Russ Thornton Interviews Kim Hoipkemier

Kim New

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Musings from the CEO (Spring 2013)

Estate Planning has evolved significantly over the last several years.  In recent months, we have seen the estate tax exemption become “permanent” at $5,250,000 per person, and it will continue to adjust with inflation.  We have also seen the lifetime gift tax exemption and generation-skipping transfer tax exemption be permanently increased to keep pace with the “new” estate tax exemption.  An obvious effect of this development is that a significant number of estates will be able to pass to the next generation without transfer taxes.  A married couple can now pass at least $10,500,000 of wealth to their children before their estates are hit with the still significant 40% tax rate.

Congress has also made “portability” permanent, which means that any unused exemption when the first spouse dies is carried over to the estate of the surviving spouse.  Prudent planning generally does not rely on portability, since it is sabotaged by the subsequent marriage of the surviving spouse and does not apply to generation-skipping transfer tax.

The focus of seasoned estate planning techniques will continue for the more wealthy.  Estate planning should become less costly and complicated for most Americans, however, Hoffman & Associates will still focus on a significant use of dynasty trusts for a plethora of reasons.  These include not only potential estate tax savings, but also income tax flexibility, asset protection from creditors, preservation of family wealth in the bloodline, protection from divorce, and simplifying probate.  Dynasty trusts, however, are under scrutiny and threat as the Obama Administration pushes its agenda.  While most states are extending the period of time that trusts can hold property, there are proposals to limit that duration for transfer tax (and other?) purposes.

Joe Nagel’s article in this Newsletter is a good reminder to us of the many reasons for estate planning, most of which are not focused on taxes.  We want to be good stewards of our assets.

At Hoffman & Associates our practice will continue to focus on estate planning techniques and working with clients to accomplish their estate planning objectives, with significant focus on succession planning for family businesses and asset protection.

We are seeing an increased focus on elder law matters.  As our client base gets older and the imminent demographics of the country are affected by the baby boomers and their parents, medical technology and a focus on general health issues constantly increase our life expectancies.

As income tax rates continue increasing, we are witnessing a rekindling of our clients’ focus on income tax planning.  This is “back to the basics” for a tax planning firm like Hoffman & Associates.  We continue to focus on important decisions about retirement plans, social security, tax deductions, and the tax sensitive nature of investments on behalf of our clients.

Kim Hoipkemier’s article this month highlights a focus area of Hoffman & Associates, namely, Estate Planning for Women.  Again, demographics, the economy, education and corporate America recognizes that women continue to live longer, earn more, and prosper, with the ever increasing responsibility to juggle and manage family and wealth.

Finally, at Hoffman & Associates we have begun a new area of service for our clients, as their situations demand new and flexible assistance to help them manage their daily financial lives.  The Hoffman Family Office (HFO) services include record keeping, bill paying, bookkeeping, budgeting, investment analysis, insurance analysis/shopping, and family philanthropy matters.  Whether it is the overwhelmed widow, the busy corporate executive, or the family that wants to responsibly out-source some of their financial tedium to their trusted advisors, we want to fill the vacuum by providing such help from the Firm they have trusted with so many other important areas of their planning and financial well-being.  Carolina Gomez of our office has been busy defining the areas where HFO can make a difference, and is ready to talk to you about any area you think HFO may be of assistance.

These are interesting times, and I choose to believe we are at the beginning of good times.  While we are clawing out of a recession, and Washington, DC has us constantly on pins and needles, the economy is generally getting better, unemployment is generally not increasing, and our clients generally are in an upswing in their attitudes and well-beings.  We want to be here for those who need assistance, whether it is planning for them or an elderly family member, assisting with the growth and success of their business, or simply to put their mind at ease that they have satisfactorily addressed planning considerations within their realm of influence.  Let us hear from you!

 

 

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.

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.