Jim Nabors Saved $4.8 Million in Taxes By Marrying His Husband

Posted on December 8, 2017 by James Lange in Current Events, Estate Planning, Estate Tax, Income Tax and tagged estate plan, Estate Planning, Jim Nabors, Same-Sex Couples, Same-Sex Marriage, Taxes, Washington State.

Jim Nabors: Actor, Singer, and Comedian

On November 30, 2017, Jim Nabors, perhaps most famous for his role as Gomer Pyle, died at the age of 87. Jim is survived by his husband Stan Cadwallader, whom he married in 2013. Their marriage came one month after same-sex marriages became legal in Washington State.

It is quite eye-opening to look at the tax consequences of their decision to get married; Mr. Nabors died with a $13M estate. The terms of his will are not public, but for the sake of argument let’s assume he left his estate to his husband. Because of the marriage, no Federal or Hawaiian estate or inheritance taxes are due at death because of the unlimited marital deduction.

Smart Estate Planning

If Jim and Stan had remained unmarried partners the payout to the Government would have been astronomical. A $3,000,000 payment in federal estate taxes alone is bad enough. A payment of over $1,800,000 in Hawaiian inheritance taxes would add a total of $4,800,000 in total taxes. These numbers don’t include the income taxes that will be saved because of the longer “stretch” a spouse receives on an inherited IRA or retirement plan.

The moral of the story is that for many life-long partners, gay or straight: Get Married for the Money. Obviously the decision to marry hinges on more than whether marriage is a financially strategic move. But if you are simply avoiding the formalities, it might make sense to think about the long-term tax consequences on your financial security—for both you and your partner. Marriage is usually a big plus for purposes of Social Security, especially if one partner has a much stronger earnings record than the other partner.

More Information Is Always Available

For more information visit www.paytaxeslater.com.To schedule an appointment with Jim Lange, please call his office at 412-521-2732. You can always contact Jim at jim@paytaxeslater.com.

James Lange, CPA/Attorney of Lange Financial Group, LLC, is the author of several books on retirement and estate planning, including Live Gay, Retire Rich. His books on retirement strategies have been endorsed by Charles Schwab, Larry King, Jane Bryant Quinn, Ed Slott, and many more. He hosts a weekly financial show on KQV News Radio in Pittsburgh. PA.

New Social Security Rule Will Hurt Women by Eliminating Benefits Options

Posted on December 16, 2015 by James Lange in Beneficiary Designations, Estate Planning, Lange’s Cascading Beneficiary Plan, Retire Secure!, Retirement Planning, Social Security, The Lange Money Hour, Video Resources and tagged beneficiary designation, Social Security.

James Lange, CPA/Attorney, Advises Married Couples Ages 62-70 to Apply and Suspend NOW. After April 29, 2016, it will be too late!

In early November, President Obama signed the Bipartisan Budget Act of 2015 into law and the repercussions are devastating to the married women of our country.

Pittsburgh – December 16, 2015 – Married women, statistically the widows of the future, will pay a high price due to the changes that the Bipartisan Budget Act of 2015 has made to Social Security. Pittsburgh attorney and CPA James Lange takes action by releasing audio and video presentations as well as transcripts and a report that will help couples ages 62-70 navigate this new rule and protect their benefits while they still can!

SOCIAL SECURITY SURVIVOR BENEFITS ARE CRITICAL TO WOMEN

The financial well-being of widows is often dependent upon the choices that are made while their spouses are still alive. Spousal and survivor Social Security benefit choices can mean the difference between living comfortably in retirement and falling under the poverty line for women whose spouses leave them behind. Widows are commonly younger than their deceased husbands and the Social Security benefits they have earned, especially in the Boomer generation, are commonly less than that of their deceased husbands. This means that a widow will depend on collecting survivor benefits, often for many years, based on the benefits to which their deceased spouses were entitled.

