Preserving Your Wealth

You might get investment advice from any of the following sources: a financial planner; a financial consultant; a financial advisor; an investment advisor; an investment representative; a stock broker; a wealth manager; an insurance agent; a relative; or a bank trust officer.

New estimates suggest that 70% of Americans who reach age 65 will, at some point, need extended health care. The U.S. Department of Health and Human Services projects that some 20% of retirees could require five or more years of such care. To pay for this care, many are turning to long-term care insurance (LTCI). However, these policies come with a profusion of confusing choices.

Most of James Mitchell's fortune was held in his revocable living trust. Six days before his death in 2005, he transferred a 5% interest in two real estate properties to an irrevocable trust for his sons. The reason for the transfer was to keep the properties in the family at least until the sons reached age 45.

Word came in April that Superman would renounce his American citizenship in an upcoming issue. Three questions sprang to mind: When did Superman gain American citizenship? How hard is it to renounce one's citizenship? Why would one do that? We are not authorities on comic book trivia, so the first question will remain unanswered. Renouncing citizenship is a straightforward process.

According to SEC reports, Monroe L. Beachy began offering investments to Amish families in 1986. His success in making his pitch was tied to the fact that he himself was Amish. Beachy promised higher returns than those available from banks, coupled with the safety of investing in U.S. Treasury bonds. Does that sound familiar? Over the next 25 years, he raised $33 million from some 2,600 investors, most of whom were Amish.

What can be accomplished with this power to delegate the authority to manage property in a trustee? Trusts can be individually tailored to address many different financial goals. As a result, there's no such thing as a "typical trust." However, certain basic trust approaches are widely used. The following fictitious examples may spur your thinking about how trust planning might help you to meet your own financial goals.

In a quest to stimulate the housing market, Congress enacted three different versions of tax credits for homebuyers. Each has its own rules. Whether the tax credit must be repaid depends upon the purchase date of the home, as well as whether the home has since been sold at a profit.

One year ago, the conventional wisdom was that Congress wouldn't let the federal estate tax expire for 2010; some sort of temporary patch would be crafted, as is done each year for the Alternative Minimum Tax. The political divide was deeper than the pundits predicted. A stalemate in the Senate led to the previously enacted transition rules for estate and gift taxes going into effect.

A charity-sponsored auction can be a great fundraiser; successful auctions have already raised millions of dollars. Donors provide the goods; bidders receive valuable property or services; everyone has a good time; and the charity receives the proceeds. Plus, there are tax breaks all around, right?

A period of economic weakness is not generally a good time for a major tax increase. However, increased income taxes have already been legislated for 2011, when tax cuts enacted under President Bush will expire. Some in Congress have argued that these tax cuts should be allowed to expire for upper-income taxpayers, while others believe that these breaks should be extended to everyone.

Always an essential element of portfolio planning, taxes are about to become even more important to those at the upper end of the income spectrum. Temporary tax cuts enacted during the Bush administration expire at the end of this year, and a cloud of political uncertainty hangs over them.

Parents and grandparents of a child with a lifelong disability, such as autism, have a special estate planning challenge. On the one hand, they want to provide the financial support that the child never may be able to provide for himself or herself. On the other hand, they want to protect the child's eligibility for the full range of government support programs, including health care.

Taxpayers are free to move money from one IRA to another, so long as they complete the transaction within 60 days. If they hold on to the funds for 61 days, they have a taxable distribution on their hands, and possible penalty taxes as well.

Remember when "hidden treasure" resided in chests buried by pirates? Today's precious assets may be invisible to the naked eye until retrieved from a hard drive.

The tax credit for first time home buyers of up to 10% of the purchase price of a home, slated to expire on November 30, was superseded when Congress enacted the Worker, Homeownership and Business Assistance Act of 2009 in November. The new rules apply to all purchases after November 6, 2009. The new deadlines are April 30, 2010, for binding purchase contracts and June 30, 2010, for settling the purchase. The new law contains a number of important wrinkles that home buyers will want to learn.

