I-Plan by Michael Minter: Get yours Today!

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Estate Planning:President Obama has said that he is willing to let the Bush tax cuts expire.

 

Gift and Estate Tax Planning Opportunities Set to Expire 12/31/2012

Time to plan your Estate is now and the clock is ticking. 

President Obama has said publicly that he is willing to let the Bush tax cuts expire. On January 1, 2013, when the exemption amount falls from $5 million to $1 million, Congress may change this. Then again, they may not.

Given the time it will take to set up trusts, holding companies, or another form of asset protection, estate planning has to be in the works now for anyone who wants to avoid paying 55% in estate taxes or passing that cost onto their heirs. 

Never has wealth preservation and planning been more critical for individuals and families. The expiration of the Bush Tax Cuts means that not only will millions of people owe up to 20% more in taxes, but, their options for asset protection will look substantially different when everything over $1 million dollars, or $2 million for a couple, is going to be subject to the highest rate of taxation. And no one is talking about this. 

The best and simplest ways to both legally reduce taxes and avoid double whammy of the scheduled increase and the decrease in exemption is to review all assets with a professional authorized to set up the necessary structures to protect your wealth. 

Mintco Financial has a team of specialists to help you reduce taxes and plan for your Estate. Call us now at 813-964-7100 or visit our site at www.MintcoFinancial.com  

Michael Minter,one of the specialists in Estate Planning, is also author of the book I-Plan, where he mentions Estate Planning.

Estate Planning: Why you need one

Why do you need proper Estate Planning?

Proper estate planning that takes into account past and potential changes in estate tax laws can help you to:
 
Protect against federal and state-level wealth transfer taxes
 
Ensure proper distribution of estate assets
 
Provide creditor protection
 
Avoid probate
 
Grant powers of attorney to make financial and health decisions in the event of incapacitation

Appoint guardianship for minor children
 
Instruction on the proper distribution of assets to family members


Got a question?  We offer a complimentary evaluation of your Estate Planning. Or we can help you building one.


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Plan for family Succession

Written by

Tom Cooney and Crystal Faulkner

I own a small business, and some of my children work for me. I don't want to give up control of my business, but I also don't want to miss out on any tax-savings opportunities. Do you have any practical tips for results-driven succession planning?

The Tax Relief Act of 2010 provides you an opportunity to shift a portion or all of the ownership of your business to your children by taking advantage of the $5 million gift tax exemption ($10 million if combined with your spouse) that was included in the law passed by Congress late last year. The additional gift tax exemption combined with the fact that many businesses are worth less than they were before the recession makes this a great time to be thinking about succession planning since a larger portion of the ownership in your company may be transferred at lower values.

The fear of losing control of your company is very valid and a concern we hear frequently from entrepreneurs. You've undoubtedly worked hard to build your business and you want to make sure the value isn't compromised. The good news is that you can transfer a portion of your business without relinquishing control of the entire company. There are many ways to maintain control depending on the legal structure of your business. For example, you may be able to restrict voting and transfer rights on the ownership that you transfer. In addition, you may be able to utilize trusts to own the shares or units transferred.

Before you decide on the method of transfer, your biggest challenge may be deciding if the business should remain in your family or sold to an outsider or to management. Assessing whether your children have the appropriate skills and abilities to run the business is difficult and often emotional but this issue should be addressed early and periodically reviewed. If your children are not yet in significant management roles you may also want to include key members of management in your succession plan. You should consider motivating your key employees to remain with the company through the management transition. You may want to explore phantom stock arrangements or deferred compensation agreements as an incentive for your management team to stay on board through the transition and beyond. In some cases, an ESOP, which allows employee ownership, may be appropriate. If you decide that your business should remain in the family, you'll need to address several objectives to make the transfer successful.

A primary goal that you should consider is how to transfer your ownership to the active family members of your business using the least amount of your gift exclusion and minimizing your tax cost. If you wait until your death to transfer, your estate may not have enough liquidity to meet tax requirements which means the estate may need to sell the company. Of course, you want to retain enough business or non-business assets so that you will be able to maintain your lifestyle after the transfer.

