estate planning

Estate Planning 101: Stealth Taxes

The Bird’s Eye View:

In part three of our estate planning series, we’re talking with attorneys Chris Gaughan and Casey Connealy about stealth taxes. They are sneaky taxes that we often don’t think about or know about but can really add up.

 

Your Guide:

Welcome to part three in our series on estate planning. On this episode of Your Retirement Elevated podcast with Scott Dougan, we’ll explain four types of stealth taxes and what you need to know about them.

Our guests today are Chris Gaughan and Casey Connealy, with Gaughan & Connealy Estate Planning Attorneys.

“Stealth taxes are mandates and rules that increase revenues without raising the ire of taxpayers,” said Casey. “These are ways that the government or administrative bodies can say ‘Hey, we are going to charge a fee for this.’”

Death taxes

“One of the biggest concerns that clients express to us is they don’t want to pay any taxes unnecessarily when they die,” said Chris. “There is this assumption out there that you’re going to pay some kind of death tax.”

Death tax isn’t as bad as it looks, but it can be if you’re not careful. The way death tax works is there’s a certain amount of money you’re allowed to leave your family before you have to pay a tax. It’s called the estate tax exemption. Right now, that threshold is really high. It’s $11.7 million.

Individual retirement accounts

We’re talking about IRAs, 401ks, 403bs or any traditional retirement accounts that are pre-tax. They end up having to be taxed either to you, or your kids if you don’t spend all the money, at ordinary income rates. This is typically a much higher tax rate than paying regular capital gains.

During this episode, Chris and Casey also talk about stealth taxes on probate and other administrative fees. Listen to the full episode or use the timestamps below to find specific segments.

[2:19] – What are stealth taxes?

[4:00] – Death taxes

[7:57] – Individual retirement accounts

[11:34] – Probate

[14:09] – Delays and administrative fees

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

Check out Part 1 of our Estate Planning 101 Series 

Check out Part 2 of our Estate Planning 101 Series

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

Estate Planning 101: Wills and Trusts

The Bird’s Eye View:

In part two of our estate planning series, we’re talking with attorneys Chris Gaughan and Casey Connealy about the difference between wills and trusts. Which one should you have, and what are the pros and cons?

 

Your Guide:

Welcome to part two in our series on estate planning. On this episode of Your Retirement Elevated podcast with Scott Dougan, we’ll explain the difference between wills and trusts.

Our guests today are Chris Gaughan and Casey Connealy, with Gaughan & Connealy Estate Planning Attorneys.

“As estate planners, the number one question that we get without a doubt is what is the difference between a will and a trust,” said Casey. “They don’t know the difference, and they don’t know which one of those they might need.”

What if you don’t have a will or trust?

Studies show as many as 70% of people don’t have a will or a trust when they die.

“If you don’t have an estate plan at the time you pass away, state law is basically going to govern where your stuff goes,” said Chris.

This is where probate comes in. It’s a process of retitling assets when you die. There are a couple of drawbacks to probate, but the biggest one is the cost. Probate fees can be around 3% to 5% of the gross value of whatever goes through probate.

So if you have a house worth $250,000, and there’s a mortgage for $200,000, that 3% to 5% probate fee applies to the total value of the house, not the mortgage. To get that house through probate, you’re looking at anywhere from $7,500 to $12,500.

In addition to the cost, probate is very time consuming. It can take anywhere from 12 to 18 months.

During this episode, Chris and Casey also share:

  • What a will is and why you need one
  • How you can protect your children
  • Reasons to use a trust

Listen to the full episode or use the timestamps below to find specific segments.

[2:40] – What if you don’t have a will or trust?

[5:34] – What is a will?

[7:43] – What is a trust?

[9:40] – Other reasons to use a trust

[12:15] – Divorce protection

[13:16] – Protecting children

[14:12] – Money management concerns

[14:59] – Children with special needs

[15:56] – Should I have a will or trust?

[19:33] – What do I do next?

[21:16] – Contact Chris and Casey

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

Check out Part 1 of our Estate Planning 101 Series. 

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

Estate Planning 101: Powers of Attorney

The Bird’s Eye View:

In part one of our estate planning series, we’re talking with attorneys Chris Gaughan and Casey Connealy about powers of attorney. Do you need a power of attorney, how are they used and what are some common misconceptions?

 

Your Guide:

Welcome to part one in our series on estate planning. On this episode of Your Retirement Elevated podcast with Scott Dougan, we’ll explain some issues, opportunities and mistakes in estate planning, especially with powers of attorney.

Our guests today are Chris Gaughan and Casey Connealy, with Gaughan & Connealy Estate Planning Attorneys.

“A lot of people think estate planning is just, ‘Hey, what happens when I die? Do I need a will? Do I need a trust? How will my family get my assets?’” said Casey. “Estate planning really starts before that. If you get sick, you get disabled, somebody needs to make decisions for you.”

The thing people hear about most often is powers of attorney.

Two common types of powers of attorney

1) Financial power of attorney, also known as property or general power of attorney

You allow someone to deal with your financial issues if you’re sick or hurt or unavailable.

2) Medical power of attorney, also known as durable health care power of attorney

You allow someone to make medical decisions for you if you’re hurt, sick or can’t communicate.

If you don’t have power of attorney

So, what if you don’t have this set up? You’ll encounter the dreaded “P word” – probate, or living probate. There are some common misconceptions with this, and it’s important to know that spouses and adult children do not have automatic rights.

“Many people believe, ‘If I get sick, my spouse will make this decision. If I can’t do it myself, my son will go to the bank and pay my bills for me,’” said Casey. “Unless there’s something written down showing you want that to happen, they don’t have any legal right to do that.”

During this episode, Chris and Casey also share:

  • Common misconceptions about power of attorney and why they’re wrong
  • The validity of power of attorney
  • Why you must have copies of your power of attorney handy
  • Who should have a power of attorney

Listen to the full episode or use the timestamps below to find specific segments.

[1:33] – What is estate planning?

[2:35] – Two types of powers of attorney

[4:09] – If you don’t have power of attorney

[6:13] – What if you do have power of attorney?

[10:19] – Misconceptions about power of attorney

[13:36] – Validity of power attorney

[15:12] – Make sure you have copies

[16:44] – Who should have a power of attorney?

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact