South Florida Estate Planning Law : Florida Estate Planning Lawyer & Attorney : David Shulman Law Firm : South FL Wills & Trusts

I found this article from Newsday interesting.  They list six ways to save taxes, based mostly on depressed asset values, something that I've written about before.

1. Convert your traditional IRA to a Roth IRA.
2. "Undo" or recharacterize a Roth IRA conversion if your initial conversion was in 2008 when values were significantly higher.
3. If you have begun taking Required Minimum Distributions from your IRA, don't take one in 2009.
4. Take what the articles calls "inherited IRA deductions" which is an income tax deduction for the estate taxes paid on an inherited IRA for something that is known as income in respect of a decedent (IRD).
5. "Get ready" for higher taxes rates that are coming.
6. Transfer assets out of your estate while they are at a low value. 

Each of these may be a good idea depending upon your individual situation.  Before going through with any of them you should see an expert -- a tax attorney, CPA, or financial planner that specializes in this area.

• Email This
• Print
• Comments
• Trackbacks

The New York Times published a good article yesterday laying out what I've been telling everyone lately -- that it's time for everyone to reevaluate their estate plan. In Smaller Though It May Be, It's Time to Look at the Estate NYT writer Paul Sullivan states:

But estate planning is not primarily about avoiding a tax that few have been subject to since it was instituted in 1916. The primary goal has always been how to bequeath what you have to the heirs you picked. And if handled wrongly, wills can become a vehicle that destroys families.

 The most important points that I hope people take from this article are that:

1. The Estate Tax is here to stay.  Virtually every Estate Planning attorney will tell you that repeal, fought so hard for by Republicans is dead.
2. The "exemption," that is the amount a person can die owning before being subject to the estate tax is currently $3.5 million, and probably will be at least that amount in the future.
3. Over the past two years, many people who are (or were) subject to the Estate Tax lost a substantial amount of their wealth.  Not only that, their successful adult children, who didn't necessarily need an inheritance from their parents have also lost a substantial amount of wealth.  I've heard anecdotal evidence that sales and rentals of this movie have skyrocketed (just kidding).

 Those three above factors result in many estate plans being very problematic.  They may have been perfect when drafted.  The problem is the attorney who drafted it did not anticipate the fundamental change in the economy.  No one did.

• Email This
• Print
• Comments
• Trackbacks

There was a short article yesterday in the Bristol (CT) Press by Connecticut Attorney Daniel O. Tully pointing out that "If your finances have changed markedly since you wrote your will, you should check your estate plan to see if you need to make any changes."  This is especially true if your plan includes "specific bequests" which are gifts of specific property upon your death.

For example, your Will might currently state, "I give, devise, and bequeath my 10,000 shares of my Citibank stock to my son Barack, and the rest, residue, and remainder of my estate to my daughter Michelle" 

Assume you executed your Will on March 16, 2004.  On that date, 10,000 shares of Citibank was worth close to $500,000. Today, after the perceptions decline in the stock market,10,000 shares of Citibank is worth about $17,000.  If you died today with those provisions in place, this could create an inequity that you hadn't intended.  Therefore, it is a good idea to review your documents to see if you made any specific bequests, and contact your estate planning attorney to discuss whether or not a change is necessary.

Also, as I have written about before, I believe that this decline in the world economy provides the greatest opportunity for gift and estate tax planning in years, possibly ever.  Note that I am not talking about Citibank, or any specific stock or asset in particular, but just assets in general.

Currently -- and I am simplifying this -- the US imposes a gift tax on the value of assets that you give away during life, and on the value of assets that you own upon your death.  One of the benefits of giving away assets now is that you are only subject to tax on the current value of the asset, and all of the future appreciation is removed from your estate and not subject to the gift or estate tax.  If you are relatively young and healthy, and you believe that in the long term that the value of the assets you own will appreciate, you should evaluate whether it makes sense to give some property to your children or even grandchildren now, so if the value of that property comes back up, it will be out of your estate and not subject to the estate and gift tax.  Even after the current stock market decline, $10,000 invested in Microsoft in early 1990 would be worth $282,200 today.  A gift of Microsoft stock in 1990 would have removed all of that appreciation from your estate.

I realize that many people are concerned about giving away assets now -- either because they do not believe that their children are ready to handle large amounts of money or they are afraid that they themselves will need the money to live later in life.  Depending on your individual circumstance, there may be solutions to each of these problems, which your estate planning attorney can discuss with you.

• Email This
• Print
• Comments
• Trackbacks

One of the greatest issues facing estate planners today is the vast decline in so many of our clients' wealth.  This is especially true in South Florida where the real estate market has collapsed, and Bernie Madoff's clients abound.  The list of people whose "fault" this is is too long to post here.  But certainly the financial press has some culpability in building up the bubble.

Last night's interview of CNBC's Jim Cramer by Jon Stewart should be essential watching for everyone.  Also, while I don't do litigation, it's certainly a masterful cross examination.

• Email This
• Print
• Comments
• Trackbacks