Outright vs. Trust. Although the gifts can simply be made outright, it is recommended that the gifts be made in dynasty gift trust structure. This will provide the donee(s) with a certain level of divorce, creditor and transfer tax protection that they could not provide for themselves.Dynasty Gift Trusts. The advent of the current version of the generation-skipping transfer (GST) tax coupled with an increased desire to achieve creditor protection and revised state laws have drastically increased the use and popularity of long term – or perpetual – dynasty trusts. By retaining the property in a dynasty trust (and making it a spendthrift trust), the property will remain the separate property of the beneficiary (e.g., a child or other descendant) – and protected from attachment in a property settlement should there be a divorce or by a judgment creditor in a lawsuit. In addition, the trust assets and all appreciation would not be includible in the estates of any future … [Read more...] about The Clock is Ticking: Should You Act Before December 31, 2012?
Income vs growth stocks
Know the value of your business – and how a buyer might value it. There is not one standard metric used to value a business, and a valuation may take a variety of factors specific to the business or its industry into consideration. Often, buyers will be willing to pay a multiple of earnings or revenue, though the specific multiple will vary based on industry, size, growth potential, as well as other factors. Sellers, who at times tend to overvalue their company, could benefit by engaging a professional valuation firm for an independent perspective. Also, having multiple years of financial statements that have been audited by a reputable CPA firm will enhance the reliability of any buyer price proposal and reduce the likelihood of the buyer lowering its initial offer once it gets “under the hood.” … [Read more...] about Founder’s Decision to Sell: Considerations for Obtaining Sustained Value for Life’s Work
Executive BranchFederal ReserveFed Indication that QE Could Slow Down and End by Mid-2014 Causes Market DropOn June 19th, the Federal Reserve announced that, though for the time being it will continue its monthly bond buying, it will begin to reduce purchases later in 2013 and end the accommodative monetary policy by mid-2014. While for now purchases will continue at $85 billion per month with interest rates remaining low, Bernanke, speaking after the Federal Open Markets Committee meeting said that “if the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year.” Bernanke’s comments caused the U.S. stock market to fall dramatically the following day, with the Dow Jones down 353.87 points, or 2.3 percent at close on top of a 200 point dip immediately following Bernanke’s comments. Likewise, the Nasdaq was down 78.56 points, or 2.3 … [Read more...] about Financial Services Legislative and Regulatory Update – Week of June 24, 2013
Furthermore, the conversion makes more sense if it results in more overall wealth. Earnings in a traditional IRA are tax-deferred, but not tax-free upon withdrawal and earnings in a Roth IRA are not only tax-deferred, but are also tax-free provided certain requirements are met upon withdrawal. While permanently avoiding tax is generally better than merely deferring it, whether the value of deferring tax on the amounts transferred to the IRA plus the after-tax return on the current tax savings related to the traditional IRA contributions exceed the permanent tax savings on the Roth IRA’s earnings depends on several variables, including the individual’s current and future tax rates, expected earnings of the IRA, and time horizon before withdrawal. For example, if an individual (age 45, in the 15% tax bracket, with an existing traditional IRA valued at $50,000 and consisting wholly of deductible contributions and earnings therefrom) plans to make annual … [Read more...] about Dissecting the Roth IRA Conversion: Is Conversion Right for Everyone?