Winning a large lottery is a dream come true, but you are faced with immediate estate tax exposure if you were to win over $5.25 million. A recent Powerball lump sum payout totaled almost $371 million. (The annuity option would pay over $590 million) . The ticket was sold in Florida, where there is no state income tax to pay. But 25% would be deducted from the lump sum for federal income taxes, leaving $278 million. You might think that paying almost $100 million in taxes would be enough, … [Read more...] about Powerball Winner Faces Immediate Estate Tax Exposure
If you think about estate planning you might reduce it to the act of drawing up a last will to express your final wishes regarding monetary assets. This is a rather closed viewpoint because it doesn't really address the stages of aging. The majority of people don't pass away without going through these stages, and it takes intelligent advance planning to prepare for them. Retirement Planning When you reach the age of Social Security eligibility you do not magically gain the … [Read more...] about Planning for the Stages of Aging
It is useful to consider the odds when you are getting remarried after having been divorced. There are various different theories with regard to why it is so, but a high percentage of divorced people who get remarried wind up getting divorced again. The majority of second marriages fail, and almost 3 out of every 4 third marriages do not withstand the test of time. Most people who get remarried after divorcing have children. From an estate planning perspective you have to consider … [Read more...] about Consider the Odds When Getting Remarried
The budget that is being proposed by the executive branch for 2014 includes a shift toward calculating inflation via the use of a chained CPI or Consumer Price Index. The government has been using the Consumer Price Index for Urban Wage Earners and Clerical Workers to determine the rate of inflation. This determination is utilized to provide cost-of-living adjustments for people who are receiving Social Security benefits. Going to a chained CPI is going to save the program money, but … [Read more...] about Chained CPI Part of Proposed Budget
A 529 plan is a college savings plan that is offered by individual states. You contribute assets into the plan and they are invested, similar to the way that a 401(k) plan operates. You name a beneficiary who will utilize these assets to pay for college expenses. If the markets are favorable these assets will continually grow, and this growth is not taxable if the money is ultimately used for qualified purposes. These plans can be beneficial for those who are looking for estate tax … [Read more...] about What Is a 529 Plan?
If someone told you that you could work with an estate planning lawyer to create a defective trust how would you feel about that? Most people are automatically going to equate the term "defective" with something that is useless. In fact there is an estate planning device called an intentionally defective grantor trust that is in fact more effective than it is defective in practice. Some people have to take steps to gain estate tax efficiency. The estate tax exclusion is $5.25 … [Read more...] about Why Would You Want a Defective Trust?
The estate tax parameters were newly defined after the enactment of the American Taxpayer Relief Act of 2012. When you look back on the situation that was described as a path toward the fiscal cliff this precipice represented a plunge into a sea of tax increases and spending cuts. One of the taxes that would have went up was the estate tax. Under the laws as they existed throughout 2012 the top rate of the estate tax was going to rise to 55% in 2013 while the exclusion was reduced to … [Read more...] about Possible Estate Tax Hike in the Offing
When you are a young adult you have a unique opportunity to develop a long-term financial plan that leads to a comfortable retirement. Clearly, the more time you have to save the more likely it is that you will be successful and ultimately reach your goals. Unfortunately, when people are young they may be more prone to live in the moment without thinking ahead toward the future. As a result, in many cases this opportunity is lost. Even those who did take the necessary steps may be … [Read more...] about Retirement Planning: Revise and React
Last year there was an incentive for people to give large gifts to their loved ones. The gift tax is unified with the estate tax, and in 2012 the unified exclusion was $5.12 million, and the maximum rate was 35%. Throughout 2012, the existing laws would have resulted in an increase in the top rate to 55% and a reduction in the exclusion to $1 million in 2013. Let's say that you had $5 million in total wealth. You could give substantial gifts to people who would otherwise be … [Read more...] about Giving Taxable Gifts? IRS Must Be Notified
You may want to give to charity when you are planning your estate. Your legacy could then live on after your passing as some of your resources are utilized to make the world a better place. If you do have philanthropic aims you have to decide on a vehicle or vehicles of charitable giving. One option is the creation of a private foundation. When you look into the subject you may be surprised to hear that most of these foundations don't have any employees, and the majority of them … [Read more...] about Make Charitable Gifts Count