Posts Tagged ‘capital gains tax’

Income Taxation of the Third-Party Special Needs Trust

MARCH 23, 2015 VOLUME 22 NUMBER 12

Last week we wrote about how to handle income tax returns for self-settled special needs trusts. Our simple message: such trusts will always be “grantor trusts”, an income tax term that means they do not pay a separate tax or even file a separate return.

This week we’re going to try to explain third-party trust taxation. Unfortunately, the rules are not as straightforward or as simple. But that doesn’t mean you won’t understand them.

First, a quick definition of terms. A “third-party” special needs trust is one established by the person owning funds for the benefit of someone else — usually someone who is receiving public benefits. The usual purpose of such a trust is to allow the beneficiary to receive some assistance without forcing them to give up their Supplemental Security Income (SSI) or Medicaid (in Arizona, AHCCCS or ALTCS) benefits.

To figure out what to do about income taxes on the trust Jack set up, we need to consider a couple of questions:

  • Did Jack retain some levels of control over the trust while he’s still living?

If, for instance, Jack has the power to revoke the trust, or he stays as trustee, or even if he receives the trust’s assets back if Melanie dies before him, even this third-party trust may be a “grantor trust.” If it is, though, the grantor will be Jack — and he will probably pay any tax due on all of the trust’s taxable income. The trust will not need to have a separate EIN (tax number) and even if it does the actual income will usually be reported on Jack’s personal income tax return. None of the rest of this newsletter will be relevant to Jack’s income tax return.

What kinds of control might Jack have to trigger this treatment? There are volumes of suggestions and commentary written about that question, and it is impossible to answer without having spent some time reviewing the trust, its funding sources the IRS’s “grantor trust rules” and Jack’s intentions when he set it up. Some of the kinds of control might have been intentional, while others might surprise Jack (or even the lawyer who helped him draft the trust).

  • Does the trust treat principal and income differently?

Sometimes a trust might say that its income is available to the beneficiary, but not the principal (though this kind of arrangement is less common today than it was a few decades ago). In such a case the taxation of interest and dividends might be different from capital gains.

  • Does the trust require distribution of all income?

Some trusts mandate that the current beneficiary must be given all the trust’s income. That’s very rare in the case of special needs trusts (since the whole point is usually to prevent the beneficiary from having guaranteed income) but sometimes a trust might have been written before the beneficiary’s disability was known, and inappropriate provisions might still be included. If the trust does require distribution of income, it will be what the tax code calls a “simple” trust and will have some slight income tax benefit. But it also will probably need to be modified (if it can be) to eliminate the mandatory distribution language.

  • Has the trust made actual distributions for the benefit of the beneficiary?

It is a bit of an oversimplification, but usually trust distributions result in the beneficiary paying the tax due. That is true even though the distribution is not of income. Let us explain (but not before warning you that we are going to simplify the numbers and effect somewhat):

Assume for a moment that Jack’s trust for Melanie is not a grantor trust. It holds $250,000 of mutual fund investments, and last year the investments returned $20,000 of taxable income. During that year, the trustee paid $10,000 to Melanie’s school for activity fees (so that Melanie could participate in extracurricular activities, go on field trips, and have the services of a tutor). The trustee also received a $4,900 fee for the year.

Now it is time for the trust to file its federal income tax return (the Form 1041). The trust will report $20,000 of income, a $100 personal (trust) exemption, a $4,900 deduction for administrative expenses and a $10,000 deduction for distributions to Melanie. The trust will also send a form K-1 to Melanie showing the $10,000 distribution; she will be liable for the tax on the income. The trust’s taxable income: $5,000.

But what if the trustee also paid $15,000 for Melanie and her full-time attendant to spend a week at a famous theme park? As before, the trust will have a $5,000 deduction for the personal exemption plus administrative expenses, but distributions for Melanie’s benefit totaled $25,000 — and the remaining taxable income was only $15,000. The trust will report a $15,000 distribution of income to Melanie, and send her a K-1 with that figure. She will be liable for income taxes on the $15,000 and the trust will have no income tax liability at all.

We can come up with infinite variations on this story. Perhaps the trustee purchased a vehicle for Melanie, and had it titled in her name. Maybe there were payments for wages for that attendant. Each variation might change the precise nature of the deductions, reporting and taxation, but the bottom line will be (approximately) the same in each case. Distributions to Melanie or for her benefit will shift the taxation from the trust level to her individual return.

