Retirement planning can involve contributing money into an individual retirement account. With a traditional IRA you contribute money before paying taxes. You can deduct your contributions from your earnings when you are filing.

There is a limit regarding how much you can contribute into a traditional individual retirement account during any given year. In 2013 this amount is $5500. If you are 50 or older this maximum contribution increases to $6500.

Assets placed into the account grow without the earnings being taxed. You start getting taxed when you begin to withdraw funds. You can do this when you reach the age of 59.5 without penalties.

Under federal guidelines you must begin to take distributions when you are 70.5 years of age, and the amount you must take is based on your anticipated lifespan. Because of this there may not be anything left when you pass away to leave to your heirs.

Roth individual retirement accounts are set up differently, and they can be a useful estate planning tool. With these accounts you make contributions with earnings after they have been taxed. Because of this, you are not taxed if you extract funds from the account after retirement.

The feature of these accounts that makes them a viable estate planning tool is the fact that you don’t have to take mandatory minimum distributions when you reach any particular age. Because of this the assets that have been placed into the account can continue to grow tax-free throughout your life.

When you pass away a beneficiary or beneficiaries that you name when you open the account assumes ownership of these funds. The beneficiaries could continue to take maximum advantage of tax-free growth by accepting only mandatory minimum distributions.

These distributions are compulsory for the beneficiaries though the original account holder does not have to take money out of the account during his or her life.

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Ryan M. Denman and Dennis D. Duffy

Duffy Law Office

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

Senior citizens face some emotional challenges as they lose loved ones over the years. Loneliness can decrease your quality of life, and it can even result in depression.

The good news is that there is a ready friend available to you as a senior citizen in the form of a dog. If your physical capabilities are a factor there are a number of smaller breeds that are recommended for seniors. These animals have good temperaments and they are quite manageable.

You tend to get outside more as you exercise the dog, so this will naturally be good for your health and improve your mood. Plus, dogs attract dog lovers so you may find yourself engaged in more frequent conversations with others.

And of course the dog itself would be a fine companion.

When you are thinking about getting a dog as a senior citizen you may be convinced about the benefits. The thing that may be holding you back is the thought that you may die before the dog does.

This is a legitimate concern, but you should not let it stop you if you want to bring a pet into your home. You can provide for the dog in your estate plan by creating a pet trust.

You identify the potential caretaker, you name a trustee, and you fund the trust adequately. The trustee administers the funds in accordance with your instructions as recorded in the trust agreement.

If there’s anything left in the trust after the pet dies these funds will go to the beneficiary that you include when you create the trust agreement.

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Ryan M. Denman and Dennis D. Duffy

Duffy Law Office

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

The economic downturn that started in 2007 had some wide-ranging impact as we all know. However, one of the things that you may not think about is the effect that this debacle had on the inheritances that baby boomers will be receiving.

From June of 2006 to June of 2010 the amounts of the inheritances that were earmarked for members of the baby boomer generation went down by 13% according to research that has been conducted by the Center for Retirement Research at Boston College.

Even people who are relatively comfortable have been damaged by the altered economic playing field. Merrill Lynch conducted a survey that found that 41% of people with $250,000 or more in assets said that preserving inheritances was a priority for them. This figure was 54% in 2009.

Aside from the economic downturn there is another reason why baby boomers should be expecting lower inheritances. Due to advances in medical science and other factors people are living longer lives. According to the United States Census Bureau the group comprised of people 85 years old and older is growing the fastest.

Once an individual reaches the age of 65 there is a statistical likelihood that he or she will live to the age of 80. A 65-year-old woman has a 53% chance of living to the age of 85.

Someone who is planning for retirement should take these statistics to heart. If you have always been confident that you will be inheriting a significant sum of money someday you may want to reevaluate given the statistical trends that we are seeing.

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Ryan M. Denman and Dennis D. Duffy

Duffy Law Office

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

On the surface estate planning can seem like a purely financial endeavor. However, most senior citizens experience a gradual decline before they pass away. You are generally not completely healthy one day and dead the next.

There are certain contingencies that you face as you grow older, and comprehensive estate planning involves addressing these possibilities. This can be done in part through the creation of a revocable living trust.

The vehicle of asset transfer known as the revocable living trust is typically utilized as a probate avoidance tool. Probate is a legal process that enters the picture when you pass away in direct personal possession of property that you want distributed to your heirs.

