Tag: financial planning

Professor of Law Points to McManus’ Guidance on Using Life Insurance in Your Estate Plan

Gerry W. Beyer

Gerry Beyer, Professor of Law at Texas Tech University School of Law, recently featured on his blog McManus & Associates’ latest educational conference call, “Top 10 Things to Know to Make the Most of Life Insurance in Estate Planning.” As pointed out by Beyer, using life insurance in your estate plan can provide significant protection for your loved ones.

To see the top 10 questions to ask yourself when estate planning with life insurance, read Beyer’s post. And check out more hot topics related to estate planning by visiting “Wills, Trusts, and Estates Prof Blog,” a member of the Law Professor Blogs Network sponsored by Wolters Kluwer.

Conference Call: Top 10 Considerations for Estate Planning with Life Insurance

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.

LISTEN HERE: “Top 10 Considerations for Estate 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.

Fox Business: McManus shares advice on how to ensure a trust meets personal, financial needs

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Top-rated Attorney John O. McManus recently spoke with Bankrate Reporter Judy Martel about how to ensure a trust is set up to meet your personal and financial needs. Published today and syndicated by Fox Business, Martel’s piece, “An Irrevocable Trust That Evolves with You,” covers the keys to choosing a trust that “meets your specific needs while building in the maximum amount of flexibility allowed so that, as your needs change and evolve, you retain some power over the trust.”

In the article, Martel shares counsel from McManus:

One of the first important considerations when setting up a trust is its location, says John McManus, founder of McManus & Associates in New Providence, N.J. Some states offer better creditor protection, allow for a trust to exist for a longer period of years before becoming taxable or do not impose state income tax on trust assets. A few states, he says — notably Alaska, Delaware, South Dakota and Nevada — provide additional power to the trust creator while still protecting assets from creditors and maintaining the trust’s tax-beneficial status. Although trusts can be set up in those states regardless of where you live, it is typically more expensive.

She also draws on knowledge shared by McManus, the founding principal of McManus & Associates, to help readers understand the structure of a trust:

At the top of the triangle is the trustee, the person who has legal title to the assets in the trust and the one responsible for managing the trust, making discretionary decisions and carrying out the terms of the trust agreement. The creator can be the trustee, but generally that’s not a good idea in most states because, depending on how the trust is written, the state laws and how much discretionary power the creator has, the trust can lose its tax-beneficial status or be subject to creditors, McManus says.

Beneficiaries, the second point of the triangle, are those who will receive the beneficial interest in the trust. They can be amended, added or dropped if the creator of the trust retains the right of appointment, McManus says. “Let’s say I have two layers of beneficiaries in my trust — first to my wife and sister and then to my children and my sister’s children,” McManus says. “After I create the trust, I want to cut out one of the beneficiaries, or one of them needs more money. I have the right to choose who will receive money and how much,” he says. Even better, he adds, “I don’t have to decide that right away. That allows people to put a lot of assets in that trust when they otherwise might not because who knows how my sister’s children will turn out or how my children will turn out?”

What standards help ensure that the beneficiary’s needs are met within reason and as defined by the trust agreement?

The amount of distribution is also up to the creator of the trust. It can be controlled by the use of ascertainable standards, which restrict the trustee to distributions for the benefit of health, education, maintenance and support, says McManus…They also protect the trust from being taxed if a child beneficiary is also named as trustee, McManus says.

To learn more about how to draft an irrevocable trust properly to save in estate taxes and give you “the comfort of knowing you’ve ensured a financial future for your beneficiaries,” read the whole story here.

Flickr/aresauburn™

Flickr/aresauburn™

Wall Street Journal Cites Tips on Family Meetings from John McManus

On May 11th, an article by Kelly Greene titled “When It’s Time to Huddle” appeared on page B8 in The Wall Street Journal. Greene’s story discusses an important issue that families across America are facing every day: complicated financial and legal planning for elderly relatives. In the piece, Greene relays key tips for tackling this challenge:

Be inclusive.

Don’t delay.

Hire a professional referee.

Set an agenda in advance.

Tap long-distance relatives.

Under “Don’t delay,” Greene captures advice from McManus & Associates Founding Principal John O. McManus that “families should hold meetings before any serious health problems develop.” From the article:

John McManus, an estate-planning lawyer in New Providence, N.J., says there is a “gaping hole” in family planning around preparing for parents’ aging. He considers instituting family meetings among his clients’ families, and in his own, one of his top professional and personal priorities, he says.

“Meetings are critical for getting ideas out on the table,” Mr. McManus says. “There is no one correct answer on how to deal with Mom or Dad’s health issue,” so it’s helpful to have time to think through the choices as a family.

For more tips, check out the full story. And for guidance on how to handle family meetings addressing the health of older loved ones, give McManus & Associates a call at (908) 898-0100.

Article for LifeHealthPro from McManus & Associates: “The Road Ahead for Estate Planning”

Penned by John O. McManus, founding principal of McManus & Associates, the article “The Road Ahead for Estate Planning” is today featured by LifeHealthPro. LifeHealthPro is a go-to resource for advisors, insurance wholesalers, CPAs and estate planning attorneys.

