If the person can prove the above information, his/her additional part time employment would be excluded as income under the Idaho Child Support Guidelines.

Payroll Taxes Increase to 6.2% from 4.2% (almost a 50% increase)

Taxpayers Making $200,000 (Single), $250,000 (Couples) Would See Payroll (Medicare) Taxes Increase an Additional 0.9% on Top of the 6.2%

Taxpayers Making $400,000 (Single), $450,000 (Couples) Would See Top Marginal Income Tax Rates Increase to 39.6% from 35%

Taxpayers Making $400,000 (Single), $450,000 (Couples) Would See Long Term Capital Gains Rate Increase to 20% from 15%

Taxpayers Making $200,000 (Single), $250,000 (Couples) Would See an Investment Surtax of 3.8% on Interest, Dividends, Capital Gains and the Like on Sources Above the Limits

Estate Tax Exemption Amount Remains at $5.125 Million (adjusted from inflation), But Rate Increases to 40% from 35%

Taxpayers Making $250,000 (Single), $300,000 (Couples) will Face Exemptions and Deductions Phaseouts

There are a few things that you need to take care of before sending your senior off to college. In essence, you need to really prepare your student for college. While your college-bound student should be emotional and mentally prepared for the challenge of higher education, there is no way to know how they are going to adapt to a new environment, especially if your student is moving far away for school.

Set Them Up for Success

The most important thing you can do is to be involved in the process of enrolling. That means going to orientation with your son or daughter. It means figuring out which courses are required in the first year, and it means helping your student get registered. You don’t have to do it for them, but be there to support the process and help problem-solve.

It’s also smart to take a self-guided campus tour. Have your son or daughter lead the way, just so they feel comfortable navigating in unfamiliar surroundings.

If you haven’t already done so, set your son or daughter up with his or her own bank account. Teach them to account for expenses in a checkbook ledger, and teach them to develop and actually use a budget.

Depending on maturity, this might also be a good time to consider a “starter” credit card with a very low limit. Certain banks, many of which will likely be marketing to students on campus, will offer low-limit cards. Such cards should be used to establish a credit file, not to indulge in rampant consumerism. Judge your student’s maturity level and ability to grasp that concept and make a good decision.

Transferring Other Responsibility

College is a good time to teach your student about taking responsibility for things other than just money and registering for classes. It’s a good opportunity for you to have a serious discussion about the responsibility that accompanies adulthood.

Things you can discuss include health care proxies and living wills. Of course you’ll want to be designated as a decision-maker, but by having these conversations, you can begin to impart a sense of what it means to function in society as a responsible adult and what it means to take responsibility for oneself. There is nothing wrong with creating good legal documents for your college-bound student. In fact, it’s a good idea and it can give you a sense of security in knowing that certain details have been handled.

It’s really never too early to have these conversations. Unfortunately, it’s often too late. While it might seem morbid to have such discussions when a “New Beginning” is at hand, the truth is that these issues need to be addressed. The very beginning is really the best time to plan for any possible eventualities.

We’ll Help You Launch

We can craft some custom documents for you and for your college-bound student. To that end, we want to have a very serious conversation with you about your estate and legacy planning. Call our office today to schedule a Family Wealth Planning Session™, and if you mention this article by name, we will waive our customary $750 fee. Use this opportunity to learn for yourself so that you can be a good role model for your future college student.

Not to worry… keep reading!

Let’s start at the beginning. An A/B trust is a marital trust system comprised of two trusts, an A trust and a B trust. The A trust is typically referred to as the marital trust, though sometimes it is a QTIP trust (just keep that in mind for now). The B trust is the trust that benefits the broader family.

Here’s how it works

1. A married couple puts the appropriate language to create A/B trusts in their last wills or revocable living trusts.

2. Assets are divided so that they are owned in relatively even proportions between the spouses. The entire A/B plan falls apart if assets are owned jointly, since then the assets pass directly to surviving spouses without the tax benefits of the A/B system.

