Trusts and Estates

Worried About Estate Taxes? Don’t Die in These States Next Year!

Published on: September 29, 2014 | By McCulloch & Miller, PLLC

Moving to New York to avoid state death taxes? “When your bordering state is telling you, ‘Come on over!’ the pitch is compelling,” McManus says. “If New York has a more welcoming tax scheme, then people will say, ‘Let’s call me a New York resident.’” McManus says that he and his wife might make the New York move in retirement themselves; they already have a place in the West Village they rent out for now.

Would your state's death tax prompt you to move to another state? You wouldn't be the first to consider relocation.

The number of death tax jurisdictions is 19 states plus D.C. at present. However, there are several states making changes for 2015. These states are lessening the death tax liability by increasing the exemption dollar threshold, figuring in inflation, and eliminating “cliff” provisions that tax the first dollar of an estate.

Advantages of 529 Plans for Houston Investors

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

Even though many gifts no longer make tax sense, 529 plans remain viable options for both estate tax exclusion and income tax reduction, without much complexity and cost.

Which gifts make sense for taxes these days? Consider your options.

Before recent changes to the federal estate tax exemption amount (i.e., $5 million per taxpayer, as indexed for inflation), taxpayers were encouraged to make lifetime gifts to reduce their federal estate tax. This was especially the case when the exemption was $1 million per taxpayer with top 55% rate on any amount over that. Now, however, the common advice is for all but the über wealthy to retain their assets to ensure there is enough to live on during their lifetime. According to a recent National Law Review article, titled "529 Plans: Estate Tax and Income Tax Advantages," a second benefit of passing assets at death is that the recipient of the assets obtains a "step up" in the assets' basis to fair market value—avoiding income tax on the sale.

A Will May Not Cover Every Aspect of Your Houston Estate Planning

Published on: September 25, 2014 | By McCulloch & Miller, PLLC

Wills, health care directives, lists of passwords to online accounts. By now, most people know they should prepare these items — even if they haven’t yet — and make them available to trusted family members before the unthinkable, yet inevitable, happens.

While getting estate planning items in order is more urgent for seniors, everyone should do this.

A recent article in The New York Times, titled"There’s More to Estate Planning Than Just the Will,"chronicles the experience of Erik A. Dewey, a writer from Tulsa, Okla., who was tasked with sorting through piles of paper and online information when his father died at age 65—just a week from retirement. Dewey compiled everything he learned from the experience into “The Big Book of Everything.” Here are some of the most basic items.

An Introduction to Retirement Planning for Houston Families

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

Schwab-Pomerantz and Cuthbertson, who is publishing director at Schwab, have put together a comprehensive guide that will help you plan for retirement.

If you need to plan for your retirement, you may feel overwhelmed to even start the process. What steps do you need to take first? What type of planning is recommended for your age and stage of life?

A recent article in The Washington Post, titled "Headache-free retirement planning," considered “The Charles Schwab Guide to Finances After Fifty: Answers to Your Most Important Money Questions” by Carrie Schwab-Pomerantz with Joanne Cuthbertson.

Joan Rivers’ Dream Hollywood Funeral – Is It Tax Deductible?

Published on: September 23, 2014 | By McCulloch & Miller, PLLC

On September 4, 2014, comedy icon Joan Rivers passed away. It's no secret that Rivers hoped for a funeral that rivaled her lifestyle: big and over the top.

Craft services. Paparazzi. Meryl Streep crying in five different accents. These are just a few of the wishes the late Joan Rivers had for her Hollywood funeral. Those arrangements, Forbes reports–Meryl Streep notwithstanding–would be easy to arrange with the late Joan Rivers’ money. The article is titled"Saying Goodbye To Joan Rivers: The Bigger The Funeral, The Bigger The Tax Deduction?"

Rivers' income from book royalties, appearance fees and salary at E! Television, plus sales of her QVC merchandise may have exceeded $1 billion. So, Joan could afford the big farewell.

Houston’s Billionaire, Bunny and Big Court Battle

Published on: September 22, 2014 | By McCulloch & Miller, PLLC

After nearly 20 years of litigation and fighting in the press, the conflict between the estates of Anna Nicole Smith and her billionaire husband J. Howard Marshall has been resolved.

