Tag: life-insurance
-
Planning to Maximize the Section 2013 Credit
The TPT credit, allowed by the tax code, is a benefit for estate planning and administration. It can help in filing federal estate tax returns and can be used to plan for maximizing its potential benefit. It’s important to understand how it works and to consider it in both estate planning and administration phases. The…
-
A Practical Discussion on Advising the Lottery Winner
If someone in Florida wins the lottery, their advisors need to understand the tax issues related to their winnings. It’s important to plan ahead to save as much money as possible on income, gift, estate, and generation-skipping taxes. If a client wins, they should not sign the ticket until they figure out who owns it.…
-
Planning for Large Estates After TRA 97: A New Look at Some Old (Charitable) Friends
The Taxpayer Relief Act of 1997 didn’t actually provide relief for many rich people because the estate tax credit is only available for estates worth less than $10 million. This means that larger estates still face a 55 percent tax rate, just like before. As a result, estate planning techniques like life insurance trusts and…
-
Understanding Estate Planning with Qualified Personal Residence Trusts
A QPRT is a type of trust where someone transfers their house to a trustee and retains the right to live in it for a certain number of years. It’s a way to save on taxes and make the most of the exclusion amount. However, it’s best to act fast, as there’s a possibility that…
-
Notice 2002-8: IRS Overhauls Split Dollar
In 2002, the IRS issued Notice 2002-8 which changed the way split dollar life insurance plans are taxed. It addressed issues related to the employeeâs interest in the policy cash value and the standards for determining insurance company term rates. The IRS also introduced two alternative theoretical approaches for taxation of split dollar plans. These…
-
Tax and ERISA Considerations Associated With Nonqualified Severance Benefit Plans Sponsored By Professional C Corporations
Nonqualified deferred compensation arrangements are used by employers to attract and keep employees, allow them to save money for the future, and provide extra pay and incentives. However, these arrangements are usually not backed by any assets, so there is a risk that the employer may not be able to pay. There are ways to…
-
Section 412(i) Defined Benefit Plans: Simplicity, Safety, and Power
A 412(i) plan is a type of retirement plan that is fully insured and guaranteed by the government and an insurance company. It is like a private social security plan. Employers may want to qualify their plan under §412(i) because it exempts them from certain funding requirements, making it less complicated and costly to manage.…
-
When Good IRAs Go Bad: Common Pre- and Post-mortem IRA Problems with Uncommonly Bad Results
An Individual Retirement Account (IRA) is a savings account for retirement. The rules for IRAs have changed recently, providing new opportunities for planning after the account owner passes away. The new rules allow for the IRA to be passed on to a spouse or other heirs, while still deferring income tax. However, it’s important to…
-
Relationship Dissolution Planning Part II: Planning for Married Couples
When people are getting a divorce, they can plan ahead by creating a property settlement agreement. This agreement says how their property and debts will be divided after the divorce. They can include details about each asset they own and all the money they owe. This can help make the divorce process smoother and less…
-
Qualifying Trust Transfers for Split-gift Treatment
Section 2513 of the tax code allows a married couple to split gifts, meaning they can both take advantage of tax exclusions and exemptions for gifts made by one spouse. This can help minimize gift tax liability and maximize the amount that can be gifted to others. It can get complicated when the non-gifting spouse…
-
The Testamentary Charitable Lead Annuity Trust Revisited
A testamentary charitable lead annuity trust is a great way for wealthy clients to give to charity and still provide for their family. It pays money to charity for a certain period of time, and then the remaining assets go to the family. The estate gets a tax deduction for the money given to charity.…
-
Employer-owned Life Insurance After the Pension Protection Act of 2006
Employers often buy life insurance for their employees, but there have been some cases of abuse. Congress added a new law, 101(j), to stop these abuses. This law has extra requirements for employers, and if they’re not followed, the money from the life insurance could be taxed. In the 1980s and 1990s, some companies started…
-
Tax and Asset Protection Benefits Afforded Florida Domiciliaries
The main reason people move to Florida is because of its warm weather. But Florida also has good tax laws and protections for your assets. If you want these benefits, you may need to take some steps to make sure you qualify. If you own property in another state or spend a lot of time…
-
Asset Purchase Stockholders’ Agreements
A stockholders’ agreement is like a contract for people who own a company together. It helps to keep things fair and protect everyone’s interests. It can say things like who can buy or sell the company’s stock, how important decisions are made, and how to keep business secrets safe. It’s a good idea to have…
-
Estate Planning: The Clock is Ticking Use it or Lose it Before 2013
In 2010, President Obama signed a law that changed the estate, gift, and generation-skipping transfer (GST) tax rates and exemptions. These changes will end in 2012, and if new laws aren’t passed, the old tax rates and exemptions will come back in 2013. This means that people should consider using the new tax laws to…
-
It’s 2013: Now What?
In 2011 and 2012, lawyers were advising clients about tax and estate planning opportunities to transfer up to $5 million tax-free. However, Congress passed the American Taxpayer Relief Act of 2012 (ATRA) at the beginning of 2013, making the planning efforts unnecessary in many cases. ATRA maintains the $5 million exclusion amount and other important…
-
Captive Insurance Companies: Florida Enters the Arena
A captive insurance company is a company formed by a business owner to insure the risks of their operating business and affiliated companies. It must be operated like a real insurance company and be licensed as one. Captive insurance companies have been around for a long time and are used by both large and small…
-
A Primer on Private Placement Life Insurance
PPLI is a type of life insurance that can help with income tax and estate planning. It’s like regular life insurance, but with more investment options and lower costs. It’s a good option for people who want to save on taxes and have more investment flexibility. However, there are certain rules and requirements that need…
-
Pay Early, Pay Less: Maximizing TPT Credit Availability for Married Couples
The federal estate tax credit allows married couples to save on taxes when one spouse dies within 10 years of the other. This happens because some of the property transferred from the first spouse to the second spouse is not subject to tax in the second spouse’s estate. As a result, the combined estate tax…
-
Designing Trust Systems for Florida Residents: Planning Strategies, Things You Should Know, and Traps for the Unwary
Trusts are commonly used for estate and financial planning. They help avoid probate and protect assets. There are different types of trusts and it’s important to understand the implications before funding one. For unmarried individuals, a revocable trust is often used to avoid probate and maintain control over assets. However, in some cases, it may…
-
Revocable Inter Vivos Grantor Trusts
Some people are saying that you can set up your own trust instead of using a lawyer, but I disagree. A really smart estate planning expert, Rohan Kelley, has said it’s okay for simple estates, but I think it’s still risky. Trusts and wills are two different things, and using a do-it-yourself trustee instead of…
-
Durable Powers of Attorney: A Less Restrictive Alternative?
In Florida, there are laws that give someone the power to make decisions for another person if they become unable to do so. These laws have changed over time to allow more people to act as a decision maker. An article questions how much power these decision makers actually have and if they need to…
-
Understanding the Testamentary Effects of Community Property Rules
Due to a lot of people moving to Florida, the state has community property rules that are important in legal decisions. In 1992, the Florida probate laws were changed to include a version of the Uniform Disposition of Community Property Rights at Death Act. This act affects what happens to a person’s property after they…
-
Disclaimer Statute May Permit Judgment Debtors to Deliver Money to Friends or Family With Nothing to Creditors, But Not Always in Florida
Yes, there may be a way for a judgment debtor in Florida to prevent a judgment creditor’s lien from attaching to inherited assets, but it depends on the debtor’s financial situation. The debtor may be able to use a legal process called a disclaimer to avoid the creditor’s claim, but only if the debtor is…