Articles Tagged with Beneficiary

Savings money stackWe’ve heard or read the stories of wealthy families forced to sell off prized heirlooms so that hefty estate taxes could be paid.  It is never a happy day when an heir needs to sell the family home, wine collection, fine art or collection of vintage automobiles to raise cash for the estate tax. Proper estate planning for wealthy families should include a rather simple solution to this problem: life insurance.

This was recently explained in the Wills, Trusts & Estates Prof Blog in "How Life Insurance Can Be Used To Help With Estate Taxes."

You may consider the creation of an irrevocable trust and make it the beneficiary of a life insurance policy.

CoinsTo the digerati – the elite of the technology world – Bitcoins are as valuable as the dollar or any other state-sponsored currency. But the rules are still under development for estate planning purposes, and planning for an estate that includes Bitcoins must take this into account.

Most people know what Bitcoins are, even if they don’t use the digital currency that has become popular in the online world. The theory behind Bitcoins was that the world was ready for digital currency, an electronic peer to peer cash system that would eliminate the use of money created by countries.

Bitcoins were to be untraceable and uncontrollable by any government.

Stack of law booksToday’s low interest rates create special problems for those focused on income, including retirees and the income beneficiaries of trusts.

Prolonged periods of low interest rates can result in low trust income, creating conflict among beneficiaries. Many trusts are set up in a way that creates two different groups of beneficiaries. The first group are income beneficiaries who have a right to the current income the trust property generates. Another group are remainder beneficiaries. They get what is left in the trust when the trust ends. Income beneficiaries naturally want the income maximized and remainder beneficiaries want the principal maximized.

As Forbespoints out, in an article titled With Interest Rates Low, Here's How To Boost Income From A Trust, low interest rates make it difficult for trustees to keep both groups happy. There simply are not enough good investment vehicles available to keep both groups of beneficiaries happy in low interest rate environments. The solution is known as the power to adjust. This allows trustees to reclassify trust assets. Forbes has an example of how it can work: “By utilizing the power to adjust, trustees are able to invest in the best total return portfolio without regard to the amount of income it generates; so, for example, in the current low-rate climate, this may result in a portfolio that is primarily equity.  The power to adjust allows the trustee to take a certain amount of principal, reclassify the assets as income, and distribute the assets to the income beneficiary.”

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