I previously reported that the changes in the Medicaid rules from the Deficient Reduction Act were to become effective in North Carolina on March 1, 2007. Now it appears that the implementation date has been moved to April 1, 2007. See my earlier posts under the Medicaid category to read about the changes.
It’s vitally important to make sure that the proper beneficiaries are designated for your IRAs and other retirement accounts, since the beneficiary designation controls what happens to the account, regardless of what your will, trust, divorce settlement, or any other agreement says.
The following is based on IRA expert Ed Slott’s “IRA New Year’s Resolutions:”
1. Obtain a copy of the beneficiary form for each IRA you own.
2. Make sure you have named a primary beneficiary and a secondary (contingent) beneficiary for each IRA you own. Secondary beneficiaries are less important for IRAs payable to trusts.
3. If there are multiple beneficiaries on one IRA, make sure that each beneficiary’s share is clearly identified with a fraction, percentage or the word “equally,” if applicable.
4. Make sure that the financial institution holding the IRA has your beneficiary designations on file and that their records agree with yours.
5. Keep a copy of all your IRA beneficiary forms and give copies to your financial advisor, attorney, and CPA.
6. Let your beneficiaries know where to locate your IRA beneficiary forms.
7. Review your IRA beneficiary forms at least once a year to make sure they are correct and reflect any changes during the year due to new tax laws or major life events such as death, birth, adoption, marriage, divorce, etc.
8. Check the IRA custodial document for every financial institution that holds an IRA account for me. Make sure that the document allows the provisions that are important to you and your beneficiaries. All IRAs are not created equal!
9. Do not name your estate as beneficiary.
10. Consider a Standalone IRA Trust to obtain maximum stretch-out and protection of your IRAs for younger beneficiaries.
Yesterday the U.S. Senate approved an amendment to the Budget Resolution that would extend the 2009 estate tax rate (45%) and exemption ($3.5 million) through 2012. Under current law the estate tax would be "repealed" in 2010, but would return in 2011 with an exemption of only $1 million.
Click "Continue Reading" to view a report from Marshall Jones of West Palm Beach.
Continue Reading...Of baby boomers born between 1956 and 1964 who plan to move to another state after retirement, the top intended destination is North Carolina, according to a Harris Interactive Study (Polte Homes - Baby Boomer 2005). 14% of those surveyed said they planned to move to NC, beating out Florida, Arizona and California.
Based on my observations, the areas in North Carolina that seem to be most popular as retirement destinations are Chapel Hill and Pittsboro, Hendersonville, Wilmington, Brunswick County, and Moore County.
Though it was published last year, I just found this article on the web - Survey shows North Carolina Farmers Need Help with Estate Planning. It didn't surprise me to read that the vast majority of farmer have never sought professional estate planning advice, and only 43% reported having a Will. I think this echoes the population of North Carolina as a whole.
Proper estate planning can make the difference between losing a farm when a senior family dies versus successfully keeping it going for generations.
Earlier this week the IRS published Notice 2007-30, which contains a list of 40 frivolous positions taxpayers should avoid taking on their income tax returns.
In 2006, the penalty for frivolous tax returns was increased from $500 to $5,000. The new penalty amount applies when a person submits a tax return, any portion of which is based on a position the IRS identifies as frivolous.
Four revenue rulings issued along with with the notice address particular frivolous claims frequently made to the IRS. The revenue rulings deal with:
The rulings emphasize the adverse consequences to taxpayers who fail to file returns or fail to pay taxes based on any of these frivolous arguments.
The courts have not only rejected these arguments numerous times, but also have imposed thousands of dollars in fines on taxpayers or their representatives for pursuing frivolous cases.
"Our rulings on frivolous arguments emphasize that the IRS and the courts reject these arguments about the validity of the income tax and ‘too good to be true’ schemes to eliminate tax liability," said IRS Chief Counsel Donald L. Korb.
The IRS continues to investigate promoters of frivolous arguments and to refer cases to the Department of Justice for criminal prosecution. In addition to tax and interest, the $5,000 penalty, taxpayers who file based on a frivolous position may be subject to civil penalties of 20 or 75 percent of the underpaid tax. Persons who bring frivolous tax cases in court may face an additional penalty of up to $25,000.
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All taxpayers, whether one uses a professional tax preparer or not, would be well-served to review Notice 2007-30.
I recently came across an article on SmartMoney.com entitled 10 Things Your Estate Planner Won' t Tell You. Being an Estate Planner, I read the article with interest, and while it contains some useful tips, I found several things that I strongly disagreed with or were just plain wrong.
Click "Continue Reading" for the full text of the article and my responses in italics. My main message is that if you choose a experienced, qualified and reputable attorney to head up your estate planning team, you will avoid many, if not all, of the problems discussed in the article.
Continue Reading...Capital Trust Company of Delaware's website is full of articles and other information on trusts and estate planning One short piece that I found worth sharing is the Beneficiary Bill of Rights.
When preparing trusts, estate planning attorneys should not simply draft to reflect the wishes of the grantor, but should also incorporate provisions providing protection for the beneficiaries. An example would be the power to remove the trustee without cause and name a replacement trustee. Such a provision can be invaluable in avoiding conflict and even litigation with an uncooperative trustee, but certain limitations may be necessary to reign in greedy or overly aggressive beneficiaries.
On February 26, 2007, the United States Supreme Court declined to hear the wrongful death case against the North Carolina private security firm Blackwater Security Consulting, LLC filed by the estates of four of its employees killed in Iraq in 2004. The lawsuit alleges that the firm failed to provide proper equipment for the men.
While I haven't yet read any of the court pleadings, my guess is that Blackwater is concerned that it won't get a fair trial in North Carolina.
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