Survey: Family drama causes estate issues
Families face a variety of estate planning challenges, and family drama may be chief among them.
Q: How often are family challenges a problem in estate planning?A: According to a survey by TD Wealth. 44 percent of planning professionals say family conflict is the biggest threat to estate planning this year, followed by tax reform (25 percent) and market volatility (12 percent).
Q: What are some steps to avoid conflict interfering with estate planning?A: Use an experienced estate planner to ensure you have the proper planning documents in place to outline your intentions and appoint a fiduciary.
Q: What internal dialogues should families have to avoid any drama?A: Hold frank conversations so everyone knows what to expect in the event of your death. Fewer surprises mean less discord. If you are giving unequal gifts, tell your heirs why and document your rationale in an estate planning letter.
Q: How is it possible for families to avoid costly tax surprises?A: For most taxpayers, the Tax Cuts and Jobs Act reduced the overall tax burden.
However, even though taxpayers will see an overall reduction in their taxes, many of them could
still end up with a nasty tax bill at year end.
Q: Does the Tax Cuts and Jobs act assist in anyway?A: Following passage of the TCJA, the IRS released updated withholding tables to reflect the new law. As a result, many people saw their paychecks increase. But the withholding tables didn’t take into account the wide range of individual circumstances affecting exemptions.
Q: By withholding annually will this help taxpayers?A: By having your employer withhold taxes from your paycheck, you spread out your tax liability
and avoid underpayment penalties. You may have withheld the right amount in the past,
but TCJA changes may have altered your situation. The IRS advises that families with complex tax situations may have their income taxes withheld incorrectly and may end up owing more.
Q: What families should make a particular effort to review their withholdings?A: People living in high-tax states, Two-income households, Households with children and people who itemized deductions in 2017 and anyone with a large tax bill or large refund in 2017. The loss of certain exemptions may not be offset by the higher standard deduction. Some taxpayers could end up with a larger return than expected while others will be saddled with a challenging tax bill.
Q: What should families with complex financial situations do to properly prepare?A: It’s generally a good idea to review your withholding annually or when you have a significant
life change. Use the IRS online withholding calculator to review your withholding. Better yet, sit
down with your tax adviser to get a clear understanding of your upcoming liability. As always,
talking with an adviser can help you figure out if you should be expecting a large tax burden
next spring — and give you extra time to prepare.