The American Taxpayer Relief Act of 2012 (ATRA) delivered transfer tax certainty, large indexed transfer tax exemptions, and portability. Taking into account new norms, McManus & Associates, an estate planning law firm based in the Tri-State Area, today released a new installment in its free Educational Focus Series, “Top 10 Signposts to Guide Planning for Estates under $10MM.” During a conference call for clients, the firm’s Founding Principal and top AV-rated Attorney John O. McManus shed light on estate planning strategies that should be considered today following recent changes to federal and state laws.
Yesterday, McManus & Associates held a client conference call reviewing several immediate strategies that clients should consider employing before year-end. With the proposed tax reforms listed in President Obama’s budget, certain planning strategies are in the crosshairs and may not be around for long. Although legislation next year could be made retroactive to January 1, 2014, if you act before the end of 2013 such changes will not affect your planning. Get inside the castle walls now.
During the half-hour call, the firm shares effective strategies and highlights maintenance items required to ensure one’s family wealth remains protected. Below are the 10 questions that will be answered by listening to the recording.
- Laws could change with new revenue debates. Have you made lifetime gifts in trust? Created a grantor trust?
- Have you made sure to operate your family LLC/Limited partnership as a legitimate business? What should you do before year-end?
- What should you give away? Are you planning to make annual exclusion gifts, gift appreciated securities etc? Have you prepared Crummey notices?
- Should you create lifetime trusts for your children? Have you given your trustees a limited power of appointment?
- What can you prepay? What should you prepay? Home, deductibles, medical expenses, major year-end purchases?
- Have you crossed any major milestones this year? Do you have children who turned 18 this year? Do the fiduciaries and guardians named in your documents still reflect your current wishes? Are your powers of attorney up to date?
- Have you made contributions to your family foundation and/or donated to charity?
- Are you over 70 ½? How to use Required Minimum Distribution to your advantage.
- Create GRATs or QPRTs. Given the current interest rates what should you consider?
- How should you consider harvesting capital gains, timing long-term losses?
Give us a call at 908-898-0100. We can help you identify which strategies you should implement now before the calendar rolls over to 2014.
Whether as a wealth replacement strategy combined with philanthropic giving or as a safeguard to cover expenses and taxes, use of life insurance in your estate plan can provide significant protection to your loved ones. This useful planning tool has several unique benefits, which should be considered in every wealth transfer plan. John O. McManus, founding principal of McManus & Associates, recently held a conference call with clients to review the most important considerations when planning with Life Insurance.
Find answers to the questions below and more by listening to the free recording.
1. If a life insurance policy is owned by a trust, what is the ongoing maintenance required for the strategy to succeed most effectively?
2. What are Cristofani beneficiaries and how can they make a life insurance trust even more gift tax efficient?
3. How can insurance be utilized to facilitate a business succession plan?
4. Term, whole life, 2nd to die, from a layman’s standpoint, what are the unique benefits of each?
5. How can ownership and beneficiary designations for a life insurance policy affect the taxable assets of the estate?
6. How do non-citizens avoid qualified domestic trust requirements with a life insurance trust?
7. What are some strategies to avoid the 3-year look back period when existing insurance is transferred to a trust?
8. Annual exemption gifts can fund a life insurance trust gift tax free, but what about generation skipping tax issues? How is the trust affected?
9. When the terms of an irrevocable trust do not reflect the wishes of the parties, what options are available?
10. How to use life insurance as a wealth replacement strategy with charitable giving.
McManus & Associates would be happy to discuss how these strategies apply to you and yours. Give us a call at (908) 898-0100.
State laws vary rather widely regarding the jurisdiction of trusts and trust assets. Certain jurisdictions have laws that are generally more favorable in their treatment of trusts for purposes of asset protection, access to trust-owned assets and creditor protection. As part of McManus & Associates’ Educational Focus Series, Founding Principal John O. McManus shares expert guidance on the top 10 things to consider when deciding where to site your trust.
Top 10 Considerations for Domestic Asset Protection Dynasty Trusts
During the discussion, you’ll find answers to the 10 questions below:
- What is a self-settled trust? When can the grantor list himself or herself as a beneficiary?
- How do state income taxes affect the choice of situs for my trust?
- What variation is there in state legislation regarding creditors and Statute of Limitations?
- Are certain exemptions made for specific types of creditors?
- What are the standards for proving fraudulent transfers?
- What role do the courts play regarding actions involving a Trust?
- Does the state require an Affidavit of Solvency upon the transfer of assets?
- How does the rule against perpetuities affect choice of situs?
- Discussing observations of trustee fees in each of the most favorable states.
- What are some of the other miscellaneous trust enhancements in the most favorable states?
We would love to learn more about your asset protection needs. Send us an email at firstname.lastname@example.org or give us a call at 908.898.0100.
McManus & Associates today hosted the June installment of its Educational Focus Series. Over the course of the firm’s 25 years in the field of Estate Planning, we’ve seen all manner of challenges to estate plans. From will contests to litigation, we are always aware of areas where even the slightest degree of risk might reside. Constantly working to protect against this, we are in a perpetual state of research and development to create the most comprehensive, state of the art plans that protect against even the most remote possible risks.
