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Taxes

3 Ways to Avoid Probate

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Listen to Chad Groover, elder law attorney from Upstate Elder Law, talk about ways to avoid probate on our latest podcast. Be sure to also listen and read our prior blog and podcast on how the probate process works.
 
You may have heard about the horrors of the court proceedings after death, but in truth, probate has gotten an undeservedly bad reputation, especially in recent years. If you bypass probate, your estate will go to your beneficiaries without any court proceeding, and you may save a certain amount of time and expenses. However, there is usually little reason for most people to avoid probate today. States continue to revise their probate laws, making them more consumer friendly, particularly for small estates. In fact, there are some good reasons to distribute your property by will. Decisions are binding and have legal finality once your will is probated. Creditors who fail to file claims against your estate within a specific amount of time — usually six months after receiving notice — are out of luck.
 
 
However, some major drawbacks to probate do exist, including the time it can take. The process averages six to nine months to complete but may take up to two years or more for some complex estates, tying up the assets that your family may need immediately. Also, for a larger estate, the cost may be as high as 5 percent of the estate’s value.

To learn more, consider downloading our Bypassing Probate Article

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How the Probate Process Works

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Listen to Chad Groover, elder law attorney from Upstate Elder Law, talk about how the probate process works on our latest podcast. In case you missed it, We heard Chad Groover speak at our First Friday Networking at Noon event. 

​Intelligent Investing does not provide any tax, legal, or accounting advice. Any  material in the email or attachments has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

How the Tax Cuts and Jobs Act Affects ABLE Accounts

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Expansion of 529 plans to allow transfers to ABLE accounts

The new tax legislation also allows 529 account owners to roll over (transfer) funds from a 529 plan to an ABLE plan without federal tax consequences. This ability to transfer funds will expire at the end of 2025 unless a future Congress acts to extend the law.

An ABLE plan is a tax-advantaged account that can be used to save for disability-related expenses for individuals who become blind or disabled before age 26. Like 529 plans, ABLE plans allow funds to accumulate tax deferred, and withdrawals are tax-free when used to pay the beneficiary’s qualified disability expenses, which may include (but are not limited to) housing, transportation, health care and related services, personal assistance, and employment training and support.

ABLE accounts have annual and lifetime contribution limits. Contributions from all donors combined during the year cannot exceed the annual gift tax exclusion ($15,000 in 2018). As for lifetime limits, each state sets its own limit, which is also the state’s maximum for its 529 college savings plan contributions. In most
states, this limit is at least $350,000.

A list of ABLE plans offered, by state, and a comparison tool are available at ablenrc.org.

Note: Investors should carefully consider the investment objectives, risks, charges, and expenses associated with 529 plans and ABLE plans before investing. Specific information is available in each plan’s official statement. Participating in a 529 plan or ABLE plan may involve investment risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful. Before investing, consider whether your state offers residents favorable state tax benefits for 529 plan or ABLE plan participation, and whether those benefits are contingent on joining the in-state plan. Other state benefits for 529 plans may include financial aid, scholarship funds, and protection from creditors.

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How the Tax Cuts and Jobs Act Affects 529 Plans

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Tax Cuts and Jobs Act Affects 529 Plans

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How the Tax Cuts and Jobs Act Affects 529 Plans is a blog that should help you know what happened as a result of the passing of the Tax Cuts and Jobs Act, a sweeping $1.5 trillion tax-cut package, became law. College students and their parents dodged a major bullet with the legislation, as initial drafts of the bill included the elimination of Coverdell Education Savings Accounts, the Lifetime Learning Credit, and the student loan interest deduction. Also on the table in early drafts of the bill was the taxation of tuition waivers, which are used primarily by graduate students and employees of higher-education institutions. In the end, none of these provisions made it into the final legislation. What did make the final cut was the expanded use of 529 plans.

Be sure to also check out our other blog on How the Tax Cuts and Jobs Act Affects ABLE Accounts.

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2018 IRA and Retirement Plan Limits

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IRA contribution limits

The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2018 is $5,500 (or 100% of your earned income, if less), unchanged from 2017. The maximum catch-up contribution for those age 50 or older remains at $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2018, but your total contributions can’t exceed these annual limits.

Traditional IRA income limits

The income limits for determining the deductibility of traditional IRA contributions in 2018 have increased. If your filing status is single or head of household, you can fully deduct your IRA contribution up to $5,500 in 2018 if your modified adjusted gross income (MAGI) is $63,000 or less (up from $62,000 in 2017). If you’re married and filing a joint return, you can fully deduct up to $5,500 in 2018 if your MAGI is $101,000 or less (up from $99,000 in 2017). Note that these figures assume you are covered by a retirement plan at work.

Read More and Download Here:

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