3. When one spouse dies, the entire tax-free portion of his or her estate is transferred to the B trust. This trust can be for the benefit of the surviving spouse, children, grandchildren, and just about anyone else. It is very flexible.

4. The taxable portion of the deceased spouse’s estate is transferred into the A trust. This is a very strict trust that must benefit only the surviving spouse and no one else. By doing this, the law provides that taxes are deferred on the taxable portion until the surviving spouse passes away. When the surviving spouse dies, if his or estate is taxable—if it is greater than the available exemption—then the excess will be taxed at the applicable rate.

Where the QTIP Comes Into Play

The QTIP comes into play at step 4 above. One can elect to make the A trust a QTIP trust.

Why?

Spouses can give unlimited gifts to one another tax-free, but the law is very strictly construed. It MUST be a gift only between spouses. The QTIP election is an exception to that rule. It allows for the creation of a trust that benefits only the surviving spouse during his or her life but then passes on to other beneficiaries like children or grandchildren.

So when might a QTIP election be wise? Well, how about in a blended family situation where both spouses have children from previous marriages? You want to make sure that your spouse is cared for after you die, but then you want the remaining interest in the trust to go to your children (or to whomever else you want) rather than just to your stepchildren.

QTIP elections are the primary reason for using A/B trusts at all, at least until 2013 when the estate tax laws are likely to change and the portability of the estate tax exemption could very well go away.

Let us guide you

This is all very complicated stuff. There’s no way to explain it all in the course of one short article, but then again . . . we don’t need to, because we are here to meet with you in person, and we would very much like an opportunity to do that.

While revocable living trusts are ubiquitous in the world of estate planning, it seems that many people are still confused about them, so we are going to clear up a few commonly asked questions.

What does revocable mean?

It means that you can “undo” the trust at any time. In almost all cases, it also means that you can amend or change the terms of the trust. Revocable trusts are the ultimate in terms of flexibility, so don’t worry if circumstances change down the road and you want to make adjustments to your plan. You can make any changes you want (with legal guidance, of course).

It’s a trust, so who controls it?

You do! Revocable living trusts are also known as grantor trusts. A trust is a grantor trust when the trust creator (“grantor”) is also the trust beneficiary. In the case of revocable living trusts, grantors (often joint grantors, since married couples often form these types of trusts) retain authority over the assets as trustees. In short, that gives them full, unfettered discretion over the management of the trust.

Are assets in a revocable living trust protected from creditors?

Generally speaking, no. In the vast majority of states, spendthrift provisions—the clauses that make trust assets inaccessible to creditors—are not generally enforceable for the grantor of a grantor trust (e.g. revocable living trust). In a few states, however, grantor trusts can gain asset protection benefits. Grantor trusts in these states are termed “domestic asset protection trusts,” and they require grantors to comply with very specific rules.

Now that assets are in the trust, what can I do with them?

That answer is simple. You can do anything you want with the assets! You are the trustee, so management of the trust is in your discretion. If you have cash in your revocable living trust, you can open brokerage accounts and trade stocks, bonds, and other financial products through your trust. You also have the option to hold your cash in regular bank accounts or in overseas accounts. In short, you have full discretion over the investment decisions inside your revocable trust.

One word of caution: If you have rental real estate, you probably need to add another layer to your estate plan. The reason is that rental real estate is sometimes classified as a “risky” asset and, therefore, needs to be insulated from the other assets inside your revocable trust.

Finally, it’s not necessary to put your retirement investments (e.g. 401(k) or IRA accounts) into your revocable living trust. The better course of action is to specify beneficiaries through your retirement plan administrator, which will still allow you to avoid probate.

Pull the trigger

We have a message for you if you haven’t yet created an estate plan for yourself: One day it will be too late. Right now you have the power and the opportunity to make some difficult choices that simply shouldn’t be left to your loved ones. If you are interested in meeting with an estate-planning attorney, please call our office, mention this article by name, and request an appointment. We normally charge $500 for Family Wealth Planning Sessions™, but if you mention this article, we will waive that fee. So don’t wait. Time is yours to use or lose!

