to validate wills, determine rightful heirs, settle outstanding debts, and distribute inheritance property to designated beneficiaries.

Numerous strategies exist to avoid probate. The most common include establishing irrevocable life insurance trusts, living trusts, and designation of transfer on death and payable on death beneficiaries.

On average, the probate process takes six to nine months to settle. When decedents die intestate (without a will) probate usually takes between nine months to one year to complete. Much depends on the estate value, court caseload, and family dynamics.

Working with estate planning lawyers is particularly important when family strife exists. Sadly, death can bring out the worst in people. Anger, greed and envy can drive heirs who feel slighted to contest the will and prolong probate for months or years.

If heirs contest the Will, the estate is responsible for defense legal fees. If the judge rules in favor of the Plaintiff, the estate is oftentimes responsible for restitution of their legal fees as well. This can create a heavy financial burden and potentially bankrupt the estate.

Retaining the services of a qualified estate planning attorney can lessen the potential for family feuds and contesting the will. Often, decedents appoint a family member to the position of estate administrator. This can place a target on their back if siblings don't agree with the decision. Having a neutral third party manage the estate can squelch potential eruptions and expedite the probate process.

At minimum, estate planning should include a Last Will and Testament, Power of Attorney, and Healthcare Proxy. Guardianship for minor children is established through the last will. Individuals with assets valued over $100,000 should consider establishing a trust.

Multiple types of trusts exist and each offers advantages and disadvantages. Estate planners can explain which type of trust will best suit each individual's needs.

It is best to engage in estate planning while in good health. Individuals who procrastinate until they are diagnosed with terminal illness or transferred to a nursing home run the risk of heirs contesting the Will. Heirs can claim the decedent was not of sound mind because of their illness.

Many estate planning lawyers provide complimentary consultations to discuss available services and fees. Ask friends or family for referrals or locate estate planning attorneys though phone directories, lawyer referral networks, or the American Bar Association at abanet.org.

Simon Volkov is a real estate investor who specializes in estate liquidation and probate real estate. His website offers hundreds of articles about probate, hiring an estate planning attorney, wills and trusts, and estate planning information. Simon buys probated houses and inheritance assets, and provides cash for inheritance advances to individuals who qualify. Learn more about selling inheritance assets held in probate by visiting http://www.SimonVolkov.com.

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Update Dec. 23 - 2009 "Life Insurance and Estate Planning" By Insurance Experts

2009-12-23T11:23:00.000-08:00

By Shane Flait

You may have heard about estate planning. Your estate is composed of everything you own or control - and that includes yourself. But what is the 'planning' really about and should you be concerned getting it done?

Later in life - perhaps during your retirement years - you decide that you should make provisions for both you and your estate. This article addresses 5 basic questions that encompass those provisions, the consequence of not answering them, and the urgency for doing so.

What are your answers to these 5 basic estate planning questions:

1. Do you want 'a say' in how you should be cared for if you become mentally or physically incapacitated to the extent you can't give input?

2. Would you like to eliminate needless loss of some or all of your assets when your long term care needs become enormously expensive so they cut deeply into your assets - which you wanted as a legacy for your beneficiaries?

3. Do you want to be sure that your assets go to the people you choose to get them when you die?

4. Would you like to minimize excessive tax loss on what you want to give your beneficiaries?

5. Do you want to prevent public exposure, costs and delays that probating your assets will produce?

I think that everyone would answer 'yes' to each. But you can't attempt to address them unless you aware that these questions must be answered.

We spend most of our lives trying to survive and prosper as if we're going to live forever. But there comes a time when we must address our future death and possibly a time of very poor health.

If you don't, here's what happens with respect to those five questions:

You may become incapacitated in a number of ways. Perhaps a heart attack, a stroke, or a severe car accident could leave you unable to handle you financial affairs. If so, someone else will handle those affairs - and not be handled in the manner or for the purposes you would want. Your assets may be squandered or stolen at worse.

If you're in a near death situation, what amount of resuscitation or extending life efforts should be performed on you - and who should decide this?

You need long term care when you can't perform a few of the daily activities of life. This may include a condition of senility. The concern here is 'how will you be taken care of?' Perhaps you'll be put in a nursing home when it's not really necessary - cut off from your close child. Or, perhaps, you won't when you should be.

Who do you trust to handle such decisions? The cost of long term care in a nursing home can easily be $70,000 to $90,000 per year. Paying for this can run through a lot of your assets in just a few years.

When you die, there's no way to guarantee just who will get your assets unless you make provisions for who gets what. With no provision -such as a will or trust - in place the state has rules for how much of what you have will go to your spouse and then to your children.

Such rules may be wholly unsatisfactory to you. You may have kids from a previous marriage you want to give something to, and you may have stipulations on how some of your money should be used by your beneficiaries - and not squandered.

Without living trusts or other arrangements made, everything in your name will have to be probated. That's a court process in your county that determines what you have, what it's worth, who you owe debts to, and then takes care of getting all this evaluated with debts and taxes paid.

Probate is not only a public process but a time-consuming and costly one. You may wish to avoid the probate process to keep your holdings secret, or to get your assets to whom you want to have them.

Lastly, end of life taxes - called estate and gift taxes - are imposed on the value of your estate and the gifts you've made during your life. There are exclusion levels for estate and gift values given before these taxes are imposed, but if you've an estate worth some millions of dollars, estate and gift taxes can rob up to 45% of what you've left or transferred.

Why is getting these questions answered such an urgent issue? It's because...

1. You never know when you'll die

2. You never know when you'll become mentally incapacitated

3. You never know when you may need long term care

And solutions to some of these requires 5 years lead time - at least - before these circumstances occur!

Shane Flait gives you workable strategies to accomplish your goals in financial, legal, tax, retirement and protection issues..

Get his FREE report on Managing Your Retirement http://www.easyretirementknowhow.com/FreeReportandSignUp.htm

Read his ebook: 'Wise Way to Financial Independence' =>

Article Source: http://EzineArticles.com/?expert=Shane_Flait

Estate Planning - What About Life Insurance?

By Ronald Hudkins

Not too many years ago life insurance was considered to be the indispensable platform upon which all other estate planning efforts should be based. In fact, for those in the median and lower income ranges, it was often the only recognized method for protecting one's heirs, particularly in the event of untimely death. However, over the past twenty or so years, the concept of financial planning has changed considerably. The proliferation of varied retirement plans available through work (IRAs, SEPs, SARSEPs, mutual funds, etc) has changed people's perspectives about the need for life large life insurance policies.

Does that mean that you don't need life insurance? No. Most people, perhaps with the exception of the very wealthy, do need some sort of life insurance, although even the very wealthy may opt for a life insurance policy (generally whole life) to defray the costs of burial and estate taxes.

In general, the options are whole life (also called permanent insurance) and term life, with variations like universal life or variable life that combine some of the benefits of each. Different companies offer different options, but which you need and how much you need are matters for heated debate. Those who sell one and make most of their commissions from it will vehemently try to convince you that the other is not a good investment. Here are some facts for your consideration.

Whole Life Insurance Advantages:

• Offers a guaranteed death benefit no matter how long you live
• Is generally not subject to rising premiums; rates stay the same
• Many policies become "paid up" at some point (15 years, age 65, etc.) after which no more premiums are paid
• Has investment value which can be cashed out after some specified interval
• Can be borrowed against in case of financial emergency
• Can, in many cases, occasionally earn dividends depending on the company's solvency and accuracy in predicting actual costs
• The income from a whole life policy is tax deferred
• Can be cashed out after age 65 and used for retirement

Whole Life Insurance Disadvantages:

• Costs more than term life insurance
• Generally returns a fairly low rate of interest
• Does not begin to accumulate any real value for the first 10-15 years
• If the policy is surrendered within the first few years, money paid into it is lost
• Does not provide the investment value of a mutual fund or other investment

Term Life Advantages:

• Premiums are generally very inexpensive
• Lower premiums allow the buyer to purchase more insurance with higher death benefits
• Can be quite useful if the buyer only needs coverage for a specified period (while paying off the mortgage or while kids are in college, etc.)
• Leaves the buyer with more money to purchase other investment vehicles like mutual funds, stocks, bonds, etc. that provide higher rates of return than whole life
• Often beneficial for younger families who can't afford whole life rates, but need to insure the primary income earner

Term Life Disadvantages:

• Only pays if and when you die; you can never personally recoup any of the money spent on term life insurance
• While premiums are lower than whole life, they also tend to go up and can become unaffordable
• Term life is only available for a specific term (up to 30 years), and then goes away; if you don't die within the term, your premiums are lost

Almost everyone needs life insurance of one variety or the other. The type of insurance and the amount to purchase depend entirely upon you, your family and your mutual goals and needs. In any case, make sure the company you purchase insurance from is reputable and financially solvent. Don't be convinced by a fast-talking sales person without doing your homework first. There are few remedies if your life insurance company dies before you do.

Ronald Hudkins is an advocate for consumer awareness. He has noted that more than 70% of the American public fails to make appropriate estate plans prior to death or incapacitation and as such; authored an Ebook "Asset Protection and Estate Planning for All Ages" It is available for free download at http://stores.lulu.com/rhudkins

Article Source: http://EzineArticles.com/?expert=Ronald_Hudkins

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Update Dec. 03 - 2009 "Life Insurance and Estate Planning" By Insurance Experts

2009-12-03T04:10:00.000-08:00

By Michael Mize Russell

One of the major problems faced by most of the people having properties is debt burden and they are concerned about facing creditors with less human attitude. Getting protection from such creditors is an integral part of estate planning.

Facing creditors that are insistent on getting back their money only without any consideration about the problems encountered by people is never one of the nicest experiences in life. One of the major aspects of effective estate planning is getting protection from such creditors. Protecting not only the interest of the owner of the estate but also their children and families from such creditors, and especially creditors who are aiming to grab large chunks of the estate with ulterior motives, are also integral part of such planning.

Million dollar question that comes up is how does one protect himself against such creditors? Simultaneously the question that crops up is how could possibly they pass on the family values along side the properties in question to the children, heirs and successors in interest? Tricky questions as they are, the answer is always the same; effective planning and management of the estate is the keyword to the solution. Effective planning can only be possible with obtaining the services of the Estate Planning Attorney.

