There are several tax and estate planning strategies that high-net-worth individuals (HNWIs) should consider seizing upon before year-end. In a conference call with clients today, John O. McManus, founding principal of McManus & Associates, weighed in on timely topics for the benefit of clients, from legislative initiatives that may impact estate planning to why an estate plan needs to include provisions governing digital assets. Below, listen to the call recording and find an outline of the issues covered during the discussion:
What legislative initiatives and political
current events may impact estate planning? If enacted, the SECURE Act will drastically limit the
ability to “stretch” an IRA for your children and the estate and wealth tax
proposals of the Democratic candidates for President may suggest urgency in
need to complete wealth transfers.
How does being diagnosed with a significant
health problem impact the estate plan? It is best to re-focus on the estate plan and have
difficult conversations with family members and advisors as soon as reasonably
possible because of the elevated concern about incapacity or demise.
Why should major life events cause one to
re-visit the estate plan? Marriages or divorces in the family, the acquisition of new
assets or investments, starting a business can all serve to undermine the
intended estate plan or create a new blind spot or vulnerability.
What are the important principles in planning
for the modern family? Blended
families, same-sex marriages, single-parent families, and domestic partnerships
each raise their own nuanced considerations, which places a greater emphasis on
a specialized and flexible approach.
Why and how should you discuss your estate
plan with your children? Discussing
death, taxes, and asset protection may be uncomfortable, but they are essential
to best prepare your heirs for their inheritance.
What is a family mission and how can it be
integrated into the estate plan? It is important to consider imparting sentiments in
support of the family legacy, such as preserving family traditions and
What are the risks of failing to properly plan
for the disposition of a specific asset, such as a home, personal effects, a
business, or even frequent flyer miles? Items that may have a sentimental value or disproportionately
favor one child over another may cause divisiveness and other
What estate planning lessons can be drawn from
the Financial Independence, Retire Early (FIRE) movement? Prudently structuring discretionary
trusts can avoid an outcome in which children are deprived of their motivation
for self-sufficiency and can also provide opportunities for them to amplify
their personal wealth.
Once an estate plan is completed for the time
being, what are the practical steps that should be taken to protect the
documents and other important information? Current best practices include various options
for physical and electronic storage to ensure these materials are readily
available during an emergency or tragedy.
Why must an estate plan include provisions
governing digital assets, including web-based accounts and cryptocurrencies? Wills, Trusts, and Powers of Attorney
should specifically authorize a fiduciary to have access to all information,
including online and digital passwords to ensure efficient access to accounts.
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.”
Recently, the New York Times ran a story by Nelson D. Schwartz, titled “In an Age of Privilege, Not Everyone Is in the Same Boat (A1, April 24).” John O. McManus – McManus & Associates’ founding principal who grew up in the Bronx but has worked with high net worth families for 25 years – penned the Letter to the Editor below in response:
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:
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.
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.
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.
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.