Most asset protection plans include an asset protection trust. An asset protection trust is a special kind of trust that is written to keep the assets from creditors, divorcing spouses, or other threats. Some states have enacted specific statutes to create special trusts with strengthened asset protection features. South Dakota has one such statute.
What is Estate Planning? It is the basically how we plan to move all of a dead person’s property to another person. Once you are dead, you aren’t there to own things anymore. We really can’t leave your things owned by no one. So, we need to move them on to your heirs.
The Minnesota Supreme Court handed down its decision in Fielding v. MacDonaald et al. The decision rendered the statute that determines when a trust is taxed as a resident to the state unconstitutional as it applies to many different trusts. Previously, Minnesota would tax a trust as a resident perpetually if the Grantor was a Minnesota resident at the time it became irrevocable (among other times). This raised the question of whether this tie to the grantor was constitutional for due process reasons.
If you are preparing to send your son or daughter off to college to pursue higher education, you may be wondering how their first semester of school will go. During this exciting new chapter in your family’s life, the last thing you may be thinking about is estate planning for your college-aged child. While your child may not have any assets (yet), once he or she turns 18, your child is considered an adult in the eyes of the law. Before your kids go away, have a frank conversation with them about how much information — including grades, finances, health records — you will be able to access.
- Trusts can also get a 20% Qualified Business Income Deduction
- Trusts will likely also get their own SALT deduction
- This can cause more deduction to be had overall
- Planning for asset protection and business succession including trusts, now also benefits client’s income tax planning
- Clients should consider using trusts to get the most out of these deductions and to create the best value plans
There are many ways to own your assets. When you die, it is only natural that you want your family to share in the bounty of your hard work. As a way to simplify the transfer process and avoid probate, you may be tempted to add a child or other relative to the deed or bank account utilizing the ownership type of joint tenancy with right of survivorship . However, while this type of ownership delivers a lot of potential benefits, it may also be masking some dangerous pitfalls. (more…)
There are many concerns about protecting assets after divorce. Consider this story. Beth’s divorce from her husband was recently finalized. Her most valuable assets are her retirement plan at work and her life insurance policy. She updated the beneficiary designations on both to be her two minor children. She did not want her ex-husband to receive the money.
Not surprisingly, most people loathe reviewing their estate plan because it can be both confusing and daunting. Others do not want to think about death and avoid the topic altogether. If you already have put an estate plan together, you are ahead of the curve as many people do not have one. If you do not yet have an estate plan, there is no better time than now to sit down and get one in place. In either scenario, below are five common estate planning mistakes and how to fix them so that you are fully protecting your family.
1. You Have Not Updated Your Plan
Many people consider estate planning a “one and done” proposition. This could not be further from the truth. Life happens. This may include adding new beneficiaries due to the birth of children or grandchildren, or removing beneficiaries due to a change in circumstances. Your family’s needs will almost certainly have changed over the years since you first created your estate plan. Likewise, your executor – the person who will be in charge of your assets in the event of your untimely death – may have passed away or may no longer be able to serve. For these reasons, it is key to keep your beneficiaries and successor executors current.
2. Your Plan is Missing Key Components
While you may already have an estate plan in place, it may not be comprehensive enough to fully protect your loved ones after you have passed. At a minimum everyone should have a last will and testament, a financial power of attorney, and a health care directive. These documents should have been reviewed by a knowledgeable estate plan attorney within the last 5 years and immediately after any major life event, such as a marriage, divorce, birth or death of a child, receiving an inheritance, or significant increase or decrease in assets. With these life changes, the level of protection you need may have also changed. Relying on an old strategy may leave you and your loved ones vulnerable.
3. You Have Not Kept Up with Changes in Tax Laws
In the past twenty years, the estate tax exemption has increased by fifteen times. If you have significant wealth you need to make sure your estate plan takes advantage of unique planning opportunities under current law. This is because an outdated estate plan structure that has not kept up with current tax law can actually do more harm than good for your loved ones, since it may needlessly cause taxes to be paid. Accordingly, a qualified estate planning attorney who fully understands your circumstances should review your documents and make any necessary adjustments.
4. You Moved Without Updating Your Estate Documents
It is important to understand that each state has different laws that governs estate planning. For this reason, if you move from one state to another it is vital that you have a local estate planning attorney review and revise your documents. You want to make certain your plan is compliant with the laws in the state in which you primarily reside. This also applies to medical powers of attorney or advance directives that may be valid in your old state but ruled invalid in your new state, depending on the local law.
5. You Failed to Focus on Life Insurance and Retirement Accounts
One common mistake is for individuals to fail to review life insurance policies after they were originally issued. Neglected policies may not be properly funded, resulting in a lapse in coverage and requiring hefty premiums to keep the policy in force. Likewise, it is important to take advantage of listing beneficiaries on retirement accounts rather than leaving them to your estate. When a beneficiary is listed, these assets avoid probate – the long and expensive legal process of distributing your assets upon your death through court supervision – and allows beneficiaries to keep the majority of these funds in tax-advantaged accounts.
We’re Here to Help.
Without proper maintenance and administration, your carefully put together estate plan may not work as you intend. Instead of allowing this to happen, give us a call today, so we can begin reviewing your estate plan to make sure all of your bases are covered and any needed changes are made.