Tuesday, January 31, 2012

Who will take care of your child if you die?

By: Barry G. Allen- President & CEO

As a parent you may find this question a difficult one to answer. I trust, however, you will agree it is a crucial question you must answer – and – the sooner the better. Not to answer this question leaves the fate of your “orphaned” child entirely up to a stranger, namely, a judge. Therefore, naming a guardian for minor children in a will is one of the most important stewardship actions a parent should perform.

Remember, a guardian isn’t forever. If you decide to change the guardian you can always make that change either with a codicil to your will or a new will. For example, if your child or children are young, their grandparents may be the best choice; however, when they become teenagers, grandparents may no longer be the wisest choice. The person or persons you choose do not have to be blood relatives; it should be someone you feel would be the best surrogate parent.

Geography, religion, education, family size, financial resources and lifestyle are also important factors in choosing a guardian. You might decide an aunt, your sister, is the clear choice, but she lives quite a distance away in another state. As a result, your children could be uprooted from their community, church and school at a time in their lives when they most need those relationships.

After considering all of the relevant factors, you may conclude you still have not identified the “perfect” candidate, and therefore, you continue to delay the decision. Perhaps in such cases an imperfect choice would be better than no choice at all.

And, finally, I recommend you talk in advance to the one you choose, and secure his or her consent before naming them. Although the law does not require it, it’s the prudent thing to do. Even though the overwhelming majority of guardians named in wills never have to fulfill the duty because most minors reach age 18 with at least one parent alive, it’s wise stewardship to name one. So, parents, don’t wait! And, grandparents, make sure your children have taken care of this for the sake of your grandchildren.

Tuesday, January 17, 2012

Who will inherit your estate?

By: Barry G. Allen- President & CEO

Unless you do take the appropriate steps, much of what the Lord has entrusted to you to manage, namely, your net worth – that is - your estate, may not go to those you intended it to go. 

What you may not realize is, even if you have a last will and testament, much of what you own at the time of your death may not pass according to the terms of your will. Therefore, it is of utmost importance you engage in some planning to avoid unintentionally disinheriting your intended beneficiaries from a significant portion of your estate. Such planning is consistent with the biblical admonition of the Apostle Paul found in 1 Timothy 5:8, “If anyone does not provide for his relatives, and especially his immediate family, he has denied the faith and is worse than an unbeliever.”

Examples of accounts that will not pass according to the terms of your will are accounts for which you have named beneficiaries and accounts jointly owned with rights of survivorship. Retirement accounts and life insurance policies typically have named beneficiaries. If you intend for those funds to pass to the same beneficiaries as the ones named in your will, then you must make sure you have coordinated the beneficiary designations with the provisions in your will. Bank accounts and real estate owned by married couples typically are jointly owned with rights of survivorship (JWROS). As a result, those assets pass directly to the surviving joint owner at the death of the first to die regardless of the beneficiary designation in the will of the first to die.

Let me urge those of you who have a will to take the time early in this new year to review the beneficiary designations of your retirement and insurance accounts and the way in which your other assets are titled, and make sure they are all coordinated with your intentions as outlined in your will to assure those you want to inherit your estate will inherit your estate. And furthermore, make sure your intentions are consistent with God’s intentions.

The KBF is available for private estate stewardship consultation as well as conducting a Christian estate stewardship seminar in your church. Call us toll-free and visit our website and Facebook page.

Wednesday, January 11, 2012

Federal Tax Benefits- Some Change, Some Remain the Same, One Gone

By Laurie Valentine- COO & Trust Counsel

As a new calendar year begins we see, as we do in most years, some federal tax benefits have changed, some remain the same and one has been lost.

The standard mileage rates for use of a car, van, pickup or panel truck have not changed: 55 cents for business miles; 23 cents per mile for medical or moving expense deductions; and 14 cents per mile driven in service of charitable organizations.

The 2011 payroll tax cut that reduced the Social Security withholding rate from 6.2 percent to 4.2 percent of wages has been extended by Congress until February 29, 2012.

The payroll tax cut extension includes a new “recapture” provision for employees who receive more than $18,350 in wages during the two-month extension period. A 2 percent additional income tax is imposed on the portion of such employees’ compensation earned during the period that exceeds $18,350. This is an add-on to the employee’s general income tax liability and not subject to reduction by credits or deductions.

The personal and dependent exemptions increased $100 and the standard deduction increased for all filers: $300 for married couples filing jointly; $150 for singles and married individuals filing separately; and $200 for heads of household. Tax bracket thresholds also increased for each filing status.

The unified credit against federal estate and gift tax increased to $5,120,000 from $5,000,000. The new credit amount is available to estates of those dying in 2012 and for gifts made during 2012.

One federal benefit that was not extended is the IRA Charitable Rollover which permitted gifts of up to a total of $100,000 each year directly to qualified charitable organizations from the giver’s IRA. It expired December 31, 2011.

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.