Blog

Choosing the Right Insurance Mix

Posted by Wesley Young @ 8:50am on March 8, 2019

Should you purchase term insurance or is permanent insurance the better buy? If you already own a term policy, should you convert it to a permanent plan, such as whole life? Or is a flexible plan such as universal life the way to go?

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Business Valuation Concepts

Posted by Wesley Young @ 10:25am on February 15, 2019

Business valuation is an important, yet complex, process that is frequently employed in a variety of business contexts. It is generally necessary to ascertain the value of a business when: selling to a third party, gifting interests to related parties, obtaining business financing, establishing a value for estate tax purposes, or establishing a value for purposes of a buy-sell agreement. Valuation is a specialty often practiced by certified specialists and experts familiar with valuation standards, concepts, industry metrics, financial principles, and additional relevant factors and variables.

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Combining Buy-Sell with Retirement Planning

Posted by Wesley Young @ 2:035pm on January 13, 2019

A Limited Liability Company (LLC) is an entity that offers business owners the liability protection of a corporation and the flexible tax characteristics of a partnership. Planners are putting LLCs to ever-greater use to help their clients address a wide variety of needs, from asset protection to estate planning. One area in which LLCs have shown themselves to be particularly useful is buy-sell planning for business owners in a manner that not only addresses the potential death of an owner, but also addresses retirement as well, in a tax-efficient manner. Business owners can utilize an LLC and cash value life insurance to formulate a comprehensive buy-sell plan.

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Using the 1040 to Find Planning Opportunities

Posted by Wesley Young @ 12:05pm on December 21, 2018

Pre-retirement. For most taxpayers, the best way to reduce current income is to establish and fund a qualified retirement plan or IRA. After deductible retirement plan contributions have been maximized, the next best thing from an investment standpoint is to find ways to defer investment income. Roth contributions may be appropriate where a current tax deduction is not as important as future tax-free income. Additionally, certain assets—such as non-dividend paying (growth) stocks, tax-efficient mutual funds and exchange-traded funds, deferred annuities, and life insurance—can defer income tax. With regard to investment income that cannot be repositioned or earned income, when possible, time the recognition of income to stay below the next highest tax bracket.

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Transferring a Life Insurance Policy to an Irrovocable Trust

Posted by Wesley Young @ 9:45am on November 18, 2018

The irrevocable life insurance trust (ILIT), when structured properly, is a staple of estate planning for high net worth families. An ILIT can provide a means to make leveraged transfers to heirs free of both estate and income tax. Ideally, the trust is drafted prior to application for and purchase of the life insurance policy that it will eventually hold as its primary asset. However, circumstances may arise which result in a need to transfer an existing policy into a trust. In this event, special measures must be taken to preserve the income and estate tax benefits of the ILIT.

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Income in Respect of Decedent

Posted by Wesley Young @ 11:20am on October 9, 2018

Income in Respect of a Decedent (IRD) is all the income a decedent would have received had death not occurred, but was not properly includible in his/her final income tax return. IRD must be included in the income of the decedent's estate, if the estate receives it. Or if the beneficiary receives the income, it is income on the beneficiary’s income tax return. IRD retains the same tax nature after death as it would have had if the decedent had received the item of income while alive. There is no step-up in basis for IRD items.

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Trust Protector

Posted by Wesley Young @ 4:50pm on September 17, 2018

A trust protector is an individual, group of individuals, or entity with specified powers over a trust. A trust protector’s powers may be extremely narrow in scope, limiting the protector to an exclusive list of actions, such as the ability to remove and replace the trustee or to make discretionary distributions of trust assets. Alternatively, a trust protector may be given broad powers, such as to modify terms of the trust, terminate the trust, or add or remove trust beneficiaries.

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Supporting Organizations

Posted by Wesley Young @ 10:25am on August 17, 2018

A supporting organization is a special type of entity that, based on its close relationship with a public charity, is itself classified as a public charity rather than a private foundation, even though it may be funded by only one donor.

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Gifts to Minors

Posted by Wesley Young @ 12:15pm on July 8, 2018

Helping a child with his or her education or support often requires gifts. Fortunately, there also may be income and estate tax savings to making gifts to minor children. Gifts can be made directly or indirectly to a child, or to a trust for his or her benefit.

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Irrevocable Life Insurance Trust

Posted by Wesley Young @ 4:30pm on June 8, 2018

An irrevocable life insurance trust (ILIT) can be a useful vehicle to hold life insurance policies outside the grantor’s taxable estate. When an insured owns a life insurance policy on his/her life, the insured controls and has ownership rights over the life insurance, but the policy will be included in the insured’s taxable estate. However, by giving up control and ownership over coverage held within an ILIT, death proceeds may be removed from the grantor's estate, reducing the grantor’s estate tax obligation and providing numerous other benefits.