For a smooth transfer, you should focus on creating wealth for yourself independent of your business. You can use creative retirement options which in turn will make the transition much easier. You may be able to utilize deferred compensation plans, consulting agreements, non-compete agreements, employment contracts or other means to help assure your stream of income. If you own real estate in conjunction with the operation of your business you may be able to utilize the real estate to maintain your income stream.

When transferring family wealth through a business it's preferable to transfer ownership to the children who work in the family business. Many parents want to be sure that all of their children are treated equally and make the mistake of allowing the children who do not participate in the family business to also have ownership. Generally, this is not a good idea and often causes family feuds between siblings. Non-business assets (such as life insurance and real estate leased to the operating company) should be used for any of your children who aren't active in your business. This allows you to maintain as much equality as you want without encumbering the management of the business.

Business succession planning is one of the most crucial parts of your estate plan and critical for the long-term success of your organization. If you don't plan appropriately you will needlessly end up paying more in estate and gift tax to the IRS, which reduces your family's overall wealth. It's not an easy process, but proper succession planning is one thing you should definitely do to help carry on your legacy. You should consult with your professional advisors that are familiar with your circumstances for their ideas.

Consult us: 716-565-1300 or anecamara@mintcofinancial.com

www.MintcoFinancial.com

Understand Life Insurance

from Wall Street Journal 

Life Insurance quote: mintcofinancial.com/life-insurance-quote.asp


Life insurance is one of those financial products that can give people the heebie-jeebies. It can sound confusing and complicated, and it involves thinking about a very scary proposition: death.

But life insurance really isn't as frightening or complex as it seems. It's actually a fantastically useful and flexible estate-planning tool that can provide income-tax-free security for your loved ones. It can also provide liquidity to pay estate taxes, especially if your estate largely consists of assets such as real estate or a closely held business that you may be reluctant to sell to raise cash. (If the policy is owned by an irrevocable trust, the insurance payout can avoid estate taxes too.)
Here's a rundown of some of the basics of life insurance:
 
1 'How do I buy insurance?'
You can go directly to an insurance company or use a broker, either in person or online, that compares products from multiple insurance companies and can help you find the best quote.

You also can check if your employer, union or trade association offers a group life-insurance policy. Group life-insurance policies may not offer as much flexibility as some individual policies, but they typically don't require a medical exam -- a boon for those in poorer health seeking to be insured.

When you're shopping for policies, stick to companies with high financial strength ratings from firms such as A. M. Best, since the last thing you want when spending money for peace of mind is to have to worry about your insurer going bust.

Most individual life-insurance policies require you to get a medical evaluation so that the insurer can assess your health and longevity risks. That's typically arranged by your insurance broker or the insurer, at no cost to you. In most cases, a medical technician will come to your home or office to get some vital stats and blood and urine samples.

mintcofinancial.com/life-insurance-quote.asp 
 
2 'Do I need insurance?'

You generally can skip life insurance if you're single with no dependent kids and don't expect to have a taxable or debt-ridden estate. Also think twice about forking over for life insurance if your premature death wouldn't affect the ability of your surviving partner to pay for daily living expenses.

But do consider life insurance if you have dependent children, are a business owner or if your spouse doesn't work or you have a big income disparity. In these cases, if you die prematurely, a life-insurance policy can help the survivor pay for your family's day-to-day cost of living, including mortgage payments or help your business remain viable after your death.

There are many variables to factor in when considering how much life insurance to buy. It depends on your current and projected income and assets, your family's annual living expenses, the length of the policy you are considering and whether you have any specific future economic needs -- such as a child's college tuition, a special-needs child who needs lifelong support, or expected estate taxes to pay off. Your insurance broker or salesperson can help you come up with a coverage amount that's suitable for your situation.
 
3 'Term or permanent?'

Life insurance, in its most basic form, can be divided into two categories: term and permanent, also called cash-value. Term life, the simplest and cheapest form of life insurance, is when you buy an insurance policy that lasts for a set period, typically 10, 20 or 30 years.

A term policy, which usually costs just a few hundred dollars a year if you're in good health, is appropriate for people who only want life insurance for a limited number of years -- such as until your children are grown or until you reach retirement age.

Permanent or cash-value life insurance, by contrast, lasts for the remainder of your lifetime. These policies are often used for specific estate-planning purposes, such as funding future estate taxes or for ensuring the continuity of a family business.
 
