The American Taxpayer Relief Act of 2012 – George Mentz JD MBA CWM QFP

Happy New Year and Welcome to 2013. On January 1, 2013, new legislation was retroactively passed the U.S. Senate, and then later in the House of Representatives. The American Taxpayer Relief Act of 2012 (ATRA) would permanently extend a number of major tax laws and temporarily extends many others. Here are the fundamentals.

Federal Tax rates

The top federal income tax rate on working families and small business will increase to 39.6% beginning in 2013 for individuals with income that exceeds $400,000 ($450,000 for married couples filing joint returns). For most other individuals, the ATRA Law permanently extends the lower income tax rates that have existed since President Bush put the tax relief for working families in place. That means most taxpayers will continue to pay tax according to the typical 6 tax brackets (10%, 15%, 25%, 28%, 33%, and 35%) that were used for 2012.

The new taxes implemented on dividends and capital gains were reversed at the last minute. The lower tax rates that applied to long-term capital gain and qualifying dividends have been extended for most individuals as well. If you’re in the 10% or 15% marginal income tax bracket, a special 0% rate generally applies. If the Congress had not acted, the dividend and capital gains tax rates on the poor would have doubled. If you are in the 25%, 28%, 33%, or 35% tax brackets, a 15% maximum rate will generally apply for capital gains. . Beginning in 2013, however, those who pay tax at the higher 39.6% federal income tax rate (i.e., individuals with income that exceeds $400,000, or married couples filing jointly with income that exceeds $450,000) will be subject to a maximum rate of 20% for long-term capital gain and qualifying dividends.

The ATRA American Taxpayer Relief Act permanently extends AMT Alternative Minimum Tax relief increasing the AMT exemption amounts for 2012, and providing that the exemption amounts will be indexed for inflation going forward. The Act also extends provisions allowing nonrefundable personal income tax credits to be used for offsetting AMT liability.

Wealth Phaseout s and Limits on Deductions and Exemptions
Over the years, itemized deductions personal exemptions were limited for higher-income individuals and families. For the last 2 years, the limits have not been operative.

The new laws provides that personal and dependency exemptions will be phased out for those families earning an amount over about 250 thousand dollars per year. Further, deductions will be limited. For both the personal and dependency exemptions phaseout and the itemized deduction limitation, the threshold is $250,000 for single families ($300,000 for married couples filing joint federal income tax returns).

Estate Taxation Relief
The ATRA Act makes the $5 million exemption amounts permanent for the estate tax, the gift tax, and the generation-skipping transfer tax–the same exemptions that were in effect for 2011 and 2012. The top tax rate, however, is expanded to 40% beginning in 2013.
The Act also permanently extends the “portability” provision in effect for 2011 and 2012 that allows the executor of a deceased individual’s estate to transfer any unused exemption amount to the individual’s surviving spouse.

Other Provisions and Temporary Rules

• Exclusion of qualified mortgage debt forgiveness from income provisions extended through 2013
• Section 179 expense limits extended through 2013
• “Marriage penalty” relief in the form of an increased standard deduction amount for married couples and expanded 15% federal income tax bracket
• Expanded tax credits relating to the dependent care tax credit, the adoption tax credit, and the child tax credit
• Rule changes and expansion of: Coverdell education savings accounts, employer-provided education assistance, and the student loan interest deduction
• Charitable IRA distributions (For age 70½ IRA holders- are able to exclude from income up to $100,000 in qualified distributions made to charitable organizations) extended through 2013
• Provisions relating to increased earned income tax credit amounts for people with 3 or more children are extended through 2017
• The $250 above-the-line tax deduction for educator classroom expenses.
• The option to deduct state and local sales tax in lieu of the itemized deductions for state and local income tax.
• The deduction for qualified higher education expenses are all extended through 2013

If you are seeking professional help, please consult with a CWM Chartered Wealth Manager or Accredited Financial Analyst and consult with a licensed professional before making any important decision.

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 the founder of the American Academy of Financial Management and the US Academy of Business and Financial Management http://aafm.us
*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.

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.

This week LIMRA held its Annual Advanced Sales Forum in San Diego. The title of the event was “Forecast: Bright and Sunny Sales Ideas”. The event was well attended by executives of advanced markets groups for life insurance companies, distribution channels and other associated with the organization.

