218 North 14th Ave, P.O. Box 317, Sturgeon Bay, WI 54235


Door County Estate Planning

Monday, December 21, 2015

Charitable IRA Rollover is now permanent

On December 18, 2015 legislation was signed into law by the President that makes the IRA rollover permanent and retroactive to December 31, 2014. Gifts transferred directly from a donor's IRA to charity at any point during 2015 will qualify as a rollover gift.  This law is also permanent, meaning future gifts will also be treated in the same way.

To recap, below is how the IRA charitable rollover works:

1. Donor must be at least 70 ½
2. Gift must come from an IRA (not a TSA or 401(k))
3. Gift must be a direct transfer from the IRA to a qualified charity
4. $100,000 aggregate limit for all 2015 direct IRA transfers to charity
5. Gifts will be exempt of federal income taxes and satisfy minimum distribution requirements
6. Transfer must take place by December 31, 2015 for qualifying 2015 IRA charitable rollover gifts


Monday, October 20, 2014

14 Things to do Before the End of 2014

The end of the year will be here before we know it, but there is still time to get some major estate planning goals accomplished. Here are ten things to do before the end of 2014.
1. Get Organized.

Would your family:
a.         Be able to find your accountant, lawyer financial advisor or insurance agent?
b.         Be able to determine if there is an advance care directive, a Health Care Power of        Attorney, or Financial Power of Attorney, and where to find them?
c.         Have the necessary passwords for your on line activities?
d.         Create an inventory of what you own and what you owe: A comprehensive list of your assets and debts, including account numbers and contact information,  stored in a convenient location.

2. Update health care documents. Everyone over the age of 18 needs a Durable Power of Attorney for Heath Care, which gives another person legal authority to make health care decisions (including life and death decisions) for you if you are unable to make them for yourself; and 2) HIPPA Authorizations, which give written consent for doctors to discuss your medical situation with others, including family members. Give copies to your agents and your doctors. Make sure they are stored in a convenient location readily accessible by your family. Hint: Not in your Safety Deposit box.

3.  Prepare a Financial Power of Attorney. Who do you want to be in control of your finances? Without a written Financial Power of Attorney, the Court will be in charge of your affairs if you are incapacitated. Do it right. A power of attorney needs to be well-thought out so it is effective when you need it most.

4. Have your estate planning done. Set the end of the year as your deadline to finally get this completed. Stop procrastinating. If it’s because you don't have an attorney, ask friends and acquaintances for referrals. If it’s because you aren’t sure who you want to be the guardian for your minor children or who you want to be your trustee or how to divide your estate, your attorney can help you decide. (You can always change your mind later. Don’t let these decisions keep you from putting a plan in place now).

5. Review and update your existing estate plan. Personal and financial circumstances will change throughout your lifetime, and your plan needs to change with them. Revisions should be made any time there are changes in your family (birth, death, marriage, divorce, remarriage), your finances, tax laws, or if a trustee or executor can no longer serve. Now is a perfect time to do this; if there are changes you want to share with family members, you can do that when they are home for the holidays. 
6.  Review/update beneficiary designations. This is especially important if your beneficiary has died or if you are divorced. If your beneficiary is incapacitated or is a minor, setting up a trust for this person and naming the trust as beneficiary will prevent the court from taking control of the proceeds.

7. Make tax-free gifts. Under current federal law, you can give up to $14,000 to as many people as you wish each year. This is a great way to reduce the size of your estate (and potentially save estate taxes) over time. Charitable gifts are unlimited. So are gifts for tuition and medical expenses, if you give directly to the institution.
8. Review/update your insurance. Check the amount of your life insurance coverage and see if it meets your family’s current needs. Consider getting long-term care insurance to help pay for the costs of long-term care (and preserve your assets for your family) in the event you and/or your spouse should need it due to illness or injury.
9. Talk to your children about your estate plan. You don’t have to show them bank and financial statements, but you can talk in general terms about what you are planning and why. The more they understand it, the more likely they are too readily accept it—and that will help to avoid discord after you are gone. You can also talk to them about your values and the opportunities that money can provide. Even better, show your values by doing charitable work together —the holidays are an excellent time for families to do this.
10. Get basic documents for your unmarried kids who are over 18. It’s a mild shock when we learn we can’t see our college kids’ grades without their permission, even though we pay the tuition. It can be much worse if they become ill. Adults (18 and over) need to have a Durable Power of Attorney for Health Care and HIPPA Authorization so you can act on their behalf in a medical emergency. And, while you’re at it, go ahead and have your attorney prepare a Simple Will and Durable Power of Attorney. Hopefully, these will not be needed but if an event does occur, you will be glad you have them.
11. Get Your Free Credit Report. We are all entitled to one free credit report every year at  https://www.annualcreditreport.com/index.action. IF you haven't gotten yours yet, make sure you do this before the end of the year.
12. Make Your Contributions to your Retirement Plan. Now is the time to get those contributions into your plan. If you have not contributed enough to get your employers full match change your contribution amount in your remaining paychecks. If you have an IRA or better a Roth IRA make your contributions. Think about a ROTH IRA conversion. See your tax advisor now to discuss this planning opportunity.
13. Make Your Charitable Contributions.  Donate to your favorite Charity. Some of the best donations are appreciated assets like stock. You also will want to clean up your clutter and give those gently used items to Goodwill.
14. Get Tax Ready. Make an appointment with your tax advisor so you can make adjustments before the end of the year. Get your bills, receipts and income items organized now. Make the upcoming tax season easier on yourself.

Monday, September 15, 2014

529 Plans

Nearly 12 Million Sec. 529 Plans

Each year the College Savings Plans Network publishes a report on Sec. 529 plans. The National Association of State Treasurers created the network to monitor these plans.

All states maintain a tax-advantaged Sec. 529 plan. Cash amounts up to five annual exclusions may be contributed to an account in one year. The funds grow tax-free and may be distributed tax-free to students for appropriate educational expenses. The account beneficiary is usually a child or a grandchild of the donor.

In September 2014, the “Mid-year Review of 529 Plan Activity” was published. It is a good picture of the current use of Sec. 529 plans to fund future education needs for children and grandchildren.

1. Investment Balance – There currently is $244.5 billion in the Sec. 529 plans. During the first six months of 2014, the total balance grew 7.6% or by $17.4 billion.

2. Accounts – The number of accounts grew from 11.1 million at the start of 2014 to 11.83 million by mid-year.

3. Account Size – The average size of a 529 plan grew 14.7% over the past 12 months to $20,671.

4. Contributions – Parents and grandparents are very interested in these plans because 44% of the accounts received an additional contribution during the first half of 2014.

Information on Sec. 529 plans is available on www.irs.gov, www.savingforcollege.com or www.collegesavings.org.

Read more: http://www.rossestateplanning.com



Monday, August 11, 2014

Inherited IRA'S are Not Creditor Protected

Over the last few years there have been a number of changes about how the IRS treats inherited IRAs and the necessary provisions if you name a trust as the IRA beneficiary. On June 12th of this year the United States Supreme Court unanimously ruled in  Clark v. Rameker  that inherited IRAs are not afforded the same protections from creditors as regular IRAs.

 I am asking all clients to review the beneficiary designation for their IRAs.

Planning Tip:
First, if you are married your spouse should be the primary beneficiary. This gives the greatest flexibility to “stretch out” the distributions from the IRA, have creditor protection, and get maximum tax deferral.

Second, if you are single the question of who to name as beneficiary is a bit more complicated. The answer depends upon the size of the IRA. If the size of each beneficiary’s IRA share is too small to make use of stretching out distributions over their life expectancy, then you should name them directly, but no creditor protection. If asset protection is a concern, then you would name a trust that you create for their benefit (Castle Trust). 

Third, In the past the Revocable Trust was named as the beneficiary to take advantage of all of the planning built into the Trust. Experience and a change in IRS rules has eliminated this opportunity. The beneficiary form needs to be updated.

Read more: http://www.rossestateplanning.com
See my Article entitled the Six Biggest Beneficiary Designation Mistakes.

Tuesday, August 5, 2014

Multiple Member LLCs Protect Family Assets

  • LLC statutory charging order provisions offer unique asset protections to family businesses.
  • Statutory conversions of corporations to LLCs can prevent the loss of family businesses to creditors or divorcing spouses of family members.
There are instances where the single-member LLC is appropriate, and these instances may include the following:

1. The Business Owner, such as a Contractor or the Owner of any Business. When a person wants to protect assets owned outside the LLC from lawsuits occurring inside the LLC.