If you just hold onto everything that you own and direct the transfer of these assets to your loved ones in your will property that is deemed probate property must pass through this process.

It can be time-consuming, and it can be costly. Plus, anyone can access the probate records and know everything about your final affairs.

When you digest the above you can see why people sometimes choose to avoid probate.

Another thing that makes revocable living trust so attractive is the fact that you can include an incapacity component. If you were to become incapacitated as a senior citizen there would be the need for a representative to make decisions in your behalf.

The state can be petitioned to decide who will make financial decisions in your behalf once you are incapacitated. If that’s doesn’t sound so appealing, you can create a revocable living trust and name a disability trustee.

This successor trustee that you are comfortable with would be empowered to handle the trust should you become incapacitated at some point in time.

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Ryan M. Denman and Dennis D. Duffy

Duffy Law Office

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

The federal estate tax and the gift tax are unified. There is a unified $5.25 million exclusion in 2013.

As a result, you could give $5.25 million in taxable gifts throughout your life without incurring any gift tax liability. However, if you did this all of your estate would be subject to the estate tax.

Aside from this $5.25 million unified exclusion there are some additional gift tax exemptions. Each taxpayer can give gifts to unlimited numbers of individuals each year that do not exceed a certain amount per gift.

In 2012 this amount was $13,000, but it has been raised to $14,000 in 2013. So, a married couple could combine their exemptions to give us much as $28,000 to any number of recipients this year tax-free.

People who are exposed to the federal estate tax may want to consider taking advantage of this annual exemption by giving gifts over an extended period of time. It should be noted that the gifts do not have to be direct cash gifts; this exemption could be used to incrementally fund certain types of trusts or distribute shares in a family limited partnership.

There are a couple of other exemptions that you should be aware of as well. If you wanted to pay for health insurance as a gift to someone you could do that without incurring any gift tax liability. You could also pay medical bills tax-free as a gift.

There is also a school tuition exemption. You can pay the tuition of any number of students equaling any sum of money without receiving a tax bill. But, this is a tuition only exemption and it doesn’t extends to books, fees, dorm expenses, etc.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

There are websites out there that sell supposed one-size-fits-all estate planning documents. However, each state has different rules so it is hard to imagine how you can have one document that would be applicable in all jurisdictions.

That being stated let’s look at some of the specific Iowa probate rules.

Very Small Estates

When you use a last will as your vehicle of asset transfer the estate generally must be probated, but there are some exceptions. Here in Iowa you may be able to skip probate by preparing an affidavit if the assets in question do not exceed $25,000 in value.

Simplified Probate

It is also possible for the executor or executrix of an estate here in Iowa to petition the court to allow for a simplified probate process. This is only possible if the gross value of the estate is not in excess of $100,000.

Full Probate Process

Other estates are subject to the full Iowa probate process when a last will is used to express the final wishes of the decedent.

Probate can be a time-consuming process, and the heirs won’t receive their inheritances while the estate is being probated. Challenges can be presented before the probate court, and this can slow things down even more.

There are expenses that go along probate as well, and these costs can erode the value of the estate.

Probate Avoidance

It is possible to use legal devices that enable asset transfers outside of probate. One of these is the revocable living trust. If you convey assets into this type of trust you can call the shots while you’re still living as you act as trustee and beneficiary.

After your death the trustee that you name when you execute the trust agreement distributes the assets to your beneficiaries according to your written instructions.

We are grateful you follow us and value your comments and input.  You Can Also Find Us Online: Facebook | Twitter | LinkedIn Thanks again.

Ryan M. Denman and Dennis D. Duffy

Duffy Law Office

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

When you are serious about having your financial affairs in order for your own well-being and that of your children you may have to balance matters of the head versus matters of the heart.

Let’s say that you were married for 25 years and you have children. You get divorced, and after a while you meet a special someone and you decide that you may want to get remarried.

It may not be easy to pop the question with an engagement ring in one hand and a premarital agreement in the other.

At the same time, you would do well to understand something about second marriages. Around 67% of them end in divorce someday.

You may insist that your relationship is different. Perhaps it is, but the people comprising this 67% probably had similar thoughts before things went awry.

Even if you want to take the chance, what about the inheritances that you have planned for your children? If the marriage did not last and your ex-spouse walked away with a considerable portion of your resources your children would be paying part of this price.

Another thing to consider is the possibility of predeceasing your new spouse even if the marriage lasts. If he or she inherits everything, where does that leave your children?