As another year comes to a close, you will have the chance to make many decisions that affect your financial well-being in the year ahead. In particular, these last months are the last chance that you will have for moves that will alter your 2009 tax obligations. This year's financial market roller coaster may make this unusually complicated for some taxpayers.

The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 was signed by President Obama last May, after passing both Houses of Congress by wide, bipartisan margins.

"Probate" is a word with two meanings. Specifically, it means proving to a court that a will is valid. More generally, "probate" refers to the whole process of settling an estate disposed of by will—assembling assets, notifying creditors, paying taxes, distributing bequests and so on.

When William joined his employer's saving and investment plan (SIP), he signed a beneficiary designation to identify the person to receive the account balance, if any, at his death. He named his wife, Liv, the approach most people ordinarily would take. William was free to change or revoke the beneficiary designation at any time, and if no one were designated, the funds would pass to his estate.

For comedians, and perhaps for life in general, timing is everything. Our tax code includes innumerable examples of that, which is what contributes to its extraordinary complexity. Congress affixes special dates to some tax breaks to lower their "revenue costs." Here are three new examples, taken from the "stimulus bill" enacted in February.

It's complicated enough for parents of college-age children to find their way through the maze of federal loan applications. Sorting through the list of possibilities for tax relief for tuition expenses, and eligibility for them, only adds to the headaches.

The fraud perpetrated by Bernard Madoff remains in the headlines months after it first came to light. At least some of the recent news gives some hope of relief for as many as 13,000 investors who may have lost as much as $65 billion. The IRS has announced that it will allow investors who fall victim to investment fraud and schemes to claim an income tax deduction under the casualty and theft loss section of the tax code. Details are forthcoming, but claiming the deduction is sure to be a complex and time-consuming process.

The IRS examined only 1.01% of all individual income tax returns in 2008, down slightly from 2007. But the Service audited almost 3% of $200,000 plus returns, up 16% from 2007; 49% from 2006. For those earning $1 million or more, the figure jumped to almost 5.6%

Worrying about economic conditions is not confined to the adult world. Many psychologists believe that children, especially teenagers, are well aware that their parents are concerned and are feeling-if not necessarily expressing-their own anxiety. In an ABC News poll conducted last November, 75% of 12- to 17-year-olds who said that their parents were worried about the economy also said that they were worried themselves.

IRA owners received an early Christmas present at the end of 2008 when Congress suspended the rule that requires mandatory withdrawals starting at age 70 1/2. The suspension, which also applies to other retirement plans such as 401(k)s and IRA beneficiaries who must withdraw funds from inherited IRAs over five years, is in effect for 2009 only.

In Part One of this discussion, we took a look at some of the basic income-tax-saving techniques that could help reduce your 2008 tax bill. Here, we examine some of the other steps to consider before the year's end.

It might be a dormant bank or investment account, an individual stock, or an insurance check. It could be unused travelers' checks or even a balance on a gift card. Today some states with burgeoning deficits, hunting for sources of easy revenue in hard times, are becoming more aggressive in scooping up certain property when there's been a dearth of activity in connection with it. What is scooped up can turn out to be no small line item in a budget: For example, seized property accounted for the third-largest source of revenue in Delaware in its last fiscal year.

This year your tax planning involves predicting the future. There's a good chance, according to many, that we will see an increase in taxes next year. Depending upon what the changes are, you could find yourself in a higher bracket. If that happens, strategies such as deferring income and accelerating deductions would be just the opposite of what you should be doing - making it all the more important to discuss with your tax advisor any moves that you might be considering.

Mortgage fraud schemes have existed for years. But, as the FBI warns in its annual mortgage report issued earlier this year, a depressed housing market provides an ideal climate for mortgage fraud perpetrators to employ a variety of schemes to take advantage of the downward trend. As lending practices tighten in response to the subprime lending crisis, financial institutions are employing higher standards and fewer loans are being originated-forcing scammers to turn to alternative methods.

Living trusts are flexible, versatile, asset-management tools that can offer long-range value in a variety of financial and family circumstances. But they aren't for everyone. We would be pleased to answer any questions about what, specifically, a living trust might accomplish for you and your family. For starters, you should find this introduction helpful.

