People sometimes assume that a trust is a somewhat glorified legal device that accomplishes the same thing that a will would accomplish. In fact, there are different types of trusts. Trusts can satisfy objectives that a will would not satisfy. Let's look at some of these scenarios. Estate Tax Exposure The federal estate tax is a legacy threat to high net worth families. This tax carries a 40 percent top rate, so we are talking about a very significant level of taxation. The good news is … [Read more...] about Isn’t a Trust Just a Glorified Will?
Tax Efficiency
Estate Tax Strategy for Appreciable Assets
There are things that you can do to potentially transfer assets at a tax discount if your estate is going to be exposed to the federal estate tax. This tax is applicable on transfers that exceed the amount of the federal estate tax exclusion. For the rest of this year, the exclusion is $5.43 million, but it is going up to $5.45 million next year after an inflation adjustment is applied. If you are married, you can use the unlimited marital deduction to transfer unlimited assets to your spouse … [Read more...] about Estate Tax Strategy for Appreciable Assets
THE ABLE ACT: New Financial Planning Tool for the Disabled.
In 2014, Congress passed a new law that will change the lives of millions of people living with disabilities. Achieving a Better Life Experience, otherwise known as the ABLE Act will allow those living with disabilities to establish tax-exempt savings accounts that will not be counted against them when qualifying for government assistance, such as Medi-Cal and SSI. In the past, disabled persons were limited to no more than $2,000 in assets in order to qualify for these assistance programs, … [Read more...] about THE ABLE ACT: New Financial Planning Tool for the Disabled.
Estate Tax Strategy for Appreciable Assets
There are things that you can do to potentially transfer assets at a tax discount if your estate is going to be exposed to the federal estate tax. This tax is applicable on transfers that exceed the amount of the federal estate tax exclusion. For the rest of 2015, the exclusion is $5.43 million, but it is going up to $5.45 million in 2016 after an inflation adjustment is applied. If you are married, you can use the unlimited marital deduction to transfer unlimited assets to your spouse … [Read more...] about Estate Tax Strategy for Appreciable Assets
Annual Gift Tax Exclusion Will Remain Constant in 2016
Since we are getting near the end of 2015, certain parameters that are relevant to the field of estate planning are subject to adjustments for 2016 to account for inflation. We recently passed along information about the unified federal gift and estate tax exclusion. It has been $5.43 million throughout this year, but it is going up to $5.45 million in 2016. This is not the only the exclusion that you can use to give gifts to others in a tax-free manner. There is also an annual gift tax … [Read more...] about Annual Gift Tax Exclusion Will Remain Constant in 2016
Can a Surviving Spouse Use Two Estate Tax Exclusions?
The federal estate tax exclusion is the amount that can be transferred before the estate tax would become applicable. However, if you are married to an American citizen, you do not have to use any of your exclusion to transfer assets tax-free to your spouse. There is an unlimited marital deduction that allows for unlimited transfers between citizen spouses. For the remainder of the 2015 calendar year, the exact amount of the estate tax exclusion is $5.43 million, and the maximum rate of the … [Read more...] about Can a Surviving Spouse Use Two Estate Tax Exclusions?
Tips When Inheriting IRAs
We regularly get inquiries from our clients who are recipients of an inheritance. An ever increasing asset that is being inherited is a retirement account such as an IRA. Special considerations must be attended to when inheriting an IRA because of their special characteristics. In this blog, we'll discuss some of these considerations. Don’t automatically request to cash in the IRA. The income tax repercussions could be great and there are better options. If you opt for a lump sum … [Read more...] about Tips When Inheriting IRAs
Do You Have to Report an Inheritance as Taxable Income?
You may be concerned about taxes that your loved ones may have to pay when they receive their inheritances. We will examine some taxes that can come into play, but first, we should look at regular income taxes. There is usually very little good news to pass along with regard to taxation, but this case is an exception. In fact, an inheritance is not considered to be taxable income, so your loved ones would not have to report their inheritances when they file their returns. Plus, appreciated … [Read more...] about Do You Have to Report an Inheritance as Taxable Income?
Estate Tax: Citizenship Can Be a Factor
The federal estate tax is potentially applicable on asset transfers to anyone other than your spouse. It is possible to use the unlimited marital deduction to transfer any amount of property to your spouse free of the death tax. There is a gift tax that exists to stop people from giving gifts in an effort to avoid the estate tax. This unlimited marital deduction also applies to lifetime gift giving. The estate tax exclusion is $5.43 million. This is the amount you could transfer to anyone … [Read more...] about Estate Tax: Citizenship Can Be a Factor
What Is a QTIP Trust?
The acronym QTIP may conjure certain images outside of an estate planning context. For our purposes as estate planning attorneys, the acronym stands for a qualified terminable interest property trust. This type of trust can be useful if you are a parent who is getting remarried. Protecting Your Children If you are getting remarried as a parent, you may have estate planning concerns. Clearly, you want to make sure that you provide resources for your new spouse to draw from after you are gone if … [Read more...] about What Is a QTIP Trust?