  • Is Melanie’s trust a “Qualified Disability Trust”?

Yes, it is. We slipped the controlling fact into our narrative quite a while back. Melanie receives SSI. The same would be true if she was receiving Social Security Disability Insurance (SSDI) payments. It could be true even if she was not receiving either benefit, but it probably would not be.

The effect of being a Qualified Disability Trust: instead of a $100 exemption (deduction) from trust income on the trust’s own tax return, the trust would get an exemption set at the current annual exemption amount for individuals. In 2015 that means the trust would get a $4,000 exemption — which could ultimately save the trust, or Melanie, the tax on that larger amount.

Some people resist understanding tax issues, thinking they are just too hard. We don’t agree. These concepts are manageable. We hope this helped.

Even With No Estate Tax, Some Tax May Be Due on Inheritance

JUNE 9, 2014 VOLUME 21 NUMBER 21

Our clients are often confused about whether their heirs will owe any taxes on the inheritance they are set to receive. We don’t blame them — it’s confusing. Let us try to reduce the confusion.

The federal estate tax limit was raised to $5 million and indexed for inflation in 2011. That means that a decedent dying in 2014 can leave up to $5.34 million to heirs with no federal estate tax consequence at all. It is easy to double that amount for a married couple. And in 2006, Arizona eliminated its state estate tax — so there is no Arizona tax to worry about. That means that there is simply no tax concern for anyone not worth $5 million or more, right? The 99% can pass their entire wealth to their children without fear of tax consequences, right?

Of course that’s not right — it would be way too simple if that were the case. The world — at least the political world — seems to dislike simplicity as much as the physical world abhors a vacuum. Even if your estate is modest, you need to be aware of the tax consequences of leaving money to your heirs. Here are a few of the more common ways your estate might be subject to taxes on your death:

Living, and dying, somewhere other than in Arizona. About half the states, like Arizona, have no estate or inheritance tax. But that means that nearly half of the states do have a tax; some states tax the estate, and some the recipient of an inheritance. Before federal estate tax changes in 2006, it was possible to generalize about those state estate tax regimens — they tended to look alike. But no more. You need to worry about state estate taxes if you live in one of those states with a tax, if you own real estate in one of those states, or if you have heirs who live in one of those states. The details can be mind-bogglingly complex, and they are beyond our scope here. There are plenty of online resources to look up state-by-state rules — we tend to favor this 2013 article from Forbes magazine, partly because it is engagingly titled “Where Not To Die in 2013.” The information is already a year old as we write this, but not that much has changed, and it will give you a good head start.

Owning retirement accounts. You sort of knew this one already, right? You have an IRA, or a 401(k), or a 403(b) retirement plan, and you’ve named your children (or your spouse, or your helpful neighbor) as beneficiary. But keep this in mind: if you leave, say, $100,000 in an IRA to your children, they are going to receive something more like $70,000 of benefit. With careful planning, they can delay the tax liability — but they will pay ordinary income taxes on what they withdraw. Income tax will be paid by anyone receiving the retirement account (except a charity, of course — they pay no income tax), and at their ordinary tax rates. You might have arranged to minimize your own withdrawals, and pay a very low tax rate on the income you do take out — but your daughter the doctor and your son the architect might pay a much higher tax rate and have to start taking money out of the account immediately after your death.

What can you do about that issue? If you have charitable intentions, you can name a charity as beneficiary of your retirement account. You can leave it to grandchildren, who might pay a lower tax rate (and have more immediate use for the money). You can create a trust that forces your heirs to take the money out very slowly. But at the end of that process, some significant income tax is going to be paid by the recipient of your IRA or other retirement account.

Having income-producing property at your death. Arizona does not have an inheritance tax, so there is no tax cost to receiving an inheritance. Except that sometimes there is a small cost. If you leave an estate including, say, stocks and bonds, or mortgages secured by real estate, or anything else that receives income, your estate may incur a small amount of income tax liability during its administration. That can be true even if you create a revocable living trust, since it will typically take 6-12 months to settle even simple estates. But rather than your estate paying the income tax liability, it usually is passed out with distributions to your heirs. So when your daughter hears that there is no tax on her inheritance, she may be surprised when her accountant tells her she owes income tax on a few hundred — or thousands — of dollars of that inheritance.

Having property that has appreciated since you received it. Income tax is usually due on the gain in value of an asset during the time you held it. Most people realize, however, that when you die most or all of your property receives a “stepped-up” basis for calculation of capital gains. That means that your heirs usually do not pay any income tax on the increase in value during the time you owned property.

