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.
Tuesday, February 24, 2009
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.
Top 7 Mistakes in Estate Planning: Mistake No. 1
During the Middle Ages, crusaders sailing East developed Trusts to protect their families and their assets when they could not. A lot has changed over the centuries, but the essential purpose of estate planning has not. People plan to protect themselves and their families from probate, taxes and costly mistakes. However, without fully understanding the changing legal and financial landscape even a well thought out estate plan can fail. It is critical to plan with skilled legal, tax and financial professionals and to watch out for common pitfalls. If you have already planned your estate or are considering creating a plan these are the seven most common mistakes to be wary of.
Mistake No. 1: Not planning to avoid probate
Many people only have a will or nothing at all to direct the disposition of their estate. However, a will alone cannot avoid the expenses and time delays of the probate process for those with estates greater than $15,000. Even in the simplest situation the process requires a minimum of a year. If your family or financial situation is more complicated because of blended families or conflict among your children, the process can take much longer than that.
The probate process is also public, with family and financial matters becoming public record, including announcements in the local papers. This can attract unsavory attention to a surviving spouse or other family members.
Consider avoiding the expenses and time delays of probate and protect your family with a Trust. A Trust, with you in charge, can own your home and other assets and allow them to pass to your family smoothly and efficiently. It can also build in tax savings and asset protection that a will cannot. It is very important to work with a qualified professional who will help you understand how a trust and other documents should be designed to meet your goals.
Mistake No. 1: Not planning to avoid probate
Many people only have a will or nothing at all to direct the disposition of their estate. However, a will alone cannot avoid the expenses and time delays of the probate process for those with estates greater than $15,000. Even in the simplest situation the process requires a minimum of a year. If your family or financial situation is more complicated because of blended families or conflict among your children, the process can take much longer than that.
The probate process is also public, with family and financial matters becoming public record, including announcements in the local papers. This can attract unsavory attention to a surviving spouse or other family members.
Consider avoiding the expenses and time delays of probate and protect your family with a Trust. A Trust, with you in charge, can own your home and other assets and allow them to pass to your family smoothly and efficiently. It can also build in tax savings and asset protection that a will cannot. It is very important to work with a qualified professional who will help you understand how a trust and other documents should be designed to meet your goals.
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