Month: January 2022

Taking Care of Grandchildren through Your Estate


grandparents

Taking Care of
Grandchildren through
Your Estate

Part of your legacy planning is considering how to leave assets to your grandchildren.  This can be a very challenging topic and requires careful thought and planning.

Some Key Questions to Consider:

  • How to select who gets what? This can be the most challenging part of inheritances, especially to avoid resentment caused by improper planning. For example, leaving a family business might seem like a great long-term investment and income stream to one grandchild, yet a burden and poor liquidity to another.
  • How to handle sentimental assets? A will can be an effective instrument to specify assets among grandchildren.
  • What about cash vs. real estate vs. IRAs? Liquidity is a consideration for real estate, as well as potential ongoing use of the property by your heirs (i.e., will they keep it as investment, which may mean relatively low near-term income, or sell it and reap the proceeds?). Consider taxation when gifting different assets to specific heirs, as IRA accounts are subject to taxes.
  • Are control systems needed? You can set up a trust that distributes your gifts over a period of years or as the grandchild ages (e.g., at ages 20, 25, and 30), or for specific purposes, such as education, wedding or home purchase.
  • What age? If you don’t create a trust, any funds you leave to your grandchildren are overseen by the child’s parents or guardians until they turn 18 or adulthood (per state), then given to the child.
  • What about the parents? Be sure to speak with the grandchild’s parents. For example, giving large sums of money may actually not be appreciated by the parents, who could feel it hinders a child’s character development.

Distribution Tools

Grandparents who wish to help their grandchildren have several ways to leave assets, with selection depending on your circumstances and the size of your estate.  Consult with a lawyer for the proper strategy for any of these methods:

  • Will - A will can specify what assets are distributed to which grandchildren. However, a will alone doesn’t always provide for a trust’s specific financial instructions, probate avoidance, and taxes.
  • Trustee appointment – You can appoint a trustee to hold and manage your grandchild’s estate portion, aimed at ensuring that funds are used as intended by the grandchild or for the grandchild’s benefit.
  • Trusts – A trust distributes your assets with more control over use of funds. There are various ways a trust can be set up, including irrevocable trusts and revocable trusts.
  • Conservatorships – These should be considered if your grandchild is unable to manage the basic necessities of life (food, clothing, and shelter) without relying heavily on others.
  • Custodial accounts – If you’d like to set aside funds now, a Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account allows gifting of stocks, bonds, and other securities to grandchildren. However, the grandchild can take possession of these custodial accounts as soon as allowed by state law, and you have no control over use of funds.
  • Investment and bank accounts – Transfer of these accounts at your passing are a simple solution for small amounts or if you don’t need to divide a complex estate among grandchildren.
  • Educational savings accounts – College savings accounts in a grandchild’s name allow gifting college-earmarked funds before death that grow as tax-deferred in investments.
  • Retirement accounts – If your grandchild has earned income, you may be able to contribute to their Roth IRA.

Experts in Grandparent Estate Planning

The above information just touches the surface of the delicate issue of estate planning for the benefit of your grandchildren. At Mortensen & Reinheimer, PC we have decades of experience helping grandparents with estate planning.  Please contact Mortensen & Reinheimer, PC at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.

Tamsen-Reinheimer_150x100

About the author:
Tamsen R. Reinheimer, Attorney, is a Certified Specialist in Estate Planning, Trust & Probate Law (The State Bar of California Board of Legal Specialization). She has significant experience in all aspects of estate planning, trust administration, and probate. Contact Tamsen at tamsen@ocestateplanning.net.

Tax Moves that Put $ Back in Your Clients’ Pockets – Refs

Tax Moves that Put
$ Back in Your Clients’ Pockets

solutions

Do your clients need a new tax accountant?

In the December 2021 issue of “Solutions” we offered several ideas to wrap-up your clients’ 2021 tax situation for maximum advantage.  Looking forward, what can your clients do to best take advantage of tax planning opportunities in 2022?  

TIME FOR A CPA CHANGE?

As 2021 tax returns will be due soon, your clients might be asking for a referral to a quality tax accounting firm.  If so, we’d like to invite you to consider MyCFO! (Click here for 10 questions to ask when interviewing a tax accountant.)

Of primary importance at this time, yes, we do a fantastic job in tax preparation.  But MyCFO does so much more than tax compliance – we are exceptional in tax planning.  This combination is why so many businesses choose MyCFO to prepare their 2021 tax returns.

