The Wealth & Wisdom Blog

Initiating Difficult Conversations

Posted on June 19, 2021 by Cory Wessman

“Son, we have decided that your brother is going to lead our family company.”

Those of us who are “Minnesota nice” have a difficult time initiating difficult conversations, especially with family. For example, have you and your spouse had conversations about his or her wishes to remarry if you die? (without naming names, of course). According to a study entitled, “The Better Than Expected Consequences of Asking Sensitive Questions,” those who fail to initiate difficult conversations are missing out on important benefits. According to the authors, “individuals make a potentially costly mistake when they avoid asking sensitive questions, as they overestimate the interpersonal costs of asking sensitive questions.” While we often avoid difficult topics for fear of offending others, we miss out on the opportunity to use the difficult topics to deepen our relationships.

In this month’s update, I share a few thoughts as to how clients might communicate difficult estate planning topics with their family.

(more…)

American Family Plan and Gifts to Children and Charity

Posted on May 19, 2021 by Cory Wessman

A few weeks ago, President Biden introduced proposed legislation under the name of the “American Families Plan” (“AFP.”) In this month’s update, I wish to summarize the appropriateness, or perhaps the double-meaning, of the name of the American Family Plan legislation. If the AFP is enacted, certain taxpayers should consider gifts to other members of the taxpayer’s family, or perhaps gifts to favorite charities, thereby benefitting other American families. There are many uncertainties about the AFP proposal, including the opportunities that wealthy taxpayers might have to liquidate highly-appreciated assets ahead of the effective date of any legislation. For now, I wish to draw your attention to how two tax proposals, if enacted, would impact gifting decisions.

(more…)

Charitable Remainder Trusts

Posted on May 19, 2021 by Cory Wessman

A charitable remainder trust (“CRT”) is a type of irrevocable trust that creates a “split interest” in contributed property between the taxpayer and one or more tax-exempt charities. This type of irrevocable trust structure provides three separate tax benefits: (a) an immediate charitable deduction to the taxpayer equal to a certain percentage of the value of the contributed assets; (b) the deferral of the capital gains taxes on assets contributed to the CRT; and (c) the avoidance of any estate taxes for assets contributed to the CRT. The CRT planning proceeds as follows:

(more…)

Margin for Error in Estate Planning Decisions

Posted on April 20, 2021 by Cory Wessman

“Spread the News, Cory,” my friend told me after arriving home from a weekend skiing with his wife and friends in Colorado a few weeks ago, “the pandemic is over.” While my friend’s exuberance may be a bit premature, I think all of us can relate to a desire to be done with the pandemic. In this month’s update, I wish to emphasize, through two recent client illustrations the importance of creating margin for error in our estate planning decisions.

(more…)

Planning for Multi-Generational Living Arrangements

Posted on March 25, 2021 by Cory Wessman

“How Much Rent Can I Legally Charge my Mother-in-Law?”

Even before the outbreak of COVID-19 last March, I was interacting with an increasing number of clients considering multi-generational living arrangements. According to an article last week in the Wall Street Journal, the incidence of these multi-generational living arrangements, defined as multiple adult generations living together in one primary residence, has actually increased during the pandemic. According to the Journal, 15% of residential purchases made between April and June of 2020 were for multi-generational living arrangements. In 2018, a record 64 million people lived in multi-generational households, which account for 20% of the population. As home values continue to increase, and many older Americans seek at-home end-of-life care, this trend will only continue.

In this month’s update, I suggest a few important questions to ask mom and dad (the “Senior Gen”), as well as the younger generation (“Junior Gen”), who are considering such multi-generational living arrangements. These questions are as follows:

(more…)

Minnesota Tax Law Update

Posted on February 17, 2021 by Cory Wessman

“Dad, it’s so cold outside. Why can’t we live in a warmer state like Grandma and Grandpa?”

This past week, a few of my clients called me from their winter residences in Florida and Arizona. In addition to their own estate planning matters, we discussed the significant temperature differential between our respective locations. On a somewhat related note, Governor Walz recently announced his proposals for state estate tax and income tax changes. In this month’s advisory update, I summarize a few of the Governor’s proposals and provide a brief comments as an estate planning practitioner.

