Charitable Giving Under the New Tax Law

President Donald Trump signed the Tax Cuts and Jobs Act into law on December 22, 2017. While the new legislation redefined the tax brackets and eliminated personal deductions, it also changed the rules for charitable giving. Here are some of the changes you need to know in order to plan your donations appropriately for the upcoming year. Read more

The History and Facts of Estate Tax

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Estate tax in the U.S. is a contentious topic, and legislation surrounding estate taxes often fluctuates depending on the current political climate. This has caused estate tax to take many forms over the decades. In any case, it’s a good to know what you’re dealing with and how to handle it, so you can be better prepared when planning your own estate. Read more

Are You Missing This Vital Estate Planning Step?

Creating a trust without properly funding it is like opening a checking account and never depositing your paychecks. If you have questions or concerns about funding your trust, contact the Law Offices of David L. Carrier today.


Estate Planning Steps

What Does the Tax Cuts and Jobs Act of 2017 Mean for My Estate Plan?

The Tax Cuts and Jobs Act of 2017 (TCJA) is understandably a mixed bag for many people. If you utilize a pass through LLC you may have received a tax cut, but you may have also lost some deductions and credits along the way. TCJA’s effects are likely different for every household based on a host of factors, from income to how you manage your deductions.

Double the Gift and Estate Tax Exemption

Although complete repeal of the gift and estate tax was part of the initial negotiations, it was eventually dropped from the final bill. That being said, the gift and estate tax exemption is being temporarily doubled as a consolation prize. Although temporary, this modification may be significant for some filers.

State and Local Tax (SALT) Deductions

If you were previously exceeding the new $10,000 cap on SALT deductions, you could potentially have some other options. Some filers may own businesses they can shift property taxes to, in which case the cap wouldn’t apply. You may also be eligible for a home office deduction.

Changing Domicile

It’s not uncommon for people in high-tax states to change their domicile to a low-tax state. Although our state taxes in Michigan aren’t as high as those in places like New York or California, this is becoming an increasingly popular option for people who have lost their SALT deduction.

Incomplete Gift Non-Grantor (ING) Trust

An incomplete non-grantor trust, if set up correctly in a low or no income tax state, can help some filers avoid their home state’s higher state tax rate. A non-grantor trust does not pass tax exposure on to the grantor. From an estate planning standpoint, if you put your assets into an ING, it will be viewed as an incomplete gift for gift tax purposes because the grantor is maintaining control of the assets, but a completed transfer in terms of your personal income tax. Because the gift is incomplete, it doesn’t count against your lifetime gift and estate tax credit.

529 College-Savings Plans

Although contributions to 529 College-Savings Plans aren’t considered part of your estate, you still retain control over them, including the power to name beneficiaries. To encourage college savings, the federal government even allows savers to group five years of gift tax exclusion into a single year. So a single person could potentially contribute $75,000 – or a married couple, $150,000 – in a single year and avoid gift or GST taxes as well as using up any of their gift tax exemption.

The new law adds even more flexibility to 529 plans because they can now be used to pay for elementary and secondary school expenses in addition to college.

Learn About Your Options

The Tax Cuts and Jobs Act of 2017 (TCJA) is having some complicated effects on tax and estate planning. That’s why it’s so important to review both with your CPA and your estate planning attorneys. If you have questions about the TCJA and how it may affect your estate plan, call the Law Offices of David L. Carrier at 616-361-8400.

 

https://www.cpajournal.com/2018/01/30/tax-cuts-jobs-act-might-change-estate-planning/

https://www.cnbc.com/2016/08/02/how-the-wealthy-use-ing-trusts-to-slash-the-state-income-tax-rate-they-pay.html

https://www.kraftcpas.com/articles/will-new-tax-law-impact-estate-plan/

Gift Planning for Every Age

Gift planning – also called “planned giving” – is a great way for individuals to schedule future financial gifts for their loved ones, nonprofits, educational institutions and other organizations. While many give for emotional reasons, gift planning can also provide the giver with financial benefits such as reduced tax rates and a guaranteed source of income.

No matter where you are in your life or what your financial situation is, there is a gift planning strategy for you. The following slides will show you which gift planning options are most appropriate during each part of your life.

Mid-Life: 40s-50s

In your 40s and 50s you may have appreciated assets that have gained value over time, such as stocks, that you wish to utilize. You may also be planning more actively for retirement.