“Our expectations were well met”, said John Frey, Director of Corporate Sales, National Underwriter Advanced Markets. NU’s Advanced Market team was well represented. Accompanying Mr. Frey at the conference was Dean William Byrnes of the International Tax & Financial Services Program, Thomas Jefferson School of Law & Benjamin Terner, Author & Editor, Advanced Markets.

Forum sessions presentations included:

“What’s Hot…What’s Not 2011 Edition” by Lawrence Brody, J.D., LL.M. & Thomas Commito, J.D., LL.M, CLU, CHFC, AEP. This topic examined recent developments affecting life insurance, estate and tax planning. Specifically the presenters focused on planning after the 2010 Tax Relief Act, recent decisions on policy valuations and recent decisions affecting estate planning.

“Yesterday, Today and Tomorrow: An Economic Update” by Dr. Robert T. LeClair, Associate Professor of Finance, Villanova University. Dr. LeClair’s talk focused on the current economic conditions both domestically and globally. He examined past data in connection with present day national fiscal position as well as discussing future implications and projections. His research focused on the major challenges the U.S. faces going forward in the years to come. His timely presentation was complemented by very volatile markets recently.

“Uncovering the Secrets of Social Security” by Frank Rainaldi, CLU, CHFC, DAEP, Chief Executive Officer, The Kugler Company. Mr. Rainaldi’s discussion focused on the misinformation surrounding social security. Particularly, many recipients don’t understand how to maximize spousal benefits. He noted in his discussion how one spouse can receive spousal benefits while both spouses receive the eight percent per year Deferred Retirement Credits from age 66 to 70. He also discussed how a worker or spouse can receive reduced early retirement benefits and subsequently qualify for the eight percent delayed retirement credit, as well as, the advantage of a spouse receiving spousal benefits that are based solely on the other spouse’s work record rather than a combination of both spouses’ work record.

“Standards of Care: How Consumers, Advisors and Producers Perceive ‘Fudicary’” by Maribel Gerstner, J.D., CFP, CLU, ChFC, CRCP, and Richard Weber, CLU, AEP. The discussion was focused around the Dodd-Frank’s implication on the financial services industry. Specifically, the harmonizing of standards of care was front and center to the discussion topic.

The breakout session discussions included topics such as:

“Sun or Rain? Flexible ILITs Have you Covered!”

“Advanced Planning Opportunities with Annuities”

“LTC Solutions for Families, Business Owners, and Affluent Clients”

“409A, Bonus Plans, Sec. 79 – An Advisor Guide”

Tomorrow’s blogticle will continue to discuss advanced planning regarding year-end considerations.

Author: George Mentz

A bachelor’s or graduate degree is usually required for personal financial advisors. Employers often do not require a specific field of study for personal financial advisors, but a bachelor’s degree in accounting, finance, economics, business, mathematics, or law provides good preparation for the occupation. Courses in investments, taxes, estate planning, and risk management are also helpful. Programs in financial planning and “personal finance”  are becoming more available in colleges and universities.

In addition, personal financial advisors need strong math, analytical, and interpersonal skills. They need strong sales ability, including the ability to make a wide-range of customers feel comfortable. Personal financial advisor training emphasizes the different types of investors, and how to tailor advice to the investor’s personality. They need the ability to present financial concepts to clients in easy-to-understand language. Some advisors have experience in a related occupation, such as accountant, auditor, insurance sales agent, or broker.

Although not always required, certifications enhance professional standing and are recommended by employers. Personal financial advisors may obtain a Licensed Financial Planner credential. This type of certification, issued by one of the many financial organizations typically requires 3 years of relevant experience; the completion of education requirements, including a bachelor’s degree; assessment, and adherence to a code of ethics and continuing education requirements.

There are many designations offered in the USA that are disclosed to FINRA. [1] The process can be completed in about 18-24 months unless you have already satisfied the exam and course requirements from accredited institution. [2] [3] If competition in the industry continues to grow, i.e., increased number of personal financial advisors is expected to increase by 30% over the 2008-18 period, those providing the most value will realize the highest gains. Education and training are important considerations with regards to clients deciding which personal financial advisor to work with. Thus those personal financial advisors with advanced education degrees and designations may find additional opportunity over those with a bachelor’s degree or even less education.