REAL-LIFE METHODS TO MINIMIZE TAXES

Here are examples of how MyCFO helps our clients as their tax accountant: (click each for extended details)

  • Avoiding surprises on quarterly payments: This busy client came to MyCFO needing a better way to project quarterly tax payments. MyCFO set up a system, which we review annually with the client, in which specific percentages of rent and contractor income are set aside on a monthly basis just for taxes.  This system has proven to be accurate within a few percentage points, so that the client doesn’t have to worry about tax payments (read more here).
  • Multi-state taxation: In this case, our new client (with online sales comprising 25% of revenues) did not really view themselves as a multi-state business, but the state tax authorities told them otherwise. We helped them out of the current tax situation with minimal fines, then built them an effective an affordable framework for future compliance. 
  • Mergers and acquisitions tax planning – Multiple partners, loans, and tax implications: Our client’s ownership was composed of three partners, each with loans to the business of different amounts, and an earnout (i.e., part of purchase price paid in future) to consider. Not only was a calculation of payout/partner necessary but structuring the deal to minimize taxes for the sellers was of paramount importance (read more here).
  • Succession planning – Impact on taxation: In Massachusetts, the estate tax applies to estates worth more than $1 million, with the progressive rate toping out at 16%! Recently, our client came to us with several succession planning issues but one of the most important was fairness in distribution of overall assets to different children.  Based on the owner’s directives, MyCFO arranged a business valuation, which helped with proper proportioning of the estate, and helped the business owner to select which non-business assets should be distributed to each child (read more here).
  • Structuring for complex business transactions: As a business grows, owners may decide to form a number of related companies. However, tax benefits and structuring are often left as an afterthought, which leads to unintended consequences. In this case, our client’s decades-old family business had expanded through vertical integration.  Part of MyCFO’s solution was to form a holding company. Of course, taxation was considered in the process, as the multi-state aspect of some of the companies impacted their overall profitability.  We also consulted with the client on tax issues related to future buyout options for family members looking to leave the business (read more here).
  • Real estate transactions: Cashing out on residential rental and commercial real estate properties seems wonderful until the tax bill arrives. MyCFO helps our clients to use all available avenues to minimize or defer the related capital gains tax, which can vary depending on the situation.  A popular option to delay such taxation is through a 1031 exchange (read more here).

DON’T DELAY – CONTACT US TODAY!

For all of our clients, MyCFO applies our decades of experience in innovative tax planning and preparation.  If this is the kind of innovative thinking and client-focus that your client may need in a tax accountant, please have your client contact us to discuss preparing their 2021 returns.

Tax Moves that Put $ Back in Your Clients’ Pockets – prospects

Tax Moves that Put
$ Back in Your Pocket 

solutions

Need a new CPA for your 2021 taxes?

In the December 2021 issue of “Solutions” we offered several ideas to wrap-up your 2021 tax situation for maximum advantage.  Looking forward, what will your business do to best take advantage of tax planning opportunities in 2022?  

TIME FOR A CPA CHANGE?

It’s January and you realize that 2021 tax returns will be due soon.  Once again, you might be reflecting upon some discontent with your current CPA.  Maybe you feel that the fees for tax preparation services just don’t measure up with the service received.  Or perhaps their annual tax preparation services are acceptable, but you can’t help but wondering “Isn’t there something more?  My colleagues brag about how their CPA really helps them – why doesn’t mine do more for my business?”

If you’re considering a move to another CPA firm, now is the time to begin interviews – and we’d like to invite you to consider MyCFO! (Click here for 10 questions to ask when interviewing a tax accountant.)

Yes, we do a fantastic job in tax preparation and would be happy to do your business and personal tax returns for 2021.  But MyCFO does so much more than tax compliance – we are exceptional in tax planning.  This combination is why so many businesses choose MyCFO to prepare their 2021 tax returns.

REAL-LIFE METHODS TO MINIMIZE TAXES

Here are examples of how MyCFO helps our clients as their tax accountant: (click each for extended details)

  • Avoiding surprises on quarterly payments: This busy client came to MyCFO needing a better way to project quarterly tax payments. MyCFO set up a system, which we review annually with the client, in which specific percentages of rent and contractor income are set aside on a monthly basis just for taxes.  This system has proven to be accurate within a few percentage points, so that the client doesn’t have to worry about tax payments (read more here).
  • Multi-state taxation: In this case, our new client (with online sales comprising 25% of revenues) did not really view themselves as a multi-state business, but the state tax authorities told them otherwise. We helped them out of the current tax situation with minimal fines, then built them an effective an affordable framework for future compliance. 
  • Mergers and acquisitions tax planning – Multiple partners, loans, and tax implications: Our client’s ownership was composed of three partners, each with loans to the business of different amounts, and an earnout (i.e., part of purchase price paid in future) to consider. Not only was a calculation of payout/partner necessary but structuring the deal to minimize taxes for the sellers was of paramount importance (read more here).
  • Succession planning – Impact on taxation: In Massachusetts, the estate tax applies to estates worth more than $1 million, with the progressive rate toping out at 16%! Recently, our client came to us with several succession planning issues but one of the most important was fairness in distribution of overall assets to different children.  Based on the owner’s directives, MyCFO arranged a business valuation, which helped with proper proportioning of the estate, and helped the business owner to select which non-business assets should be distributed to each child (read more here).
  • Structuring for complex business transactions: As your business grows, you may decide to form a number of related companies. However, tax benefits and structuring are often left as an afterthought, which leads to unintended consequences. In this case, our client’s decades-old family business had expanded through vertical integration.  Part of MyCFO’s solution was to form a holding company. Of course, taxation was considered in the process, as the multi-state aspect of some of the companies impacted their overall profitability.  We also consulted with the client on tax issues related to future buyout options for family members looking to leave the business (read more here).
  • Real estate transactions: Cashing out on your residential rental and commercial real estate properties seems wonderful until the tax bill arrives. MyCFO helps our clients to use all available avenues to minimize or defer the related capital gains tax, which can vary depending on your situation.  A popular option to delay such taxation is through a 1031 exchange (read more here).

