Category: Thursday Thoughts

Many states offer some tax relief for their elderly citizens.  There may be some generosity behind the offer, or it may be part of an attempt to compete with lower-tax states for retiree residents.  That competition may heat up now that the state and local tax deduction is limited to $10,000.  The tax relief takes […]

Lotteries have become enormously popular in the United States.  There is a widespread perception that many lottery winners burn through their newfound wealth rather quickly, and don’t end up better off in the long run. Swedish researchers have examined this perception more rigorously, in a manner akin to a randomized test of a drug’s efficacy.  […]

Aretha Franklin, the “Queen of Soul,” passed away in August. Her life and musical legacy were remarkable. Her estate planning, not so much. Reportedly, Ms. Franklin died without ever executing a will. Her four sons filed notices with the probate court, before her funeral, that they were interested parties to her estate. One signed a […]

The Grantor-Retained Annuity Trust (GRAT) has emerged as a popular strategy in the estate planner’s toolkit.  The idea is that a grantor places assets in a trust while retaining the right to receive payments from the trust.  When the term of the trust expires, any assets remaining in the trust pass to a beneficiary, typically […]

Usually an IRA is invested in stocks, bonds, mutual funds, and perhaps certificates of deposit. Sometimes a retiree may see this nest egg as a resource for a more unconventional investment.  In that case, one needs to beware of the rules against self-dealing.  Some transactions are prohibited under the tax code and may lead to […]

A parent, who is still living, created an irrevocable trust before 1985 for his lineal descendants. The trust creation date was before the effective date of the current generation-skipping transfer tax, and so the trust is protected from that tax by the “grandfather” rule for pre-existing trusts. The trust will divide into three portions upon […]

An item in Barron’s a few years ago by Lauren Foster demonstrates that being a trustee may be harder than some people expect (“The Five Biggest Ways to Bungle a Trust,” May 21, 2011).  Foster’s observations are must reading for anyone who expects to be a trustee, or who has nominated a family member to […]

The best way to prepare for retirement is to save, early and often.  Generally, one should set aside 10% to 15% of one’s income each year.  If the habit takes hold early in one’s career, a very meaningful nest egg should be the result. Saving is easier when there is a tax deduction for it, […]