Planning Potpourri


Trust in Follow Through:

It's not only for your golf swing. If you set up a trust you must review it annually with your advisers. Are you adhering to the terms of the trust? Are there trustee, investment adviser or other actions to memorialize? Have you documented compliance with the prudent investor act? Have income tax considerations been addressed? Does the trust have appropriate property or liability insurance coverage? If the trust owns life insurance have you periodically evaluated the policy performance and options? Have you documented this? Tax laws change. Have relevant changes been considered? Advisers learn new tricks. Has your trust benefited? If the trust purchased assets from the grantor have all payments been timely made? If there is a guarantee with a fee, has the fee been paid? If assets purchased include interests in an LLC or other entity do the entity documents and tax filings reflect this? If corporate stock is purchased is the trustee participating in annual meetings, signing consents, etc? No estate or financial plan is designed to sit on a shelf.


Minimum Distributions:

The penalty for failing to take minimum required distributions from your plan are huge. Have your investment manager put your plans on auto-pilot to automatically pay the minimum distributions so you don't have to remember.


Uglier Kiddie Tax:

Kids subject to the Kiddie Tax pay tax at their parents income tax rate. The goal is to prevent parents from shifting income producing assets to their kids to save income tax (hey, why make saving for college easy). Now a child over age 18, but under age 24, who is a full time student, is caught in the Kiddie Tax snare unless their earned income exceeds ½ of the amount of their support. The Kiddie Tax won't apply to the first $1,700 of unearned income (inflation adjusted). The Small Business and Work Opportunity Tax Act of 2007.

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