DON’T DELAY – CONTACT US TODAY!

As your CPA, MyCFO applies our decades of experience in innovative tax planning and preparation.  If this is the kind of innovative thinking and client-focus that you’d like to see for your tax accountant, contact us to discuss preparing your 2021 returns.

AB 150 – SALT Limitation Workaround

 

solution

Unexpected opportunity to save taxes!

Under the Tax Cuts and Jobs Act of 2018, taxpayers could only deduct a yearly combined maximum of $10,000 of their state income taxes and property taxes on their Federal tax return which became known as the SALT limitation.

Assembly Bill 150 provided a workaround to the SALT limitation which was confirmed by the IRS via notice 2020-75. This set of regulations has provided an unexpected opportunity for business owners to save a great deal of taxes.

How Does It Work?

(read the full article here)

 

Tax Moves that Put $ Back in Your Pocket

Tax Moves that Put
$ Back in Your Pocket 

solutions

Need a new CPA for your 2021 taxes?

In the December 2021 issue of “Solutions” we offered several ideas to wrap-up your 2021 tax situation for maximum advantage.  Looking forward, what will your business do to best take advantage of tax planning opportunities in 2022?  

TIME FOR A CPA CHANGE?

It’s January and you realize that 2021 tax returns will be due soon.  Once again, you might be reflecting upon some discontent with your current CPA.  Maybe you feel that the fees for tax preparation services just don’t measure up with the service received.  Or perhaps their annual tax preparation services are acceptable, but you can’t help but wondering “Isn’t there something more?  My colleagues brag about how their CPA really helps them – why doesn’t mine do more for my business?”

If you’re considering a move to another CPA firm, now is the time to begin interviews – and we’d like to invite you to consider MyCFO! (Click here for 10 questions to ask when interviewing a tax accountant.)

Yes, we do a fantastic job in tax preparation and would be happy to do your business and personal tax returns for 2021.  But MyCFO does so much more than tax compliance – we are exceptional in tax planning.  This combination is why so many businesses choose MyCFO to prepare their 2021 tax returns.

REAL-LIFE METHODS TO MINIMIZE TAXES

Here are examples of how MyCFO helps our clients as their tax accountant: (click each for extended details)

  • Avoiding surprises on quarterly payments: This busy client came to MyCFO needing a better way to project quarterly tax payments. MyCFO set up a system, which we review annually with the client, in which specific percentages of rent and contractor income are set aside on a monthly basis just for taxes.  This system has proven to be accurate within a few percentage points, so that the client doesn’t have to worry about tax payments (read more here).
  • Multi-state taxation: In this case, our new client (with online sales comprising 25% of revenues) did not really view themselves as a multi-state business, but the state tax authorities told them otherwise. We helped them out of the current tax situation with minimal fines, then built them an effective an affordable framework for future compliance. 
  • Mergers and acquisitions tax planning – Multiple partners, loans, and tax implications: Our client’s ownership was composed of three partners, each with loans to the business of different amounts, and an earnout (i.e., part of purchase price paid in future) to consider. Not only was a calculation of payout/partner necessary but structuring the deal to minimize taxes for the sellers was of paramount importance (read more here).
  • Succession planning – Impact on taxation: In Massachusetts, the estate tax applies to estates worth more than $1 million, with the progressive rate toping out at 16%! Recently, our client came to us with several succession planning issues but one of the most important was fairness in distribution of overall assets to different children.  Based on the owner’s directives, MyCFO arranged a business valuation, which helped with proper proportioning of the estate, and helped the business owner to select which non-business assets should be distributed to each child (read more here).
  • Structuring for complex business transactions: As your business grows, you may decide to form a number of related companies. However, tax benefits and structuring are often left as an afterthought, which leads to unintended consequences. In this case, our client’s decades-old family business had expanded through vertical integration.  Part of MyCFO’s solution was to form a holding company. Of course, taxation was considered in the process, as the multi-state aspect of some of the companies impacted their overall profitability.  We also consulted with the client on tax issues related to future buyout options for family members looking to leave the business (read more here).
  • Real estate transactions: Cashing out on your residential rental and commercial real estate properties seems wonderful until the tax bill arrives. MyCFO helps our clients to use all available avenues to minimize or defer the related capital gains tax, which can vary depending on your situation.  A popular option to delay such taxation is through a 1031 exchange (read more here).

DON’T DELAY – CONTACT US TODAY!

As your CPA, MyCFO applies our decades of experience in innovative tax planning and preparation.  If this is the kind of innovative thinking and client-focus that you’d like to see for your tax accountant, contact us to discuss preparing your 2021 returns.