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Show Page 12 The Ogden Valley News Volume I, Issue X July 1999 Current Legislation Governing Credit Unions On March 22, 1999, Governor Mike Leavitt signed into law the Utah Credit Union Act Amendments. What does the new legislation do? The legislation prohibits credit unions from serving the residents of more than one county with one exception–credit unions that built a physical location in more than one county before 1994 may continue to serve residents of those counties. In addition to residents of a single county, a credit union may choose to serve members of various employer or association groups. However, those credit unions serving more than one county are limited in the employer and association groups they may add to their field of membership and where they can build new branch facilities. For example, Weber Credit Union, which has two branches in Weber County, is allowed to accept Weber County residents as members. We have also chosen Weber, Summit and Morgan School district employees as an employer group. All employees and students of these school districts are eligible to join, even though they may live outside Weber County. Members, the credit union difference. The term members can be confusing to many people. Some people believe that they cannot join a credit union because they don’t qualify as members. Most Utahns are still eligible for credit union membership. Membership in a credit union does actually mean something. It means that everyone who is a member is a part owner of the credit union. Ownership gives members the right to attend and vote at the credit union’s annual meeting. Also, like most large businesses, a credit union is governed by a Board of Directors. The difference is, a credit union Board of Directors is made up of credit union members who volunteer their time to be on the board. Credit union members (in good standing) are eligible to run for positions on the Board of Directors at the annual meeting. An Effective Approach To Estate Planning children without any federal estate tax. Together the couple can transfer $1.25 million to their children with no federal estate taxes due. An unmarried individual can transfer $625,000 to anyone with no federal estate taxes due. Some people think estate planning is an intimidating and complicated process. It doesn’t have to be. Awareness of a few rules mixed with some common sense and a good team of financial advisors can usually result in an effective estate plan. Married couples with larger estates need to have the kind of will that takes advantage of this unified credit at the first death if they wish to shelter $1.25 million. That means when one spouse dies, the deceased spouse’s will cannot pass everything directly to the surviving spouse. Two Basic Estate Planning Problems: Estate Taxes and Probate Two major estate planning problems people encounter are estate taxes and probate. Estate taxes are assessed on larger estates on property formerly owned by the deceased individual and are often the largest expense of an estate. Probate is the court supervised process of administering and transferring the deceased’s property to the rightful heirs. Probate can cause delays before an estate is distributed, conflicts with heirs and big expenses to the estate. What You Should Know About Estate Taxes. Instead, the will (or revocable trust) should indicate that $625,000 of the deceased’s estate should pass either directly to the children or to a certain type of trust–often referred to as the Family Trust or Credit Shelter Trust– to take advantage of this credit. Married couples with estates of over $1.25 million and unmarried individuals with over $625,0000 (if they die in 1998) will have federal estate taxes due–so they should do some estate planning. What You Need To Know About Probate Remember these rules: Remember these rules about probate: • Everything passes free from federal estate tax to your surviving spouse. • Only property you own in your own name passes through probate. • • Up to $625,000* in total passes estate tax free to children (or someone other than your spouse) if you die in 1998. Property owned in joint tenancy avoids probate. • Life insurance, annuities, IRAs, 401(k)s and any other property with a named beneficiary avoids probate (unless the beneficiary is your estate). • Property owned by a living trust avoids probate. • Unmarried individuals can shelter $625,000 from federal estate tax. • Married couples can shelter $1.2 million* from federal estate tax–with a proper will or trust. (Most states also have some form of estate tax. Check with your local attorney.) The federal estate tax is assessed on all property owned by an individual at death. Two major tax breaks can help you avoid or reduce it: the unlimited marital deduction and the unified credit. The unlimited marital deduction shelters all property that passes to the surviving spouse. But what if a couple wants to pass some assets to their children and the rest to the spouse? The second tax break–the unified credit–allows one spouse to pass up to $625,000 to anyone other than the other spouse without incurring federal estate tax if they die in 1998. The surviving spouse also can pass $625,000, when he or she dies, to the Property passing through a will is transferred through probate. Without a will, the probate court applies the laws of the state to determine who will receive property. The probate court distributes only property owned only in the deceases’s name or payable to the deceased’s estate. Property that doesn’t pass through probate includes: • Property owned in “joint tenancy” or “joint tenancy with right of survivorship” such as homes, checking accounts and mutual funds. • Property with a named beneficiary like life insurance policies, annuities, IRA’s, 401(k) plans and other pension and profit sharing plans. • Property owned by a living trust. Common Estate Planning Solutions You can reduce or avoid the federal estate tax problem, as well as the delay and expense of probate. These techniques reduce your federal estate tax and pay any “unavoidable” tax: • Lifetime gifts: You can “gift” up to $10,000 per year per recipient ($20,000 if your spouse joins in the gift**) without incurring any gift or estate tax–plus reduce the size of your estate. • Charitable gifts: You can make unlimited gifts to charity while you’re alive or upon your death, without incurring any gift or estate tax–this could reduce your income tax. PLANNING cont. on page 16 |