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Important IRS Update: Significant Interest Penalty Increase for Tax Underpayments

The Internal Revenue Service (IRS) has recently announced a critical change that could significantly impact taxpayers who underpay their taxes. This update is particularly relevant as we approach the next tax filing season. Previously, the IRS charged a 3% interest penalty on estimated tax underpayments. However, this rate has now been increased to a substantial

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Will Inflation Hurt Stock Returns? Not Necessarily

Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks. A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns. Since 1993, one-year returns on

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Maximize Your Charitable Impact with These Four Strategies

As the year draws to a close, it’s a perfect opportunity to rethink how you give to charity. This is important for managing how much tax you pay and how much help reaches those in need. Here are four effective strategies: Need Guidance? Reach Out to Us! These strategies are just a starting point. There

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When to Use a Family LLC

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Category: Asset Protection Estate Planning Estate Taxes Family Limited Partnerships Family LLCs

Most people have heard about LLCS, but you might not be aware of the best situations to use them when it comes to your family. Essentially, a family LLC is an estate planning tool for holding assets or transferring them to succeeding generations.

The people most likely to use a family LLC are those individuals who want to keep family assets together and intact, managed only by a limited number of people. As an LLC manager, you’re in control while you’re alive, but you can also exercise control in selecting who will manage the LLC after you pass away.

If your family has rental real estate, it’s a good option to use a family LLC. You can manage it during your lifetime, and then at your death a portion of the LLC managing that real estate goes to your children. This limits the opportunity for children to argue after you have passed away about who is entitled to what.

Another benefit of a family LLC is that you can gift it during your lifetime. Without having to worry about other members signing off on your decisions, you can sell, lease, or buy assets while you are still alive. This gives you control while you are still present with opportunities for your heirs to manage the LLC after you are gone.

Interested in learning more about Family LLCs or other family entities? Send us an email at info@lawesq.net or contact us via phone at 732-521-9455.

Special Planning for Second Marriages: Lessons Learned From Casey Kasem

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Category: Blended Families Family Limited Partnerships

The recent news hoopla over Casey Kasem illustrates an important lesson for planning your own estate: things may change when you throw a second marriage into the mix, calling for a re-evaluation of your plans. There are many things that should be addressed in estate planning where a second marriage has occurred. Doing so will help prevent problems and lay the groundwork for plans that actually carry out your wishes rather than spark legal battles among family members.

Special Planning for Second Marriages Lessons Learned From Casey Kasem
(Photo Credit: mediaconfidential.blogspot.com)

Medical directives, powers of attorney, and even decisions about burial planning should all be considered in your estate plan if you are involved in a second or third marriage. This avoids conflict between family members that can make the grieving process even more difficult.

When it comes to passing down assets, this is especially complex in a second marriage. Who should get the money? Should it be split between children? Does it go to the first wife in one lump sum and the remainder is split among the children? There’s a lot of tension that can arise if you don’t think about the answers to these questions well in advance. Conflicts tend to crop up especially when a non-parent spouse is receiving assets that children feel entitled to in one sense or another. The more clarity there is in your planning, the better. Once you’ve met with an estate planning professional, it’s important that you in some sense communicate what you have outlined to family member stakeholders. To learn more about estate planning techniques for second and third marriages, email us at info@lawesq.net or contact us via phone at 732-521-9455

What About Blended Families?

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Category: Family Business Family Limited Partnerships

Planning for blended families presents particular challenges when it comes to ensuring your wishes are carried out. While every situation is unique, here are a few common problems and ways to address them.

Blended Families
(Photo Credit:  sitcomsonline.com)

Let’s say you want to disinherit your ex-spouse. At the very least, make sure you have replaced him or her as the named beneficiary of your retirement plans and other assets. You should also consider a Long-Term Discretionary Trust (LTD Trust) to administer your children’s inheritance, with a party of your choosing serving as trustee. In this way, even if your children reside with your ex-spouse, your trustee will control the inheritance through the LTD Trust and ensure it is used only for your children. Should one of your children predecease your ex-spouse, the inheritance would remain
in your LTD Trust for your grandchildren and, if there are none, for your surviving children or other beneficiaries of your own choosing.

Another useful trust is called a Qualified Terminable Interest Property Trust (QTIP Trust). It can protect your new spouse by providing income and even principal for life. It can also protect your new spouse’s inheritance in the event of a subsequent remarriage and divorce. And, upon the death of your new spouse, the QTIP Trust assets may pass to the LTD Trust you established for your own children.

To learn more about the unique planning problems associated with blended families, and how we can help address your particular concerns and goals, please contact us for a consultation.

Keys To Selling Your Family Business

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Category: Business Succession Planning Distribution of Assets Family Limited Partnerships Life Insurance Policies

There are plenty of challenges to running a successful family business. But they can look like a hop, skip and a jump compared to the challenges associated with passing your family business along to your children or other relatives.

English: Pugh's Garden Centre A family-owned b...
(Photo credit: Wikipedia)

Only 33 percent of family owned businesses survive the transition from first generation ownership to the next, according to an article in the Vail Daily.

Why so hard?

In some cases, it is because no one in the family is interested in taking the business over.

But more often it is because there no good succession plan in place.

To come up with a workable succession plan, you must collect the thoughts and opinions of all family members as to who wants to be involved and how. You must know who wants to do what kind of work.

You must also discuss retirement goals for family members, cash flow needs and the goals and needs of the next generation of management.

Key decisions, of course, include who is going to be in control and who will eventually own it.

Your succession plan could be based on setting up a family limited partnership, where you, as the general partner, control day to day decisions, but over time sell off shares to family members. Eventually you give up control to who is ultimately going to run it.

Or you could set up a buy-sell agreement, which allows you to name the buyer — it could be one of your children — and establish a price. Then your child could buy a life insurance policy on you and eventually use the proceeds to buy the business.

But there are many strategies that can be considered. Best to consult an attorney with expertise on business succession and business buying and selling.

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Leaving the Vault Open: A Revocable Trust Will Not Protect You From Creditors.

Categories
Category: Asset Protection Estate Planning Family Limited Partnerships Trusts

One popular misconception concerning estate planning is that any trust will protect an individual’s assets from creditors. However, as a recent article explains, this is not true. If you are considering incorporating a trust into your estate plan as an asset protection tool, it is important to understand which trusts will actually provide asset protection.

As the title suggests, a revocable living trust will not protect trust assets from creditors. The primary purpose of these trusts is preserve privacy & ease the transfer of wealth by keeping a person’s assets out of probate, which often saves a family time and money. If you have a revocable living trust, it is important to realize that creditors can reach the assets within that trust. This is because you never fully relinquish control of your assets in a revocable trust so you are still considered the legal owner.

If you are interested in incorporating a level of asset protection into your estate plan, consider using an irrevocable trust, or in some cases, as Family Limited Partnership (FLP) or Family Limited Liability Company (FLLC). In contrast to a revocable living trust, an irrevocable trust, FLP and FLLC will protect your assets from creditors. This is because the trust or entity creator is not considered the owner of the assets held in the trust or entity. The trade off, however, is that you may relinquish direct total control of the assets placed in the trust (although, if done right, you may still exercise indirect control.)