Pushing through the urge to disengage and through the resistance to be involved is difficult, but if we don’t all take responsibility for it, then we’ll end up in a place that we don’t want to be in. Think about it like this: Who is taking responsibility for our current situation? The answer is that we should all be taking responsibility, whether we played our role actively are passively.

More Reasons To Be Involved Than Ever Before

Even if the typical issues like taxes, the economy, social matters, job creation, globalization, and fiscal policy aren’t enough to motivate you to be involved, there is one issue that will probably get you off the couch this election season: YOUR MONEY!

On December 31st of this year, a law that provides very good tax treatment for estates will sunset, unless it is renewed by Congress and the President. The current law exempts from taxation estates of $5 million or less ($10 million for married couples). That means that most folks currently fall completely outside the realm of taxation.

If the current law does expire, the law that replaces it will likely tax estates that exceed the $1 million mark. In other words, the new law will almost certainly cast a much wider net, and if you are at all concerned about your wealth, then you should be paying attention to the 2012 elections and writing to your representatives in Congress. Every dollar in your bank account is a reason to be more involved than ever before.

It Can Actually Be Fun

The idea is to fully express yourself, and it’s okay to have some fun while doing it. While the issues are very serious, there’s no reason that you have to take yourself too seriously, even when you’re talking politics with friends and family. When you talk about your favorite candidates, talk about the issues and encourage your loved ones of voting age to research those issues and where the candidates stand on those issues. And smile while you’re doing it!

An election year also presents an opportunity to teach your kids about our electoral system, the reasons it exists, and the importance of being involved. Kids really do believe that they can make a difference in the world, and that idea should be nurtured, since children really are our future.

What You Can Do

Even if the beneficial estate tax laws sunset in 2012, you can take action today to prevent losing significant benefits. There are several things you can do. You can give gifts, you can create a trust, and there are some other tricks that can likely help you save on estate taxes.

If you have questions about establishing an estate plan, please don’t wait to call our offices. Time is ticking. If you call our office today and mention this article by name, we’ll give you a Family Wealth Planning Session™ free of charge . . . a $500 value, absolutely free of charge. Don’t wait. November and election time could honestly be too late.

Some Examples of Assets without Physical Form

Do you own a domain name . . . you know, a web address? How about a Facebook account? What about an easily recognizable email address or a Twitter handle? Are any of those things valuable and worth passing on to your loved ones? If so, have you made arrangements to have ownership of those assets transferred upon your death?

Those sorts of assets without form are just a few examples of intangible assets. Other examples include copyrights, patents, trademarks, and licensing agreements, to name a few. You must include these assets in your estate plan or else you risk having a court decide who gets the revenue streams derived from those assets. In an increasingly complex world, value becomes locked into all sorts of unexpected places. Think about a cellular telephone packed with customer contact information as an example. The information locked in the phone is much more valuable than the phone itself.

The value of your legacy is no different. The value of your life is not locked into or limited to your physical form. It goes well beyond the physical. Your greatest legacy is your story and what you share with your loved ones while you’re alive, so that you can see and enjoy the impact you have on your family and friends. We all shape the world in our own unique ways. What’s important is that you pass on your story so it can inspire and shape your family for generations beyond your life.

Maximize Each Moment of Your Life

It’s important to implement a comprehensive estate plan, but it’s also important to share information on how to access your estate plan and your intangible assets with someone you really trust. That way your physical and intangible assets get passed to the people you want to have them, and you never have to waste any of your valuable life worrying about what will happen after you’re gone. To the contrary, you can revel in knowing that you’ll be a positive force in your family for many, many years after your death. That’s true peace of mind, and it will allow you to live in and fully maximize each moment without fear of forgetting to pass on your important heirlooms, stories, and secrets—the things that might serve as a foundation for your family going forward.

The process of planning your estate can be daunting. The good news is that you’re not alone, because we are a law firm dedicated to helping you develop and monitor a complete plan that achieves your desired results and minimizes the obligations of your loved ones.

