There are differences between a Roth IRA and a traditional IRA that are worth noting. Contributions to, and withdrawals from, each type of IRA are taxed differently. Contributions to a Roth are never tax deductible, while contributions to a traditional IRA may not be tax deductible. Additionally, qualified withdrawals from a Roth IRA are not subject to income or capital gains taxes. This distinction means that Roth IRAs provide tax-sheltered investment growth, while traditional IRAs provide investment growth that is only tax-deferred.

An age limit on contributions is another distinction between traditional and Roth IRAs. There are no age limits on contributions to a Roth IRA. However, contributions can only be made to a traditional IRA until the year the investor reaches 70.5. Individuals wishing to continue making contributions to an IRA account well into retirement should consider a Roth.

There are estate planning implications in deciding which IRA is appropriate. If the goal of an estate plan is to maximize assets and disbursements to beneficiaries, a Roth IRA offers unique estate planning benefits. Because a Roth IRA does not require individuals to make distributions from the account, it could grow more than an account might under traditional IRA rules.

This change in the rules will open new options for some investors. Individual investors should consider both the costs and benefits of conversion specific to their financial situation before making a decision. Consult an estate planning professional about any questions concerning account conversion.

Bernard Krooks is a New York Elder Law and New York Estate Planning lawyer with offices in White Plains, Fishkill, and New York, New York. To learn more, visit http://www.littmankrooks.com.

The tax breaks are generally popular among both Democrats and Republicans and are routinely extended at the end of each year. However, this year legislators have reached an impasse over the proposed method for paying for the cuts. According to the House bill, the tax breaks would be funded with a tax increase on investment fund managers and a crackdown on the use of overseas tax havens.

The measure passed the house with a vote of 241-181, but it has not yet made it out of committee in the Senate. The package could be passed and applied retroactively, making tax planning and estate planning somewhat trickier in the following months. An estate planning or tax planning attorney can advise on the best financial strategies whatever measures may ultimately pass.

Bernard Krooks is a New York Elder Law and New York Estate Planning lawyer with offices in White Plains, Fishkill, and New York, New York. To learn more, visit http://www.littmankrooks.com.

Since it is nearly impossible to predict what year one might die, estate tax planning is crucial for all families who have accumulated assets in excess of $1 million. One tool that may be employed to address this issue is a bypass trust. Bypass trusts allow parents to double the amount of money that can be passed on to children tax-free.

When the first parent dies, instead of leaving all their assets to the surviving spouse, assets up to the exemption amount can be left to a trust for the benefit of the children. Therefore, when the second parent dies, he or she may also leave assets up to the exemption amount to the surviving heirs. In this way, parents are able to collectively double the amount they would otherwise be able to leave to children tax-free.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.

Anyone who meets the age requirement and has enough home equity can take out a reverse mortgage as long as they live in the home. No payment is due on the loan as long as it is outstanding and the homeowner still occupies the home. The loan becomes due only when the homeowner moves out.

A reverse mortgage can be an attractive option but it is not the right option for everyone. Reverse mortgages have up-front costs and can be expensive to originate. Reverse mortgages also take away equity that the homeowner may need for future emergencies or health care costs. And, since proceeds from the sale of the home are generally used to pay back the loan, reverse mortgages can take away from any inheritance that would be left to surviving children. Consult an estate planning attorney to see if a reverse mortgage fits into your plans.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.

Understandably, the Revocable Living Trust is an attractive option. Probate can take months, or longer, depending on the complexity of the estate. Even in the case of an uncontested Will, the court fees involved with the probate process can add up. The assets in a Living Trust, however, can be transferred immediately with little expense. Incorporating a Living Trust into your estate plan will save your beneficiaries time, money and the hassle of dealing with probate.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.

Family Limited Partnerships work well, but only if they are used carefully. The partnership must be funded and maintained. This often includes keeping up with the legal aspects of the partnership like paying annual fees and adhering to the Operating Agreement. In addition, not all assets should be placed into the partnership. Families should be sure to separate their personal assets, like the family home and monthly bills, from the partnership assets. Make sure to consult with an estate planning attorney to ensure that a Family Limited Partnership is working as it should to protect your assets.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.

For example, take an individual who is currently receiving disability benefits as well as public assistance for medical care. He receives a sum of $150,000 as a gift from a well-intentioned aunt. That money will be considered income and will cause him to lose his medical and disability benefits. Within three years, the cost of daily and medical care has depleted the gift. At that time, he will need to reapply for government benefits and may be left with no means to cover medical expenses while he is waiting for the  new benefits to take effect.

The good news is, t is possible to leave money to a loved one without hindering their ability to receive government benefits. The way to do this is to establish a special needs trust. Your estate planning lawyer can advise on the best plan for your individual needs.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.

Funding your trust is the process of re-naming your assets so that they are in the Trust’s name and therefore separate from your estate. Generally, trusts hold certain types of assets, such as annuities, stocks, bonds, mutual funds and life insurance policies. Funding a trust is critical, since only those assets that are officially contained within your trust are legally protected.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.

Now, non-spousal beneficiaries may keep the plan going, pacing their withdrawals over time and avoiding the taxes that come with cashing out the entire amount.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.

While the establishment of a trust is an important step, it is critical to remember to fund your trust on a regular basis. Since a revocable living trust can be modified if necessary to reflect changing needs and goals, there is no reason to stop contributing to it entirely if you are faced with unexpected difficulties or are simply focused on other issues in your life, be they good or bad. An unfunded trust is like a plan for a dream home without any of the materials to build it.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.

When planning for taxes as a part of your estate planning, you must take into account estate, gift, capital gains and property taxes. And tax laws often change. Consulting with a lawyer about proper estate planning can significantly reduce your estate and total tax burden.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.

Probate courts also handle cases that determine the validity of a Will. Wills that are not written by an attorney may be open to legal challenge and could be rendered invalid. Help your family members avoid the hassle of the probate process by working with a lawyer to draft a legal Last Will and Testament and know your assets will be distributed according to your plans.

To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.