Educational Alerts

The federal government and each state have a list of assets that are protected under the bankruptcy code. Every state protects personal residences. (Some states offer virtually unlimited protection and other states offer only protect a modest amount of equity in the home.) The amount of protection for qualified retirement plans governed by ERISA (Employee Retirement Income Security Act) and contributory IRAs is also defined by both federal bankruptcy law as well as state laws. An area of … [Read more...] about Supreme Court Rules on Bankruptcy Protection of Inherited IRAs

“It’s not fair!”   Parents hear this protest all the time, and it often comes from children who confuse being treated fairly with being treated equally.   One of the challenges of parenting is figuring out how to be fair to your children when, often, that doesn’t mean treating them exactly the same. Here’s an example:   Andy is ten years old and Emma is sixteen. Emma has her driver’s license and a part-time job. If you wanted to treat the two equally, you could … [Read more...] about Fair Does Not Always Mean Equal

In IR-2013-35 (March 28, 2013), the IRS reminded us that in most cases seniors who turned age 70½ during 2012 need to start taking Required Minimum Distributions (RMDs) from their IRAs, 401(k)s, and other retirement plans by April 1, 2013. The April date only applies to persons who are taking their first RMD. For all subsequent RMDs, the senior will need to take the distribution by December 31st of that year. Of course, seniors who do decide to delay their first distribution to the year … [Read more...] about Planning for Retirement Assets Can be Difficult

Football fans (and others) were shocked on December 1st of last year to learn about the murder of Kasandra Perkins. Perkins had been killed by Kansas City Chiefs linebacker Jovan Belcher. Jovan subsequently committed suicide at Arrowhead Stadium in front of his coach and the team general manager. The deaths of Kasandra and Jovan left their four month old child, Zoey, the subject of a guardianship dispute between Cheryl Shepherd, Zoey’s paternal grandmother, and her maternal grandparents, … [Read more...] about Guardianship Provisions Essential To a Comprehensive Estate Plan

Last month, we let you know that Congress let the United States go off the fiscal cliff, only to come to the rescue in the early morning hours of January 2, 2013, with the passage of the American Taxpayer Relief Act of 2012 (“ATRA”). To review, ATRA makes most of the provisions of the previous estate tax law permanent. The amount that can be passed free of gift tax and estate tax is indexed for inflation, with the figure set at $5.25 million for 2013. The maximum gift and estate tax rate was … [Read more...] about More Reasons for Clients to Review Their Estate Plans

On December 31st, the United States went off the “fiscal cliff.” But, less than twenty-four hours later, Congress passed the American Taxpayer Relief Act of 2012 (“ATRA”). ATRA makes most of the previous estate tax law permanent. The amount that can be passed free of estate tax in 2013 is $5.25 million, with annual adjustment based on the CPI. The estate tax and the gift tax remain unified, so what is used during life is not available at death. The generation-skipping transfer tax exemption is … [Read more...] about New Year’s Resolution #3 – Get My Estate Plan Reviewed

This month’s Alert focuses on the increased trust litigation arising from the unintended consequences of the temporary repeal of the estate tax in 2010. The estate tax was repealed for much of the year in 2010. While taxpayers with large estates benefited from the lack of the estate tax, the change in the law has caused litigation with inconsistent results. Estate planning attorneys have traditionally employed a strategy for married clients with large estates: dividing the contribute share of … [Read more...] about 2010 Tax Law Leads to 2012 Litigation

The Alert this month examines "portability" and the steps necessary to take advantage of it under newly-released regulations. For many years estate planning attorneys have had to draft complicated provisions into the estate plans of married couples in order to make maximum use of the applicable exclusion amount (the "AEA"). The AEA is the amount that can pass free from estate tax at the death of an individual. Technically, even without “portability,” a married couple can pass twice the AEA to … [Read more...] about IRS Issues “Portability” Guidance

This month's Alert examines the importance of proper IRA beneficiary designations. The Alert examines a case in which the stretch of IRA distributions was not maximized because of the beneficiary designation. A parent with a large retirement account often doesn't want to name a child as the direct beneficiary of the retirement plan. This might be because the child is a minor. It could be because the child has a disability and is receiving government assistance. Other reasons include the … [Read more...] about Planning Blunder Leads to Increased Income Taxes

With more than half of marriages ending in divorce, an increasing number of families are “blended families.” The Alert this month examines the unique issues faced in planning for blended families. Approximately 50% of first marriages, 60% of second marriages, and 75% of third marriages end in divorce. With those statistics in mind, it is not surprising that many couples doing estate planning have children from previous relationships. This can add complexity to the estate plan. One or more … [Read more...] about His, Hers, or Ours? – Estate Planning for Blended Families