If you’d like to learn more about what that means, call our office today to schedule a Family Wealth Planning Session. We normally charge $750 for a Family Wealth Planning Session, but to give you an opportunity to consult with us and understand the estate planning process, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

In addition, proper estate planning may be necessary in order to reduce an estate tax burden. Protecting your property is complex. The amount of money and other assets you have will determine the type of planning best suited to your needs, so the first step of creating any estate plan is taking a thorough inventory. Depending on your needs, the management of your wealth can involve the creation of revocable living trusts, wills, lifetime gifts, and life estates.

The assets that need to be identified and evaluated when creating your estate planning strategy include investments, real property, insurance policies, and personal effects. The bottom line is that you want to do whatever is necessary to make sure that your assets are properly managed, that your wealth is distributed to your beneficiaries in accordance with your wishes, and that your tax burden (if any) is minimized.

The Process

Beyond taking an inventory, there are four basic components to estate planning:

• Property Law

It is important to understand that in the absence of estate planning, property is passed according to a succession plan mandated by law. The process of estate planning allows individuals to trump the law of succession and make sure their own wishes are fulfilled. Estate planning also relieves loved ones from the responsibility–the often painful and embarrassing process–of going before a judge and publicly discussing family matters in the event of an incapacitation.

All assets are subject to property law in one way or another, including cash, stocks, bonds, life insurance policies, retirement accounts, and of course real estate.

• Legal Documents

The two most common documents in an estate plan are wills and living trusts. These documents contain your instructions for the distribution or management of your assets. These documents name an executor who will be responsible for the execution of your instructions in the event of your death or incapacitation.

• Estate Taxes

Understanding your tax burden will help you develop a plan to minimize taxes. The amount of taxes due upon your death will depend on the value of your assets, and the laws in this area are constantly in flux. Currently, there are federal estate taxes and you may have an additional state tax burden, depending on where you claim permanent residency.

• Financial Goals and Plan Development

There are many ways to protect your assets, pass wealth, and minimize taxes. The type of property you have acquired and your financial goals will determine the methods you need to implement to protect your property. Your financial goals should include asset protection before and after death, which may involve “gifting” some of your assets during your life, either to individuals or to trusts set up so that you make sure gifts are used according to your wishes.

In order to develop and implement a plan that meets your specific needs, you should consult a knowledgeable professional. You want to choose an attorney who specializes in estate planning and has implemented systems to ensure that a comprehensive plan is created for every specific situation, not an attorney who dabbles in estate planning.

Let a Professional Guide You

You’ve worked hard to acquire the assets that you have, and you shouldn’t ever have to worry about how those assets will be passed on in the event that something happens to you. You should know that it will benefit the people for whom you care most, because with that in place, there is really nothing to worry about.

Call us today to schedule your Family Wealth Planning Session. Our Family Wealth Planning Session normally runs $750 (and we fill up fast at that rate), but this month I’ve made space for the next two people who mention this article to have a complete planning session with me at no charge. Call today and mention this article.

Reason #1: Protecting Property for Certain Beneficiaries

When most of us think about estate planning, we think about passing our property to our family and other loved ones after we die. However, sometimes our intended beneficiaries are unable to handle an inheritance. Minor children are the most common example of this. Minor children aren’t even allowed to own property in many states. In most states, a guardian is appointed to hold the property on behalf of inheriting children until they are legally old enough to own property. Even then, if you speak to parents of an 18 year old, they might cringe at the idea of their teenager receiving any large sum of money. An 18 year old with outright legal ownership of money might very well quit school, buy a sports car, and head to Hawaii. Having a living trust alleviates this problem.

Reason #2: Managing Property upon Incapacity.

If you can believe it, one major concern today is the idea of living too long! Many people worry about whether or not their parents can live in their own homes. Many worry about how their parents’ bills are being covered and about the safety of their money from other people. Unfortunately, in the case of parents who have not done adequate estate planning, the only option is to file an application with the probate court for a guardian. That’s a jaw-grinding experience, because it exposes personal and financial information to total strangers. Besides, it’s a humiliating indignity to be declared legally incompetent.

