Avoid Joint Ownership Mistakes

From CBN Planned Giving

Planning for the distribution of assets by joint tenancy seems simple, but doing so needs to be considered very carefully. Creating a joint ownership for property with a child, such as bank accounts, where the child does not contribute to the property will be deemed a gift. For instance, if you add your child as a joint owner to a checking or savings account, then any amount withdrawn by the child will be deemed a gift, or if you buy real estate and name your child as a joint owner, even though the child did not contribute anything for the property, then the child's interest in the property will be deemed a gift.

Gifts that are more than the gift annual exclusion of $14,000 for the calendar year are subject to gift tax.

Stepped-up Basis
When a parent adds the name of a child to the title of their property, creating joint property ownership, that child also receives the tax basis of that property. When the surviving child, a joint owner, sells the property the tax treatment would be the same as if the property had been sold by the original owner parent. The asset would lose its "step-up" in basis and potentially result in a large capital gains tax on the appreciation (selling price less cost basis) when it is sold.

When wealth-transfer planning for your family, treatment of assets eligible for a stepped up basis need to be given consideration. If property has already appreciated significantly, then it usually is better to leave it as part of the estate, since it will receive a stepped-up basis upon inheritance by the child. This is the stepped-up basis or readjustment of the value of an appreciated asset for tax purposes at death. With a step-up in basis, the value of the asset is determined to be the higher market value of the asset at the time of inheritance, not the value at which the original party purchased the asset.

For example, when you sell an asset such as stock, you owe capital gains tax on the difference between what you paid for it (your basis) and what you get for it. But if you inherit certain assets you can step up their tax basis to whatever they were worth at the benefactor’s death. That means highly appreciated inherited property can be sold immediately with no capital gains, or later, with all the gains before you inherited it disregarded. By contrast, if you receive property from a living donor (transfer by joint ownership), you take on his or her tax basis when the time comes to calculate capital gains.

Good and Bad Assets to Leave Children
To eliminate or reduce taxes at death to heirs, strategically plan giving assets based on the type of asset and the type of beneficiary.

To help reduce the income tax burden to family recipients, consider leaving children assets that have tax-free income (e.g., a Roth IRA) or appreciated assets whose basis can be stepped up at your death (e.g., real estate or appreciated securities in a taxable account).

Consider donating to qualified charities other assets that would otherwise be subject to income taxes if passed to family members. A tax-exempt public charity can withdraw pre-tax monies from non-Roth retirement accounts, such as Traditional IRAs and 401(k)s without paying income taxes. In addition, an estate could take a charitable deduction which would reduce the size of the taxable estate.

Revocable Living Trusts - A Better Alternative
The issues discussed above are just a few of the problems people face with joint tenancy. One should not presume that joint tenancy is a simple and inexpensive estate planning solution. The Revocable Living Trust is a better solution because it protects a person’s estate from their children's creditors, it allows a person to avoid probate, and it preserves both a couple’s federal gift and estate tax exemptions.

The Revocable Living Trust also gives greater control and flexibility. If a person later changes their mind and wants to leave all or part of their property to others or if they want to exclude one of their children from inheriting, they will be able to do so. They will also be able to insure that their children inherit property even if their spouse remarries. If they decide to sell their property they can do so without anyone else’s consent. Finally, a Revocable Living Trust avoids the necessity of a probate proceeding if the person becomes physically or mentally incapacitated because the successor trustee takes over without court intervention.

It is recommended you consult with your tax advisor and attorney when implementing your estate plan.

Create a Legacy
Please let us know if you have considered CBN for a Legacy planned gift. We want to personally thank you and let you know how much we appreciate your support. Your gift will help CBN continue its mission to impact the world with the Gospel of Jesus Christ.

“A charitable bequest or beneficiary form designation are excellent ways to create a lasting legacy.”

Free Will and Trust Guide Kit: Request by e-mail to Frank.Nico@CBN.org

Your legacy gift supports the CBN Family of Ministries through mass media, primarily television broadcasts and digital media, and humanitarian projects: The 700 Club and other CBN TV programs worldwide, CBN News, CBN prayer centers, Superbook animated Bible series, Orphan's Promise, CBN Israel, U.S. and international humanitarian and disaster relief aid through CBN International and more.

