The importance of trusts in estate planning is seen in their ability to minimize estate taxes and hopefully avoid probate. A trust is basically a fiduciary agreement, one based on trust and confidence, between the person making the trust (grantor) and the trustee. This agreement gives the trustee the authority to manage the assets of the trust and distribute those assets to the beneficiaries as specified in the trust agreement. There are several different types of trusts with their own … [Read more...] about Trusts Can Satisfy Many Different Objectives
Taxes
The History of the Federal Estate Tax
There are many people who have ideological difficulties with the fairness of the federal estate tax. Where does this idea come from? Throughout your life, you pay taxes on your income, and this includes investment income, even though you make investments with assets that you have left over after paying income taxes. Of course, there are also property taxes, sales tax on your purchases, and somewhat hidden taxes on things like energy, communication, hospitality, gasoline, alcohol, tobacco, … [Read more...] about The History of the Federal Estate Tax
Is There a Federal Inheritance Tax in the United States?
There are terms that are used in the field of estate planning that can sound interchangeable, and this can lead people to misguided beliefs. This dynamic enters the equation when it comes to death taxes. You may assume that an inheritance tax and an estate tax are identical. The idea is that these are just two different terms that can be used to describe the same thing. If you are not an estate planning professional, this assumption may make sense, because they do sound quite similar. In … [Read more...] about Is There a Federal Inheritance Tax in the United States?
Isn’t a Trust Just a Glorified Will?
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?
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
Do It Yourself Planning: Is It a Good Idea?
They say that you should not answer a question with another question. However, this is irresistible when you are talking about do-it-yourself estate planning. Can you just plan your own estate? Technically, anyone can try to execute estate planning documents, but the real question is this: should you try to plan your own estate? DIY Estate Planning There are Internet marketers who sell do-it-yourself legal documents, including estate planning documents like last wills and living trusts. They … [Read more...] about Do It Yourself Planning: Is It a Good Idea?
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
