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

This month’s alert examines the current, perhaps short-lived, opportunity for clients to give away millions of dollars during their lifetime without a gift tax. Unless the law changes, this narrow window will close at year-end. The lifetime gift tax exemption amount and the applicable exclusion amount (the amount that can be left free of estate tax) is $5,120,000 for 2012 (or double that amount for couples who plan properly. However, unless Congress acts before year-end, this amount will … [Read more...] about Millions in Tax Savings Available to Clients Who Act Quickly

This month's Alert examines how effective use of disclaimers can save millions in taxes. The Alert examines a ruling request presented to the IRS involving such a situation. Often parents do not consider the potential future success of their children in structuring their own estate plan. If a child is fortunate enough to have a taxable estate (over $5,120,000 currently, scheduled to drop to $1 million in 2013), giving the child an inheritance will only increase the tax burden of the child's … [Read more...] about Double Disclaimer Saves Millions in Estate and GST Tax

This month's Alert reviews the inflation adjustments applicable to federal taxation in 2012. It examines changes in the estate, gift, and generation skipping transfer taxes, as well as income taxes.Many changes have occurred with regard to the income, gift, estate, and generation skipping transfer tax in 2012. Most of these changes have come about due to indexing for cost of living.Estate Tax The applicable exclusion amount (the amount that can be given free of estate tax at death) has … [Read more...] about Tax Changes for 2012

This month’s Alert examines when the income of a trust may be considered available to creditors. The Alert examines a case involving the availability for purposes of determining alimony.The New Jersey case of Tannen v. Tannenhas drawn national attention. Mark and Wendy Tannen were married for nearly eighteen years. During the marriage, Wendy’s parents created and funded an irrevocable trust which was a third-party defendant in the suit. Wendy was the trust’s sole beneficiary and Wendy and her … [Read more...] about Income from Trust Excluded in Determining Alimony Payments

This month’s Alert examines the continuing uncertainty with the Estate and Gift Tax and the unique, limited-time opportunities which are available now. The Congressional “Super Committee” failed to reach bipartisan agreement in structuring a deficit reduction plan. This means that unless Congress takes action in 2012, there will be automatic budget cuts totaling $1.2 trillion over ten years, beginning in January 2013. Given that 2012 is an election year, both parties will be weighing whether … [Read more...] about Fate of Estate and Gift Taxes Remains Uncertain – But, Many Planning Options Remain Available For Now

Elder law is an increasingly important area of law for clients. This month’s Alert examines a Wisconsin case concerning an Irrevocable trust which was included as an available asset for Medicaid purposes. The Alert also examines what they could have done differently to achieve a better result. Lucille Hedlund and her husband, Clarence, transferred the majority of their assets to their three children in 1991. The same day that Lucille and Clarence transferred the assets to their children, the … [Read more...] about Wisconsin Appeals Court Holds Assets of Irrevocable Trust are Available for Medicaid Eligibility Purposes

This month's Alert examines the IRS’ recent release of instructions regarding how to ensure portability of the applicable exclusion amount at the death of the first spouse. Many surviving spouses may see an estate tax return at the death of the first spouse to be unnecessary. This alert shows why advisors should document that they advised the filing of an estate tax return.The executor of the estate of a married decedent dying in 2011 and 2012 can carry forward the unused portion of the amount … [Read more...] about IRS Issues Instructions for Estate Tax Returns for Decedents Dying in 2011 and 2012

Clients occasionally attempt do-it-yourself estate planning. Sometimes they use software assistance, borrow from others’ documents, or amend their professionally prepared documents themselves. This month’s Alert looks at one such story and the havoc it wrought. In the end, the client’s goals were not achieved and her loved ones were pitted against each other in court. On occasion, a client will try to take matters into their own hands and amend their estate plan themselves. The reason is a … [Read more...] about A “Do-It-Yourself” Mystery: The Case of the Neighbor Girl and the Well-Meaning Widow