One of my favorite programs, the very useful and easy-to-use Mind Manager program from Mindjet recently released a Mac version of the program.
Annuities and Seniors
This Tribune article confirms my experience. Annuities are often sold to elderly client who don’t understand them. Annuities have their place, but not for older folks who pay no income tax.
Wealthy Fams behind Estate Tax Repeal
Several ultra-wealthy families were behind a lobbying campaign to eliminate the estate tax. They tried to "keep it quiet," but citizen.org issued a report found out about it.
Roth 401ks are here
IRS recently approved Roth 401ks. Employers have to amend their 401k plans to allow for them. Distributions can be taken at age 59.5 and must begin at 70.5 years old or on death or disability. The funds must be in the Roth 401k for five years before they can be distributed without penalty. All earnings on the account are tax free.
The maximum in all 401ks for 2006 $15,000.00, or $20,000.00 if you are over age 50.
These look like a great opportunity, especially for high income earners who don’t qualify for a Roth IRA.
New website for Setting Home Price
A slick new website just debuted today. The site is zillow.com
There is no "registration" so that someone can badger you to list your house. Simply enter the address and the estimated value pops up with a cool satellite picture of the house. (All your neighbor’s values pop up too!) This is a great new site. Try it.
Series LLC comes to IL
Delaware pioneered the Series LLC. It’s an LLC that can have different series within one LLC entity. In August 2005, IL approved a similar statute.
Once the bugs are worked out, a Series LLC may be the perfect vehicle for real estate investors. Each property could be put in a different Series. There would be only one filing fee for the Series LLC and the client would not have the cost and hassle of multiple LLCs to hold title to multiple properties.
One commentator does not recommend using Series LLCs in IL yet.
The IL statute says that if the correct filings are done with the state:
"then the debts, liabilities and obligations incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series only, and not against the assets of the limited liability company generally or any other series thereof…"
Here is the link to the IL statute.
Major Medicaid Overhaul Coming
It is expected that on February 1, 2006, President Bush will sign a bill drastically changing medicaid planning. Many things will change including:
1. 36 month look-back period extended to 60 months;
2. The start of the penalty period is no longer the date of the gift;
3. Recordkeeping requirements for gifts;
4. Homes over $500,000.00 in value will not be exempt.
Here is a good summary of the proposed changes.
Watch Out for Illinois Estate Tax
There is an Illinois inheritance tax. Watch out for it, because it takes a bite from large estates. I just finihsed working on an estate for a client of mine who died in 2005 with an estate of 2.0 million. His children owed $180,000 to IRS and $91,000 to the state of Illinois. The first $1.5 million of his estate was not taxed because that was the tax-free amount in 2005. So, only $500,000 of the estate was subject to tax and Illinois took almost 20% of that!
For 2006, the Illinois tax will affect those estates greater than $2.0 million any stays there until 2010 when there is no Illinois inheritance tax (or federal tax) for 1 year. Then, in 2011 the Illinois inheritance tax will affect those estates of $1 million or more. The Illinois attorney general’s web site explains this messy situation.
The solutions to this problem: Make Florida your residence if you can. It has no "state" estate tax. Try to reduce your estate to under $2.0 million with proper estate planning. GRATs, QPRTs and ILITs can help reduce large estates.
Get a Copy of Your Deed Online
Obtaining a copy of the deed to your house was always a cumbersome thing. In Cook County, you can now get a copy of your deed online for about $2. Go to www.ccrd.info You will need the PIN number of your property (from your tax bill). Type in the PIN and the property recording history will appear. Input your credit card and you can download the deed. I use this all the time and it works well, (except for a period of about two months in April and May of 2005 when it didn’t work at all). Now the bugs are worked out and it’s a great convenience.
Difference Between Wills and Living Trusts
I recently had an e-mail crisis both at home and in the office. I use SBC for dsl service and I could not send an outgoing email to anyone. It just stopped cold. Incoming email was fine. It drove me nuts.
First, I (wrongly) blamed hostway an otherwise excellent host for my web site. They said "call SBC" and I did. I know enough about technology to get by, but I was really confused by the terms they used like "ISP" and "SMTP server." I finally connected with a great technical service rep (in India) and she helped me get it all straightened out. She kept it very simple. I trusted that she knew what she was doing (and she did).
The email adventure made me relate to many of my clients who come in to talk about wills and trusts. They are usually confused, afraid of being overcharged and don’t understand the jargon. Estate planning is really confusing and I have found that I have to remind myself to stay really basic about things — what is joint tenancy, what does a will affect, what are the benefits/downsides of a trust.
In an effort to keep it simple, I put together a powerpoint presentation on the difference between wills and trusts. I use this when I meet with clients and it’s a good reminder to me that to keep things simple.