CA Estate Planning

IF YOUR CHILDREN WON’T LISTEN TO YOU PERHAPS THEY’LL LISTEN TO AMERICAN EXPRESS!

There is an old saying that can be painfully true, “You are only as happy as your unhappiest child.” One of the most common laments I hear from parents of adult children is that, for whatever reasons, their offspring seem to (repeatedly) need financial assistance … not because of illness of hardship, but simply through poor decision-making.

It’s hard to talk-turkey with your adult children, and they seldom listen anyway. But, maybe they will listen to advice from a third-party, especially if that advice is delivered in a manner with which they are most comfortable – fresh, fun and online.

American Express has launched Currency (www.getcurrency.com) to provide just that type of advice.  They offer online “courses,” and even a new iPhone app, Social Currency for social networking. A recent hot topic: Currency 101: What is “Spending”?

Some of other course topics include Buying Your First Home, Get a Handle on Your Taxes, and Managing Student Loans.

But if your adult children still keep on coming to you for “loans” there are two estate planning steps you can take that might discourage them for “freeloading” of you:

(a)  Make provision in your trust that any loans will be deducted from their share of your estate on your deaths

(b)  Set up a spendthrift trust which can limit their access to their share of your estate by providing for payout to be at the discretion of a third-party trustee.

And if neither of those deterrents are effective, well stop giving them loans or make them sign promissory notes for the loans.  It’s called “tough love”!

 

For more information regarding spending advice and planning that can ensure your family is taken care of, while still responsible with their money, visit us here to set up a FREE consultation.  

Have You Talked With Your Family About Proper Planning?

Talking about money with family members is never easy. What’s even harder is if you are the child trying to talk about money with your parent(s), and harder still if you are an adult trying to talk about money with your Depression-era parents. People who have lived through the Depression tend to have different thoughts about money and often regard it as private -- even within the family. They learned a silence about money that was meant to stop or hide worries, but now could actually create more of them. The New York Times recently offered a few suggestions on how to talk about money and estate planning with Depression-era parents:

• Parental Duty: Sometimes framing the conversation in terms of how you are worried for them will trigger “the silence.” Instead, try to remind them that you are concerned whether they have done the right thing in terms of handling their estates. This type of conversation may trigger a sense of “parental duty,” which people from this era generally take very seriously.
  
  
• Use Yourself as an Example: You can begin talking about your own concerns, strategies, and plans and even ask for advice. Use that as an opportunity to ask your parents about how they may have handled their own plans.
  
  
•  Professional Assistance: Some parents may also feel more comfortable discussing their financial situation in front of a disinterested party, like a longtime accountant, lawyer or financial planner. The trouble here is that many parents will be wary of the cost of professional assistance, but if you offer to help with the cost, or cover it entirely, they may be more willing to schedule an appointment.

 

The final advice is to use good timing. Thanksgiving dinner probably is best left for enjoying everyone’s company, swapping stories, perhaps watching football, and eating too much pie.  If you are going to discuss finances with parents, it is best to do it in the location where they are most likely to feel comfortable and at ease, like their own living room, or going on a favorite walk.  Sometimes, it may be easier to broach the subject with just one parent who is more amenable to listening to you and get them to discuss the matter when the spouse is most likely to be receptive.

If you would like more information about your family’s estate planning and assistance in explaining to loved one’s the importance of proper planning Click HERE to schedule a FREE consultation.

NEW SMALL BUSINESS LAW PROVIDES SPECIAL INCOME TAX BREAK ON ROLLOVER FROM 401 (k) TO ROTH IRA THROUGH 12/21/10

The remaining months of 2010 may prove an uneasy time for tax and financial planning – with the status of Bush-era tax cuts and the possible return of the estate tax hanging in the balance while a “lame duck” congress still has the wheel. However, the Boston Globe reports the end of year holds some good news for retirement investors – thanks to new rules put into effect by the small business bill passed last month making Roth IRAs a more attractive option.

While traditional retirement accounts allow you to invest pre-tax dollars, paying the tax on withdrawals during retirement; the opposite is true for Roth accounts. With a Roth account, you will pay the tax up front, but the funds are freely accessible during retirement. The ability to draw money from both taxable and nontaxable accounts allows a retiree to better control tax liability.

The new small business law includes a provision that allows you to roll over funds from a 401(k) into a Roth account, without incurring the associated penalty (10%) for doing so before age 59.5. The conversion process will still be subject to income tax, but there law also includes a special tax break available if you make the switch this year. To qualify, however, the funds must convert before December 21, 2010, so don’t wait until the last minute to make this decision.

Visit our Small Business Information section of our webiste or Click HERE to schedule a FREE consultation to find out how this new law affect you.

Are you ready for estate tax 2011?

Now that the Republicans have secured a large majority in the House and the Democrats continue to hold on the Senate just barely, we can expect a battle royal over the estate tax.  One big question for the crystal-ball gazers is when will the legislation be passed?  My bet is “not any time soon.”   While taxes will be a major issue in the lame-duck session, it won’t be until the next Congress that the real battle will be fought in a House that is in no mood to compromise.

So what happens to the estates of people who die early in the new year?  They will have an exemption of only $1 million that could prove to be disastrous for many families who may not be particularly cash-rich but have a large amount of equity in their houses.

The Democrats and Republicans are still very far apart on the estate-taxation issue – the Republicans set on anywhere from abolishment to $5.5 million -- and with the President still set on $1 million threshold, it may be well into the year before there is any agreement on the exemption and tax rate.

What are those married couples who have more than $2 million ($1M each) in savings able to do to protect their hard-earned wealth in the meantime? 

Many of the tax avoidance tools just are not practical for people with relatively modest wealth.  However, at the very least, you should have an experienced estate-planning attorney check your estate plan to ensure that you are sheltering the maximum amount of your estate from taxation, whatever the threshold level.  Even abolishment of the tax could have a negative impact for many families who have not updated their estate plan in the last few years.

If you would like more information regarding what you can do now before the end of the year to minimize estate tax in the near future, please call us at 1(877) 858-4724 or Click HERE to schedule a FREE consultation!