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457 Plans-Deferred Compensation

Posted by Wesley Young @ 1:05pm on May 21, 2018

Section 457 of the Tax Code provides the rules that govern all NQDC plans sponsored by “eligible employers.” The term “eligible employer” is defined to include states, their instrumentalities (e.g. schools, police departments, etc.) and tax-exempt organizations, but does not include “the federal government or any agency or instrumentality thereof.” A plan sponsored by a state or local government entity does not have to meet a specific ERISA exemption.

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Qualified Personal Residence Trust

Posted by Wesley Young @ 11:15am on April 23, 2018

A Qualified Personal Residence Trust (QPRT) can allow a homeowner to transfer a residence to other family members at a reduced gift tax cost while retaining the right to use the residence for a term of years. At the end of the period, the residence is removed from the grantor’s estate. However, if the grantor dies during the term of the trust, the entire value of the residence will be included in the grantor's taxable estate. QPRTs are valuable estate planning tools for homeowners, especially if a home has significantly appreciated in value, or if the personal residence or vacation home is of substantial value.

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Series LLC

Posted by Wesley Young @ 8:30am on March 8, 2018

A Series Limited Liability Company (Series LLC) is a form of entity that allows a single “parent” LLC to partition its assets and liabilities among various sub-LLCs called “Series.” Each Series may have different assets, operations, and/or investment objectives, and the members and managers, as well as their rights, obligations, and their sharing ratios, may be varied in each Series.

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Revocable Living Trust vs. Traditional Will

Posted by Wesley Young @ 11:30am on February 13, 2018

Revocable Living Trust: No estate tax savings. Trust assets are included in the grantor's gross estate and subject to estate tax. The same estate tax planning methods are available as with a traditional will.

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Taxation of Entities

Posted by Wesley Young @ 9:05am on January 26, 2018

Certain tax issues arise when distributing assets, including cash from a business. The type of entity the business is organized as largely determines what the tax consequences will be. C corporations, S corporations, partnerships, and sole proprietorships each have certain business advantages and disadvantages and are taxed differently.

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Charitable Estate Planning

Posted by Wesley Young @ 2:20pm on December 14, 2017

Every state now has legislation authorizing the use of some form of advance health-care directive—a power of attorney, a living will, or both. For those who have not executed an advance directive, some states have "surrogate decision-making" statutes allowing family members and others to make health-care decisions for individuals who lack decision-making capacity.

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Spousal Lifetime Access Trust (SLAT)

Posted by Wesley Young @ 4:00pm on November 19, 2017

A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust that can own permanent life insurance and/or other assets. A SLAT permits the non-insured spouse to have access to the trust for distributions of principal and income during the spouse's lifetime, while continuing to prevent inclusion of the death benefit in the grantor's estate.

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Donor Advised Funds

Posted by Wesley Young @ 1:55pm on October 8, 2017

Donor advised funds (DAFs) are separate accounts of a sponsoring charitable organization established by a donor. The donor (or his designee) retains the right to make nonbinding recommendations for fund grants and investments. The sponsoring charity typically receives a small annual management fee and may assist the donor with selection of worthy grant recipients and performing due diligence on donor’s recommended grants.

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Living On the Edge

Posted by Wesley Young @ 3:25pm on June 7, 2016

One of the greatest gifts we possess is the desire to make today better than yesterday and tomorrow better than it is today. We all have a gap between what we see and what could be. This gap between where we are and where we want to be is never fully and finally satisfied. No matter how much success...

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Prepare to Receive

Posted by Wesley Young @ 1:25pm on March 30, 2016

What kind of future are you preparing to receive? Your present condition in life is not an accident. It is the direct beneficiary of the choices you have made in the past.

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Normal Vs. The New Normal

Posted by Wesley Young @ 9:30am on December 2, 2015

It was a trip to Europe in the early 80's that would birth a business idea in Howard's heart. An idea that he thought was going to be what was next when it came to coffee - a network of coffee houses similar to the Italian café. After passionately laying the idea out to his employers...

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GPS Leadership

Posted by Wesley Young @ 11:45pm on June 10, 2015

Have you ever traveled somewhere using a GPS to lead you step by step? It is great isn't it? The GPS tells you when to turn right or left and when to go straight, until eventually it says "you have arrived at your destination." Here is an interesting thought. While the GPS does a great job getting you to the destination, it does not do a great job preparing to get you there on your own the next time.

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Prepare to Receive

Posted by Wesley Young @ 9:10am on April 8, 2015

What kind of future are you preparing to receive? Your present condition in life is not an accident. It is the direct beneficiary of the choices you have made in the past.

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Where is the AX DULL?

Posted by Wesley Young @ 4:00pm on July 21, 2015

Have you ever found yourself in a place in your life that you are working hard but you don't seem to be making the kind of progress you seek?

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