Archives for August 2013

DOMA Update: Breaking news!

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) announced today that all same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. More importantly, the ruling applies regardless of whether or not the couple lives in a jurisdiction that recognizes same-sex marriage.

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Exciting News for the Atlanta Metro Area!

The Georgia Society of CPAs and the Personal Financial Planning Division of the AICPA are sponsoring my PFS Exam Live Review & Financial Planning Boot Camp in Atlanta, GA.

A CPA/PFS is a Certified Public Accountant (CPA), who specializes in any form of personal financial planning including income tax, estate, retirement, insurance or investment planning and holds the Personal Financial Specialist (PFS) Credential. The PFS Credential is awarded by the American Institute of Certified Public Accountants (AICPA) to CPAs who have fulfilled the following requirements: two years of financial planning experience, 75 hours of financial planning education and successfully passed a national exam. Additionally, as CPAs the PFS credential holder must meet their individual state board of accountancy’s education, exam, experience, and licensing requirements.

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Estate Planning Tips for CPAs

Challenge: Shifting From Estate Tax Planning to Estate Planning

The American Taxpayer Relief Act of 2012 (ATRA) has changed the complexion of estate planning for CPAs and how they provide services in this area. So how do CPAs offer clients value in estate planning if it’s not tax planning related?

Solution: Start with your client’s tax returns.

When I meet with a client for the first time, the most important documents I examine are their last two years of tax returns. As I review them, I mentally go through The Checklist for Using the Tax Return to Identify Personal Financial Planning Opportunities. I am then able to identify and analyze the key financial and estate planning issues. Imagine, using a tax return to help clients in the areas that matter most to them—financial and estate planning!

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Pitfalls of Required Minimum Distributions

According to the Oxford English Dictionary a pitfall is a trap or a snare. Typically this trap is a pit flimsily covered or camouflaged. Another definition for pitfall is a hidden or not easily recognized danger or difficulty. Pitfall is the most appropriate word to describe the difficulty a taxpayer encounters when trying to navigate Required Minimum Distributions (RMD) and account types.

Almost everyone has heard about, or read the phrase, Required Minimum Distribution. The RMD is a requirement that taxpayers begin to take distributions from their retirement accounts. This is the government’s way of finally making you pay taxes on all those deferrals and the tax deferred growth in those accounts. The RMD is to begin no later than April 1 of the year after the taxpayer turns 70 and a half. So with that said: Are you beginning to see a pitfall?

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No Trespassing! Simple Advice for Future Protection

Many of my company’s clients have a second home in a remote location and they often ask, “Is it wise to post ‘No Trespassing’ signs?” The short answer is yes. I usually follow up with the ‘why’ in order to overcome the objections voiced by most individuals, who do not want to put forth the effort to post ‘No Trespassing’ signs properly.

In addition, the laws regarding trespassing are state specific. My comments are general in nature, and more specific guidance should be obtained from an attorney in your jurisdiction.

My concerns regarding trespass fall into two general categories: liability and conveyance. Liability is easily understood, if someone is hurt on your property, you may be liable. Conveyance is a more difficult topic to understand and is the one I routinely encounter in my practice.

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When it comes to Life Insurance and Property Settlements, Spouses Beware!

Not long ago, I received a question from an adviser. The adviser  had a client who routinely prepared her own tax returns. She had telephoned the adviser because she had received a Form 1099-R from Podunk Mutual Life Insurance Company. The Form 1099 included a gross distribution of $190,000, and the taxable amount was $147,000. The client said she had not received a check and was wondering why she had received a form 1099-R.

In 1976 her former husband purchased a whole life insurance policy with a death benefit of $145,000. He was the insured and the owner of the policy. Over the years, he borrowed against the life insurance policy for a variety of reasons. In 2001, the couple divorced. As a result of the property settlement, the former husband transferred ownership of the life insurance policy to her.

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Smoke and Mirrors: Life Expectancy and Financial Planning

In writing a financial plan there are many factors to consider. Key factors to be considered are: inflation rate— CPI, CPI-U: rate of return on investments— historic and projected; income needs and life expectancy. Lately, I have become convinced that life expectancy is the most critical of all the variables and the one most likely to derail a financial plan.

Recently, I spoke at a major financial planning conference. The attendees of the conference were the brightest and the best in the financial planning field. My topic for the conference was how to model health care expenses for retirees in a financial plan. When I shared with the audience that our firm models all of our plans to age 100 the ‘Twitter-verse’ erupted.

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