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Tag Archive for Estate Planning

Do You Have A Succession Plan For Your Family Business?

Mitchell R Miller
If you own a family business, you are facing one of the most difficult issues in planning your estate. Not the tax issues — those are easy to handle by comparison, but the family dynamics surrounding to whom you are leaving your business.

Often, you — the founder — will have a very different view of the business than do your adult children — the future beneficiaries.

  • To you, the business may represent the heart of the family legacy; to your children, it may be unimportant, or even an outmoded and unwanted burden.
  • There may be some children involved in the business, and others not involved; how do you ensure that all are treated equally?
  • Suppose one or more of the children not involved in the business wants to become involved — or the child or children in wants out?
  • Maybe the time has come for the business to transition to professional or employee management — although you just cannot imagine giving up control.
  • Perhaps a sale to a competitor or even liquidation is the right move; how will you feel to see your life’s work on the auction block?

These are just a few of the situations that can cause difficulties in arriving at a plan which meets your family’s needs. You can see why the statistics show that only about 30% of family businesses survive through more than one generation, and only about 10-15% make it through the third generation.

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Estate Planning Tips For Checking And Savings Accounts, Etc.

Mitchell Miller

Warren Kozak’s April 27, 2018, Wall Street Journal article titled “You Can Limit Death’s Financial Costs, if Not the Emotional Ones” features several excellent points – what the author describes as his own “real rookie mistakes that led to hours of extra work and substantial fees” and which inspired him to write the article to save other people from his mistakes.

Here is just one important issue from his article:

Issue One: When we opened those checking and savings accounts, we never named beneficiaries. I had assumed, incorrectly, that our accounts would simply transfer to the other in case of death. The banker who opened the accounts never suggested otherwise. With a named beneficiary, her accounts would have simply been folded into mine. Instead, I had to hire a lawyer—at $465 an hour—to petition the court to name me as the executor of her estate. I needed this power to transfer her accounts. Filing costs in New York City for the necessary document was $1,286. The running bill for the lawyer stands at $7,402.00, and I expect it to rise. [In California, the costs could be even higher — MM.]

I also needed the documents for the companies that managed her retirement accounts and a mutual fund, because, as at the bank, we never named a beneficiary. By the way, this paperwork also required signature guarantees or a notary seal, which can take up an afternoon.

These are just some of the seemingly “simple” money matters that can cause trouble and expense for your intended beneficiaries if estate planning and documentation is not done correctly.

Have questions on estate planning? Contact Mitchell R Miller.

 

Estate Tax Planning Under Tax Cuts And Jobs Act

Haik Chilingaryan- Estate Planning

Even though Estate Tax Planning is currently utilized by only high net worth individuals, historic trends have shown that the risk of a person’s estate being subject to the estate tax may be applicable to also those individuals with more modest estates. If the federal estate taxes are owed at a person’s death, the then dead individual (“decedent”) has considerably less money to pass to his or her heirs, given that nearly half of the taxable amount may be taxed. There are available avenues that may lessen the value of a person’s estate by the time of death and potentially escape the estate taxes altogether.

Estate taxes are determined by the Basic Exclusion Amount (“BEA”) that is in effect at the time of the person’s death. The way the IRS calculates estate taxes is it tallies up the total value of the estate, then determines whether any gifts were made in any particular year that may have exceeded the Annual Exclusion Amount (“AEA”) and arrives at the final figure of the amount of tax owed. Both the BEA and AEA are indexed with inflation.

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No Estate Plan Is The Same: Part 2 – Finances

Haik Chilingaryan - No Estate Plan Is The Same - Part 2

For all of our existence, one common misconception among the general public was that estate planning was only for rich people and “Trust Fund Babies”. However, this notion could not be further away from the truth, especially when considering the recent changes we have seen in family dynamics and financial opportunities.

The three major financial institutions of the United States consist of the banking industry, stock brokerage industry, and insurance industry. Under the Glass-Steagall Act, each major industry could not engage in activities that fell within the scope of the other two industries. In 1999, the Glass-Steagall Act was repealed and the door was left open for each major industry to conduct activities and transactions that fell within the scope of the other two industries. This in turn increased the probability for both unlimited prosperity and financial collapse.

The second part of this two-part article (View Part 1)analyzes financial planning from an estate planning standpoint. Financial planning is an essential component of estate planning. The amount of wealth you generate prior to retiring will generally determine whether you will have a comfortable retirement and have anything left over to pass on to your descendants after your death. When choosing a retirement plan, you ideally want some combination of the following tax efficient strategies: for the contributions to be tax deductible, the appreciation to be tax deferred, and the distributions to be tax-free.

