Incapacity Planning

Incapacity Planning is a topic that sneaks up on people.  It is a vital part of any Estate Plan.  Most people are familiar with the concept of Probate. You normally think of this as something that could happen to you when you die.  It is also something that most of my clients tell me they want to avoid.  What you don’t often hear much about is the fact that you can go through Probate while you are alive. Incapacity planning can prevent this.

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Asset Protection Trust

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.

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Does your trust have to pay Minnesota state income tax?

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.

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Getting the Most Out of The New Pass-thru Business Tax Deduction

  • 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

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Joint Tenancy: The ‘Simple’ Fix that Can Leave Your Family Broke

Is Joint Tenancy an Estate Plan?

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…)

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Protecting Assets After Divorce

Protecting Assets After Divorce

 

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.

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How to Leave Your Retirement Plan to Your Minor Children

How to Leave Your Life Insurance and Retirement Plan to Your Minor Children

Your children are your pride and joy. It is no surprise that at some point or another, every parent likely becomes concerned about who will care for a minor child or children if one or both parents die or are incapacitated. From a financial perspective, many parents turn to life insurance in an effort to take care of their family in the event of death. While it is true that life insurance is a particularly helpful financial tool to protect your loved ones, it is just as important to consider how to leave the proceeds to your minor children. Beyond this, you should also take into account how to incorporate your retirement money (IRAs and 401(k)s), another common, significant asset into your overall estate plan. This post will talk about how to leave your life insurance and retirement plan to your minor children.

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What is a Spendthrift Trust? It Can Be a Great Solution for Your Heirs

What is a Spendthrift Trust?

There are many tools that can be used when putting together your estate plan. These tools can also provide asset protection while you are alive.One such tool is a trust.

A trust is a fiduciary arrangement, established by a grantor or trustmaker, which gives a third party (known as a trustee) the authority to manage assets on behalf of one or more persons (known as a beneficiaries).  Since every situation is different, there are different types of trusts to ensure the best outcome for each beneficiary. One type of trust, known as a spendthrift trust, is commonly used to protect a beneficiary’s interest from creditors, a soon-to-be ex-spouse, or his or her own poor management of money. Generally, these trusts are created for the benefit of individuals who are not good with money, might easily fall into debt, may be easily defrauded or deceived, or have an addiction that may result in squandering of funds.

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