- Will manipulated by third party and abuse of durable power of attorney. Undue influence by family members resulting in last minute changes to a will.
- Marshaling and valuing for tax purposes, international assets.
- Where has Generation Skipping Tax Exemption been utilized? You may be unaware of the significance of automatic allocation rates.
- Distributions to charities and notifying the attorney general/government agencies.
- Fiduciary’s responsibility to preserve and maintain the estate. (Stock fall in value, sale of home, house broken into, and unclaimed property.
- Significant gifts made during life that affect intended outcome of the estate plan.
- Failure to use a firm familiar with the sophistication of the planning documents to administer the estate. Failure to correctly interpret the documents.
- Personal property disputes after death of a loved one. Fighting in families over whether to sell or keep items to memorialize loved ones. Beneficiaries challenge distributions to surviving spouse from trust.
- Failure to title assets correctly. Joint accounts versus convenience accounts. Revocable Living Trusts not properly funded result in probate issues.
- Are there sufficient liquid assets available to continue to operate family business, preserve the family retreat and pay estate taxes?
We would be happy to answer your questions. Give us a call at 908.898.0100.
With the flurry of trusts created over the past two years that peaked as we approached the “fiscal cliff,” guidance on how to properly maintain and operate these wealth transfer vehicles is useful. Now that they are in motion, who is at the helm?
During this 30-minute call, McManus & Associates reviews strategies to ensure that your trust operates properly as it advances your estate planning and wealth transfer goals. John O. McManus also discusses the special provisions for life insurance trusts, payment of taxes on income earned by trust assets and the new planning ideas utilizing the trust as a leading instrument to accomplish the mission.
- Are all trust accounts, real property owned by trust and life insurance policies held in trust correctly titled?
- How does the tax basis of an asset and its projected future growth affect future planning? What future swaps of assets might you consider?
- How do we avoid common filing and reporting errors, especially payment of income taxes? If it’s a grantor trust, do we file an income tax return?
- Now that the trust is funded what post-funding strategies can be employed to impact the trust to better meet your goals?
- If you have not used the full exemption amount, ($5.25MM), should you consider making additional gifts now to further “freeze” the estate.
- If your life insurance has been transferred to trust, are you properly maintaining the trust to address annual payments?
- When and why should you transfer a trust to an asset-protected state? Are there any actions pending against an individual who is a beneficiary of the trust or you, the grantor? What states are most favorable?
- When should you consider an institutional trustee? What are the pros and cons? When an individual is named as trustee, does he know his responsibilities?
- When your trust owns your primary residence, how should you cover expenses, insurance and titling? If you are the occupying tenant, have we formalized a lease agreement?
- How should you make distributions when the family business or other corporate entity (LLC, partnership, etc) is owned by a trust? Are two transactions necessary?
From jewelry to art, cigar collections to fine china, dividing tangible personal property equitably among loved ones after death can be a major challenge for an executor. In order to keep the court from stepping in to divide the pots and pans –a task no judge desires– direction on how to allocate specific items should be given (rarely explicitly mentioned in wills).
In a new conference call led by McManus & Associates Founding Principal and top AV-rated Attorney John O. McManus, learn about unique ways to plan for division of specific personal tangible property and special planning considerations for unique items such as music, art, wine, scotch and even gun collections.
After listening to the discussion, you’ll have answers to the questions below. Don’t hesitate to give McManus & Associates a call at (908) 898-0100 if we can be of further assistance.
1. Is it appropriate to use a personal property memo to capture personal items? Can enforcement of such a memo be guaranteed?
2. How do we catalog our personal property in a memo? Should items be specifically insured?
3. How to plan for art, jewelry and the use of a life estate for personal property, especially in a second marriage.
4. Are you a history buff with collection of Revolutionary and Civil War rifles? Who can you leave them to? Details on fiduciaries who need special licenses or permits.
5. How will pets, especially rare or exotic species be provided for?
6. How do you transfer and value intellectual property, Copyrights, projected sales, music and art?
7. Illegal transportation across state lines? Expensive transportation? Wine or gun collections, a grand piano? How to plan for covering expenses and proper transportation.
8. If you are named a fiduciary, what tasks should you consider taking now to ensure you are protected during probate?
9. Do you have bank accounts worldwide? Considerations to simply the probate process? Are you filing annual disclosures for FBAR?
10. What strategies can you use to ensure an equitable distribution of personal property when considering certain highly valuable assets?
In the early morning hours of January 1, the United States Senate passed legislation to avoid the ‘fiscal cliff.’ Nearly 20 hours later the House followed suit. Several surprising outcomes regarding estate planning emerged as part of this deal, which according to the Wall Street Journal, is “chock full of goodies” for nearly every interest group. The Estate Planning community was surprised to enjoy the benefit.
John O . McManus, top AV-rated estate planning attorney and founding principal of McManus & Associates, today held a conference call with clients about the new laws and ways to remain protected moving into 2013.
