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Estate Planning Insights & Tips

When is an equal distribution of assets a bad idea?

It is common for those who put together an estate plan to attempt to distribute assets to heirs in equal portions. The idea behind the move is logical — each kid gets an equal share of the parent’s or grandparent’s assets. But does it end up working this way?

The next series of posts will delve into this question. This, the first post, will discuss an example of an unequal transfer. The next post will provide some resolutions to increase the likelihood that an estate plan will result in an equal transfer of assets.

Taxes & gift giving: Did recent tax reform change anything?

An estate plan accounts for more than just a transfer of assets at one’s death. It guides financial planning, health care decisions and even how we gift. Anyone that puts together an estate plan with a one size fits all mentality is unlikely to make the most of the plan. When drafted wisely, an estate plan can do more than just transfer assets — it can result in serious tax savings. 

The best way to make the most of these benefits is to stay current. Any changes to the tax code could impact the plan and trigger a need to review and adjust the plan. The Tax Cuts and Jobs Act (TCJA) passed at the end of 2017 is one such change.

Three common audit triggers

Tax season is upon us. Those who are getting ready to file their tax returns may wonder whether this is the year they are chosen for an audit. Audits are generally not random. There are some red flags that can increase a taxpayer’s risk of a federal audit.

For example, the Internal Revenue Service (IRS) is more likely to audit:

When should I update my estate plan?

Ideally, an estate plan should be an evolving set of documents. These legal tools should change and grow with you — not remain static. Those who put together an estate plan and forget it are less likely to have an estate plan that truly reflects their desires then those who review the documents and make updates.

When should you take the time to review your estate plan? Four life events that trigger the need for a review include:

Estate planning 101: How are stocks transferred?

An estate plan can ease the transfer of assets. This includes everything from a family home to less tangible assets, like stocks. Here are three examples for the best way to discuss the transfer of stocks:

  • Example #1: Stockowner does not include stock in the estate plan or does not have an estate plan. The stock will likely transfer either to a surviving spouse or as directed by the beneficiary designation. Probate may be required if a beneficiary designation or transfer-on-death beneficiary is not listed. Probate is best avoided, as it is a costly, time consuming and public process.
  • Example #2: Stocks as part of a retirement account. When the stock is part of the retirement account, the transfer is complete without taxation. If, however, an heir makes a withdrawal, income taxes may apply.
  • Example #3: Stocks held within a trust. This answer is more complicated. The exact impact will depend on the details of the trust. If the stockowner set up the trust as a generation-skipping trust, the heir could owe capital gains taxes upon transfer.

      Did the new tax law make trusts obsolete?

      A trust is an estate planning tool that can reduce one's estate tax obligation. As a result, some may think the increased estate tax exemption rates that went into effect with the passage of the Tax Cuts and Jobs Act (TCJA) have made the need for a trust unnecessary.

      This is not so.

      Although trusts continue to provide estate tax benefits, this is just one of the many advantages a creator can reap from the use of a trust. Additional benefits that remain applicable today include:

      Top reasons to have an estate plan

      Estate planning is not just for individuals and families with large estates. One of the most important documents to have in your estate plan is a will. Have you thought about getting a will but decided to do it later? Think again. Dying without a will creates serious repercussions for your loved ones.

      Do you know the benefits of having a will?

      Everyone needs and benefits from having a will. This is true for families with significant assets. It is just as true for new parents and single individuals who may just be starting their careers. Whoever you are, you will benefit from having a will.

      What to know about asset protection and estate planning

      Are your assets protected? Every family should answer this question with a confident yes. Unfortunately, many people do not know where to start when it comes to wealth management and asset protection.

      How to protect and preserve your wealth

      Wealth management is a vital part of estate planning. You can preserve your wealth in a variety of ways with a thorough estate plan that transfers your assets to a trust, limited liability entity or other an insurance policy in some cases.

      Most people forget this asset in their estate plans…did you?

      Estate planning provides the opportunity to review and account for all assets. Most people have plans that include tangible forms of property, retirement accounts, stocks, bonds and business interests. But did they remember to include digital assets?

      Digital assets have grown in recent years and are tracking to continue to grow in the future. As a result, it is important to account for these assets within your estate plan.

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