Estate Planning

Houston Families Can Plan A Family Business Legacy

Published on: March 6, 2014 | By McCulloch & Miller, PLLC

These two experiences taught me a lesson about family businesses. Making a family business a family legacy takes planning and preparation. While each family business has its own unique issues, there are some common strategies associated with succession planning.

Sometimes, passing along your assets to the next generation is simply a matter of passing them along. You just let the gift and the potential represented by that gift be your legacy (emphasis on the “sometimes”). However, when the asset is a business, it is rarely that simple.

A business is not merely a thing. No, a business is a mindset, an activity and, oftentimes, even a lifestyle. It can get complicated. If your legacy is the family business, then with great responsibility comes the need for equally careful planning, preparation and dialogue.

Estate Planning With A Life Estate in Houston

Published on: March 5, 2014 | By McCulloch & Miller, PLLC

Probate court is no one's idea of fun, so it's something you may want to spare your heirs when they inherit your home. One simple tool for doing that: a "life estate."

Do you want to avoid probate when it comes to the transfer of your assets at death, especially when it comes to your home? Perhaps you would prefer that home to pass directly into the hands of your adult heirs. If yes, then consider using a “life estate” approach.

If the concept of a life estate is new to you, then a recent article in The Wall Street Journal ought to be on your reading list. As the article titled “An Easy Way for Heirs to Inherit Your Home” explains, a life estate for real estate operates like a “payable-on-death account” for a bank account.

Houston: Family Wealth And Financial Entropy

Published on: March 3, 2014 | By McCulloch & Miller, PLLC

The numbers also show that roughly one in three businesses pass to the next generation. Just about 10% of family businesses pass to the grandchildren’s generation. Still fewer make it to the subsequent generation. Regardless of the reasons, family money seems to move away from that which created it. Among wealth advisors, there is a saying: the first generation makes it, the second generation spends it, and the third generation blows it.

Family wealth created through a family business can be a wonderful blessing for a family. The trick is keeping it through the generations. Far too few families make proper plans to keep the family business going between generations. That is where the real work needs to be done.

Only the big family names (think “Rockefeller”) lead us to believe that family wealth is perpetual. In reality, family wealth left unchecked has a tendency to follow the laws of entropy as it devolves into chaos and greater and greater breakdown or division. This phenomenon, along with some constructive advice, is featured in a two-part Forbes article titled “How The Wealthiest Families Make And Lose Their Money.”

Some States Propose Changes To State Death Taxes

Published on: February 26, 2014 | By McCulloch & Miller, PLLC

New York’s governor, Andrew M. Cuomo, took a step toward bringing the state’s estate tax in line with the federal one. And he is not alone among governors of cold-weather states (along with the District of Columbia) that have realized affluent residents are moving to states without estate taxes (and in some cases, income taxes) and in doing so, depriving their old state of the other taxes they paid, like property, sales and income tax.

With the federal estate tax exemption climbing to more generous levels, many states are considering a change in their own estate taxes. Why? Because taxpayers who are in the clear when it comes to federal death taxes may still be hit with state death taxes.

Will the states follow suit and drop draconian estate laws?

Houston Residents: Planning for the Final Chapter

Published on: February 20, 2014 | By McCulloch & Miller, PLLC

Completing the following four tasks can help you meet any last obligations to your loved ones, ensure your final days are spent as you want, and reconcile your dreams with the realities of your life.

Is a goal without a plan just a wish? Regardless of the goals you have for your estate, loved ones or retirement, if you don't have a plan in place you may never reach your goals. There are some very real decisions to be made against the very real timeline of your life.

So, why do you need to plan? This may be a perfect time to step back and get a little perspective.

Should Houstonians Downsize In Retirement?

Published on: February 14, 2014 | By McCulloch & Miller, PLLC

Emotionally, it's hard to let go of a home filled with memories. Moving is a hassle, and downsizing to a smaller home isn't always the cash bonanza some might expect.

When entering your golden years of retirement, what is the ideal living arrangement for your new stage of life? Do you stay in your home where you've made life-long memories? Or do you downsize to something else in hopes of saving on expenses and maintenance?

Even if you have yet to confront these fundamental retirement questions, you ought to consult a recent article in The Wall Street Journal titled “When Should Retirees Downsize Homes?” The Journal asks, “when” not “if,” but that does not mean there is not another side of the story. Enter the DailyFinance with an article providing yet additional reasons to stay put. In fact, that article is aptly titled “7 Reasons Not to Move in Retirement.”

Are You Making Plans For Your Digital Estate, Houston?

Published on: February 11, 2014 | By McCulloch & Miller, PLLC

Without a plan in place, you risk burying your family in red tape as they try to get access to and deal with your online accounts that may have sentimental, practical or monetary value.

Just when you think you've covered all your bases when planning for your estate, the issue of your digital accounts comes up. Yes, all of your online accounts need to be considered too. Have you made proper arrangements for them?

The problem of the digital estate is an entirely 21^st century problem. Thankfully, more information is coming to light about the consequences of failing to make plans for digital assets. If this is a new subject matter for you, then you will want to read a recent MarketWatch article titled “Who gets your digital fortune when you die?”

The Roth IRA Is “Mr. Popularity” in Houston and Beyond

Published on: January 27, 2014 | By McCulloch & Miller, PLLC

Conversions from regular IRAs to Roth retirement accounts increased more than nine times in 2010, rising to $64.8 billion from $6.8 billion in 2009, according to data released [January 3rd] by the Internal Revenue Service.

As reported in Bloomberg on the day of an IRS announcement, conversions from traditional to Roth IRAs increased by nine times in 2010. That was the first year of new laws surrounding the tool, pulling in over 10% of all millionaires with it. Indeed, this rise in popularity means a Roth IRA is food for thought.

For a bit of the history behind the IRS data, have a look at the original Bloomberg article titled “Tax Break for IRA Conversion Lured 10% of Millionaires.” Roth IRAs are just another IRA in that it is an account earmarked for a retirement account. Interestingly, Roth IRAs work backwards by taxing at the time of deposit rather than at the time of withdrawal. That timing is the crucial difference.

New Year, New Estate Plan for Houston Residents

Published on: January 20, 2014 | By McCulloch & Miller, PLLC

Estate planning is a difficult topic to address because it requires you to think about a world without you in it. No one likes to reflect on their own demise, which is why many people simply put estate planning off for another day and only get around to it when the chips are down.

A new year means a new start — another "go" at those to-do lists. Will estate planning make the list this year? Estate planning is not always easy think about, but it is oh so necessary.

Understandably, musing over matters of your own disability and death are not at the top of anyone’s list of “fun things to do,” they are a matter of personal, adult responsibility. In addition, plans can get rather complex when it comes to complex lives, complex families, and complex assets. As with most complex but essential matters in life, it is best to start with the basics.

Beneficiary Designation Debacle

Published on: January 15, 2014 | By McCulloch & Miller, PLLC

If your beneficiaries are out-of-date, when you die, your assets could go [to] the wrong people – a former spouse, for example – no matter what your will says.

Often, the biggest mistakes we can make when it comes to our estate planning are also some of the easiest to prevent. For example, the consequences of failing to update your beneficiary designations can be catastrophic, while the “fix” is as easy as a phone call or completing a paper (or online) form.

A recent Forbes article titled “The Big Estate-Planning Goof You May Be Making” puts the importance of proper beneficiary designations in perspective.