If you take the correct legal steps you can protect yourself while you make sure that everyone you love is provided for after you pass away. On the other hand, if you go forward simply hoping for the best you may be taking a considerable risk.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

The guidelines that are utilized by the Internal Revenue Service to collect estate and gift taxes were defined anew by the enactment of the American Taxpayer Relief Act of 2012.

In 2011 a $5 million exclusion was put into place with an adjustment for inflation to be added in 2012. This adjustment brought the 2012 exclusion up to $5.12 million. The maximum rate of the estate and gift taxes during those two years was 35%.

Now that we are working under the terms of the aforementioned American Taxpayer Relief Act of 2012 we have a slightly altered framework. The exclusion has remained constant, and after the latest adjustment for inflation we have a $5.25 million exclusion in 2013.

In spite of the fact that this piece of legislation is called a “taxpayer relief act,” it included an increase in the top rate of the federal estate tax, the gift tax, and the generation-skipping transfer tax to 40%.

Unlike parameters that were put into place in the recent past this framework carries no sunset or expiration date, so pundits have referred to this arrangement as being “permanent.” This is really not an accurate definition because nothing is permanent in the realm of taxation. Legislation can always be passed that alters the landscape.

In fact, these parameters are already being threatened. The president has announced his budget plans for 2014, and an increase in the estate tax is part of the plan.

This budget proposal would increase the top rate of the estate tax to 45% in 2018, and at that time the exclusion would be reduced to just $3.5 million.

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Ryan M. Denman and Dennis D. Duffy

Duffy Law Office

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

There are various decisions that must be made when you are mulling over the future distribution of your remaining assets after you pass away. Of course you have to make a list of the people who will be receiving inheritances, and then you have to decide how much to give to each individual.

Many people would say that you obviously give equal amounts to people that share the same relationship with you, such as your children and your grandchildren. If you decide to give a certain total percentage of your overall estate to your children they should divide this percentage equally because this is the only fair and equitable choice.

There is nothing inherently wrong with this logic, but some people see it a different way. They take the financial situation of each person into consideration and make certain adjustments.

This is going to result in unequal inheritances. If you decide to leave inheritances that are not equal you may want to consider making your choices known to all interested parties.

An individual who feels as though he or she was unfairly treated could take exception and contest the estate on the grounds that the decedent was not of sound mind when he or she executed the estate plan. Allegations of undue coercion or fraud could also be at the core of a challenge.

If you bring everyone together and explain your decisions all family members will know that you are indeed making your choices when you are of sound mind. They will all know that you understand exactly what you’re doing and why you are doing it, and this should eliminate the possibility of a successful estate challenge.

We are grateful you follow us and value your comments and input.  You Can Also Find Us Online: Facebook | Twitter | LinkedIn Thanks again.

Ryan M. Denman and Dennis D. Duffy

Duffy Law Office

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

Most Americans have not taken the time to put the necessary estate planning documents in place. This is a statistic that must change, because a lot of families pay a hefty price when their loved ones were remiss about making preparations for the inevitable.

This initial estate plan will include a vehicle of asset transfer, durable powers of attorney, and advance directives at minimum. This is the first step. But when you take this first step you may want to consider what takes place after someone passes away.

The documents that you execute will provide instructions regarding your wishes, but in and of themselves they are just that, a set of instructions. Someone has to complete all the hands-on tasks if these final wishes are to become concrete in reality.

This is the matter of estate administration. When you are speaking with your attorney initially about an estate plan you should also discuss the matter of estate administration.

If you choose to use a last will to direct future asset transfers the process of probate is a factor to consider. You need to select an executor or executrix to administer the estate, and this administration will be done under the supervision of the probate court.

This representative will usually need the assistance of an attorney. The intelligent course of action would be to arrange for the lawyer that you worked with to draw up the estate plan to act as the probate lawyer after your passing.

Your executor would simply take a moment to contact your attorney at the time of your passing and a fully informed professional will be at the ready to assist.

Though assets distributed through a living trust are not subject to the probate process, trust administration also requires legal guidance. So, a similar dynamic would exist if you use a trust. Your family makes a single phone call to your attorney and trust administration support is immediately going to be available.

We are grateful you follow us and value your comments and input.  You Can Also Find Us Online: Facebook | Twitter | LinkedIn Thanks again.

Ryan M. Denman and Dennis D. Duffy

Duffy Law Office

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.