5 Million Dollar Strategies – Exclusions and Planning by George Mentz JD MBA CWM

With less than 3 weeks before the Estate and Gift Tax rates change, Americans are speedily transferring assets so as to benefit from the existing tax fairness rules.

There are 2 key objectives in wealth management. There are rules and then there is strategy. The purpose must be effectively intertwined with the laws on the books, and then mixed with the products and services available. And, it all must be documented effectively.

This all makes you think about the options available under the “so called” 5 million dollar exclusion. Here are examples:

1. Gift money to a trust and use a trust department while creating trust documents that have various provisions such as “spend thrift” or education, welfare, and living sustainability clauses.
2. Gift cash to multiple 529 plans to benefit several if not dozens of heirs for educational purposes.
3. Move stock or member interests in small to medium companies to heirs.
4. Create a dynasty trust with a wide array of beneficiaries who are descendants of children or relatives.
5. Buy homes or apartments for loved ones. Have the homes in trust where they are sustained & can’t be encumbered or legally attacked.
6. Set up UGMA or UTMA accounts for grandchildren, nieces, nephews and so forth.
7. Move income producing assets into your children’s name so as to capture a better tax rate.
8. Donate appreciated assets or stock to your children and have them move to a tax free state such as Texas and capture the low capital gains rate before year end.
9. Sell a business for stock, and immediately gift the stock to heirs or loved ones.
10. Borrow the money against your assets such as stock or real estate, and gift it to loved ones.
11. Release loans to family members as a gift.
12. Fund a major insurance trust immediately with a single premium policy.
13. If you demand that family behave and receive a lot of money later, create trust where beneficiaries only receive a portion of the money until they turn 35 or 45 years old.

*It is generally best to consult with a Chartered Wealth Manager and then use a licensed attorney who specializes in your county or state with trusts and wills. Moreover, it is advisable to consider using a lawyer or trust department to manage your estate, trusts and wills. Trust departments offer a lot of services to evaluate and can manage the assets of a trust while also paying bills, insurance, managing successions, and even running a business.

The TJSL Thomas Jefferson School of Law has an LLM program in international tax and finance.  To enroll or tell your staff about the program, view here: www.llmprogram.org

About the Author: Dr. George Mentz is a world recognized consultant and award winning professor who has authored several revolutionary books. Prof. Mentz, an international lawyer, has been a keynote speaker globally in Asia, Arabia, USA, Mexico, Switzerland, and in the West Indies. Mentz can be contacted for speaking engagements at www.gmentz.com or www.managementconsultant.us or www.selfhelpbook.org  Mentz is a licensed attorney and CWM Chartered Wealth Manager who resides in Colorado Springs Colorado USA
*No tax, insurance, investment or legal advice provided herein. Please consult with a licensed professional in your jurisdiction before making any important financial or legal decision.

Estate Planning 2012 – Do I Need to Worry? Is there a Strategy Going Forward? by George Mentz, Esq.

You may think estate planning is just for the wealthy. If your assets are worth $1,000,000 or more, estate planning is still a pending and delicate issue. With most assets such as homes and stocks devalued at the moment, those prices and valuations may move up quickly in the coming months and years. You may not also be familiar with your spouse’s net worth or pending inheritances either.

With the tax changes for 2011 and 2012, you may not need to worry so much about estate taxation because of the 5 million that an individual can leave without estate taxes while the spousal exemption is still in force, but it will keep changing and taxes will probably go back up soon. Presently, the old trusts may or may not be needed depending on your net worth, spouse, health, children and other dynamics, so this is one of the most dynamic times in history for a review of estate planning documents.

Tax Year Tax Rate Exemption Equivalent
2009 45% $3,500,000
2010 N/A or 35% N/A or $5,000,000
2011 35% $5,000,000
2012 35% $5,120,000
2013 55% $1,000,000

The worst problem is that there is no guarantee that any large exemption will be available anytime in the near future.

Adding up the value of your assets can be an eye-opening experience. By the time you account for your home, investments, company value, retirement savings and life insurance policies you own, you may find your estate will end up in the taxable category.

The strategy that must be evaluated by yourself or your parent(s) is whether to use the large exemption NOW and make large gifts of your holdings to your loved ones in the short term.

By giving now, you can fund:
1. Pre-Fund Education of children and grandchildren
2. Home purchases or rental real estate in a low market for children.
3. Give away assets such as stock to loved ones.
4. Move large gifts of family stock to your children.

Further, it is always a good time for you or your clients to review:

1. Durable Power of Attorney
2. Wills
3. Medical Directives
4. Any Trusts (Some may want to be voided and replaced)
5. LLCs and Company Stock (operating agreements)
6. State Tax issues
7. Guardianship designations
8. Whether a professional trustee should be involved
9. Checking all of your designations and beneficiaries of your insurance, annuities, or other non-probated assets.
10. Document preservation.

The last challenge is document preservation. Make sure your important documents are: with a reputable or safe law firm, with a reputable trust department, in a bank deposit box that somebody knows about, or preserved in another type of lock box service that will notify your loved ones about your intentions.

All Rights Reserved – No legal advice is intended herein. Please consult with a qualified or licensed professional in your jurisdiction before making any important decision.