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As you approach adulthood and start to think about your future, are you really ready to be financially responsible for yourself? If you answered no, you’re not alone. The Jump$tart Coalition administered a basic financial literacy test to high school seniors, and less than half of the students correctly answered the questions. Another study found that over 75% of college students believe they are not ready to make smart financial decisions for themselves . Pretty scary, isn’t it? If you think about it, most of your friends probably don’t know how to balance a checkbook. In fact, very few […]

Estate tax exemptions are high enough these days that most individuals don’t have to consider avoiding estate taxes as part of their estate planning. Instead, the focus should about leaving a legacy: What should you do to help protect and preserve your family? Here are some common mistakes that can damage that legacy plan — and what to do to potentially avoid them: 1. No contingent beneficiaries on retirement accounts. Every retirement account should require you to specify a beneficiary, but what if they pre-decease you? Always specify at least one contingent beneficiary: the person(s) to inherit your account […]

When planning an estate, most often parents distribute their assets equally among their children. If it’s their goal to be fair to each child, it does not necessarily mean leaving your assets equally to each child. Sometimes special circumstances need to be taken into consideration. If parents have done lifetime gifting to one child, but not another, they may or may not want that taken into consideration in their estate planning. Some parents want the lifetime gift to be extra if a child needed the help, as compared to the other more financially independent children. If […]

Overlooking the need to elect portability is a common mistake—and one that can lead to the loss of valuable estate tax savings down the road.

Because of the generous federal estate tax exemption, most upper middle class clients understandably fail to realize the need for making a portability election in order to preserve the portability option for the future. Fortunately, the IRS has provided relief for certain clients who have failed to make a timely portability election (typically without the need for an expensive private letter ruling)—but for many clients, advisors need to remain vigilant in ensuring that the need for making a portability election is even on the client’s radar following the death of a spouse.

The Po...

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In this article by Deborah J. Tedford, an attorney and principal in the Tedford Law Firm of Mystic, Connecticut, she discusses the very important issues surrounding digital assets.

Introduction. Unheard of twenty years ago, digital assets have become ubiquitous in our society. Estate planners must be able to advise clients on planning and administration of these assets. Issues relevant to estate planning covered below include: (1) what digital assets are, (2) why they must be considered in modern estate planning, and (3) how best to create such a plan.

Definition of Digital Assets. The best definition of digital assets depends on the circumstances. The simplest definition is any electronically stored information that holds value. When...

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The concept of a “trust” is fundamentally very simple: One person holds legal title to an asset for another. If I transfer title of the family farm to you, and say, “Hold this land for the benefit of my family,” then a trust has been created.

Because the concept of the trust has expanded so greatly over the centuries, to where now large financial institutions often hold north of a billion dollars in trust, the concept has become daunting and lost its fundamental meaning for most folks. There are also myriad types of trusts: revocable and irrevocable trusts, grantor trusts, qualified trusts, lead trusts, life insurance and annuity trusts, unit trusts, and even the stupidly-named “intentionally defective trust...

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Beach chairs on sand Early retirement is again in reach, but the game has changed. Do you dream of leaving full-time work behind at 60 or even sooner? Plenty of Americans do, of course. But the real question is whether you can afford to clock out early. It may require tradeoffs, such as moving to a smaller home or picking and choosing your hobbies. Yet it may not be as big a stretch as you think. Here’s what you need to know. You need not fear losing health insurance Until recently, health insurance was one of the biggest obstacles […]

Family limited partnerships (FLPs) and family limited liability companies (LLCs) have been a mainstay of estate and related planning for decades. FLPs and LLCs (collectively, FLPs) could have been formed for a myriad of reasons. However, in many cases, achieving valuation discounts for gift or estate tax purposes was a major motivation. Many clients who created these entities hoping to obtain discounts have forgotten the many other benefits these entities can afford them and their families and, as such, are pushing practitioners to dissolve these entities, or worse, terminate them on their own with no professional help. While in […]

When my in-laws became too incapacitated to handle their own affairs, my wife and I took over. A year and a half later, we’re still trying to figure it all out.

“No, no, no, don’t transfer me to her again,” pleads my wife.

It is a typically frustrating moment in our family crisis, one that many grown children will have to face, ready or not: We are people in our 50s who are unraveling the finances of parents who can no longer do it themselves.

My wife, Julie, is on the phone with the company where her 82-year-old dad had once worked, trying to change the direct deposit of his pension checks to a bank closer to the assisted-living home where he and his wife now live, which is near us in Pennsylvania. Again and agai...

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In addition to the federal estate tax (which is fourth highest in the OECD ), many U.S. states levy their own estate and inheritance taxes. While estate taxes are charged against the estate regardless of who inherits the assets, inheritance taxes are levied on the transfer of assets to heirs, based on the relationship of the inheritor to the deceased. In the case of inheritance taxes, spouses, children, or siblings often have different exemptions, which we list in detail in table 35 in the 2015 edition of our annual handbook, Facts & Figures . Currently, fifteen states and the […]

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