“One of the best things a husband can do to protect his wife in widowhood is to maximize his own Social Security benefits. One technique that we use with our clients is apply & suspend.” James Lange of Pittsburgh-based, Lange Financial Group, LLC comments. “The law prior to the Bipartisan Act allowed the husband to apply for, and then suspend collection of his benefits, while allowing his wife to collect a spousal benefit. It was a win-win for our clients!”

This technique was used strategically to maximize the husband’s and wife’s long-term benefits. That, unfortunately, is coming to an end, with the exception of certain couples who take the appropriate action between now and April 29, 2016. For many couples, the income stream from spousal benefits in the previously allowed apply and suspend technique made it possible (or at least more palatable) for the husband to wait until age 70 to collect Social Security, thus maximizing their benefits.

“This new law cuts off that income stream, making it if not impossible, at least more difficult, for husbands to choose to delay collection of their benefits.” Lange warns, “Unfortunately, it is the widows of these husbands who cannot maximize their Social Security benefits who will be left in reduced circumstances for the rest of their lives.”

JIM LANGE’S ADVICE

DO NOT WAIT. Congress has eliminated one of the best Social Security maximization strategies. Fortunately, some recipients may be grandfathered already and others could be grandfathered if they act between now and April 29, 2016. Others will have to make do with the new laws. In either case, now is the time to review your options. We have posted a one hour audio with a written transcript explaining the old law, the new law and the transition rules. Readers can go to www.paytaxeslater.com to access this audio and transcript.

ABOUT JAMES LANGE

James Lange, CPA/Attorney is a nationally-known Roth IRA and retirement plan distribution expert. He’s also the best-selling author of three editions of Retire Secure! and The Roth Revolution: Pay Taxes Once and Never Again. He hosts a bi-weekly financial radio show, The Lange Money Hour, where he has welcomed numerous guests over the years including top experts in the fields of Social Security, IRAs, and investments.

With over 30 years of experience, Jim and his team have drafted over 2,000 wills and trusts with a focus on flexibility and meeting the unique needs of each client.

Jim’s recommendations have appeared 35 times in The Wall Street Journal, 23 times in the Pittsburgh Post-Gazette, The New York Times, Newsweek, Money magazine, Smart Money and Reader’s Digest. His articles have appeared in The Journal of Retirement Planning, Financial Planning, The Tax Adviser (AICPA), and other top publications. Most recently he has had two peer-reviewed articles published on Social Security maximization in the prestigious Trusts & Estates magazine.

To learn more, or sign up for their newsletter, visit www.paytaxeslater.com.

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Keeping Up with Your Kids and Grandchildren

Posted on July 20, 2015 by James Lange in Beneficiary Designations and tagged family, grandchildren, James Lange, The Lange Financial Group.

An excerpt for the Lange Financial Group Newsletter:

Social media is a great way to keep in touch with family. I feel connected to a number of relatives and friends who live in different cities because I spend a few minutes on Facebook. In fact, recently I was able to tell my brother how his own daughter was doing because of something she posted on Facebook and he doesn’t use Facebook.

If you have young grandchildren, there’s a good chance photos are posted regularly. This way, you can see current photos of the little ones, and you don’t have to feel like you’re pestering your kids to send you physical copies. Of course, social media has its limits. Because sites are more public, probably too public, don’t expect to engage in detailed or private family matters over this medium.

Schedule a weekly phone or video call: Arranging a weekly call doesn’t have to be a struggle. A simple 15 minute call is time enough to catch up regularly. The more you and your kids do it, the easier and more routine it will become. However, if you’re more interested in receiving information, let your kids do the talking. Try to schedule a time that is mutually available for everyone, so the call is a treat and not a chore.

Share a monthly meal: For kids who are closer to home, make time once a month to eat a meal together. This is an easy way to get all your kids under one roof again. Just because your kids are grown up doesn’t mean they won’t enjoy a home-cooked meal every now and then.

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Life Insurance: Is It Right for Your Estate Plan?

Posted on May 21, 2015 by James Lange in Beneficiary Designations, Estate Planning, Estate Tax, IRAs, Life Insurance, Retirement Planning and tagged Estate Planning, Estate Tax, Insurance, IRA, James Lange, Life Insurance, Retire Secure! A Guide to Getting the Most out of What You've Got, Retirement Planning.