Yet another side of proper estate management that is often overlooked by many is the considerations about the influence of the estates inherited by the children. No one can really say that the characters of the children won't be spoiled inheriting such estates in succession. Concern as such is not confined to any particular part of the globe. Whether it is Orange County or Southern California or any other part of the world, parents will continue have such concerns whenever the question of inheritance of estates arise.

Last but not the least is the apprehension that inheritance could result in break up of relations between hitherto attached inheritors. With the owner present, others firmly stood behind him and expressed attachment to each other. Disappearance of the owner caused that bond breaking and resulting in dispute in many families ultimately ruining them. Occurrences like this have taken place irrespective of the status of the family concerned. Accomplishment of the task satisfactorily would be the hallmark of an efficient Trust Planning Attorney.

People searching for efficient and reliable Estate Planning Attorney will not only find the information provided at http://www.witticklaw.com very useful but also can directly contact through it with one of them in Orange County or Southern California logging on to it.

Article Source: http://EzineArticles.com/?expert=Michael_Mize_Russell

Common Estate Planning Mistakes and Tips to Avoid Them - Don't Lose Your Assets!

By Bill Broich

Make certain your estate is protected and liability is minimal. Learn these basic steps to be protect your assets and reduce your liability.

· Neglecting to provide trust provisions for minor children as beneficiaries of a will.

· Not updating your plan when you move to another state or change marital status.

· Having a will, but neglecting the other important documents such as a durable power of attorney, health care power of attorney, and living will and HIPAA authorization.

· Expecting that jointly owned bank accounts or other property will automatically pass under the terms of your will.

· Not realizing that beneficiary arrangements and designations supersede a will for life insurance and retirement accounts.

· Neglecting to update beneficiaries for life insurance and retirement after divorce or death of a beneficiary.

· Neglecting to naming successor fiduciaries and personal representatives (executor) in your will or trust.

· Not informing your family and personal representative (executor) the physical location of your estate planning documents.

· Neglecting to keep your estate plan upgraded and renewed on a timely basis.

· Having a living trust, but failing to fund it.

· Altering, writing or marking on the original documents in an attempt to change a name or other information without witnesses or proper documentation.

· Not seeking proper legal counsel in setting up your estate planning trust or other documents.

These mistakes only apply to those who have attempted to put in place estate planning; most people have made the mistake of not planning at all and are guilty of the error of omission.

As with all important decisions, seek competent legal and tax advice. An attorney experienced in estate planning issues can be of great assistance in regards to your personal situation. If possible obtaining a second opinion makes good sense.

Bill Broich is a leading expert in the field of annuities. He has helped many people use and understand the benefits of annuities. Want a financial product that is immune from a faltering economy? Want to protect your savings and retirement funds? Look at an annuity. Get a free annuity booklet from Annuity.com: Free Annuity Book.

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Update Nov. 16 - 2009 "Life Insurance and Estate Planning" By Insurance Experts

2009-11-16T05:12:00.000-08:00

By Michael Mize Russell

Many large business houses have been facing the problems of succession issues. At the same time smaller enterprises are not immune from the syndrome either. Effective business succession plan is one of the most important aspects of estate planning at its best.

While chalking out their estate planning many estate owners forget taking care of one of the major aspects of it, the family business succession plan. Large commercial enterprises like Reliance and General Motors have already faced such problems and there are numerous others who have already been in the frying pan or in line for it. Addressing the problem requires effective planning and foresight and it is better to have such plan in place in the lifetime if someone owns a family business.

Not having such plan in place could create real problems. Yet having one could really help even after the death of the original owner preventing the family going apart due to property conflicts. Since careful planning and strategy building are both involved in such planning, services of some reputed and reliable probate attorney could be real help. Problems like these are common to all irrespective of the geographical locations, social formation, custom, usages, and even the specific law of the land.

Developing a family business succession plan may be an integral part of the overall estate planning but it is no mean task. Psychological barriers apart from other considerations, the state of mind of some of the inheritors and their current status could all substantially influence the formation of such plans. Of course the problem has been minimized to a great extent with the advent of Internet and World Wide Web. For instance it is now possible getting all the information about best attorneys dealing with real estate management in Southern California just sitting at home and surfing the websites.

Interesting aspect of such planning process is the probabilities of disputes arising among the family members on succession after the demise of the real owner. Unless effectively addressed before it starts, it could well go out of hand and could become one of the greatest challenges even for the avid Estate Planning Attorney .

Qualitative and educative information on estate planning in areas like Orange County or Southern California are available at http://www.witticklaw.com. Numerous testimonials and feedbacks from previous users of the services of the website as well as of high quality Estate Planning Attorney are available facilitating their selection.

Article Source: http://EzineArticles.com/?expert=Michael_Mize_Russell

Estate Planning - Protection Against Unforeseen Risks and Over Taxation

By Michael Mize Russell

Unpredictable future is the way of life. Unforeseen risks lark in the wing taking the toll of victim's life and resources. Finding adequate protection against unforeseen risks is one of the tasks that could be achieved by perfecting estate planning.

Unpredictability of future is way of human life. One can hardly predict accurately what lies in store in the days to come though certain things could be anticipated. Unforeseen risks lark in the wing and when they arrive they take heavy toll of the victim's lives as well as their resources. Finding protection is therefore essential and the estate planning attorney aims at achieving the goal by way of perfecting the estate management plans.

Multiple risks await human beings in the sphere of estate management. Property management, liability reduction, death and disability prospects, health care issues, as well as the long term care are all parts of life that bring up risks and security issues. Few of these risks could be insurable while others involve buying a reasonably profitable insurance plan. Risk issues haunt every type of people including professionals, businessmen, athletes, or even the entertainers. One of the major aspects of effective estate planning is utilizing the insurance investments in such way that it provides tax benefits and at times could be real profitable investment as well.

Tax planning is another area that has major significance in estate planning. Issues involved does not include whether one would pay taxes or not since their payments are mandatory. Issues really involve the effective planning of when and how much tax would be paid by the payer. Incentives are available from the Government in form of both tax deductions as well as credits. For instance the progressive tax policy followed by most modern governments require that as the income of the concerned person grows he or she would be paying higher marginal rate of taxes. Taking advantage of the myriad tax breaks during planning your estate management or personal finances that could have substantial influence on anyone's success could be the way suggested by the probate attorney who will always try that your will is not subjected to Probate.

People searching for information and tips on the protection against unforeseen risks and taxation could visit http://www.witticklaw.com for the purpose. Providing information on probate attorney and estate planning attorney specializing in accomplishment of the task, the website is extremely useful.

Article Source: http://EzineArticles.com/?expert=Michael_Mize_Russell

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Update Oct. 29 - 2009 Life Insurance and Estate Planning By Insurance Experts

2009-10-28T22:31:00.000-07:00

By Kyle J Norton

Estate planning is the process of accumulating and disposing of wealth before death of individual and married couple. Its aim is to maximize the wealth of the estate owner. The most important goal of estate planning is to make sure that the greatest amount of the estate passing to the estate owner's intended beneficiaries while paying the least amount of taxes. Life insurance if one of the vehicles can ensure that because life insurance is tax free on hand of beneficiaries.

I. What is universal life insurance?

Universal life insurance is one of most flexible life insurance that has been around since the early of 1980 and has been used in estate planning process. It contains 2 components: life insurance and investment funds.

1. Life insurance normally is used to protect the policy insured's family or company in case of sudden death of the insured. It may be used in estate planning because of its tax exempt status. Since it is tax free, it can use to pay for tax and other expenses that might eat away the estate owner wealth upon his or her death.

2. Investment funds

Investment funds are the most important figure in the universal life insurance policy. The maximum amount is predetermined every year according to state or provincial law. Any growth of the maximum amount deposited into the policy is tax free upon the death of the life insured.

3. Registered investment funds

It works like other registered pension plan but it is principle guaranteed by insurance company up to 100% upon the death of policy owner.

Upon the death of policy insured, The assets held under his or her mane must be liquidated including any deferred investments, capital gain and tax must be paid before assets can be distributed to the estate. If universal life insurance is one of vehicle was used in estate planning, the life insurance and investment funds are paid to beneficiary tax free can be used to pay for any estate tax, leaving the much large portion of wealth to the estate. That is main reason, it has been used successfully in assisting estate planning.

II. Other benefits

1. The investment fund can provide addition income for the estate owner while he or she is alive. Any withdrawal is taxable in the same year

2. Funds can be withdrawn anytime

Universal life investment funds can be withdrawn any time, if it is requested by the policy owner

3. Registered funds can be additional income when you retire.

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at:

http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

"Let Take Care Your Health, Your Health Will Take Care You" Kyle J. Norton I have been studying natural remedies for disease prevention for over 20 years and working as a financial consultant since 1990. Master degree in Mathematics, teaching and tutoring math at colleges and universities before joining insurance industries.

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3 Estate Planning Steps For Young Families

By Jamie Kahn

Dependent children require resources for health, maintenance, support and education. Some support is provided through guidance while other support requires money. Parents must provide both but what happens if the parents aren't there to provide either?

The first step is crucial: have reasonable life insurance.

Could you imagine raising someone else's child if the parents left no money? Most current statistics state raising a child to the age of 18 costs $250,000. Costs are higher in the earlier years due to doctor visits, diapers and daycare. On the back end, higher education could require additional money beyond age 18.

Even if only one parent is gone can the remaining parent alone afford mortgage payments, taxes, utilities and the costs of raising children?

What would the quality of life be for the surviving parent?

A family with one young child should consider having $500,000 in coverage.

What are your life insurance options? Three common forms are term, universal and whole life. Universal and whole life insurances are more expensive because they never terminate if you properly pay your premiums. Part of the premiums builds cash value, which one can borrow against or withdraw.

For many families term insurance is the best option because it is much cheaper and ends when needs for life insurance often diminish. It does not continue indefinitely nor does it build any cash value. If the term is 20 years, you pay the same premium for 20 years and after 20 years the policy ends.

How much does term insurance cost? $500,000 of coverage for a healthy, non-smoking parent is often less than $40/month.

It's a good idea to have coverage on a stay-at-home spouse to help cover child-care costs and future retirement earnings if that parent were to return to work when dependent children are older.

Step two is naming legal guardians for your children. Otherwise a court is left to decide who will raise your children. If you have a valid Will naming guardians, a court still appoints your children's guardians but a court will almost always honor your request unless a valid reason is provided to the court to consider otherwise.

