McManus Weighs in on Self-Directed IRAs for NerdWallet

Andrea Coombes, whose stories on retirement, investing, taxes and other topics have appeared in the Wall Street Journal, MarketWatch, San Francisco Chronicle and other outlets, recently wrote an article on an investing strategy for the bold-hearted. Her piece, “Self-Directed IRAs: An Option for Expert Investors,” sheds light on the benefits and risks of self-directed IRAs.

Coombes spoke with McManus & Associated Founding Principal John O. McManus for his take. From the story:

The two main reasons investors take on the risks of self-directed IRAs are higher expected returns and the opportunity for diversification.

“If you understand investments, particularly in certain segments, you can take advantage of higher yields and maybe less volatility,” says John O. McManus, who has invested in real estate and other assets through a self-directed IRA for about 15 years. McManus founded the estate-planning firm McManus & Associates in New York and New Providence, New Jersey.

His self-directed IRA also lets McManus invest in companies that aren’t publicly traded, which “a mutual fund will not allow you to do,” he says. But, he warns, “This is not a game for the unsophisticated.”

Head over to NerdWallet to learn more about the advantages and drawbacks of self-directed IRAs. For guidance on your overall wealth management strategy, contact McManus & Associates at 908-898-0100.

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McManus Helps Uncover HSA Pitfalls for MarketWatch Column

Andrea Coombes, Ways & Means columnist for MarketWatch, recently took on the task of identifying “hidden pitfalls” of Health Savings Accounts, which are medical savings accounts with tax advantages. For her piece, she spoke with John O. McManus to learn what happens to HSAs when the accountholder passes away.

The fourth item on Coombes’ list of 10 pitfalls:

Your entire HSA account becomes taxable when you die, unless you’ve named your spouse as beneficiary, in which case your account becomes your spouse’s HSA. So, from an estate planning perspective, what’s the best way to handle these accounts, assuming you’re older and have a hefty sum stashed? “Our view is postpone withdrawals from accounts that are compounding tax-free,” John O. McManus, founder of McManus & Associates, a trusts and estates law firm in New York and New Providence, N.J. Once you’re over 65, you can withdraw money without the 20% penalty faced by those under 65. (If you spend on non-medical costs, you’ll owe income tax, which is the same as withdrawing from a traditional IRA, but health accounts don’t have required minimum distributions, so you have more control.) Letting the money grow is valuable, McManus says, given that people are living into their 90s and nursing-home costs can run “$100,000 just for living quarters and medical assistance.” If you bequeath the account to a non-spouse beneficiary, he or she will owe income tax on its fair market value.

To read Coombes’ full column, “10 hidden pitfalls of health savings accounts,” click here. For guidance on utilization of investment and savings vehicles as part of your estate plan, give McManus & Associates a call at 908-898-0100.

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McManus Pens Expert Article for Thomson Reuters Practical Tax Strategies

INTRA-FAMILY LOANS

GIVING THE GIFT OF A LOAN

Intra-family loans can provide tax benefits to both lenders and borrowers if properly structured.

JOHN O. McMANUS

JOHN O. McMANUS is a top AV-rated estate planning attorney and the founding principal of TriState Area-based McManus & Associates (www.mcmanuslegal.com).

When it comes to wealth management, sometimes the gray area is the sweet spot. There are often legitimate opportunities for growing and preserving assets beyond the welldefined, black-and-white tax rules. Identifying these legal loopholes can greatly benefit a client and his or her loved ones, without breaking any laws.

Gifting as a loan, or intra-family loans, is an estate planning technique which, under rules set forth in the Code, allows a significant amount of money to be transferred to a family member with a customized repayment plan—sans the gift tax implications. Also, there are no concrete limitations on the family members who can be borrowers or the trusts for their benefit. With carefully structured lending— through a promissory note, for example—the borrower is able to take advantage of interest rates below those charged by commercial lenders, as the government allows relatives to pay a very low, “safe harbor” interest rate. In a parent-child relationship, the child then pays back the loan over time.

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McManus Featured in Financial Advisor magazine’s “Fidgety About Tax Reform? Here Are 10 Things Estate Planners Can Do Now”

Karen DeMasters of Financial Advisor magazine recently spoke with John O. McManus for a slideshow article that offers “tips for what estate planners can do while the world waits for ‘U.S. tax reform’ to take shape.” The feature, titled “Fidgety About Tax Reform? Here Are 10 Things Estate Planners Can Do Now,” starts by flipping a common adage on its head – from the piece:

The only thing certain used to be death and taxes, but now the taxes are coming into question.

President Donald Trump and the Republican-dominated Congress are expected to revamp taxes and maybe change gift and estate tax rules, but no one knows what that will entail or when it might happen

According to McManus:

There is much uncertainty about particular aspects of the Republican tax proposal—including a replacement tax on the wealthy—and there is already concern about the likely impermanence of any new legislation. These factors highlight the importance of flexibility in preparing an estate plan and proceeding with wealth transfers suited to the current political and economic circumstances.

Even if tax legislation passes, it’s likely that the rules of the game will continue to change, perhaps frequently, going forward. It’s essential to stay in the know regarding the potential impact of new laws, in addition to tools currently available to protect your wealth.

As pointed out by DeMasters, “McManus says the following strategies are good for the long or short term, and most can be used advantageously by mass affluent as well as the ultra-wealthy.”