Has recent market volatility got you worried about your current investment strategies? Before changing directions on your own, it's a good time to look at getting professional assistance with your investments. Professionals are experienced in analyzing the significance of economic and market events and their portfolio management implications.

A recent report from the National Coalition on Health Care probably did not come as a surprise to business owners who offer health care benefits to their employees. In 2007 employer health insurance premiums increased by 6.1%, twice the rate of inflation. And since 2000 the increase in the cost of premiums has been explosive-100%, compared to a cumulative inflation of 24%-making health insurance the fastest-growing expense for business owners.

When it comes to taxes, your idea of where your home is may not match the opinion of the taxing authorities. The problem arises usually when you maintain residences in more than one state. Your choice of domicile likely would be the state with the most favorable tax climate.

The recently enacted Economic Stimulus Act of 2008 will put money in the pockets of over 130 million households. The following information should answer some of the questions that you may have about your rebate.

A number of cost-of-living adjustments are built into the Tax Code. Other important amounts and thresholds change as a result of schedules introduced in tax legislation. Here is a brief summary of some of the key number changes that may have an impact on your income tax, retirement and estate planning in 2008.

In Part One of this discussion, we took a look at some of the basic tax-saving steps to consider prior to the end of the year - chiefly, deferring income and accelerating and "bunching" your itemized deductions. Now let's take a look at some of the other opportunities that may help reduce your 2007 tax bill.

Although your federal income tax return won't come due until April 15, 2008, most of the opportunities for limiting your 2007 taxes vanish at the end of the year. Here's a look at some of the steps to consider taking before December 31 to keep your tax bill as low as possible.

Today's technology has made it easier to make purchases and transact business. But this "blessing" can sometimes turn into a curse - just ask anyone who has been the victim of identity theft or a clever e-mail scam.

Often, one of the objectives of a trust-based financial plan is to separate the benefits of property ownership into current and future portions. In a marital deduction trust, to take a routine example, a surviving spouse must have the right to all the trust income, paid at least annually, and in the future, after that spouse's death, the remainder beneficiaries (typically, the children or grandchildren) will receive what is left in the trust.

The classic situation is that of the lottery winner. Suddenly besieged by an army of new friends, well-wishers and advisors, tempted by a world of seductive possibilities, all too often their stories end unhappily. Although lottery winners are exceedingly rare, the challenge of handling a large influx of money is actually quite common. Whether expected or not, an inheritance, divorce settlement, severance package or pension payout, proceeds from the sale of a business, life insurance, royalties, mineral rights or legal judgments - all can put in one's hands the equivalent of several years of ordinary earnings.

In late May, as part of legislation that increased the minimum wage and provided funding for the Iraq war, came a modification of the "kiddie tax" rules that may have flown under the radar for many people.

For centuries, living trusts have been a popular management tool for the preservation and growth of one's assets. Living trusts offer a remarkable degree of flexibility, helping people achieve their needs for today as well as for tomorrow. And for planning for the future, for coping with the unexpected. For maintaining financial security for loved ones and for organizing one's assets in an efficient manner. Not to mention the peace of mind that comes with having a solid plan in place for the management of one's wealth.

Higher education costs continue their relentless upward spiral. For the 2006-2007 academic year, the average cost at a four-year private college topped out at over $30,000. Many families are turning to an array of tax-advantaged savings accounts to help them meet the high cost of higher education. Contributions to such plans are not deductible, but taxes on growth and earnings in them are deferred and may be avoided altogether when the funds are used for qualified education expenses.

Providing for a surviving spouse, often the single most important objective in a family's estate planning, never has been as simple as creating a will that leaves "all my property to my beloved." Today's complex and changing tax laws only make the job more challenging. The answers to the following questions will shape the strategy for providing for your spouse.

As you plan for your offspring, what is the best approach for protecting the legacies that you will pass on to them? Outright inheritances may be inappropriate for those with poor financial judgment; or who might face a divorce at some time in the future; or who may have a history of addiction or inappropriate behavior. Then, too, professionals such as doctors and attorneys, who face the threat of financially crushing malpractice suits, may be looking for ways to protect themselves.