Don’t put your own children through that painful experience.

A revocable living trust solves this problem. A revocable living trust allows your successor trustee to take control whenever you resign or are incapable of handling your affairs. There is typically no interruption in the management of assets, and there is no court supervision. Revocable living trusts also enjoy a greater level of acceptance throughout the legal and financial community, and almost all states provide a broad range of statutory powers regarding the management of trust property. While it is true that a living trust isn’t effective unless your property is in the trust, a durable power of attorney will enable your attorney-in-fact to transfer property into your trust if you can’t do it on your own. Of course, we can help you with all of the details.

Reason #3: Avoiding Probate.

When you die, property in your revocable living trust will not go through probate. That’s because the living trust itself spells out who gets to take ownership of the property. It’s very similar to 401(k) plans, life insurance, annuities, IRAs, and company retirement plans. Since those properties each have a designated beneficiary, those properties do not go through probate but, rather, pass directly to the beneficiaries (often with some tax advantages).

Jointly owned property with a right of survivorship does not go through probate either. It passes automatically to the surviving joint owner. Unfortunately, relying completely on joint tenancy laws is not advisable. It’s entirely possible that both joint tenants die at the same time or that the surviving tenant passes away without having specified who should inherit the property. A revocable living trust spells that out in advance.

Estate Planning can be Daunting

The process of planning your estate can be a daunting task. The good news is that you don’t have to do it alone, because we are a law firm dedicated to helping you develop and monitor a complete plan that achieves your desired results and minimizes the obligations of your loved ones.

If you’d like to learn more about what that means, call our office today to schedule a Family Wealth Planning Session. We normally charge $750 for a Family Wealth Planning Session, but to give you an opportunity to consult with us and understand the estate planning process, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

What is a Business?

In a very broad sense, a business is something that delivers value to customers in exchange for enough revenue to make operations worthwhile. People and businesses are very similar in that both spend their time acquiring assets.

Business entities are even more similar to people. A business entity has its own legal existence. That just means that business entities can enter contracts, buy and sell goods, sue and be sued, and do just about anything else that a person can do.

The similarities end, however, when the discussion turns to continuity. A business entity, unlike a person, can exist perpetually. Sure, businesses can be wound up and their existence terminated, but they can and often do outlive their founders. The result is that business entities themselves do not need to make or have estate plans. People do, because people cannot live perpetually.

The Living Trust Solution

The irony, of course, is that businesses are owned by people. Without a plan in place for what will happen in the event of death, all assets owned by individuals, whether businesses, cash, stocks, or real estate, may become subject to the court system. In the case of assets like cash, being subjected to probate simply means that attorney fees will eat up a big part of the estate.

In the case of a business, the probate process can very well mean a total loss. That’s because probate takes a long time, and if there is no succession plan in place, then a business may not be able to operate lawfully and may have to be wound up.

It goes without saying that if you own a profitable business, you want to pass it along to those who matter most in your life. A living trust is the perfect mechanism for people, business owners and non-business owners alike to pass on their assets without involving the court system, at a significant cost savings, and with a high degree of privacy.

In the case of business owners, there are some specific benefits to using a living trust:

· The ability to pass ownership of your business without the need for court involvement, so that operations never skip a beat.

· The ability to specify a succession plan in accordance with your business’s governing documents (e.g. operation agreement or partnership agreement).

Tailoring living trusts is a big part of our legal practice. We are here to serve your needs and provide a customized solution to your estate and succession planning needs, so that you never have to worry about what will happen to your loved ones, your assets, or your business in a worst case scenario.

Call us today to schedule your Family Wealth Planning Session, and learn how we can create a trust that meets your needs. Our Family Wealth Planning Session normally runs $750, but the first two people to mention this article will receive a complete planning session with me at no charge. Call today and mention this article.