Insurance salesmen are often maligned and are frequently the butt of some pretty bad jokes. At the risk of being categorized with those poor men and women, I’ll tell you that I don’t hesitate to recommend life insurance to many of my own clients after evaluating their estate planning needs. Why? Because when it is appropriate and structured properly, life insurance has a number of benefits that make it an excellent and possibly the best wealth transfer strategy.

If you read the earlier chapters, you learned that legislative changes since 2009 mean that federal estate tax is an issue for far fewer taxpayers than in the past. The IRS wasn’t feeling guilty about charging estate tax on your assets, they just gave more people a reason to worry about a completely different problem called federal income tax. Chapter 12 of Retire Secure! delves into some techniques that show how life insurance can be used to help minimize the damage to the estate caused by income taxes at death. It also discusses how life insurance can be used to provide liquidity for a number of estate settlement needs, and also how it can be used to benefit the estate if there is a disabled beneficiary. While life insurance can be extremely beneficial it is important to remember that in situations where taxes and other estate needs aren’t a concern, the cost of the life insurance – especially for a senior citizen – might not be worth it.

In earlier chapters, there are several references to the possibility that Congress may eliminate the benefits of the Stretch IRA. Chapter 12 introduces some new ideas regarding the inclusion of a Charitable Remainder Unitrust (CRUT) in certain estate plans. How do you think your children would react if you named a charitable trust as the sole beneficiary of your retirement plan? They might react very favorably when they find out that, in the long run, they could end up with a lot more money.

This is a very complicated estate planning technique that is not appropriate for everyone. Under the right set of circumstances, though, life insurance can be a very effective addition to an estate plan – especially if the owner of the IRA has always supported charities. Would you like to endow a chair at your local university or symphony orchestra, or perhaps provide financial support for your favorite hospital or religious organization long after your death? Read Chapter 12 to learn the basics of this strategy, and how life insurance can play a key role.

Stop back soon for an update on some really big news about the possible death of the Stretch IRA.

Jim

Jim Lange, Retirement and Estate Planning A nationally recognized IRA, Roth IRA conversion, and 401(k) expert, he is a regular speaker to both consumers and professional organizations. Jim is the creator of the Lange Cascading Beneficiary Plan™, a benchmark in retirement planning with the flexibility and control it offers the surviving spouse, and the founder of The Roth IRA Institute, created to train and educate financial advisors.

Jim’s strategies have been endorsed by The Wall Street Journal (33 times), Newsweek, Money Magazine, Smart Money, Reader’s Digest, Bottom Line, and Kiplinger’s. His articles have appeared in Bottom Line, Trusts and Estates Magazine, Financial Planning, The Tax Adviser, Journal of Retirement Planning, and The Pennsylvania Lawyer magazine.

Jim is the best-selling author of Retire Secure! (Wiley, 2006 and 2009), endorsed by Charles Schwab, Larry King, Ed Slott, Jane Bryant Quinn, Roger Ibbotson and The Roth Revolution, Pay Taxes Once and Never Again endorsed by Ed Slott, Natalie Choate and Bob Keebler.

If you’d like to be reminded as to when the book is coming out please fill out the form below.

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Ways to Cut Taxes for the Next Generation – Consider Gifting Money to Children

Posted on May 14, 2015 by James Lange in Beneficiary Designations, Estate Planning, Retire Secure!, Retirement Planning, Tax Law and tagged Gifting Money to Children, James Lange, Pittsburgh, Retire Secure Book, Retire Secure! A Guide to Getting the Most out of What You've Got, Retirement, Tax Planning, Taxes, Western Pennsylvania.

