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Estate Planning Case Study: Too Much Life Insurance?

Posted by Larry Jones on Jun 20, 2019 9:30:00 AM

The Scenario:

Jack Howard, age 70, and his wife Marcy, 64, are very comfortable financially. Jack made a large amount of money from a series of successful patents obtained through the years. The value of Jack and Marcy's estate is calculated to be $11.9 million. Included in that amount will be a $1 million life insurance payout, from a policy on Jack, to Marcy. The life policy currently has a cash value of $700,000

Unfortunately, that million dollars will be included in Marcy's estate when she dies, and it will push her over the Estate and Gift Tax exemption, which is $5.45 million for the first to die, and then is rolled over to the surviving spouse, for a total exemption of $10,900,000. That will leave an estate tax bill of around $400,000. Now, that amount can easily be obtained from the life insurance payout. But is there a better way?

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Topics: Case Studies

Case Study - 81 Year Old Widow

Posted by Larry Jones on May 28, 2019 9:30:00 AM

Although the person I'll reference in this study is fictional (I'll call her Mary), her circumstances are certainly not. Let's take a look at Mary's financial situation:

Mary is a widow, and her husband Bud passed away five years ago. Her financial situation is still very similar to what it was before Bud died.

She has $350,000 in a brokerage account, which is an IRA, and another $50,000 in bank CD's. She has an accountant who does her taxes, a financial advisor from her bank, and an attorney who has helped her prepare legal documents, such as her will. She has no trusts. Her sources of income are social security, a survivors pension from Bud, and a 4% drawdown each year from her IRA. 

One afternoon Mary has a stroke. She loses the ability to speak and all mobility.

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Topics: Case Studies

You Can Make College Planning Easy

Posted by Larry Jones on Jan 31, 2019 9:30:00 AM

A Brain is a Terrible Thing to Waste

Should your child go to college?

My parents were part of the "greatest generation." Dad was a veteran of WWII (and not happy about it. He was on the verge of being called up from a minor league baseball team to play in the majors when Uncle Sam summoned him instead...) and came home in 1945 to a world finally at peace. In those days, a college education was considered a sure ticket to success. That's not so much the case today. It really depends on your field of study as to what your opportunities will be, and many college graduates come into the workforce only to discover that it's very difficult to find employment using their particular field of study. Many skilled trades pay as much or more as could be earned with a degree. I'm of the opinion that college isn't for everybody, and many are in college who shouldn't be.

Nevertheless, most parents have the hope that their little angel or angel-ette will one day discover the cure for cancer, bring about world peace, or colonize Mars, and to do that, they're going to need to attend college. 

And so the next question is: how are we going to pay for it?

Read More

Topics: Case Studies, College Planning

Case Study: Can You Reduce Taxes With a Charitable Remainder Trust?

Posted by Larry Jones on Dec 20, 2018 9:30:00 AM

The Scenario

Carl and Joanna are amateur investors who have done very well. They have some growth stocks that have gone from $100,000 just a few years ago to $200,000 today. These are not their only assets, and their estate is fairly large. They have two grown children, and also feel very strongly about leaving a positive legacy behind through some charitable giving. Being alumni of the University of North Carolina at Chapel Hill, they are also rabid basketball fans and have great disdain for Duke University. They'd like to take some income from the growth of these stocks, but there is a tax issue. If Carl were to sell his stock portfolio he'd owe capital gains taxes of 20%, or $20,000. Being a Tarheel, that rubs him the wrong way.

Is there a good way out of this dilemma for Carl?

Read More

Topics: Case Studies

A Case Study in Estate Tax Reduction

Posted by Larry Jones on Oct 30, 2018 9:30:00 AM

The Scenario:

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Topics: Case Studies

Estate Planning Case Study: Too Much Life Insurance

Posted by Larry Jones on Jun 21, 2018 9:30:00 AM

The Scenario:

Jack Howard, age 70, and his wife Marcy, 64, are very comfortable financially. Jack made a large amount of money from a series of successful patents obtained through the years. The value of Jack and Marcy's estate is calculated to be $11.9 million. Included in that amount will be a $1 million life insurance payout, from a policy on Jack, to Marcy. The life policy currently has a cash value of $700,000

Unfortunately, that million dollars will be included in Marcy's estate when she dies, and it will push her over the Estate and Gift Tax exemption, which is $5.45 million for the first to die, and then is rolled over to the surviving spouse, for a total exemption of $10,900,000. That will leave an estate tax bill of around $400,000. Now, that amount can easily be obtained from the life insurance payout. But is there a better way?

