Archive for the 'Estate Planning' Category

Daily living – from dawn to way past dark – is so demanding that we often give little thought to the future. Did you know that that on average, a person

– Works more than 40 years to accumulate worldly wealth
– Spends 10 years trying to hold onto what has been earned
– But does not even spend 2 hours planning how to distribute what is left behind

In fact, every year as many as 70-80% of adult Americans who die do so without letting their own voice be heard in the form of their personal Will. Why do so many fail to take advantage of all that a Will makes possible?

You might say, “we’re not dealing with a mansion, here!”

It’s true; many people look at a modest home and a few investments and think they aren’t enough to bother with the time and expense of a Will. This is often a costly assumption. Many folks who have lived in the same home for 30 or 40 years are shocked when they add it all up. So, even people of modest means can leave tax issues behind for loved ones to unravel.

This is just one example of why so many may postpone the creation of a Will. But no matter what the reason, a little time and thought today can result in significant savings and unnecessary emotional stress later. In addition, the creation of a personal Will is the way you give voice to your faith in the Lord, your hopes for your family, and the values you wish to leave behind. It gives lasting voice to your legacy . . . a voice that can echo for Eternity.

Village Missions will provide to you free of charge, “A Guide to Planning Your Will and Trust.” This guide will help you to think about how you want your assets to be distributed at death and assist you in gathering the information your attorney will need to prepare a will and trust to carry out your wishes. It will save you time and money when you consult with your attorney.

Ask for your copy by e-mailing us, or calling 1-800-617-9905 x 112.

Every year Americans contribute to IRAs, 401k plans, and other retirement plans, building resources that help them secure a comfortable retirement.  And, thanks to careful, diligent saving, many families are waking up to an attractive nest egg in their retirement years.

Statistics indicate that most people take only minimum withdrawals from their IRAs for a number of years after age 70 1/2.  As a result, many retirement fund balances do not diminish until retirees are well into their eighties, if at all.  This means that retirement accounts are often a substantial portion of the estate at death.

The most common way retirement funds are transferred is by naming a child as the beneficiary of the retirement plan.  And while this seems on the surface to provide children with a nice inheritance, transferring retirement funds in this manner can result in the highest levels of taxation, dramatically shrinking the actual amount realized by family.

For example, a $1 million dollar IRA could be subject to federal estate tax, state inheritance tax, and federal and state income tax.  The net result of this taxation can easily approach 60% . . . leaving only 40% for the children . . . or $400,000 of the original $1 million plan.

Retirement accounts are excellent tools for amassing funds, but make poor inheritance plans.  However, there is good news.  Some careful planning can result in minimum tax and maximum returns. 

This report discusses the pitfalls that both IRA owners and beneficiaries can fall into, and the techniques to avoid them.  Please note – the planning techniques described in this report are not all applicable to Roth IRAs.  Consult your tax or legal advisor for advice regarding your specific situation.

A Typical Estate

Let’s take a look at the Estate of Mary Smith.  Mary has a typical estate of $500,000 which includes a $50,000 IRA.  Mary has been a faithful supporter of a charity and desires to leave a tenth of the estate to that charity.  

The typical plan is to allow the children to receive the IRA under the IRA beneficiary designation and to transfer $50,000 by will from the remaining assets to the charity.  Since the estate assets generally include a home, perhaps stocks and bonds, cash and CDs and land, the assets given to charity would come from the type of assets that could be given to family with no income taxation to the family.  That is, assets that enjoy a “step-up” in basis. 
However, IRAs do not receive a “stepped-up” basis.  The recipient will pay income tax on the entire amount of IRA assets when they are distributed.  The chart illustrates that the IRA passed to the children has shrunk by $15,000, or 30%.  Larger estates that exceed estate tax limits will experience more significant tax impact.  The important point to keep in mind from this simple illustration is that even the smallest estates will experience a tax impact if the distribution of retirement assets is not handled carefully.

Continue for “A Better Solution”….  (more…)

If you wish to remember Village Missions in your will, here is some suggested wording that you can share with your attorney:

“I hereby bequeath to Village Missions, an Oregon nonprofit corporation, with a tax identification number of 43-6043847, (insert percentage of estate or dollar amount) to be used for (insert name of ministry project) or for general purposes as determined by the board of directors.”

Our full legal name and current contact information is:
 

Village Missions
PO Box 197
696 E Ellendale Ave
Dallas, OR  97338
(503)623-4107
Toll Free (800) 617-9905
www.Village-Missions.Org 

We are a 501(c)(3) nonprofit charitable organization incorporated in the state of Oregon.
  Our IRS Tax Identification Number is 43-6043847.
 Contact us to receive your free Guide to Planning Your Will and Trust which will help you collect and organize the information you will need to furnish the attorney making your will. This workbook will greatly speed the process and save you attorney fees.