Russ Thornton Interviews Kim Hoipkemier

Kim New

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Estate Planning for Women

Women are a powerful financial force in today’s economy as they independently earn, manage, and distribute more wealth than ever before.  That’s why at Hoffman & Associates we  feel it’s important for women to take control of their long term financial security and develop a proper estate plan.  A successful estate plan is one that helps protect and preserve your wealth, gives you control over financial matters, ensures children and elders are taken care of, and honors your strong charitable passions.

Today, women face many challenges whether married, divorced, single or widowed, including a possible lack of financial know-how, lower lifetime wages and compensation, and greater responsibility for caretaking of children and elders.  Why are women unique when it comes to estate planning?  First, because women generally outlive men by five to seven years, and the average age of a widow is merely 56 years young.  Some of these single women are faced with managing thousands and even millions in assets without ever balancing a checkbook.  For single working women, compensation is also a major obstacle as women tend to earn less over their lifetime as compared to men and many take time off during child-bearing years, which may affect social security and pension benefits.   Another challenge unique to women is their tendancy to be the main caregivers in the family, making it critical to develop a comprehensive plan for the care of minor and special needs children, as well as elderly parents.  Finally, women generally harbor more charitable inclinations than men making it a priority for them to consider philanthropy and giving as part of their estate plan.

Here is a  checklist women can use in developing a successful estate plan:

  • Become educated in the importance of tax planning, know the current tax laws, become familiar with exclusions and how to take advantage of them, investigate advanced estate planning tools and techniques, including trusts, gifting, and college savings plans.
  •  Create an itemized list of all property and debts, including, but not limited to, insurance policies, securities, bank accounts, real estate, jewelry and artwork, business interests, pension plans, IRAs, and other retirement benefits.
  •  Consult with appropriate advisors (estate planning attorney, CPA, financial advisor) and execute a Will to direct the disposition of your estate, designate who should be in charge, simplify probate, and name guardians for minor children.
  •  Consider a Trust for the protection of children and assets and to reduce the tax liability (income, gift and estate).
  •  Get general powers of attorney and advanced directives for healthcare in place.
  •  Create a viable plan to manage and preserve your estate, keeping in mind the changing exemption limits for passing assets.  Currently the permanent estate and gift tax exemption is $5,250,000.
  •  Consider having adequate life insurance in place to pay taxes if necessary and to help preserve your family’s lifestyle by paying for children’s education, mortgage expenses, taxes or other needs after your death.
  •  Record where a safe deposit box is located and maintain all important documents in an organized manner.  Maintain a written list of all current advisors and keep it with your  list of property and debts.
  •  Provide instructions regarding your funeral wishes and any prepaid funeral plans to whomever may be involved in making such arrangements.
  •  Consider charitable transfers to accomplish your estate planning goals. A charitable remainder trust, charitable lead trust, charitable gift annuity or outright gifts to any number of charities.
  •  If you are a business owner, plan for your business’ succession, so you are deciding who will manage your entity during illness, disability, or after death.

 

Although some women feel uncomfortable taking on financial responsibility for their  future and that of their heirs, we strongly urge every woman, whether married, single, divorced or widowed to take a careful look at their financial situation and plan accordingly. Married women should ensure their estate plan coincides with that of their husbands to adequately take advantage of tax considerations.  And since married women are more likely to outlive their husbands, they must be prepared to ultimately be responsible for the protection and distribution of all assets.  For many working women, their main concerns include retirement planning and long term financial security, guardianship for minor children, caretaking for elderly parents, lowering tax liability, and ensuring assets remain in the family bloodline. We encourage all women to consult with professional advisors to ensure adequate financial and estate plans are in place while also incorporating lifetime goals and wishes.  Hoffman & Associates has created specialized estate planning services  for women designed to address these specific needs.  For more information on our targeted services, please visit www.hoffmanestatelaw.com.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.  The information contained herein is provided “as is” for general guidance on matters of interest only.  Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services.  Before making any decision or taking any action, you should consult a competent professional advisor.

The New Tax Law: Does Your Estate Plan Need to be Updated?

Congress passed the American Taxpayer Relief Act of 2012 (the 2012 Tax Act) in the final hours of 2012.  The 2012 Tax Act means big changes for gifts, trusts and estates tax laws from what was scheduled to occur without any congressional action – something better known as the Fiscal Cliff.

