Estate Planning

Wednesday, June 15, 2011

Estate Planning with IRAs and Qualified Plans

As of December 31, 2010, individuals hold nearly $17.5 trillion in IRAs and qualified plans.  These assets now account for 37% of all household financial assets.  Because of the way lifetime required minimum distributions are now calculated, retirement plans will frequently be the largest asset held at death. 

IRAs and qualified plans were designed to accumulate wealth for retirement, not accumulate wealth for future generations and the tax laws were designed accordingly.  As a result, retirement accounts may present the greatest challenge when it comes to funding a Trust.  Even the best designed estate plan will fail unless assets are properly titled and beneficiary designation forms are properly completed.

With a properly drafted Trust and a properly completed beneficiary designation form you can leave a $100,000 IRA to a 25 year old beneficiary that will provide the beneficiary with $400,000 of after tax income over his life expectancy with all the benefits normally associated with leaving property to a beneficiary in Trust.  Compare this with the $60,000 the beneficiary would receive if left to a Trust that, because of the way the Trust was drafted or the way the beneficiary designation was made, does not qualify for look-through status.

Jason Salinardi

BridgeBuilder

With a two-year old at home, I had to include this thought for the week.

Thought for the Week

"A two-year old is kind of like a blender, but you don't have a top for it."

~Jerry Seinfeld

Wednesday, May 25, 2011

Control From the Grave

There is a fine line between protecting your family's inheritance and controlling from the grave.  I recently read an article about Wellington R. Burt who died in 1919, yes 1919 that is not a typo, who left behind a multimillion dollar estate.  At one point in time, Mr. Burt was ranked among America's eight wealthiest men.  He had written into his estate planning documents the unusual provision that his estate would not be distributed until 21 years after the last of his grandchildren died.  That 21 years has finally come, 92 years after Mr. Burt's death.  He did provide for his children, ranging from $1,000-$30,000/year.  His estate is currently valued at approximately $100 million.  I bet his children wished their father would have provided more for them and their children.  Attached is an article about Mr. Burt's estate and his heirs.  It's an interesting read.  In addition our partner, Jeff Matsen, is quoted regarding the unusual nature of Mr. Burt's bequest.  http://bit.ly/mulz4y

Jason Salinardi

BridgeBuilder

Thought for the Week

"A man always has two reasons for doing anything:

a good reason and the real reason."

~ J.P. Morgan

Thursday, May 19, 2011

Do It Yourself Estate Planning

I've had several clients come in with Wills and Trusts they prepared themselves.  It is a universally bad idea to prepare your own estate planning.  Don't just take my word for it.  Here is a link to a recent Forbes blog post by Rob Clarfeld: http://onforb.es/lJGYfA

Jason Salinardi

BridgeBuilder

Thought for the Week

"Discipline is the bridge between goals and accomplishments"

~ Jim Rohn

Monday, January 31, 2011

A Different take on Estate Planning: Family Wealth & Legacy Planning

People tend to throw around the term estate planning without really knowing what it means.  There is a common misconception that estate planning is all about money.  Although money is an important aspect of estate planning- it's not the only aspect and at BridgeBuilder we believe it's not even the most important aspect.  

Don't get me wrong, money is a very important piece of the overall planning process and it will drive a lot of outcomes.  However what we've found when working with our clients is that the family legacy is actually the most important part of estate planning.  That's why we call our process Family Wealth & Legacy Planning. 

Family Wealth & Legacy Planning is an invaluable gift you give yourself and your loved ones.  It's a process that focuses not only on the financial (what you own) aspect, but effectively captures and preserves their life experiences, stories, life lessons, personal treasures, values and beliefs (who you are & what you know) and shares them with those you love most.  It is a process that truly builds a bridge to future generations.