But be careful — that is not always true. If you gave the property away before your death, or you inherited it in a trust (like a spousal credit shelter trust), it might not get a stepped-up basis. That can mean that the property your heirs receive carries a significant built-in income tax liability. It might not be due immediately on your death, but it might limit their choices about when to sell or give away the property. This is much more of a problem today than it was just a few years ago — with the proliferation of A/B (credit shelter, or survivor/decedent’s) trust planning in the past three decades, a lot of property is now held in trusts and will not get a stepped-up basis on the surviving spouse’s death.

Owning an annuity. You might have done some clever tax planning by buying a tax-sheltered annuity five years ago. But if you die holding that annuity, your heirs might have to pay the income tax on the income accumulated during the years you have held the annuity, and they might have to pay it immediately. Note that tax-sheltered annuities are not called tax-free annuities — they are just a mechanism to delay the income tax liability to a later date when, one presumes, your tax rate might be lower. If your currently-employed children step into your shoes, that assumption might turn out to have been incorrect.

Planning options.  What can you do if you fit into any of these categories? If we are preparing your estate plan, we will talk with you about the issues. Any capable estate planning attorney should be able to see whether you have issues to be concerned about. But that is why we always ask you for detailed information about your assets, your family and your circumstances. Yes, the estate tax regimen has gotten simpler — but that doesn’t meant that the decision-making is necessarily simple.

Joint Tenancy with Right of Survivorship, or Community Property?

MARCH 24, 2014 VOLUME 21 NUMBER 12

Which is better? How should we take title to our house? How about our brokerage account?

These questions are really common in our practice. The answer is actually pretty straightforward, but we do need to lay a little groundwork.

Arizona is a community property state. That means that property held by a husband and/or wife is presumed to belong to them as a community. That presumption does not apply if the property existed before the marriage, or was received by a gift or inheritance. There are special rules for property you owned in a non-community property state before you moved here. It’s also possible for a married couple to enter into an agreement that changes the nature of community property, but those agreements are relatively rare.

Historically, there was one great disadvantage to community property ownership, and one great advantage. That is, there was one advantage and one disadvantage if you assume that the couple would never get divorced. If you have substantial separate property and are considering turning it into jointly-held property, is that advisable? That question is beyond our short essay today, and the answer depends on your comfort level with your spouse and marriage. We’re not particularly accomplished marital counselors, and we don’t have any facts for your personal situation.

But assuming you and your spouse live together more-or-less-happily until  one of you dies, here are the competing considerations to holding property as community property:

Advantage: Income taxes. Upon the death of one spouse, property held as community property takes on a new “basis” for calculating future capital gains. If you have stock that you bought at $1,000 and that you now sell for $10,000 (congratulations!), you have “recognized” $9,000 of gain and will pay income taxes based on that amount. But if you held that property in joint tenancy with your late spouse, it got a step-up in basis to his or her date-of-death value; assuming the stock was worth $10,000 on that day, your income tax is only on $4,500 of the total gain. But if you had held that stock as community property with your late spouse, there would be no capital gains tax on the sale at all.

Disadvantage: Probate. Until 1995, community property could not pass automatically to the surviving spouse. That meant that a probate was often required to transfer the deceased spouse’s community property interest to the surviving spouse. Since no probate was required for property held in joint tenancy (the “right of survivorship” part of joint tenancy means the surviving joint tenant receives the property without having to go through the probate process), most married couples opted for joint tenancy rather than community property.

In 1995, the Arizona legislature made the disadvantage to community property disappear — they created a concept of “community property with right of survivorship.” That means a married couple can have it all: they can get the full stepped-up basis for income tax purposes, but avoid probate, on the first spouse’s death.

