Disabled beneficiaries present unique estate planning problems

Article Abstract:

Families with a disabled beneficiary should make sure that their estate plan is structured in a manner that ensures the beneficiary of optimal care and financial support. To do so, they should hire estate planners that would investigate the disability of the beneficiary, family relationships and the need for long-term care. These planners should also be tasked with learning the various government assistance programs for disabled individuals, such as Social Security, Medicare, special education for children, supplementary security income, Medicaid, welfare benefits and institutionalized care. Families should avoid giving an outright bequest to disabled children because it may disqualify them from government assistance. A better alternative is a trust because, if arranged appropriately, it does not disqualify the child from government help. The best trust is the discretionary trust, although testamentary, inter vivos, support and community trusts can also be used.

Care and treatment, Evaluation, Disabled persons, Estate planning, Discretionary trusts

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Stock appreciation rights offer flexibility, benefits

Article Abstract:

Stock appreciation rights (SARs) entitle their recipients, often a company's key employees, to cash and/or stock whose value is determined by the appreciation of the firm's stock between the time of granting and the time of exercise. SARs provide corporate executives and other important employees with risk-free means of becoming part of the organization's growth. For tax purposes, employees exercising an SAR and receiving cash should declare such cash as part of the gross income in the year of exercise. However, before the exercise, SAR grantees receiving cash should include this cash in the gross income only upon its actual or constructive receipt. One advantage of SARs over other types of executive compensation is the flexibility in how plans can be structured since they are nonqualified. On the other hand, a major disadvantage of the SAR is its complicated accounting treatment.

Compensation and benefits, Executives, Executive compensation, Employee benefits

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Filing a joint final tax return can be an effective strategy for the surviving spouse

Article Abstract:

There are advantages and disadvantages to having a surviving spouse file a joint final tax return. In order to be able to file jointly the survivor must not have remarried, the taxable year must not be a fractional part of a year because of an accounting change, and neither spouse can be a nonresident alien. The advantages of filing a joint return include the inherent income splitting benefits, benefits if there are capital losses or an NOL, and special considerations of medical expenses, savings bonds and partnership interests. A joint return should not be filed if the estate may become insolvent, if the executor wants a fast closing, and if the decedent had substantial medical expenses.

Tax accounting, Spouse's share

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