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Note: Nothing in this publication is intended or written to be used, and cannot be used by any person for the purpose of avoiding tax penalties regarding any transactions or matters addressed herein. You should always seek advice from independent tax advisors regarding the same. [See IRS Circular 230.]

Volume Ten Number Two February 2012

Life Insurance, Anyone?

Now may be a good time to think about life insurance - perhaps with one big premium payment.

Why? Because we currently have $5,000,000 gift and generation skipping tax exemptions - something that is scheduled to go away next year. (Note that due to this unique opportunity to make larger gifts to your heirs tax-free, insurance companies have been asked to write many more single premium policies than in the past.) A single large premium paid now can yield benefits to your heirs several times bigger by the time you die - all tax-free.

How? Give that life insurance policy to your beneficiaries outright, or to a trust for their benefit. They will receive the full face value of the policy free of all taxes when you die.

What will the face value of the policy be? That depends upon many factors, such as --

Your age
Your health
Whether the policy covers a single life or pays only after both you and your spouse have died
Whether benefits are fully guaranteed, and
Which insurance company is issuing the policy.

Therefore, when buying life insurance the advice of a skilled insurance professional is critical. What is done with the insurance proceeds is up to you (within limits that we can discuss) and your intended beneficiaries.

Scholarship, Anyone?

It has come to our attention that NursingHomeAbuse.net is offering a $5,000 scholarship to assist U.S. students committed to raising awareness of and preventing nursing home abuse. Any student enrolled in an accredited post-secondary institution is eligible to apply; however, this scholarship is particularly suited for students studying nursing, social work, psychology, or healthcare administration. The applicant must also be receiving some form of need-based aid. The scholarship will help pay for non-tuition related living expenses for the 2012-2013 academic year that are not covered by the recipient's current financial aid, such as:

Rent
Childcare
Books and School Supplies
Utilities – Gas/Electric
Utilities – Internet Connection
Groceries

Applications must be emailed or postmarked by February 15th, 2012 to be considered. The winner will be announced on May 31st, 2012.

Wealth Transfer, Gifting & Crummey Trusts

Generational Generosity

Estate Planning Mistakes Would you rather transfer your wealth to the IRS or to your loved ones? If you answered the IRS, then disregard this article. On the other hand, if you answered your loved ones, then read on. We will review some of the relevant tax rules for lifetime gifting and then examine two common transfer methods (along with a few of their potential pitfalls).
Every taxpayer may transfer up to $13,000 each year to an unlimited number of individuals. This is known as the Annual Gift Exclusion (AGE). Through gift splitting, spouses may give a total of $26,000 each year to an unlimited number of individuals (even if only one spouse is the sole source of the funds gifted).

Read on Wealth Transfer & Gifting...

Crummey Trusts

There are many non-tax benefits to making lifetime gifts to loved ones, aside from the obvious tax benefits. For example, what better way to preview the financial maturity of your loved ones with an inheritance in the future than through a dress rehearsal in the present … while you are still in the audience?
If you are like most people, you may be reluctant to part with control over how your lifetime gifts will be used once transferred. Unfortunately, when you retain direct control over a gift, the value of the gift (and its appreciation) may be included in your estate upon your death for estate tax purposes.

Read on for more information about Crummey Trusts ...

Did You Know?

Did you know that:

While three in ten Americans DO have a plan, the average age of a will coming into a law office for update or probate is nearly 20 years?
A Power of Attorney of similar vintage may be rejected by banks and other third parties?
In three out of four cases, a Health Care Directive (also sometimes called a "Living Will") is unavailable when needed?
Ten out of ten Americans MISTAKENLY believe that life insurance proceeds are automatically exempted from Federal Estate Tax?
The Wills of most married couples control ONLY personal effects?
There are legitimate means of leveraging the $13,000 annual gifting exclusion, of avoiding capital gains tax on super-appreciated low-yield assets, and of ensuring that 99% of assets flow to the next generation in a thoughtful, protected manner?

QUICK TIP

Is it Time to Review Your Plan?

Proper estate planning is a process, not simply a one-time event. Therefore, it only makes sense to periodically review your planning goals and legal instruments. Review this list of life changes that could alter your estate-planning needs. If you notice some areas that might apply to you or your family, it may be time for an estate plan check-up.

Marriage, remarriage or divorce
Death of a spouse
Substantial change in estate size
Death or incapacity of an executor, trustee or guardian
Move to another state
Acquisition of property in another state
Birth or adoption of a child or grandchild
Serious illness of a family member
Change in business interest or retirement
Change in insurability for life insurance
Marriage or divorce of a beneficiary
Change in beneficiary attitudes
Financial irresponsibility of a child
Change in tax law
More than two years since review of plan with attorney

Ask Yourself These Important Questions About
"Wealth Transfer & Gifting."

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