Estate Planning

How Life Insurance Works Best in an Estate Plan

Published on: February 15, 2019 | By McCulloch & Miller, PLLC

Life insurance can help heirs avoid having to incur expenses like estate taxes, funeral costs and similar expenses. However, it also gives heirs breathing room, so they can make the best use of other assets.

Here is an example of how life insurance should work. A father, Howie, dies and leaves a large estate to daughter Eva. The estate is large enough that it triggers a huge estate tax. However, the bulk of his assets are tied up in an IRA and real estate properties, some of which could be put on the market quickly, but not quickly enough for tax deadlines.

With that scenario, Eva might not want to immediately force a sale of the real estate. However, if she accesses the inherited IRA to raise money, she’ll have to pay income tax on the withdrawal and lose a terrific opportunity for extended tax deferral.

Here’s How to Donate to Loved Ones and Avoid a Tax Bite

Published on: February 8, 2019 | By McCulloch & Miller, PLLC

While there’s a time limit on this great opportunity for tax-free giving—2025, unless Congress makes some changes—this is a good time to take advantage of minimizing your tax liability through generosity. There’s a new big break for top-dollar wealth transfers, thanks to the new tax law.

Basic rule: the more you give away, the smaller your estate and, therefore, the smaller your tax liability. If you’ve got a lot of wealth, this is a good time for you and those you want to make gifts to. The sooner you exploit this, the more you can give. It means that there’s less of a chance your estate will have to write a check to the IRS.

The Street’s recent article, “This Is the Golden Age of Tax-Free Gift Giving,” says the federal government has taxed estates since 1924, and as recently as 2001, the threshold when taxes kicked in was $675,000. This exemption level from taxation has been increased ever since. However, a large increase came from the Tax Cuts and Jobs Act, which took effect in 2018. The Act doubled the exemption level and indexed it to inflation. Anything above the new limits is taxed at 40%. It is $11.4 million for singles and $22.8 million for married couples in 2019.

How to Make Your Charitable Giving Have a Greater Impact

Published on: February 1, 2019 | By McCulloch & Miller, PLLC

Most donations are made in December, and charities of all shapes and sizes make the most of the holiday spirit. However, by taking a bit of time to plan out charitable giving, including doing some research and talking with your family about your legacy, your giving could have a greater impact this year and in years to come.

A rough ride in the start of the year’s markets and changes to the tax laws have left many donors wondering if they can afford to be as generous in 2019, as they were in the past. Fundraisers advise donors to think more about what non-profits have greater meaning to them and to take a more thoughtful approach to giving. Philanthropy is still good for your legacy, sense of community and, when done right, taxes.

The Reno Gazette Journal’s article, “Get an early jump on charitable giving” looks at tax planning opportunities for charitable giving, specifically in light of the Tax Cuts and Jobs Act and Qualified Charitable Distributions (QCD). Here’s a review of why people give. The primary reasons for donating include the following:

A Love Story: George and Barbara Bush

Published on: January 2, 2019 | By McCulloch & Miller, PLLC

Their lives were devoted to family and public service, and to each other. The passing of George H.W. Bush and his wife gave many Americans pause to consider their leadership and their devotion.

Few were surprised when George H.W. Bush passed less than eight months after Barbara’s death. Their deep connection—from his service in World War II to the Presidency and their role in public service after leaving the White House—was evident to everyone around them, says Forbes in the article, “Valuable Estate Lessons From The Passing Of George And Barbara Bush.”

The death of a longtime married couple in quick succession, is often called “broken-heart syndrome” or “widowhood effect.” The thought is that the lives of two people are so entwined they can’t bear to be without each other. The time between the Bushes’ deaths also raises practical questions in estate planning. Timing is critical in an estate plan, and if the deaths of married spouses happen within a short period of time, it can make the administration of an estate more difficult.

What Will Happen to Paul Allen’s Vast Fortune?

Published on: December 27, 2018 | By McCulloch & Miller, PLLC

The co-founder of Microsoft serves as an excellent example of advance planning, maintaining privacy and creating a legacy.

Through a trust established years ago and several companies, Paul Allen began building his legacy of philanthropy long before his death. His last will and testament was a simple six-page document, according to an article from The Seattle Times, “Paul Allen’s will sheds little light on what will happen to estate.”

