Estate Tax

Can I Give My Kids $15,000 a Year?

Chambliss: “If you have it to give, you certainly can, but there may be consequences should you apply for Medicaid long-term care coverage within five years after each gift. The $15,000 figure is the amount of the current gift tax exclusion (for 2018), meaning that any person who gives away $15,000 or less to any one individual in one particular year does not have to report the gift to the IRS, and you can give this amount to as many people as you like. If you give away more than $15,000 to any one person in a single year (other than your spouse), you will have to file a gift tax return. However, this does not necessarily mean you’ll pay a gift tax. You’ll have to pay a tax only if your reportable gifts total more than $11.18 million (2018 figure) during your lifetime.”

By |2018-11-06T14:21:14-08:00November 9th, 2018|

You’ve won the Mega Millions jackpot! Time to hide.

The Washington Post:  “First things first: Quadruple-check your ticket after Tuesday’s Mega Millions drawing. Then do it again. Do they match the winning numbers (5-28-62-65-70, with a Mega Ball number of 5)? No? Skip to here. Yes? Lock the deadbolt and read on. Congratulations! So, you’ve done it. Beaten the odds — one in 302,575,350 — and won the largest Mega Millions jackpot in history. And it’s yours alone, so you’re almost certainly about to enjoy an astronomical spike in wealth. Now what? Before you shout from the rooftops or broadcast your excitement on social media, take a deep breath and keep some practical advice in mind. To sign or not to sign the back of the lottery ticket? There are plenty of people who will advise you to sign the back of the lottery ticket right away — including lottery officials in South Carolina, where Tuesday’s winning ticket was sold. After all, what would happen if, heaven forbid, you lost the ticket? Or worse yet, if an unscrupulous person in your life took the unsigned ticket and claimed it as his or hers?”

By |2018-10-29T15:20:43-07:00November 1st, 2018|

Soldiers with Fortunes?: Rethinking the Tax Treatment of Fallen Combatants

SSRN:  “Section 2201 of the Internal Revenue Code provides a partial estate tax exemption for members of the armed forces who die in, or as a result of, combat operations. In this Article, I explore the origins of this exemption and assess the extent to which it serves three important policy goals: (1) reducing financial and administrative burdens on military families, (2) incentivizing military service, and (3) avoiding the moral hazard of the government being able to “profit” (through increased tax revenues) as a result of combat deaths.”

By |2018-03-05T13:34:51-08:00March 6th, 2018|

More Planning Tips for Individuals Under New Tax Act

JDSupra:  “As Shanna Yonke mentioned in her January 22, 2018 Legal Update The New Tax Law Provides Estate Planning Opportunities, President Trump signed the Tax Cuts and Jobs Act into law on December 22, 2017.  The Act (officially, Public Law 115-97) is the most sweeping tax legislation to be enacted in decades.  It is broad in scope, complicated, and will impact almost every aspect of tax, estate, retirement, and business planning.”

By |2018-02-19T08:30:51-08:00February 19th, 2018|

These 2 States Killed Their Estate Tax in 2018

Yahoo Finance: “The successful passage of the new tax reform laws will make a big difference for Americans across the nation in early 2019 when they file their income tax returns for the 2018 tax year. Among the many provisions of the bill were measures that doubled the exemption amount for the federal estate tax, effectively leaving Americans beyond the reach of the death tax until their net worth hits eight figures.”

By |2018-01-30T08:39:45-08:00February 2nd, 2018|

This Time Is Different: You Really Do Need to Update Your Will and Durable Power of Attorney

Davis Wright Tremaine LLPP: “With the advent of higher exemptions with respect to the Federal Gift, Estate, and Generation-Skipping Transfer Tax passed last December (referred to as the 2017 Tax Act), it really is necessary to review your estate tax planning and it would also be a good time to review your durable power of attorney in light of the recent adoption of the Washington Uniform Power of Attorney Act, effective January 1, 2017.”

By |2018-01-31T08:08:19-08:00January 31st, 2018|

Estate Planning Opportunities and Considerations Beginning in 2018

Schulte Roth & Zabel LLP:  “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (“Act”) was enacted in December 2017 and implements a wide range of changes to existing tax laws. The Act temporarily increases (from Jan. 1, 2018 until Dec. 31, 2025) the federal estate, gift and GST tax exemption amounts from $5.6 million to approximately $11.2 million.”

By |2018-01-16T15:13:39-08:00January 16th, 2018|

AICPA Asks IRS for Portability Relief for Surviving Spouses

Journal of Accountancy:  “In a letter to IRS Commissioner John Koskinen and other IRS officials on March 19, Troy Lewis, chair of the AICPA Tax Executive Committee, requested that the IRS provide relief to surviving spouses who want to elect portability of the deceased spouse’s unused estate tax exemption (DSUE) amount.  Sec. 2010(c) allows the surviving spouse of a decedent who dies after Dec. 31, 2010, to elect to use any amount of the deceased spouse’s estate tax exemption that was unused by the deceased spouse. This is commonly referred to as the portability election. The election must be made on a timely filed Form 706,  United States Estate (and Generation-Skipping Transfer) Tax Return, and must be made by the executor of the deceased spouse’s estate.”

By |2016-12-13T20:33:26-08:00March 25th, 2015|

Why The Estate Tax Is Stupid

This is a great article from Estate of Denial discussing why the estate tax is a dumb tax and is a fail in terms of both social and fiscal policy.  According to the article, the estate tax actually reduces total federal tax revenue, fails to reduce income inequality and has little to no effect on wealth inequality.

“This study confirms that the cost of the estate tax far exceeds any benefits it produces.”

