It's not only about investments.

• Author: Hook, Howard

Many people fear a bleak future because their investments seem to be at risk in the current recession. In the following article, a financial planner discusses other opportunities people should plan for and issues they may need to address to ensure a secure future.

It's been all about the investments, particularly during the last couple of recession-laden years. However, investors need to be aware that plenty of other issues lurk in the background that, if not addressed properly, can come back to haunt them. Truth be told, those issues may play as big a role or an even bigger role in one's financial future.

The good news is that, today, numerous planning opportunities exist that people can take advantage of to maximize their assets. Some have been covered by the mainstream media, such as the ability to convert traditional IRAs to Roth IRAs. Other opportunities should be considered as well.

Estate Tax Repeal

On January 1, 2010, the unthinkable happened: the federal estate tax was repealed. People dying in 2010 may pass an unlimited amount of money to heirs without paying a federal estate tax. Prior to this year, individuals could pass unlimited amounts of money to their spouses and up to $3.5 million dollars to nonspouses before the estate was taxed. Much controversy surrounded the imposition of this transfer tax, as well as the repeal of the tax.

However, hidden in all of this is something that may affect those with estates of much less value. Depending on how one's will is written, the repeal of the federal estate tax can have several consequences. Many people have wills providing for the funding of a trust at the death of the first spouse in order to reduce the amount of estate taxes owed when the surviving spouse dies. The language used may have directed that the amount funded into this trust should be the maximum amount that can pass free of federal estate tax. This was, at the time, correct.

However, such terms could lead to several problems now that the federal estate tax has been repealed for 2010. A literal reading of the clause could cause one's entire estate to go into trust. Although many times the trust is for the benefit of the surviving spouse, it does not have to be. Therefore, in certain cases the surviving spouse can, in effect, be disinherited. At a minimum, this strategy may needlessly create administrative difficulties, with trust accounts needing to be opened and tax returns filed.

Many trusts were written so that...