(more…)

2020 Year-End Tax Update and Planning in a Time of Uncertainty

Posted on December 22, 2020 by Cory Wessman

“Our new constitution is now established and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” Benjamin Franklin’s letter to Jean-Baptiste Leroy, 1789.

For many of us, the end of the calendar year could not come soon enough. Between the social unrest, political turmoil, the COVID-19 pandemic, and the economic and societal upheaval created thereby, few of us will shed any tears for the end of the 2020 calendar year. Looking ahead, many clients and fellow advisors lament the lack of certainty surrounding government institutions, the future of tax laws, and perhaps the economic outlook.

In this time of uncertainty, I encourage our clients to make decisions based upon the certainties of life, decisions based upon their faith, their love for their families, and their charitable endeavors. Over this past year, I have been honored to help some clients make significant lifetime gifts. Some clients have helped with an adult child’s unexpected living expense costs, other clients with educational costs of their grandchildren, and other clients with the establishment of charitable strategies. While tax law changes might impact the tax efficacy of such lifetime gifting decisions, I am certain that none of the clients that I assisted this past year with significant gifting matters will regret their gifting decisions, given that these decisions were ultimately driven by non-tax considerations.

Keeping in mind that tax rules are likely to change in the coming years, we should plan on the following tax rules going into 2021:

(more…)

Four Strategies for Funding a Grandchild’s College Costs

Posted on November 29, 2020 by Cory Wessman

“Golf is a game whose aim is to hit a very small ball into an even smaller hole with weapons singularly ill-designed for that purpose.” Winston Churchill.

As a golfer, I have come to realize, through many poorly-played rounds, that the use of the correct “tool” (that is, club selection) is of critical importance in executing the appropriate strategy. For those endeavoring to complete a home improvement project, I am told that having the appropriate tool on hand is key to the efficient completion of your project.

Over the past few months, I have had the pleasure of representing several clients who have shared a common planning objective: to provide for the educational costs of their grandchildren. Ideally, a grandparent will have the personal satisfaction of seeing their granddaughter or grandson move the tassels on their cap and hear Pomp and Circumstance at a post-pandemic graduation ceremony. Just as certain tools are better than others when it comes to golf or home improvement projects, the most appropriate gifting strategy should be customized for each family. In this month’s update, I provide a brief overview of four different gifting strategies that grandparents could implement to assist grandchildren with educational costs.

(more…)

In-Laws and Estate Planning

Posted on October 27, 2020 by Cory Wessman

“Well, that was a son-in-law.” So exclaimed my golf playing partner immediately after he drove his tee shot off the first tee right into the trees, resulting in a penalty stroke. “What do you mean,” I asked my friend, what does that errant golf shot have to do with a son-in-law? “Not what I had in mind,” he responded.

Since the beginning of the pandemic, I have seen a marked increase in the number of clients expressing concern about how their son-in-law or daughter-in-law might impact their estate planning decisions, particularly lifetime gifts to their adult children. These conversations may be a result of marital stresses aggravated by the pandemic but, regardless, with more onerous tax rules on the horizon, more clients are concerned about how a son-in-law or daughter-in-law would impact lifetime gifts to adult children. This month’s update provides a few thoughts related to the management of a difficult son-in-law or daughter-in-law within estate planning decisions.

(more…)

Annual Exclusion Gifts

Posted on September 30, 2020 by Cory Wessman

Do your givin’ while your livin’ so your know’n where its goin’. Unknown Poet and Estate Planner

Many of my clients share with me their pleasure in seeing their family use and enjoy gifts made by them. Whether it is paying for a nice dinner out with the family (remember those days?), a vacation adventure with the grandkids, or even paying some of a grandchild’s staggering educational costs, my clients generally feel that making such significant lifetime gifts are a good use of hard-earned assets. For my part, I am glad to remind them of the tax planning benefits of making such lifetime gifts. In last month’s update, I provided a brief overview of the policy position of Biden and Trump and how those positions would impact estate planning. Ahead of the tax law changes I believe to be on the horizon, this month’s update provides a brief summary of “annual exclusion gifts.”

(more…)

Information on Estate Planning, Estate and Trust Administration and Unique Asset Planning