The Leave A Legacy estate planning presentation by attorney Suzanne Pennington can be viewed at www.CBNLegacy.org

If you have a question or would like more information send e-mail to Frank.Nico@CBN.org or call our toll free number at 1-800-333-2373.
CBN Planned Giving - CSB 112, 977 Centerville Turnpike, Virginia Beach, VA 23463

Planning for the Unexpected From CBN

In the context of estate planning, the risks of loss are greatest in times of transfer, be it wealth transfer, through gifts or bequests, or power transfer, through a succession event. If these  scenarios aren’t properly planned and executed, a lifetime of work and wealth  accumulation can be undone in an instant. Estate planning can be extremely complicated, and the consequences of handling it poorly  can be costly to your loved ones or intended beneficiaries. Start by Taking Inventory of your Assets It takes time and effort to make a list of your property, but identification of your assets is very important. Values are also important and estimates need to reflect the potential reductions for liabilities. Your list of major assets should show how title and ownership is held. Customize the Plan There’s no single estate-planning template. Each plan must be customized to fit the individual and the family needs in order to maximize its effectiveness. Talk to your Family about the Future Your family needs to know what’s in store. Especially since inheritance can be a loaded issue. Be as upfront as possible about your intentions, to help alleviate conflicts after  you are gone. The Blended Family Second marriages present estate planning challenges which can be met with a combination  of good communication and smart planning. You each may have property and other assets  you've brought to the relationship. You will want to provide for your spouse's needs,  while ensuring that your property ultimately will go to your children. Find an estate  planning attorney in your state with experience in blended families to guide you all the  way to a completed plan. DIY Wills aren’t the Answer Don’t attempt to write a will yourself. It’s too easy to make a big, costly mistake. Guardianships Naming a guardian for children who are minors is essential, but perhaps even more  important is notifying the potential guardian and others of your intentions to avoid conflicts  in the future. Don’t Stop with a Will A simple will may not be sufficient in terms of a complete estate plan. Determine if a living  trust is also necessary. Some major advantages of the trust: (1) The trust is revocable (2) The trust is private (3) The trust avoids the probate process (4) There can be provisions for medical care and managing assets Assign a Successor Executor & Trustee Since every will must have at least one executor and every trust must have at least one trustee,  it's a good idea to name a successor executor or trustee in your estate plan, in case the original executor or trustee passes away. Fund the Trust A revocable living trust is only effective if its assets are properly funded. In order to fund a  trust properly, you need to make sure that all of your trust assets are titled in the name  of the trust. Keep your Plans up to Date An estate plan isn’t something that can be done once and then put in a drawer and forgotten.  It has to be constantly updated and reevaluated because laws, objectives, and people, change. Using your Estate Plan to Create a Christian Legacy A good estate plan can indeed create a legacy for family and the Lord’s work, giving added  meaning to your life. The estate plan can provide specific instructions to use property the  Lord entrusted to your care to lift up those in need. Paul spoke to those in Corinth and said, “Now he who supplies seed to the sower and bread for food will also supply and  increase your store of seed and will enlarge the harvest of your righteousness.  11 You will be enriched in every way so that you can be generous on every occasion,  and through us your generosity will result in thanksgiving to God.”     2 Corinthians 9:10-15 (NIV) Create a Legacy Please let us know if you have considered CBN for a Legacy planned gift.  We want to personally thank you and let you know how much we appreciate your  support. Your gift will help CBN continue its mission to impact the world with the  Gospel of Jesus Christ. “A charitable bequest or beneficiary form designation are excellent ways to create a  lasting legacy.” Free Will and Trust Guide Kit: Request by e-mail to Frank.Nico@CBN.org Your legacy gift supports the CBN Family of Ministries through mass media,  primarily  television broadcasts and digital media, and humanitarian projects: The 700  Club and other CBN TV programs worldwide, CBN News, CBN prayer centers,  Superbook animated Bible series, Orphan's Promise, CBN Israel, U.S. and  international humanitarian and disaster relief aid through CBN International and more. The Leave A Legacy estate planning presentation by attorney Suzanne Pennington  can be viewed at www.CBNLegacy.org If you have a question or would like more information please e-mail me at Frank.Nico@CBN.org  or call our toll free number at 1-800-333-2373.

Understanding Reverse Mortgages

Understanding Reverse Mortgages

Precautions to Take When Considering A Reverse Mortgage
If you are at least 62 years old and have equity in your home, you may be eligible to use that equity to generate additional income during your retirement years. The arrangement is called a reverse mortgage. You borrow money using your home as collateral and make no monthly payment as long as you live in your home. When you die or move out of your home, the loan, plus interest and fees, becomes due.

If you are considering a reverse mortgage please do your due diligence in regards to the following points:

1. Don’t underestimate the closing cost fees.
2. Determine if it disqualifies you for Medicaid and Supplemental Security Income program eligibility.
3. If long term care is required, you may have to leave the home and move into a nursing or care facility.
4. Determine if the amount loaned is limited requiring payoff sooner than expected.
5. In the event your heirs are not able to pay-off the loan upon your death, it would result in home foreclosure.

