Clinton Lawyer Explains How To Tackle Estate Planning When You Live in Two States

By Ronald Morton | Leave a Comment

Being able to split your time between two or more places you love is a much-desired retirement dream for many people.  A great example are those folks referred to as “snowbirds” who live farther north in the US during the summer and then head back to the warmer southern states for the winter.  That allows folks to enjoy our gorgeous Mississippi spring and fall, and relatively mild winter, while escaping our punishing summer humidity.

Many people living this lifestyle completely overlook the fact that it can have a major impact on what happens to their assets when they die.  If you were to pass away in Mississippi, the laws governing your estate may be totally different than those in New York, Vermont, or whatever cooler state you’ve chosen for the hot season.

Some Laws Differ from State to State

Basically, you need to make a decision about which state is your true legal residence.  This may be affected by the amount of time you spend in each or some other factor.  If you’re in a situation where you truly can choose, then you really want to work with a Hinds County estate planning lawyer to figure out which state’s laws are going to be the most advantageous to you and your estate.  There are all kinds of factors which can influence this decision, such as the property laws of each, your marital status, and even tax rates.  For example, Florida has been known for not having estate taxes at all.  This is great, but it does have other taxes that could come into play.

When you pass away, your estate can end up going through probate in both states.  This can be time consuming and expensive, and you may be able to avoid it by working with a Hinds County lawyer to set up some trusts and other protections.  There are some documents, however, that you might want to consider creating in both states where you reside.  For example, it may be helpful to have medical and financial powers of attorney drawn up in both Mississippi and the other state in order to avoid problems and delays should they be needed.

What Do You Do When You Live In Two States?

Even if you “live” in both states, you can only officially reside in one.  You are considered a visitor in the other state.  A Mississippi attorney will be able to help get you up to speed on the laws of our state and can help you compare them to similar laws in the other state where you reside.  Just as you’ve chosen to live in two states for the advantages to your life, there are also advantages to what happens after!

 

Trust Lawyer in Jackson MS on How Much Financial Information You Should Share With Your Family

By Ronald Morton | Leave a Comment

$5 Million Gift Exemption – Use it or Lose it!

By Ronald Morton | Leave a Comment

As everyone knows, the election is finally over! After almost $6 Billion in combined advertising in House, Senate, and the Presidential races by the candidates, the parties, and independent groups, little has actually changed in Washington.
President Obama has been reelected. The electoral vote was 332 to 206.  The popular vote was 50% for President Obama and 48% for Governor Romney.  The Democrats have a slightly larger majority in the Senate.  The Republicans have a slightly smaller majority in the House.  Given this current climate of continued divided government, we have no clear view of where things may be headed concerning the estate tax and taxes, except that what we do know is that the estate tax laws on the books today are scheduled to “sunset” in 6 short weeks on December 31.  Without congressional intervention, federal estate and gift taxes stand to increase dramatically on January 1, 2013, affecting everyone who dies with an estate valued over $1 million.

Many of our clients think that only the super-rich need to worry about estate and gift taxes.  But they should think again. There has been no indication from Congress or the White House on whether, or what type, of final tax exemption number may replace the $1 Million exemption, if any, except for the usual chest thumping and saber rattling.

A Little Background

In December 2010, Congress passed a set of laws known as TRA 2010. These laws extended the Bush tax cuts until midnight on December 31, 2012.

Under TRA 2010, individuals with estates under $5.12 million are not subject to federal gift or estate tax. However, if Congress allows TRA 2010 to expire, estates larger than $1 million will become taxable at the beginning of 2013.

What Can You Do?

 

Outright Gift

One option is to gift a portion of your estate.  Between now and December 31 2012, an individual can gift up to $5.12 million (and a couple can gift up to $10.24 million) completely gift-tax free.  These gifts can be made directly to loved ones, like children, or gifted into trusts for the benefit of these individuals to protect the gifts from divorce and creditors.  This strategy is straightforward and works well if your clients are comfortable giving away a significant portion of their assets during their lifetime. But many clients are not willing to simply give away millions just to reduce their tax bill.

Spousal Lifetime Access Trust

Another way to preserve an estate is to lock in the current estate tax exclusion using a well-planned trust. Here’s an overview of how this strategy works:

  • Clients put their money into a trust for their spouse or partner, removing those assets from their estate.
  • The Client’s spouse or partner can act as trustee, making distributions to him- or herself, subject to certain restrictions.
  •  The trust assets are available for the client’s spouse or partner to use and enjoy, but they are not included as part of his or her estate either.
  •  Clients have the option to name their children or others as trust beneficiaries, as well.

For wealthy married clients, or those in a long-term relationship, the spouses or partners can even set up trusts for each other. Certain rules must be followed so that those trusts avoid the “reciprocal trust doctrine.”  A qualified estate planning attorney can explain how this is done. Using this strategy, your clients an shelter a total of $10.24 million, together with all the future growth on those funds, from estate taxes.

Timing is Everything

The clock is ticking. No one knows what Congress will do between now and the end of this year. One thing is certain: Clients have until December 31 to complete the planning and gifting necessary to benefit from what the law currently allows. It can take several weeks for an experienced estate planning attorney to complete the work involved in establishing a trust and transferring all the necessary assets, so clients should not delay talking to their attorney to choose a course of action.

How to Leave a Legacy

By Ronald Morton | Leave a Comment

In the estate planning process you will probably cover the basics of estate planning: naming an executor, stating your final wishes and identifying beneficiaries to receive your estate. For some people, though, a basic estate plan is not enough. What if you want to leave more? Through legacy planning you can leave a financial heritage and a sense of who you are to your family and to your community.

Family Trusts

Trusts are an excellent way to leave a financial legacy for your loved ones. You can do so through individual lifetime trusts or even family trusts. Long term Trusts can provide financial stability for those close to you throughout their life. With a Generation Skipping or Dynasty Trust, you may even be able to help your grandchildren or great-grandchildren pay for college.

Personal Documents

Legacy planning also focuses on leaving behind a piece of yourself for your family to remember and for future generations to know. There are many ways to do this. You can create write a letter to each loved one to be read after your death. You can also write a memoir with remembrances and life lessons to provide your current family and descendants with a sense of who you really were. You can also write a family history with the help of genealogy research. Learning about your family’s past can help you and your loved ones better understand and appreciate your current life.

Charitable Trusts

Do you have a favorite charitable cause that you donate funds to each year? With a Charitable Trust, you can help others for years after you are gone. Such a Trust is a great way to help a cause close to your heart.

You can also save money when you use a Charitable Trust. These Trusts provide a tax deduction for the year they are funded. They also lower your taxable estate, which helps your family with lower or avoid estate taxes upon your death.