Does that mean that all property should be titled as community property with right of survivorship? Almost, but not quite. There are a handful of problems that occasionally crop up and have to be considered:

  • Not every married couple intends to leave everything to one another. You can still get the full stepped-up income tax basis and leave your share of community property to someone else — your children from a prior marriage, perhaps, or another family member. In such a case it might make sense to hold the property as “community property” (with no right of survivorship) but have a will or trust to make provisions for each spouse’s share.
  • The income tax benefit does not always appear. Note that the benefit is not a direct tax savings, but only a potential savings. If you get a full stepped-up basis on property that you then hold until your own death, you haven’t really saved any tax money. But the community property benefit just might give you flexibility — you can decide to sell property after your spouse’s death on the basis of good investment advice, rather than the tax effect.
  • The option only applies (this is obvious, but we need to say it) to married couples. “Community property” is not available to anyone else. Is it available to same-sex married couples? We think so (see our articles on the subject over the last few months here, here and here), but we might turn out to be wrong about this.
  • The benefit may not even be necessary for some assets. No growth in your brokerage account? No benefit. You invest only in municipal bonds and certificates of deposit? Minimal to no benefit. But here’s the big one: most people’s biggest growth asset is their home — and there’s already a substantial ($250,000) exemption from capital gains taxes for a single (widowed) person selling their home.
  • Have you already established a trust as part of your estate plan? You may not need to go through the analysis, since the practical effect of your plan may be the same as the benefit of community property with right of survivorship — or better. Ask your estate planning attorney to review this with you.
  • There are sometimes costs to making the change. For real estate, you will need someone to prepare a deed (you can probably get it right on your own, but it makes sense to hire a professional). In addition, there are modest costs to record the new deed.
  • This only applies to Arizona property. No problem with your brokerage or bank account — they are Arizona property if you live here. Your vacation cottage in Montana, or your Mexican condo held in a land trust, are a different matter. But if your vacation cottage is in Alaska, or California, Idaho, Nevada or Wisconsin, you might be able to do something similar. Ask a local lawyer about the possibility.
  • We need to reiterate: if you have separate property and transfer it to community property with right of survivorship to take advantage of income tax benefits, you may have made a gift of half of your separate property to your spouse. Be careful, and make sure you know what you’re doing.

What’s your bottom line? Should you change everything you own from joint tenancy with right of survivorship to community property with right of survivorship? Maybe, but your home is the least urgent thing to tackle. Your brokerage account? Absolutely. Your summer cottage in another state? Check with your lawyer and ask her (or him) to find out whether the other state has community property with right of survivorship.

Note that none of this really helps you deal with retirement accounts, IRAs, 401(k) accounts, separate property you brought from another state or your complex estate planning intentions. For those, you really need to talk with your lawyer. Also, please be clear: we do not know the correct answer if you live in a state other than Arizona — talk to your local lawyer about that.

 

Simple Estate Planning for a Married Couple

AUGUST 12, 2013 VOLUME 20 NUMBER 30

Last week we saw a married couple in our office. The couple had come to us for estate planning. They did not have children with disabilities, or spendthrift sons-in-law or daughters-in-law. Their assets were not unusual (some Arizona real estate, a brokerage account, several bank accounts). Their net worth was well under the $5.25 million that would have made us want to talk about federal estate tax issues. They intend to leave their estates to one another and, on the second death, to relatives and a few charities. In short, they were a pretty typical couple.

This couple already held everything they owned as “joint tenants with right of survivorship.” That, of course, means that on the death of the first partner, the survivor would receive everything without having to go through the probate process. Ordinarily we would have told them that they ought to have fairly simple wills and Arizona powers of attorney. We would have suggested that they transfer all their real estate and brokerage assets into “community property with right of survivorship.” That’s a slight improvement on joint tenancy because on the first death the survivor gets a stepped-up income tax basis on the entire value of assets held as community property. It is an option that is only available to married couples, and it’s usually worth considering.

Though our couple was married, they did have one legal issue that complicates their estate planning. They are both of the same gender. They got married in another state, where same-sex marriages are recognized, and then retired to Arizona. They are looking forward to enjoying the sunshine, outdoor recreation opportunities, and casual lifestyle of The Grand Canyon State. Though Arizona was once known as The Valentine State (do you know why?), our state Constitution expressly invalidates this couple’s marriage.

Or does it? They have arrived in Arizona at a time of legal ferment. The U.S. Supreme Court has invalidated a federal ban on same-sex marriages; is invalidation of Arizona’s ban (and those in place in dozens of other states) far behind? And, more importantly for our couple, what are legally married gay couples supposed to do in the meantime?

