Mistake No. 7: Not keeping plans updated.
Many families who set up estate planning several years ago are unaware that planning is an ongoing process. Family circumstances and laws change significantly over time, making their plan ineffective for their current needs. For an estate plan to work effectively it should be reviewed on a regular basis with your Attorney and other advisors to ensure that your documents are current.
Of course we are not all Crusaders, but everyone wants to protect themselves as best they can during their lifetime and provide for their family when they are gone. If you have a plan in place or are thinking of creating one, the first step is to work in conjunction with a skilled tax and estate planning attorney to provide guidance and education. Only by being clear on your goals can you develop current planning to take care of your family.
Tuesday, March 24, 2009
Tuesday, March 17, 2009
Mistake No. 6: Not planning to protect children and grandchildren's inheritances.
Many people have wonderful, effective planning to pass their wealth down to the next generation, but what then? Inheritances distributed outright can be lost, to divorce, lawsuits and creditors. It is critical to consider protecting your children and grandchildren by leaving their inheritance in trusts accessible for their own needs while barring creditors and predators.
Many people have wonderful, effective planning to pass their wealth down to the next generation, but what then? Inheritances distributed outright can be lost, to divorce, lawsuits and creditors. It is critical to consider protecting your children and grandchildren by leaving their inheritance in trusts accessible for their own needs while barring creditors and predators.
Tuesday, March 10, 2009
Top 7 Mistakes In Estate Planning: Mistake No. 5
Mistake No. 5: Not planning for the cost of nursing home care.
One out of every three adults over the age of 65 will need nursing home care for some period of time and increasing health care and nursing home costs are one of the greatest threats to a comfortable retirement. The costs in Massachusetts are approaching $12,000 a month and rising.
Because long term care insurance is so expensive, many families have chosen a Protective Trust to protect their lifetime savings, homes and other asset so that they do not need to spend their lifetime savings on a nursing home. A Trust also provides flexibility to protect assets and pay for in home care and assisted living facilities.
One out of every three adults over the age of 65 will need nursing home care for some period of time and increasing health care and nursing home costs are one of the greatest threats to a comfortable retirement. The costs in Massachusetts are approaching $12,000 a month and rising.
Because long term care insurance is so expensive, many families have chosen a Protective Trust to protect their lifetime savings, homes and other asset so that they do not need to spend their lifetime savings on a nursing home. A Trust also provides flexibility to protect assets and pay for in home care and assisted living facilities.
Tuesday, March 3, 2009
Top 7 Mistakes In Estate Planning: Mistake No. 4
Mistake No. 4: Not considering the potential for double taxation on IRAs and other retirement plans.
Taxes on IRAs and other retirement plans can create a 70% tax before your IRAs can reach your children or grandchildren. IRAs and other retirement plans are taxed twice, once as part of your taxable estate, and a second time as they come out of the IRA as income. These taxes together can reduce your IRA by 70% unless you plan effectively.
The combination of a Retirement Plan trust and an effective plan to stretch out and protect an IRA over the lifetime of a younger person, such as a child or grandchild, can create significant tax savings and magnify growth for your family.
Taxes on IRAs and other retirement plans can create a 70% tax before your IRAs can reach your children or grandchildren. IRAs and other retirement plans are taxed twice, once as part of your taxable estate, and a second time as they come out of the IRA as income. These taxes together can reduce your IRA by 70% unless you plan effectively.
The combination of a Retirement Plan trust and an effective plan to stretch out and protect an IRA over the lifetime of a younger person, such as a child or grandchild, can create significant tax savings and magnify growth for your family.
Tuesday, February 24, 2009
Top 7 Mistakes in Estate Planning: Mistake No. 3
Mistake No. 3: Not planning for the Massachusetts and Federal Estate Taxes.
A trust is an effective way of doubling the amounts that a married couple can pass tax free to their children and grandchildren. While the federal estate tax free amounts continue to change and may drop to $1 million per person in 2011 - or even as soon as 2010 - it is important to consider how the growth of your assets over time will effect your tax situation. The state of Massachusetts also imposes a separate estate tax on all estates over $1 million. Your planning should address both of these taxes, which can be substantial.
A trust is an effective way of doubling the amounts that a married couple can pass tax free to their children and grandchildren. While the federal estate tax free amounts continue to change and may drop to $1 million per person in 2011 - or even as soon as 2010 - it is important to consider how the growth of your assets over time will effect your tax situation. The state of Massachusetts also imposes a separate estate tax on all estates over $1 million. Your planning should address both of these taxes, which can be substantial.
Saturday, February 21, 2009
Top 7 Mistakes In Estate Planning: Mistake No. 2
Mistake No. 2: Not planning for a disability
Disability is more likely than death in any given year. Do you know what will happen to your family, health and financial decisions if you were to become disabled? Who would pay your bills, access your bank accounts and make any needed decisions for your retirement plans?
If you have not planned adequately, your family may need to apply for a court conservatorship or guardianship to be able to effectively care for you and your assets. The guardian may not be the person you would choose. The most effective way to avoid these unnecessary complications is to plan ahead with a trust and other disability documents that are current and meet privacy standards under HIPAA. A durable power of attorney alone will not be enough, as these documents are often rejected by institutions if they were signed more than one year ago or not on their proprietary forms.
Disability is more likely than death in any given year. Do you know what will happen to your family, health and financial decisions if you were to become disabled? Who would pay your bills, access your bank accounts and make any needed decisions for your retirement plans?
If you have not planned adequately, your family may need to apply for a court conservatorship or guardianship to be able to effectively care for you and your assets. The guardian may not be the person you would choose. The most effective way to avoid these unnecessary complications is to plan ahead with a trust and other disability documents that are current and meet privacy standards under HIPAA. A durable power of attorney alone will not be enough, as these documents are often rejected by institutions if they were signed more than one year ago or not on their proprietary forms.
