Nationally, Americans’ retirement assets total more than $14.5 trillion. Even considering the recent bear market, this amount is up significantly over the last decade.
No matter the amount of your retirement assets, proactive planning is critical because of the sometimes confiscatory taxes these assets are subject to – up to 70% or more in certain circumstances. As you may know, traditional retirement assets are not subject to income tax until withdrawal – and because the withdrawals consitute income, the larger the withdrawal, the higher the tax rate. If you’re like many of our clients, you want these assets to grow to the maximum extent possible, since assets not taxed until withdrawal grow much faster than assets that are taxed every year.
I recently hosted a seminar on Asset Protecting IRAs and Qualified Plans (which includes 401(k)s, defined contribution plans, defined benefit plans, etc.) and learned several strategies that can help defer and perhaps eliminate the tax liability of these hard-earned assets, while at the same time legally protecting them from creditors. These strategies can also help coordinate retirement plans with your overall estate and financial planning objectives to ensure that those objectives are met.
Friday, February 19, 2010
Thursday, February 18, 2010
How does divorce affect your trust?
By: Patrick D. Newton: If you set up a revocable trust for your self that has provisions in it for your spouse, including naming the spouse as a current or successor trustee, those provisions are revoked upon divorce. This default rule could be changed in the trust document itself, but generally would not be.
As for an irrevocable trust, the Grantor's divorce from a spouse who is a beneficiary, or a trustee, does not impact the irrevocable trust at all. This general rule could also be drafted around. Typically, if you are creating an irrevocable trust for your spouse, you will want to include language that will deem the spouse as deceased upon divorce.
If you are creating an irrevocable trust to qualify for the unlimited marital deduction, you cannot have such a provision and also qualify for the marital deduction. You could, however, terminate the spouse's role as a trustee, and you could arguably terminate any access to principal. The income in a marital deduction trust must continue to be paid to the spouse for his or her lifetime.
As for an irrevocable trust, the Grantor's divorce from a spouse who is a beneficiary, or a trustee, does not impact the irrevocable trust at all. This general rule could also be drafted around. Typically, if you are creating an irrevocable trust for your spouse, you will want to include language that will deem the spouse as deceased upon divorce.
If you are creating an irrevocable trust to qualify for the unlimited marital deduction, you cannot have such a provision and also qualify for the marital deduction. You could, however, terminate the spouse's role as a trustee, and you could arguably terminate any access to principal. The income in a marital deduction trust must continue to be paid to the spouse for his or her lifetime.
LLC dissolution
I was asked today whether one member of a two member North Carolina LLC could force a dissolution of an LLC. While the operating agreement for the LLC could so provide, North Carolina statutes requires all members to consent in writing in order to dissolve an LLC. Of course, if it has no members, then it could be dissolved by the Organizers, and if no members for more than 90 days, it dissolves automatically.
Patrick
Patrick
Estate tax viewed as big Ag issue in ’10
It is no surprise that the Estate Tax will be a big issue for farmers and ranchers in 2010. They have a lot to lose if we go back to a $1 million estate tax exemption.
Go to Article.
Patrick
Go to Article.
Patrick
My Personal Thoughts on the Estate Tax
I have said for years that I thought we would actually have repeal in 2010. I have also thought that the estate tax exemption will go back to $1 million in 2011. Well we are more than 6 weeks into 2010, and we have repeal.
If Congress were to change the estate tax laws in any way during calendar year 2010, then they would essentially be legislating a tax increase. I understand that politicians do not particlularly like to vote for a tax increase, as it can impact re-election. If Congress waits until January 2011 to change the estate tax laws, then they would legislating a tax cut! Tax cuts are good for re-elections.
Anyways, I still think it will go back to $1 Million in 2011.
Take care, Patrick
If Congress were to change the estate tax laws in any way during calendar year 2010, then they would essentially be legislating a tax increase. I understand that politicians do not particlularly like to vote for a tax increase, as it can impact re-election. If Congress waits until January 2011 to change the estate tax laws, then they would legislating a tax cut! Tax cuts are good for re-elections.
Anyways, I still think it will go back to $1 Million in 2011.
Take care, Patrick
Thursday, February 4, 2010
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