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Navigating Estate Planning for Hertz Global Holdings Employees: Adapting to Federal and State Tax Changes

'Hertz Global Holdings employees must remain proactive in updating their estate plans to reflect the evolving tax landscape, ensuring their financial legacy is preserved despite anticipated changes to exemption limits and estate tax regulations.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement Group.

'Hertz Global Holdings employees should consider adjusting their estate plans now to take advantage of current exemption limits before the anticipated reductions in 2026, ensuring that their assets are protected and efficiently passed on to future generations.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

Upcoming Changes to Estate Tax Exemptions — How the reduction of the federal gift and estate tax exemption in 2026 may impact Hertz Global Holdings employees' estate plans.
Strategies for Managing Different Asset Types — The tax implications of retirement accounts, taxable accounts, and real estate when structuring an estate plan.
The Role of Life Insurance in Estate Planning — How irrevocable life insurance trusts can help mitigate estate tax burdens and facilitate a smooth transfer of wealth.

Estate planning remains a complicated area of financial management for Hertz Global Holdings employees. With major changes to federal tax regulations expected by the end of 2025, employees should consider adjusting their estate plans to accommodate possible changes.

Modifications to Exemption Limits' Effects.

At USD 13.99 million per person, the federal gift and estate tax lifetime exemption is currently USD 13.99 million. This exemption is expected to drop to around USD 7 million post-2025. This change creates concern among users of the existing higher gifting limits. But Treasury Department regulations from November 2019 say gifts made between 2018 and 2025 under the higher exemption amounts will not be affected even if the exemption amounts decrease after 2025. Source: Treasury Department:

Considered Aspects for Different Account Types.

The federal estate tax affects all account types differently - and that includes employees of Hertz Global Holdings companies - because assets at death are taxable at the full market value. Assets in retirement accounts like traditional IRAs or 401(k)s are subject to income taxes and possible penalties if passed before death. Alternatively, assets in taxable accounts like real estate or brokerage accounts might be better suited to lifetime gifting strategies. Roth conversions may also improve tax efficiency on large assets in retirement accounts.

Considerations Regarding Real Estate and Estate Taxes.

Estate planning for real estate involves considering the property's value at death because it directly affects estate tax, whether the heirs plan to sell or keep the property. States such as Nebraska and Pennsylvania tax the heirs on inheritances. Hertz Global Holdings employees planning their estates should structure plans that provide enough liquidity to cover estate taxes and other costs without having to liquidate large assets like real estate or family businesses, especially since estate tax exemptions could decrease in 2026.

Life Insurance & Estate Planning.

Life insurance proceeds are included in the estate's gross value. But the proceeds of a policy owned by an irrevocable trust are not included in the estate and are exempt from estate taxes. This setup allows structured planning using annual exclusion gifts to fund life insurance premiums through trusts - a useful tool for tax-advantaged wealth transfer - especially with estates that may be over federal exemption limits.

Reviewing Your Estate Plan

Hertz Global Holdings employees should review and update their estate plans every three to five years or at the time of a major life event like marriage, the birth of a child, or a significant change in net worth. State or federal tax laws also should cause an evaluation of estate plans. Some whose plans might not reflect new laws or personal circumstances should consult an estate planning attorney, especially with tax changes coming soon.

Final Thoughts

Hertz Global Holdings employees should take proactive estate planning steps to protect their legacy amid possible federal tax law changes. This means understanding how different asset types affect estate taxes, using trusts for life insurance, and maintaining estate liquidity to service tax obligations. Such strategies match financial planning to laws of today and tomorrow, preserving wealth for future generations.

Like navigating changing waters, Hertz Global Holdings employees should update their estate plans to reflect changing tax landscapes. Actively preserving financial legacies through lifetime gifting or asset restructuring may help them weather changes in federal tax exemptions. A bit like a captain in shifting seas, careful preparation may lead an estate to its destination.

Articles you may find interesting:

Source:

1. 'Understanding the 2026 Changes to the Estate, Gift, and Generation-Skipping Tax Exemptions.' Husch Blackwell , June 2024, www.huschblackwell.com .

2. 'Estate Planning Considerations for Highly Appreciated Assets.' McLane Middleton , September 2024, www.mclane.com .

3. 'Estate Planning Now and for the 2026 'Double Exemption' Sunset.' Eide Bailly , July 2023, www.eidebailly.com .

4. 'Make Estate Planning More Tax Efficient By NOT Splitting Assets Evenly.' Michael Kitces , August 2024, www.kitces.com .