In addition to naming guardians a last will and testament can indicate distribution terms for your assets and appoint people to handle your estate. Wills can be created online or by attorneys and can cost anywhere between $100-$1000, depending on the attorney, your state and the complexity of your estate.

The third step is creating a trust. While a will is just a piece of paper with distribution and guardian instructions, a trust can be pictured as a box to hold assets for beneficiaries long after the parents pass until children are mature enough to manage money (from the sale of a primary residence, life insurance and other assets).

Some statistics show beneficiaries, regardless of age, spend their inheritance within two years. With a trust, beneficiaries can be forced to wait until predetermined ages before receiving their inheritance. If they need money prior to that age for reasonable health, education, maintenance or support needs, they may make a formal request to the acting trustee who says "yes" or "no", based on how they think you would have responded.

It is this estate planner's opinion that even age 25 is too young to receive money without any guidance because many children graduate from college at age 22 or 23. If a graduate knew in two years he or she would be receiving a decent sum of money, that child might not pursue and develop a career with the same intensity as a child not expecting to receive a sum of money in the near future.

Example: At age 30, beneficiaries can receive ¼ of their inheritance with no strings attached. At age 35, beneficiaries receive another ¼ and perhaps the remainder at age 40. Hopefully if the first ¼ is spent recklessly, they will be wiser the second and third time around.

Trusts can also maintain a residence for children and their appointed guardians until the children have finished school. This is very appealing for parents whose kids are entrenched in their school with their friends and if potential guardians don't have a large enough home without buying a new home.

For beneficiaries with special needs who receive disability income, trusts can hold distributions to those specific beneficiaries to avoid a disruption in government assistance.

A Will can create a trust, called a Testamentary Trust, which forms after you pass. The downside to Testamentary Trusts is they will not help your estate avoid the court process of probate, which is how the state ensures the wishes of your Will are carried out correctly and creditors are given an opportunity to make claims against your estate.

Depending on the state you live in, probate can delay the transfer of the estate by months or even years. Quite often attorneys are hired to assist with the probate process, which can increase the overall cost of the process.

A common and simple way to ensure any delay in your estate's transition is avoided is to create a Revocable Living Trust. Assets held by the trust avoid probate and can be distributed immediately once all debts have been settled. Living Trusts typically come with a Will called a Pour Over Will, which will name the guardians for children.

Living trusts can be found online or through an attorney. Costs average $500-$1500 though it's not uncommon for attorneys to charge up to $5000 for a living trust.

Begin by contacting multiple insurance agents. Research estate planning online to understand the basics and prepare yourself with questions for an estate planner. To find an estate planner ask for referrals from family, friends, your insurance agent or your financial adviser. If they have none to refer, a search on the Internet and a few phone calls should help you find someone affordable.

The most important thing to understand about estate planning is it is not a one-time event of signing documents and feeling safe. It is a process that periodically needs review and updating. Find a good planner you can afford who will ensure the estate planning process fulfills your needs.

Jamie Kahn is owner of Four Peaks Planning, Inc., an estate planning firm in Arizona. His focuses on helping young families create and maintain affordable estate plans.

http://www.livingtrustvswill.com

Article Source: http://EzineArticles.com/?expert=Jamie_Kahn

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Update Oct. 10 - 2009 Life Insurance and Estate Planning By Insurance Experts

2009-10-10T06:16:00.000-07:00

As we mentioned in previous articles, estate planning is the process of accumulating and disposing of wealth before death of an individual or estate owners. The most important goal of estate planning is to make sure that the greatest amount of the estate is passed to the estate owner's intended beneficiaries while paying the least amount of taxes. Life insurance always play an important role in estate planning because they are tax free on the hand of designated beneficiaries up on the death of insured. In this article, we will discuss 3 types of life insurance are used in estate planning.

I. Term

It is a type of insurance that protects the insured family for a certain period of times such as 5, 10 and 20 years. it is best used in estate planning for people who plan to start a family soon, because it is cheap compared to other types of insurance. Most term life insurances are used to create an estate asset in case of sudden death of policy holder.

II. Whole life

It is a participate insurance with dividends paid by insurance company each year. It is best used in estate planning for people who already have known their assets or for people who want to create an estate asset in case of sudden death.

III. Universal life

It is the best insurance for people who have a lot of unpaid taxes, because it contains life insurance and investment values. At the death of the policy insured the life insurance and the funds accumulated are paid to the designated beneficiary or beneficiaries tax-free.

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at:

http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

"Let Take Care Your Health, Your Health Will Take Care You" Kyle J. Norton

I have been studying natural remedies for disease prevention for over 20 years and working as a financial consultant since 1990. Master degree in Mathematics, teaching and tutoring math at colleges and universities before joining insurance industries.

Article Source: http://EzineArticles.com/?expert=Kyle_J_Norton

Life Insurance and Estate Planning
By Kyle J Norton

As we mentioned in previous articles, estate planning is the process of accumulating and disposing of wealth before death of an individual, or estate owners including married couple. It's aim is to maximize the wealth of the estate owner.

I. Life insurance

The most important goal of estate planning is to make sure that the greatest amount of wealth is passed to the estate owner's intended beneficiaries while paying the least amount of taxes. Life insurance plays an important role in state planning because life insurance is tax-free on hand of beneficiaries upon the death of the insured.

II. How it works

1. The proceed from the life insurance can be used to pay off any probate, taxes, and fees that normally have to be paid by your estate.

2. Under universal life policy, growth of assets in your life insurance policy is tax-free. The proceed of life insurance plus fund values will be not be taxed on hand of your designated beneficiaries and it can be used to pay off the debts of your estate.

3. While you are alive, the fund values that are not registered can be withdrawn anytime. Funds that are registered can provide you with additional income when your retire. Since the funds can be withdrawn, it gives some security in case of emergency.

4. Life insurance in a group plan. Not only can it enhance employee benefit package and provide coverages to protect against loss due to the death of a business partner, it can also be used as a strategy to minimize corporate taxes.

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at:

http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

Article Source: http://EzineArticles.com/?expert=Kyle_J_Norton

Life Insurance and the Estate Planning Cycle
By Kyle J Norton

Estate planning is the process of accumulating and disposing wealth before death of an individual or estate owner. The most important goal of estate planning is to make sure that the greatest amount of the estate passes to the estate owner's intended beneficiaries while paying the least amount of taxes. In this article, we will discuss the important role of insurance in estate planning cycle.

1. Creating wealth
Before one can build their wealth through investment vehicles, he or she must know how to save. In this stage, life insurance is always the first stage of estate planning cycle so it can guarantee there are funds around for the beneficiaries in case of sudden death. Most of the time, this stage applies to people just starting a family and have little savings. The type of life insurance used generally is term life insurance because it provides larger amounts of insurance with affordable premiums.

2. Wealth protection
a) In the later stages of a person's life, when debt is diminished and wealth has been created, protection and conservation of the asset becomes more important. In this stage of the estate planning cycle, term life insurance is no longer provides enough protection. Therefore universal life insurance may be considered, since all investment funds up to maximum amount allowed each year that have been deposited in the universal life policy is tax exempt upon the death of policy insured.

b)Universal life insurance now becomes more important because all unrealized capital gains from stock accumulation, and the appreciation of rental property will have to pay upon the death of the owner. Since life insurance is tax free and is considered as a liquidate asset, it can be used for various purposes such as funeral expense, and paying income tax without selling estate asset at a cheap price if the person dies in the economic down turn.

c) Life insurance also helps to pay off liabilities of estate testator and acts as an emergency fund in case there are no other liquidate assets around.

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at: http://medicaladvisorjournals.blogspot.com

http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

All rights reserved. Any reproducing of this article must have the author name and all the links intact.
"Let Take Care Your Health, Your Health Will Take Care You" Kyle J. Norton
I have been studying natural remedies for disease prevention for over 20 years and working as a financial consultant since 1990. Master degree in Mathematics, teaching and tutoring math at colleges and universities before joining insurance industries.

Article Source: http://EzineArticles.com/?expert=Kyle_J_Norton

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Update August 31 2009 Life Insurance and Estate Planning By Insurance Experts

2009-08-31T04:35:00.000-07:00

8 Critical Estate Planning Mistakes
By Mark Connell

I'd like to discuss eight critical estate planning mistakes that can create serious problems for those you leave behind. These estate planning mistakes can be easily avoided.

1. No Plan At All: Probably the worst mistake you could make is having no plan at all. It is estimated that between 50% and 70 % of Americans do not have a Will. You are the only one who can protect yourself, your loved ones and your hard-earned assets. The intestate laws of Connecticut will determine who inherits your assets when you have no Will. You can refer back to the February, 2009 issue of STRUCTURES to see what that Will would look like. Also remember to review and update your estate plan regularly.

2. No Estate Tax Planning: With proper planning, a married couple can protect up to $4 million from State of Connecticut estate taxes and $7 million from Federal estate tax. The basic level of planning to accomplish this is called a "Credit Shelter Trust". In larger estates, irrevocable life insurance trusts, qualifired personal residence trusts, charitable trusts and family limited partnerships can be used to protect assets from estate tax. Without such planning, an unexpected and surprisingly large estate tax due can be due.

3. No Incapacity Planning: There is more to estate planning than distributing assets after death. A comprehensive estate plan begins with planning for your own incapacity. You should name a health care representative to make health care decisions for you if you can't. You should have a Living Will to prevent unnecessary or unwanted life support. Either a durable power of attorney or a living trust should be in place to handle your affairs if you're not able to.

4. No Guardians for Minor Children Named: Parents devote considerable time to providing for the needs of their children. But, these same parents often fail to appoint guardians for their minor children in the event both parents are gone. Who should be the guardians to raise your minor children? What special instructions would you give them? You must legally appoint the guardians in your Will. Most importantly, a stanby guardian is an absolute must. Many people rely on a guardian designation in their Will. But, this would be completely ineffective if the parent is disabled or cannot be immediately located.

5. No Planning for Life Insurance: Life insurance is a useful financial tool for many Americans to help support a surviving spouse and minor children or to pay estate taxes. One of the greatest tax myths is that life insurance is tax-free. Even though the death benefit is income tax-free to your beneficiary, the entire value of the death benefit is counted for estate tax purposes. You can structure life insurance to avoid estate taxes and still fulfill your objectives through a properly structured "Irrevocable Life Insurance Trust". Otherwise, you could unintentionally make the IRS a beneficiary of nearly half of your life insurance.