Reasonable minds can differ on what our couple should do. In fact, we are fond of saying that if you get ten lawyers in a room and discuss legal issues, you will get at least twenty firmly-held, well-reasoned opinions. But here is what we discussed with our clients:

  • Consider creating a joint revocable trust. Declare in the trust that everything you own is community property, and file any future tax returns on that assumption. The worst that could happen would be that the IRS ultimately disagrees, and then you are back where you would be if you did nothing of the sort. BUT note that the establishment and funding of a trust is more expensive (by, perhaps, a factor of three or four), and opposite-sex married couples don’t have to go through this kind of silliness.
  • At least create reciprocal wills, and guard them more carefully than opposite-sex couples need to. If a couple whose marriage is recognized in Arizona never get around to making a will, or misplace their wills, it is likely that the default rules will follow what they wrote in their wills. If the marriage is not recognized, though, a missing will could mean biological family members of the deceased spouse take in preference over the surviving spouse — or at least that litigation is required to establish the validity of the out-of-Arizona marriage.
  • Critically important for gay couples, married or not, is signing of a document directing funeral arrangements and disposition of remains. Time and again we have seen same-sex partners shut out of funeral and burial arrangements, even by family members who professed affection for the surviving partner in the hours before death. The advent of same-sex marriages might turn out to have eased that kind of pain, but it may be yet another opportunity for litigation, and at a time of high emotional fragility.
  • Go ahead and try putting real estate and brokerage accounts in “community property with right of survivorship.” Expect a little different experience between stockbrokers and the County Recorder; the former is probably used to same-sex community property declarations, and the latter probably thinks it has a responsibility to uphold Arizona’s misguided law. Do you want to be a little bit subversive and act as an agent for positive change, albeit a small change? Talk with us — we like both of those ideas.
  • Review and update your plans more often than other couples need to. We usually counsel that estate plans have about a five-year life, and we expect to actually see clients again in about 7-10 years. Same-sex married couples ought to shorten that to 3-5 years, as there will be changes AND we want to have recent documents in the ultimate time of need (that’s a not-very-disguised euphemism for “when you get sick or die”).

We were very chagrined to have to advise this delightful couple that Arizona is so unwelcoming. We really want to help them secure the benefits of their marriage in Arizona. We can accomplish almost everything that an opposite-sex married couple can get with their Arizona-recognized marriage, except for the (admittedly small) income-tax benefit of “community property with right of survivorship” titling. But we can’t really tell our couple that they have a moral or legal duty to carry the torch for change in this arena, because the reality is that the benefit is modest for most couples. That’s because:

  1. Your real estate may well appreciate during your life, but if the only real estate you own is your residence then you already get a significant income tax avoidance opportunity (up to $250,000 in gain) without regard to your marital status. Be careful about relying on this as your sole tax-avoidance technique, but for most people it means that they will not ever pay taxes on increases in their home’s value anyway.
  2. Although capital gains in your stock holdings do not have the same partial exclusion opportunity, it is still easy to avoid paying income tax on the increased value by simply not selling the stocks. That means that an “unmarried” couple like our clients would have lost flexibility, not cash — still a negative, but not with as obvious a dollar cost.

For our part, we are looking forward to a time (we hope that it is soon) when these kinds of distinctions are no longer necessary. Meanwhile, we wish the very best for all our clients who have retired to The Valentine State.

 

Estate Taxes, Crystal Balls and What Might Happen This Year

MAY 24, 2010  VOLUME 17, NUMBER 17
There is no estate tax in 2010. But there might be. When will we know? What should you do?

Estate planning attorneys have joked darkly (as a group, we often have slightly off-kilter senses of humor) that 2010 is the year to die. Because of Congressional plans first adopted a decade ago, the federal estate tax has long been scheduled to disappear this year, but to return in 2011 with a sort of taxman’s vengeance. Although estates of less than $3.5 million were exempted from estate tax last year, next year the limit is scheduled to drop to $1 million.

For years we estate planners have all reassured our clients that Congress would not — could not — let that happen. Many of us even confidently predicted what Congress would do. Most of us agreed that it was likely Congress would leave the estate tax in place, with the $3.5 million exemption figure or maybe a slightly higher number, and tinker with some of the mechanics. Don’t worry, we all said, there is no way the estate tax will return to the $1 million level — nor will it disappear altogether in 2010, even just for a year.

We were all wrong. Congress has been unable to reach any agreement about how to act, it is now 2010 and there is no estate tax.

But there might be. Speculation has swirled for months about whether Congress has the power to reinstate the estate tax now and make it retroactive to the first of the year. Even if it is legal (and it is not completely clear that it is), every passing day makes it politically less palatable. One idea now being discussed: could Congress reinstate the estate tax but let the executor of each estate decide whether to apply the “new” estate tax or the eliminated estate tax rules?