Let's be honest, the financial aspect of "estate planning" is the easy part.  All the tools are out there, you probably have heard of all of them: wills, trusts, powers of attorney, health care directives, ILITs, GRATs, GRUTs, CRTs, CLUTs, etc.  The financial aspect is simply matching your goals and objectives with the right tools.  So you need to be sure that your attorney elicits your goals and objectives and has a full understanding of all the tools available.  However, that's just the starting point if you want to get to the real value of a Family Wealth and Legacy Plan.

The challenging part is peeling back the layers of someone to really get an understanding of what is important to them, what they truly want to protect and preserve, and what type of legacy they want to leave behind.  Then taking the essence of that person and incorporating it into their legal documents and providing them with the tools necessary to accomplish those goals and objectives.  The end result is much more than just legal instruments talking about money, the end result is a family legacy that means something.  My goal with BridgeBuilder is to help people develop their family legacy plan.

Jason Salinardi

BridgeBuilder- Plans for Life

Thursday, June 24, 2010

Two Recent Forbes Articles Regarding the Estate Tax

Are you prepared for the return of the Estate Tax in 2011?  Check out this recent Forbes article.  http://bit.ly/9cYLCJ

Does Congress know what they are going to do?  Some senators now want to put a surtax on billionaires to tax them at a rate of 65%.  Check out this recent Forbes article for more information.  http://bit.ly/bvTpUy

If you or anyone you know needs help with estate planning, please contact us.

Jason M. Salinardi

BridgeBuilder- Plans for Life

Thursday, June 24, 2010

Wednesday, June 16, 2010

Elder Law Issues

Almost all of our Kansas City area clients ask us, what is Estate Planning?

In our last couple installments we have been discussing the areas of concern for families and business owners regarding estate planning, which are as follows:

1. Lifetime control over financial and health care decisions
2. Planning for the cost-effective and expedient transfer of wealth at death
3. Family maintenance and protective planning
4. Business succession planning
5. Charitable planning
6. Gift and estate tax planning
7. Legacy planning
8. Elder law issues

Last week Garrett reviewed area 7 – Legacy Planning, today I will touch upon area 8 – Elder Law Issues.  The area of Elder Law is a complicated, confusing maze of Federal and State laws and regulations that is a separate specialty area, just like taxation.  While we have the taxation specialty, we have partnered with attorneys who have the Elder Law specialty to better assist our elderly clients.

Elder Law Issues

Elder law focuses on the legal needs of the elderly, and utilizes a variety of legal tools and techniques to meet the goals and objectives of the older client.

All of the typical estate planning concepts are still at play in Elder Law, but the client is typically “closer to the risk” in the context of planning for incapacity with alternative decision making.  The elder law client also frequently needs assistance in planning for possible long-term care needs, including nursing home care.

Locating the appropriate type of care, coordinating private and public resources to finance the cost of care, and working to ensure the client’s rights to quality care, are all part of Elder Law Issues.

For more information or if you have questions, please contact us.  Please keep the questions and comments coming.

 

Jason M. Salinardi

BridgeBuilder - Plans for Life

Monday, June 07, 2010

Legacy Planning

Almost all of our Kansas City area clients ask us, what is Estate Planning?

In our last couple installments we have been discussing the areas of concern for families and business owners regarding estate planning, which are as follows:

1. Lifetime control over financial and health care decisions
2. Planning for the cost-effective and expedient transfer of wealth at death
3. Family maintenance and protective planning
4. Business succession planning
5. Charitable planning
6. Gift and estate tax planning
7. Legacy planning
8. Elder law issues

Last week Jason reviewed area 6 – Gift and Estate Tax Planning, today I will cover area 7 - Legacy Planning.

Legacy Planning

Legacy planning recognizes that our roles as estate planners should be much more than simply ensuring that assets are transferred efficiently and expediently. When our clients die, hopefully, they will pass something much more than money or property. They should pass a legacy that demonstrates their values, or what they found important in life.

As estate planning attorneys, we need to find a way to guide our clients into a distribution plan that speaks volumes about the client as a person and not just as a source of inheritance. The distribution plan should help enhance the lives of the client’s beneficiaries. It should motivate and inspire.

