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Avoiding The Lose of Assets

asset-protectionThe bad news … money and assets are lost and never recovered by loved ones of the departed in a high frequency of estates.

The good news (or at least not so bad news) … the total value of money and assets lost is likely less than $1,000.

Here is the scenario: parents pass away and one or more of the following asset classes are not claimed or marshaled by the Executor or loved ones:

  1. Accrued and unpaid interest or dividends not paid prior to death;
  2. Refunds (e.g. utility deposits, tax refunds, cancelled subscriptions);
  3. Insurance death benefits;
  4. Co-op patronage refunds (usually due to check being returned as “Not Deliverable” since payment usually occurs years following death).
  5. Cash is “hidden” in objects that get discarded (e.g. aluminum foil package in freezer, between pages of books; buried coffee can);
  6. Unknown valuables are donated or sold for significant discount to value (e.g. art, coins, documents, jewelry, antiques, collectibles); and
  7. Unclaimed reward points (e.g. Marriot rewards, Amex points, frequent flyer miles).

We encourage clients to create a binder containing instructions to Executor and/or loved ones that lists accounts, assets, reward partners, outstanding deposits, insurance policies, and trusted advisers (e.g. CPA, attorney, financial adviser). The lists guidance goes a long way in allowing family members to discover all of the property in marshaling the assets for distribution.

In some cases, there are processes imposed on the holders of unclaimed property. Executors should search the website missingmoney.com to capture any funds recorded as unclaimed.   In addition, the Executor would just need to forward the mail, carefully review all financial records, and get appraisals for anything not obviously worthless.

 

If you have any questions on protecting your assets and how this information may apply to you or one of your loved ones please call us at 404-909-8842 or email at  admin@brysonlawfirmpc.com.

Senior Planning

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Of all the challenging decisions involving a senior, the hardest has to be the maze of choices involving care options.  When a senior lacks mental or physical capacity to live alone, the choices are not obvious. Can the senior continue to stay home with a little extra help? Are personal care homes capable of providing appropriate medical care?  Will the high quality of life focus provided by assisted living facilities deplete the senior’s lifetime savings available?  Do the long-term care needs of the senior justify the high costs of 24-hour skilled care of a nursing home?  Can the senior’s funds be used to make improvements to a child’s home to allow the senior to move in (e.g. in-law suite).  Before facing the long-term care decisions, hopefully the senior executed documents specifying the individual in charge and the scope of authority.  A health care advance directive (aka health care power of attorney) specifies the individual that will make medical choices and the intentions of the senior with respect to the end of life choices.  A financial power of attorney specifies the individual that will handle the assets and the corresponding authority and limitations.  Of course, the powers of attorney are only utilized when the senior does not have mental capacity to manage his/her own decisions.  However, when a senior does not execute documents prior to losing capacity, the options are typically limited to court intervention.  Every state has a process by which an incapacitated individual can have a person appointed to manage his/her finances and assets (Conservator or Guardian of the Property) and a person appointed to manage his/her health care decisions (Guardian of the Person).

Estate Taxes

It comes as no surprise to anyone that action or inaction by Congress in 2012 will drastically alter the estate tax landscape.  The estate tax exemption (i.e., amount of assets not subject to estate tax at your death) will go from $5 million to $1 million in 2013 if Congress does not act.  Planning for this uncertainty can be challenging.  The best plan for many clients is to implement a “disclaimer” plan in which the surviving spouse gets to decide how much to “disclaim” in setting up estate tax avoidance trust.

End of Year Tax Planning

End of year income tax planning can go a long way in reducing overall tax liability.  Consider the following:

  1. Pay state income tax estimates before 12/31 (even though not due until 1/15)
  2. Pay property tax bills before 12/31
  3. Rebalance investment portfolios by 12/31 and recognize loss positions
  4. Contribute to IRAs and education accounts (e.g., Section 529 College Savings Plans).  Depending on the plan type, you may have until 4/15 to contribute
  5. Defer income such as sale of stocks and property having gains until 1/1.  Consider a “like-kind” exchange for any property sale resulting in capital gain
  6. For small business owners, consider delaying collection on outstanding receivables until 1/1
  7. For small business owners, consider purchasing needed items before 12/31.  Remember, purchasing items unnecessary to the business is never good tax planning!

 

 

Lower Your Property Taxes

Although property taxes can’t be avoided, they can certainly be minimized.  The following strategies will ensure you are not paying more than your fair share:

  1. Regular appeal of value (we can handle this for clients in Georgia);
  2. Apply for all exemptions available, such as conservation use, senior, homestead, surviving spouse, and disability); and
  3. Reapply for all exemptions following a transfer of property to a trust – and in many cases the trust can be drafted by use to ensure the continuance of exemptions.

Unclaimed Property

Executors should always check for unclaimed property as part of the administration of estates.  Georgia has an unclaimed property section of the Department of Revenue.  The following address directs you to the search screen.  If the estate is outside of Georgia, use Missing Money Website to search.

Georgia Department of Revenue Search Screen

Protect Your Assets

An effective family asset protection plan is to transfer assets to an irrevocable trust.  In the trust, you can preserve property tax benefits for the home-place, minimize income taxes at death, provide for asset management due to incapacity, and allow for Nursing Home Medicaid or VA eligibility.  The primary requirements are (1) that the  parent is comfortable with relinquishing control, and (2) the successive generation (children) are responsible, trusting, and independent.

Credit Benefit

Aside from asset protection and tax planning, another benefit to holding assets in a business entity is credit.  When structured properly, business entities allow you to keep business loans off of the owner’s personal credit history.  Business loans can drag down a credit score and result in an increase in the cost of borrowing – or depending on the debt-to-income ratios, can even result in losing credit opportunities.

Estate Planning

Estate planning is not just having a Last Will and Testament.  A common misconception among clients is that life insurance and retirement accounts are controlled by the Will.  In reality, the beneficiary designations on life insurance and retirement assets control ultimate distribution for those assets.  It is very important to ensure that the beneficiary designations compliment the Will.  For example, if the Will says your kids receive all assets through a trust until he/she is 30, then the beneficiary designation should name the trust as the beneficiary until the child is 30.  Note, additional provisions are required in the trust to facilitate tax deferral where a trust is the beneficiary of a retirement account.