Strategic
Issues...Online
For week of
February 26,
2007, Issue #297
Featured
Articles:
1. CPAs:
Helping Senior Clients Weigh All the Options
2.
Tech Tip Weekly: Saving
Multiple Word Documents
3. Focus on
Fraud: Domain
Name Registration Scams (Part 3 of 3)
4.
Compliance Calendar
If you
would like to have further information on
any of these articles, let us know.
We would appreciate receiving your comments
and/or suggestions, anytime!
acarroll@pmcpa.com
1.
CPAs: Helping Senior Clients Weigh All the
Options
CPAs are
often called upon by senior clients or
members of the client's estate planning team
to assist with decisions about who should
receive their assets, and how and when those
assets should be distributed. Decisions
regarding charitable giving, maximizing
distributable wealth and tax considerations
are major issues for seniors and their
beneficiaries when an estate is
transferred. And often the cornerstone of
the estate plan is a life insurance policy.
Often
included in the client decision-making
process is whether an existing policy that
was purchased years ago as a component of a
wealth management or estate plan is still
appropriate in terms of its application to
the client's objectives. Or, perhaps, the
policy is no longer needed, given a
reduction in the estate value. In such
instances, estate planning professionals
should triangulate the situation in
order to determine (a) whether the policy
should be surrendered; (b) whether a 1035
exchange would be appropriate, or (c)
whether the policy should be settled in the
secondary market if the insured is a senior
over the age of 70.
If a client
is having difficulty making premium
payments, but would prefer not to surrender
the policy, the CPA will want to determine
whether the insurance contract allows for a
reduction in death benefit, which lowers the
cost of insurance. The 1035 code that
provides for a tax-sheltered exchange of
cash value from one life insurance policy to
another - might make sense if the insured
qualifies for a better policy. The 1035
exchange allows the insured to avoid capital
gains in the first policy as long as the
second policy is of greater or equal costs.
If the insured is over the age of 70,
selling the policy in the secondary market
should also be explored due to the fact that
the average life settlement is typically
three times the cash surrender value.
Aside from
the surrendering, exchanging or selling an
unwanted life insurance policy, CPAs will
want to consider yet another option -
charitable giving. Rather than donate other
assets in their
estate to
charity, the senior may want to
consider either gifting the life insurance
policy to the charity directly, or pursuing
a life settlement and subsequently donating
the proceeds to the charity.
A gift of
life insurance appeals to a variety of
donors because it is cost-efficient and
because there is no erosion in payout due to
administrative fees.
2.
Tech Tip Weekly: Saving Multiple Word
Documents
To save a multitude
of MS Word documents all at once, you can switch
to each window and pull-down the File, Save
command. Or you can be sneaky and do the
following.
-
Press and hold the Shift key -- either
one.
-
Choose File, Save All.
Normally, you
choose the Save item. But if you press the
Shift key before choosing the File menu, it
magically becomes the Save All menu item.
There is no prompting
(unless the documents hasn't been saved yet),
and no wait-and-see. Everything is just saved to
disk as fast as your PC can handle it.
3.
Educate Employees
IT professionals in most companies will be aware
of these types of scams, but it can be costly
for you if other employees who are allowed to
authorize small payments don’t know about them.
So inform your employees about domain name
scammers; it may help preserve your good name.
[ Refer to the prior two weeks Strategic Issues
. . . Online for Parts 1 and 2 of 3 at
www.pmcpa.com ]
4.
Compliance Calendar
March 2
-Employers
deposit Social Security, Medicare and withheld
income tax for February 24, 25, 26, and 27.
March 7
-Employers
deposit Social Security, Medicare and withheld
income tax for February 28 and March 1 and 2.
March 9
-Employers
deposit Social Security, Medicare and withheld
income tax for March 3, 4, 5, and 6.
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