6. No Planning For "Out of State" Real Estate: If you own real estate outside your home state, a probate proceeding may have to be opened in that other state to transfer title to that "out of state" real estate. This can be avoided if you make appropriate legal plans in advance. The probate process is much more burdensome in some states than in others.

7. No Tax Planning for Qualified Retirement Plans: A great deal of the wealth in America is currently in qualified retirement plans. Without careful coordination more than half of your retirement assets can go to the IRS instead of to your loved ones. The effect of taxes on these assets can be substantially reduced with proper planning.

8. No Lifetime Gifting Plan: A terrific planning opportunity is the annual gift exclusion. You can give up to $13,000 each year to as many individuals as you want without any gift tax due. This removes the value of the gifted asset from your estate and removes any future appreciation on the gifted asset. But, be careful because lifetime gifts can be subject to capital gains tax later on.

Mark R. Connell Attorney At Law, LLC
420 East Main Street, Suite 12
Branford, CT 06405
Phone: (203) 488-5586
http://www.markconnellattorney.com

Article Source: http://EzineArticles.com/?expert=Mark_Connell

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Update Augaust 12 2009 Estate Planning By Insurance Experts

2009-08-12T04:59:00.000-07:00

Estate planning is the process of deciding how to effectively transfer your assets, at death, and during your lifetime. Without proper Estate Planning you could unnecessarily lose a sizable portion of your estate to taxes. While avoiding taxes is an obvious reason for Estate Planning, a more important reason may be in its ability to allow you to direct the transfer of your assets after death.

If you have an old Will, it may be time for an upgrade.

Once executed, your will should be updated regularly, especially under these circumstances: A birth, marriage or divorce in the family; a move to another state; a change in tax laws; a change in the status of dependent children; impending retirement; or a change in personal circumstances or needs.

An out-of-date will can be more trouble than having no will at all. Consider a situation involving a man who executed a will in 2001, giving $10,000 to a woman he named as a "friend." A year later, the man and woman get married. The man dies in 2004. Unfortunately, the man never updated his will. At her husband's death, the woman claimed her elective share as a wife (one-third of the total estate) rather than abiding by the terms of the will. The man's children from his first marriage objected. The court could decide that the surviving spouse is limed to $10,000.00 from the estate.

The following is 10 life changes that have the potential to affect your estate and would indicate the need for a revised Will:

• Births

• Marriage or divorce-yours or one of your children's

• The death or incapacity of a named beneficiary in your will

• Changes in your personal net worth

• Change of your needs or your beneficiaries' needs

• Change of residence-Do you now live in a different state? Check the laws of that state.

• Changes in the tax law

• Change of personal representative of your estate or guardian of dependents under your care

• New charitable interests

• Retirement

What Happens If You Die without a Will? If you don't have a valid will, the state where you are domiciled (i.e., the state in which you live most of the time, vote, have your driver's license) will decide what happens to your assets. For example, in Georgia, if you die leaving a surviving spouse and two children, and no Georgia will, the surviving spouse does not inherit the estate.

Planning for Your Will. If you are married or single, if you have children or relatives, you need a will. If you have charitable causes you want to help perpetuate, you need a will. If you own a home or have a bank account, stocks or any other kind of property, you need a will.

Having your will prepared by an attorney and executed according to state guidelines is essential. Several steps are necessary for a will to be legal.

• It should be in writing.

• It should be signed by the one creating the will.

• It should be acknowledged to be the will of the person who signs it.

• It should be dated.

People who are not beneficiaries of the will must witness the signature of the person who creates the will. They must also sign it as witnesses. Also, if a will is notarized by a third witness it makes the process of probating the Will much easier.

Stefano Grossi

LegalCreation.com

Article Source: http://EzineArticles.com/?expert=Stefano_Grossi

How to Choose the Best Estate Planning Attorney For You and Your Family
By Don West, Jr.

Legacy & Estate Planning allows clients to address their values, finances and legacy plan progress. For most professionals and entrepreneurs the importance of proper estate planning need not be stressed. When you hear the term estate, it refers to everything that you have worked hard to accumulate. Your home, real estate, bank accounts, stocks, bonds, mutual funds, cars, life insurance, business interests, artwork and jewelry. Without proper planning and based on the amount of total assets that you own there could be a hefty tax bill to upwards of 55%. Additionally, your beneficiaries may also be delayed and inconvenienced with all of the requirements in settling your estate.

When you arrive at the important decision to hire an estate planner you want the best for your family. You will have to consider if you want a traditional estate planner who only focuses on the hard numbers and physical assets or would you prefer a holistic counselor who also incorporates legacy development and planning into the process. Conscientious adults make an effort to bank with the best, invest with the best and associate with the best. When seeking to hire a planner the qualities you need to look for include the following.

Trustworthiness
The sensitivity of your personal financial matters dictates that you need to have a high level of trust in the counselor who assists you with planning. Most high net worth individuals utilize a team approach that includes their accountant, their financial advisor and an estate planning attorney. Each of these professionals typically are competent and knowledgeable and have earned the clients trust over time and through reputation. The importance of using the team is that most already have these separate advisors in place, in order to keep an orderly ship, communication and collaboration is stressed so that all goals can be working simultaneously toward similar objectives. A separate approach often leads to undesired inefficiencies.

Professionalism
You should hire an estate planning lawyer that is highly professional. Your estate planning lawyer should be a recognized leader in his or her field and typically hold a special certification or advanced legal degree. In many instances your estate planning lawyer will be standing in your shoes as a professional representative of your interests and affairs. It is important that such an important representative properly represent your family's good will and precious resources. If you have a complicated situation or lots of assets, choose someone experienced with complex situations and issues so they will always be a shining reflection of your initial decision to hire them in the first place.

Ethics
Since estate planning will deal with all or most of your assets, you should hire an estate planning lawyer that is reliable and ethical. This fact can be checked by asking the lawyer if anyone has ever filed a complaint against them in the past. Most will answer honestly, but it is a question of ethics so one should always stay alert. An ethical estate planning lawyer should consider all your needs and best interests above everything else. An ethical planner will always provide sound and legal advice and never recommend faddish or illegal scams to save or hide money.

Commitment
Commitment to a high standard of quality is a good characteristic in an estate planning attorney. Your planner should provide a warm and courteous environment that fosters a sense of security and accomplishment. Attention to the smallest detail in addressing every last issue in your legacy and estate planning process is the trademark of and excellent planning institution. Your planner is willing to stay until the job is complete and will not have problems working with your investment advisor, accountant and insurance professional. In the most productive relationships your planner is a multi-generational partner who will work with you side-by-side through a process that at times can be long and arduous, but is made simple and enjoyable due to their enthusiasm and pride in their work.

When you take the time to consider the long term implications of preparing a solid plan the question of who will prepare my plan becomes far more important. Utilize these tips and you should find a rewarding and securing planning experience just around the corner.

Donald L. West, Jr., J.D., CLTP
Chartered Legacy & Trusts Planner
Axis Legacy & Wealth Planning, LLC

dlw@donwestjr.com
http://www.legacy-lawyer.blogspot.com
404-435-5419

About the Author: Don West, Jr. counsels families, individuals and entities on the principles of generational legacy and wealth transfer as a Vice President and Trust Officer for Axis Legacy & Wealth, LLC, an elite wealth management firm with a unique planning philosophy of promoting "Healthy & Sustained Multi-Generational Family Prosperity".

Article Source: http://EzineArticles.com/?expert=Don_West,_Jr.

Estate Planning - Structure the Future of Your Legacy Today
By Bernard B.

According to the book LEAP by Robert Castiglione, estate planning has two objectives:

1. Distribution of assets - Ensure that your assets are distributed to the right people, within the proper time constraints and conditions. How you own and control your assets can affect how they are distributed to your beneficiaries.

2. Conservation of assets - Avoid probate and all the extra fees, taxes, and costs. The bulk of your wealth should go to your beneficiaries, not to the IRS and attorneys.

Even if you don't have a large estate, a plan is necessary to ensure that your assets are handled in the manner in which you intend. Besides, the plan is to grow your wealth, right?

As an exercise, imagine you were to die tomorrow. Think about what would happen to your wealth.

- Who would get what?
-How long would it take for my assets to get disbursed?
-Who much will my assets be taxed?
-How much of a burden will my estate be to my beneficiaries when I pass away?

To some, these questions may feel awkward because not a lot of people like discussing death. But being prepared for death is a lot better than not being prepared.

Without the proper planning, your death can cause a lot more hardship than what is intended. Your estate should be the least of burdens during this time.

There are a lot of benefits to this process. With preparation and education, you will begin to understand:

1. The benefits and limitations of drafting a will.
2. Estate income tax and strategies for minimization.
3. The advantages of trusts.
4. The rewards of creating a Family Bank.

To us, estate planning involves more than leaving behind money. It's about building a legacy...a living legacy. We want to leave our future generations...

Wealth, Knowledge, and Experience.

90% of people fail to plan their estate. 100% of those people will pass away. However, the legacy you build today can live beyond your lifetime.

All About Business Life Insurance For Estate Planing Information By Insurance Experts

2009-08-04T08:49:00.000-07:00

The life estate is something every first year law student learns about when they study the arcane and often bizarre history of property law that harkens back to the days of English knights, lords and serfs, and the transfer of property through the ceremonial throwing of dirt clods with oaths of duty to accompany. The life estate is about as old as they come as instruments of wealth transfer go and students love it, because it is relatively easy to understand. Apart from what students love and what is easy to remember, however, the life estate still has practical value today in your estate planning and assets management schemes.

The basic idea of the life estate is that a person can be left a piece of property for life, and upon their passing, the property in question can go to whoever is designated to receive that property afterward. The individual or group who receives the property after the life-tenant passes is called the remainderman or remaindermen, which is useful only in that it helps one to remember that the person who remains gets the property. If, for example, one wants to leave a family estate that has been with the family for many generations to their spouse and then have it immediately pass on to their children or another relative who will maintain the estate for the generation to come, then a life estate might be the perfect vehicle to do so. Another example is the same family estate, left to a surviving spouse until the surviving spouse either dies or remarries. Again, the aim is to ensure that the estate stays in family, a contingency which is threatened by the remarriage because that creates a new marital joint-tenancy, absent any other provision. Often the life-estate was used to keep assets, like the family home, headed down a single line of familial ownership.

