For readers unfamiliar with the generation skipping transfer tax (GSTT), in its simplest form it is what it sounds like – a transfer tax that is triggered when an individual (transferor) bequeaths all or a portion of an estate to a person (skip person) that is two or more generations below them, with an age difference of 37 ½ years or more. The simplest and perhaps most common example would be a grandparent leaving assets to a grandchild.1 [+] Read More

At least we hope it’s a never ending story. About two years ago, we wrote an article about the government potentially ending the Stretch IRA. Back then, there was a proposal being floated that would require non-spousal beneficiaries to receive and pay taxes on IRA distributions within five years of the IRA owner’s passing. The law never materialized, and Stretch IRAs are still a great potential tool for preserving wealth over generations. But here we are two years later, and the proposal is back again—this time as part of the 2017 White House budget. The administration is seeking to accomplish the same thing it couldn’t accomplish back in 2014, to “require non-spouse beneficiaries of deceased IRA owners and retirement plan participants to take inherited distributions over no more than five years.” In layman’s terms, it means that if you inherit an IRA from someone you weren’t married to, you have to distribute all of the funds within a 5-year period, and possibly be responsible for all the associated taxes. Today, a non-spouse person that inherits an IRA can “stretch” out their distributions over a lifetime, in hopes of reaping the long-term growth benefits of a tax-deferred IRA. In the proposed law’s defense, IRAs were never designed to be “legacy” accounts – they were designed to give people the opportunity to save for retirement in a tax advantaged way, and then use that money for retirement. Once the retiree passes away, the tax break should theoretically end – and the concept of a Stretch IRA runs counter to that. As long as it remains on the table, however, investors who have inherited an IRA would be wise to consider it as part of their investment plan. It’s difficult to argue against leaving assets in a tax deferred growth account for as long as possible. [+] Read More

We’ll admit it: creating a comprehensive estate plan is not the easiest thing in the world to do. In fact, it usually involves a great deal of time, planning, and in some cases can come with a price tag. But that does not make estate planning any less important to your financial future! Spending adequate time on your estate plan can mean having your assets distributed the way you want them distributed, and it can save your family time and money and help them avoid the hardships that often accompany estate settlements where plan documents are unclear (or non-existent). Enter Estate Planning 101, your guide to the estate planning basics you need to get started. Creating a comprehensive estate plan takes time, and your plan is subject to change over the years as your family and financial circumstances change. Our goal is to give you a starting point by outlining some of the basics. What is an Estate Plan? An estate plan creates a documented approach for how your assets should be distributed after you pass away (or become unable to make your own financial decisions). Many folks may believe that an estate plan is only necessary for the very wealthy, but that is not necessarily the case at all. [+] Read More

Estate taxes are a hot-topic amongst both political parties and often big news when they are brought to the forefront of campaigns. While the parties battle back and forth, there are still some ways you can potentially reduce the impact of taxes on your estate. Using an estate planning checklist is a good place to start, as it helps you map out your estate planning strategy. Rather than take estate planning advice from just anyone, consider what you really want to do with your money and look for estate planning tips that are tailored to the plans, goals, and ideas you have. Here are five potential ways to lower your estate tax bill. [+] Read More

Filing taxes often puts our financial lives under a microscope, and that’s a good thing – we take stock of where we stand financially and we can review strategic opportunities for how we take income, how we spend, and how we invest. With all of this information already out on the table, a sound next step is to shift focus to your estate plan. Tax and estate laws are constantly changing, so the planning process can be complex and you should enroll the help of professionals in each area as you get started. But there are also a few core elements of planning that have been fairly constant over the years, and we’ve assembled them into an estate planning checklist for you as a basic guide. [+] Read More

For years, Stretch IRAs have been used as estate planning tools to help pass on tax-deferred wealth even longer. By using a Stretch IRA, the IRA owner designates a younger-generation member of the family as the beneficiary of the IRA. Under current law, the beneficiary can elect to receive the RMD (required minimum distributions) based on his or her longer life expectancy. This method allows younger beneficiaries to potentially enjoy decades of tax-deferred (or in the case of Roth IRAs, tax-free) withdrawals. [+] Read More

Creating a Family Limited Partnership (FLP) as part of your estate plan can potentially save your family thousands of dollars in gift and estate taxes. FLPs also provide savings via protection of your assets from creditors – in this sense, you’re saving by not losing. For families with significant assets in businesses, real estate, or other income producing assets who are looking for effective ways to pass assets to heirs in a tax-efficient manner, Family Limited Partnerships are worth exploring. What is a Family Limited Partnership? It is a limited partnership in which (generally senior) family members contribute assets in exchange for general and limited interest, and then in turn transfer limited interest unto heirs. The partnership itself isn’t taxable – the owners of the partnership report its income on their personal tax returns, in proportion to their interests. [+] Read More

High net worth investors who open a trust account have two choices when it comes to choosing a trustee, generally speaking: assign a friend/family member/associate, or hire a corporate trustee to handle the trust management duties. If you’re looking for a corporate trustee service, consider The Advisory Trust Company of Delaware. 6 Benefits of Using Advisory Trust as Your Trust Administrator1 1) A Singular Focus on Trust Administration Services At Advisory Trust, they focus solely on administering the trust, meaning you can keep your financial advisor and the money manager strategies that make up your investment plan. Some corporate trustee services require you to give them discretion over investment decisions within the trust – meaning you would have to potentially fire your financial advisor and hand over control of your portfolio to the corporate trustee. [+] Read More

If you are the beneficiary of a Traditional, Simple, or SEP IRA and have just inherited the assets, you have a few reasonably simple options available to you. We’ve created a guide below to help you understand your choices. Inheriting an IRA means having a new set of financial decisions, and since your financial situation is unique it’s a good idea to ask for help. Your financial advisor should be able to guide you through these options so the transition goes smoothly and you can make a choice that’s right for you. Below we break it up into two sections: spouses who have inherited IRA assets, versus non-spouses. [+] Read More