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More About This Title JK Lasser's New Rules for Estate, Retirement, andTax Planning, Fifth Edition
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JK Lasser's New Rules for Estate, Retirement and Tax Planning is the authoritative guide to estate, retirement and tax planning, fully updated to reflect new changes and legal updates. Written by some of the most recognized experts in the field, this book offers useful planning advice for people of various ages and income levels, including information on retirement planning, trusts, charitable contributions, gifts, life insurance, and wills. In this guide, you'll find up-to-the-minute facts, valuable insight, and solid strategies to help you preserve your wealth and plan your estate under current tax rules. The helpful companion website provides spreadsheets, tools, and additional reading to help you get organized, while the book's expert guidance provides the background information you need to prepare properly.
Estate planning is a complex topic, made even more complex by constantly changing laws. Failing to plan properly can result in your loved ones losing out on much of your hard-earned assets, and researching the topic on your own can be a minefield of assumptions, misunderstandings, and potential legal consequences. New Rules for Estate, Retirement and Tax Planning helps you sidestep the confusion, distilling the information down to what's relevant and current. This practical resource covers a wealth of important issues, including:
- Estate planning, taxation, and investing for maximum growth
- The role of wills, executors, and trusts, and how to treat charitable contributions
- Life insurance, retirement planning, Social Security claiming strategies and the do's and don'ts of gifting
- Business planning, including succession, asset protection, and family limited partnerships
You've worked hard your entire life. You managed to accumulate assets. New Rules for Estate, Retirement and Tax Planning will help you maximize the transfer of your assets to the people and charities you love rather than the federal government in the form of taxes.
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STEWART H. WELCH III, AEP, CFP®, is a nationally recognized financial advisor who has served as Chair of the Disciplinary and Ethics Commission and as a member of the Board of Directors of the Certified Financial Planner Board of Standards, Inc.
HAROLD I. APOLINSKY, ESQ., EPLS, is a board-certified estate-planning attorney with the law firm Sirote & Permutt, PC in Birmingham, Alabama. He previously taught estate planning at the Cumberland School of Law and the University of Alabama Law School.
J. WINSTON BUSBY, ESQ, LLM, is an attorney at Sirote & Permutt, PC, focusing on tax and estate planning, income taxation of trusts and estates, succession planning, charitable giving techniques, and tax-exempt entities.
J.K. Lasser—Practical Guides for All Your Financial Needs Please visit our Web site at www.jklasser.com
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Acknowledgments xi
Introduction xv
1. American Taxpayer Relief Act of 2012 1
Marginal Ordinary Income Tax Rates 2
Capital Gains Tax Rates and Qualified Dividends 2
Educational Provisions 2
Business and Corporate Tax Relief 5
Estate, Gift, and Generation-Skipping Transfers 5
The 3.8 Percent Tax on Net Investment Income 10
2. Estate Planning 13
What Is Estate Planning? 13
The Benefits of Estate Planning 14
The Nightmares of Poor Planning 16
The Myths of Estate Planning 17
Guidelines for Successful Estate Planning 18
3. The Estate Tax System 21
Determining Your Estate Net Worth 21
Understanding the Estate Tax System 21
Your Estate Tax Picture 26
Your Future Estate 30
Overview of Estate-Planning Strategies 30
4. Investment Strategies for Maximizing Estate Growth 33
Growth Strategy with a Safety Net® 34
Prioritizing Your Investment Dollars 38
Retirement Planning: Choosing the Best Investment Environments 39