gifting money to children lange financial group In January of 2015, President Obama proposed eliminating the tax-free benefits of Section 529 college savings plans. Under his proposal, savings would grow tax-deferred, but withdrawals would be taxed as income to the beneficiary (usually the student). His belief was that taxpayers who save in 529 plans are families who can better afford the cost of college than everyone else. In reality, it is estimated that close to ten percent of 529 accounts are owned by households having income below $50,000, and over 70 percent are owned by households with income below $150,000. What isn’t surprising, though, is that the tax revenue realized by this action would have been significant, because as of the end of the 4^th quarter of 2014, the assets held in 529 and other college savings plans reached almost a quarter of a trillion dollars. How many students would have been forced to apply for loans if they had been required to pay tax on withdrawals from their college savings plans? Fortunately, the House of Representatives thought differently than the President and, in February of 2015, they passed HR 529. This bill not only maintains the tax-free status of 529 plans, but also makes them more flexible and easier to use. Hopefully the Senate will follow the House’s lead and pass a companion bill with similar provisions.

Do you have college savings plans established for your children or grandchildren and, if so, were you aware of this attack on their tax-free status?

Gifting money to children

Contributing to college savings plans for children and grandchildren is a form of gifting, which is a topic that I discuss in detail in Chapter 11 of Retire Secure!. Gifting money to children is an excellent way to minimize taxes at your death, and, depending on the amount gifted, can also provide the recipient with tax-free income. Unfortunately, strategies that reduce taxes frequently come under fire and it is critical that you stay on top of the rules. Also discussed in this chapter are the perils of gifting to relatives in an attempt to avoid seizure of your to pay for nursing home care. It’s a bad idea – don’t even think about it – but it is still beneficial to understand the laws on this subject.

Many couples are not aware that the American Taxpayer Relief Act of 2012 introduced a concept called portability that makes estate taxes less of a concern for many individuals than in the past. If you have not had your estate plan reviewed since 2012, you should read Chapter 11 to learn about the potential pitfalls of what I call “The Cruelest Trap of All”. Since the passage of this act, many estate plans are outdated and could cause the surviving spouse to be disinherited at the first spouse’s death.

Gifting money to children strategies, and the tax implications of gifting, should be a critical part of every estate plan. Changes in legislation that were not anticipated at the time the plan was established, though, can make your plan ineffective and in some cases disastrous. As much has changed in this area; please read Chapter 11 thoroughly to see how you might be affected.

Stop back soon!

Jim

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Retirement and Estate Planning Case Study: Plan with the Big Picture in Mind

Posted on May 7, 2015 by James Lange in Estate Planning, Retire Secure!, Retirement Planning and tagged Estate Planning, James Lange, Retire Secure Book, Retire Secure! A Guide to Getting the Most out of What You've Got, Retirement, Retirement Planning.

Knowing that many people aren’t as enthusiastic as I am about topics like taxes, interest rates and so on, I tried to make Retire Secure! as reader friendly as possible. Even so, I know there are still folks out there who find it difficult to apply the concepts outlined in the book to their own personal situations. It’s for those people that I wrote Chapter 10, a Retirement and Estate Planning Case Study on Eddie & Emily. It is a real life retirement story loosely based on an actual client who came to me with some concerns.

Chapter 10 is written from this couple’s point of view. It walks the reader through the thought process that these clients went through as they entered retirement, and how we helped them achieve peace of mind about their concerns. Every client’s situation is different, so it would wrong to imply that one course of action is always better than another. Since we helped them plan with the big picture in mind, though, they were confident that the decisions that they made were the best possible for themselves and their children.

Stop back soon for a peek at Chapter 11. It’s a lot more technical than Chapter 10, but contains important information on the best ways to transfer wealth to your heirs.

See you soon!

Jim

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The Clear Advantage of IRA and Retirement Plan Savings during the Accumulation Stage

Posted on January 21, 2014 by James Lange in 401(k), Estate Planning, Estate Tax, Income Tax, IRAs, Lange’s Cascading Beneficiary Plan, Retirement Planning, Roth 401(k), Roth IRA, Tax Law.

If you are working or self-employed, to the extent you can afford to, please contribute the maximum to your retirement plans.