However, the life estate has other uses, for example, it can leave an asset to be owned by one person until the death of third person. If an older relative has become incapacitated, such that it is difficult for them to make decisions for themselves, then the asset can be left in the care of another for the incapacitated person's lifetime. An example might be, that Blackacre (the fictitious name for a piece of property used in law schools everywhere) is left in the care of cousin Tilly, until great aunt Nelly's death. Thus, Tilly is allowed to make Nelly comfortable at Blackacre (the family home) until Nelly passes on. In this instance, Nelly's life is what is called, the measuring life of the life estate, and Tilly's ownership ends when Nelly is gone.

On the whole, the life estate may be falling out of use for a number of reasons and being replaced by the much more fluid instrument of the trust. But, the life estate still captures, from time to time, our instincts regarding how property is to pass from one generation to another and that is why it is still relevant even for an estate planner who uses it very rarely. It helps us to ask and to get the answer to very difficult questions, which is part of the act of estate planning. Both the client and the attorney must face tough questions, and the life estate (even if it is sometimes regarded as a legal relic of the past) tells us how people used to answer questions of intra-generational wealth transfer and why. We may use different instruments to bring about our legal ends (or we may not), but even if we do, the life-estate still has relevance in helping us think about the questions that underlie the choices to be made in estate planning.

Article Source: http://EzineArticles.com/?expert=Ronald_Hudkins

How to Protect Your Estate Using Life Insurance Premium Finance Program
By Boaz Arbel

The most common and probably smartest answer would be to buy a life insurance policy for the main purpose of estate planning and estate protection. You can purchase a major life insurance based on your net worth and then place it in a trust outside of your estate. Having your life insurance policy issued into a ILIT (Irrevocable Life Insurance Trust) will separate between the life insurance death benefit and your estate, and therefore allow taxation eliminate.

How would you pay the high life insurance policy premiums? The first option would be to pay it out of your pocket, each year, by taking money out of your savings. In some cases you'll have to break saving programs that you kept for a rainy day or even to sell some real estate to cover the costs. The other option would be to finance the premium via a bank or a premium finance company.

Life insurance companies recognize the need of life insurance for estate planning and have approved these types of deals in the past. A Carrier Approved Premium Finance Program is a great tool to support the expense of paying the high premiums on a life insurance policy. The idea behind the Carrier Approved Premium Finance Program is that the premium will be paid by a bank for a certain period of time that is agreed upon in advance. it can range from a 2 year period to a lifetime.

Once the loan is due, all premium paid-to-date in addition to the interest and other fees will be paid back to the bank. in case the insured passes away prior to the loan maturing, all death benefits will be paid to the beneficiaries minus the amount that is due for the premiums. In order to initiate a Premium Finance transaction, the insured must qualify not only by the insurance company standards, but also by the Life Insurance Premium Finance Company.

When it comes to the Life Insurance Company, the insured must be healthy at a standard level or better and prove his/ her medical and financial status. On the Premium Finance Company side, their evaluation will be based on age, life expectancy, health situation and financial status. They will also require some collateral to secure the loan.In conclusion, all senior citizen with a high net worth of approximately $2,000,000 should look into estate protection alternative and may want to think about getting a new Life Insurance Policy to cover all estate tax when they pass away.

Boaz Arbel is the General Manager at Arbel Life, LLC, a New York based company that specializes in the high net worth senior market. To obtain further Information about Life insurance Premium Finance, Life Settlement and to read additional articles about these subjects please Arbel Life, LLC website: http://www.arbellife.com/ Boaz Arbel can be reached at boaz@arbellife.com

Article Source: http://EzineArticles.com/?expert=Boaz_Arbel

Life Insurance Audit Could Save You Thousands
By Robert B Scott

How do you know if you have the best insurance policy? Has your agent reviewed it with you in the last 3 years? Have you had any family changes since you purchased your policy? Who is the owner of the policy? Who are the beneficiaries of the policy? Is your estate named as the beneficiary? Could the death benefit expose your heirs to estate taxation of the death benefit? Will your policy last as long as you do? Will your policy premiums be substantially increased as you age? Is your ex-spouse your beneficiary?

Do you have enough?

The answers to all these questions can be discovered with an insurance audit.

An insurance audit is a process by which your policy is reviewed to determine if there are any concerns that a list of questions may turn up and also if you have any danger of running out of coverage due to lower than expected interest crediting rates, higher cost of insurance charged to your policy or poor investment performance. An Insurance Audit may turn up cost saving changes you may want to make, and in some cases allow you to get substantially better coverage without an increase in cost. An insurance audit may include an inforce illustration, disclosure of costs, riders, benefits, availability of cash value, cost of loans, comparison to original illustration, and competitive offerings to save money or increase coverages if requested.

Recently, I met with a client that had a policy she purchased in the 90's. When we reviewed her policy, we discovered it would terminate at age 100. With a review of offerings from competitors, we were able to exchange her existing policy for another policy with a death benefit guarantee to age 120 with no more premiums. In addition, she was able to pull out $70,000 dollars cash and use it for income. The change increased her coverage from $290,000 to $300,000 but more importantly, she now has additional income to protect her lifestyle.

If a life insurance policy was written in the 80's, it may have been illustrated at a higher interest rate than has been paid for years. These policies may be in danger of "blowing up". This means the policyholder may have to continue paying premiums for a lot longer period than was initially illustrated, or the policy may have an increase in premium that may be unaffordable for the client. The sooner you discover these problems, the better.

An insurance audit is also an excellent tool for a trust officer tasked with fiduciary responsibility of life insurance policies owned by irrevocable trusts used for estate planning purposes. Again, many of these policies are perfect for benefit enhancement with no additional cost to the trust. Since a grantor may fund the trust annually to pay the premiums, this could save the grantor money that could be redirected to other investments or gifting strategies.

If you have a simple term policy or you are a smoker, an audit may simply assist you in finding a less expensive policy, saving you more than the cost of an audit.

Life insurance is far too important to buy and forget. With regular attention, you can avoid making any mistakes that could cost you or your heirs a fortune.

Robert B. Scott is a financial representative with National Financial Services Group in Nashville, TN.
He specializes in Insurance Planning, Tax Reduction and Retirement Planning. He can be reached at rbscott21@gmail.com or at 615-485-1768.

For informational purposes only. No legal, accounting, or investment advice is being given or recommended.

Article Source: http://EzineArticles.com/?expert=Robert_B_Scott

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All About Business Life Insurance For Estate Planing Information By Insurance Experts

2009-08-04T08:46:00.000-07:00

Estate Planning Tips
By Bill Broich

Estate planning is really more about making decisions and being organized than it is anything else. Once you undertake the process decisions need to be made and once that is decided obtain the plan and materials necessary becomes a simple process. Here are a few things to be aware of and a list of items to consider.

Make and execute a will: A will is merely directions left by you for how, when and where you want your assets transferred after your death. Your will call also include special instructions regarding your "personal" goals. It can also leave instruction for minor children and the naming of a guardian.

Revocable living trusts: It may make sense to consider the use of a trust if you own real estate or other assets that would need a new title or deed. Trusts can help avoid the need of probate and often can reduce costs.

Health care directives: these directives will allow your heirs and caretakers to fully understand your wishes in regards to assets and end of life care. The term "living will" is often used as a health care directive as can "power of attorney." A general "power of attorney" is often to allow a trusted person to conduct and maintain your financial estate.

Assets that avoid probate: Anything that a beneficiary can be named to can avoid probate. These can include bank accounts, stock brokerage accounts, life insurance, annuities and retirement accounts such as an IRA.

Calculate estate taxes and probate costs. Many estates will be liable for estates taxes (death taxes) and this may result in needing to liquidate assets to comply with the liability. Make certain you fully understand these potential liabilities. Often life insurance is used to provide liquidity to solve the problem.

Funeral costs: Many people pre-pay estate taxes and leave behind specific instruction for a final service. These instructions are often hand written and a nice place to keep them is with your will. It is a good idea to inform a child or a close friend of their existence.

Safe storage: Your health directives and your power of attorney should be kept safe and trusted friends or children should know their location. Other items to keep safe could be deeds, brokerage account information, IRA information, funeral plans, general financial information and tax returns.

Bill Broich has been helping seniors manage their estates for over thirty years. He advocates using annuties as a financial instrument when appropriate and has written a guide about annuties and estate planning. Obtain a free annuity guide here: Estate Planning Tips.

Article Source: http://EzineArticles.com/?expert=Bill_Broich

Medicaid Estate Planning: Maximize Your Results
By Rocco Beatrice

For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address specific transfers by seniors under the new Medicaid nursing home provisions. Under the new provisions, before seniors qualify for Medicare assistance into a nursing home, they must spend-down their assets. These new restriction have a 5-year look-back. The look-back used to be 3 years.

By a vote of 216-214, the U.S. House of Representatives passed budget legislation that will impose punitive new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. You can link to the new law Deficit Reduction Act of 2005 in PDF format, click on: http://www.rules.house.gov/109/text/s1932cr/109s1932_text.pdf. The section on the transfer provisions begins on page 222.

WHAT'S MEDICAID?

What’s Medicaid? Medicaid is a government assistance program for people over the age of 65 or who are disabled. Medicaid assistance was designed for those who could not afford medical expenses (for the poor) but Medicaid has become the default for the middle class. The middle class has become the new poor.

Medicaid planning and Medicaid rules are complicated. The government is mandating a 5-year look-back on any transfers you may have made to disqualify you from entering the nursing home. Before the 2005 Tax Reduction Act it was 3 years. The transfer of any assets by the elderly has taken a notation of a “fraudulent conveyance” or in government parlance “deprivation of resources.”

These new rules are spousal impoverishment programs designed to punish the healthy spouse. If one of the spouses gets sick, all resources have to be spent before you can qualify for government assistance. These new restrictive rules punish the healthy spouse leaving the healthy spouse at the mercy of welfare or her children. It’s very humiliating when seniors have planned their retirement based on their ability to keep their home.

