Asset protection trusts, which are controversial and used to block creditors, are becoming more popular.
Of the three leading diseases that kill most Americans, two are well known for being financial nightmares: heart disease and cancer. The cost of drugs, multiple surgeries and hospitalization are widely recognized as presenting huge financial challenges to families, even when there is health insurance. But less known is the high cost of dementia. A study examined Medicare patients with cancer, heart disease and dementia and found that the average total cost of care for a dementia patient over the course of five years was$287,038. The average Medicare cost of care for a heart disease patient was $175,136. For a cancer patient, the average Medicare cost was $175,136. And while Medicare paid almost the same amount for each of these three diseases - around $100,000 - dementia patients had far and away more expenses that were not covered. The average out-of-pocket cost for a dementia patient: $61,522.The dementia patient needs human caregivers to assist them with basic activities of life and supervision, costs that are not covered by Medicare. The out of pocket cost for a dementia patient is more than 80% more than the cost for a patient with heart disease or cancer.
Taxes and inheritance issues go together like Halloween and trick or treating. Tax planning is a critical part of estate planning, and families who wish to transfer assets from one generation to the next need to prepare for both aspects, as settling an estate can easily become quite complicated. Many estate plans include the use of irrevocable trusts. There are some basics that heirs need to know if they are beneficiaries of these trusts.
With every state seeking additional revenue and every candidate seeking additional votes, estate taxes have become part of many politicians' platforms. Most of us pay more attention to estate taxes on the federal level, but estate taxes on the state and federal level have changed a lot in recent years. Not everyone is clear on how these changes apply to them and their estate planning. Key point to keep in mind - state and federal taxes are very different from one another. The bottom line: everything you own, including the face value of insurance policies where you are an owner, gets taxed. The federal estate tax exemption is $5 million, and federal estate tax of approximately 35% is levied on any estate valued at more than $5 million. Using the "portability" feature, any married person can pass along any unused portion of their $5 million to their spouse.
If you are a member of a couple, whether you are married, living together or have some creative arrangement, if your lives and finances are intertwined, there are money and estate planning matters that should be dealt with sensibly and fairly. The biggest mistake most couples make is not planning and not discussing their financial lives. Without good communication and proper planning, one or the other member of the couple invariably ends up resentful or feeling like they are being treated unfairly. Best example: one is a saver, the other is a spender.
It is impossible to know how events will play out, both on a grand scale and in small and unexpected ways. Last minute decisions, like those of the rock musicians who won seats in bets and then were killed in the Buddy Holly plane crash in 1959, are often said to be a function of fate or a larger plan. But that is not how you want to handle planning for the succession of a family farm. Today's family farms are poised at an important place in time. A lack of planning could spell a disaster for families, farms and our national ability to produce food.
Collectors of fine art are advised not to think of their collections as investments, but collectors cannot ignore the value of their art portfolio, nor should they fail to consider what will happen to the artwork when they are not around to appreciate it. And as the art portfolio grows in value, whether through acquisitions or the artist's ascent in popularity, it may become a significant asset that has an impact on heirs financial and tax lives. Heirs who may not appreciate the art collection as much as their parents or grandparents do may see the artwork only as a tax burden. How can you best manage estate planning when a substantial proportion of the assets are art?
Will you be leaving substantial assets to your heirs? Then you are probably concerned about estate taxes and the bite they'll take out of your multi-million dollar estate. Not to mention state taxes that your heirs may have to pay. Our contributors have a few savvy strategies that can help lower your estate tax burden.
Technically speaking, whenever you give a gift to someone, you have to follow the gift-tax rules. You don't have to file a gift tax return every time you give someone a birthday present or a bouquet of roses, but it's useful to know when the gift tax - embodied in IRS' Form 709 - needs to be dealt with. It's better to know the rules and follow them than to have to deal with the IRS with an unexpected tax.
Whether it's a farm or a manufacturing facility, family businesses are a key part of the global economy. Family business owners are not always very good about keeping their estate plans up to date. Circumstances change: the value of the business may grow or shrink, relationships within the family may change, and tax laws change. Failing to update the family business's estate plan can lead to financial disaster. Legacies built up for generations can come apart in the span of one generation when planning is not done properly or kept up-to-date.