Avoid These Estate-Planning Pitfalls

There’s a lot about the estate tax that’s up for grabs right now, as I discussed in this article. At the same time, many aspects of estate planning are crucial no matter what the tax code says, such as creating a living will, naming individuals to act on your behalf if you die or become disabled, and choosing beneficiaries of your investment accounts. To discuss some of these important concepts, I interviewed H. Susan Jones, a top estate-planning attorney based in the Chicago suburbs.

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In the interview, Susan discussed some of the most common pitfalls of estate planning and how to avoid them, as well as some underutilized estate-planning maneuvers. An excerpt from our interview is below.
Christine Benz: What are the big mistakes you see people making when it comes to estate planning?

Susan Jones: The biggest mistake is a misunderstanding of beneficiary designations. Many assets today are transferred at death through a beneficiary designation. [Read the full article]

Commodity fund investors have started receiving their Schedule K-1s in the mail recently, so we thought it would be a good time to review the pros and cons of the various exchange-traded fund structures from a tax perspective. Also, we’ll discuss some of the issues to which investors will need to pay attention when they are preparing their 2009 tax returns.

Most investors are familiar with Form 1099 that accompanies many “1940 Act” funds (traditional mutual funds that hold equities). However, if you bought a commodity-futures-based ETF, you might have received a Schedule K-1 instead. While the form may be intimidating at first, it should not be perceived as a tax nightmare. We’ll help you walk through the filing process later in the article.

If you acquired your commodity exposure through an exchange-traded note, then you won’t have to deal with the extra filing headache. [Read the full article]

Gov. Joe Manchin’s bid to exempt some business property from taxes by amending the West Virginia Constitution cleared the House of Delegates on Wednesday, but worries of lost revenue persist among counties.

The measure sent to the Senate 95-1 would ask voters to allow counties to decide whether to keep new business inventory and equipment off the tax rolls.

If senators adopt the resolution, the question would end up on the November ballot. Voter approval would allow the Legislature to set the tax break’s terms and a date from when acquired inventory or equipment would qualify. It would not apply to property held by public utilities.

“Certainly, there’s a lot more work to do in this area, but I think that this is an important step in making West Virginia competitive with surrounding states,” said House Minority Leader Tim Armstead, R-Kanawha, before the vote. [Read the full article]

South Dakotans would no longer pay a state sales tax on food but would pay a slightly higher tax on other goods under legislation to be considered by the state House.

Much of the committee debate Thursday centered on whether the bill would really help low-income households as the sponsors intend because they would pay more on other necessities such as clothing and utilities.

Critics questioned the wisdom of tinkering with a dependable source of tax revenue at the same time legislators face challenges in balancing the state budget.

The bill to remove the 4 percent tax on food and boost it to 4.3 percent on everything else was passed 9-6 by the House Taxation Committee. Local sales taxes on food would not be affected.

Bill sponsor Rep. Marc Feinstein, D-Sioux Falls, said the food tax raised $56.8 million last year. [Read the full article]

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