Wednesday, May 12, 2010
Lion of the Year Award
Thank you Phoenix Biltmore Lions Club for your support and for the award of Lion of the Year 2009 and 2010. It has been exciting working with a Club that supports so many good causes-- glasses for children in need; Christmas gifts and scholarships for families of those serving abroad in the National Guard. It is an honor to be a part of the club.
Tuesday, May 4, 2010
Are your retirement account designated beneficiaries properly listed?
People with a revocable living trust often forget to use the trust when they fill out their designated beneficiary for their IRA or 401K or other qualified retirement account. The participant's spouse is normally the first beneficiary. The second beneficiary should be the Trustee of the participant's revocable living trust.
Even if the trust is intended to pay out to your children, listing the trust avoids having to have a conservatorship because a minor is a beneficiary. A minor in Arizona can only receive $10,000 in a year so if an IRA or 401K is going to pay out more than $10,000 to the minor, a conservatorship has to be set up with the court and last until the minor is 18.
If you list the trust, then the trustee can hold the retirement account benefits without court involvement. If you are leaving your retirement account to adult children, then list the adult children as the second beneficiary after the trust. Then, if an adult child predeceases you, his share can go to your minor grandchildren without the court being involved. If the adult children are all alive, the Trustee can disclaim or distribute the qualified retirement account to the adult children and it can even be stretched over their life time.
Even if the trust is intended to pay out to your children, listing the trust avoids having to have a conservatorship because a minor is a beneficiary. A minor in Arizona can only receive $10,000 in a year so if an IRA or 401K is going to pay out more than $10,000 to the minor, a conservatorship has to be set up with the court and last until the minor is 18.
If you list the trust, then the trustee can hold the retirement account benefits without court involvement. If you are leaving your retirement account to adult children, then list the adult children as the second beneficiary after the trust. Then, if an adult child predeceases you, his share can go to your minor grandchildren without the court being involved. If the adult children are all alive, the Trustee can disclaim or distribute the qualified retirement account to the adult children and it can even be stretched over their life time.
What is going on with the federal estate tax law?
I heard that someone kept their loved one alive through January 2 on machines just to take advantage that there is no estate tax law this year. Unfortunately, there also is no step-up in basis at death and so that family could be facing a very high capital gains tax. This was not a concern when there was an estate tax because there also was a step-up in basis at the time of death.
However, Congress is not done with confusing us all. Legislation is being contemplated that will reinstate the estate tax with a $3.5 million exclusion. It likely will be retroactive or at least an alternate option for those estates where someone died this year.
The reinstatement of the estate tax with the $3.5 million exclusion, as it was in 2009, could be good news because next year the estate tax comes back with an exclusion of only $1 million. The estate tax with the exclusion of at least $3.5 million has been one of the fairest "death taxes" that have been considered in the last decade. Until Congress finally sets a law in place, there are several planning options for those with an estate close to or over $1 million which need to be considered.
However, Congress is not done with confusing us all. Legislation is being contemplated that will reinstate the estate tax with a $3.5 million exclusion. It likely will be retroactive or at least an alternate option for those estates where someone died this year.
The reinstatement of the estate tax with the $3.5 million exclusion, as it was in 2009, could be good news because next year the estate tax comes back with an exclusion of only $1 million. The estate tax with the exclusion of at least $3.5 million has been one of the fairest "death taxes" that have been considered in the last decade. Until Congress finally sets a law in place, there are several planning options for those with an estate close to or over $1 million which need to be considered.
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