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Recent Blog Posts
Creating estate plans: Preparing after the birth of a child
Now that your little bundle of joy is here, it is time to talk estate planning. Just like how you checked finding a pediatrician and decorating the nursery off your to do list, now is also the time to make sure everything is in place in case anything ever happened to you and your partner.
A will is one of the most important documents you will create after the birth of a child. This document not only specifies how your assets are to be divided, but it should also list who your child’s guardian is. This is a matter not to be taken lightly, as a guardian is someone who will raise your child if something were to happen to you.
While some parents choose a brother or sister to act as their child’s guardian, others choose a close friend or other family member. No matter who you choose, since it is such a large and life-changing responsibility, make sure you talk to this person beforehand and make sure they are up to the task before finalizing documents with your attorney.
If This is December, It’s Time to Consider 529 Qualified Tuition Plans
Got a kid or grandchild headed to college….sooner or later? December is a great time to set up and contribute to a 529 plan, to take advantage of this year’s annual gift exclusion amount. 529 plans are an efficient and cost effective way for parents and other family members to help pay for accredited post-secondary educational expenses. “529” is a reference to the Internal Revenue Code section setting out the terms and conditions for qualified tuition plans. All 50 states and the District of Columbia, as well as many state educational institutions, provide or spo nsor 529 plans where income earned on assets are not subject to federal income tax and may not be subject to state income tax if ultimately used for qualified educational expenses.
Properly structured contributions to 529 plans can also avoid federal gift tax. Annual contributions of up to the annual gift tax exclusion amount per beneficiary ($14,000 in 2017 and $15,000 in 2018) are not subject to federal gift tax (provided no other gifts are made to the beneficiary during that year), plus married couples may effectively double their contributions. In addition, contributions also may be front loaded for up to five years, provided the donors file a federal gift tax return to make the five-year election. However, in order to take advantage of front loading annual exclusion amounts, the donors must survive for the entirety of the five-year period; if the donors pass away during the five-year election period, contributions allocated to the remaining years after death will be included in the taxable estate of the donors.
Have you heard about the changes for 529 education savings plans?
Previously, 529 plans could be used only to cover costs for college and other post-secondary educational expenses. The new tax bill changes that, allowing use of 529 savings plans to support children’s K-12 education, and authorizes 529 accounts withdrawals for public, private or religious schools. With this expanded flexibility, families not currently setting aside money for education may want to reconsider earmarking some savings toward a 529 plan.
Home schooling families are also allowed to use 529 funds towards educational expenses. The expanded rule limits the benefits to $10,000 per year, per child.
The new legislation also further supports funding of “ABLE” accounts designed for use by people with disabilities. Under the new law, one can roll over 529 plan assets to an ABLE account. Both accounts must have the same beneficiary or a member of the same family, and allows rollovers up to the annual gift exclusion amount, which will be $15,000 as of January 1, 2018.
How a life insurance trust can help preserve your wealth
Estate planning goes far beyond itemizing assets and listing beneficiaries to receive these assets. Especially for those who plan to leave a good deal of wealth and possessions when they pass, the process of estate planning should also take a close look at just what can be done to best preserve wealth for future generations.
There are a number of tools at your disposal when putting together an estate plan. The choices you make and the way you decide to set up your estate is a very personal matter. Your attorney should be looking at your financial goal and big picture – and then making suggestions for how to proceed from there. No matter what direction you go in, you and your attorney should be looking at all of the possible exemptions and tools that may be available when putting together the plan.
In this post, we are going to focus on just one of these tools: the irrevocable life insurance trust. In past blog posts, we have discussed a number of other possible tools, including those related to gift giving and retirement accounts, as well as qualified personal residence trusts. A life insurance trust is an additional tool to consider.
Changes to your family can mean changes to your estate plan
If you have already put together a will and estate planning documents, you’ve already gone a long way in terms of preparation for the future. However, do not let those documents go stale. Rather, make sure to review them at least every five years – or sooner – if you or your family recently went through any major life changes.
