Written by Jeff Camarda: Camarda Financial Advisors (Jacksonville, FL).

Control Over Estate Taxes 

There can be no doubt that the estate tax is here to stay, and will apply in some form – likely the same exemptions and rates on the books for this year – for 2010, the previously-legislated year of the long-awaited appeal. After that, all bets are off, but my hunch is the tax will become much more oppressive, to feed massive Federal deficits, and because higher taxes have become “fashionable” again.

However things break, there are some basic rules we’d do well to remember:

1) Each of us gets to gift or pass on a limited amount tax-free

2) While each of us gets our own exemption amount, if the first spouse to die does the natural thing and leaves everything to the other spouse, their exemption is completely wasted.

3) Life insurance, which, if owned by you or your spouse, can cause some pretty big numbers to be needlessly pulled into your taxable estate. Another special type of trust, called an “ILIT”, can help solve this problem.

4) The last tax issue involves “stretching” IRA-type accounts, so that heirs pay tax as they pull money out, instead of up front in a big lump sum. Many clients want to have their kids be able to stretch the taxes, but still benefit from the protections of trust planning. For this, so-called “conduit” provisions are needed in the trust document.

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Many of our advisors are members of the Financial Planning Association (FPA) and also the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning).

Using the services of a qualified financial advisor (to help you identify the strengths and weaknesses in your financial picture) will ensure you can retire comfortably! 

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

Tags: Estate Planning, financial advisor, Financial Advisors, Financial Planning, Retirement Planning

This entry was posted on Tuesday, October 20th, 2009 at 10:22 am and is filed under Estate Planning, Wills and Trusts. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.