4 'Why the cost difference?'

Permanent insurance is more costly than term life insurance because it lasts longer and because it provides more than just a death benefit: It also has an investment component in which money accumulates tax-free within the policy.

In other words, a portion of your premium is placed in a separate investment account; this money grows tax-free while the policy is in force. (How it's invested depends on the policy.) As more money builds up inside the policy, you might eventually use this stash of cash to help you pay the policy's premiums.

Many insurers tout the tax-free investment benefits of cash-value policies. Not only does the money grow inside the policy tax-free, but your beneficiaries don't have to pay income taxes when they receive the policy's payout. A cash-value policy might make sense if you have already contributed the maximum amount to other tax-deferred investment accounts, such as 401(k)s and individual retirement accounts.

On the other hand, the higher premiums, commissions, and sometimes limited investment choices might not make a cash-value account worth it.

Some people choose to buy a special kind of permanent policy called a "second-to-die" or "survivorship" policy.

These policies pay out when the second person in a couple -- you or your spouse -- dies, and the money generally goes to your children or other heirs. They typically cost less than traditional permanent insurance because they are based on the life expectancies of two people, rather than one.


Do you need a quote? Or understand more about Life Insurance?

Call us at 716-565-1300

Free quote : mintcofinancial.com/life-insurance-quote.asp


Email:anecamara@mintcofinancial.com


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5 Trust Fund Rules That Can Really Help Children

Article from  ANNE BRENNAN, The Fiscal Times

If you’re in the fortunate position of deciding where to leave your millions or billions, take some advice from billionaire Warren Buffett’s son, Peter: Don’t spoil them.

Warren’s philosophy is that you should give children “enough to do anything, but not enough to do nothing.” Instead of perpetuating the cliche of lazy trust-fund babies, Warren pledged most of his fortune to philanthropy, and Peter Buffett received $90,000 in stock for personal use. He and his siblings each received $1 billion to do nonprofit work. And Peter is all right with it, using the money to build a career as a composer. 

These kinds of champagne problems are no longer restricted to the uber wealthy. Now more people than ever are faced with the challenge of making crucial financial decisions for their heirs. The nation’s estimated 78 million baby boomers are the greatest entrepreneurial generation and have accumulated staggering amounts of money from a variety of sources such as high-tech stocks. It’s not just a matter of turning over a pension fund or selling Grandma’s house anymore.

“There’s a tremendous amount of wealth,” says Richard Gotterer, managing director of Wescott Financial Advisory Group in Florida.

But history shows how difficult it can be to have such wealth within your reach. Paris Hilton’s billionaire grandfather Conrad Hilton reportedly slashed her inheritance after her wild behavior, choosing to give away 97 percent of his $2.3 billion fortune to his family’s foundation.

“In many cases, a gift or inheritance can do more harm than good,” says Anne Marie Levin, attorney and vice president and trust specialist at PNC Wealth Management in Wilmington, Del. 

Financial experts say that employing creative approaches to trust funds, such as implementing incentives for your children, can offer your children financial protection and personal empowerment.

Here are five things to consider if you are going to create a trust fund: 

1) Passing the buck before taxes go up. One of the hottest topics concerning funding trusts is making gifts to irrevocable trusts to take advantage of the current $5 million (or $10 million per couple) gift-tax exemption, Levin says. (The $5 million gift-tax exemption was raised from $1 million to $5 million in 2010 and will stay in effect through 2012.) A popular estate planning option that isn’t scheduled to change is an individual annual tax-free gift of $13,000 (or $26,000 per couple).

2) Timing is everything. The key is to build flexibility, says David R. Okrent, an estate planning attorney in New York. When it comes to trust funds, one of the biggest questions is when to give wealth, while you’re alive or after you die? One option is to stagger when a child receives the inheritance — say every five years — at 25 years old, 30, etc. This allows children to mature. Many young people would find it hard not to blow all the money on cars and fun, Gotterer says. “You really want to look at your children and their strengths,” he says.

