Month: December 2012

The 12 Days of Tax Deductions

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This will be a short post, and it’s a slight departure from our normal subject matter, but it ties in tangentially with our normal focus. On December 10, NPR’s Morning Edition started a limited, daily segment on its weekday program.  The segment addresses the various tax deductions and credits that are subject to the ongoing fiscal cliff negotiations and that could disappear on January 1.  In light of the holiday season, the series is named, appropriately, 12 Days of Tax Deductions.  It began on December 10 and concludes tomorrow, Christmas Day.  The first segment can be found here – http://www.npr.org/2012/12/10/166858489/12-days-of-tax-deductions, and all subsequent entries can be found by going to the Morning Edition page here – http://www.npr.org/programs/morning-edition/ – entering the date of the show, and scrolling down to the tax story. If we get a good response to this, we can post more about the tax deductions, but in the meantime, have a great listen, and Happy Holidays!

529 Plans

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Today’s post shifts focus some.  Estate planning seeks to pass on as large or robust an estate as possible.  Prudent estate planning also ensures that those charged with preserving and growing that estate are up to the task.  529 plans accomplish both.  They allow savings for a specific, educational purpose, and they minimize tax liability along the way. What’s a 529? 529 plans are named after Section 529 of the Internal Revenue Code, which was passed by an act of Congress in 1996.  There are two types of plans: prepaid and savings.  A prepaid plan lets a taxpayer pay for tuition at today’s rates, rather than paying tuition at the then prevailing rates years later when the taxpayer’s child actually attends college.  It’s a hedge against inflation generally and the ever increasing cost of college specifically. A savings plan is one in which the taxpayer makes contributions to a plan or a fund, with the expectation that the investment in the fund appreciates in value over time.  In some ways, it’s similar to several other savings …

Testamentary Trusts – Trusts When You Can’t Be There

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More trusts?  Yes, but only a little bit more.  So far, we’ve discussed only trusts that can be established during the grantor’s lifetime.  This entry concerns trusts that only come into existence once the grantor is deceased. A testamentary trust is a trust created by a person’s will.  No will, no testamentary trust.  The person creating it is the testator, not the grantor.  A grantor sets up a trust during his or her lifetime.  Here, where the trust is established after death, it is established by a person who executed a will – a testator.  To do, the testator’s intent to set up the trust must be clear in the testator’s will.  This is important –  if the intent to create a trust or to grant powers to a trustee in the will is not clear, then there will be no trust. Testamentary trusts can be used for tax purposes, or they can be used for other purposes, such as making a gift to someone under a will who is under some legal incapacity, e.g.: …