Estate Planning

Wealth Transfer Goal: Keeping the Houston Family Together

Published on: April 21, 2014 | By McCulloch & Miller, PLLC

“I had this fear that wealth could dissolve the family and the business would disintegrate,” Mr. Wiener, 68, said. So he hired coaches and consultants, had family meetings and set up a family foundation — all with the goal of keeping his family together after he died. “It’s not perfect; it’s an evolving process.”

Whether rich or poor, homey or worldly, it’s about keeping the loved ones together and passing on the family wealth most efficiently.

Whatever your station, you might learn a thing or two from the problems faced and solved by others. As the New York Times notes in a recent article titled “Looking for Ways to Keep Money From Dividing a Family,” you can especially learn from those who happen to be part of an exclusive club like Tiger 21.

Stepping Up with Portability in Estate Planning for Houston Couples

Published on: April 18, 2014 | By McCulloch & Miller, PLLC

One of the key advantages of a portability-based estate plan over a credit shelter trust-based estate plan is that portability allows the married couple to obtain a second step up in basis upon the death of the second spouse.

With the new ability to minimize estate taxation, known as “portability,” there is now a choice between the automatic portability plan and the old standby of the trust-based plan, notably the credit shelter trust plan.

One important detail driving the choice is the “step up in basis,” as pointed out in a recent Forbes article titled “Portability Plans Vs Credit Shelter Plans Round 1: Step Up in Basis.”

The Family Limited Partnership: Your Key To Control In Houston

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

FLPs offer multi-layered benefits by providing senior family members with several advantages—all without ceding control of the assets to junior family members.

Estate Planning is often a game of give and take. So what if you want to give away your assets, but not just yet?

As is so often the case, where there’s a need there’s a tool. A particularly powerful tool in this case is the Family Limited Partnership (FLP). An FLP can do double duty as a tool for asset protection as well as for estate planning.

Deciphering The Technical Language Of Trusts

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

NING, Ding, Grat. Ilit, Crat, Crut, Qtip.

So what are these oddly named trusts and what do people who need them need to know?

Ever been to a place where you don't understand the language? Learning a new language is no easy task. At least when it comes to French or Italian (or Hindu, Swahili or Balinese, if you happen to be that well-travelled) most us of who can’t speak a lick can get through with pointing and smiling. However, when it comes to technical languages there is a different type of difficulty.

Is An Inheritance Helpful Or Hurtful For Houston Families?

Published on: March 24, 2014 | By McCulloch & Miller, PLLC

One of the most common themes among my affluent clients is a desire to see their children make it on their own. Over 90% of these clients are first-generation wealth builders, meaning they didn’t inherit their money but accumulated it from saving, investing or building a business. They value hard work and frugality and feel leaving a large inheritance to a child is more hurtful than helpful.

When it comes to planning for one's estate, most children assume their parents will leave it all to them. Is that really in the cards?

A recent Forbes article takes a different tack and asks “Why Bother Leaving an Inheritance for the Kids?”

Unequal Inheritances: How Do Houston Families Slice the Pie?

Published on: March 7, 2014 | By McCulloch & Miller, PLLC

Advisors say it doesn’t happen often, but parents who divide their assets unevenly are playing with fire. That said, there are things they can do to try to keep the fire under control, so it doesn’t become a conflagration that blows the family up.

Sometimes it is easy to split up your assets like pieces of the pie, with equal pieces for everyone. Sometimes, the assets just do not split that way or maybe you do not want to split them equally. For those who receive something less than equal, they may feel spurned or sense favoritism.

How do you split your estate unevenly and still keep the peace in the family or, at the very least, keep it out of the courts?

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?