www.280living.com
February 2010
Estate Planning Red Flag
DHL
FedEx
UPS
|
USPS
Your Child is on the Title to Your Home or Other Assets by L.B. Feld, Esq. One of the most common, and costly, estate planning mistakes is to own property jointly with your child. Many people hold property – such as homes, bank L.B. Feld accounts and investments – with their children as joint tenants with right of survivorship. Their goal is to avoid probate and to ensure that when they die the property is transferred to their child automatically without the need for a Will or other estate planning vehicle. There are several potential problems with this approach! • Unless you purchase real estate together with your child, adding his or her name to the title is considered an immediate taxable gift of half of the property’s value. This gift may necessitate the filing of a Federal Gift Tax return and have future consequences for both estate and gift tax purposes.
• As soon as your child becomes a joint owner, the property is exposed to claims by his or her creditors or could be “caughtup” in a messy divorce. • While joint cash accounts with your child are not considered a gift, your child may gain access to such bank accounts, and can dispose of them without your consent or knowledge. • For other assets, such as real estate, you may not be able to sell or borrow against that property without your child’s consent and signature. • Your one child receives the property immediately when you die, even if he or she lacks the maturity to manage it, or may be one of several children. • When you die, 100% of the property’s value will be included in your taxable estate even though probate is avoided. • Your child can step up the basis on 100% of
the property that is included in your estate. If any portion of the property is deemed to be your child’s share, there would be no step-up in basis for that portion of the property. Another potential problem with joint tenancy is that you may unintentionally disinherit a family member. Suppose, for example, that you and your spouse each have one child and several grandchildren from previous marriages. After you die, your spouse adds both children to the title to the family home as joint tenants with right of survivorship. If your child dies before your spouse’s child, the latter will become sole owner of the home when your spouse dies, effectively disinheriting your grandchildren. All of the problems previously discussed can be avoided with one or more common estate planning techniques. The distribution of investment accounts and cash deposits can avoid probate through the use of carefully drafted Transfer on Death (“TOD”) or Pay on Death (“POD”) designations. A Revocable Management Trust (i.e., a “living trust”) can avoid probate while acting as a Will substitute directing the distribution of assets, etc. You must carefully weigh the pros and cons of joint ownership with a child.
Nick Saban Head Football Coach, University of Alabama by Steve Pryor
Second Quarter For April, get your investments straight. What do you own? Why do you own it? How are you doing? May is about insurance. Do a full review. What do you own? Why do you own it? Is there a better way? In June, read a book. Knowledge is power. Understanding gives insight and perspective to every decision.
Bring in this ad for 20% off packing & shipping of one package Good for the month of February 2010 FedEx, UPS, DHL only
DHL
FedEx
UPS
USPS
The information contained herein should not be construed as legal advice or a legal opinion with respect to any specific facts or circumstances, and is not to be used as a substitute for the advice of counsel
“It’s a process.“
First Quarter In January, set goals and priorities. What keeps you worried about money? What changes in your finances would make you happy? For February, find a trusted advisor. Everyone needs help. Trusted means trusted (not smartest, richest or most impressive). The job in March is to plan for taxes. Uncle Sam will be trying very hard to take more of your money.
The Love Experts at Pakmail can help!
L.B. Feld is a shareholder at Feld, Hyde, Wertheimer, Bryant and Stone P.C. L.B’s practice focuses on the representation of closely-held businesses and their owners, assisting with their individual estate, wealth transfer and business succession planning. For questions or comments you may contact him at: lbfeld@feldhyde.com. To learn more about Feld Hyde, visit its website at www.feldhyde.com.
4 Quarters Process When you look at the challenges in today’s financial world, do you feel like an underdog? What would it take to make you a winner? Recruiting the best, coming up with the right schemes and finishing everything you do with a purpose could put you into a whole different league. But you must buy into the process:
Need to send a little LOVE for Valentine’s?
Third Quarter Establish or update your will in July. Pass your life savings efficiently to those you love. In August, establish or update a durable power of attorney. Modern advances in medicine create complicated choices. Use September to take care of any special family needs. Every family is the same, every family is different. Fourth Quarter Get serious in October. Plan to get rid of all debt. The borrower shall be slave to the lender. November’s job is to have a review meeting with your advisor. What do you own? Why do you own it? How are you doing? December: Develop a giving plan before Christmas. Giving can pay dividends that saving and investing cannot. Your family and friends are watching. Following this process over the next four quarters could make you feel like a financial champion. And it should not take three years. TAX/LEGAL ADVICE Neither NEXT Financial Group, Inc. nor its representatives offer tax or legal advice. Please consult your tax or legal professional before taking any action.
Pryor McCormick, 3000 Riverchase Galleria, Suite 750, Birmingham, AL 35244, (205) 986-0060. Securities offered through NEXT Financial Group, Inc. Member FINRA/SIPC. Pryor McCormick is not an affiliate of NEXT Financial Group, Inc
BeyondWellness Men’s & Women’s Weight Loss Management Featuring the
HCG Diet
Medically Supervised Packages Starting at
$199
Call Today 408-2889 www.beyondwellnesstoday.com Other Services Offered: Skin Tightening • Hydrofacial • Chemical Peel Botox • Latisse • Permanent Makeup 5291 Valleydale Road, Suite 127 408-2889 • www.beyondwellnesstoday.com
15