You May Be Overestimating Your Social Security Benefits

Studies have found that workers overestimate how much they will receive in Social Security benefits when they retire. Having a good understanding of the realities can help you plan for retirement. Researchers from the University of Michigan studied the expectations of workers and found great uncertainty about future Social Security benefits as well as a tendency to overestimate the amount they think they will receive. Half of the workers surveyed in the study did not know their benefit amount. The average overestimation of the benefit was $307 a month, more than one-quarter of the average forecasted benefit. The study found that as

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How to Protect an IRA From Heirs’ Creditors

When a person declares bankruptcy, an individual retirement account (IRA) is one of the assets that is beyond the reach of creditors, but what about an IRA that has been inherited? Resolving a conflict between lower courts, the U.S. Supreme Court in 2014 unanimously ruled that funds held in an inherited IRA are not exempt from creditors in a bankruptcy proceeding because they are not really retirement funds. Clark v. Rameker (U.S., No. 13-299, June 13, 2014). This ruling had significant estate planning implications for those who intend to leave their IRAs to their children. If the child inherits the

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6 Things to Ask Before Agreeing to Be a Trustee

Being asked to serve as the trustee of the trust of a family member is a great honor. It means that the family member trusts your judgment and is willing to put the welfare of the beneficiary or beneficiaries in your hands.  But being a trustee is also a great responsibility. You need to go into it with your eyes wide open. Here are six questions to ask before saying “yes”: May I read the trust? The trust document is your instruction manual. It tells you what you should do with the funds or other property you will be entrusted to

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Trusts: Revocable Vs. Irrevocable

The Fundamentals of Trusts Trusts: A Powerful Tool for Protecting Wealth Despite what the term “trust fund baby” would suggest, trusts are not just for billionaires, celebrities, or old-money families. Trusts are a powerful tool for protecting wealth, both during life and following one’s passing, even for people of less-than-Vanderbilt means. When a trust is set up, wealth—be that cash, real estate, or other assets—is removed from the control and management of you, the grantor, and put under the fiduciary care of a third party, the trustee or trustees. A trustee may be an individual, individuals, or a financial institution.

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What Is the Generation-Skipping Transfer Tax?

The estate tax gets all the press, but if you are leaving property to a grandchild, there is an additional tax you should know about. The generation-skipping transfer (GST) tax is a tax on property that is passed from a grandparent to a grandchild (or great-grandchild) in a will or trust. The tax is also assessed on property passed to unrelated individuals more than 37.5 years younger. The GST tax was designed to close a loophole in the estate tax. Normally, grandparents would leave their estates to their children, incurring estate taxes. Then the children would pass on the estates

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How an Irrevocable Life Insurance Trust Can Be Used to Avoid or Reduce the Estate Tax

With the federal estate tax exemption possibly about to be lowered, it may be time to think about steps you can take to keep your estate from being taxed. An irrevocable life insurance trust allows you to pass on money to your heirs while avoiding both the federal estate tax, as well as any applicable state estate tax. Senate Democrats have proposed lowering the current estate tax exemption from $11.7 million for individuals and $23.4 million for couples to $3.5 million for individuals and $7 million for couples. While it is unclear if this proposal will pass, it is likely

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