Do you know what makes up your estate? The list below may surprise you.

• Home
• Retirement Plans
• Life Insurance
• Real Estate
• Investment Accounts
• Autos, boats, RVs, planes
• Furnishings
• Collections
• Personal effects
• Jewelries
• Cash
• Business interests

Pretty impressive list, huh? This is not an exhaustive list and you may have more assets that make up your estate. Every United States Citizen has tax coupons. This is similar to grocery store or retail store coupons. Currently, tax coupons in 2017 are as follows: $3M in Maryland and $5.49M for Federal.

Planning your estate helps you take advantage of your tax coupons. It’s a “use it or lose it” deal. Example: If a married couple has a combined total of assets that is over $3M ($3.1M or more), your estate will pay16% Maryland taxes on anything over $3M.
So, assuming your estate has $3M (factoring in your life insurance, real estate, retirement plans, etc), your spouse who should only be dealing with issues like funeral arrangements, properly grieving your passing, or comforting your children (if any), will not have to worry about paying the state of Maryland a whopping $80,000 in taxes for your half of the amount over $1M ($500,000).
If you had properly planned your estate, that sum would have gone into a Qualified Terminable Interest Property (QTIP) Trust which your spouse can use without having to worry about payment of taxes. In this situation, no federal tax is due since the exemption amount is $5.49M.

How about your child or children? Will they know what to do with a $1M dollar inheritance at 18, 20, 21, even 25? What if your child gets sued, has creditor problems, marries an “evil” spouse, has special needs, loves spending money unnecessarily, etc? What will happen to that inheritance? I will leave that to your imagination.
Planning your estate enables you to create what I call beneficiary trusts. If properly drafted, this Trust can protect the spendthrift child from themselves, or protects your child against lawsuits, or a divorce, creditors, personal injury claims, etc.

How about your IRAs? We all know that your IRAs are growing tax deferred right now until you reach the proper retirement age in the IRS code? What if you die before that age? Do you know you can prolong those tax deferrals for your children’s benefit? A properly planned estate will include a separate IRA Retirement Trust also known as a Stretch or Inherited IRA Trust. The longer your IRAs can grow tax deferred, the more money stays in your estate for your   beneficiaries’ benefit. There is power in tax deferred investment.
For example, $1 doubled every year for 20 years tax free (at an annual return of 12%) is $1,048,567. Conversely, $1 doubled every year for 20 years at a tax rate of 29% is $45,701. An IRA is treated as “inherited” if the individual for whose benefit the IRA is maintained acquired the IRA on account of the death of the original owner. . Under the IRS Code and Regulations, the IRA assets can be withdrawn based upon the life expectancy of the beneficiary. If you have $250,000 or more in your IRA, consider adding an IRA Retirement Trust to your estate plan.

Estate planning is a lifetime process. Personal and legal changes may occur after you have planned your estate. Work closely with your estate planning attorney so that all documents in your estate plan works exactly the way you designed them. There is nothing worse than having an estate plan that fails.

So, what are you waiting for? Contact an estate planning attorney today to get started. It’s all about peace of mind.

Contact us today for more information on creating estate plans that are specifically designed for your needs.

I imagine that thinking about not being there to raise your children is unthinkable and not something people like thinking about but the alternative is worse. The court chooses for you!!
No one would like a court choosing a guardian to raise their children with no input from them. Yet that is what happens when you have not created a plan where you selected trusted guardians for your minor children.
Planning now enables you to choose the right guardian for your minor children without leaving it up to a court. Here are some tips to help you make great choices:

1. Expand the pool of preferred people and focus on less obvious choices. Create a list of all the people you know who you could trust to care for your children. Do not limit your list to close family members. Although parents and siblings can be excellent choices, think about including extended family members who are old enough to raise your children e.g. cousins, aunts, uncles, nieces, nephews, even second cousins once removed.
2. Think about trusted friends who can be great guardians. Apart from family, think about trusted close friends who will be happy to do the job. Consider families with whom your family is close, families of your children’s close friends, friends you know from your place of worship, even teachers or child care providers with whom you and your children have a special relationship.
3. Don’t worry about finances or the size of someone’s house. Don’t remove anyone from consideration just because you don’t think they have the financial means to take care of your children. With proper planning, you can take care of the finances with what you leave to your children (having a good chunk of life insurance is a good idea). You can even instruct your trustee to provide funds for your chosen guardian to build an addition to their home or move to a larger home to accommodate your children.
4. Think about and focus on love. Will each couple or person on your list truly love your children if appointed their guardian? Will they treat your children like second fiddles if they have children of their own? Do they truly love your children and will make them feel loved no matter what?
5. What about their values and philosophies? Ask yourself which people on your list most closely share your values and philosophies with respect to your religious beliefs, moral values, child-rearing philosophy, educational values, and social values. Are you all on the same page regarding this?
6. Once you make your selection(s), think about your reasons and write them down. Did you choose friends over relatives or a more distant relative over a closer one? Make sure you explain your decision in writing so there is no doubt that you carefully and deliberately made your choice(s). If you do this, a court can uphold your decision in the unlikely event your decision is challenged by people who feel they should have been chosen.
7. Select both temporary and permanent guardians. The temporary guardians you select may be appointed if both parents become temporarily unable to care for their children, for example, as the result of a car accident. You may want to choose different people to act as temporary and permanent guardians. It may be wise to select someone who lives close to you as a temporary guardian. This is important because if both parents are temporarily disabled, they’ll want the children close by and may not want their lives unnecessarily disrupted by moving them far away and/or moving them into a new city and school. If you have no relatives or close friends nearby, consider families of your children’s friends.
8. Talk with everyone involved. Discuss your potential choices with your children if they are old enough. Get their input before making your decision. Discuss with the people you’d like to choose and ensure you are all “on the same page”. This will also help you determine if they are willing to be chosen and would feel comfortable acting as guardians for your children. Choosing a guardian for your children requires planning ahead so the courts will not pick someone you dislike or a stranger for your children.

Imagine your relatives arguing in court over who gets your children – or having them agree but not on the people you would have chosen. That’s why it’s important to choose a guardian while it’s still up to you.
Remember, if you do not choose a guardian for your children, the courts will step in and appoint someone on your behalf.
Contact us today for more information on creating estate plans that incorporate guardians for your minor children.

In our “consumer driven” society, where knowledge is power and “do-it-yourselfers” abound, there is a disconnect between planning an estate, purchasing life insurance, developing an investment portfolio,  building retirement accounts, managing business interest, etc.. Most people do not think about integrating any of these events and more often than not, engage in them as separate “stand-alone” events.

The consumer benefits greatly from integrating these important events together as a whole. Perhaps as a financial or insurance professional, you are asking: what does creating an estate plan have in common with purchasing life insurance, building retirement accounts, developing an investment portfolio or incorporating clients’ LLC/partnership/corporation interests? It helps you and your client create a big picture of tax savings, generational planning, and ongoing monitoring of portfolios to help maximize those tax savings.

With proper planning, your client should be able to enjoy the results of their hard work, save on taxes, leave an ongoing inheritance for their children, grandchildren, great-grandchildren, leave a legacy for their loved ones for generations to come, etc. When all these important events are woven together, the informed client will no longer have fragmented pieces and weak links in their overall plan but an integrated whole.

Successful Estate Planning involves Team Work. There is an old adage that one broomstick by itself is weak and easily breakable but it is difficult to break a bunch of broomsticks tied together. This is so true. Unless your client has a very simple estate with no business interests, no properties, no life insurance, retirement plans, and everything they own is $250,000 or less, they should be incorporating a professionally created estate plan into their financial portfolio.

Integrating that plan together means working with a group of skilled professionals from different disciplines. At the very minimum, your client’s team should include an estate planning attorney, a financial or investment advisor, a Certified Public Accountant (CPA), an insurance professional, and an appraiser or valuation expert (if they own a business or have part interests in a business).
That team should be able to work together in a collaborative manner so that the client’s goals, values, and investment strategies can be shaped into an effective estate plan. For example, the CPA can work with the estate planning attorney to identify tax issues and implement tax-deferred strategies such as the Qualified Terminable Investment Property (QTIP) Trust for estates over State and/or Federal allowable tax exemptions.  

A qualified and experienced financial adviser/professional can help clients identify and develop investment strategies that will work with their estate plans while taking into consideration their overall financial goals. An Insurance professional can help clients with selecting life insurance products that integrates with their estate plan. All these professionals will work together to ensure a comprehensive fully integrated plan that will benefit clients and their loved ones. It is important to collaborate with all these professionals especially when planning for a growing or fairly sizeable estate.

Do your clients have estate plans as part of their financial portfolio?