Making home improvements? Making a major purchase? Facing a big college tuition bill? For homeowners a home equity line of credit may be the most economical and flexible way to borrow money.

The Tax Relief and Health Care Act of 2006, enacted by Congress on December 11, 2006, and signed into law on December 20, ended the year on a positive note for taxpayers. Several taxpayer-friendly provisions of earlier law, scheduled for extinction at the end of tax year 2006 have been extended.

A number of cost-of-living adjustments are built into the Tax Code. Other important amounts and thresholds change as a result of schedules introduced in tax legislation. Here is a brief summary of some of the key number changes that may have an impact on your income tax, retirement and estate planning in 2007.

In Part One of this discussion, we took a look at some of the basic tax-saving steps to consider prior to the end of the year - chiefly, deferring income and accelerating and "bunching" your itemized deductions. Now let's take a look at some of the other opportunities that may help reduce your 2006 tax bill.

Although your federal income tax return won't come due until April 16, 2007 (because April 15 falls on a Sunday), most of the opportunities for limiting your 2006 taxes vanish at the end of the year. Here's a look at some of the steps to consider taking before December 31 to keep your tax bill as low as possible.

When Congress adjourned in early August, little was clear regarding the future of the federal estate tax. Both chambers went into recess until after Labor Day. In recent months the focus had shifted from outright repeal - majority support was lacking - to some form of compromise legislation.

As a corporate fiduciary, we are dedicated to providing our clients with trustworthy asset management. Of course, we also provide traditional trust services, such as administering estates and managing trust funds for young or inexperienced beneficiaries. Our primary function, however, is helping people turn financial success into financial security.

Have you received "spam," or junk e-mail, recommending that you invest in a stock, perhaps even invest in that stock before it is first publicly offered for sale in an Initial Public Offering (IPO)? A recent

For some months now, Congress has been debating the extension of certain tax breaks, such as the lower long-term capital gains and dividend rates. As of this writing, no resolution has been reached. Alternative minimum tax (AMT) exemptions are part of the extensions package. Inflation adjustments from prior years expired at the end of 2005, meaning that more people are apt to fall within the clutches of the AMT.

Investing and managing your various assets wisely are but means to a very important goal: financial security for yourself and your family.

In a February 10 speech before the Conservative Political Action Conference in Washington, D.C., Senate Majority Leader William H. Frist (R-Tenn.) stated that he plans to bring legislation to the floor in May to repeal the federal estate tax. Last year the House of Representatives passed legislation to repeal the estate tax in full, but the Senate never acted on the bill.

A number of cost-of-living adjustments are built into the Tax Code. Other important amounts and thresholds change as a result of schedules introduced in tax legislation.

A number of cost-of-living adjustments are built into the Tax Code. Other important amounts and thresholds change as a result of schedules introduced in tax legislation.

In the global village that today's world has become, uncertainties and concerns extend beyond just the stock market and the economy. The continuing conflict in Iraq, the war on terrorism and many other developments on the international front are likely to have an impact on business and professional people, active and retired, and upon their families. Now more than ever, it's evident that more than money is required to create lasting financial security. Trustworthy asset management is needed as well.

Tax considerations are not, and should never be, the be-all and end-all of investment decisions. The choice of assets in which to invest, and the way in which you apportion your portfolio among them, almost certainly will prove to be far more important to your ultimate results than the tax rate that you pay on your portfolio's earnings.

How often have you heard or read that stocks held for "the long-term" are likely to outperform other investments? It's a generality, true, but there are statistics to back up that statement. But those numbers need to be put in perspective. Very few, if any, of today's investors were likely to have bought stocks way back in 1926 and have held them for 80 years. Which leads to the question, then, just how long is "long enough" for an investor who is concerned about risk to feel safe about investing in stocks?

Thanks to a new consumer protection law, you are now able to obtain free copies of your credit reports annually.

The National Association of Security Dealers (NASD) continues to warn investors and consumers about "phishing," a scam that uses spam e-mail to lure investors into revealing bank or brokerage account information, passwords or PINs, or other types of confidential information.