Why would anyone want to be subject to the estate tax? Because of something called “carryover basis.” As the rules now stand for the estate of someone dying in 2010, there is no estate tax but accumulated capital gains can be taxable if and when heirs sell the property they inherit — though there is $1.3 million of capital gains avoidance given to the estate of each decedent.

Let’s imagine a scenario: because you are a market genius, you bought $1 million worth of McDonald’s stock in early 2003. It is now worth about $5 million. That is the only thing you own, and you are not feeling very healthy. Now assume Congress adopts a new estate tax for 2010, sets a $5 million exemption amount, and allows your heirs to decide whether to apply it or the current, no-estate-tax system.

Your heirs actually do better with the imaginary new estate tax in place. They could inherit your entire estate with no tax consequences; under the current 2010 rules, they will eventually owe income tax on about $2.7 million of gain. Need the math? Here it is: your imaginary estate has $4 million of capital gains that would be untaxed under either 2009 or 2011 rules, but do not escape taxation in 2010. You do get a $1.3 million exemption, which leaves $1.7 million of gain that your heirs receive along with their McDonald’s shares. So if they ever sell their inherited stock, they will owe a significant (but uncertain) income tax on the capital gain.

The truth is, of course, that you didn’t buy a million dollars worth of McDonald’s stock in 2003. In fact, there is a slim likelihood that you are worth more than a million dollars at all. That is not because of recent market reverses — that is because only about one percent of Americans have that kind of net worth, according to the most common estimates. And if you are not worth a million dollars on the day you die, neither the current nor any proposed federal estate tax regimen will make the slightest difference to your estate or heirs. State estate tax rules vary somewhat, but Arizona imposes no estate tax at all, and most of the states that do would also exempt assets of less than $1 million.

But what if you are worth more than a million? What are you supposed to do? The best answer for now might be to keep an eye on what Congress is doing, expect to pay to have your estate plan updated before the end of this year, and in the meantime try to avoid heavy traffic or unhealthy eating. Yes, we know — that wasn’t very helpful advice.

How about this advice: if you are worth more than a million dollars, you should probably have your estate plan reviewed now and expect to have it reviewed again next year, or after we know what Congress is going to do. Depending on your net worth, the types of assets you own and your intended beneficiaries, it might turn out that you don’t need the 2011 return visit — but we won’t know until Congess acts.

Our Free Seminar Reviews 2010 Law Changes For Estate Plans

APRIL 19, 2010  VOLUME 17, NUMBER 13

This has been a tumultuous year for estate planning attorneys—and for their clients. The federal estate tax has been repealed, there are new rules in effect governing Roth IRAs, and heirs are facing higher capital gains liability. We don’t profess to have all the answers, but we think we have a pretty good handle on the questions.

You may agree with us when we say it would be productive to get together and review the current situation. In the next in our series of client education program, scheduled for Thursday, May 6, 2010, we hope to meet with as many of our clients as we are able, to review what is happening, what might change and what should be done.

As of January 1st, the federal estate tax has been eliminated – for this year only. What are the consequences of the repeal of the estate tax? What are the chances Congress will act this session to reinstate the estate tax? What does the tax look for 2011? What does the elimination of the “step-up in basis” mean for your heirs? Is it possible that your family could pay more in capital gains tax than they would have paid in estate tax?

We’ll talk about the (temporary) repeal of the estate tax and whether you should consider changes to your family trust or estate plan. We’ll talk about the competing proposals for changes to the estate tax exemption and the tax rate, and speculate about how likely it is that any one proposal will become law.

Recent rule changes make it easier for wealthier individuals to convert traditional Individual Retirement Accounts to Roth IRAs. Together, we’ll compare the ways in which IRAs and Roth IRAs are taxed, the distribution requirements for each, and the costs associated with making a conversion, so that you can decide what is right for you.

We know from talking to many of our clients that reducing the burden of probating your estate is a major concern. Beneficiary designations are an important tool for transferring assets to your family upon your death. Sadly, many people fail to take full advantage of this useful estate planning tool, or neglect to update their beneficiary designations when family situations (or estate plans) change.

We’ll take this opportunity to review the categories of assets that can be transferred via beneficiary designation, explain how the beneficiary designations work, and encourage you to review your existing designations to make sure that they are consistent with the rest of your estate plan.

This client education program is scheduled for Thursday, May 6th. The program is available to our clients (and family members and invitees) free of charge, but space is limited. To make reservations, telephone Yvette at (520) 622-0400. We look forward to seeing you there!

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