5. 'Estate Tax Exemption Sunset 2026: Key Questions Answered.' Merrill Lynch Wealth Management , March 2024, pbig.ml.com.

How does The Hertz Corporation's pension plan ensure that employees are fairly compensated for their years of service, and what specific criteria does The Hertz Corporation use to determine eligibility for benefits under the Account Balance Defined Benefit Pension Plan?

Fair Compensation for Years of Service: The Hertz Corporation's pension plan ensures employees are fairly compensated for their years of service by granting Compensation Credits as a percentage of eligible pay. Eligibility for benefits starts once employees have at least 1,000 Hours of Service in a 12-month period, ensuring that benefits are proportional to service time. Benefits become vested after three years of service, securing an employee’s accumulated benefits.

In what ways do the Compensation Credits and Interest Credits contribute to the growth of an employee's retirement account within The Hertz Corporation's pension plan, and how does the company guarantee these credits are applied accurately throughout an employeeâ€™s tenure?

Growth of Retirement Account: Within The Hertz Corporation's pension plan, Compensation Credits and Interest Credits contribute to the growth of an employee's retirement account. Compensation Credits are calculated as a percentage of the employee’s eligible pay, and Interest Credits grow the account balance annually based on a preset rate, ensuring a systematic increase in the retirement funds over an employee's tenure.

What are the implications of the freeze date on participation in The Hertz Corporation's pension plan, and how might this affect current employees who are considering their retirement options within the next few years?

Implications of Freeze Date: The freeze date impacts current employees by discontinuing the accrual of new Compensation Credits. Employees enrolled in the plan before the freeze date retain their accrued benefits, but no new benefits will be added post-freeze. This could influence current employees' decisions on retirement timing and financial planning.

How does The Hertz Corporation handle claims for pension benefits, and what processes are in place for employees to appeal denied claims according to the guidelines set out in the Account Balance Defined Benefit Pension Plan?

Claims for Pension Benefits: The Hertz Corporation handles claims for pension benefits through a detailed procedure where employees can file a claim with the Committee. If denied, the employee can appeal the decision. This process ensures that employees have a structured avenue for resolving disputes regarding their pension benefits.

Under what circumstances can an employee of The Hertz Corporation be considered fully vested, and how does vesting impact an employee's future retirement benefits?

Vesting and Impact on Retirement Benefits: Employees of The Hertz Corporation are considered fully vested in their pension benefits after three years of service, which secures their right to pension benefits accrued till that point. Vesting ensures that upon leaving the company, employees are entitled to their accumulated benefits, directly impacting their financial stability in retirement.

How do The Hertz Corporation's pension benefits compare to other companies in the industry, especially in terms of contribution percentages and payment options available upon retirement?

Comparison with Industry Standards: The pension benefits at The Hertz Corporation, which include both Compensation and Interest Credits, are competitive within the industry, particularly because the company covers the full cost of the plan. The option to receive benefits as a lump sum or an annuity upon retirement provides flexibility compared to other industry plans.

Can you explain the process and the timeline involved for receiving pension benefits after retirement from The Hertz Corporation, including any choices that the retiree must make regarding payout methods?

Receiving Pension Benefits Post-Retirement: The timeline and process for receiving pension benefits after retirement involve choosing a payout method (lump sum or annuity) and filing a claim. Benefits can start as early as age 55 for early retirement, or at the normal retirement age of 65, with the account continuing to accrue Interest Credits until the benefits commence.

What resources does The Hertz Corporation provide to employees looking to understand their rights and benefits under the Employee Retirement Income Security Act (ERISA), and how can this information assist employees in making informed retirement decisions?

Resources on ERISA Rights: The Hertz Corporation provides resources to help employees understand their rights under ERISA through its pension plan website and support center. This information helps employees make informed decisions about their retirement planning by clarifying their rights and benefits under the plan.

What procedures should an employee at The Hertz Corporation follow to update their personal information or beneficiary designations in their pension account, and why is it crucial to keep this information up to date?

Updating Personal Information: Employees at The Hertz Corporation are encouraged to update their personal and beneficiary information via the Hertz Pension Center website. Keeping information current is crucial for ensuring that all communications and benefits are correctly handled, especially for claims and beneficiary designations.

If employees of The Hertz Corporation have questions or require further information regarding the pension plan, what steps should they take to contact the company, and what information will they need to facilitate their inquiry?

Contacting for Further Information: For further inquiries about the pension plan, employees should contact the Hertz Pension Center. This center provides access to plan details and assistance for any additional information required by employees, ensuring transparency and accessibility in managing their retirement benefits.