WH Cornerstone Investments Newsletter
Turning your paycheck into a playcheck TM September 2004

in this issue

Strategy to Help Bypass Estate Taxes

Is Worker Retirement Confidence Justified?

Disability Income Protection

Not Your Father's Pension

Staying the Course in Overseas Investing

Young Families Often Neglect Life Insurance

Springboard Enterprises Venture Capital Forum


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


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

  • Is Worker Retirement Confidence Justified?
  • 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.

    Read on...
  • Disability Income Protection
  • 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.

    Read on...
  • Not Your Father's Pension
  • 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.

    Read on...
  • Staying the Course in Overseas Investing
  • 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.

    Read on...
  • Young Families Often Neglect Life Insurance
  • 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.

    Read on...
  • Springboard Enterprises Venture Capital Forum
  • 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.

    To learn more...
    :: toll free: 888.797.9009 or local: 781.934.9154

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