2. The Landlord. When a person who owns rental property wants to protect his or her individually owned investments outside the rental property from lawsuits resulting from an accident on the rental property, which can be owned by an LLC.

3. The Owner of S-Corp Shares. When the client owns S-Corp stock and wants the stock owned by an LLC (for asset protection not provided by the corporation) the LLC must be a single-member LLC deemed to be a disregarded entity. If the S-Corp stock is transferred into a multi-member LLC, the S-Corp will lose its S Election.

4. The Lonely Client. When the client has no other person or entity to name as the second member of the LLC.

Individuals who want to ensure the availability of a key set of LLC statutory business asset protections called “charging order protections” should think about who holds the LLC membership rights and have a clear Operating Agreement. To explain:

1.     Most U.S. LLC acts contain provisions that provide, in effect, that if a member of a multi-member LLC (a “member-debtor-in-default”) incurs an unsatisfied judgment arising outside the LLC’s business, the judgment creditor may obtain a “charging order” against the LLC.  A charging order requires, to the extent of the judgment, that the LLC must distribute to the creditor any LLC profits it would otherwise distribute to the member-debtor-in-default.

2.     Furthermore, many state LLC acts expressly provide that these charging order provisions are the exclusive remedy for the above judgment creditors; and even as to LLC acts that are not express, extensive case law and important policy considerations support this exclusivity.  Because of charging order exclusivity, creditors cannot levy on the membership rights of member-debtors-in-default and thus become substituted LLC members.  And because they cannot become substituted members, they cannot force the sale of LLC assets in satisfaction of their judgments.  Although general and limited partnership statutes also provide charging order provisions, corporations do not.  For many individuals, charging order protections are a major reason for holding assets and conducting their businesses in LLCs rather than in corporations.

The policies underlying charging order provisions are twofold.  First, charging order provisions support the critical principle (often referred to as the “pick your partner” principle) that LLC members should not have to accept potentially disruptive creditors as co-members.  Second, these provisions thereby prevent creditors from forcing sales of LLC assets and thus depriving innocent non-debtor members of the going concern value of their LLCs.

Wisconsin defines member to be a person. WI STATS 183.0102(15) Member" means a person who has been admitted to membership in a limited liability company as provided in s. 183.0801 and who has not dissociated from the limited liability company.

Person is defined WI STATS 183.0102 (18). "Person" includes an individual, a partnership, a domestic or foreign limited liability company, a trust, an estate, an association, a corporation or any other legal or commercial entity.

Read more: http://www.rossestateplanning.com

Tuesday, July 22, 2014

The New Wisconsin Trust Code.

The new Wisconsin Trust code has gone into effect on July 1, 2014. It has updated  many of the rules and regulations for Trusts. For example:

Revocable Trusts.  Contrary to prior law, the new Code provides that a trust is revocable by the trustmaker (the person who created the trust) unless the trust instrument provides otherwise.  Not only may a trust be revoked by the Trustmaker, but also by a properly authorized agent, such as a guardian, if a Trustmaker is incapacitated.

Modification and Termination of Irrevocable Trusts.  The Code makes it easier to modify or terminate an irrevocable trust.

Decanting Trust Assets.  Subject to certain restrictions that are designed to protect the interests of beneficiaries, the trustee of an irrevocable trust (the “first trust”) may transfer trust assets to the trustee of another trust (the “second trust”), a procedure commonly referred to as “decanting.”  Trustees or beneficiaries might wish to decant the assets of an irrevocable trust to a second trust to (i) change the state law that governs the trust, (ii) change how and when beneficiaries receive distributions, or (iii) modernize an outdated trust document.

 Directing Parties/Splitting up the Duties.  The Code introduces a new concept to Wisconsin trust law by authorizing a trustmaker or a court to appoint “directing parties” who are granted powers to direct the trustee to make investment or distribution decisions.  This allows a trustmaker to divide the traditional duties of a trustee and assign them to other parties.

Trust Protectors.  The Code introduces another concept to Wisconsin trust law, (which has been around for may years in Irrevocable Trusts) by authorizing the appointment of one or more trust protectors.  A "trust protector" is a person who is granted certain powers over the trust, the trustee, or trust property.  Trust protectors are often used to modify terms of the trust for various reasons such as a change in tax laws or changes in circumstances.

Nonjudicial Settlement Agreements.  The Code permits parties interested in a trust to enter into agreements concerning any matter involving the trust without having to take court action.  Such an agreement, called a nonjudicial settlement agreement, becomes part of the terms of the trust.

