Top 10 Estate Planning Myths and Mistakes
April 9, 2015
Recently, Clive Grimbleby, Partner and CPA, and Vince Jamison, attorney at Ross W. Lee, presented "The 10 Myths of Estate Planning" during a breakout season of United Capital Modesto's event titled "This Economy and You," which featured presentations and breakout sessions providing practical advice on real estate, personal finance, health care, preparing for retirement and estate planning. The event took place at the Gallo Center for the Arts on February 25, 2014.
The Top 10 Myths and Mistakes
- An estate plan is not necessary unless I’m old or rich. You’re never too old to start planning, and by no means must you rival Warren Buffett! At all income levels, making arrangements early in life ensures that not only will your financial goals be met, but your family will avoid unnecessary stress and uncertainty in what will unquestionably be a difficult time.
- If I have a will, my family will avoid probate following my death. A will tells the world how to distribute your assets post death; however, it won’t save your family the time and expense of probate*. To do that, you must set up a trust. Trusts are legal devices which allow you to put conditions on how and when your assets will be distributed, thereby negating the need for court-supervised inventory and division of your estate.
- If I have a trust, my family will avoid estate taxes following my death. Nothing in life is certain but death and taxes, and this remains true for estate taxes. Having a trust will not eliminate them, but a properly drafted trust, knowledgeable legal and tax advisors, and creative gifting can help reduce the estate tax burden. Additionally, having a trust will help avoid the additional expense of probate fees.
- I can gift property to my children during my lifetime without worrying about taxes. Dead or alive, taxes are always something to bear in mind when gifting. While it is true that you can gift tax free, the exclusion amount caps off at $14,000 per individual for tax year 2014. If you’re trying to whittle down your estate, this can be problematic, but there are creative ways to go about gift distribution that will keep you out of the tax zone. For example, a husband can give his son $14,000 tax free and his wife can do the same, adding up to a grand total of $28,000 for that particular child. For help with your gifting plans and avoiding unnecessary taxes, we recommend talking to your attorney or accountant.
- A trust will make everything more complicated for my family. On the contrary, a trust will make everything much easier! Not only will having a trust negate the need for probate, it will also minimize the bickering and disagreements that often arise when splitting an estate. You’ll save your family time, money and possibly preserve their relationship. Trusts offer increased asset protection against creditors and lawsuits, too.
- I have to leave assets to my children outright regardless of their maturity level and my concerns. So little Johnny is 20 years old, has totaled 3 vehicles in 4 years, and can’t hold down a job for more than six months, and you have a nagging suspicion that $500,000 will not be well managed in his possession (we can’t imagine why!) A trust might be your, and his, best ally. Through the trust, funds can be disbursed when certain stipulations are met (such as Johnny reaches 30 years of age), and they can be distributed in a lump sum or slowly over the course of many years. This type of plan can also be useful in the case of special needs children whom you want well cared for in your absence.
- There’s no need to coordinate my life insurance and investments with my estate plan. Life insurance can be a powerful tool used not only to support surviving spouses and heirs, but to cover the taxes and fees associated with your death. Although insurance proceeds are almost always income tax free, estates over the applicable exclusion amount of $5.34 million may have their death benefits taxed as part of the estate. Means exist to keep your life insurance both income tax and estate tax free; a knowledgeable tax or legal expert can guide you.
- I formed a trust but have no idea if it’s funded or not. Chances are if you’re not certain, it’s probably not. To “fund”, all of your possessions must be titled in the name of your trust. An unfunded trust will not be of benefit to your trustee, as they can only control assets in the trust’s name. This means your assets will go through probate following your death and assets could end up in the hands of unintended individuals. Full and continuous funding of your living trust is essential.
- I haven’t reviewed or update my estate plan in years! There’s no hard-and-fast rule about when you should review your estate plan, but due to economic and tax code changes, a quick review should occur annually, and a thorough review should be conducted every five years. An additional review should occur after every major life event (i.e. marriage, divorce, addition of a dependent, family death, retirement, change in relationship with trustee, etc.) Doing so will give you peace of mind and ensure that all of your goals are being met.
- I have a CPA that I talk to during tax season, but I don’t feel the need to establish a tax and legal team. Not only should you establish a team to help with your estate planning, you should establish a team capable of communicating and working together to develop a plan best suited to your needs. To get started, contact a member of our Estate Planning Team at (209) 527-4220 or firstname.lastname@example.org.
*Probate is a legal process that takes place after death to establish the validity of a will. It includes identifying and inventorying the deceased person’s property, having the property appraised, paying debts and taxes, and distribution of any remaining property as the will (or, in the absence of a will, state law) directs.
New website and online client portal enhance customers’ ease of use
April 9, 2015
Grimbleby Coleman has invested in technology to embrace clients’ needs for faster, safer and more digitally available information. With a new website, Grimbleby Coleman is now able to digitally provide secure client access and enhanced security with document transfer. The new suite of website offerings is referred to as the “Client Corner” and provides one single place for clients to access electronic resources. For client convenience, secure online credit card payments are now accepted.
As President, Clive Grimbleby shares, “We hope that our clients will appreciate and utilize the convenience of our new portal service, which will allow for a more secure transfer of information while embracing our environmentally friendly ‘green’ efforts.”
