Tag: estate planning

Trump Tax Bill Passes – Act Now: Top 10 Year-End Tax Planning Strategies

With President Trump having signed the GOP tax bill today, new tax planning opportunities are now available – but you must take advantage of many of them within the next nine days, before 2018. John O. McManus, founder of top-rated estate planning law firm McManus & Associates, makes the following time-sensitive recommendations in light of tax reform and the reduction of income tax rates:

  1. Accelerate your income tax deductions. Certain itemized deductions, i.e. income tax and real estate tax deductions, will be capped at $10,000. Pay your January estimated taxes in December; make your January mortgage payment in December; deduct any unreimbursed medical expenses; make your 2018 charitable donations in 2017. Some commentators suggest prepaying property taxes that have been assessed, such as the 2/1/18 and 5/1/18 installments – but it depends on the state. Also, the American Institute of Certified Public Accountants has opined that CPAs should advise clients that payments in 2017 of state tax liabilities projected for 2018 are not deductible on their 2017 federal income tax returns. You should be mindful of the fact that these additional payments could cause you to be subject to the alternative minimum tax, which results in you losing the benefits of these state and local taxes.
  2. Prepay in 2017 any business entertainment expenses, such as sports tickets or green fees, and membership dues for clubs organized for business. The final tax reform bill disallows these expenses; it will continue to allow the deduction of 50% for food and beverages associated with a trade or business.
  3. Postpone/defer receipt of income until 2018 to take advantage of the lower tax rates.
  4. Review your potential capital expenditures. Under the final tax reform bill, until January 1, 2023, a business will be able to expense 100% of the cost of the non-real estate property as first-year additional depreciation (bonus depreciation). (There is the possibility that 100% expensing may be available for property placed into service after September 27, 2017). Starting in 2023, the allowance of 100% is phased out by 20% each year.
  5. While rates are higher in 2017, make gifts to charities and family foundations with appreciated assets. Because of the lower limitation of 20% of AGI for appreciated stock to a foundation, you should split your gift between this year and next.
  6. Consider gifting low-basis stock instead of selling to raise cash for gifting that could lead to gains.
  7. Fund a charitable remainder trust with concentrated positions in appreciated securities in order to diversify without adverse tax consequences associated with selling appreciated securities.
  8. Harvest your losses to offset capital gains.
  9. Establish and fund qualified plans. Consider making a gift of up to $5,500 to either a traditional or Roth IRA for your children or grandchildren who are not funding their own IRAs, but have enough earned income to report.
  10. Contribute up to $28,000 gift-tax free per married couple ($30,000 for gifts made in 2018) to a 529 Plan, which grows free of income tax. The final tax reform bill will allow withdrawals for private, elementary and secondary school expenses up to $10,000 per year.
  11. Make annual exclusion gifts to chosen loved ones of $28,000 per married couple ($30,000 for gifts made in 2018).
  12. Make gifts into trusts for children/grandchildren.
  13. Make unlimited gifts directly to educational institutions and medical facilities.
  14. Make distributions of income from trust accounts and estate accounts to lower the income tax liability. Estates and trusts are taxed at the highest income tax rate (and a lower threshold at which the 3.8% Medicare surtax applies). Therefore, it may make sense to distribute income to the beneficiaries to be taxed at the beneficiaries’ lower income tax rates.

“Trump’s new tax bill creates tax planning opportunities before year-end,” commented McManus. “Find time for last-minute tax planning as soon as you finish your last-minute holiday shopping.”

For trusted advice on tax and estate planning, call McManus & Associates at 908-898-0100. Learn more about the award-winning firm at www.mcmanuslegal.com.

Conference Call: Year-End Boot Camp

There are a limited number of days left in 2017. McManus & Associates Founding Principal John O. McManus recently discussed imperatives before year-end for the firm’s clients, in light of significant current events, concerns, and considerations, and amidst a changing tax and economic environment. Listen to the call below, as well as review the list of topics that are covered. 

 

1.Tax Reform –  How will potential estate tax repeal impact you?

2. Estate Freezes – You have exhausted much of your lifetime gift exemption; how can a GRAT aid in shifting wealth in a tax-effective manner?