Over the last 50 years, MBA credentials have been driving their way into the finance landscape along with others such as licensed attorneys and accountants who are also providing wealth management services. This increased competition from higher level service providers creates the need for others to keep pace. There has been a push for higher standards in the last 25 years so that designations and  credentials require double accredited program education and exams which include ACBSP Accreditation, AACSB Accreditation or ABA Accreditation.   Graduate organizations such as American Academy of Financial Management ® offer various designations for personal financial advisors. These include the, CWM ® Chartered Wealth Manager, CAM ™ Chartered/Certified Asset Manager –and MFP ™ Master Financial Professional Planner. [4] [5]

Lastly, masters education as a path to professional certifications and professional designations are currently being offered through post graduate educational institutions. For example the LL.M. Masters of Law Program at Thomas Jefferson School of Law, an American Bar Association approved school in San Diego,  offers degree courses and exams which are accredited by the AAFM® Certification Council as a qualified assessment and education for certification eligibility. In addition, there is a concentration in personal wealth management through the law school’s online masters  program which is the first of its type in the US to be disclosed and reviewed by the ABA American Bar Association. [6] As such, an  excellent opportunity to take courses in tax, finance, estates, asset management, wealth management and compliance is to apply to the online graduate program at: http://llmprogram.tjsl.edu

In closing, a  great start to finding a career in banking and finance would be searching online with  www.AAFM.eFinancialCareers.com

We invite your opinions and comments by posting them below, or by calling the Panel of Experts including:

George Mentz, JD, MBA -  is an international lawyer, editor, author and contributor in the areas of personal finance, securities law, and wealth management.  Prof. Mentz continues to consult  with the US Government and United Nations on issues related to careers and education. Dr. Mentz is the first person in the US to obtain quad credentialing as a lawyer, Double Accredited MBA, Juris Doctorate Degree, financial consultant certification, and qualified financial planner.  Mentz and his educational & professional development firms have worked with thousands of executives in over 150 countries. Dr. Mentz has taught over 200 business and law courses at various accredited institutions, and he is the founder of the Mentz Consumer Protection, Class Action,  and Securities Law Firm http://securitieslawyers.us Mentz has served on the advisory boards of the: The African Economists Association, The Royal Society of Fellows, The Arab Academy of Banking & Finance, The China Wealth Council, The GFF Global Finance Forum in Switzerland, and the Indian Academy of Financial Management.    Mentz is the winner of several faculty awards and a meritorious award for charitable service.   Mentz has been a pioneer in promoting  accredited program courses, exams and standards as a government recognized  path to professional certification.

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[1] FINRA Financial Industry Regulatory Authority –  Understanding Professional Designations – http://apps.finra.org/DataDirectory/1/prodesignations.aspx

[2] See generally Louise Tutelian. “Dream Jobs: Six-Figure Salaries and a Bright Future- Financial Advisor”. CBS Moneywatch.com. 2/23/2011. http://moneywatch.bnet.com/career-advice/article/six-figure-jobs-financial-advisor/6197979/. Last Accessed 5/24/2011.

[3] American College Program CHFC – http://www.theamericancollege.edu/financial-planning/chfc-advanced-financial-planning

[4] United States Government  Department of Labor, Bureau of Labor and Statistics, Financial Analysts and Personal Financial Advisors. Occupational Outlook Handbook, 2010-11 Edition.”  http://www.bls.gov/oco/ocos301.htm

And also Wall Street Globe References . http://www.wallstreetglobe.com/news.html

[5] FINRA Financial Industry Regulatory Authority –  Understanding Professional Designations – http://apps.finra.org/DataDirectory/1/prodesignations.aspx

[6] See Thomas Jefferson School of Law, LL.M. Program. http://llmprogram.org/curriculum.html.

Sales of variable annuities (VA) with guaranteed living benefit (GLB) riders continue to grow exponentially, according to LIMRA’s Variable Annuity Guaranteed Living Benefit Election Tracking Survey. The Survey showed a 78 percent increase in assets of VAs with GLB riders, from $292 billion in the fourth quarter of 2008 to $521 billion in the fourth quarter of 2010.

