Planning for a Disclaimer in 5 Easy Steps

What is a disclaimer?

beneficiary disclaimerA disclaimer is a formal refusal of an inheritance (or part of an inheritance) by a beneficiary.  By creating a “path” for disclaimed assets to follow, a skilled planner can provide a beneficiary with the option to pass assets to alternate beneficiaries.

1. Make sure the IRA owner names contingent beneficiaries.  Naming a contingent beneficiary directly on the beneficiary form is good practice and a pivotal part of most disclaimer planning.  When a disclaimer is executed, the person making the disclaimer is treated as if he or she had predeceased the IRA owner.  The contingent beneficiary would then inherit the property.  If there is no contingent beneficiary listed, often the funds will default to the estate of the deceased IRA owner.

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Sometimes It Pays to Treat Your Kids Unequally

Treat Your Kids UnequallyAs the father of more than one child, I understand the desire to try and treat children as equally as possible. You certainly don’t want one child to think you love him/her any less, or more, than your other children (though children will inevitably feel that way at one time or another), and you want the best for all of your children. But while children may share the same parents, may grow up in the same house and may be raised in the same manner, they are very much like snowflakes. Each one is truly unique. However, when dividing your estate, it may be beneficial to treat your kids unequally.

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Avoiding Spousal Beneficiary Mistakes in 5 Easy Steps

Who is a spouse beneficiary? Spousal Beneficiary

A spouse beneficiary must be married to the account owner at the time of the account owner’s death, and he or she must be named on the beneficiary form (or inherit directly through the document default provisions).  A spousal beneficiary has a number of unique options

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3 Questions When Preparing a Power of Attorney for an IRA

Much consideration should be given when choosing your Power of Attorney.

Giving another person the ability to make significant financial decisions and/or take IRA Power of Attorneyactions on your behalf is not an easy thing to do. That said, various situations may arise where you no longer want to, or are able to, manage your own finances. In such cases, you want to make sure someone else can act on your behalf as Power of Attorney.

Typically, this is done via what’s known as a Power of Attorney (POA) document. This form, which is generally prepared by an estate planning attorney, grants a person – known as your attorney-in-fact (or agent) – the ability to step into your shoes and make what are often critical and important decisions..

Clearly, great thought should be given to whom you name as your attorney-in-fact. All too often though, that’s where the thought stops. In reality, a commensurate level of thought and discussion should take place regarding the document itself and the provisions that are incorporated into your POA.

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Fixing a Missed RMD in 5 Easy Steps

Required Minimum DistributionWhen should you look for a missed RMD (required minimum distribution)?

RMDs must be taken by IRA owners beginning in the year they turn age 70 ½ and by IRA and non-spouse Roth beneficiaries beginning in the year after the death of the account owner. RMDs not taken are subject to a penalty of 50% of the amount not taken each year.

When should you looked for a missed RMD?

You should look for a missed RMD every year after an account owner turns age 70 ½ and when an IRA or non-spouse Roth beneficiary inherits an IRA. Ask your advisor to double check any calculations to be sure they are correct.

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Gifting-During-Life Strategy: Does It May Sense for YOUR Family?

Estate PlanningWhen it comes to estate planning, one of the primary goals is to transfer as much of a person’s assets to their intended beneficiaries at the lowest cost or, in other words, by paying the least amount of tax.Today, the federal estate tax exemption is $5,430,000 per person. It is also portable (can be transferred) between spouses, giving them a maximum exemption of $10, 860,000 per couple and the maximum rate is 40%. That is a far cry from where we’ve been. In the not-too-distant past, the federal exemption was at $1 million, it wasn’t portable and the top rate was 50%.

Due to the massive amount of assets that could have been lost to federal estate tax, people looked for any way to avoid it. Oftentimes, that included gifting away assets during life, which, while providing an estate tax edge, probably wasn’t the better move when it came to the income tax side of things. As a result, in order to maximize the value of one’s estate, a careful analysis of estate tax costs vs. income tax costs was necessary.

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Leaving a Legacy: 3 Differences Between Roth IRAs and Life Insurance

Copyright Ed Slott and Company 2014 | By Jeffrey Levine, IRA Technical Expert

Roth IRA or InsuranceLife insurance and Roth IRAs have a lot in common. They are both often used as wealth transfer tools to help facilitate an efficient transfer of assets from one generation to the next, and they are both able to provide a tax-free legacy, just to name a few. Despite their many similarities, however, Roth IRAs and life insurance are very different and the rules that apply to one don’t always apply to the other. In fact, more often than not, that’s the case. Below, we discuss three differences between Roth IRAs and life insurance.

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There’s More to Estate Planning Than Just the Will

Article Credits: The New York Times | September 6, 2014 | By Alina Tugend | Courtesy of Ed Slott and Company

More to Estate Planning Than Just the WillWILLS, health care directives, lists of passwords to online accounts. By now, most people know they should prepare these items in their estate planning — even if they haven’t yet — and make them available to trusted family members before the unthinkable, yet inevitable, happens.

But the information family and friends will need when a loved one dies goes far beyond those much-talked-about documents, and having them can make the end of life just a little less painful for those who remain behind.

Consider the experience of John J. Scroggin, who runs a tax business and estate-planning firm in Atlanta. His father, who died in 2001, wanted to be buried in Arlington National Cemetery in Washington.

“I called Arlington and they told me I needed his DD 214 to bury him at the cemetery.” Mr. Scroggin recalled. “I had never heard of a DD 214, but they told me if I could not find it, they would put him in cold storage for six months while they found it.”

After a frantic search, “I found Dad’s DD 214 as a bookmark in a book,” he said. The Arlington burial took place. The lesson: Add military discharge papers to the documents you hand over to family members or trusted friends.

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A New Reason to Hoard Assets

Article credits | The Wall Street Journal | March 28, 2014 | By Arden Dale

The wealthy may be putting the brakes on the gifting bonanza of the past few years.

State of Estate TaxThe wealthy are gifting less to their families these days.

Large gifts that shrink an estate for tax purposes no longer make sense for many people now that the federal government taxes only estates larger than $5.34 million, or $10.68 million for couples.

With that threshold—which adjusts for inflation and which Congress has called permanent—so high, many financial advisers recommend that their clients wait until they die to give their assets away.

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Handling Your Ex: Tips For Switching 401(k) Beneficiaries

Article Credits: Investor’s Business Daily | By: Donald Jay Korn | February 3, 2014

401(k) BeneficiariesDivorce, Remarriage?

If your account is not going to your spouse, here’s how to proceed

In estate planning, the beneficiary designation usually rules. But in some cases there’s a higher power: federal law. In particular, the Employee Retirement Income Security Act of 1974 (ERISA) rules, when it comes to employer retirement plans like a 401(k).

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