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By: Hoopes Adams & Scharber

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Family Wealth Matters

Latest from Family Wealth Matters Blog

A professional diagnosis, appropriate legal planning, and understanding the available financial resources are keys to meeting the needs of a loved one in decline.

It’s one of the handful of questions that we dread hearing from our clients:

My spouse is showing signs of dementia. What do I do?

After taking a deep breath, expressing our sympathy for their concern, and acknowledging the potential seriousness of Alzheimer’s disease and other forms of dementia, we seek to help our clients examine their situation from three perspectives:

medical, legal,

and

financial

.

Medical Diagnosis.

If your spouse, parent, or other loved one…
Continue Reading Dementia: Responding to the Signals of Potential Incapacity

gift ekaterina-shevchenko-ZLTlHeKbh04-unsplash Photo by Ekaterina Shevchenko on Unsplash
Photo by Ekaterina Shevchenko on Unsplash

Gifting is expected to grow in popularity, along with anticipation that the IRS will improperly pursue “strict compliance” with its disclosure requirements.

In previous issues we have warned that, if Congress does not act, after 2025 the estate tax exemption will drop from $13.6 million per person to just $6.2 million (i.e., $5 million adjusted for inflation). As a consequence, one’s seemingly modest estate, which up to this point has not warranted estate tax planning, could become subject to taxation after their death.

The looming possibility of estate tax liability in the future, where none exists now, makes discussions of…
Continue Reading “Adequate disclosure” of gifts exceeding the yearly limit

You can help your fiduciary administer your trust and non-trust assets by anticipating what information they will need and telling them – while you’re alive – where to find it.

It’s a common scenario: Our client’s estate plan has been finalized, they signed all of the pertinent documents (Trust, Will, powers of attorney, memorial instructions, etc.), and they have come to our office for a brief meeting to pick up their document binder and flash drive.

At some point during their visit, they are likely to raise a few frequently asked – and important – questions:

  • Should we tell our

…
Continue Reading Equipping Your Successor Trustee or Personal Representative

A useful tool from its inception, the 529 concept has improved as the scope of its permitted use has grown.

A 529 or “qualified tuition” plan is federally authorized savings plan that you can use for a child’s or grandchild’s college tuition and other educational expenses. In most states, contributions to the plan are tax deductible (state), and the earnings in a 529 account are not subject to federal income tax.

Here are the features of

AZ529: Arizona’s Education Savings Plan

:

  • offers parents, grandparents, and students an opportunity to save for “qualified education” expenses – tuition, books, and room

…
Continue Reading A 529 Plan Can Help Cover the Growing Costs of a Child or Grandchild’s Education

For owners of valuable residential real estate, a QPRT offers an attractive way to transfer it to their beneficiaries while continuing to occupy the home.

For many couples and individuals, their homes (primary or second) make up a substantial portion of the value of their estate. In larger estates, the existence of residential property poses estate tax considerations and, in the event of a lawsuit or creditor claim, exposes the property to seizure by third parties.

Protecting valuable residential real estate can be achieved through the use of a “qualified personal residence trust” (QPRT) — a type of irrevocable trust…
Continue Reading Achieving estate tax savings and asset protection through a QPRT

Whether your kids’ launch will succeed or fail is ultimately up to them, but helping them anticipate and navigate life’s challenges is a valuable parental role.

The results of a recent online search included this eye-catching title: “

Has Google Replaced Mom and Dad?

”

In addition to being somewhat prophetic (it was written in 2012), the article’s insights could lead one to a sobering conclusion – that, in contrast to preceding generations, children of the Internet era are far less likely to view their parents as their primary source of information, knowledge, and wisdom.

One of the consequences of…
Continue Reading We Have Lift-Off: A Mentoring Checklist for Parents of Adult Kids

The use of a holding company offers an extra layer of legal separation between you and your business entities and assets.

Over the years, numerous strategies have been developed to help business owners, professionals, and owners of vulnerable assets protect their interests against litigation, creditor claims, and other future legal and financial threats.

In

our asset protection practice

, we utilize a variety of legal structures, special trusts, and other planning vehicles to help our clients achieve their legal and financial goals and achieve peace of mind.

That assortment of asset protection options includes a long-standing, battle-tested option: the

holding…
Continue Reading Asset Protection: Should a Holding Company Own Your Business?

A new federal law requires most legal entities to report specific information about the business and its owners. This article provides multiple updates that warrant business owners’ attention.

The CTA is a provision of the Anti-Money Laundering Act, which is part of a federal effort to combat shell corporations, LLCs and other entities that engage in illegal money laundering and other criminal financial activities.

This article provides a general overview and multiple updates from our September 2023 article. This version includes the following changes:

  • The Beneficial Ownership Information

    reporting portal

    is ready to use.

  • FinCEN has published the

    Small Entity

…
Continue Reading UPDATE: Corporate Transparency Act Update: effective date pushed back to January 1, 2024

An LLC interest held outside of a trust is considered personal property and subject to probate upon the owner’s death.

You can spare your successor trustee that pain, and spare your estate the cost of probate, by transferring your LLC interests to your trust. Doing so can help you achieve your major estate planning objectives and pave the way for a smooth and hassle-free transition of your LLC to your beneficiaries.

Here are common steps for conveying your LLC ownership to your trust:

  • Be sure that your LLC’s operating agreement allows you to transfer your interest to a trust. If

…
Continue Reading Should your revocable trust own your LLC?

Creating a trust is of little benefit if your assets have not been properly transferred to it.

The situation we’re about to describe sounds like modern-day folklore, but it is painfully true and far more common than one might realize.

Consider the story of John and Jane. Because of some recent

changes in their family and business situations

, they wisely scheduled a meeting with an estate planning attorney for a review of their 10-year-old trust and related documents. The review revealed that, while their trust otherwise seemed to be in order, it was missing a key element:

assets.

Imagine…
Continue Reading Funding your trust: a crucial step in achieving the benefits of a sound estate plan

A new federal law requires most legal entities to report specific information about the business and its owners.

Effective January 1, 2024, the federal Corporate Transparency Act (CTA) requires the majority of companies doing business in the U.S. to report to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) specific information about the business entity and the people who have “substantial control” of it.

The CTA is a provision of the Anti-Money Laundering Act, which is part of a federal effort to combat shell corporations, LLCs and other entities that engage in illegal money laundering and other criminal financial activities.
Continue Reading Corporate Transparency Act places new reporting requirements on most business entities

The good news: Assets transferred to a revocable or “living” trust continue to receive the step-up.

Step-Up in Basis.

Generally, assets that are part of a person’s gross estate for estate tax purposes receive a step-up in tax basis at the time of the owner’s death, pursuant to Internal Revenue Code Section 1014. The higher basis reduces the taxable gain on the asset when it is sold.

Example:

In 1990, Michael bought a Babe Ruth baseball card for $100,000. By early 2020, its value had grown to $400,000. If he had sold it then, he would have owed taxes on…
Continue Reading IRS: Assets conveyed to an irrevocable grantor trust are not eligible for step-up in basis