Ronald Morton's Elder Law Blog

Planning for the New "Zero Percent" Tax Bracket

This article addresses a law change that is important to all wealth planning professionals and their clients. Beginning January 1, 2008 and continuing through at least 2010, a zero tax rate may apply to long-term capital gain and dividend income that would otherwise be taxed at the regular 15% and/or 10% rates. The new zero tax rate is available to the extent that the taxpayer's other taxable income minus exemptions and deductions is less than a specified amount.

Exciting New Developments in Buy-Sell Planning

This article examines exciting new developments in business succession planning - specifically, the use of LLCs or partnerships to own life insurance for buy-sell planning purposes.  Such a structure obtains the advantages of cross-purchase and stock redemption buy-sell agreements without many of the disadvantages of either traditional structure.  This development is significant to all wealth planning professionals and their business-owner clients. 

Ethical Wills - Passing along more than your stuff.

Stephanie West Allen has an excellent post on her blog on the use of ethical wills.  Ethical wills attempt to convey ideals and values to future generations, rather than simply passing on an individual's personal belongings.  In our office, we refer to this type of planning as Legacy Planning, and attempt to incorporate this planning into all estate plans.

Buffett Urges Preservation of the Estate Tax

Billionaire Warren Buffett urged Congress to preserve the estate tax, saying that plans to repeal it would benefit a handful of the richest American families and turn the country into a "plutocracy."

How to Contest a Will

You had a loving relationship with your mother and she always said she would leave everything to you and your siblings, but after she died, you discover she had recently written a new will, leaving everything to her housekeeper. Is there anything you can do? If you believe a loved one's will is not valid, you may be able to contest it. But proving a will is invalid is difficult and this process should be undertaken only if you are sure there is something wrong.

Protect Your Children: Choose a Guardian

Many parents suddenly find themselves considering estate planning because they want to ensure the care of their children. Some new clients of mine, John and Anna, a couple from Madison, Mississippi, recently adopted a newborn baby. Even though they are in their late twenties, they're concerned about who would care for their son if something happened to them. As a result, they have begun to look into estate planning and evaluate their current financial plans. They have a retirement plan (IRAs, pensions and 401(k) benefits), life insurance and other investments, but they recognize that those plans may not meet their new needs as parents. So, what should parents know about guardianship and conservatorship or "guardian of the estate?" And, how do you go about choosing the best person to care for your children's physical, mental and financial needs?

Taxation of Trusts Simplified

 Trusts are Separate Taxpayers
All trusts are separate taxpayers. Unless disregarded under the exception for grantor trusts discussed below, each trust has its own tax year and tax accounting method. Trusts also receive income and pay expenses. Net income is taxed either to the trust or to the beneficiaries, depending upon the trust terms, local law and, in the cases of complex trusts (defined below), whether the trust distributed the income.

Non-Spouse Stretch IRA from Qualified Plans

One of the retirement account reform provisions contained in the Pension Protection Act of 2006 permitted non-spouse beneficiaries to transfer their 401k funds into an inherited IRA and take advantage of "stretch" distributions over their lifetimes instead of being subject to 5 year payout rules.  Unfortunately, the IRS issued a Notice which provided that this provision was permitted at the discretion of the plan administrators, but was not mandatory.  Congress has stated that this optional treatment was not intended, and corrective legislation has been proposed.  The IRS has now reversed its  position, and stated that, beginning  with 2008, non-spousal rollover will be required as an option. 

http://www.irs.gov/retirement/article/0,,id=173372,00.html

Dead Hand Control

Wills can be powerful instruments, as the
will of Leona Helmsley makes clear.

The hotelier and real estate mogul became a
symbol of 1980s greed and was given the
nickname ''the Queen of Mean'' after
revelations of her tyrannical treatment of
employees came to light during her 1988 trial
on tax evasion charges. A housekeeper
testified that she heard Helmsley say, ''Only
the little people pay taxes.'' Helmsley was
convicted and served 19 months in prison and
recently died at age 87 with an estimated $4
billion estate.

Child Conceived by Artificial Insemination Does Not Inherit

The Supreme Court of New Hampshire rules that a child conceived after her father’s death through artificial insemination is ineligible to inherit from him as his surviving issue. Khabbaz v. Commissioner. (N.H., No. 2006-751, Aug. 9, 2007).