In the piece, John discusses the several surprising outcomes regarding estate planning that emerged as part of the fiscal cliff deal and outlines the new tax rates and exemption amounts. He also recommends several “tactics to try.” From the article:

Here are a few of the trust and non-trust estate planning strategies that married and single persons should explore in 2013:

  1. Foundations: With increased taxes, gifts to charity have a greater tax-deductible value. Gifts to foundations allow full deduction in the year of the gift, whereas transfers out of foundation can be as small as 5 percent on an annual basis, allowing assets in the foundation to continue to grow.
  2. Charitable trust: These enable one to make gifts to charity and receive immediate deductions. One can continue to receive income from the charitable gift for a period of time. Gifts can also be made where the charity gets a distribution each year and the loved ones receive the remainder.
  3. Family mission planning: The family mission and preparing heirs for inheritances are critical to ensuring a successful transfer of wealth and family values, to helping minimize conflict and maximize harmony and to supporting charitable endeavors.
  4. Life insurance trusts: Funding a trust with a life insurance policy is a smart way to get a windfall of cash when someone passes away to pay off estate taxes. It’s also an avenue for getting a big asset off of one’s balance sheet, keeping a large amount of cash safe and protected. Make sure the trust is named as the beneficiary and policy owner (e.g., John Doe Irrevocable Trust). If a house is put into a trust and the house is insured, make sure to get the insurance policy changed to reflect the ownership by the trust. The trust should be the primary insured on the policy, and the individual can be the secondary.

And cautioning readers to be mindful of what’s ahead that could impact estate planning, he shares this observation:

Several valuable opportunities emerged as part of the fiscal cliff negotiations that pleasantly surprised the estate planning community. We are not completely out of the woods, however, with the debt ceiling debates just around the corner. When it comes to safeguarding wealth and family values, it’s important now to look ahead without losing sight of what’s in the rearview mirror.

Read the whole thing at http://www.lifehealthpro.com/2013/02/22/the-road-ahead-for-estate-planning. Also keep an eye out for John’s piece in Monday’s Life Insurance Insider e-newsletter. Next week will be a special estate planning edition.

Courtesy of LifeHealthPro

Bloomberg BNA: Two New Stories Cite Firm’s Founding Principal

 

 

McManus & Associates Founding Principal and top-AV rated Attorney John O. McManus recently spoke with Diane Freda, reporter for Bloomberg BNA’s Daily Tax Report®. The publication is a leading source of legal, regulatory, and business information for professionals covering issues in taxation, pensions, and accounting.

BNAFreda’s December 27th story “IRS Shuts Down Online EIN Applications, Complicating Year-End Gift Transactions” cites John’s thoughts on the IRS’s “planned outage” of online applications for employer identification numbers, from December 27th through January 2nd. It was the publication’s most-read article of the day.

Her second piece, “Fiscal Cliff Unified Estate, Gift Tax Exemptions Seen as Windfall by Advisers,” was published on January 2nd and includes John’s reaction to the passage of provisions in fiscal cliff legislation ensuring estate and gift tax exemptions remain at $5 million for the upcoming year and near future.

To learn more about fiscal cliff unified estate and gift tax exemptions, give our office a call at (908) 898-0100.

Reproduced with permission from Daily Tax Report, 248 DTR G-4 (Dec. 28, 2012). Copyright 2012 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

Reproduced with permission from Daily Tax Report, 02 DTR G-8 (Jan. 3, 2013). Copyright 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

Bankrate.com: “Are these tax proposals fair?”

Jennie Phipps, who has been reporting on retirement for six years, recently spoke with McManus & Associates Founding Principal John O. McManus about estate and retirement planning strategies and based an article for Bankrate.com on the conversation.

In her story, titled “Are these tax proposals fair?” Phipps highlights five estate and retirement planning strategies at which the Obama Administration has taken aim, according to McManus. As she notes in her piece:

Some of the people who are using these strategies as they approach retirement have lots of money to manage. But those using these approaches also include small-business owners and farmers eager to pass their enterprises on to their children without burdening them with a huge tax bill, McManus says.

Phipps summarizes what the government proposes to do to collect more taxes from money passed down via estates and tasks readers with deciding whether the proposals are fair. She calls out the following:

  1. Lower the estate tax exemption.
  2. Retool intentionally defective grantor trusts.
  3. Tax grantor retained annuity trusts, or GRAT.
  4. Limiting generation-skipping transfer tax exemptions to 90 years.
  5. Taxing grantor trusts when Dad still manages the money.

Phipps’ article expands on all five; read more here: http://www.bankrate.com/financing/retirement/are-these-tax-proposals-fair/

The story closes with thoughts from John:

McManus says he believes that taxing estates at 45 percent is unfair and counterproductive. “We are proposing to penalize hardworking people who aren’t making millions. Having to pay a punitive amount in taxes takes away the motivation to start up a business.”

Please give our office a call at (908) 898-0100 if we can help with questions.

New Jersey Newsroom: “A tax tip that can save you thousands”

Warren Boroson

Warren Boroson – author of more than 20 books, including “J.K. Lasser’s How to Pick Stocks Like Warren Buffett,” and whose articles have appeared in publications like Reader’s Digest and New York Times Magazine – recently turned to McManus & Associates Founding Principal and top AV-rated Attorney John O. McManus to talk strategies for the looming Fiscal Cliff and rising taxes that 2013 will likely bring.

Boroson’s article “A tax tip that can save you thousands,” published by New Jersey Newsroom, is based on John’s foresight and guidance. Here’s an excerpt:

The gift tax exemption will likely be reduced next year, so something that well-to-do people should consider doing, McManus suggests, is setting up a trust to put assets into, to protect those assets from Uncle Sam. These trusts will give you “flexibility, control, and access.”

To learn more about what you can expect in terms of gift-tax rates and tax benefits “when the battle about the so-called Fiscal Cliff is over,” check out Boroson’s full column to read John’s expert insight: http://www.newjerseynewsroom.com/economy/a-tax-tip-that-can-save-you-thousands