Mr. Pay Taxes Later and Mr. Pay Taxes Now had identical salaries, investment choices, and spending patterns, but there was one big difference. Mr. Pay Taxes Later invested as much as he could afford in his tax-deferred retirement plans—even though his employer did not match his contributions. Mr. Pay Taxes Now contributed nothing to his retirement account at work but invested his “savings” in an account outside of his retirement plan.

Please look at Figure 1. Mr. Pay Taxes Later’s investment is represented by the black curve, and Mr. Pay Taxes Now’s, by the gray curve. Look at the dramatic difference in the accumulations over time—nearly $2 million.

There you have it. Two people in the same tax bracket who earn and spend an identical amount of money and have identical investment rates of return. But, based on the simple application of the “Pay Taxes Later” rule, the difference is poverty in old age versus affluence and a $2 million estate.

Can't see this image - go to https://www.paytaxeslater.com/ and download the book!

Retirement Assests, IRAs vs. After-Tax Accumulations

Retire Secure! Pay Taxes Later – The Key to Making Your Money Last, 2nd Edition, James Lange, page. xxxi https://www.paytaxeslater.com/

Blog Series: Five Easily Avoided Estate Planning Mistakes

Posted on April 1, 2013 by James Lange in Estate Planning.

Estate planning mistakes are made all the time and usually this is because the financial advisor/accountant/attorney has overlooked important issues. We have chosen to highlight five very common mistakes in this blog series. All of these mistakes are easy to avoid, as long as you and your trusted advisors know how to recognize them!

It is important to also consult with an attorney in your State in order to review whether or not these issues pertain to you. In any case, it is recommended to ask your estate planning attorney what the most common mistakes they encounter on a regular basis are, and bring up these issues with them for discussion.

Mistake 5 – Not funding your living trust properly.

It is estimated that only about one-third of the trusts are funded properly. In many cases, people establish a living trust properly, but fail to transfer their assets into the trust at the proper times or at all. Therefore, it is important for your trusted advisor to actually look at each of the documents such as account statements, property tax bills, etc. in order to review the actual title of the property and determine when and how you should fund the trust. While in many cases funding the trust properly requires relatively swift actions, not all living trusts should be funded immediately.

Occasionally, it is prudent to establish a Living Trust but not immediately fund it for reasons such as liability protection (doctors, lawyers, etc.) until they are beyond the tail period on their malpractice or because a retirement institution will not accept a sophisticated beneficiary designation attachment but will accept a trust as a contingent beneficiary.

Therefore, it is really important to discuss your full situation and goals with your advisor to avoid making a mistake in funding your trust.

This is only one common mistake. Again, please make sure that you consult a competent estate planning attorney to make sure everything in your estate is in order and fits perfectly with your individual situation!

Blog Series: Five Easily Avoided Estate Planning Mistakes

Posted on March 31, 2013 by James Lange in Estate Planning.

Mistake 4 – Having the wrong beneficiary named on retirement accounts.

It is estimated that over one-third of retirement accounts either have an incorrect beneficiary or do not even show who the beneficiary of the account is! It is critical to make sure that your advisor retains all copies of the beneficiary forms and makes sure that they are, in fact, correct and that the beneficiary is not deceased or the beneficiary is simply the estate. Remember – in the event that no beneficiary is found, the default is usually going to be the estate. This can be unfavorable because the retirement account will not have a designated beneficiary which might create significant income tax problems for the beneficiaries in the future if other estate planning tools are not in place.

This is only one of the various common mistakes. Again, please make sure that you consult a competent estate planning attorney to make sure everything in your estate is in order and fits perfectly with your individual situation!

Blog Series: Five Easily Avoided Estate Planning Mistakes

Posted on March 30, 2013 by James Lange in Estate Planning.

Mistake 3 – Not having your estate updated on a regular basis.

It is best to have your estate plan reviewed at least once every three years to make sure that everything is current. Very often someone has made changes in their life during a three year period of time. This can include death, divorce, new children or grandchildren and changes in desired beneficiaries.

In addition to this, the individual may have moved to a new State and their existing estate plan does not comply with the various rules of the new State. It is extremely important. Also, new tax laws often warrant changing the estate plan.