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Newsletter Archive

Making Plans to Sell a Business

December 2016

I help my business owner clients make plans for their business’s survival after death or other life-changing event. I recently learned about a court case where two owners of a Kentucky business had a falling out, and they asked the court to decide some things about one owner’s buyout of the other. The case is Conlon v. Haise, No. 2014-CA-001581-MR decided on September 30.  I thought you might be interested, as I think the case has lessons that apply to many business situations. To continue reading, click here.

Common Life Insurance Related Mistakes

April 2016

I recently learned about court cases that illustrate some common mistakes that people make with regard to their life insurance policies.  Some of the errors were made at the time the policy was put in force, and others developed over time.

 Here are some examples: To read more, click here.

 

Recent Social Security Changes

March 2016

On November 2, 2015, the Bipartisan Budget Act of 2015 was signed into law. The Act contains provisions that are meant to help the financial sustainability of the Social Security program. In particular, the Act derails key Social Security strategies, namely the file-and-suspend strategy and the filing of a restricted application for spousal benefits strategy.

The loss of the key planning strategies can have major impacts on clients’ expected retirement income. Here are two examples: To continue reading, click here.

 

The New Tax Numbers for 2016

February 2016

Most of the significant changes in tax law due to Affordable Care Act and the tax compromise originally passed in January of 2013 have remained substantially unchanged in 2016. 

  1. The 3.8 percent Medicare surtax still applies to the investment income of high income taxpayers.
  1. The personal exemption phase-out and itemized deductions phase-out for high income taxpayers are still in effect.
  1. The top personal income tax bracket of 39.6 percent is also still in effect, with a slight increase in brackets from....To continue reading, click here.

 

Choosing the Right Kind of Pension Plan

January 2016

Closely held business owners usually search hard to find tax-advantaged benefits for themselves and for their employees.  Qualified retirement plans--pension plans--are usually high on the list of desirable strategies.

A qualified retirement plan, sometimes referred to as a pension plan, allows the employer to take a tax deduction for amounts that it commits to the plan.  The participating employee generally does not have to pay any current income taxes on the amounts put in the plan. To continue reading, click here.

 

Year End Tax Planning - Ideas You May Not Have Heard Before

December 2015

Is your experience like mine? Every year around this time, I receive a glossy newsletter from my CPA friends, suggesting year-end tax strategies that should be considered. Many of the ideas are the same from one year to the next:

  • Accelerate or defer income between this year and next
  • Accelerate or defer expenses between this year and next
  • Consider maximizing retirement plan contributions

Is there something new or creative out there? 

I’ve put together a list of strategies that I haven’t heard many other financial professionals talking about. To continue reading, click here.

 

Buy-Sell Planning for the Business Owner: A Recent Court Case

November 2015

In my last two letters, I discussed how important proper buy-sell planning can be for the owner of a closely-held business. I’ve seen my clients make the mistake of failing to plan for the sale of their businesses in the event of death, retirement or disability.

I recently learned of a real-world example of a case where a failure in the buy-sell planning process led to litigation, and I thought it would be worth sharing. To continue reading, click here.

 

Buy-Sell Planning for the Business Owner

October 2015

In my letter last month, I discussed how important proper buy-sell planning can be for the owner of a closely-held business.  I’ve seen my clients make the mistake of failing to plan for the sale of their businesses in the event of death, retirement or disability.

One of the most important provisions in a business’s buy-sell agreement has to do with business valuation.  For example, in a two-owner business, if one of the owners dies, how much should the surviving owner have to pay for the deceased owner’s business interest? To continue reading, click here.

 

Buy-Sell Planning for the Business Owner

September 2015

My closely-held business owner clients usually rely on their businesses for lots of things:

  • To provide income for the owner’s family
  • To support the families of employees
  • To leave a family legacy either:

*By allowing family members to take over one day or

*To turn the business into money at death or retirement

I do my best to work with business owner clients to protect the business, and toward meeting the owner’s financial goals. A properly drafted and implemented buy-sell agreement can....To continue reading click here.