Read More

Topics: Case Studies

Case Study - The 81 Year Old Widow

Posted by Larry Jones on May 24, 2018 9:30:00 AM

Although the person I'll reference in this study is fictional (I'll call her Mary), her circumstances are certainly not. Let's take a look at Mary's financial situation:

Mary is a widow, and her husband Bud passed away five years ago. Her financial situation is still very similar to what it was before Bud died.

She has $350,000 in a brokerage account, which is an IRA, and another $50,000 in bank CD's. She has an accountant who does her taxes, a financial advisor from her bank, and an attorney who has helped her prepare legal documents, such as her will. She has no trusts. Her sources of income are social security, a survivors pension from Bud, and a 4% drawdown each year from her IRA. 

One afternoon Mary has a stroke. She loses the ability to speak and all mobility.

Read More

Topics: Case Studies

Making College Planning Easy

Posted by Larry Jones on Jan 30, 2018 9:00:00 AM

girl-1741925__340.jpg

A Brain is a Terrible Thing to Waste

Should your child go to college?

My parents were part of the "greatest generation." Dad was a veteran of WWII (and not happy about it. He was on the verge of being called up from a minor league baseball team to play in the majors when Uncle Sam summoned him instead...) and came home in 1945 to a world finally at peace. In those days, a college education was considered a sure ticket to success. That's not so much the case today. It really depends on your field of study as to what your opportunities will be, and many college graduates come into the workforce only to discover that it's very difficult to find employment using their particular field of study. Many skilled trades pay as much or more as could be earned with a degree. I'm of the opinion that college isn't for everybody, and many are in college who shouldn't be.

Nevertheless, most parents have the hope that their little angel or angel-ette will one day discover the cure for cancer, bring about world peace, or colonize Mars, and to do that, they're going to need to attend college. 

And so the next question is: how are we going to pay for it?

Read More

Topics: Case Studies, College Planning

Case Study: Reduce Taxes With the Charitable Remainder Trust

Posted by Larry Jones on Dec 14, 2017 9:29:00 AM

The Scenario

Carl and Joanna are amateur investors who have done very well. They have some growth stocks that have gone from $100,000 just a few years ago to $200,000 today. These are not their only assets, and their estate is fairly large. They have two grown children, and also feel very strongly about leaving a positive legacy behind through some charitable giving. Being alumni of the University of North Carolina at Chapel Hill, they are also rabid basketball fans and have great disdain for Duke University. They'd like to take some income from the growth of these stocks, but there is a tax issue. If Carl were to sell his stock portfolio he'd owe capital gains taxes of 20%, or $20,000. Being a Tarheel, that rubs him the wrong way.

Is there a good way out of this dilemma for Carl?

Read More

Topics: Case Studies

A Case Study: Estate Tax Reduction

Posted by Larry Jones on Nov 2, 2017 9:30:00 AM

The Scenario:

Read More

Topics: Case Studies

What you don't know can hurt you!

As a fiduciary I am required to always act in your best interests, and as a professional planner, it's my job to be familiar with all types of possible solutions and financial vehicles. In short, I have no interest in selling any particular product or any affiliation with a particular company. I work for my clients.

Are you:

  • concerned that your tax bill is too high?
  • tired of watching your nest egg decline by significant amounts every 5-7 years?
  • wishing you could find more free time?
  • looking for ways to help protect yourself against litigation that could destroy all you have worked for?
  • worried that Uncle Sam is going to enjoy your retirement more than you are?

If any of the above describes you and you'd like to get a question answered then just click the button below and we'll be in touch.

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