Thursday, February 5, 2009
Top Threats to Business Owners in Today's Economy
In an economy like today’s business owners, executives, professionals, and many ordinary families face an increasing risk from creditor liability and lawsuits. Each year theories of liability expand, making it more difficult to protect assets. A downturn in the economy, such as the one in which we now find ourselves, can increase the risk of creditor threats. For many in the business and professional communities, the economy’s current woes provide an incentive for creating a plan to protect the assets they have spent so many years and so much effort creating.
The Top Threats of Liability in Today’s Economy
1. If they have sold or intend to sell a business, and the business does not meet the new owner’s expectations, they may be the subject of a suit by the disgruntled purchaser. The seller of a business typically must sign off on a wide variety of “representations and warranties,” and an unhappy purchaser can often leverage these against the seller, claiming misrepresentations or the use of misleading projections.
2. With a greater risk of business deals falling through, there will also be an increased risk of litigation.
3. If companies do not perform well, shareholder suits can multiply.
4. If the economic downturn severely affects a business’s cash flow, or if a business is forced to liquidate, there may be suits by suppliers and lenders. Plaintiffs in such suits may attempt to “pierce the veil” of the business entity and move against the owners’ personal assets.
5. In a time when many family’s net worth has recently decreased, they feel a greater need to protect the family’s still-existing nest egg from the effects of claims.
6. A person experienced in one business may have investments in unfamiliar business activities. One could find oneself as a general partner in a risky endeavor, the potential liability for which is increased during economic bad times.
7. Business owners often expand their activities to include service on Boards of Directors for corporations and community boards or trusts. Liability insurance is often costly, and deep-pocketed individuals serving in these capacities can often attract lawsuits or claims.
8. Unfortunately, statistics show that economic difficulties can also have collateral effects, such as marriage difficulties, and planning above and beyond a prenuptial agreement may be a consideration.
These concerns are in addition to those always faced by people in the business community, regardless of the state of the economy. As businessmen and women know, in dealing with a third party there is always an inherent financial risk, whether the risk relates to a service provided to the party, a product (or other asset) sold to the party, a disgruntled or injured employee, an unforeseen accident, etc. To protect against such risks, businesses often operate in the form of a corporation or limited liability company, and families and businesses purchase insurance. These forms of asset protection do not, however, fully protect a family’s assets from unforeseen liabilities and uninsured losses. Because of this, many planners reccomend an “integrated estate plan,” which combines traditional estate planning with asset protection planning. The asset protection component of the planning focuses on protecting the personal wealth of the business or professional person and his or her family.
So what “integrated estate planning” arrangement is considered the best to avoid being targeted by plaintiffs and contingency fee lawyers? Competent planning that includes the use of a protective trust is the most effective. What better way to convince the plaintiff’s attorney to just go away (perhaps with a token settlement) than to demonstrate to him or her that even if a judgment is rendered against you, protected assets are not going to be available to satisfy that judgment.
For more information, visit www.dsullivan.com or call (781) 237-2815. You can also subscribe to this blog by clicking subscribe below.
The Top Threats of Liability in Today’s Economy
1. If they have sold or intend to sell a business, and the business does not meet the new owner’s expectations, they may be the subject of a suit by the disgruntled purchaser. The seller of a business typically must sign off on a wide variety of “representations and warranties,” and an unhappy purchaser can often leverage these against the seller, claiming misrepresentations or the use of misleading projections.
2. With a greater risk of business deals falling through, there will also be an increased risk of litigation.
3. If companies do not perform well, shareholder suits can multiply.
4. If the economic downturn severely affects a business’s cash flow, or if a business is forced to liquidate, there may be suits by suppliers and lenders. Plaintiffs in such suits may attempt to “pierce the veil” of the business entity and move against the owners’ personal assets.
5. In a time when many family’s net worth has recently decreased, they feel a greater need to protect the family’s still-existing nest egg from the effects of claims.
6. A person experienced in one business may have investments in unfamiliar business activities. One could find oneself as a general partner in a risky endeavor, the potential liability for which is increased during economic bad times.
7. Business owners often expand their activities to include service on Boards of Directors for corporations and community boards or trusts. Liability insurance is often costly, and deep-pocketed individuals serving in these capacities can often attract lawsuits or claims.
8. Unfortunately, statistics show that economic difficulties can also have collateral effects, such as marriage difficulties, and planning above and beyond a prenuptial agreement may be a consideration.
These concerns are in addition to those always faced by people in the business community, regardless of the state of the economy. As businessmen and women know, in dealing with a third party there is always an inherent financial risk, whether the risk relates to a service provided to the party, a product (or other asset) sold to the party, a disgruntled or injured employee, an unforeseen accident, etc. To protect against such risks, businesses often operate in the form of a corporation or limited liability company, and families and businesses purchase insurance. These forms of asset protection do not, however, fully protect a family’s assets from unforeseen liabilities and uninsured losses. Because of this, many planners reccomend an “integrated estate plan,” which combines traditional estate planning with asset protection planning. The asset protection component of the planning focuses on protecting the personal wealth of the business or professional person and his or her family.
So what “integrated estate planning” arrangement is considered the best to avoid being targeted by plaintiffs and contingency fee lawyers? Competent planning that includes the use of a protective trust is the most effective. What better way to convince the plaintiff’s attorney to just go away (perhaps with a token settlement) than to demonstrate to him or her that even if a judgment is rendered against you, protected assets are not going to be available to satisfy that judgment.
For more information, visit www.dsullivan.com or call (781) 237-2815. You can also subscribe to this blog by clicking subscribe below.
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