2012 Charitable Giving Strong Despite Weak Economy

Charitable giving is a great way to help others and the community. It’s a staple topic of conversation among estate planning attorneys, accountants, and related financial professionals, as well as fresh on the mind of many affluent individuals, families, and small business owners. CNBC has this article encouraging people not to use the uncertain 2013 tax situation as an excuse for procrastinating, but rather to map out charitable giving scenarios and choose one to follow this year. And the WSJ has this blog post about the 2012 Bank of America study of high net worth charitable giving with some encouraging findings, including that affluent individuals and families are still giving generously to charities despite the difficult economy we’re all grappling with.

Charitable giving can be done through a trust, a donor advised fund (at the Greater Kansas City Community Foundation, the  National Christian Foundation, or the Jewish Community Foundation, for instance), or through individual or corporate donations. Even amidst the economic turmoil and uncertainty we’re all experiencing, we encourage everyone to honor their favorite charities or causes and remember those less fortunate this holiday season in their personal charitable giving – remember, we’ve all been blessed immeasurably and sharing with others is caring for them. If you want to set up a trust or donor advised fund for your charitable giving, our law firm, Johnson Law KC LLC, can help. Give us a call (913-707-9220) or email (steve@johnsonlawkc.com) to schedule a convenient appointment.

(c) 2012, Stephen M. Johnson, Esq.

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Inheriting in Trust

Yahoo Finance and CNBC have this interesting story about Whitney Houston’s daughter. The famed pop star’s daughter is set to inherit a large fortune from her late mother’s estate, but some of the daughter’s advisers are concerned that the inheritance will make her a target for creditors. Inheriting in trust is better than inheriting money outright, as it protects your inheritance from creditors and divorcing spouses, among other unpleasant surprises in life. Inheriting in trust using a discretionary trust gets into an estate planning buzz word, asset protection. Asset protection is using an entity, usually a trust or LLC, to hold an asset and protect it from your creditors, divorcing spouses, spendthrift kids, or others who might squander your money. Asset protection and discretionary trusts are not allowed under Kansas law, but Kansas and Missouri residents can use a Missouri trust to protect assets for generations. Missouri (unlike Kansas) welcomes dynasty trusts – irrevocable trusts designed to pass wealth across families for generations – and allows them to last indefinitely. For clients who anticipate receiving more than $400,000 in inheritance, we recommend a beneficiary defective inheritor’s trust (BDIT or inheritor’s trust). An inheritor’s trust allows you to protect the assets and keep them off your balance sheet for tax purposes (so you don’t have to worry about estate, gift, or generation-skipping taxes) while having the assets available for your use and enjoyment.

Our firm, Johnson Law KC LLC, is experienced counseling clients on all aspects of estate planning, asset protection, and inheritor’s trusts. If we can serve you or your family with these sensitive matters, please call (913-707-9220) or email us (steve@johnsonlawkc.com) to schedule a convenient appointment.

(c) 2012, Stephen M. Johnson, Esq.

Time to Sell?

Thinking of selling your business, transitioning it to the next generation, retiring, or moving onto the next great entrepreneurial idea? Bloomberg has this interesting article noting that many financial advisors are recommending that their wealthy clients sell their businesses by the end of 2012 to avoid tax hits in 2013. As we approach the expiration of the Bush tax cuts (on the estate, gift, generation-skipping, and capital gains taxes), the Obama tax cuts (on payroll taxes), and massive planned spending cuts to the federal budget on the one hand, and a potentially historically close election on the other hand, we’re entering a perfect storm. While no one can predict what will happen with taxes, the economy, or the election, if you’ve got a business and you’re looking to sell, now’s a good time to get out and enjoy the fruits of your labor. The article also recommends some good ideas on stock options, capital gains, and Roth IRAs.

Our firm, Johnson Law KC LLC, has the depth and breadth of legal and business expertise to advise you and your family on arranging a sale or other exit from your small business, as well as serving you and your family’s estate planning needs. If we can serve you, please call me (913-707-9220) or email me (steve@johnsonlawkc.com) to schedule a convenient appointment.

(c) 2012, Stephen M. Johnson, Esq.

Roth IRA: Good for All Ages

Smart Money has this article recommending that parents set up a Roth IRA for their teenage children. Good idea: it’s never too soon to help your family, loved ones, or friends get a jump on saving for their future. And once your child reaches retirement age, they’ll be able to take IRA distributions tax free, a major Roth advantage. If our firm, Johnson Law KC LLC, can help you with your estate planning needs or provide you with more information about retirement savings strategies, or any of your legal needs, give us a call (913-707-9220) or email us (steve@johnsonlawkc.com) to schedule for a convenient appointment.

