Your estate may be more valuable than you think

Your estate may be more valuable than you think, especially when you factor in the value of all the personal property you have accumulated. And while that may seem like good news, it may also present several problems.

 First of all, taxes could severely limit the amount your loved-ones receive. In fact, Federal estate taxes can claim as much as 40% 1 of all the assets you plan to leave behind.

Secondly, those assets may take time to liquidate – or be held in probate – denying your family access during an already difficult time.

Even with the change in estate tax law, estate taxes remain a consideration. That means if you own assets, there’s a good chance you’ll need to plan for their future disposition. You may be worth more than you think. All of these assets are included in your gross estate: Cash, Stocks, bonds and annuities, Certain life insurance proceeds, Real estate, including your family home and vacation home, Property held in a trust you control outright, Art and other collectibles, Qualified retirement plan accounts, such as 401(k)s and profit-sharing plans and Your business.

Even if your estate doesn’t qualify for Federal Estate tax liability, you may have State ‘Death’ Taxes to be concerned with, for example currently in New York State the Estate tax exemption limit amount is $1million.

Many U.S. states also impose their own estate or inheritance taxes, and some impose both. Some states “piggyback” on the federal estate tax law in regard to estates subject to tax (i.e., if the estate is exempt from federal taxation it is also exempt from state taxation). Some states’ estate taxes, however, operate independently of federal law, so it is possible for an estate to be subject to state tax while exempt from federal tax (e.g. New York State).

Learn what you need to about your estate, as your life changes (we hope for the better) make sure your planning reflects where you are and want to be. Consult your trusted advisors today.

1 Estates
valued in excess of $5,000,000 from 2013 will be subject to estate tax rates
varying from 20-40% (depending on amount). On January 1, 2013, the American Taxpayer Relief Act of 2012 was passed which permanently establishes an exemption of $5 million (as 2011 basis with inflation adjustment) per person with a maximum tax rate of 40% for the year 2013 and beyond.

Information provided has been prepared from sources and data we believe to be accurate, but we make no representation as to its accuracy or completeness. Data and information is provided for informational purposes only, and is not intended for solicitation or trading purposes. Please consult your tax and legal advisors regarding your individual situation.

 

Posted by Troy Barrow, LUTCF – Troy is an independent Agent practicing professionally for six years and is the owner of Arlington Insurance Planning Services, licensed in the States of New York and New Jersey. You may contact Troy at 646 580-5189 or tbarrow@aipsny.com.

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Husbands, Wives, and Retirement

Retirement — The Dream: After a lifetime of hard work — raising the kids, sweating out the bills, and building a stable and secure life — you and your spouse will be able to enjoy your golden years doing the things you’ve always dreamed about.

Retirement — The Reality: It might be years of fun and leisure, but retirement can also be a time of financial difficulties, compounded by illness and loneliness.

An overly harsh view? Perhaps, but it’s prudent to prepare for the worst while hoping for the best. That’s why married couples need to arrange for their own (and each other’s) retirement security as early as possible. Much of this preparation has to do with recognizing the need to “send money ahead” to fund a comfortable retirement. But there’s more. Couples of all ages need to map out an understanding of the three possible stages of retirement.

Three Stages of Retirement
Stage 1 — Life as a healthy, retired couple. This is the ideal, the retirement dream that most couples envision. If they’ve planned well, they’ll have the money to do everything they’ve dreamed about doing. Unfortunately, “dreaming” is about as far as retirement planning goes for too many people.

Stage 2 — Living with a prolonged illness — possibly a series of them, as health deteriorates in later years. When one partner’s health begins to fail, the other becomes the caregiver. Worse, medical bills begin to soar. Without adequate medical insurance, the financial strain can be devastating.

Stage 3 — One partner dies, possibly leaving the survivor in a financially threatened position, unless proper plans have been made.

Planning Is the Key
The key to coping with the potential financial difficulties of retirement is early planning. If you and your spouse are aware of and prepared for these three stages of retirement, you shouldn’t run the risk of outliving your retirement funds. When the two of you consider retirement, also consider the financial aspects. Whether you’re just starting out on a life together or shopping for that perfect condo on the Gulf of Mexico, you’ll want to consider the following:

• Draft a will with your attorney and keep it current. It’s the starting point for all retirement planning.
• Take time to map out a retirement game plan together. Identify common goals and determine the methods for achieving them. The closer you are to retirement, the more specific your plans should be.
• Share information and responsibilities. Make sure both of you know where all the financial records are and how to access them.
• Send dollars ahead. Know the benefits of your pension and retirement plans, and Social Security. Then begin to build up a supplemental fund of your own. Take charge of your own retirement — a large portion of retirement funds may need to come from personal savings.
• Plan to properly conserve your estate. A will can only go so far. Estate taxes may erode a substantial part of your lifetime legacy — plan ahead to make sure your heirs receive what they deserve.
• Prepare for all possibilities. Life insurance, long-term care insurance and disability insurance (during working years) can be excellent ways to protect the retirement dreams you have.
• Have trusted professionals. It’s important to develop relationships with experts in several areas — legal, tax, insurance, and financial professionals are the people who can help you map out and fund your retirement plan.

For information on how insurance and other financial products can be used to protect your retirement dreams, please contact Troy Barrow, Arlington Insurance Planning Services, at (646) 580-5189 or tbarrow@aipsny.com.