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New Year’s Resolution #10: Plan for Long-Term Care
According to a recent CBS MoneyWatch article, “How to ease the pain of paying for elder care,” the cost of caregiving for parents, spouses or partners is shared by members of all generations. Baby Boomers spend 13% of their annual income on unpaid caregiving, while members of the 71 to 91-year-old Silent Generation spend about 25%, mostly on spouses or partners. Gen Xers—ages 35 to 50—spend about 24% of their annual income on caregiving for parents, and millennials (ages 18 to 34) spend the largest percentage, at 27%, belying many stereotypes.
Read MoreNew Year’s Resolution #9: Plan for Incapacity
There are many unexpected ups and downs in life. Having an estate plan in place is how responsible adults do their best to protect themselves and their families, according to The Villager, in a recent article, “Power of attorney protects loved ones.”
Read MoreNew Year’s Resolution #8: Avoid These 5 Estate Planning Blunders
For most Americans, preparing an estate plan is not overly complicated. They meet with an estate planning attorney to discuss what the family needs, how they want to provide for the family and the attorney prepares documents. According to a post on CNBC.com, “Don’t drop the ball when planning your estate,” people who have cared for their families for decades often forget the importance of this step; it’s a way to care for loved ones even long after they’re gone.
Read MoreNew Year’s Resolution #7: Prepare for a New Administration
If Trump’s administration succeeds in eliminating the U.S. federal estate tax, there will still be plenty for estate planning attorneys to do, according to a Forbes article, “If the U.S. Federal Estate Tax Goes Away, What Will Single-Family Offices Likely Do?” Estate plans are still going to be needed to provide direction as to how assets are to be distributed, and all estate plans will likely need to be reviewed and revised in light of changes to the law.
Life insurance purchased to pay estate taxes will also need to be reviewed. One way to do this is to convert permanent policies with meaningful cash values into private placement life insurance policies (PPLI). Private placement life insurance is a variable universal life insurance policy that provides cash value appreciation based on a segregated investment account and a life insurance benefit. PPLI is designed to maximize savings and minimize the death benefit.
The investment account typically uses tax-inefficient hedge fund strategies. PPLI can be especially useful as an element of more complicated tax strategies. With advances in technology and greater efficiencies, private placement life insurance is becoming more popular for more wealthy individuals.
Certainly, other changes in tax law are likely to impact estate plans. It will be important as the new administration begins to tackle its campaign promises to keep abreast of changes in the law and speak with your estate planning attorney about the impact on your estate plan.
Whether or not the federal estate tax is eliminated entirely, or if a new estate tax structure is created, the only thing that is certain is that if changes are made, estate plans will need to be reviewed and revised. Make sure to keep in touch with your estate planning attorney as new laws take shape and new legislation is passed.
For those who are clients of Family Estate Planning Law Group, you know that we will be keeping abreast of any changes and should you have any questions, you can feel free to contact our office. Our next client workshop on January 25, 2017 will focus on some of the potential changes in estate planning. To register, visit our events page or explore our website for more information.
Reference: Forbes (September 29, 2016) “If the U.S. Federal Estate Tax Goes Away, What Will Single-Family Offices Likely Do?”
Read MoreNew Year’s Resolution #6: Verify Asset Alignment and Track Assets
At Family Estate Planning Law Group, we focus quite a bit on educating our clients about the importance of aligning their assets with their estate plans. However, equally important is the verification that financial institutions have correctly aligned assets and ongoing tracking of assets to ensure new assets are aligned and old assets are transitioned out correctly. Today, we’ll look at these crucial elements of making sure an estate plan works.
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