Choosing a Disability Insurance Policy
Disability coverage will protect you from a loss of income in the event you become disabled as a result of an accident or illness. This is an important risk to protect against because if you are under age 65, you have a much higher risk of becoming disabled than you do of dying. If your household depends on your income, you should carry this insurance on yourself. If your spouse is the primary earner in your household, you will want to purchase disability insurance on his income.
Your disability coverage policy should provide for both short-term and long-term disability benefits. It is important that you read the fine print in choosing a disability policy, paying particular attention to how a policy defines a disability. For example, some policies pay benefits if you can no longer perform your usual and customary occupation, others only pay benefits if you can
Charitable Remainder Trusts
If you wish to include a favorite charity in your a state, the chartiable remainder trust (CRT) is a very powerful estate planning tool that may enable you to reduce your liability for income and estate taxes and diversify your assets in a tax
Choosing a Business Entity Type
Many clients ask me about incorporating their businesses. It is a relatively easy and inexpensive process, but it does require some planning. Depending on the size, complexity and type of business you are engaged in, there are pros and cons to each entity type. The forms of entity that are available include the sole proprietorship, partnership, corporation, s-corporation, and limited liability company. If you don If you have a child (or a grandchild) who is going to attend college in the future, you have probably heard about qualified tuition programs, also known as 529 plans (for the Internal Revenue Code section that provides for them), which allow prepayment of higher education costs on a tax-favored basis. There are two types of programs: prepaid plans, which allow you to buy tuition credits or certificates at present tuition rates, even though the beneficiary (child) won’t be starting college for some time; and savings plans, which depend on the investment performance of the fund(s) you place your contributions in. I recommend the latter, in which you will be able to choose the type of investment vehicle for your savings. A good investment advisor can assist you with setting one up and choosing the best investments. You don’t get a federal deduction for the contribution, but the earnings on the account aren’t taxed while the funds are in the program. You can change the beneficiary or roll over the funds in the program to another plan for the same or a different beneficiary without tax consequences. Distributions from the program are tax-free if they don’t exceed the student’s qualified higher education expenses. If the program was established by a private education institution (rather than a state), the distributions are tax-free beginning in 2004. Qualified higher education expenses include tuition, fees, books, supplies, and required equipment. Reasonable room and board is also a qualified expense if the student is enrolled at least half-time. Distributions in excess of qualified expenses are taxed to the beneficiary to the extent that they represent earnings on the account. A 10% penalty tax will also be imposed. Accredited colleges, junior colleges, and area vocational schools are qualified to participate in the tuition program. Accredited post-secondary schools offering credit towards a bachelor’s degree, an associate’s degree, a graduate or professional degree, or another recognized post-secondary credential, are also eligible to participate, as are certain proprietary institutions and post-secondary vocational schools. The contributions you make to the qualified tuition program are treated as gifts to the student, but the contributions qualify for the annual gift tax exclusion, which is $11,000 for 2004. If your contributions in a year exceed the exclusion amount, you can elect to take the contributions into account ratably over a five-year period starting with the year of the contributions. Thus, assuming you make no other gifts to that beneficiary, you could contribute up to $55,000 for each beneficiary in 2004 without gift tax. (In that case, any additional contributions during the next four years would be subject to gift tax, except to the extent that the exclusion amount increases.) You and your spouse together could contribute $110,000 per beneficiary, subject to any contribution limits imposed by the plan. A distribution from a qualified program isn’t subject to gift tax, but a change in beneficiary or rollover to the account of a new beneficiary is. Wondering how to provide for the care of your pet if something happens to you? If taking care of your pets is an important estate planning goal, then there are ways you can structure your estate plan to accomplish that. In some states, you have the option of setting up a pet trust, with a trustee that can manage funds that you leave in your will for the care of your pet. Louisiana unfortunately does not provide for pet trusts, but there are other alternatives to plan for the care of your pets, such as an outright gift to a caretaker with instructions that the money is to be used for your pet’s welfare. For a great discussion of this issue, visit the Louisiana Pet Lawyer blog at http://www.lapetlawyer.com/2006/04/estate_planning_2.html.College Savings Plans
Providing for Your Pet