We now have a permanent estate and gift tax exemption amount of $5,000,000, adjusted for inflation annually beginning in 2010.  We also have permanent portability, or the availability of a surviving spouse to use the deceased spouse’s estate tax exemption in certain circumstances.  The estate tax rate is set at 40%, and our annual gift tax exemption amount was raised to $14,000.  In addition, there were a number of changes to the taxation of trusts.

With the new changes in the tax law in place, and some of them “permanent,” does your estate plan need to be revisited?

The most popular estate plan for decades for married couples has been the bypass trust/marital trust or A/B trust combination to ensure the most advantageous tax situation.  With more than $10 million in assets exempt from estate tax, the concern over estate taxes has been all but taken off the table.  These trusts are still fantastic vehicles in an estate plan for reasons other than just tax savings, but it may be a good time to revisit your documents and make sure the trusts or other planning techniques fit your situation.

Dig out the copies of your current estate plan, and review these questions below.  If anything is of concern or may just need a second glance, give us a call.

  1. Is your estate large enough to trigger federal estate taxes?
  2. Does your plan distribute your property outright or in trust?  Do you know why?
  3. Does the plan name the appropriate individuals or entities to make distribution, investment or other important decisions?
  4. Is there a relationship among your beneficiaries that could cause a conflict with the decision maker you appoint?
  5. Are you recently married or divorced?
  6. Is either spouse a non-U.S. citizen?
  7. Are your charitable intentions, if any, properly reflected?
  8. Are your assets properly protected in the case of creditors, judgments or divorce?
  9. Do you have the proper powers of attorney in place in the event of disability or incapacity?  Does the document name your desired agent?
  10. Is your plan just out of date?

For more information regarding estate planning, business law or tax controversy and  compliance, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com or call us at 404-255-7400.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.  The information contained herein is provided “as is” for general guidance on matters of interest only.  Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services.  Before making any decision or taking any action, you should consult a competent professional advisor.

Tax Law Changes in the News

Stay up to date and informed about changes in tax law.  Highlighted in this article are some of the most recent.

Form 706 In Final Form:  On October 11, the IRS  issued the 2012 estate tax return (Form 706) in final form.  New on this form is the  portability election.  With portability, if an individual dies and does not utilize his or her applicable exemption amount,  the unused portion transfers to the surviving spouse if so elected by the deceased spouse’s personal representative.

According to regulations issued in June of 2012, executors choosing to make a portability election must estimate the total value of the gross estate based on a determination made in good faith and with due diligence. The instructions on Form 706 will provide ranges of dollar values, and every executor must identify the particular range within which the best estimate of the total gross estate falls.  An amount corresponding to this range will be included on the Form 706, which must be filed in order to execute the applicable exemption amount.  However, since this form is newly released, it is recommended that clients consult a tax professional and file extensions for early 2012 deaths.

New Tax Laws: Georgia’s Jobs and Family Tax Reform Plan is a comprehensive reform of how taxes are collected in Georgia.  The plan eliminates both the sales and ad valorem tax on automobiles and replaces them with a one-time title fee that is paid when the title is transferred from one owner to another.

The bill also phases out taxes assessed on energy used in manufacturing, so Georgia is now at an advantage in allocating new manufacturing in this state.  For example, Caterpillar added 1,400 jobs because of the phase out of such tax.

The bill also levels the playing field between retailers by requiring online retailers to collect and remit sales tax, just as brick and mortar stores do now.

Finally, the bill caps retirement income exclusion for senior citizens at $65,000 for a single filer and $130,000 for joint filers.

The Georgia Tax Tribunal Act provides a low cost mechanism for Georgia citizens to resolve tax disputes with the Department of Revenue.  The Tribunal, which will come into existence on January 1, 2013, ensures Georgians will be able to come before an expert to handle challenges to state tax assessments and denials of state tax refund claims.

 

For more information regarding estate planning, business law or tax controversy and  compliance, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com or call us at 404-255-7400.

 

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.  The information contained herein is provided “as is” for general guidance on matters of interest only.  Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services.  Before making any decision or taking any action, you should consult a competent professional advisor.