 

Tax Planning for Same-Sex (and all) Married Couples

August 2015

Do you know any same-sex couples in a committed family relationship? The Supreme Court changed the rules about how same-sex married couples are treated under federal law. Regardless of whether you support the decision or not, the decision creates opportunities for same-sex couples that they should know about.

The Supreme Court decided in Obergefell v. Hodges that prohibitions against both the performance of a same-sex marriage and the recognition of a same-sex marriage were unconstitutional. The majority opinion concluded that the right to marry is a fundamental right inherent in the liberty of....To continue reading click here.

 

Annuities and Taxes - More Things to Consider

April 2015

Last month I wrote you about some of the tax and other rules that can make non-qualified deferred annuities (NQDAs) attractive. This month, I want to highlight some other advantages and opportunities with regard to NQDAs. 

  • The law now allows the owner of an NQDA to do a tax-free exchange to two or more new NQDAs. This ability to trade for multiple contracts may provide unexpected opportunities to maximize the available retirement income. To continue reading, click here.

 

Annuities and Taxes

March 2015

Many of my clients worry about income taxes. They complain about the taxes due when money is earned, and also gripe about the capital gains hit when invested capital is liquidated. Since 2013, my high income clients have had even more reason to be upset by taxes due to the increases associated with higher federal tax brackets and the Medicare surtax.

For those individuals who don't want to have to pay immediate income taxes......To continue reading, click here.

 

The New Tax Numbers For 2015

February 2015

Most of the significant changes in tax law due to Affordable Care Act and the tax compromise originally passed in January of 2013 have remained substantially unchanged in 2015.

  1. The 3.8 percent Medicare surtax still applies to the investment income of high income taxpayers.
  2. The personal exemption phase-out and itemized deductions phase-out for high income taxpayers are still in effect.
  3. The top personal income tax bracket of 39.6 percent is also To continue reading, click here.

 

Misconceptions About Trusts

January 2015

Many of my clients have created trusts as part of their estate plans. In my experience, people often get confused about the purpose, administration and effectiveness of their trusts. 

Here are a few of the most common mistaken impressions that I’ve heard about revocable trusts:

1. A revocable trust saves estate taxes. While it is possible for a revocable trust to provide for efficient wealth transfer to the next generation, To continue reading, click here.

 

Making Trusts Part of Your Estate Plan

December 2014

My clients are often confused about trusts and their purposes.  It’s not surprising, as trust documents have their own foreign-sounding language. Furthermore, there are so many descriptive names for the kinds of trust that make it hard for a lay person to understand what they do.

Here’s a list of the types of trust that I see when I work with my clients, and a short description of the main purpose of each of them: To continue reading click here.

 

The IRS Comments on Some Sophisticated Planning

November 2014

I spend a significant amount of evaluating certain kinds of financial planning techniques, and thinking about whether they might help my clients solve problems. As part of that evaluation process, I review the announcements that are made by the IRS, including its private letter rulings. To continue reading click here.

 

Tax Planning for the Year

October 2014

Are you making financial plans for the end of 2016?  Make sure that you get good advice with regard to:

  • Traditional IRAs,
  • Roth IRAs,
  • Pensions,
  • Social Security,
  • Life insurance and Annuities

I get asked questions about those topics all the time. Here’s a small sampling of frequently asked questions, along with short answers to them.

Question: I am 74 years old and have received no required minimum distribution (RMD) information from the custodian of my IRA. Isn’t the custodian supposed to send such information? To continue reading click here.

 

Minimum Distributions Based on Age

September 2014

My clients are often surprised to learn that the federal government requires them to take distributions from their traditional IRAs and employer pension accounts when they reach a certain age. For most, required minimum distributions (RMDs) must begin on or before April 1 following the year a person turns 70 ½.  RMDs must typically continue for the rest of a person’s life.

Many of my clients worry about outliving their money. With increasing life expectancies, running out of money is becoming more of a problem for retirees. To continue reading click here.

 

Beneficiary Designations

August 2014

We often have to explain to our clients how important it is for them to get their beneficiary designations right. For many of our clients, beneficiary designations will control the distribution of more liquid wealth than any other estate-planning document.