When reviewing your estate plan, there are a few major life changes to consider and keep in mind.
If you changed your marital status
Marriage and divorce are two reasons to update your estate plans. If you recently got married, you will want to make sure to update any beneficiary designations. However, if you recently split, by divorce or even separation, you will want to consider updating these very same designations, obtaining waivers, and/or making changes to your will or trusts. Without these updates, your spouse could end up with less – or your ex could wind up with more.
Trusts: The benefits of flexibility and control
When creating an estate plan, you will likely run into the option of setting up a trust or a will – or both. This leaves many wondering what the best option is. Should you transfer your assets to a trust? Or should you spell out your wishes in a will? Or does it make sense to have both a trust and a will?
The answer: It all depends on the specifics of your situation and what your wishes are for after you pass.
In this blog post, we will provide a basic overview of a trust versus a will and give you general examples to think about as you put your plans together. To really figure out what will work best though, we highly encourage speaking with an estate planning attorney, as the process can be rather complex with many variables to consider.
Trusts and wills overview
Both a trust and a will allow you to designate your assets to a loved one after you pass. However, the way each functions varies greatly.
Save Money With New Montgomery County Property Tax Credits
Over 65 and living in your Montgomery County, Maryland home for 40 years or more? New property tax credits for qualifying Montgomery County, MD homeowners could save you BUSHELS of MONEY!! Read on – *NEW* Property Tax Credit for Elderly Individuals and for Military Retirees (Bill 42-16)
The gift of your home: How a QPRT can reduce your taxes
Your home is a considerable asset. Yes. You have money in the bank, investments made and valuable possessions, but your home is also a rather significant asset to take into account when deciding how you want to leave your assets to your loved ones.
At the end of the day, the goal is to reduce the tax burden for you and your loved ones. Utilizing a qualified personal residence trust, commonly referred to as a QPRT, is one estate planning tool that allows you to live in your home, while also gifting the home to someone else, such as a child or grandchild. The benefit with a QPRT is that it reduces the size of your estate, which equates to a tax savings.
The basics of a QPRT
By no means are you expected to have an in-depth understanding and knowledge of how a QPRT works. After all, this is what your attorney is for. Rather, that you need to know is that you can give your home away, while still living in it for a certain period of time. After this time period is reached – a time period you pre-determine – the home is then either given to the named person or to a trust.
Strategies To Save Your Loved Ones Money After You Pass
You have worked hard for everything you have and you no doubt want to leave your children with your assets when you pass. While this sounds simple enough, the truth is that estate tax laws are downright confusing, and one small mistake or oversight can have serious financial implications for your heirs.
When it comes to estate planning, there is a number of different estate tax planning strategies you will want to explore with your attorney.
Tax benefits through trusts
Trusts can be beneficial for a number of reasons. These financial estate planning tools allow you to not only decide who will receive your assets, but you can also set stipulations for how and when these assets can be used — both while you are alive and after you pass. In addition to giving you more control over your assets, irrevocable trusts also provide tax benefits, as the assets are considered no longer owned by you and are therefore not subjected to estate taxes.
Prenuptials and estate plans for marriage after 50
Finding love in life is a great feeling, no matter your age. However, just like there are considerations for a 25-year-old to make prior to marriage, there are also important decisions someone 50 or older also needs to consider before walking down the aisle. In this blog post, we hope to provide some basic information on the importance of having a prenuptial agreement and finalizing estate plans before getting married.
Prenuptial agreement: Protect your children’s assets
Those who are 50 or older tend to be better established in life. Going into a marriage, there may be significant assets already, such as a home, retirement accounts and investments. The thing is, unless a prenuptial agreement specifically spells out the terms of how to divide assets in the event of a divorce, you run the risk of an ex-spouse getting the assets you intended for yourself, along with the ones you were hoping to one day leave to your children and grandchildren.