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No Estate Plan Is The Same: Part 1 – Families

Haik Chilingaryan - Estate Planning- Families

For all of our existence, one common misconception among the general public was that estate planning was only for rich people and “Trust Fund Babies”. However, this notion could not be farther away from the truth, especially when considering the recent changes we have seen in family dynamics and financial opportunities.

Families have historically been composed of one male parent, one female parent, and a child (or children). While traditional families are still very much in existence, there are now compositions of family structures of virtually every imaginable scenario. This includes families with children raised by single mothers or single fathers, cohabiting couples with or without children, and people who neither have children nor domestic partners. By no means is this an exhaustive list. Therefore, the internal makeup of virtually every household is unique, which in turn requires carefully crafted planning techniques to be implemented for each individual family.

The first part of this two-part article analyzes planning considerations for families with young children, families with adult children, married couples, unmarried cohabiting couples, and people who neither have children nor cohabiting partners.

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Estate Planning – Here Is What Can Happen Without An Estate Plan

Haik Chilingaryan - Pass-Through Entities

Let’s begin by debunking an age-old myth that somehow estate planning is only pertinent to those people who have a significant amount of wealth. There are many compelling reasons for anyone to have an estate plan. One such reason is to prevent the courts from making decisions on your behalf, especially in such a manner that you would probably not want to be made in the first place. In addition to overriding your wishes, the court proceedings may come with a heavy price tag and take a very long time before all the dust settles.

In essence, effective estate planning solves matters of life and death. It allows you to decide who will make health care and financial decisions in the event a mental or physical condition renders you disabled or incapacitated. It also allows you to determine who will inherit your assets and when those assets will be inherited. Similarly, estate planning allows you to determine who will inherit your business in the event you are disabled, incapacitated or dead. It also provides you with the tools you need to protect your children and any family members with special needs.

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Estate Planning In A Nutshell

Haik Chilingaryan, Estate Planning Tax Lawyer, Los Angeles, CA

What Is Estate Planning?

An estate plan includes trusts, wills, health care directives, financial directives, guardian designations, and living wills. However, proper estate planning does not merely include the delivery of these documents, but the process of identifying the objectives sought by our clients and putting in place the strategies that help them achieve their goals. Thus, estate planning primarily consists of the advice and guidance that you get from a professional who can be a steward in the preservation of your wealth.

In a nutshell, our firm takes the comprehensive approach to estate planning, which includes not only the methods in which a person’s assets are distributed upon death, but also the implementation of strategies that preserve the most amount of wealth during one’s life. It follows that the most amount of wealth that can be preserved during one’s life can increase the overall value of the estate, which the beneficiaries will receive upon one’s death. Our firm also uses the various tools available in the legal realm in order to protect the assets of our clients from creditors and predators.

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The Down And Dirty On The New Tax Rules And Estate Planning

Most articles about the passage of the Tax Cuts and Jobs Act in December buzz about the resulting income tax consequences for individuals and businesses.

But what about the intersection of the TCJA and estate planning?

In a report by Stefi Gascon Hafen, published by AccountingToday, she comes to some interesting conclusions about the TCJA’s significant impact on estate planning. Read more

5 Non-Tax Reasons For Estate Planning

As the Unified Gift and Estate exemption is now $5.49 million per person, is there still a need for a living trust or estate plan?  There are many reasons for a comprehensive estate plan other than to save estate taxes.  Below are just five of these reasons how a good estate plan can be beneficial and help achieve goals.

1) Avoid probate

In California probate is a process where a will must be proven to the court, and it is notoriously costly and lengthy.  In addition to the administrative hassle, probate can also have fees up to 4% of the estate.  However, with a trust plan in place probate, with its fees and headaches, can be avoided. Read more

Significance Of Stepped Up Basis In Estate Planning IRC 1014

According to Internal Revenue Code Section 1014 the basis of property acquired from a decedent is the fair market value of the property at the date of the decedent’s death.

This is often referred to as stepped up basis and it is profoundly significant for U.S. taxpayers dealing with the myriad of issues surrounding estate planning or tax preferential transfer of assets. Read more

Estate Planning For American Expatriates

Retiring abroad is more popular than ever, thanks to perceptions of a better quality of life, more affordable health care, and a warmer climate.

Americans living abroad earning over $10,000 a year (or just $400 of self-employment income) are still required to file a U.S. tax return though, declaring their world wide income. This includes expats who have retired or settled permanently abroad. Read more

Stepped Up Basis In Estate Planning IRC 1014

According to Internal Revenue Code Section 1014 the basis of property acquired from a decedent is the fair market value of the property at the date of the decedent’s death.

This is often referred to as stepped up basis and it is profoundly significant for US taxpayers dealing with the myriad of issues surrounding estate planning or tax preferential transfer of assets. Read more