Advisors are likely to find that the protection offered by GLB elections will remain a popular option until consumers regain confidence in other investing prospects. But with unemployment still around 9%, it could be a while before we reach that turning point. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of guaranteed living benefit sales in Advisor’s Journal, see More Consumers Buy Guaranteed Living Benefits Riders (CC 10-70)

For in-depth analysis of the topic of the taxation of annuities, see Advisor’s Main Library: A—Amounts Received As An Annuity & B—Amounts NOT Received As Annuities

National Underwriter Offers Tax Advisors Expert Analysis of the Impact of the Recently Passed Tax Relief Act of 2010 on Their Clients

The proprietary analysis is the only practitioners’ guide in Q&A format that answers the most critical questions asked by clients on insurance, estate and gift tax law changes.  National Underwriter’s wealth management experts and report authors, Professor William H. Byrnes, Esq., LL.M, CWM and Robert Bloink, Esq., LL.M., noted, “While most media attention has focused on the Act’s retention of existing tax rates on the highest-earning Americans, tax, insurance and investment advisors are finding that the most important changes, from their perspective, are likely to be found in insurance, estate and gift tax provisions that will drive client decisions on investment strategy and wealth management priorities in 2011 and beyond.”

“This is the only guide available on the market today that gives financial planners and producers issue-specific, time-critical information in Q&A format that addresses their most important technical questions with content that can also be used directly in client presentations,” Prof. Byrnes added.

Tax and insurance advisors looking for answers on how the new Tax Relief Act of 2010 will impact their clients are finding them in The National Underwriter Company’s just-published Selected Provisions and Analysis of the Tax Relief Act of 2010.  The proprietary analysis is the only practitioners’ guide in Q&A format that answers the most critical questions asked by clients on insurance, estate and gift tax law changes.

Copies of the 64-page report are available for only $12.95 plus shipping and handling here.  Producers and their companies can also license use of their logos and contact information directly on the cover of the guide for a marketing and client-management tool.

National Underwriter’s wealth management experts and report authors, Professor William H. Byrnes, Esq., LL.M, CWM and Robert Bloink, Esq., LL.M., noted, “While most media attention has focused on the Act’s retention of existing tax rates on the highest-earning Americans, tax, insurance and investment advisors are finding that the most important changes, from their perspective, are likely to be found in insurance, estate and gift tax provisions that will drive client decisions on investment strategy and wealth management priorities in 2011 and beyond.”

Rick Kravitz, Vice President & Managing Director of Summit Business Media’s Reference Division, said, “This proprietary analysis – compiled by leading experts in the field – demonstrates National Underwriter’s commitment to bringing timely and critical updates to advisors and financial planners so that they can successfully build their practices and better serve their clients.”

Prof. Byrnes, a former Coopers & Lybrand associate director in international tax and now Dean of the wealth management graduate program at Thomas Jefferson School of Law, noted that the 64-page analysis has answers to more than 100 important questions in these areas:

• Income Tax
• Estate and Gift Tax
• Generation Skipping Transfer Tax
• Deduction for State and Local Sales Taxes
• Alternative Minimum Tax
• Tax Credits
• Payroll Tax Holiday
• Wage Credit for Employees Who Are Active Duty Members of the Military
• Charitable Distributions from Retirement Accounts
• Bonus Depreciation and Section 179 Expensing
• Basis Reporting Requirements for Brokers and Mutual Funds
• Regulated Investment Company Modernization Act of 2010
• Health Care Act
• Form 1099 Reporting Requirement for Businesses
• American Jobs and Closing Tax Loopholes Act of 2010
• Requirements for Tax Return Preparers

“This is the only guide available on the market today that gives financial planners and producers issue-specific, time-critical information in Q&A format that addresses their most important technical questions with content that can also be used directly in client presentations,” Prof. Byrnes added.  “The unique combination of The National Underwriter Company’s editorial staff and the resources and professional experience of the wealth management faculty at Thomas Jefferson School of Law provides assurance that these are answers that can be counted on.”

About The National Underwriter Company

For over 110 years, The National Underwriter Company has been the first in line with the targeted tax, insurance, and financial planning information you need to make critical business decisions.  With respected resources available in print, on CD, and online, National Underwriter remains at the forefront of the evolving insurance industry, delivering the thorough and easy-to-use resources you rely on for success.  National Underwriter is a Summit Business Media company.

