Estate Planning: What Happens to Your Money After You Die?
By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel
One of the most important issues in estate planning is what happens to your money after you die. How quickly your heirs receive the inheritance depends largely on your estate planning. (If you’re having any difficulties with an inheritance, please email me at doug@profile-financial.com.)
3 things to consider when planning your estate
When setting up U.S. IRA and brokerage accounts for clients who live in Israel, I ask them to consider what will happen when they no longer need their money. Here’s where to start:
When clients pass away, we work with the family and guide them step by step through the money transfer. If you have questions about handling your estate, send me an email (doug@profile-financial.com) or call (02-624-2788) and let’s begin a conversation about how to make the right moves.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
Avoid These Common Mistakes When You Receive an Inheritance
By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel
A new client recently told me, “My late father left me an inheritance of an IRA (Individual Retirement Account) worth $1.5 million, and I’m the sole beneficiary. What should I do with it? If I bring the money to Israel, I’ll have to sell the stocks and wire the money to my account here. But if I do that, I’ll have to pay tax in the United States and maybe Israel, too.”
Unfortunately, many beneficiaries make costly money mistakes. Read about the mistakes you should avoid if one day you receive an inheritance, and then check out our free interactive tool at www.profile-financial.com/interactive.
Don’t take money out of the IRA
If a beneficiary withdraws the funds from the IRA, he’ll lose a fantastic American tax benefit. People with regular IRAs only pay tax on the money they withdraw. Any money remaining in the account can continue to grow untaxed. An inheritor can transfer the original IRA into a “beneficiary IRA” (a.k.a. “stretch IRA”) and this maintains the tax-deferred status of the account until the money is eventually withdrawn.
No U.S. capital gains tax on sales inside an IRA
According to IRS rules, U.S. citizens holding IRAs don’t pay capital gains tax (or tax on interest and dividends) when they sell stocks for a profit inside their account. This is a huge benefit when compounded over many years.
Probably no estate tax
U.S. citizens who leave their estates to their American-citizen spouses or children don’t have to pay estate tax as long as they don’t exceed the “federal estate tax exemption,” which is $5.45 million (as of 2016). (Be sure to consult with a qualified tax advisor in case there’s any state or local estate tax.)
As I don’t give tax advice to clients, I always tell beneficiaries of an inheritance to consult tax professionals. I often work directly with clients and their accountants to make sure that their investments and tax obligations are handled properly.
If you’re getting an inheritance and you live in Israel, make sure to check out www.profile-financial.com/interactive.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
A Guide to the Tax Implications of a Legal Settlement
By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel
This is a two-part article addressing questions that arise when people receive lump sums. For the entire article, go to: www.profile-financial.com/settlement.
I recently helped a number of people who are in the midst of receiving a cash settlement from a lawsuit, and had to point out that winning a lawsuit is not “free money.” In addition to having survived personal injury and a long-drawn out legal case, there may be tax implications to a legal settlement.
Lost wages or profits
If you are unfairly dismissed from employment, you may receive a settlement for lost wages, benefits, severance, back pay, or other income. According to the IRS, this settlement is considered regular income, even though severance pay is often tax free in Israel. This kind of settlement is also subject to the Social Security wage base table and Medicare tax rates for the year in which you were paid. Reporting legal compensation for lost wages is similar to reporting income for regular pay when you were employed.
Interest payments
Interest on any settlement, as with any income, is taxable and should be reported as “interest income.”
Punitive damages
Punitive damages are taxable and therefore must be reported, even if received in a settlement for personal or physical illness or injuries.
Estimate tax
Make estimated tax payments early if you know you’re going to owe at least $1,000 in income tax from having to report receipt of a legal settlement amount.
Taxation on settlements is complicated. Remember to speak with a qualified tax advisor to get advice since this article is just for general information. We help people manage their U.S. investment account, not file their tax returns.
Free information
To get this complete article along with the IRS’s information about what you need to report to the IRS regarding a legal settlement, go to: www.profile-financial.com/settlement
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
A Guide to the Tax Implications of a Legal Settlement
By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel
This is a two-part article addressing questions that arise when people receive lump sums. For the entire article, go to: www.profile-financial.com/settlement.
I recently helped a number of people who are in the midst of receiving a cash settlement from a lawsuit, and had to point out that winning a lawsuit is not “free money.” In addition to having survived personal injury and a long-drawn out legal case, there may be tax implications to a legal settlement.
Lost wages or profits
If you are unfairly dismissed from employment, you may receive a settlement for lost wages, benefits, severance, back pay, or other income. According to the IRS, this settlement is considered regular income, even though severance pay is often tax free in Israel. This kind of settlement is also subject to the Social Security wage base table and Medicare tax rates for the year in which you were paid. Reporting legal compensation for lost wages is similar to reporting income for regular pay when you were employed.
Interest payments
Interest on any settlement, as with any income, is taxable and should be reported as “interest income.”
Punitive damages
Punitive damages are taxable and therefore must be reported, even if received in a settlement for personal or physical illness or injuries.
Estimate tax
Make estimated tax payments early if you know you’re going to owe at least $1,000 in income tax from having to report receipt of a legal settlement amount.
Taxation on settlements is complicated. Remember to speak with a qualified tax advisor to get advice since this article is just for general information. We help people manage their U.S. investment account, not file their tax returns.
Free information
To get this complete article along with the IRS’s information about what you need to report to the IRS regarding a legal settlement, go to: www.profile-financial.com/settlement
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.