Fortunately, salaries are at their highest during this period of your life – around $50,000 on average.1 Take advantage of this extra income with these planned gifts:

  • Life Insurance – You can name an irrevocable primary beneficiary and grant them sole ownership of your policy so they receive the full amount after your death, or you can split the policy between multiple entities so each receives a percentage of the policy.

 

  • Gift of Appreciated Securities – Securities are investments like stocks, bonds and mutual funds that can increase in monetary value over time. If you gift appreciated securities, you do not owe capital gains tax and you can save money with income tax deductions.

Later Life: 60s-70s

At this phase, you may have retired or reduced the hours you work per week. You may benefit from a steady, guaranteed source of income, especially if you have medical and housing payments.

The following gift options ensure you receive a constant stream of income when you need it most:

  • Charitable Gift Annuities – Make an up-front gift with cash, securities or property in exchange for a fixed income and tax deductions. When you pass away, the principal goes to the entity designated to receive the gift.

 

  • Charitable Remainder Trusts – In a charitable remainder unitrust (CRT), the giver receives income depending on the fluctuating value of their trust and can add more money to the trust at any time. In a charitable remainder annuity trust (CRAT), the giver receives fixed income and cannot add more money. You get income tax deductions, and the entire value of the trust goes to your designated beneficiary once the trust expires.

Golden Years: 80s-90s

In their 80s and 90s, people are coping with long-term care and housing payments. They are making the final adjustments to their finances so their money and assets go to the proper entities.

  • Real Estate – If you are downsizing or have multiple properties, you can gift this property. This can be highly advantageous as you can get a full market value income tax deduction and bypass capital gains tax.

 

  • Charitable Lead Trust – If you haven’t already, start a charitable lead trust. The money in the trust goes to charities until your estate taxes are reduced. Once the trust expires, the rest goes to your beneficiaries.

 

  • Re-Evaluating Previous Gifts – You want to make sure that all established gifts have up-to-date beneficiaries and ensure all legal documents are consistent with your wishes.

Get Help with Estate Planning from The Law Offices of David L. Carrier, P.C.

As you can see, there are numerous gift planning options for those who wish to put their money to good use both during and after their life. However, the tax benefits and results of each plan can be confusing without proper legal guidance.

Fortunately, the estate planning lawyers at The Law Offices of David L. Carrier, P.C. can help you determine which gift plan is best for your unique situation. We have faithfully served more than 10,000 Michigan families over the past 35 years – a huge testament to our success.

To get started, call us at 616-361-8400 today for more information.

 

The Importance of Trust Reviews

As part of our practice at the Law Offices of David L. Carrier, PC, I meet with over 300 families every year
for a “Trust Review”. This includes our past clients that have questions about their Trust documents.
Sometimes they need a refresher of how the Trust works or want to make specific changes. I also meet
with clients that have a trust drafted by another law firm and they sometimes want a second opinion or
have questions how the Trust works, or they want to make changes to an old trust.

If you have a Trust, then you know that there are many benefits of a Trust: Trust assets avoid probate,
they make it easier for someone to manage your assets if you are incapable to doing so yourself. Also, the
properly drafted Trust can protect your assets when you need skilled care. (You have heard David say on
the TV and Radio: “Avoid Nursing Home Poverty”).

For Trusts to be used to their full potential, Trusts must be properly funded. This means transferring
ownership of assets to the Trust. Some assets must be held in your name. For example: IRAs, 401K’s,
403b’s and similar tax advantaged accounts can’t be owned by a trust for tax reasons. For those accounts,
we often designate either the spouse or the Trust as the beneficiary. Failing to properly fund a Trust is
the most common reason why a Trust fails.

At our Trust Reviews, we cover many topics, besides making sure that the Trust is properly funded.
Questions that are often asked include:

• Who are your current and successor trustees?
• What are the terms of your trust?
• Who are your beneficiaries and contingent beneficiaries?
• Does your Trust still suit your needs?
• Do you have a current and properly drafted Durable Power of Attorney for Financial?
• Do you have a current and properly drafted Durable Power of Attorney for Healthcare?
• Has the law changed, and should your documents be updated to take advantage of a new law?
• What changes have happened in your life that might require updating your trust documents,
(death, marriage, divorce, births, substantial changes in your finances)?

I have seen client’s estate planning documents that were drafted years ago, when the children were
minors. Today, the parents often want their adult children to be named as their successor Trustee in their
Trusts, as well as Agents for both Financial and Healthcare decisions.

We review Estate Planning documents (Trusts, Wills, Financial and Healthcare Power of Attorney
documents, Designation of Funeral Representatives) that were drafted by our office, and also drafted by
other attorneys as well. We make recommendations on what needs to be updated and why.