  1. Annual Exclusion Gifts
  2. Lifetime Exemption Gifts
  3. Short-Term And Mid-Term Grantor Retained Annuity Trusts (GRATs)
  4. Estate Freeze Installment Sales
  5. Family Limited Partnerships
  6. Upstream Gifting
  7. Community Property Trusts
  8. Charitable Remainder Trusts (CRTs)
  9. Drafting Flexibility in Core Planning Documents
  10. Philanthropic Planning

Check out the full article for more details on McManus’ list of “10 Must-Do Estate Planning Strategies” that advisors can use while waiting for decisive legislative action. 

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Trusts & Estates (WealthManagement.com) Publishes Byline by John O. McManus

Ten Estate Planning Strategies While Waiting for Tax Reform

How to proceed until Congress takes action.

John McManus | May 12, 2017

The election of Donald J. Trump to the presidency and Republican control of both houses of Congress make estate tax reform extremely probable in the next two years. However, given the new administration’s other proclaimed priorities, including the repeal of Obamacare, minimization of illegal immigration, increases in defense spending and infrastructure improvements, there are likely several months before Congress turns its attention to a tax system overhaul.

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McManus Interviewed for Wall Street Journal’s “Watching Your Wealth” Podcast

In the Wall Street Journal’s newest “Watching Your Wealth” podcast, Veronica Dagher interviews McManus & Associates Founding Principal John O. McManus on red flags that warn you your adult kids are using you for your money and/or are trying to get a bigger share of your estate. In the episode, Veronica does a “fun estate planning quiz” with John, as well, and asks him to share the best and worst estate planning advice he’s ever heard, what an estate can and can’t buy, and what he would do with $1M after tax if he inherited it.

Click here to listen to the quick, 11-minute episode: http://bit.ly/2pckWFo

To set up a time to discuss the family dynamics impacting your estate plan with the McManus & Associates team, give us a call at 908-898-0100.

Are Your Adult Children Using You For Your Money?

McManus & Associates’ John McManus discusses the red flags your children may be taking advantage of you financially and how to better communicate with them about money.

11 min: LISTEN

 

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Forbes Publishes Contributor Piece by John O. McManus, “Year-End Tax Planning Strategies Due To Trump’s Election”

John O. McManus, founder of McManus & Associates, penned the article below, which was published by Forbes and Next Avenue:

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Personal Finance

Year-End Tax Planning Strategies Due To Trump’s Election

By John O. McManus, Next Avenue Contributor 

12/19/2016

The election of Donald Trump, in addition to Republican control of the House and Senate, bodes well for significant tax reform during early 2017. For some people, this can present major opportunities for reducing taxes for 2016 by making some key year-end tax planning moves.

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Media Round-Up: Trump & Year-End Tax Planning Tasks

Investment News
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McManus & Associates recently reviewed the “Top 10 Year-End Tax Planning Tasks” in light of President-Elect Trump’s pre-election tax platform with clients. Soon after, he had a lengthy conversation with Investment News reporter Greg Iacurci on the topic. Iacurci then put together an informative, engaging slideshow based on the discussion, “8 tax moves to make this year ahead of Trump’s presidency.” From the intro:

President-elect Donald Trump and the Republican-controlled Congress have said tax reform is a high priority next year. Mr. Trump’s agenda includes items such as repealing the estate tax, consolidating income tax rates and lowering the top income tax brackets.

Although there’s no certainty of any concrete reforms occurring next year, financial advisers are betting on legislation next year and telling clients to make certain moves by year-end.

John McManus, estate-planning attorney and founding principal of McManus & Associates, offers some actions to take this year based on Mr. Trump’s current proposals.

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McManus Quoted in Investment News on Estate Tax Changes with Trump Presidency

Investment NewsIf Republicans were to win a repeal of the so-called death tax, contentious Treasury regulations on business valuation discounts would also disappear, according to Investment News Reporter Greg Iacurci. In a new story, “Estate tax repeal no ‘slam dunk’ under Trump and Republican-held Congress,” Iacurci examines how president-elect Donald Trump will govern and what policies he may or may not be able to push through upon taking office. He writes:

Mr. Trump articulated several tax proposals as a candidate on the Republican ticket, focusing on a repeal of the estate tax, consolidation of income tax rates and lowering the top tax brackets, and standardization of tax rates across businesses.

But even if the death tax is repealed, McManus & Associates Founding Principal John O. McManus brings the estate tax victory into perspective. From the article:

Financial planners and tax payers should keep in mind that the laws around estate taxes come and go, said John O. McManus, founding principal of McManus & Associates.

“Even if the federal estate tax evaporates under Trump, that is never permanent,” he said, pointing out that in 2010 the estate tax exemption was reduced to zero, only to have it set at $1 million for the following year.

Head over to Investment News to read the full story. For trusted advice on tax and estate planning strategies in light of Trump’s intended policies, call McManus & Associates at 908-898-0100.

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Trusts & Estates Publishes Feature Slideshow by John O. McManus on International Estate Planning Issues

trusts and estates logoIn Wednesday’s edition of “The Estate Planner,” a newsletter for estate planning practitioners, a Trusts & Estates/WealthManagement.com slideshow-feature by McManus & Associates Founding Principal John O. McManus was highlighted as a lead article. The item, “Top 10 Multinational Issues in Estate Planning,” appears with the preview text: “The complexities of estate and tax planning on an international scale can quickly ensnare the unaware.”

For the Trusts & Estates slideshow, the publication harnessed guidance issued by McManus & Associates for its recent “Beyond Our Borders” conference call with clients, which is part of the firm’s educational focus series. In this installment, McManus shed light on issues ranging from Foreign Bank Account Reporting (FBAR) to international guardianship, foreign succession laws and foreign trusts.

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