You want the most for your child. Above all you want to make sure they get a good start in life. That includes getting the education and training they need for a good foundation and a good career. But, if you were to die before they’ve received that foundation, how can you be sure they would still get it? You could leave them money at your death. But, if you leave money to them outright, they could use the money for something else. Here’s a sad, but illustrative story: Alice had a son, John. … [Read more...] about Planning for Education Expenses
Planning for Special Needs Children
A “special needs” child is a child who faces a physical or mental disability and may require needs-based benefits, such as Medicaid or Supplemental Security Income (SSI). A special needs child is precious, like any other child. But the same planning won’t work for this unique child. Further, a lack of planning is even more problematic for a special needs child than it would be for a child without special needs. Let’s look at an example: Mike has $900,000 in assets and has three children, Amy, … [Read more...] about Planning for Special Needs Children
Kiddie Tax is Worse Than Ever
The “Kiddie Tax” is a tax on the “unearned” income of a child. In other words, it applies to the child’s income from interest and dividends, but not from wages from a job like their paper route or McDonald’s. The Kiddie Tax has been around since 1986 and applies to the unearned income of a child over a certain small amount. In 2019, that amount is $2,200. Prior to 2018, if a child had unearned income above that threshold, it would be taxed at the higher of the child’s marginal income tax rate or … [Read more...] about Kiddie Tax is Worse Than Ever
Trusts for Privacy
There are many good reasons to use trusts: Trusts avoid the probate process, which is a public process to change title of assets from the deceased person to the new recipient. Trusts may be helpful in tax planning. Specialized irrevocable trusts may be helpful in qualifying for Medicaid. Trusts are helpful to manage your assets during your incapacity, avoiding “guardianship” or “life probate.” Trusts may continue after death for the beneficiaries and can provide a multitude of … [Read more...] about Trusts for Privacy
Estate Planning is Too Important to Procrastinate
Most of us recognize that estate planning is the loving and responsible thing to do. Yet, only 44% of adult Americans even have so much as a simple Will, according to a Gallup poll. Our world is increasingly complex. It seems our lives are busier than ever. Interestingly, this may not be what leads us to procrastinate. According to Psychology Today, there are three reasons we might procrastinate: Things Get Done. We procrastinate until we are faced with a deadline and the deadline … [Read more...] about Estate Planning is Too Important to Procrastinate
Basics of Estate Planning: Powers of Appointment – Part 2
Blog Author: Stephen C. Hartnett, J.D., LL.M. (Tax), Director of Education,American Academy of Estate Planning Attorneys, Inc. The last blog examined the basics of powers of appointment. This blog will examine how they can impact taxation. From a gift and estate tax perspective, there are two kinds of powers of appointment, a limited power of appointment (or “LPOA”), and a general power of appointment (or “GPOA”). They can cause dramatically different gift and estate taxation results, as well … [Read more...] about Basics of Estate Planning: Powers of Appointment – Part 2
Basics of Estate Planning: Powers of Appointment – Part 1
Blog Author: Stephen C. Hartnett, J.D., LL.M. (Tax), Director of Education,American Academy of Estate Planning Attorneys, Inc. Trusts have many potential benefits. One of those benefits is that they can be very flexible. One way to increase the flexibility of a trust is by including powers of appointment. A power of appointment is giving someone the ability to direct the assets of the trust. There are many different ways a power of appointment could be drafted. Manner of exercise. The … [Read more...] about Basics of Estate Planning: Powers of Appointment – Part 1