ASSETS YOU MUST SPEND DOWN

Assets that you must spend down before you can qualify for nursing home assistance. Anything you own in your name or together with your spouse. Cash, savings, checking, certificate of deposits, U.S. Savings bonds, credit union shares, Individual Retirement Accounts (IRA), nursing home trust funds, annuities, living revocable trust assets, any revocable Medicaid estate planning trust, real property occupied as a home, other real estate you hold as investment property or income producing property, cash surrender value of your life insurance policy, face value of your life insurance policy, household goods and effects, artwork, burial spaces, burial funds, prepaid burial if they can be canceled, motor vehicles, land contracts, life estate in real property, trailer, mobile home, business and business property, and anything else in your name or your possession.

WHAT DO YOU MEAN "FRAUDULENT CONVEYANCE"?

What do you mean by “fraudulent conveyance” or “deprivation of resources.” If you give away your assets and you do not receive an equal amount (value) in return, the transfer is a deprivation of resources and you have committed a fraudulent transfer, (you give your house to your children for $100.00 when the fair cash value of your home is i.e. $150,000). If you gave your house to your children for $100 sixty months (5 years) before you entered the nursing home, you "deprived your resources" from the nursing home expenses. Unwittingly, you also incurred a gift tax on the difference between the $100.00 and the $150,000 and in addition you may have cheated the government out of Estate Taxes.

HOW FEDERAL GIFT TAX APPLIES?

The gift tax rules apply to the transfer by gift of any property. You make a gift if you give property (including money), or give the use of property, or give the income from property without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

The general gift tax rules are that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts:

- Gifts that are not more than the annual $12,000 exclusion for the calendar year beginning in 2006 (This is called the Annual exclusion for any 12 month period, see below).

- Tuition or medical expenses you pay directly to a medical or educational institution for someone,

- Gifts to your spouse,

- Gifts to a political organization for its use, and

- Gifts to charities.

- Annual gift tax exclusion. A separate annual gift tax exclusion applies to each person to whom you make a gift. For 2007, the annual gift tax exclusion is $12,000. Therefore, you generally can give up to $12,000 each to any number of people in 2007 and none of the gifts will be taxable. However, gifts of future interests cannot be excluded under the annual exclusion provisions. A gift of a future interest is a gift that is limited so that its use, possession, or enjoyment will begin at some point in the future. A federal Gift Tax return is filed on form 709 for taxable gifts in excess of the annual exclusion.

FILING A GIFT TAX RETURN

Generally, you must file a gift tax return on Form 709 if any of the following apply:

- You gave gifts to at least one person (other than your spouse) that have a fair “cash” value of more than the annual exclusion of $12,000 for the tax year 2007.

- You and your spouse are splitting a gift.

- You gave someone (other than your spouse) a gift of a future interest that he or she cannot actually possess, enjoy, or receive income from until some time in the future.

- You gave your spouse an interest in property that will be ended by some future event.

- Your entire interest in property, if no other interest has been transferred for less than adequate consideration (less than its fair “cash” value) or for other than a charitable use; or

- A qualified conservation contribution that is a restriction (granted forever) on the use of real property

HOW ESTATE TAX APPLIES?

Estate tax may apply to your taxable estate at your death. Your taxable estate is your gross estate less allowable deductions. On the date of your death, everything in your name is taxable. Take inventory of what you own: Cash, Savings and checking accounts, CDs, Stocks, Mutual Funds, Bonds, Treasuries, Exempts, Jewelry, Cars, Stamps, Boats, Paintings, and other collectibles, Real Estate ... main home, vacation spot, investment realty, your Business, Interests in other businesses, Limited Partnerships, Partnerships, Mortgages and notes receivable you hold, Retirement plan benefits, IRAs, or any amounts that you expect to inherit from others.

Many people prefer not to think about what will happen on their death, but none of us are immortal and failure to make proper plans can mean that we leave behind is a mess which has to be sorted out by our nearest and dearest, at great expense and inconvenience, at a time when they are emotionally bankrupt.

Your federal death (estate) tax, up to 55%, is based on the "fair cash value" of your property on the date of your death, not what you originally paid. State probate and death taxes are based on the "location" of your property. Thus, if you own property in different states, each state has to be probated and each will want their fair share. The only real alternative to a will arrangement is to set up a trust structure during lifetime which, with careful planning, can operate to eradicate probate delays, administration costs, and taxes as well as giving a large number of additional benefits. For these reasons the use of trusts has increased dramatically.

WHAT IS YOUR GROSS ESTATE?

Your gross estate includes the value of all property in which you had an interest at the time of death. Your gross estate also will include the following:

- Life insurance proceeds payable to your estate or, if you owned the policy, to your heirs;

- The value of certain annuities payable to your estate or your heirs; and

- The value of certain property you transferred within 3 years before your death.

WHAT IS YOUR TAXABLE ESTATE?

The allowable deductions used in determining your taxable estate include:

- Funeral expenses paid out of your estate,

- Debts you owed at the time of death,

- The marital deduction (generally, the value of the property that passes from your estate to your surviving spouse), and

- The charitable deduction (generally, the value of the property that passes from your estate to the United States, any state, a political subdivision of a state, or to a qualifying charity for exclusively charitable purposes).

HOW GIFT TAXES & ESTATE TAXES APPLY TO MY ESTATE:

If you die in the tax year of 2007, your "taxable estate exemption" is $2,000,000, your "gift tax exemption" is $1,000,000 and you have a maximum estate tax of 45%.

If you die in the tax year of 2008, your "taxable estate exemption" is $2,000,000, your "gift tax exemption" is $1,000,000 and you have a maximum estate tax of 45%.

If you die in the tax year of 2009, your "taxable estate exemption" is $3,500,000, your "gift tax exemption" is $1,000,000 and you have a maximum estate tax of 45%.

If you die in the tax year of 2010, your "taxable estate exemption" is $0.00 (i.e. it's repealed), your "gift tax exemption" is $0.00 (i.e. it's repealed as well) and you have a maximum estate tax of 55%.

13 times in 32 years, congress has changed the rules. Congress is always tinkering with the “Death Transfer Tax.” For more information on what is included in your gross estate and the allowable deductions, see Form 706.

HOW TO AVOID THESE UNPLEASANT RESULTS?

You can avoid all of the above unpleasant results and filing requirements with an irrevocable trust implemented 60 months before you plan to qualify for the nursing home.

By repositioning your assets (transferring your assets) from you to an irrevocable trust, you will NO longer own the assets:

- you don’t qualify for the probate process, and

- you do not have to file an estate tax return,

- because on the date you qualify for the nursing home you do NOT own any assets,

- at the time of your death you do NOT own any assets for the probate process,

- and at the date of your death you do NOT own any assets to report on your estate tax return.

author bio - Rocco Beatrice, CPA, MST, MBA
award-winning estate planning & trust expert
MS - Taxation, Master of Science Taxation
MBA - Management / Taxation
BSBA - Management / Accounting
CPA - Certified Public Accountant
-----
http://www.ultratrust.com
Nursing Home Spend Down
71 Commercial Street #150, Boston, MA 02109
tel: +1.508.429.0011 fax: +1.508.429.3034

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Life Insurance Traps to Avoid and Critical Estate Planning Secrets to Keep Your Cash & Peace of Mind
By James Pentington III

When you buy life insurance you are buying it to benefit your family after you pass away. So why would you willingly destroy that financial benefit to the ones you love by falling into life insurance traps? You wouldn't -- well at least not knowingly...

Here are the two ways life insurance mistakes can hurt your loved ones:

Reducing the amount paid out.
Leave your family owing the IRS Estate Tax.

The IRS And Your Life Insurance Policy

The fact is that while we all should pay our fair share on taxes you do not want to burden your family with a shockingly huge tax bill the same year they are grieving your loss.

Life Insurance Trap #1 Taking Out A Policy On Yourself. The fact is you want coverage for your family when you pass away, however owning insurance on yourself can cause insurance proceeds to be subject to estate tax at rates of up to 55%. The reason for this is that the life insurance payout gets lumped into your entire estate and thus you are taxed on the entire amount of your taxable estate - which now includes that rather large insurance payout.

Estate Planning Secret To Avoid This Trap

Have the person who will be the beneficiary (i.e. spouse) take out the policy on you.

Create a life insurance trust to secure the policy and distribute funds per your written directions (will).

You can still finance the premiums on the policy by making gifts to the policy owner (beneficiary or trust), using your annual gift tax exclusion to shelter the gifts from tax.

Life Insurance Trap #2 Cashing In. Sometimes a money crisis will come along and the thought will enter your mind to cash in your policy. Sure this will give you a short influx of money however it will also cause a "taxable event," which means that you will need to pay up come April 15th.

Estate Planning Secret To Avoid This Trap

Utilize the annual gift tax exclusion. This exclusion allows you to transfer $10,000 to a person tax-free. Or $20,000 to a partner in a legal marriage. As always you will want to consult your tax professional about this before you cash out.

Life Insurance Trap #3 The Three-Person Insurance Trap. This trap is a little convoluted to follow but it happens a lot so pay attention please.

The three-person trap is where one person takes out a policy on another (say a spouse) and then assigns the beneficiary to be another person (say a child).

This is a tax trap where the payment of the benefit to the beneficiary (child in our example is deemed to be a taxable gift made by the policy owner even though the policy was taken out by the spouse.

Estate Planning Secret To Avoid This Trap

This is a simple one to overcome. Simply have the beneficiary "own" the life insurance policy. Or better yet, set up a life insurance trust own the policy.

Life Insurance Trust Warning: Always have your life insurance trust set up by a professional who specializes in trusts. A cheap trust or "generic" trust will often be constructed poorly and will fall apart when the IRS comes snooping around.

The Mother Lode Of Life Insurance Traps To Avoid And Critical Estate Planning Secrets To Keep Your Cash And Peace Of Mind.

If you need to learn more about Life Insurance Traps and the different types of life insurance then click to http://affordable-term-life-insurance.info a popular information site dedicated to insurance consumers.

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What is Estate Settlement in Estate Planning?
By Kyle J Norton

Estate planning is the process of accumulating and disposing wealth before death of an individual or estate owner. The most important goal of estate planning is to make sure that the greatest amount of the estate is passed to the estate owner's intended beneficiaries while paying the least amount of taxes. Choosing an executor will ensure that someone whom you trust will perform the duty of estate settlement upon your death.