Legacy planning emphasizes the belief that wealth goes beyond just material possessions. It involves our heritage (ancestors, traditions, heirlooms), family (beliefs, values, connections), and community (work, friendships, affiliations, and philanthropy).

Finally, legacy planning is as varied as the individual, and means different things to different people. It may translate into preserving the family cabin; funding college educations for grandchildren; rewarding beneficiaries who seek a life of philanthropy and public service (or rewarding beneficiaries who seek out the highest levels of education). Or it may simply mean a plan designed to protect children and other beneficiaries from “Affluenza” or “Sudden Wealth Syndrome”

For more information or if you have questions, please contact us.  Please keep the questions and comments coming.

Garrett L. Griffin

BridgeBuilder - Plans for Life

Wednesday, June 02, 2010

What is Estate Planning- Gift and Estate Tax Planning

Almost all of our Kansas City area clients ask us, what is Estate Planning?

We have been discussing the areas of concern for families and business owners regarding estate planning, which are as follows:

1. Lifetime control over financial and health care decisions
2. Planning for the cost-effective and expedient transfer of wealth at death
3. Family maintenance and protective planning
4. Business succession planning
5. Charitable planning
6. Gift and estate tax planning
7. Legacy planning
8. Elder law issues

Last week Garrett reviewed area 5 – Charitable Planning, today I will cover area 6 – Gift and Estate Tax Planning.

Gift and Estate Tax Planning

The gift and estate tax system essentially penalizes those who are too successful at accumulating wealth.  These taxes seek to limit the amount your clients can give to others- either during their lifetime or at death.  Collectively, “gift and estate taxes” are often referred to as “transfer taxes” because they impose a tax on the transfer of property from one person to another.

The tax is computed with reference to the value of the property that is considered to be in your gross estate at death, and the value of taxable gifts that you made during your lifetime.  Generally, at the federal level, if the total of lifetime taxable gifts and the value of the property owned as of the date of your death exceeds a certain exemption level (it was $3.5 million in 2009, no estate taxes in 2010, and set to be $1 million in 2011- see previous Blawg entries for detailed discussion of uncertainty of federal estate tax), a transfer tax liability may be due on amounts that exceed the exemption amount.  If this tax applies, it will be steep: the maximum tax rate in 2009 was 45% and set to be 55% in 2011.  (Note:  Neither Kansas or Missouri have an estate tax)

There are many deductions and strategies available to help reduce or even eliminate the transfer tax liability.  If you would like more information regarding such deductions or strategies, or have questions regarding this week's Blawg, please do not hesitate to contact us.

Please keep the questions and comments coming.

Jason Salinardi

BridgeBuilder- Plans for Life

Thursday, May 27, 2010

What is Estate Planning? - Chartiable Planning

Almost all of our Kansas City area clients ask us, what is Estate Planning?

In our last couple installments we have been discussing the areas of concern for families and business owners regarding estate planning, which are as follows:

1. Lifetime control over financial and health care decisions
2. Planning for the cost-effective and expedient transfer of wealth at death
3. Family maintenance and protective planning
4. Business succession planning
5. Charitable planning
6. Gift and estate tax planning
7. Legacy planning
8. Elder law issues

Last week Jason reviewed area 4 – Business Succession Planning, today I will cover area 5 - Charitable Planning.

Charitable Planning

Charitable estate planning can take many forms, but usually arises out of your client’s sense of commitment to a particular cause or philanthropic pursuit. Obtaining the best tax results is generally the most important and difficult planning objective in charitable transactions. Careful planning is absolutely necessary because the rules are complex and replete with traps for the unwary.

The Internal Revenue Code provides income, estate and tax deductions for charitable gifts. The deductions exist because Congress believes that the work charities do is worthwhile and that people should support them. In theory, charities relieve the government of the need to perform some useful activities and, therefore, a tax deduction for donations is appropriate. The charitable deduction is politically popular and will clearly remain part of the tax structure.