3) Offer a carrot for good behavior. Some trusts include incentives to encourage certain kinds of behavior and/or productive lifestyle; e.g., the child receives a certain amount when he/she graduates from college or to assist in starting or growing a business, Levin explains. Some trusts discourage certain behaviors, such as drug and alcohol abuse. They forbid distributions from the trust if the child has a positive drug or alcohol test.

4) Recession perks. People may own something now that’s artificially low — real estate — for example. “Today would be a good day to gift that,” Okrent says. People may decide to give this year instead of next, especially with the possibility of tax law changes in 2012.

5) Money isn’t everything. Letters or videotapes to children are “sometimes more powerful than the money itself,” Gotterer says. A lot of baby boomers have rags-to-riches stories. Every generation wants the next to have a better life. “They say, ‘I don’t want my kids to work as hard as I did.’[But] what’s wrong with that?” Gotterer says.

Contact us with any question at www.MintcoFinancial.com

Estate Planning Law Changes You Need To Know

Should you become incapacitated or when your time comes, estate planning serves to manage and protect your assets. Tasks that are generally included in estate planning are the creation of a will, establishing a guardian for living dependents, the naming of an executor, setting up a durable power of attorney (POA), designating beneficiaries for plans such as IRAs and life insurance, and limiting estate taxes.

TUTORIAL: Estate Planning
Estate planning is a dynamic and ongoing process, and as estate law changes, you'll need to respond appropriately. On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act ("TRUIRJCA" or "TRA 2010" for short). This new law provides changes to rules that govern federal estate taxes, gift taxes and generation-skipping transfer taxes for the 2010, 2011 and 2012 tax years.


What is the Federal Estate Tax?
A federal estate tax is collected when a person's assets are transferred to an heir or heirs if the value of the estate exceeds a certain amount. The tax is based on the sum of the fair market values of the decedent's assets on the date of death, less any estate tax credits and allowable deductions. Assets that are transferred to a surviving spouse are not taxed due to the unlimited marital deduction.

What is a Generation Skipping Transfer Tax?
A tax that is assessed on property that is transferred from one generation to a generation that is two or more levels below the transferor's generation is known as a generation skipping transfer tax. A property that is transferred from a grandparent to a living grandchild, for example, would be exposed to the generation skipping transfer tax, subject to the current exemption amounts.

What is a Gift Tax?
A gift tax is assessed on the value of property (such as stocks or cash) that one person provides to another as a gift. The individual who makes the gift is responsible reporting the gift to the IRS and for paying the federal gift tax. The individual receiving the gift does not need to report the gift to the IRS as part of his or her income. In 2010 and 2011, the annual exclusion from gift tax is $13,000, meaning that an individual can gift up to $13,000 to as many people as he or she likes (children and grandchildren, for example) without triggering the gift tax. Spouses may together gift up to $26,000 per year to any number of individuals without triggering the tax. The gift tax is due only when the entire lifetime gift amount to non-spouse heirs ($5 million starting in 2011) has been surpassed.

What Changes Did TRA 2010 Effect?
New and Unified Exemptions and Tax Rates
For 2011 and 2012, the federal estate tax exemption will be $5 million. The estate tax rate will be 35% for estate values greater than $5 million. In addition, federal gift tax and generation-skipping transfer tax exemptions will each be $5 million with a tax rate of 35%. For deaths that occur during 2010, the decedent's heirs can choose to apply the 2011 federal estate tax or the 2010 unlimited exemption. For most families, the 2011 rules will provide a more favorable outcome since the exemption is so large that very few estates would owe any tax.
Portability between Married Couples
The new law allows for portability of the federal estate tax exemption between married couples for deaths that occur during the 2011 and 2012 tax years. Any unused portion of the estate tax exemption from a deceased spouse can be passed to the surviving spouse, effectively permitting married couples to pass up to $10 million to their heirs without incurring estate taxes.

The Bottom Line
Many states collect estate taxes and/or inheritance taxes in addition to the federal estate taxes. Estate tax laws are complicated and may change, and since significant money may be at stake, a qualified tax specialist should be consulted before making any decisions and after any laws have changed. After December 31, 2012, estate tax laws are expected to revert to the laws that were in effect in 2001/2002 with the federal estate tax exemption dropping to $1 million and the estate tax rate climbing to 55%.


Original story - Estate Planning Law Changes You Need To Know
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