Tag Archive | "Tax & Estate Planning"

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Test Your Asset Protection IQ

Posted on 11 July 2008 by Jrallis

Estate planning, retirement planning and asset protection go hand in hand…how much do you know about Asset Protection (”AP”?)

The below are adapted from http://assetprotectionsociety.org. Suggested answers will follow in a separate post…

1. Name the types of creditors you need protection from

2. Is AP planning only about forming entities? how else can you protect assets?

3. Should you own REAL ESTATE (e.g., rental property, a vacation home/condo or vacant land) in your own name?

4. For a “professional,” is it good asset protection to have assets titled in the non-professional spouse’s name?

5. Who is everyone’s top creditor every year - guaranteed?

6. How should you own stocks, bonds, mutual funds, etc.?

7. How do you protect against downturns in the stock market and if so how?

8. How do you own boats, waverunners, snowmobiles, or planes, etc.?

9. How do you protect the equity in your home?

10. How do you mitigate capital gains taxes?

11. Do you know how an offshore asset protection trust (OAPT) works and does your money need to go offshore to have a properly setup OAPT?

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

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PPA 2006 Now Allows Direct Rollover from Non-Roth Qualified Plans to Roth

Posted on 06 February 2008 by Jrallis

Although distributions from a Roth 401(k) or Roth 403(b) account have always been eligible for rollover into a Roth IRA (in two steps–by first rolling the distribution over into a traditional IRA, and then converting the traditional IRA to a Roth IRA), the Pension Protection Act of 2006 now (in 2008) allows employees participating in traditional (non-Roth) qualified plans (e.g., 401(k), 403(b), governmental 457(b)) to rollover directly into a Roth IRA for distributions received after December 31, 2007.

Only direct (trustee to trustee) rollovers qualify (e.g., 60-day indirect rollovers do not).

Generally, the same rules apply to these rollovers as do to conversions of traditional IRAs to Roth IRAs (rollover includible in gross income (except after-tax contributions), and no 10% early distribution tax).

Taxpayers with AGI of at least $100,000 or who are married filing separately, are not eligible for this direct rollover to a Roth. These limitations were repealed by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), but not until 2010.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

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Morningstar’s List of Top Estate Planning Mistakes

Posted on 16 July 2007 by Jrallis

Morningstar has posted their top 10 list of estate planning mistakes at http://news.morningstar.com/articlenet/article.aspx?id=197757…

Of those, two really jump out:

1) Not Funding Your Trusts, and
2) Failing to Plan for the Care of Family Pets

UNFUNDED TRUSTS
It has amazed me over the years to see such thought and care go into word-smithing trust documents, only to then let these beautifully crafted documents sit on a shelf and never get properly “funded”.

Funding a trust may require a formal process to retitle the assets (e.g., real estate, bank or brokerage accounts, or vehicles).

On the other hand, for non-titled assets (like furnishings, jewelry, etc.), an unambiguous itemization of the assets as an attachment to the Trust document is usually all that is required.

In any case, funding a trust is a highly proactive step. Without funding (and your documentation is your evidence!), you are really undoing everything the trust was designed to do…

CARING FOR PETS POST-MORTEM
If you have animals you love, it makes sense to include their care in your estate planning. We’re not talking about making Fido the income beneficiary of your testamentary trust to try and avoid taxes…just simple provisions to name a guardian and provide monetary assistance for the well being of your loved ones after you’re gone.

Of course, if you are charitably minded and want to help fund animal causes at death, a Charitable Remainder Trust provides a significant income tax deduction for the present value of your eventual contribution to the charity, plus gives you an income stream for life (or a period of years, if you prefer not to take income for life).

This isn’t really an option if you only want to provide for a specific pet…but if you want to help fund general causes, this may be an ideal solution.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

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FLPs: Bad Facts Yield Bad Results!

Posted on 13 July 2007 by Jrallis

A brand new Tax Court Memo ruling gives us yet another glimpse into how the IRS defeats Family Limited Partnerships (FLPs). See Estate of Gore v. Commissioner, T.C. Memo. 2007-169 (6/27/07).

After transferring funds to the FLP, the decedent did not execute any other documents confirming any transfer of assets to the partnership. The FLP never operated a business, engaged in any investment activity, or held legal title to any assets.

Decedent’s daughter deposited dividends and interest into the decedent’s personal bank accounts from the assets which had supposedly been contributed to the FLP. Also, the individual stocks were still registered in the decendent’s and her pre-deceased husband’s names. It wasn’t until three months after she died that the FLP delivered stock certificates to the custodian…

The estate tax return did not include these assets that were purportedly contributed to the FLP. On exam, the IRS added the value of those assets to the taxable estate, because, it argued, the transfer was incomplete and the assets remained part of the estate.

The Tax Court agreed and held that her post-contribution 1) exercise of control 2) personal use of those assets, and 3) lack of credible evidence the FLP held legal title to the assets, rendered the transfer incomplete. Therefore, the assets were includible in her estate.

So, where the popular press may lead us to believe FLPs are dead or dying, the reality is that bad facts produce bad results every time.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

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