For more information or if you have questions, please contact us.  Please keep the questions and comments coming.

Garrett L. Griffin

BridgeBuilder- Plans for Life

Sunday, May 09, 2010

What is Estate Planning?- Business Succession Planning

Almost all of our Kansas City area clients ask us, what is Estate Planning?

In our last couple installments we have been discussing the areas of concern for families and business owners regarding estate planning, which are as follows:

1. Lifetime control over financial and health care decisions
2. Planning for the cost-effective and expedient transfer of wealth at death
3. Family maintenance and protective planning
4. Business succession planning
5. Charitable planning
6. Gift and estate tax planning
7. Legacy planning
8. Elder law issues

Last week Garrett reviewed area 3- Family Maintenance and Protection Planning, today I will cover area 4- Business Succession Planning.

Business Succession Planning

Business succession planning answers these questions:  What happens to the business when you are no longer running it?  Who is going to manage the business when you no longer work the business?  How will ownership be transferred?  Will your business even carry on or will it be liquidated?

Closely-held and family owned businesses must address these issues in order to orchestrate a smooth transition between yourself and the future owners of the business.  With family businesses, succession planning can be especially complicated because of the relationships and emotions involved, and because it is often difficult for the business owner to discuss transition and transfer issues among family members.

It is estimated that between 50% and 70% of family-owned businesses do not survive the transition from founder to second generation.  Estate tax plays a role in these losses, but failing to plan for the succession of the business plays an equally important or greater role.  Saving estate taxes is usually the after effect of planning for other goals, such as preserving a happy and comfortable retirement and facilitating a successful transition of the business to co-owners, family, or key employees in order to support the retirement.  Business owners also too often over estimate the value of their business and are counting on the sale/transition of their business as their sole retirement vehicle.  This often leads to the business owner working much harder and longer than anticipated.  For this reason, we work closely with the business owner and their financial advisor to ensure their succession planning goals and retirement goals are in sync and achievable.

For more information or if you have questions, please contact us.  Please keep the questions and comments coming.

Jason Salinardi

BridgeBuilder- Plans for Life

Tuesday, April 27, 2010

What is Estate Planning? – Family Maintenance and Protection Planning

Almost all of our Kansas City area clients ask us, what is Estate Planning?

In our last blawg installment Jason provided us with how BridgeBuilder defines estate planning.

He began breaking down the definition and highlighted the following areas of concern:

1. Lifetime control over financial and health care decisions
2. Planning for the cost-effective and expedient transfer of wealth at death
3. Family maintenance and protection planning
4. Business succession planning
5. Charitable planning
6. Gift and estate tax planning
7. Legacy planning
8. Elder law issues

Jason covered the first two areas of concern and today I will provide an overview of area 3 with the remaining areas of concern to be covered in upcoming blawg posts.

Family Maintenance and Protection Planning

Routinely, attorneys develop a myopic view of estate planning. They are guided by the principal goal of passing as much wealth to the next generation as tax-free as possible. While “financial wealth transfer” can, and should, be one of the goals – it should not be the primary goal. Rather, the primary goal should be the preservation of the client’s values and the corresponding protection of the client’s intended beneficiaries.

If you probe deep enough, you will find that most of your clients have definite convictions as to how they would like their beneficiaries to use their inheritance. Similarly, there is usually a strong desire to protect the beneficiary’s inheritance from outside forces, like “creditors and predators.”

The estate plan you craft should address many of the following family maintenance and protection issues:

• Who could best serve as the “back-up parents” for minor children, providing the necessary care, love and nurturing environment;

• How could “continuing trusts” be utilized to safeguard inheritances for minor beneficiaries or other beneficiaries who lack the ability to manage their inheritance;

• How can inheritances for adult beneficiaries be held in trust so as to protect the beneficiaries from the potential future divorces, lawsuits, creditors and predators;

• What types of activities, life styles, work ethics, etc. do your clients want incentivize;

• How can you minimize the potential risk of “affluenza” for beneficiaries who are going to receive sizeable inheritances;

• What if the intended beneficiaries have (or may develop) “special needs” or disabilities?

