You have to try to accept some inconvenient truths when you are planning ahead for the future. After your active retirement years start to wane, it may become harder and harder for you to go about your activities of daily living. At some point, assistance may be needed, even if it is hard to envision it right now. Just over 50 percent of seniors need some type of paid care eventually, and many others get the help they need from unpaid family members and friends. When it comes to the …
Can You Modify a Living Trust?
Before we drill down to the specific subject of this blog post, we should explain some of the benefits that living trusts provide. A lot of people think that a last will is the right transfer device for anyone that is not a multimillionaire, but in reality, this is a total misconception. The distribution process is not as simple and straightforward as it may appear to be on the surface when a last will is utilized. If you were to create a last will, you would name an executor in the document …
Estate Planning Advice Gone Awry
There are some folks that have a tiny bit of knowledge, and this can be dangerous, especially when they want to share it with others. This dynamic can definitely enter the picture when it comes to estate planning tips. At the end of the day, there is no substitute for qualified legal counsel, but some families pay a heavy price to learn this lesson. Downloads and Worksheets Several companies on the internet sell downloads and worksheets that you can use to create different types of legal …
Do You Pay Capital Gains Taxes on Inheritances?
The capital gains tax can be imposed when you sell assets that appreciated after you acquire them. This is called “realizing a gain,” and there are short-term gains that are realized less than a year after the acquisition, and long-term gains are realized more than a year after you obtain the assets. Long and short-term gains are taxed at different rates. A short-term gain is taxed at your regular income tax rate, and long-term gain rates are based on your income. People that claim $40,400 or …
Four Key Facts About Probate
Probate is a legal process that can enter the picture when assets are being transferred after someone passes away. When a will is used to facilitate asset transfers, the executor that is named in the document would admit the will to probate, and the Surrogate’s Court would supervise the administration of the estate. This court will also preside when someone passes away without a will or a trust. You should certainly understand some things about the process when you are making your estate …
Why Would You Use a Trust?
There are many different tools that can be utilized when you are planning your estate. As a layperson, there is no reason for you to have knowledge of all the devices that are available to you and why you may want to use one instead of another. With this in mind, we are going to look at five different situations that would call for the utilization of some type of trust in this post. Protection From Future Creditors People that are in high-risk professions and some business owners have to be …
Aging in Place With Community Medicaid
Everyone is well aware of the fact that you have to take financial steps in advance to be able to enjoy your active retirement years in comfort. However, many if not most of the same people make no preparations for the twilight years that will follow. Long-Term Care You may be surprised to hear that seven out of every 10 senior citizens will require help with their activities of daily living at some point in time. Some of these folks will be able to receive the assistance that they need from …
How Can You Mitigate Estate Tax Exposure
You have to be concerned about the potential for legacy erosion if you have been very successful from a financial standpoint. There is a federal estate tax with a 40 percent maximum rate, so it can have a significant impact on your family’s future. Estate Tax Exclusion Right now, the federal estate tax exclusion is $11.7 million. This is the amount that can be transferred tax-free before the estate tax would be imposed on the remainder. The current level is the highest it has ever been, and it …
Are Assets In a Trust Out of Your Reach?
You may assume that you would not be able to access assets that you convey into a trust because the whole idea is to create separation. This is true to some extent, but there are different types of trusts, and we will provide an explanation in this post. Irrevocable Trusts The notion that you cannot reach assets in a trust stems from the fact that there are irrevocable trusts. Though there are very limited exceptions, you cannot dissolve the trust, and you cannot act as the trustee if you …
Does Your Estate Plan Include a Letter of Last Instruction?
A lot of people look at estate planning as the act of stating your wishes in writing regarding the way that you want your monetary assets to be transferred after you die. This is certainly at the core of the matter, but it is also important to think about the practical side. If you use a will as your primary vehicle of asset transfer, you would name an executor in the document to serve as the administrator. Simply stating the way that you want the pie to be cut up is great. But where are …
More IRA Changes Are on the Way
The individual retirement account guidelines changed recently after the SECURE Act was enacted in December of 2019. There are follow-up pieces of legislation in the House and Senate that will make further changes, and we will look at them here. Original SECURE Act We will start with a review of the changes that have already been implemented via the first piece of legislation. Traditional individual retirement account holders contribute into their accounts before they pay taxes on the …
Is There a New York Gift Tax?
You should understand the taxes that can potentially enter the picture when an estate is changing hands. An inheritance is not considered to be taxable income, so this is a positive, and inherited appreciated assets get a step-up in basis. To explain through the use of an example, let’s say that you inherit stock from your uncle. It is worth $100,000, but he paid $10,000 for the shares many years before his death. If he would have sold the stock before his death when its value was …
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