The will was filed with King County on October 24—the same day his sister Jody announced she was named the executor and trustee of his estate.

One Dozen Must-Have Documents

Published on: November 6, 2018 | By McCulloch & Miller, PLLC

To make sure that your wishes are carried out, you’ll have to do your homework. Make sure that you cover these most important documents.

The last thing you want to do, is leave a bureaucratic mess for your loved ones when you die. Not only will it cause the family stress during a difficult time, it could change how your family thinks of you. That should be more than enough reason to get this done in advance!

US News & World Report’s recent article, “12 Documents to Prepare Now for Your Heirs,” says that when people don't have their paperwork ready, it can be a huge headache for the family. A family can be left with all kinds of paperwork to sort out while dealing with grief. Even worse, heirs may forfeit life insurance proceeds and tax deductions or overlook accounts they don't know exist. That's why it's critical to have important documents ready for loved ones. Here are the documents you should start preparing right away:

Brad Pitt is Savvy About His Children’s Future

Published on: October 30, 2018 | By McCulloch & Miller, PLLC

Here’s one celebrity savvy about estate planning. Actor and producer Brad Pitt has an estate plan that will keep his money away from his ex and benefit his children through a $250 million trust.

After reading about so many celebrities who fail to plan for the future, it’s refreshing to learn that one bold-face Hollywood star has taken steps to create a will and care for his children. In the recent article from Wealth Advisor, “Even Brad Pitt Has Prepared A Will (And A Post-Divorce Trust),” the 54-year-old Pitt has achieved the dual purpose of keeping his millions from his ex-wife and had a trust created to divide his money between his six children.

A source, who’s a family friend commented, “Brad’s intent is that any money he doesn’t have to give Angie in a divorce settlement and for child support is well-protected. He’s setting up a firewall that is specifically intended to keep her hands off his cash.”

How Does a Corporate Trustee Differ From a Family Member?

Published on: October 23, 2018 | By McCulloch & Miller, PLLC

Most of us consider naming a friend or relative with a background in finance or law to be a trustee for our family, but there is an alternative that is important to consider.

A corporate trustee will have a very different approach to managing a trust, and depending on your situation, may be a far better choice than a family member or friend. They’ll bring sound investment management skills and knowledge, minus the distractions of emotions.

The Dallas Business Journal’s recent article, “Fiduciary investment management and corporate trustees,” explains that one of the many benefits of appointing a corporate trustee, is that they are held to a fiduciary standard of care when managing a trust investment portfolio. That means that they’re legally required to place their client’s interests above their own when making investment decisions. While this may seem like a no-brainer, it’s not the rule for all financial professionals.

Aging Parents and the Important Conversations to Have Now, Not Later

Published on: October 19, 2018 | By McCulloch & Miller, PLLC

The roles are reversed when parents age. You can’t count on them to take the lead in having discussions about money, health, aging and other concerns that come in the later years.

When you were a kid, your parents were in charge. Now your parents are older, and you must be the adult in the room. Embracing that role, with thoughtfulness, will make it easier for you and your parents as you address the issues that come with aging. As recommended in the article “How to Have Difficult Conversations With Your Aging Parents” from Next Avenue, having these conversations will help you all avoid some of the uncertainty and stress in the future.

Here are the conversations you need to have:

Robert Indiana, LOVE Artist’s Estate in Litigation

Published on: October 18, 2018 | By McCulloch & Miller, PLLC

“The man who took care of Robert Indiana in the last years of his life, told a probate court hearing Wednesday that he was paid roughly $250,000 a year to tend to the aging artist, whose estate and legacy are now the subject of acrimony and lawsuits.”

Under questioning by a lawyer representing the estate, caretaker, Jamie L. Thomas said he’d been earning $1,000 a week in 2013, when he started taking care of artist Robert Indiana, who lived alone on a Maine island, until his death in May at 89.

The New York Times’ recent article entitled “Robert Indiana’s Estate: Generosity, Acrimony and Questions” reported that by 2016, Thomas said the artist had raised his salary to $5,000 a week for round-the-clock work that included bringing him meals, taking care of his dog and helping him to bed. He was also granted Indiana’s power of attorney.