If there is an area of concern you have, please let us know or contact us as we would be happy to help.  Otherwise, please keep the questions and comments coming. 

Garrett Griffin

BridgeBuilder- Plans for Life

Wednesday, April 14, 2010

What is Estate Planning?

Almost all of our Kansas City area clients ask us, what is Estate Planning?

BridgeBuilder’s definition of estate planning is as follows:
 

“I want to control my property while I am alive, take care of me and my loved ones if I become disabled, and give what I have, to whom I want, the way I want, and when I want.  Furthermore, if I can, I want to save every last tax dollar, professional fee, and court cost legally possible.”

Breaking down this definition, we find that estate planning involves the following areas of concern:

1. Lifetime control over financial and health care decisions
2. Planning for the cost-effective and expedient transfer of wealth at death
3. Family maintenance and protection planning
4. Business succession planning
5. Charitable planning
6. Gift and estate tax planning
7. Legacy planning
8. Elder law issues

I will break down the first two areas of concern today and BridgeBuilder will break down the remaining areas of concern in upcoming blawg posts.
 

Lifetime Control over Financial and Health Care Decisions

While you are alive and able, you are able to handle all of life’s critical decisions.   On a daily basis, you handle your own financial, legal, and property-related matters.  And, less frequently, you are called upon to make important medical and health care decisions.

But what if your ability to handle critical decision making was lost due to disability or incapacity?  Without proper planning in place, a “control vacuum” would appear.  There would be no single individual vested with power or legal authority to act on your behalf. 
 

When this situation arises, the only recourse available is to seek a court ordered guardianship or conservatorship.  But invoking the court’s jurisdiction is often costly, time consuming, unpredictable, cumbersome, and even embarrassing.  More importantly, the court’s involvement is completely unnecessary.

Proper estate planning operates to fill this “control vacuum” without court intervention.  It enables you to hand-pick trusted individuals and empower them to act on your behalf.  Moreover, it binds the appointed individuals to follow a specific set of instructions designed to meet your stated goals and objectives.

Generally, the areas of “lifetime control” addressed by estate planning can be broken down into three fairly distinct areas: (1) control over financial, legal and property matters; (2) control over personal health care and medical matters; and (3) control over the care and nurturing of minor children and other dependents. 

Planning for the Cost-Effective and Expedient Transfer of Wealth at Death

Dying can be costly and time consuming, particularly if there is no plan in place.  Creditors, financial institutions, and other interested parties must be notified; funeral and burial arrangements must be made and carried out; debts must be addressed; taxes must be paid; tangible and intangible assets must be protected and eventually transferred to beneficiaries; and the decedent’s overall wishes must be carried out.  There is a lot to do, and this is just the short list, which does not even include the most important- the grieving process.

Proper estate planning identifies all of the “hurdles” that may arise post-death, and minimized their effect, which allows you to focus on the grieving process.  For example, if it is determined that substantially all of your assets would be subject to lengthy and costly probate proceedings at death, we may utilize various “trusts” and other planning techniques to eliminate the need for the probate court at death.  In addition, we will devise a plan empowering your trusted family members to seamlessly retain control of and continue the operation of your assets- like businesses, farming operations, family vacation property, etc.

Understanding just what needs to be done for a particular client requires experience and knowledge of the various tools and techniques available.  Equally important is a complete understanding of you, your family and your goals and objectives.  We at BridgeBuilder understand that each client is different and no one technique works for all clients.
Until next time, please keep the questions and comments coming.  If there is an area of concern you have, please let us know or contact us as we would be happy to help.

Jason Salinardi
BridgeBuilder- Plans for Life