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Strategy to Help Bypass Estate Taxes
A Gallup poll found that about 2 percent of Americans
believe they are "rich," which was defined as having a
$120,000 annual income or $1 million in financial
assets.
Are you "rich" enough that your heirs could be
required to pay estate taxes? Fortunately, federal
law allows a surviving spouse who is a U.S. citizen to
inherit unlimited assets. But what happens after that?
Is there a way for a married couple to help shield
more than the allowable individual exemption amount
from federal estate taxes after the surviving spouse
dies?
Fortunately, by setting up a properly structured living
trust with an A-B provision (also called a bypass
trust), a married couple can potentially double their
use of the applicable exemption.
When the first spouse dies, an amount up to the
applicable exemption amount ($1.5 million in 2004 and
2005) is placed in Trust B (the deceased spouse's
trust), and the remaining assets are placed in Trust A
(the survivor's trust). The surviving spouse retains
control of Trust A and can receive income from both
trusts. Upon the second spouse's death, the assets
in Trust B generally pass to their heirs free of probate
and federal estate taxes provided that the trust is
irrevocable and the surviving spouse is not
considered the owner of the trust. Estate taxes
would be due only on assets in Trust A that exceed
the applicable exemption amount in the year of the
second spouse's death. In 2004, federal estate taxes
on a $3 million estate would be $705,000. In this
hypothetical example, the estate taxes on two $1.5
million trusts would be zero.
Federal estate taxes are slated to be eliminated in
2010, but it is still unclear whether their demise will
be permanent. Planning as though they will remain a
potential liability may help protect your heirs
regardless of what happens to estate taxes in the
future.
Strategy to Help Bypass Estate Taxes
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Greetings!
Labor Day. The day people equate as the ending of
summer and the beginning of fall. School has started
up. We all get more serious about putting our
lives back on track after those carefree days of
summer. Now's the time to get your affairs in
order. Even the Red Sox have gotten back into the
game!
Time to Share. Create a Buzz. Check out
Paula's latest article just published on the Downtown
Women's Club website. Six little known
secrets about credit cards
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| Is Worker Retirement Confidence Justified? |
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In a recent survey, two-thirds of workers expressed
confidence in having enough money to live
comfortably throughout their retirement years. Is this
confidence justified?
One way to tell is by looking at current attitudes and
behaviors about retirement.
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Read on... |
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| Disability Income Protection |
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Eighty-two percent of American workers either have
no long-term disability income protection or have
inadequate coverage. Yet people are more likely to
have a disabling accident than to die in any given
year.
One potential solution is disability income insurance,
which can provide a monthly benefit if you suffer a
serious illness or injury and are unable to work.
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Read on... |
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| Not Your Father's Pension |
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The concept of retirement is fairly young. It was only
during the past century that most people could
expect to stop working sometime during their 50s or
60s and live out their days on a pension earned over
the course of their careers.
However, participation in traditional pension plans -
technically known as defined benefit plans - has
fallen to just 38 percent of U.S. households,
compared with 59 percent in 1992. At the same time,
participation in defined contribution plans, such as 401
(k)s and 403(b)s, has grown to 79 percent of
households, up from 58 percent in 1992.
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| Staying the Course in Overseas Investing |
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Following a pattern set by Wall Street, financial
markets around the globe suffered a prolonged bear
market from 2000 to 2003. Pitching financial seas
have led some investors to turn their sails toward
domestic waters, while many others have seriously
questioned the role of international investments in
their portfolios.
Though it's natural to feel some trepidation during
uncertain times, savvy investors recognize the long-
term benefits of overseas investing.
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| Young Families Often Neglect Life Insurance |
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A recent study found that 75% of people who died
prematurely between the ages of 30 and 55 left their
spouses without adequate life insurance coverage.
Failing to leave a sufficient life insurance death
benefit could require family members to sell personal
assets such as their home, tap into personal savings
accounts, or take on additional work in order to make
ends meet. Life insurance can help provide protection
to avoid this type of financial loss.
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Read on... |
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| Springboard Enterprises Venture Capital Forum |
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Venture Capital Forum featuring emerging growth
women-led businesses from New England, the Mid-
Atlantic, and the South East. The Forum will
showcase 20-25 of the most innovative companies to
the region's top corporate, angel, and venture
investors.
Friday, November 12, 2004 at Boston University.
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To learn more... |
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