(c) 2012, Stephen M. Johnson, Esq.

What’s Your Number?

The WSJ has this interesting article about retirement planning. What’s your number? The Wall Street 2: Money Never Sleeps clip features a Wall Street mogul replying with a smile to the young trader’s proverbial “how much is enough” question “more.”

In the WSJ article, Fidelity Investments suggests that folks should save “at least 8 times their final annual pay” for basic retirement living expenses. So if your final salary before retirement is $100,000 per year, you need $800,000 in your IRA or Roth IRA to retire. For younger workers, like myself, Fidelity says that by 35, aim for “an amount equal to your annual pay.” So if you earn $50,000 a year by 35, have $50,000 in your IRA. Fidelity says by 45, you want “three times your salary,” and “five times your salary by 55.” If you’re like me, those numbers are daunting, but it’s not too late to start saving and investing to enjoy your future with your family. After all, compound interest is the 8th wonder of the world. Harnessing the power of compound interest in your IRA or Roth IRA will explode your retirement savings as you go through life.

The WSJ article rightfully recommends “The more you make, the more you need to save, not just in dollars but as a multiple of your final salary.” Lifestyle and standards of living also matter – one person’s comfortable life is another’s posh lifestyle or “slumming it” for yet another person. You don’t have to only use an IRA or Roth IRA for your retirement – stocks, downsizing your house, and other options work fine too – but IRAs and Roth IRAs are among the most tax efficient investments for funding retirement, so you’ll be working less and making more, paying fewer taxes, getting more bang for your buck.

If you don’t have an IRA or Roth IRA, you’re letting a golden opportunity to save and invest money tax free for retirement slip away. If your employer matches your IRA contribution, contribute at least as much as your employer’s match amount. We work with a number of top retirement, insurance, and investment professionals around KC to provide holistic estate planning services for you and your family’s unique needs. If Johnson Law KC LLC can help you review or implement your estate plan, give us a call (913-707-9220) or email (steve@johnsonlawkc.com) at your convenience. We’d love to work with you no matter where you’re at in the process – young professional just getting started in life, mature worker plugging away at work and home, or retired couple trying to leave a legacy for the grandkids. You want our firm’s legal and business expertise on your team and you can rely on our 50 years of combined experience for all your legal needs.

(c) 2012, Stephen M. Johnson, Esq.

Final Boarding Call: Estate Planning in 2012

The WSJ has this helpful article reminding folks to get their estate plans in order, especially for families with $1 to 5 million+ in assets. As we ring in the new year in a few short months, if Congress hasn’t done anything on the tax front, you’ll see several changes hitting your pocketbook. The Bush tax cuts will expire – so you’ll owe tax if you (1) die with more than a $1 million estate, if you (2) give more than $1 million to family or friends, or (3) if you do more than $1 million generation skipping transfers (e.g. grandparents to grandchildren). Portability is also set to expire, so you won’t be able to use your predeceased spouse’s estate tax exemption. The Obama payroll tax cut will also expire – so you’ll have less take home pay from each paycheck. Like the historically low interest rates now in play, we may not see estate and gift tax laws that allow you to pass on your hard-earned wealth and leave a legacy for your family again in our lifetimes.

Echoing the anecdotes offered in the WSJ article, our firm has been very busy lately, and our appointment calendars are filling up with work, as are the other professionals we work with to best serve clients with a holistic approach. If you need to do any estate planning, business, or real estate work before 2013, it’s time to act. If you have a small business, real estate interests, or other potentially hard-to-value assets, you may need to have an appraisal done before structuring your business succession plan, or setting up a family limited partnership (FLP) or family LLC. Appraisers’ schedules are filling up, so if you’re thinking of passing on your business or real estate holdings, it’s time to bite the bullet and get it done. Your family will thank you and you’ll be able to enjoy the holidays with the peace of mind that everything’s taken care of according to your desires.

We offer a free 1/2 hour consultation, convenient and affordable flat fee billing, and we’re a simple phone call or email away at (913) 7o7-9220 or steve@johnsonlawkc.com. At Johnson Law KC LLC, we look forward to serving your legal needs.

(c) 2012, Stephen M. Johnson, Esq.