Planned Giving News and Information
February, 2016
The following is intended as general information and does not represent legal or tax advice. The information presented is the view of the author. Individual circumstances vary - please consult your legal and tax advisors about your specific situation. To return to the general planned giving pages, please close this browser window. This News and Information section has been compiled by Future Focus.

“From what we get, we can make a living; what we give, however, makes a life.”
Arthur Ashe

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Americans Get A Grade C In Retirement Readiness
How do you stack up to your peers when it comes to being on track with retirement savings? Fidelity released a new online calculator today that lets you gauge your retirement readiness with a letter grade—and compare your score to others who earn the same amount. So instead of just comparing how your salary and benefits stack up with your colleagues in the snack pantry at work, now there’s an easy way to see where you stand when it comes to building a nest egg. Bragging rights if you get an A grade.
Overall, Americans get a C grade (a 76) in Fidelity’s latest biennial retirement savings assessment study, released in conjunction with the calculator. That’s the “yellow zone” which means you’re falling short of completely covering estimated essential retirement expenses; better get on track, or you’ll have to make sacrifices in retirement. At least that’s up from a C- (a 69) in 2013. Read more.

Taxpayer Guide to Identity Theft
For 2016, the IRS, the states and the tax industry joined together to enact new safeguards and take additional actions to combat tax-related identity theft. Many of these safeguards will be invisible to you, but invaluable to our fight against these criminal syndicates. If you prepare your own return with tax software, you will see new log-on standards. Some states also have taken additional steps. See your state revenue agency’s web site for additional details. We also know identity theft is a frustrating process for victims. If you become a victim, we are committed to resolving your case as quickly as possible. Read more.

Can Irrevocable Trusts be Revoked?
Trusts are valuable estate planning devices that allow for the transmission of wealth with lower tax liability. When proper estate management is picked, they also allow for the creation of future income, potentially allowing for the life of the trust in perpetuity. Trusts also allow for the beneficiaries to benefit from the income of the corpus of the trust, yet insure that their creditors cannot obtain the income producing assets itself. The same also applies for a financially irresponsible beneficiary, in that it provides income but prevents the financially irresponsible beneficiary from squandering the income producing asset. One of the most popular types of trusts is the irrevocable trust. As with anything in life, there are upsides and downsides; one of the downsides to an irrevocable trust is that in most circumstances, and, more particularly, most states, an irrevocable trust is usually irrevocable. Unwinding an irrevocable trust when it no longer functions as it should, due to, for example, a major change in the estate and gift tax law is possible but must be done correctly, whereby the assets from the trust may be transferred or gifted to the beneficiaries or the settlor if still alive. Read more.

5 Estate Planning Documents to Create or Update in 2016
We don't like to think about it and we get very good at putting it off. Don't consider it as facing your mortality. Think of it as the final gift to your loved ones who have to come in and clean up and make decisions during a time that is emotionally charged. Read more.

Beware of the Retirement Rules of Thumb (They Shouldn't Be Called "Rules")
A rule of thumb is an imprecise yet convenient standard to use. With retirement rules of thumb, I think of them as averages that may apply if you group the entire population together, but may not apply at all to your specific situation. 
Retirement rules of thumb may be useful if you have no idea of how much to save, how much you can withdraw, how fast your money can grow, or how to allocate your investments. However, they should not be used as a hard and fast rule that applies to you with certainty. Certain answers only come from looking at your specific financial projections and figuring out what does and doesn't apply to you. Use the "rules" below only as broad, general guidelines. Read more.

You can be scammed - Vishing and Smishing: The rise of social engineering fraud
Most of us like to think we're too clever to be caught out by email and telephone scams, but in fact any of us can get caught out by fraudsters. Their tricks have gone far beyond the infamous fax from a "Nigerian prince" you've never heard of asking you for money. Now frauds are increasingly sophisticated and you are much more likely to hear from someone you trust. Fraudsters dupe their victims using a type of psychological manipulation known as "social engineering". It is essentially a confidence trick that influences a person to take action that may not be in their best interest. With many technical security defenses in place to prevent banks and companies from being hacked directly, it is we humans that represent the weak spot that criminals seek to target. Read more.

Tax-Free Transfer: GRATs Are Great
If you own stock in a startup, GRATs are a terrific way to transfer wealth without paying gift or estate taxes. But even if you don’t, your family may be able to benefit from a GRAT – particularly if you act now, before the Federal Reserve starts raising interest rates.
A GRAT works like this: You put stock in a trust that pays you (the grantor) an annuity for a set number of years, typically two to five. What’s left after that goes to your beneficiaries, usually your kids. Here’s where interest rates come in: The Internal Revenue Service values the grantor’s gift to his beneficiaries based on the size of the annuity he takes back and the rate of return the trust is expected to earn during its term–that rate (known as the 7520 rate) is based on what Treasury’s are paying at the time the GRAT is set up. Read more.

NIMCRUTs as Retirement Savings Vehicles for Small Business Owners
Small business owners often use qualified pension or profit-sharing plans created by their companies to save for retirement, but such plans may not be the best retirement savings vehicles for many of them. There are several reasons for this:
     1. The Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (“the Code”) impose stringent nondiscrimination requirements on qualified plans. This means that they must cover not only the owner but also the rank and file employees of the company.
     2. Qualified plans may not provide as much retirement income as the business owner would like to have due to contribution limitations.
     3. Qualified plans may impose burdensome reporting and recordkeeping requirements on the business.
 A net income with make-up charitable remainder unitrust (NIMCRUT) can be used to provide the same tax-deferred growth as a qualified retirement plan but is not subject to the ERISA and Code coverage requirements, has no contribution limitations and has less onerous reporting requirements. Read more.


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Please note, individual financial circumstances will vary. The information on this site is meant as general information and does not represent legal or tax advice. The information presented is the view of the author. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only. This News and Information section has been compiled by Future Focus. Please report any problems to webmaster.