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What is a Financial Power of Attorney?
Power of attorney is a legal instrument that allows another person to act on behalf of the individual who granted the power to them. While each state has specific rules governing the designation, in most cases, you can confer it on your selected agent by completing a legal, notarized form. While the documents must be notarized, usually, an attorney is not a necessary part of the process.
What is an Immediate Power of Attorney?
A power of attorney is a designation that another person has the authority to make decisions on behalf of the power grantor. Typically, you would grant a power of attorney to someone either for convenience or necessity.
How is Cost Basis Calculated on an Inherited Asset?
If the beneficiary of a trust receives an asset valued at $500,000 but was purchased for only $100,000, does the beneficiary incur a big tax bill? For many, this could be a crippling tax bill. However, the IRS code does provide some relief for beneficiaries of inherited assets. This relief comes in the form of an adjustment to the original cost basis.
Does Guardianship Override Medical Power of Attorney?
Sometimes a person can no longer make their own decisions and needs another person designated to do so. The authority can be partial, as in a medical power of attorney, or comprehensive, as is the case with guardianship.
Does a Credit Shelter Trust Get a Step-Up in Basis?
A common tax strategy for married couples who have amassed significant financial assets is to create a credit shelter trust (CST) in order to maximize the federal estate tax exemption.
What is an Emergency Power of Attorney?
Conferring a power of attorney (POA) can be a legal event but doesn’t usually involve a lawyer. Instead, designating a power of attorney gives the named person the authority to make decisions on behalf of the person who made the designation.
What Is A Grantor Retained Annuity Trust (GRAT)?
A Grantor Retained Annuity Trust (GRAT) is when a grantor wants to transfer the appreciation of an asset to an heir(s) while also reducing the value of the asset that might be subject to estate or gift taxes. It is generally used by individuals as a possible tax shelter for a high-value asset(s) they want to pass to a beneficiary.
What are the Advantages of Financial Planning?
Financial planning is imperative to make sure your finances are in order while you are alive, and also to convey your wishes for assets after your death. However, a 2022 study showed that only 29% of surveyed Americans have a written financial plan. With the uncertainties in life, if you don’t have a plan, now is the time to get started.
What is a Credit Shelter Trust?
Affluent couples with large estates may choose to set up credit shelter trusts in an attempt to preserve generational wealth and pass high-net-worth assets onto their heirs without having to pay estate taxes.
What Is An Intentionally Defective Grantor Trust (IDGT)?
Intentionally Defective Grantor Trusts (IDGT) are when a grantor transfers an asset, or assets, into a trust where the asset and any growth are effectively removed from the estate, but the grantor still pays income tax. Effectively, the grantor’s purpose is to potentially grow the inheritance “income tax-free” for their heirs by paying the income taxes as the asset grows while they are still alive. By setting up an IDGT the grantor is “intentionally” triggering the need to pay income tax on the asset.
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