4 Northeastern states sue Trump administration

Four northeastern democratic states have sued the Trump administration claiming the new federal cap on the $10,000 cap on local and state taxes is unfair and unconstitutional.

New York, New Jersey, Maryland an Connecticut say the new tax overhaul has upended 150 years of precedent and that the deductions are essential to prevent the feds from abridging constitutional states rights. New York State Attorney General Barbara Underwood said in a statement the new law is a result of “hyper-partisan and rushed process.” A State analysis found that the cap will increase New Yorkers taxes by $14.3 billion in 2018 an another $121 billion from 2019 to 2025.

According to the lawsuit filed yesterday in Manhattan Federal Court, the so-called SALT deduction will make it more difficult for the four states to maintain their taxation and fiscal policies, thus “hobbling their sovereign authority to make policy decisions without federal interference.”

The tax law, passed last December, caused some local governments to revise their rules to help last-minute change in federal tax strategies, while homeowners in states with the highest property taxes quickly began looking to prepay bills ahead of the cap.

In a written statement, New Jersey Attorney General Gurbir Grewal said the federal government “went after these states deliberately” in crafting the SALT deductions cap.

 

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2018 tax calculator

Although the Tax Cuts and Jobs Act didn’t affect your 2017 tax return, it will impact your 2019 returns. Here is a handy 2018 tax calculator provided by H&R Block to give you an idea of how your tax liability will change in 2019. Until then you will only notice changes in your paychecks until the bill takes full-effect in 2019.

https://www.hrblock.com/tax-calculator/#/en/te/aboutYou

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The $30 trillion wealth transfer

The so-called baby boomers are the wealthiest generation in American history an in the next few decades they will be transferring that wealth It’s called the great wealth transfer.

Now whether all that wealth gets transferred or not is how well boomers manage and save that money.

Hanging on to your money

The first thing is making sure you have money to pass on. You need to prepare for unforeseen circumstances that an wipe out that wealth. Healthcare is one circumstance that can wipe out your money before you know it.  Diseases and nursing home costs can zap all your money in what seems like a heartbeat. That is why long-term healthcare insurance is not only a good idea, but necessary. The premiums may be expensive but very much worth it

Trusts. 

We’ve talked about the importance of trusts are still advocate them. That’s why we suggest setting up a living trust, that way you can manage the majority of your assets and bypass probate and get your money to your beneficiaries with the least amount of hassle.

Estate Taxes

The new overhaul of the federal tax code pretty much excludes so-called death taxes as long as your estate is less than $11 million, but you sill need to check with your state to see what if any estate taxes are charged.

 

 

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The state of bankruptcy

In 2009, in the middle of the last recession, commercial bankruptcies peaked at a high of  8,277 in May of that year according to the American Bankruptcy Institute. Since that time they have leveled out.  In May, 3,300 businesses filed for bankruptcy. While that was up from April,  the number of filings have been on the decrease for the past few years.

Since May of 2009, bankruptcy filings have been falling continuously from month to month until May of 2016 when just over 3400 were filed. That number was up over 800 from May 2015. In the year since then filings have fluctuated.

Consumer filings seemed to mirror the  commercial ones but since 2014 they have been on the rise with no fluctuations. No surprise that states with the lowest median incomes have been hit the hardest.

Alabama was the hardest hit and six of  the 10 states and eight of the 10 counties with the highest rate of personal bankruptcy filings are in the South. In addition, the top states also have the least legal protections for debtors.

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The importance of a living trust

When the time comes to be financially responsible, it is often an overwhelming process for most people. Understanding how to effectively draft a living trust will not only give you peace of mind for after your passing, but also help sort out many legal issues and ensure that your wishes will be carried out. A trust is also beneficial in expediting asset distribution and can potentially provide the opportunity to avoid unnecessary taxes. As a living trust is likely to be one of the most important documents you will draft in your lifetime, it is important to know how to navigate it to ensure your peace of mind.

The first step is to begin by compiling a comprehensive list of all your assets. Assets are defined as investments (these could be stocks and bonds), insurance policies, your business interests, and all real estate. Then, as you start with the initial draft of your financial trust, ask yourself some key questions: Whom do you want to inherit your assets? Who will handle your financial affairs in case of incapacitation? Who will make medical decisions for you if you are no longer able to? With these questions in mind, you are well on the way to forming an effective legal trust and estate plan.

It is important to have a deep understanding of the nature of your assets, which may have to be distributed in the event of your death or incapacity. While some assets are easily identifiable and accessed (for example, your bank accounts), other assets can have designated beneficiaries who could have preexisting rights or overriding provisions made for alternate beneficiaries in a trust or will. As seen, many issues can plague the process of making an effective financial trust or will. Another part in planning one’s estate that should not be avoided is the selection of beneficiaries (those who can be named as specific recipients for insurance or retirement plans). Your last will must have the names of the persons who will receive the estate; it is important to designate both primary and secondary beneficiaries in the event of unforeseen circumstances (such as if the primary beneficiary passes before the author of the will). An effective will or trust will be prepared for such contingencies; if not, your property may be distributed in a fashion that does not reflect your wishes.

In some cases, using a testamentary substitute can be beneficial. The use of a financial trust grants post-death distribution of assets, and essentially contains the same beneficiary directions in a will. The difference is that a trust does not have to go through the probate process to be effective. The asset titles must also be changed so they are owned in the trust’s name prior to death, which means bank accounts and real estate must be held in the trust name so the directions can be applied. Done properly, your trust will fully carry out your intentions and wishes after death.

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