Musings from the CEO – Summer 2014

Mike HoffmanI saw a headline the other day that declared “Why You Should Update Your Estate Plan”. Now, there is a topic that I could write a book about!

I have heard statistics that up to 80% of Americans either have no Will, or some attempt at a Last Will and Testament that is sorely inadequate. The basic core documents that everyone needs are a Will, a General Power of Attorney (that kicks-in upon disability or incapacity), and a Health Care Directive. Once these documents are in place, they need to be reviewed periodically. Obviously, tax laws and family circumstances change. Also, more and more people move because of job changes, they retire to another part of the country, or they move closer to their kids and grandchildren.

A little over two years ago, the $5,000,000 estate tax exemption became “permanent”. This does not mean that it won’t change, and in fact, it does change by going up a little bit each year. Going from $600,000 (the exemption in the ‘90’s) to $5,000,000 took most of us off the estate tax paying rolls and did change the focus of a lot of estate planners. We generally pay more attention to income tax matters than we did before. For instance, if a married couple has over $10,000,000 of exemption available, rather than trying to get everything out of their taxable estates, we would like for at least that much property to go to their heirs from their estates (after death), therefore, with a brand new income tax basis.

I read that one commentator expressed that an estate plan is not meant to be put in a time capsule and to be opened and dissected at death. An estate plan will change and evolve. There are many things that can be accomplished with a comprehensive estate plan. Not only are we saving estate taxes, income taxes, and probate costs, we are protecting assets, providing sound management of assets, and taking care of other responsibilities.

How are we leaving assets to our spouse and descendants? Can we be better stewards of our wealth by considering appropriate planning techniques, such as trusts?

It is important to periodically check the ownership and beneficiary designations of life insurance policies to make sure that these liquid assets will be handled appropriately. It is extremely important to review beneficiary designations on IRA accounts and other retirement plan assets. Not only do you want to make sure the assets go where you intend, but you want to maximize potential tax savings.

The ownership of all assets ought to be reviewed periodically. There are several types of joint ownership that have different consequences for estate planning and tax purposes. It is not just deeds for real property that should be checked, but it’s also important to understand how the titling of your investment accounts can affect the treatment of your assets at death.

If you own property in other jurisdictions, such as a house at the beach or in the mountains, this can complicate probate matters for the family. It is a relatively simple matter to use one of several techniques to remove that particular asset from your probate estate, potentially saving a great deal of time, money and aggravation for your spouse and descendants.

Most family/closely-held businesses do not have a succession plan or an exit strategy. This is particularly concerning when it is that family business that created the wealth. Will the business suffer a potential loss of value to the family when the patriarch or matriarch is no longer in the picture?

There are countless reasons why you should update your estate plan. First and foremost, make sure you have an estate plan. A failure to plan is a plan to fail.

 

For more information regarding this or any other estate planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

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.

Can You Afford To Ignore Your Business Exit?

Mike HoffmanHere’s another excellent article written by Denis M. Brown from Pace Capital Resources, LLC.  It is from The Exit Planning Review newsletter, issue 282, dated June 8, 2014.  Can You Afford To Ignore Your Business Exit?

Sincerely,

Mike

 

For more information regarding this or any other business planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

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.

Legal Matters in Starting Your Business

Mike_Hoffman_17Join Mike Hoffman in this 74 minute audio as he hosts the 11th session of the 24 hour MBA in discussing how to get your business off the ground.  There are many different legal options in starting a business, and in this audio session, you will understand the best way to start your business and keep it successful for future generations.  24hrmba-11.mp3

 

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.