I. Definition

Estate settlement is also known as an estate administration. It is a form of handling a deceased person's assets by appointing an executor. If the deceased did not leave any testamentary disposition then the dispositions can be proceeded.

II. How it works

Estate settlement includes the following:

1) Testamentary dispositions

Written or holographic wills have to apply to the court for probate before assets can be gathered by the executor, and only most recently it will have legal value. Any testamentary trusts in the will must be closely examined and resolved.

2) Notifying the public

The purpose of this notice is to inform the heirs, creditors, and debtors to the estate of the existence and identity of the liquidator.

3) Informing the federal and state/provincial governments of the person's death.

4) Identifying the beneficiaries.

5) Gathering all of the deceased person's financial documents.

All documents are gathered including life insurance policy, birth certificate, decree of divorce, and other related documents. Only the death certificate and the copy of the Act of Death are legally recognized.

6) Creating an estate account so all assets can be deposited into that account.

7) Gathering all of the deceased person's assets

All assets including stocks, bond, and property will be calculated if necessary using the arm's length method to determine the assets' value.

8) Notifying the public after all assets of the deceased person are gathered

Identifying all debtors such as credit card debts, and personal loans.

9) Filing income tax return for the deceased person.

Any taxes owed by the deceased must be paid off.

10) Pay off all debts

11) Gather other settlements if needed such as family patrimony and matrimonial assets.

12) The final step of estate settlement is to distribute the remaining assets of the deceased person to the beneficiaries.

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at:
http://medicaladvisorjournals.blogspot.com
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

"Let Take Care Your Health, Your Health Will Take Care You" Kyle J. Norton

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All About Business Life Insurance For Estate Planing Information By Insurance Experts

2009-08-04T08:44:00.000-07:00

Types of Life Insurance in Estate Planning
By Kyle J Norton

I. Term

II. Whole life

III. Universal life

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at:

http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

"Let Take Care Your Health, Your Health Will Take Care You" Kyle J. Norton

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Life Insurance and Estate Planning
By Kyle J Norton

I. Life insurance

II. How it works

1. The proceed from the life insurance can be used to pay off any probate, taxes, and fees that normally have to be paid by your estate.

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at:

http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

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How to Choose the Best Estate Planning Attorney For You and Your Family
By Don West, Jr.

Donald L. West, Jr., J.D., CLTP
Chartered Legacy & Trusts Planner
Axis Legacy & Wealth Planning, LLC

dlw@donwestjr.com
http://www.legacy-lawyer.blogspot.com
404-435-5419

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All About Business Life Insurance For Estate Planing Information By Insurance Experts

2009-08-04T08:41:00.000-07:00

Estate Planning Strategy for Seniors
By Natalie Aranda

Seniors worry about aging and illness as well as who will take care of their family when they are gone. Because of this estate planning is so important. With estate planning seniors can make a plan while they are still healthy as to how their estates will be handled upon their death and they will have the reassurance knowing their families are taken care of. There are several things seniors need to do, but the first and most important is to create a financial plan.

In order to create a financial plan it is important to consider all the different retirement issues. The plan should include developing a retirement budget. Many times during retirement income is reduced so a budget is very important. Also, the plan should address consolidating income. A discussion of how long term care would be paid for and financing options should be had so there is a basic understanding of what will pass. Investment planning should be included in the plan as well as any estate decisions that will need to be made. Tax issues are also important and should be discussed and included in the plan.

The place seniors should start is with a complete financial inventory. This includes taking not of income, assets, expenses and even liabilities. Talk about what the senior is interested in long term. Is retirement living an option or will the family home be sold. These are important questions that should be worked out early on before a situation arises. Finally, determine what kind of insurance the senior will have as well as how much money for retirement.

Also, discuss a senior life settlement. This is an option for seniors who want to sell their life insurance policy for more than the cash value the life insurance company would give them to cash out. This means seniors can sell life settlements and get money to live their retirement on and the individual who bought the insurance policy will simply cash it out upon death.

Before making any of these serious decisions it is important for seniors to discuss their options with a professional. Lawyers well versed in senior matters or financial planers are two great resources for seniors to have their legal questions answered and to receive the help they need planning their retirement. Most of the time using an expensive attorney will be expensive in the short run but it will result in major savings down the road and is worthwhile.

Natalie Aranda writes about financing. A senior life settlement is an option for seniors who want to sell their life insurance policy for more than the cash value the life insurance company would give them to cash out. This means seniors can sell life settlements and get money to live their retirement on and the individual who bought the insurance policy will simply cash it out upon death.

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Estate Planning - Four Steps to Avoid Probate
By Pauline Go

Many times it happens when a person dies - a major chunk of the estate is taken away from the rightful heirs during probate. In addition, while the probate proceedings are going on, the estate is frozen and the spouse and children cannot get access to any of the assets for weeks and sometimes for months.

Estate planning is something most of us try to avoid but little do we realize that the cost of procrastination has to be borne by our loved ones. Here are four steps that will help you avoid probate so that while your loved ones are grieving, they will not be under any financial stress.

Step 1: You have make sure that you have the right beneficiaries mentioned on your life insurance and retirement accounts. If the information is correct, then all funds and proceeds like annuities, retirement fund and life insurance money will directly go the beneficiaries.

Step 2: For all your other accounts, request your bank or broker to put a Pay on Death (POD) designation or Transfer on Death (TOD) registration. If the bank account has POD, there will be no need for probate and the proceeds will go directly to the beneficiary. The same also applies to TOD registration.

Step 3: Check the titles of all your other assets and accounts. Assets that have joint tenants with right of survivorship title go directly to the surviving joint tenant and thereby avoiding probate. However, here you should note is that the joint tenant's creditors will also have access to the assets and accounts; for those with taxable estate, joint tenancy is not the ideal way out.

Step 4: If you large assets, the best way forward is a revocable living trust. You can transfer assets like investments, vehicles, bank accounts, jewelry, antiques, furniture and real estate to the trust. Although the assets become part of the trust, you still have control and access to them.

Taking these steps does not mean that you should not draw out a will, you should. In a will you can cover other matters that are not covered by beneficiary designation, account titling and living trust. Make sure you take steps to minimize estate tax and other issues like step-up in cost basis and community property laws, if applicable.

About Author:
Pauline Go is an online leading expert in education industry. She also offers top quality parenting tips like :
Cute Baby Names & Low Progesterone And Infertility.

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Life Insurance and the Estate Planning Cycle
By Kyle J Norton

c) Life insurance also helps to pay off liabilities of estate testator and acts as an emergency fund in case there are no other liquidate assets around.

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at: http://medicaladvisorjournals.blogspot.com

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All About Business Life Insurance For Estate Planing Information By Insurance Experts

2009-08-04T08:37:00.000-07:00

Life Insurance (Get Coverage)
By Tunde Oduguwa

Having a temporary term insurance policy to protect your loved ones is regarded as a sound financial planning tool. There are numerous benefits of having a temporary term life insurance policy, including: 1. protect your loved ones from income loss and financial catastrophe. If you have young children, a spouse or even elderly parents that depend on your income. In the event of death your term life insurance policy will be the replacement of that lost income so that your loved ones do not endure financial crisis. 2. Term Insurance can be an inheritance to your heirs even if you currently have no assets.

When you buy a temporary term life insurance policy, you provide a means of financial security for your beneficiary(s): (family, dependents, loved ones, etc) for a specified term of years for a specified premium(the monetary difference between the guaranteed return and the possible return on an investment) so that upon death they will be able to meet financial responsibilities previously covered by your income.

Term insurance has been a major component of estate planning. It can be very useful for financial planning, especially for parents of young children and those who support a spouse or a disabled adult or child. In addition to helping to supporting dependents, a temporary term life insurance policy can provide cash at death to pay the deceased's debts, funeral expenses, and income or estate taxes.

Below are some key considerations to help evaluate your life insurance needs.

Dependents Self Sufficiency: If you have dependents that either unable or a long way from taking care of themselves financially, such as disabled or young children, a life insurance policy can provide piece of mind that your dependents will be cared for financially.

Dependents Financial Needs: If you are currently supporting your dependents financially, such as paying college or graduate school tuition, it may make sense to ensure that this financial arrangement continues by purchasing a life insurance policy.

Settling Personal Financial Obligations: You may have personal debts, such as a mortgage, healthcare expenses, or funeral expenses that you would like to take care of in the event of your death. A life insurance policy can provide a financial umbrella to settle these debts.

Avoiding Probate and Estate Taxes: Depending on the size of your estate, naming your dependents as beneficiaries on your life insurance policy may help them to receive money sooner and better limit their tax liabilities, as compared to traditional estate transfers.

If you decide to purchase a temporary term life insurance policy, the following factors should be considered: 1. Face amount (protection or death benefit), 2. Premium to be paid (cost to the insured), and 3. Length of coverage (term)

Various insurance companies sell term insurance with quite a number of different combination's of these parameters. The face value can remain constant or decline. The term can be for one or more years. The premium can remain level or increase. A common type of term is called annual renewable term. It is a one year policy but the insurance company guarantees it will issue a policy of equal or lesser amount without regard to the insurability of the insured and with a premium set for the insured's age at that time. Another common type of term insurance is mortgage insurance which is usually a level premium, declining face value policy.

The face amount is intended to equal the amount of the mortgage on the policy owners residence so the mortgage will be paid if the insured dies. A policy holder insures his life for a specified term. If he dies before that specified term is up, his estate or named beneficiary receives a payout. If he does not die before the term is up, he does not receive a payout. In the past, these policies would almost always exclude suicide. However, after a number of court judgments against the industry, payouts do occur on death by suicide (presumably except for in the unlikely case that it can be shown that the suicide was just to benefit from the policy). Generally, if an insured person commits suicide within the first two policy years, the insurer will return the premiums paid. However, a death benefit will usually be paid if the suicide occurs after the two year period.

Life Insurance can be used to pay estate taxes, so that your heirs wont be forced to sell assets at fire sale prices to cover tax payments. Life Insurance can also be a form of savings account since some policies allow you to build cash value, which can be withdrawn or borrowed at your request. Life Insurance can also be used to make planned charitable contribution at the time of your death.