Mistakes with regard to beneficiary designations are too common. Some errors are made at the time of purchase of the financial products, and others arise when circumstances change. Either type of mistake creates a possibility that a substantial portion of a lifetime of wealth will end up in the wrong hands after death. To continue reading, click here.

 

Estate/Asset Protection Strategies

July 2014

With news headlines announcing multi-million dollar jury awards in lawsuits, it’s easy to understand why estate /asset protection strategies might be needed.

Individuals may be interested in estate / asset protection strategies to help protect against:

  • Creditors,
  • potential ex-spouses, and
  • reducing estate taxes.

Those protecting their assets from exposure to liabilities should consider taking advantage of a number of strategies: To contine reading, click here.

 

Planning Lessons from the Clippers

June 2014

Basketball season is wrapping up, and although the perpetually rebuilding Los Angeles Clippers made the playoffs, much of sports talk is instead focused on Donald Sterling, the longtime owner of the Clippers.

Donald Sterling recently made disparaging comments about African Americans, and the NBA is seeking to force him to sell the team as public outrage continues.

The Clippers saga reinforces many lessons in buy-sell planning that I believe are useful for my business owner clients. To continue reading click here.

 

Social Security Retirement Benefits

May 2014

For most individuals, Social Security retirement benefits can play a key role in figuring the right age for retirement and maximizing income during later years. While Social Security will not usually be the only source of retirement income, the benefits can be substantial. 

Many clients want to have these questions answered when they near retirement age: To continue reading click here.

 

Rollovers from Pension Plans or IRAs

April 2014

Individuals changing jobs may have substantial pension balances that need to be dealt with. Often, they want to defer taxes on the pension plan balances, and transfer the money to another plan over which they have more control.

Others with IRA balances may be interested in making a tax free transfer to a new IRA custodian, or in splitting the current IRA account for various reasons.

Tax free transfers might be made by direct transfer or 60-day rollover

We have found that in thinking about transfers, clients want to know: To continue reading click here.

 

Annuities and Taxes

March 2015

Many of my clients worry about income taxes. They complain about the taxes due when money is earned, and also gripe about the capital gains hit when invested capital is liquidated. Since 2013, my high income clients have had even more reason to be upset by taxes due to the increases associated with higher federal tax brackets and the Medicare surtax.

For those individuals who don't want to have to pay immediate income taxes......To continue reading, click here.

 

The New Tax Numbers for 2014

February 2014

Most of the significant changes in tax law due to Obama Care and the tax compromise passed in January of 2013 have remained substantially unchanged. 

  1. The 3.8 percent Medicare surtax still applies to the investment income of high income taxpayers.
  2. The personal exemption phase-out and itemized deductions phase-out for high income taxpayers are still in effect.
  3. The top personal income tax bracket of 39.6 percent is also still in effect, with a slight increase in brackets from 2013 due to cost-of-living adjustments.
  4. The ability for those older than 70 ½ to transfer money directly from an IRA to charity has been extended to 2015.
  5. The maximum capital gains and qualified dividend rate of 15 percent has been retained for most taxpayers, with the 20 percent rate for those with high income levels.

In addition, a number of figures used in retirement planning have been updated for 2014. Some increased, some didn’t. For example: To continue reading click here.

 

The New Medicare Surtax

January 2014

Many of the provisions of the Affordable Care Act (ACA), also known as ObamaCare, are in effect.

My business owner clients are struggling to understand how the ACA will change health insurance obligations to their employees. Individual clients are sorting out whether to buy new health coverage from the federal government or a state exchange—or whether to keep their existing health insurance.

Taxes and the ACA have come together in a number of ways. First, high income taxpayers have been hit with an extra .9 percent Social Security tax obligation on their earned income. Second, certain business owners who fail to provide health insurance to employees by the deadline will have to pay a special tax penalty. Likewise, individuals who fail to buy personal health coverage may have to pay their own penalty taxes.

One of the biggest tax changes designed to help pay for the cost of the ACA was the new 3.8 percent Medicare surtax on high income earners. Combined with the other federal tax changes that affect high income taxpayers, the Medicare surtax can increase the total tax liability for my most successful clients. To continue reading click here.