There are many types of Trusts, but all Trusts should be reviewed periodically to make sure that they are
up-to-date and properly funded. Have you had your Trust reviewed lately? How about your other Estate
Plan documents? If not, perhaps it is time to call our office and schedule your free Trust Review with me.

Jim Henke
Attorney-At-Law

Why Trust Reviews Are Important

Responsibilities of an Executor

Every estate, whether through a will or a trust, needs an executor or estate administrator to handle the execution of a will or the disbursement of a trust. The job is more complicated than it may initially sound, as there are a lot of loose ends that must be tied up after someone’s passing.

The Basic Responsibilities of an Executor

Essentially, the executor’s job is to resolve any outstanding issues and divvy up estate assets after a person’s passing. This generally entails:

  • Safeguarding a person’s assets following their death but prior to dispersion to beneficiaries
  • Ensuring all debts and taxes are paid on behalf of the deceased
  • Transferring all remaining assets to the beneficiaries designated in estate planning documents

The Requirements

Although some people name a law firm, attorney or financial professional as the executor for their estate, that’s not a legal requirement. The executor can also be a family member or friend.

An executor does have a legal obligation to the deceased’s estate, what is commonly referred to as a fiduciary duty. This duty requires the executor to act honestly, impartially and diligently in their role as executor.

What the Job Entails

On a more detailed level, executors commonly have the following important duties to perform for the estate of their friend, family member or client:

Locating all assets – Ideally, assets should be easy to find and either be listed in a will or within a trust. Life isn’t always that clean and simple though, and it is the executor’s duty to locate all assets.

Distribute assets as prescribed by an estate plan – The same piece of property may be bequeathed to multiple beneficiaries in some scenarios. If you simply leave your home to your children, how exactly will that asset be divvied up? It may fall to the executor to sell real estate and other assets and then distribute the proceeds to the benefactors.

Pay debts and taxes – If an estate is going through probate, it is technically the executor’s responsibility to notify creditors of the debtor’s passing in addition to filing a final income tax return on the deceased’s behalf. If an estate is large enough to be subject to estate tax, it will be the executor’s duty to facilitate payment to the government.

Other Considerations

Depending on the complexity of the estate, there may be several ancillary duties involved within the previously stated duties. For example, an estate bank account may need to be established to house the proceeds of property liquidation. There may also be continuing upkeep and maintenance costs associated with properties in the deceased’s name, which will also fall to the executor to pay and maintain.

We accrue many things in a long life that the average person likely takes for granted. Credit cards must be closed, banks notified, government agencies informed, mail diverted, Medicare payments stopped and much more.

Choosing an Executor

Deciding who would be best for the role of executor for your estate can be difficult. Keep in mind some of the duties require filing court documents, potentially detailed financial calculations and a lot of box checking.

If you choose a family member or friend, make sure it’s someone who has the financial wherewithal to understand their role and at least a basic knowledge of legal and financial processes. You will preferably want to find someone in Michigan or the state in which you reside.

Also keep in mind that if you hire a third party, such as an attorney or financial professional, there will be a fee associated with that service. Most family members and friends tend to perform the role of executor for free.

Get Help with Your Estate Plan and Choosing an Executor

Whether you’re interested in setting up an estate plan or you have one but would like some assistance finding an executor, the Law Offices of David L. Carrier, P.C. can help. One of the services we commonly provide is assistance to family and friend executors. Even if the person you name as executor doesn’t have the time or knowledge to deal with the more intricate details of closing out your estate, we can help facilitate the process to make sure they get through it.

Contact us online or call us at (616) 361-8400 to schedule a consultation to learn more.

The Consequences of Not Having a Thorough Estate Plan

There’s a common misconception that living trusts are only for wealthy people with lots of assets. Many people also mistakenly think a will is all they need to ensure their end-of-life wishes are satisfactorily executed. Although a will is certainly better than having no plan at all, establishing a trust can minimize the hassle your family faces following your passing. Read more

Why Do I Need Life Insurance?

Life insurance is essentially money paid after your death to the beneficiary you name on your policy. You pay a premium every month to maintain the policy.