Some Final Thoughts on Investing 48
5. Retirement Planning: Living Your Dream 49
Your Retirement Requirements 49
Best Retirement Strategies 58
Reverse Mortgages 65
Social Security Strategies 68
Customizing Your Health Care Plan 73
6. You Don’t Have a Will? Big Trouble! 77
Property Transfers at Death 78
Transfers via Probate 78
Direct Transfers by Title 81
Other Methods of Property Ownership 85
Choosing the Best Methods of Ownership 86
Setting Estate-Planning Goals 87
7. Where There’s a Will, There’s Your Way! 89
What Is a Will? 89
Types of Wills 89
Advantages and Disadvantages of Wills 91
Intelligent Decisions Concerning Your Will’s Basic Provisions 93
Executing Your Will 105
Where to Store Your Will 105
Other Important Documents 106
Working with Your Attorney 111
When to Review Your Estate Plan 114
8. Using Trusts in Your Estate Plan 117
The Credit Shelter Trust Will 118
Disclaimers 122
Marital Trusts 123
Spendthrift Trust 127
Standby Trust 128
Other Trusts 128
9. Understanding the Living Trust 129
Advantages of Living Trusts 129
Disadvantages of Living Trusts 131
How a Living Trust Operates 132
Transferring Property into Your Living Trust 134
Types of Property Likely to Be Transferred 137
Living Trust Myths 139
Transacting Business with Your Trust 140
10. Using Insurance in Your Estate Plan 143
Life Insurance 143
Using Life Insurance to Replace Income 146
How Much Life Insurance Do You Need? 147
What Type of Life Insurance Is Best for You? 149
Insurance on a Homemaker 149
Insurance on Adult Children 150
How to Get the Best Deal on Term Life Insurance 150
Insurance Warnings! 150
Using Life Insurance for Estate Liquidity 151
How Much Is Enough? 152
What Type of Life Insurance Is Best for Estate Liquidity? 152
The Irrevocable Life Insurance Trust 154
Getting Your Life Insurance into Your Trust 155
Using Life Insurance to Leverage Your Estate 157
About Your Cash Values 159
Long-Term Care Insurance 161
11. Smart Strategies for Gifting Assets to Family Members 165
The Annual Gift Tax Exclusion 165
Unintended Gifts 166
Filing a Gift Tax Return 167
The Lifetime Applicable Exclusion Amount 168
Outright Gifts 168
When the Donee Is a Minor 170
Other Tax-Free Gifts 178
Family Gifts Utilizing Trusts 178
Grantor Retained Annuity Trust 178
Grantor Retained Unitrust 180
Qualified Personal Residence Trust 180
Taking Advantage of Generation-Skipping Transfers 184
Sales to Family Members 186
Loans to Family Members 188
Sales to Intentionally Defective Grantor Trusts 189
The Legacy Trust 190
12. Strategic Planning with Charities 199
Outright Gifts to Charities 200
Testamentary Gifts to Charities 202
Gifts Using Charitable Trusts 202
Using Your Charitable Trust for Retirement Planning 205
The Private Foundation 208
13. Family Limited Partnerships 213
General Structure of the Family Limited Partnership 213
Family Limited Partnership Rules 218
14. Succession Planning for the Family Business or Farm 225
Special Estate Tax Benefits for Farmers and Closely Held
Business Owners 227
Valuing Your Business or Farm 228
Succession or Sale? 229
Succession Planning: Keeping the Family Business in the Family 229
Maximizing Your Business’s Value through a Sale 230
Structuring Your Buy-Sell Agreement 232
Types of Buy-Sell Agreements 232
Funding the Buy-Sell Agreement 233
One Final Strategy—The Employee Stock Ownership Plan 234
15. Asset Protection Strategies 237
The Concept of Fraudulent Transfers 238
A Word about Jointly Held Property 241
Retirement Plans 241
Life Insurance 242
Using Trusts to Protect Assets 243
Using Limited Liability Entities to Protect Assets 245
Use of Multiple Limited Liability Entities 247
Foreign Asset Protection Trusts 248
Domestic Asset Protection Trusts 250
16. Personal Business Planning Issues 253
Choosing the Right Entity for Your Business 253
Closing Thoughts 263
Importance of a Business Plan 265
Epilogue—Dealing with Parents and Their Money 269
Appendix A—Professional Advisers 271
Appendix B—Estate Planning Terms 275
Appendix C—IRS Life Expectancy Table 281
Index 285
