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Financial Planning

Using Trusts to Protect Inherited IRAs

Many clients have large IRAs and retirement plan accounts and need special estate planning for these assets. A 2009 study by the Investment Company Institute found that retirement plans account for 34% of all household financial assets, up from 14% in 1978; IRAs alone account for more than 10% of all household financial assets; and … Continue reading »

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Income Tax Planning with Alaska Community Property Trusts

The Internal Revenue Code (“IRC”) provides substantial income and estate tax benefits to the married residents of the nine “community property” states. A tenth state – Alaska – allows married couples to opt in to the community property regime and reap these benefits. In addition, Alaska offers the married residents of the other 40 states … Continue reading »

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Financial Planning Goals

As people make financial plans, serious consideration need to be given to unanticipated cash flow needs that may arise in the future. It can be helpful to have reminders of the types of financial needs that are common, to help us remember they types of things to plan for. Examples of Items to Consider Retirement … Continue reading »

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Healthcare Cost Lifecycle

Healthcare costs vary widely from person to person, and from household to household. While this is the case, there still exists a general cycle of healthcare expenses that follows the overall life cycle of many individuals. For financial planning purposes, this is very helpful to consider when estimating future cash-flow needs and retirement expense projections … Continue reading »

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Overview of Inflation

Inflation. It can almost always be found in some corner of the financial news. Several economic reports are released on a monthly basis to advise the public of inflationary trends. Most people have heard stories, or personally remember stories, of hyperinflation in foreign countries. There comes to mind an imagery of people carting around large … Continue reading »

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Life Insurance Policy and Retirement Plan Loans

Whole life insurance policies and retirement plans both permit contributed funds to accumulate tax-deferred. (In the case of whole life policies, only the growth of the cash value component is tax-deferred). Withdrawal of funds from either source triggers income taxation. In the case of a retirement plan, early withdrawal (before age 59 1/2) additionally incurs … Continue reading »

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When to Take Social Security Benefits

When a person should take Social Security benefits depends on considerations of one’s personal health and history of family longevity. General rules of thumb: If someone expects to live longer than 80 years old, they should delay taking Social Security until the maximum start age (70). Account for family history of longevity (is it longer?). … Continue reading »

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Avoiding Probate is NOT the Same as Avoiding Estate Tax

In the realm of estate planning often things are spoken of as being “excluded” from the gross estate or “excluded” from probate. Occasionally, some confusion arises about these two things. They are very different. Exclusion from the gross estate is a tax matter. Exclusion from the gross estate is usually a matter of ownership. If … Continue reading »

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How is the Estate Tax Calculated?

Compared to the income tax, the estate tax is fairly straightforward. Although this is a bit of an oversimplification, the estate tax is determined as follows: Value the gross estate. Value deductions and exclusions. Determine net taxable estate. Apply the tax rate. In more depth, the estate tax can be calculated as follows: Gross Estate … Continue reading »

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