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Last Will and Testament - An Integral Part of Estate Planning
By Simon Volkov

Executing a Last Will and Testament is the greatest gift you can give your loved ones. When people do not take time to write out their will it creates additional grief for the family. Instead of having a say-so in how your assets are distributed, a judge will decide.

The Last Will and Testament is used to appoint an estate administrator, designate beneficiaries to receive assets and personal belongings, express burial preferences, and establish guardianship for minor children.

Overall, the last will is the package that ties up loose ends of your life. Without it, others will be left in charge of handling your affairs. Dying intestate (without a Will) creates a terrible burden for your loved ones. If you died today, would anyone know what to do? If not, it is time to create a will.

Many options exist for establishing a last will. Several websites offer downloadable forms that can be filled out and notarized. Office supply stores sell preformatted forms which only require filling in the blanks.

Most credit unions, banks, and investment brokers offer estate planning services to their customers. Estate planning can range from executing a simple last will and testament to establishing revocable or irrevocable trusts. Fees range from under $100 to several thousand. Much depends on the value of the estate and services rendered.

When individuals own businesses, real estate and valuable assets they should consider using the protection of trusts. The Will is placed inside the trust; keeping assets out of probate and exempt from inheritance tax.

Wills must undergo the probate process when not protected through a trust. This process involves validating the will, court confirmation of the estate administrator, paying creditor debts, inventory and appraisal of assets, filing a final tax return, and distributing assets to heirs and beneficiaries.

Trusts are generally reserved for estates valued over $100,000. Smaller estates can utilize techniques to keep assets out of probate. These include establishing beneficiaries on bank accounts, life insurance policies and investment accounts.

The average probated estate takes six to nine months to process. Complex estates can take years to settle. Much depends on the court caseload, estate value, and how well family members get along.

The probate process provides a platform where heirs can air grievances. If they feel slighted or were disinherited, they can contest the will. This act rarely accomplishes anything more than bankrupting the estate by overinflating legal expenses.

Estate planning experts recommend hiring a probate lawyer to administer estates where family dysfunction exists. Family strife is less likely to occur when a lawyer or professional estate planner is involved.

Author and real estate investor, Simon Volkov, has written numerous articles regarding estate planning, drafting a last will and testament, probate and inheritance. Simon specializes in buying probate estates and provides cash for inheritance. Simon is particularly interested in purchasing estates with real estate holdings. Discover available options by visiting http://www.SimonVolkov.com.

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What Are the Key Estate Planning Documents We Should Have?
By Aaron Skloff

Q: How important is it that we have a will? Are there other key estate planning documents we should have?

The Problem - Poor Estate Planning

Let's face it; nobody wants to address their demise. That is a key reason why 69% of parents with children under the age of 18 do not have a will. Unfortunately, passing away without a will can cause great emotional and financial pain to your loved ones. The lack of a designated guardian for your children can cause them hardship. The lack of a living will could force your physicians to ignore your medical wishes.

The Solution - Good Estate Planning

Good estate planning can be as easy as 1, 2, 3 - literally. With just three basic estate planning documents you can determine who will receive your assets, who will take care of your children and who will make your medical decisions if you cannot.

The Will

If you pass away without a will (intestate) in New Jersey (NJ) your spouse is only entitled to the first $50,000.00 outright. Your spouse must split the rest of your assets with your children, no matter how young or old they are. If you have no children, your parents are next in line. With a will, you decide to whom, when, and in what amounts your assets should be distributed. You select your executor or personal representative, the one who shall be responsible for the disposition of the estate.

A will must be written, signed by the testator (maker) and witnesses. The original copy is the legal document and must be signed. For a will to be legal in NJ you must have at least two witnesses. The testator and the witnesses are required to be present at the signing, and each must see the others sign the will. The witnesses do not have to read or know what the will contains. They must simply be told by the testator that it is his or her will, and asked be to sign as witnesses.

Guardianship

Without a will, someone will need to file a court proceeding for guardianship of your minor children. This person may or may not be the person you would choose to be guardian and this person may be required to post a bond. The costs of this proceeding and the cost of the bond may be paid out of the value of your estate. With a will, you can specify the person who is to be guardian of your minor children and you can waive the requirement of a bond.

Without a will a court appointed executor will designate a person to manage your children's inheritance until they reach age of 18. Ideally, you may prefer they receive the money after they complete their college education or reach the age of 25. With a will, you can specify the person who will manage this money for your children, how the money is to be spent, and at what age your children will receive the money directly.

Determining guardianship for your children can be one of the most serious decisions you will make in your lifetime. Think long and hard who the guardian(s) should be before making a decision.

Living Will

The legal name for the living will is the advanced directive. It permits you (the patient) to communicate, in advance, the medical care decisions you would make if you are rendered incapacitated. These clear instructions can circumvent a difficult decision your family may be forced to make otherwise. The living will is a relatively simple document that must be in writing, signed and dated in the presence of two subscribing adult witnesses, who must attest to the fact that the person is of sound mind and free from duress and undue influence.

Action Steps

Although the three estate planning documents listed above are of tremendous value, there are a number of variables that can add additional complications to your estate planning needs. Specifically, federal and state estate taxes that can ravish the value of your estate should always be taken into consideration. Establishing trusts may provide greater direction on the outcome of your estate.

Work closely with your financial advisor and estate attorney to develop an estate plan that meets your personal objectives.

08/20/09

Skloff Financial Group Question of the Month By Aaron Skloff, AIF, CFA, MBA

Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA), Master of Business Administration (MBA) is CEO of Skloff Financial Group, a Registered Investment Advisory firm based in Berkeley Heights, NJ. He can be contacted at http://www.skloff.com or 908-464-3060.

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Estate Planning - Universal Life Insurance and Estate Planning

By Kyle J Norton

I. What is universal life insurance?

2. Investment funds

3. Registered investment funds

It works like other registered pension plan but it is principle guaranteed by insurance company up to 100% upon the death of policy owner.

II. Other benefits

1. The investment fund can provide addition income for the estate owner while he or she is alive. Any withdrawal is taxable in the same year

2. Funds can be withdrawn anytime

Universal life investment funds can be withdrawn any time, if it is requested by the policy owner

3. Registered funds can be additional income when you retire.

I hope this information will help. If you need more information of insurance or series of articles of the above subject at my home page at:

http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

Article Source: http://EzineArticles.com/?expert=Kyle_J_Norton

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All About Business Life Insurance For Estate Planing Information By Insurance Experts

2009-08-04T08:17:00.000-07:00

Whole Life Insurance Advantages:

Whole Life Insurance Disadvantages:

Term Life Advantages:

Term Life Disadvantages:

Article Source: http://EzineArticles.com/?expert=Ronald_Hudkins

What is an Irrevocable Life Insurance Trust (ILIT) And How Can it Benefit Our Family?
By Aaron Skloff

Q: My colleague at work mentioned the importance of an ILIT for estate planning purposes. What is an ILIT and how can it benefit our family?

The Problem - Gaping Hole in Estate Plan

You have worked hard to provide a good life for your family. Now the government and state want to take away most of your assets when you pass away. They hope you will overlook an important estate planning tool that allows you to avoid unnecessary taxes.

The Solution - Good Estate Planning

With an Irrevocable Life Insurance Trust (ILIT) you can protect one of your largest assets, the proceeds from your life insurance policy, from both federal and state estate taxes. Sorry tax collectors - those are the rules.

Basics on Estate Taxes

In 2008, each U.S. citizens is entitled to a federal estate tax exemption of $2 million, with a 45% tax rate thereafter. Each NJ resident is entitled to a state estate tax exemption of $675,000, with an approximately 11%-16% tax rate (depending upon the beneficiaries and size of your estate) thereafter.

While many married couples utilize the unlimited spousal exemption to transfer assets and life insurance proceeds without tax, they are setting themselves up for a potentially huge tax burden when the second spouse passes away. While the beneficiaries of life insurance polices are not subject to taxation, the owner's estate could be - as life insurance is added to the estate's value. Let's look at an example of a married couple with children.

Between the value of their home, retirement plans and savings Bob and Myrna have $2 million in assets. Bob's estate is protected by the $2 million estate tax exemption. Bob purchased a life insurance policy for $2 million to protect his family, naming Myrna as the beneficiary. When Bob passes away, neither his estate nor Myrna will be responsible for federal or state estate taxes due to the spousal exemption.

Unfortunately, by foregoing Bob's federal and state exemptions, Bob and Myrna could be robbing their beneficiaries of their inheritance. If Myrna passes away shortly thereafter, she will leave behind a $4 million estate. If her children are the beneficiaries, Myrna's estate will be subject to $900,000 in federal estate taxes. If her siblings are the beneficiaries, Myrna's estate will be subject to over $1.1 million in combined federal and state estate taxes.

This assumes the assets none of the assets continue to grow after Bob passes away, an overly conservative assumption.

ILIT Saves Taxes

Rather than paying unnecessary estate taxes, Bob worked with an estate planning attorney to establish an ILIT. After they established a trust, they named a Trustee other than Bob to purchase a life insurance policy on Bob's life. Bob then gifted the price of the policy to the trust. Bob stipulated who the beneficiaries were on the policy, how the beneficiaries will receive the proceeds and what conditions must be met to receive the proceeds. Let's look at Bob and Myrna's circumstances after Bob established an ILIT.

With the same assets and the same life insurance benefit, Bob passes away. By utilizing the ILIT, Bob removes $2 million from his estate and passes $2 million in other assets to Myrna. The trust was designed to pay Myrna $100,000 per year and each of their children $50,000 per year. When Myrna passes away she leaves behind the full $2 million to her children, without the $900,000 tax bill discussed above.

Action Steps

Establishing an ILIT is a critical part of good estate planning. Work with a financial advisor and an estate planning attorney to establish your ILIT. Your family will thank you for generations to come.

09/03/08

Skloff Financial Group Question of the Month By Aaron Skloff, AIF, CFA, MBA

Article Source: http://EzineArticles.com/?expert=Aaron_Skloff

8 Critical Estate Planning Mistakes
By Mark Connell

I'd like to discuss eight critical estate planning mistakes that can create serious problems for those you leave behind. These estate planning mistakes can be easily avoided.

Mark R. Connell Attorney At Law, LLC
420 East Main Street, Suite 12
Branford, CT 06405
Phone: (203) 488-5586
http://www.markconnellattorney.com

Article Source: http://EzineArticles.com/?expert=Mark_Connell

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