There are many reasons to have life insurance:

  • Support your family in the event they lose your income stream
  • Pay off debts you may have incurred so your family isn’t stuck paying them in your absence
  • Pay for your children’s college
  • Cover funeral and other end-of-life expenses, including estate taxes

The Sooner You Enroll in Life Insurance, the More Affordable It Will Be

You may not have familial or financial obligations today, but you might in the future. Life insurance premiums are heavily based on health. A person who is older and has health issues is more likely to pass away in the near future, so the insurance company will charge more for the policy. Locking in a good rate when you’re young, even if you don’t have a lot of people relying on you, can pay dividends in the future.

Ensuring Your Family’s Financial Stability

The reason most people get life insurance is to safeguard their family from financial difficulties in the event they were to pass away unexpectedly. Supporting a spouse, raising a family, paying for college and making monthly mortgage payments are all things life insurance can cover. If something were to happen and you didn’t have any kind of life insurance, your family would suddenly have to figure out a way to make ends meet without your income, likely necessitating a significant downgrade in living standards.

End of Life Expenses Are More Expensive Than You May Think

The average funeral costs between $7,000 and $10,000. If you were to pass away suddenly, your family would have to try to come up with this money in the spur of the moment while they are in the process of grieving.

Estates exceeding $5.45 million are also subject to a federal estate tax. If your estate exceeds that amount, a life insurance policy may be able to offset or pay for some of those taxes.

Source: https://www.parting.com/blog/funeral-costs-how-much-does-an-average-funeral-cost/

Do You Have Debts?

Creditors generally don’t forget about someone’s debt once they die. Those responsibilities are often passed on to a spouse or children. The last thing most people want to do is put their family in a situation where they have to figure out how to maintain their current lifestyle and pay off debts without your income. Being able to wipe out credit card debt, car payments or a mortgage may make all the difference to your loved ones.

Pay for College

The College Board’s breakdown of average undergraduate college costs for the 2016 – 2017 school year:

  • $7,560 for two-year community college programs
  • $14,210 for in-state public college tuition
  • $26,100 for private college

For in-state and private college, multiply that number by four for the total cost of a four-year degree. Having a life insurance policy to cover those costs is an act that can potentially resonate through your family for generations.

Source: http://money.cnn.com/2017/05/01/pf/college/how-much-does-college-cost/index.html

Peace of Mind

No one wants to lose sleep worrying about what the future holds for their family. Knowing that if the worst were to happen to you or your spouse your loved ones would still be able to maintain the same quality of life and pursue their dreams can do wonders for your peace of mind.

If you want to learn more about life insurance or how to create an estate plan that incorporates life insurance or annuities, contact The Law Offices of David L. Carrier at (616) 361-8400 to schedule a consultation.






Who Should You Name as Conservator and Guardian for Your Minor Children in Your Estate Plan?

Establishing an estate plan is important for everyone, but it can be especially important for parents with young children. No one likes to contemplate the worst-case scenario, but it’s preferable to be prepared for all eventualities. Failing to name a conservator of your estate or guardian for your children in the event of you and your spouses’ death or incapacitation means a government bureaucrat will make the decision for you if the unthinkable were to occur. Read more

Client Success Stories…

We were very happy with the information at the workshop on Estate Planning [LifePlan workshop]. Amanda was very helpful in explaining the options we could choose from to protect our assets from excessive taxes.

All questions were answered in depth and in a manner that was very understandable. I left feeling confident that we can contact them at any time for help navigating the system.

The staff are incredibly professional. My mother was treated with utmost respect. Her paperwork was organized and concise. I dealt with David and Jim and they spoke in terms my mother and I could understand.

I was totally lost when my husband’s dementia got bad. David and his group helped me feel in control again. They are there to help me whenever I need them. I should have done this sooner.

Perfect balance of pleasant and professional. Starting with workshops with targeted info, to chit chat with David (and all the staff we met) – great experience. Thank you!

My husband and I just returned from your workshop in Portage…We are so pleased we attended and came away with so much information and insight. The workshop was well organized, well presented and your staff was wonderful. Patrick made things fun, and as he promised, the time flew by. Thanks you again for 2 very well spent hours.

Donna & Stephanie are extremely professional, on top of everything, friendly and just a joy to work with. Very prompt on phone calls, emails, etc. I am very thankful for these two people!

We have been extremely pleased with the professional service of David and the staff. It has been a pleasure working with everyone to make sure our future is secure. David was also very helpful finding an out of state attorney to help our parent’s address their Elder law needs.

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“The Law Offices of David L. Carrier is an estate planning and elder law firm located in Western Michigan. Our main office is in Grand Rapids, and we have 3 other conveniently located offices in West Michigan. We specialize in medicaid crisis planning, estate planning, elder law, probate, wills and trusts.

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