Creditors' Claims.  In general, the Code preserves current law related to spendthrift provisions in a trust document and the rights of creditors to make claims against a trustmaker’s or beneficiary’s interest in a trust.  The Code also preserves current law that allows a trustee to limit the claims of a creditor of a trustmaker upon the trustmaker's death by providing or publishing notice to the creditors.  Those looking for Wisconsin to join the ranks of states with strong asset protection trust laws will not be disappointed when using Castle Trusts.  The Code makes clear, however, that a beneficiary's use of real or tangible property owned by a trust does not subject the property to the claims of the beneficiary's creditors. A Major change is that the beneficiary can be a sole Trustee and retain creditor Protection.

Certification of Trust.  A third party may rely upon a certification of trust that sets out certain required information including a statement that the trust has not been revoked, modified, or amended. The certification of trust protects the privacy of the trust instrument because it does not need to contain the private distribution provisions of the trust.

Uneconomic Trust. The WTC increases the value of what qualifies as an uneconomic trust from $50,000 to $100,000 or less as indexed for inflation. 

Read more: http://www.rossestateplanning.com

Tuesday, July 15, 2014

American Taxpayer Relief Act (ATRA) changed estate planning.

There is a new paradigm in estate planning.

The new law increases the estate tax exemption to $5.34 million per person and $10.68 million for a married couple.  Portability of the deceased spouse unused exclusion (DSUE) has been made permanent in theory.

Estate planning is now changed for estates above the $5.34 million threshold,

  • For those estates below the exemption more true planning will be the norm.
  • Applicable exclusion amount should not be used to transfer low basis assets,
    • Taxpayers should consider keeping as much as possible in order to obtain a “step-up” in basis for those assets in order to minimize capital gains taxes
  • Income tax considerations are now more important than estate taxes.
    • Can save more in income taxes by getting a basis step-up at death
  • State of Residence
    • Will give rise to very different types of estate planning because several states (19)  have a death tax.
    • You or your heirs may move to one of those states
  • Updating credit shelter trusts to maximize step-up in basis and provide broad flexibility in tax planning upon death of the first spouse should now be a priority for most married couples.  Widows and widowers who are beneficiaries of a credit shelter trust may need to consider distributing assets out of the trust – assuming the trust allows for this  – or decanting the trust to a more flexible trust if it does not.

    Read more: http://www.rossestateplanning.com

    Tuesday, July 8, 2014

    The Estate Planning World has Flipped

     There is a new paradigm in estate planning.

    Three major changes have profoundly affected the estate planning world.

    1.  The 2012 American Taxpayer Relief Act (ATRA) with its increase in the estate tax exemption to over $5,000,000 as the lead game changer. Estate Taxes have been eliminated for most Americans.

    2.  Wisconsin last December passed the new Uniform Trust Code which took effect on July 1, 2014.

    3.  The US Supreme Court Decision in Clark v. Rameker that inherited IRA's are not creditor protected.

    I will give each of these items further discussion in upcoming articles.

    My Recommendation:  All  trusts and estate plans prepared prior to 2012 should be reviewed

    Read more: http://www.rossestateplanning.com

    Monday, April 7, 2014

    Estate Plan Review Triggers

    Planning Tip: Like your car, your estate plan needs regular "servicing." Set aside a specific time every year (your birthday, anniversary, family gathering) to review it. Become familiar with it. Keep it current so it will perform the way you want when you need it.

    The following situations should trigger the need to seek immediate legal help to review or revise the family's current estate and tax plan: 

    • Serious or life threatening illness
    • Illness or death of a spouse
    • Contemplation of marriage, or remarriage
    • Birth, death or illness of parent, sibling, child or grandchild
    • Disability of parent, sibling, child, grandchild, or a dependant or handicapped dependant that may require special considerations or a special needs trust
    • Marriage or divorce of a child or grandchild
    • Your chosen Health Care Agents can no longer serve
    • Business has grown (or declined) significantly in the last few years
    • Personal net worth has grown (or declined) significantly in last few years.
    • Your successor trustee, guardian or administrator moves, becomes ill or changes mind
    • Retirement
    • Move to a new State
    • Buy Property in another state
    • Estate Tax Law Changes
    • You change your mind

    This list is not meant to be all inclusive and are only some of the situations that may require revisions to an estate plan.