About Summit Business Media

Summit Business Media is the leading B2B media and information company serving the insurance, investment advisory, professional services and mining investment markets through a variety of channels, including print, online and live events.  Summit provides breaking news and analysis, in-depth practice management strategies, business-building techniques and actionable data to the markets it serves. Through its Media and Reference Divisions, Summit publishes 16 magazines, 20 websites and 150 reference titles. Summit’s Event Division hosts a dozen conferences across the spectrum of markets the company services.  Summit’s Data Division is the leading data provider of financial, marketing and benefits information on corporations, insurance companies and life, benefits and property-casualty agents.

Summit employs nearly 400 employees in ten offices across the United States.  For more information, please visit summitbusinessmedia.com.

New York, February 4, 2011  — Tax and insurance advisors looking for answers on how the new Tax Relief Act of 2010 will impact their clients are finding them in The National Underwriter Company’s just-published Selected Provisions and Analysis of the Tax Relief Act of 2010.  The proprietary analysis is the only practitioners’ guide in Q&A format that answers the most critical questions asked by clients on insurance, estate and gift tax law changes.

Copies of the 64-page report are available for only $12.95 plus shipping and handling here.  Producers and their companies can also license use of their logos and contact information directly on the cover of the guide for a marketing and client-management tool.

National Underwriter’s wealth management experts and report authors, Professor William H. Byrnes, Esq., LL.M, CWM and Robert Bloink, Esq., LL.M., noted, “While most media attention has focused on the Act’s retention of existing tax rates on the highest-earning Americans, tax, insurance and investment advisors are finding that the most important changes, from their perspective, are likely to be found in insurance, estate and gift tax provisions that will drive client decisions on investment strategy and wealth management priorities in 2011 and beyond.”

Rick Kravitz, Vice President & Managing Director of Summit Business Media’s Reference Division, said, “This proprietary analysis – compiled by leading experts in the field – demonstrates National Underwriter’s commitment to bringing timely and critical updates to advisors and financial planners so that they can successfully build their practices and better serve their clients.”

Prof. Byrnes, a former Coopers & Lybrand associate director in international tax and now Dean of the wealth management graduate program at Thomas Jefferson School of Law, noted that the 64-page analysis has answers to more than 100 important questions in these areas:  

• Income Tax
• Estate and Gift Tax
• Generation Skipping Transfer Tax
• Deduction for State and Local Sales Taxes
• Alternative Minimum Tax
• Tax Credits
• Payroll Tax Holiday
• Wage Credit for Employees Who Are Active Duty Members of the Military
• Charitable Distributions from Retirement Accounts
• Bonus Depreciation and Section 179 Expensing
• Basis Reporting Requirements for Brokers and Mutual Funds
• Regulated Investment Company Modernization Act of 2010
• Health Care Act
• Form 1099 Reporting Requirement for Businesses
• American Jobs and Closing Tax Loopholes Act of 2010
• Requirements for Tax Return Preparers  

“This is the only guide available on the market today that gives financial planners and producers issue-specific, time-critical information in Q&A format that addresses their most important technical questions with content that can also be used directly in client presentations,” Prof. Byrnes added.  “The unique combination of The National Underwriter Company’s editorial staff and the resources and professional experience of the wealth management faculty at Thomas Jefferson School of Law provides assurance that these are answers that can be counted on.”

About The National Underwriter Company

For over 110 years, The National Underwriter Company has been the first in line with the targeted tax, insurance, and financial planning information you need to make critical business decisions.  With respected resources available in print, on CD, and online, National Underwriter remains at the forefront of the evolving insurance industry, delivering the thorough and easy-to-use resources you rely on for success.  National Underwriter is a Summit Business Media company.

About Summit Business Media

Summit Business Media is the leading B2B media and information company serving the insurance, investment advisory, professional services and mining investment markets through a variety of channels, including print, online and live events.  Summit provides breaking news and analysis, in-depth practice management strategies, business-building techniques and actionable data to the markets it serves. Through its Media and Reference Divisions, Summit publishes 16 magazines, 20 websites and 150 reference titles. Summit’s Event Division hosts a dozen conferences across the spectrum of markets the company services.  Summit’s Data Division is the leading data provider of financial, marketing and benefits information on corporations, insurance companies and life, benefits and property-casualty agents.

Summit employs nearly 400 employees in ten offices across the United States.  For more information, please visit summitbusinessmedia.com.

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PRESS CONTACT:

Richard Niles, J.D.

Summit Business Media

201-526-2335

rniles@sbmedia.com