A celebrity estate battle that held center state in Houston gives us another valuable estate planning lesson. A recent WealthManagement.com article, titled "Anna Nicole Smith’s Estate Runs Out of Options," illustrates the critical importance of creating estate planning documents that have as much detail as possible.

Anna Nicole Smith was a famous Guess Jeans model and Playboy Playmate. She married J. Howard Marshall in 1994, after meeting in the Texas strip club where Smith worked. Smith was 26, and he was 89. Marshall died 14 months later and left his entire $1.6 billion estate to his son, Pierce. Anna Nicole received nothing.

Houston Home Owners: Make Note of New Reverse Mortgage Rules

Published on: September 19, 2014 | By McCulloch & Miller, PLLC

In a decision issued September 30, 2013, the U.S. District Court for the District of Columbia agreed with AARP and told HUD to find a way to shield surviving spouses from foreclosure and eviction.

A recent Elder Law Answers article, titled "Feds Move to Protect Some Surviving Spouses of Reverse Mortgage Holders," notes that if only one spouse's name is on a reverse mortgage and that spouse died, the surviving spouse would have to repay the loan in full or face eviction.

AARP sued the Department of Housing and Urban Development (HUD) on behalf of the surviving spouses of individuals who took out what is called a Home Equity Conversion Mortgage (HECM). These mortgages are the most common reverse mortgages and are overseen by HUD. These spouses were unable to sell and repay their loans because their homes were worth less than the balance due on the reverse mortgage due to the downturn in the economy.

Houston: Do You Know If Digital Assets Die With You?

Published on: September 17, 2014 | By McCulloch & Miller, PLLC

Death is emotionally difficult enough without discovering that you have no idea what digital assets a person had or what they wanted done with them.

A growing concern among those wishing to properly manage their digital estate is "digital death," which questions what is an asset or special relationship—and how to balance privacy and security with passing on relevant information. A recent Smart Company article, titled "The business of digital life and death," reports that 70% of 65-74 year-old Americans are on Facebook, and there are 30 million accounts that belong to individuals no longer alive. The article cites several factors in dealing with digital assets. For example, there are no international standards on digital assets or for how to address them via estate planning.

Again, social media has not been a burning issue in estate planning as of yet; however, as younger generations start to look at planning for the future, it will become more relevant as it will be more common and because the legal treatment of digital assets after death is clearly defined.

Plan Now for the “What Ifs” of Life in Houston

Published on: September 16, 2014 | By McCulloch & Miller, PLLC

The most important thing for any patient with a long-term illness is to focus on his overall health and mental outlook. Having financial plans in place allows a patient to set other worries aside.

How do you plan for future illnesses or tragedies? The "what ifs" of life are all too real, so get your financial plans in place ahead of time.

Life Insurance is extremely important if you have young children who depend on your income. A recent Time article, titled "When Tragedy Strikes a Young Family," suggests a 20- to 30-year level term policy as a good start to help support your family through the children’s school years. Another often overlooked part of this type of planning is Disability Insurance. As many people have discovered, being unable to go to work due to an injury or sickness can be more financially catastrophic than death. Expenses typically increase with treatment and recovery, but your income stops. A disability policy either through your employer or through a private insurer can be a real wise move and offers a good deal of protection—it provides a portion of your income while you are unable to work.

Hollywood Couple’s May-December Marriage Sheds Light on Estate Planning Challenges

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

Lauren Bacall's loss of husband Humphrey Bogart when her children were young does point to some of the issues surviving spouses face when there is a difference of age of 20 years or more. Of course, May-December marriages don't only happen in Hollywood, and the resources and circumstances can be very different.

Lauren Bacall lost husband Humphrey Bogart when her children were young. When interviewed by Vanity Fair in 2011, she considered herself lucky to be married to Humphrey Bogart, benefitting greatly from his knowledge of Hollywood. Bacall was 25 years younger than Bogart, but she didn't mind the age difference at all. However, losing her husband emphasizes the issues surviving spouses face when there is a significant age difference in the couple— in Hollywood or otherwise.

In May-December marriages, there is a strong possibility one spouse will survive the other by many years. Typically it is an older man and a younger woman, although vice versa as well. Since women generally live longer than men, when it is the husband who is the older spouse, the estate planning issues are even more critical. A young mother with children can be placed in a very tenuous position if she has stopped working to raise the family and the husband passes away. A young mom needs a financial plan that contemplates this situation.