    Read more: http://www.rossestateplanning.com

    Monday, March 31, 2014

    How to Prepare for Your Retirement

    How to Prepare for Your Retirement

    According to Pew Research Center, approximately 26 percent of the U.S. population is made up of the generation nicknamed the “Baby Boomers.” Born between the years 1946 and 1964, the oldest Boomers are turning 66 this year, while the youngest Boomers are expected to turn 66 by the year 2030. A growing concern for this generation is how to prepare for retirement. Currently, the average 65-year-old Boomer woman has a life expectancy of just past 87.5 years, while the life expectancy for a 65-year-old Boomer man is 86. Boomers need to plan not only for their finances directly following retirement, but also for how manage their well being.

    It’s never too soon to explore how to extend your income and begin to plan for a comfortable retirement, which not only means fiscal health, but emotional well-being as well.  Some tips include:

    Get Fit

    Before you step out of the workforce, and potentially away from your employer-mandated health insurance, make sure you are in good health. Get checked up and signed off by your doctor on any issues you may have and get the ‘a-okay” before embarking on your retirement travel or activities.

    Hobbies, Interests and Passions

    Working full-time doesn’t leave much time to pursue what really is of to interest you. But when you are retired or semi-retired, the extra time and energy may allow you to pursue your dreams. Now is the time to travel, learn a foreign language or musical instrument, spend time with your grandchildren, sign up for volunteer work or launch the teaching career by offering courses thru Learning in Retirement.

    Easy Does It

    Speaking of ‘semi-retired” don’t think you have to stop all work, all at once. Many almost-ready-to-retire workers start by negotiating a downgrade in work time, from full-time to half-days, or a three-day week.  Approach the new scheduling options as a way to make things work best for you and your employer. Transition the new employee into your old role, stay on as a consultant – just be sure to work out the details of your proposal before you approach your employer.

    Get Social

    Plan to feel a little lost when you are no longer seeing coworkers on a regular basis. Now is the time to become more active in your community and find ways to connect with others. Chances are, there are numerous organizations and groups where you can make a contribution.

    Monday, March 24, 2014

    Your Medicare card: Go ahead, leave home without it!

    What's in seniors' wallets? Most likely, a Medicare card that leaves you vulnerable to scams and fraud.

    It's a peculiar anachronism in this era of digital insecurity: Social Security numbers are printed on every Medicare card, and the back of the card instructs seniors to carry it with them at all times. (Medicare's identification number is called the Health Insurance Claim Number, but your HICN is your Social Security number.)

    If a card falls into the wrong hands, the result could be identity theft and fraudulent benefit claims submitted to the Medicare system on your behalf. While the federal government has recognized the risk for years, and bills have been introduced in Congress to compel removal of the numbers, nothing much has happened.


    Unfortunately, the problem isn't likely to be solved anytime soon. Retired Police Chief Dennis McIntosh and current Officer of Security for Baylake Bankoffers these tips for keeping your Medicare card out of the hands of fraudsters.

    -- Don't carry the card.Hesuggests that you ignore, for now, Medicare's guidance to carry your card at all times. It's unnecessary in most cases.

    Most healthcare providers have their patients in their electronic systems and know how to bill you. But if you really don't feel comfortable not having it with you, then make a photocopy and scratch out all but the last four digits, and carry that instead. That should be enough to meet their billing protocols.

    Seniors worry that they'll need their cards in an emergency. Emergency personnel can't refuse to provide care until you show an insurance card. It's true that you'd need to come up with billing information before leaving a hospital, but that doesn't mean you won't receive care.

    Despite Medicare's insistence that seniors keep their cards with them at all times, the Social Security Administration cautions beneficiaries not to routinely carry their cards "or other documents that display your number," in a guide to identity theft prevention (1.usa.gov/1ccg0sa).

    -- Give the number in advance. If you make an appointment with a new healthcare provider, provide your HICN over the phone, suggests Leslie Fried, director of the National Center for Benefits Outreach and Enrollment at the National Council on Aging. "It really shouldn't be necessary to carry your card into the doctor's office in this day and age," she says.

    -- Review your Medicare summary. Your quarterly summary notice lists all procedures and services you have received under Part A (hospitalization) and outpatient services (Part B). If you see something that isn't familiar, it could be a sign your identity has been breached.

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