Executors Are Personally Liable for Income Taxes of Decedent

In a recent case, executors of an estate were held personally liable for the unpaid tax lien on their parents' house.  The planning tips from this matter are:

1.  Make sure your parents pay their income taxes,
2.  Feel free to decline to serve as executor,
3.  Pay income tax obligations before paying other debts, and
4.  If selling an asset, do not reinvest the proceeds in a risky asset so that there will not be any liquid funds if the IRS comes looking for payment of its lien.      

Working with Blended Families

USA Today wrote about the complexity of planning for blended families with a dizzying number of familial situations.  What the article did not mention is that a trust could be used to address all of the concerns of the individuals.  Simply, a trust can be used to retain assets for a second spouse while ensuring that assets are ultimately distributed to children from a prior marriage.  Similarly, trusts can be more flexible in making differing allocations among beneficiaries.

Interesting statistic form the article.  Of people who live past 85, one half will experience Alzheimer's disease.      

Declining to Serve as Guardian?

When declining to serve as guardian of a friend's child, it is best to answer in terms of the increased family size of the restrictions placed by current housing.  Do not follow the example in an old Carol Burnett Show skit where a couple decided to act obnoxious and asocial with atrocious dinner manners so they would not be asked.  The other couple asked eventually because "you act just like we do."  

Gift Opportunity

This bears repeating.  2012 is great year to make a large gift due to the $5 million unified credit.  It is unlikely that the credit will ever be larger and it is possible that it will be much smaller if the scheduled reduction to $1 million remains intact.  

Organ Donation - Keeping Options

The WSJ ran a squeamish article about the organ donation process.  The best advice seems to be to foresake checking a box on the driver's license and allow family members decide if and when to donate organs.  Family members will be in a position to ensure that proper brain death procedures have been followed and that anesthesia has been administered.    

Timing Social Security

In trying to maximize lifetime Social Security benefits, it is best to delay taking distributions as long as possible.  However, if ill health is a factor, grab them as soon as possible.