family_tax_planning - 1 TAX 6845 Tax Planning...

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1 TAX 6845 – Tax Planning & Consulting (week: November 23) Topic: Family tax planning & tax-sheltered investments updated: November 16, 2010 I. Family tax planning A. Why family tax planning ? Investors and business people who practice effective strategies for maximizing after-tax value often accumulate substantial personal wealth. Although those earnings have already been subject to income tax, the threat of additional tax looms via the federal transfer tax system – gift taxes, estate taxes, and the generation skipping transfer tax (and possibly even state transfer taxes). Family tax planning coordinates both strategies and options to eliminate, reduce, or postpone your individual, corporate, and inheritance taxes with nontax objectives. B. What is family tax planning ? Family tax planning includes personal financial planning, retirement planning, estate planning, and planning charitable contributions to tax-exempt organizations. The goal of family tax planning is to facilitate the wealth transfer process and minimize the family’s overall tax burden. Planning includes: Minimizing gift, estate and generation-skipping taxes through the use of the annual exclusion, trusts and other entities. Planning for the transition of ownership and management of family businesses and other family assets, including arrangements to accommodate the differing interests of younger-generation family members. Protecting wealth from undesired spousal claims through pre- and post- nuptial agreements, trusts and exempt assets. Protecting assets, where appropriate, from potential creditor claims through transfers to trusts in jurisdictions having laws favorable to the use of such techniques. Planning for the consequences of catastrophic illness or mental disability.
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2 C. What is financial planning ? Financial planning is a growing area of financial services offered by accountants & attorneys. First, gather factual data – tax returns, bank statements, wills, investment information, insurance policies (including beneficiaries), asset titles (with names and terms), etc. Then, gather preference information – nontax factors, risk preferences, goals & objectives, special family needs, etc. A comprehensive financial plan may require you to: prepare personal financial statements – balance sheet and income statement (current and projected) prepare a cash budget (current and projected) include personal, business, and investment items, debt service, taxes (based on income projections analyze debt service – payment problems, refinancing for lower rates or longer terms analyze investment portfolio – amount of investments, liquidity, diversification, and risk analyze retirement savings – establish pension plans, SEP, IRAs, personal savings, consolidate 401(k)s accumulated over lifetime, social security benefits, etc.
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This note was uploaded on 09/09/2011 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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family_tax_planning - 1 TAX 6845 Tax Planning...

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