In addition, ensure you protect yourself by receiving consultation on the pros and cons by a trusted professional or elder law attorney, and only contacting a lender approved by the Federal Housing Administration (FHA), a part of the US Department of Housing and Urban Development (HUD).

Reasons Why People Avoid Estate Planning & Why Not To
Why Avoid: They don't have the time.
Why Not To: Stop procrastinating you may not get another chance.
Naming beneficiaries and an executor are two musts. Take the time to think this through. If you're married you probably think your spouse will get everything. While that may be true, you don't want your relatives and your spouse fighting over your stuff.  If you are single, then it won't be as obvious as to who gets what, especially if your siblings and parents survive you.

Why Avoid: They don't want to think about dying.
Why Not To: Estate planning is uncomfortable but necessary.
This is probably the most common reason people don't do some estate planning. Nobody wants to think about their own mortality, but we all will leave this earth someday. Why not do it while you are healthy? Estate planning can challenge your thinking. You will have to consider things like, who will get custody of your minor children, who gets your money, and where you'll want to be buried. It makes you think about not being here and how your family will cope.

Why Avoid: They don't understand it.
Why Not To: Make sure you get an education.
You must find a financial planner and/or estate planning attorney that can analyze your estate and educate you on your choices. You may not have an estate large enough for a complicated trust, but that doesn't mean you don't need a will with certain provisions in it. For example, if you become incapacitated from an accident, who will pay your bills? Do you want to be kept on life support?

Why Avoid: They don't think they have an estate to worry about.
Why Not To: Make sure you do some estate planning today before things get complicated.
Some of you may be thinking that you don't have enough wealth to worry about estate planning. You have an estate if you own pretty much anything. Something as simple as owning a car or a home can be a problem if you don't decide who will receive it when you pass. If you don't have a will or a named beneficiary such as on a retirement account, then the probate process could be a nightmare for your survivors.

Free Will and Trust Guide Kit: Request by e-mail to Frank.Nico@CBN.org

Choosing a Donor Advised Fund or Private Foundation: Compliance Requirements
A PF has more extensive filings and tax return information than compared to the DAF. Examples of possible filings include: Form 990-PF, excise tax returns, gift receipts and Form 8283. A PF’s tax returns are pubic record, so donors who are interested in privacy may prefer DAFs, which as part of a sponsoring organization do not have separate filings, although the sponsoring organization often imposes some fees on the DAF to cover compliance costs. Next Week: Control & Legacy Planning.

Secure Your Future
If you are like many people, you have watched your investments fluctuate with the markets. There isn’t much security in knowing that your future can be tossed around like the wind. You might be wondering if there is any way to create true security for you and your loved ones. The good news is that with a charitable gift annuity, you can receive fixed payments that never change with payments made to you or your loved ones for life. Contact CBN Planned Giving for more information on a Gift Annuity.

Charitable Deduction Rules for Gift Annuity
Most gift annuities are funded with cash, and the deduction may be taken up to 50% of adjusted gross income. If the annuity is funded with long-term capital gain property, the deduction may be used to 30% of adjusted gross income. Any excess over these amounts may be carried forward and deducted over as long as the next five years. In addition, annual payouts are partially tax-free during the annuity contract life expectancy period.

Charitable Tax Reference and Deduction Calculator
Gift Law Pro is a complete charitable giving and tax information service. The Gift Law Calculator is a planned gifts calculator for determining charitable gift annuity or charitable remainder trust rates, payments and tax savings. Either can be found at  www.CBNLegacy.org website. Select For Advisors from menu.

Create a Legacy
Please let us know if you have considered CBN for a Legacy planned gift. We want to personally thank you and let you know how much we appreciate your support. Your gift will help CBN continue its mission to impact the world with the Gospel of Jesus Christ.

“A charitable bequest or beneficiary form designation are excellent ways to create a lasting legacy.”

Your legacy gift supports the CBN Family of Ministries through mass media, primarily television broadcasts and digital media, and humanitarian projects: The 700 Club and other CBN TV programs worldwide, CBN News, CBN prayer centers, Superbook animated Bible series, Orphan's Promise, CBN Israel, U.S. and international humanitarian and disaster relief aid through CBN International and more.

The Leave A Legacy estate planning presentation by attorney Suzanne Pennington can be viewed at www.CBNLegacy.org  Frank T. Nico, CAP^® ChFC^® CASL^®

If you have a question or would like more information please e-mail me at Frank.Nico@CBN.org
or call our toll free number at 1-800-333-2373.