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 …
Vacation Homes and Ancillary Probate
If you own a vacation home, you have opportunities to get away with people you care about to enjoy quality time. You get all of the benefits of vacations, and you are making a good investment, so you may actually turn a profit before all is said and done. There is a lot to like about vacation home ownership, but from an estate planning perspective, you have to consider the estate administration implications. Probate Process When a simple will is used to transfer assets, the administration …
Medicare Is Not a Comprehensive Solution
The Medicare program is the source of health insurance that most senior citizens in the United States rely upon, but eligibility is not automatic. You earn retirement credits when you pay taxes, and these credits lead to future eligibility for Medicare and Social Security. In 2021, you get one credit for every $1470 that you earn, and the maximum annual accrual is four credits. After you have worked long enough to bank 40 credits, you will be eligible for these benefits when you are old …
How Are Estates Taxed?
Some of the most common questions that people have about estate planning revolve around the matter of taxation. Surprisingly, some of the news is rather good, but there is one looming threat that can impact wealthy families. We will provide all the details in this post. Income Taxes If you were to receive an inheritance from someone, you would not have to report the income when you file your tax returns. This also applies to life insurance proceeds. You would be paid directly by the company, …
Your Inheritance Plan May Require Revisions
Estate planning is not a one-time event, and you should view it in this light from the start. Circumstances inevitably evolve over time, and you should react to them so your estate plan is up-to-date at all times. Life Stages You should have an estate plan in place as soon as you are a self-supporting adult. Many employers provide life insurance as a benefit, and this is one piece of the puzzle that may be automatically put into place. An asset transfer vehicle like a will or a living trust …
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