Below please find the 10 questions that are addressed during the discussion:
1. The new tax rates and exemption amounts are set. What can you expect to pay for estates over $5.25MM?
2. What are the estate-tax “traps” to be wary of?
3. The Connecticut gifting limit of $2MM; is this a warning for future lifetime gifting limits in other states?
4. With the new permanency in the estate tax exemption, what taxpayers should make gifts over $5.25 MM and pay gift tax? (A strategy widely used for many prior generations)
5. For estates below $5.25 MM, who should employ trusts in their wills?
6. What is meant by “spousal portability” and “unification” of the exemption amounts? Does this eliminate the need for certain planning?
7. The Generation Skipping Tax Exemption Amount is also set at $5.25MM; who should take advantage of it?
8. Looking forward to March ’13 and the “debt ceiling” debates, what detrimental effect could such negotiations have on state estate taxes?
9. What are the trust and non-trust estate planning strategies that married and single persons should undertake in 2013?
10. What critical Gift Tax consequences must be avoided for gifts made in 2012? When does the statute of limitations clock begin?
McManus & Associates is here to help you make sure you’re covered. We welcome your call at 908-898-0100.
Now that the elections are over, Congress and the White House have the significant task of directing the country away from the impending “fiscal cliff.” Critical to these negotiations will be tax rates, exemption amounts and political ideologies.
During a conference call with clients, McManus & Associates Founding Principal John O. McManus identifies potential issues and ways to remain protected moving into 2013.
Here’s what the discussion covers:
- What risks do the “Fiscal Cliff” negotiations present for estate and gift tax exemptions?
- Can compromise be achieved?
- What if no compromise is achieved by Dec 31, 2012?
- How does the composition of the House and Senate effect these discussions?
- What are some of the speculations for the compromise regarding gift tax/estate tax?
- How likely is it that a compromise, achieved later in the year, will be made retroactive to January 1, 2013?
- How does the emotional power of the argument to abolish the ‘death tax’ play into the debates?
- What new taxes will be levied? For example: 3.8% Medicare tax on capital gains, dividends and the top tax brackets.
- Estate tax on the ballot. How did it fair this election?
- Have you fully funded the trusts that we have set up for you and are all titles correctly named?
Please contact our office at (908) 898-0100 if we can help with any questions.
As we have emphasized over the last two years, the Estate Tax Exemption Amount and the Lifetime Gift Exemption Amount currently at $5.0 million per person will end December 31st, 2012, and revert to $1.0 million.
President Obama has already indicated in his Green Book for the 2013 Budget that the Lifetime Gift Exemption will remain at $1.0 million and the tax rate will be 55% for transfers above that $1.0 million amount.
The opportunity, therefore, to transfer assets into a protected trust before year-end while retaining flexibility is unprecedented. The additional benefit is that the future appreciation of the assets will be sheltered from both federal and state estate tax.
When considering transfers of greater than $1.0MM in real estate, securities, partnership interests, or other assets, we strongly advise that a properly structured trust is the ideal recipient.
Given the potential value of the trust, it is specifically designed so that you and your spouse are able to enjoy a measure of flexibility to continue to access and control the transferred assets. Among other things, this is accomplished by:
- Retaining the power to remove and appoint Trustees or to receive loans from the trust;
- Granting your spouse the right to receive distributions and serve as Trustee; and
- Authorizing your spouse to determine how assets will be divided between your children.
Additionally, through the trust’s provisions, the assets receive an exceptional degree of protection against financial reversals and liability that you, your spouse, your children, and your other descendants may encounter during your lifetimes.
Again, after the expiration of the $5.0MM exemption at the end of 2012, only an act of Congress may increase the exemption from its $1.0MM level. While it is unknown how Congress may respond after the election, the exemption is still likely to substantially decrease due to the current economic and political climate.
The nation is facing a “fiscal cliff” – the coinciding action of tax increases and spending cuts in order to remedy escalating budget deficits. The result is that this special $5.0MM planning opportunity may never resurface during our lifetimes and be forever lost.
The prospective constraints on the present amount gifted will exponentially diminish the future amount that may be exempt from estate tax. This concern is compounded by the fact that certain assets may currently be undervalued due to current market conditions and may reasonably be expected to experience accelerated growth in the coming years and decades in the protected trust.
To highlight the long-term estate tax advantage of making a significant lifetime transfer to a trust, consider an example in which a $3.0MM gift is made, both spouses pass away in year 2032, the gift appreciates at a very modest 4% per annum, and President Obama’s proposed estate tax plan is adopted. The value of the assets will have doubled.
The consequences of failing to make such transfer now are at least $650,000.00 in state estate taxes and $2,600,000.00 in federal estate taxes, reducing the amount received by the children by more than 50%. Naturally, this negative effect is diminished if more assets are gifted away, if each spouse lives longer, or if the estate appreciates in value at a greater rate.
The firm will close for the year on December 15; therefore, to be effective, all work must be commenced and completed within the month of November. We invite you to call or e-mail our office to review your specific circumstances.