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While no one can predict the future, the possibility of tax reform is once again in the spotlight. If it occurs, it may very well include repeal of the federal estate tax and related changes to the federal gift tax, the federal generation-skipping transfer (GST) tax, and the federal income tax basis rules. History of the federal estate tax In general, an estate tax is a tax on property a person owns at death. In
The costs of long-term care can be overwhelming, potentially exhausting retirement income and savings. You may be thinking about buying long-term care insurance (LTCI) to help cover some of the potential costs of long-term care, but LTCI can be expensive, and if you do buy the coverage, you probably hope you never have to use it. A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the LTC policy. It should
If you transfer money or property to anyone in any year without receiving something of at least equal value in return, you may need to file a federal gift tax return (Form 709) by the April tax filing deadline. If you live in one of the few states that also impose a gift tax, you may need to file a separate gift tax return with your state as well. Not all gifts, however, are treated
Funeral Trust A funeral trust is an arrangement entered into with a provider of funeral or burial services. Prepaying funeral expenses may allow you to “lock in” costs for future funeral or burial services at an agreed-upon price. The funeral home sometimes serves as trustee (manager of trust assets), and you usually fund the trust with cash, bonds, or life insurance. A revocable funeral trust can be changed and revoked by you at any time.
If you are the adult child of aging parents, you may find yourself in the position of someday having to assist them with handling their finances. Whether that time is in the near future or sometime further down the road, there are some steps you can take now to make the process a bit easier. Mom and Dad, can we talk? Your first step should be to get a handle on your parents’ finances so
The holidays are a popular time for charitable donations. With so many charities to choose from, it’s more important than ever to ensure that your donation is well spent. Here are six tips that can help you make smart and effective charitable donations. 1. Choose your charities wisely Choosing worthy organizations that support the causes you care about can be tricky, but it doesn’t have to be time-consuming. There are several well-known organizations that rate
When an IRA owner dies, the IRA proceeds are payable to the named beneficiary–or to the owner’s estate if no beneficiary is named. If you’ve been designated as the beneficiary of a traditional or Roth IRA, it’s important that you understand the special rules that apply to “inherited IRAs.” It’s not really “your” IRA As an initial matter, while you do have certain rights, you are generally not the “owner” of an inherited IRA. The
Yes, you can name a charity as beneficiary of your IRA, but be sure to understand the advantages and disadvantages. Generally, a spouse, child, or other individual you designate as beneficiary of a traditional IRA must pay federal income tax on any distribution received from the IRA after your death. By contrast, if you name a charity as beneficiary, the charity will not have to pay any income tax on distributions from the IRA after
For a lot of young people today, it’s difficult to purchase a home without at least some financial assistance. As a result, many young adults turn to their parents or other family members for help with a down payment. If you plan on lending your child money for a down payment on a house, you should try to assume the role of a commercial lender. Setting the terms of the loan in writing will demonstrate
When you die, your estate goes through a process that manages, settles, and distributes your property according to the terms of your will. This process is governed by state law and is called probate. Probate proceedings fall under the jurisdiction of the probate court (also called the Surrogate’s, Orphans’, or Chancery court) of the state in which you are domiciled at the time of your death. This court oversees probate of your personal property and