3. Low Interest Rates and the Market – How does the continued low-interest rate environment support the transfer of investments to the next generation?

4. Leveraging Existing Trusts – How can you deploy previously gifted assets to participate in other estate tax minimization strategies?

5. Family Limited Partnerships – What actions should you be taking in light of the new Partnership Audit rules?

6. Estate Tax – Can estate tax be eliminated if you have taken full advantage of all wealth transfer opportunities but still have a sizable net worth?

7. Asset Protection – Are you confident in your protections against exposure to personal and professional liability?

8. Life Insurance – How does premium financing of life insurance by a family member or bank shift wealth and minimize tax?

9. Planning with Basis – Can you take advantage of upstream gifting to an older family member to minimize capital gains tax?

10. Compliance – Are you certain that you have met the IRS requirements for reporting gifts that you have made in 2016 and prior to 2016?

McManus & Associates Named Boutique Firm of the Year Finalist for Society of Trust and Estate Practitioners Awards

McManus & Associates, a top-rated estate planning law firm celebrating 25 years of success, today announced that it has been named a Boutique Firm of the Year Finalist by the international Society of Trust and Estate Practitioners (STEP) for the organization’s 2017/18 Private Client Awards. STEP is a prestigious, invitation-only worldwide organization of estate planners who advise international families on their global interests.

Conference Call: 10 Ways to Prevent Affluenza

Affluenza: “An Ounce of Prevention Is Better than a Pound of Cure”

According to American author Mignon McLaughlin, “There are a handful of people whom money won’t spoil….” Do you think your children are among them? From over 25 years working with wealthy families, we’ve learned that older generations must be intentional to guard against the development of affluenza in children of all ages. As with lottery winners and athletes who often squander significant sums of cash, children who see an influx of assets may mishandle what they have been given without proper preparation.

The term “affluenza”, also known as sudden wealth syndrome, is a portmanteau of the words “affluence” and “influenza.” It is typically characterized by a lack of motivation or a sense of entitlement among those who have inherited large amounts of money.

During a conference call with clients, McManus & Associates Founding Principal John O. McManus recently shared his thoughts on the 10 preventative measures against affluenza below.

LISTEN HERE for details: “10 Ways to Prevent Affluenza”

    1. Discipline Reality Check
    2. Better to Give than Receive
    3. Money Can’t Buy Happiness
    4. Patience Is a Virtue
    5. Knowledge Is Power
    6. No Substitute for Hard Work
    7. Word to the Wise
    8. Failing to Plan Is Planning to Fail
    9. Know when to Say No
    10. Preparation Is the Key to Success

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.

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.

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

 

Conference Call: Top 10 Ways to Solidify an Estate Plan Post-Execution

Execute and shelve is not an effective approach to estate planning. McManus & Associates, a top-rated estate planning law firm celebrating 25 years of success, today revealed the “Top 10 Ways to Solidify an Estate Plan Post-Execution,” a recent installment in its Educational Focus Series. During a conference call with clients, the firm’s Founding Principal and AV-rated Attorney John O. McManus shared tips on how to build a solid and complete Estate Plan to protect and nurture your family today and for generations to come.

“To make your estate plan solid, there are numerous issues to consider and actions to be taken that extend far beyond drafting documents,” commented McManus. “Building a foundation through strategic planning and establishing the framework for one’s legacy are important steps, but until all the core elements of the structure are in place, there’s more work to do.

“Today, in the Trump Era, with all the uncertainty about where the estate tax and income tax regimes converge and diverge, it is critical to ensure that core protection work is completed as we batten down the hatches, protecting for the storm of changes most certainly on the horizon. To ignore fully completing this core work as we await changes to more complex tax issues is not the most conservative approach. In fact, some have said that to neglect core planning is tantamount to being reckless with one’s loved ones.

McManus added, “As family dynamics and the legal environment evolve, it’s particularly important after the core work is completed to revisit and revise that portion of one’s estate plan, as needed.”

LISTEN HERE for details: “Top 10 Ways to Solidify an Estate Plan Post-Execution”

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:

Next Avenue logo

 

 

 

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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.