A summary of the new additions include:
- Ability to deliver tax returns electronically and safely through the Client Portal
- Ability to securely share files with a Grimbleby Coleman advisor, through either the Client Portal or Share Files feature
- Access to Bill.com and Intacct accounts
- Electronic Payroll services account access
- Disclosure Consent forms to allow Grimbleby Coleman CPAs to release your information to a third party
- Accepting online secure credit card and e-check payments
“The client portal is great and provides real-time access to the important documents my accountant is sharing, with the easy capability to authorize and sign paperwork from my smart phone or iPad. I no longer worry about losing the key documents from scanning or saving to my computer,” said Mark Butler, Vice President, Joaquin’s Painting Inc.
To learn more about the Client Corner, please visit the website: http://www.grimbleby-coleman.com/clients. To utilize the portal, each user must be a registered client.
About Grimbleby Coleman:
Since 1973, Grimbleby Coleman CPAs have been committed to serving businesses, families and individuals of the San Joaquin Valley. Headquartered in Modesto, CA. Grimbleby Coleman’s specialty industries include Agriculture, Construction, Employee Benefit Plan Audits, Healthcare, and Estates and Trusts. Services include Tax, Core Accounting, Business Advisory and Assurance. For additional information, please call (209) 527-4220, email email@example.com visit www.gccpas.net.
What happens next? That question can haunt farm families when it's time to exchange ownership from one generation to the next. How can farm families and businesses plan for their children's futures and ensure financial security? Who is entitled to what? And by the way, how can you broach these emotional and potentially contentious topics without ruining a holiday dinner?
We recently hosted a farming succession event with succession planner Kevin Spafford, who gave us helpful tips he's discovered while working with hundreds of ag families. We think they'll help you, too.
Five Keys to Succession Planning:
- Plan, plan, plan! This is a big fish to fry for any farming family. Don't avoid "The Talk" because it is a touchy or fight-triggering subject. Have an honest conversation with all parties involved and discuss who will be taking ownership of the farm in the coming years. Remember: preparation will steer the farm away from failure.
- Obstacles like greed, family disharmony, control freaks, self-interest, and lack of contribution are tricky topics to air. Speak candidly about those downfalls and nip them in the bud with new solutions. Come to terms with the fact that your family and in-laws are dynamic people who make mistakes. No matter what the concern, you must focus on the BIG picture - your children's futures and the future of the farm.
- Families can find common ground and unity by writing down both small and major goals that every person can agree on. What are your family's values? Write, type or record what your family's values are so they can properly be passed down to the next generation. Make sure every family member is aware of what you stand for and what your goals are.
- Good communication with relatives is crucial to a farm, so it's important to schedule regular meetings with the entire family during the year. If a family member can't attend because of a scheduling conflict, have them attend the meeting via speakerphone or Skype. Again, make sure that notes are taken at every meeting; it doesn't matter whether they are handwritten, typed, or even recorded. If these meetings become unfriendly, make it a rule that any family member can call a timeout.
- All the planning in the world isn't going to save a business if people don't commit, so strive to have every person on board with your family's succession plan. Speak freely when issues arise and keep lines of communication open.
Grimbleby Coleman is a trusted ally when it comes to assisting with succession planning. We want every family to accomplish its long-term financial and farm goals. There's no time quite like the present when it comes to the matter of succession planning - make plans with your family today.
Ag team Lead, Partner, CPA;
Partner, CPA and Ag Team lead Jeff Bowman updated The Stanislaus Estate Planning Council about the benefits and tactical implementation of an IC-DISC for farming clients. Jeff regularly collaborates with Lou Friedman of Gianelli & Associates to execute IC-DISCs on behalf of our clients.
Colleen Meenk, Partner and CPA; Treasurer, Stanislaus Estate Planning Council
Colleen Meenk, Partner and CPA, presently serves as the Treasurer of The Stanislaus Estate Planning Council and stated that "our members of the estate planning council were very interested to learn how the IC-DISC is set up legally speaking, as well as how it functions and benefits clients from a tax perspective. There is quite a bit of crossover from tax to estate planning, so this is a top-of-mind subject, especially in our ag-focused region."
The Stanislaus Estate Planning Council was formed to share best practices for professionals involved in estate planning. Founder, Partner and CPA Clive Grimbleby attended the meeting and expressed that "Jeff represented the firm well, while demonstrating his deep expertise in completing IC-DISCs here locally."
We have several exciting announcements to share with you!
We have an updated website to better serve you. Of particular note is our Client Corner (top right corner of website), allowing you a single place to login to our various tools, including Portal, Share Files, Bill.com and Intacct. We are also now offering online credit card payments through our Client Corner.
As you are likely aware, in response to client demand we will now be delivering tax returns electronically through our secure client portal. We are pleased to offer you this option to access your information anytime through the Client Corner (Portal/Payroll Login section) of our new website. We hope you will appreciate the convenience of this new portal service, which will allow us to better secure your documents (avoiding mailing challenges) and continue our efforts to "go green." In order to utilize the portal, you must be registered; feel free to contact our office for assistance. For instructions on how to utilize the Portal, please visit the Client Corner, Instructions section.
We are also able to accept your documents electronically through our Client Portal or our Share Files program (both located in the Client Corner of the website).
We are excited about these new tools that will allow us to serve you better. Please contact us (firstname.lastname@example.org) with any questions.