So begins “Cost and Consequences of the Federal Estate Tax” published last week by the Republican Staff of the Joint Economic Committee, whose vice chairman, Representative Kevin Brady of Texas, continues to make his mark as a leader of the pro-growth wing of the House GOP.  The report’s documentation of how the death tax fails as both fiscal and social policy stands as a timely rebuttal to the politics of envy promulgated by President Barack Obama and the leadership of the Democratic Party.

My conclusion: the death tax deserves the sobriquet: the “dumb tax.”

By |2012-09-22T11:24:41-07:00August 8th, 2012|

Be Ready For Tax Cuts To End “The end is near. The end of the Bush tax cuts that is. Are you ready?

The current tax code allows an estate to pass $5 million per person, $10 million per married couple, tax free. Over that the tax rate is 35 percent. The last time the tax rate was this low was 1931, and moved to 45 percent the next year as a means of coping with the Great Depression, and was as high as 77 percent from 1942 until 1976. But on Dec. 31, 2012, the Bush tax cuts automatically revert back to 2001 levels of $1 million exemption and 55 percent for anything above that.

Yes, the government can change this law. And it may seem more likely with a Republican in office. But House Republican Scott Rigell is actually looking to increase total tax revenues from 16.9 percent to 20 percent of GDP if coupled with a spending reduction from 24 percent to 20 percent, according to Joel Klein at Time Magazine. With the current U.S. debt-to-GDP ratio at 93.2 percent, higher than it has been since World War II when an extraordinary amount of money was being spent, and also on the rise, do you think the exemption will remain so generous and the tax rates so low? Are you willing to bet the gridlock in Washington will end? Are you willing to bet your family business?”

By |2017-10-07T11:15:26-07:00July 9th, 2012|

Estate Tax Win For LGBT Couples

JD Supra reported on a big win for same sex couples as it relates to the estate tax.  A recent New York judge held that same sex couples who reside in states that recognize same sex marriage may take advantage of the estate tax marital deduction.  According to JD Supra:

Earlier this month, U.S. District Judge Barbara Jones granted a summary judgement in an estate tax case that, according to law firm Duane Morris “created a precedent that is likely to positively affect same-sex married couples for years to come.”

The case involved a same-sex couple (Thea Spyer and Edith Windsor) who were legally married in Canada and recognized in New York because “New York affords legal recognition to civil marriages that are lawful in the jurisdiction where they are performed.”



By |2012-06-21T10:16:55-07:00June 21st, 2012|

Wealthy Americans Must Act Now To Take Advantage Of Gift Tax Exemption

CNBC:  “If you’re a wealthy American who’s planning to hire an estate or trust attorney later this year, here’s a thought: Good luck. You’re going to need it.

That’s because the transit of Venus of estate planning is passing through, and by the New Year it is likely to be gone.

It’s the lifetime gift-tax exemption of $5.12 million, paired with a similar estate-tax exemption. And it means that through the rest of this year, parents can pass along assets valued up to that amount to their heirs – maybe a house, maybe a stock portfolio, maybe part of the family business – without paying a single penny to Uncle Sam.”

By |2017-10-07T11:14:47-07:00June 13th, 2012|

Be Proactive, Not Reactive With Your Estate

JD Supra:  “Estate planning should be focused on anticipating possible outcomes and structuring your affairs for the tax-efficient disposition of your assets to your loved ones. However, all too frequently we estate-planning practitioners find ourselves working with clients in a reactive situation, trying to salvage an acceptable outcome out of some missed opportunity. Obviously, better outcomes are achieved when planning, rather than when reacting.”

By |2016-12-13T20:33:29-08:00May 24th, 2012|

GOP Freshman Urge Boehner to Repeal Estate Tax

Estate of Denial:  “The House Republican freshman class has ratcheted up pressure on Speaker John Boehner to draw a sharp contrast with Democratic progressives and bring full repeal of the federal estate tax — popularly derided as the “death tax” — to a vote on the House floor.

Congressional Republicans, GOP freshman class president Rep. Austin Scott wrote in a public letter to the speaker, ‘are eager to present a clear cut choice to voters: Support the Republican plan to bury the death tax or support Democrats’ plan to hike the death tax to a crushing 45 percent rate, or higher.'”

By |2016-12-13T20:33:30-08:00May 8th, 2012|

Myths and Truths About the Estate Tax

The Wealth Channel:  “Now that the initial shock and surprise resulting from the long-overdue estate tax reform has subsided, there’s been some time to pause and reflect. At first glance, the immediate reaction of many estate planners that I spoke with was that Armageddon had arrived. This certainly is not the case, but paralysis or procrastination will result in lost opportunity. In the discussion that follows, I’ll try to debunk some of the myths that have been offered in the immediate aftermath of the new estate tax rules. The implications of the law will be viewed prospectively and I will, by design, ignore 2010’s rather interesting situation where the compromise bill provided a choice to be made by executors on whether to elect the federal estate tax with the basis stepup or no federal estate tax with a modified carryover basis for assets left to heirs.

Myth: The increase in the exemption amount to $5 million and the reduction in the estate tax rate to 35 percent were the biggest surprises in the estate tax compromise.

Reality: The attempts by some in Congress to reach a more timely compromise in the 2008 to 2010 interval revealed that there would not be enough votes in the Senate to fix the federal estate tax at the 2009 levels of a $3.5 million exemption and a 45 percent tax rate. In fact, the Senate had previously agreed in principle to these critical components of the law as finally enacted.

The biggest surprise in the new legislation was the reunification of the estate and gift tax systems with the increase in the gift tax exemption to $5 million. This presents many tax-saving opportunities.”

By |2017-10-07T11:14:46-07:00April 25th, 2012|

Estate Tax Portability May Be In Jeopardy  “If you are currently married with significant assets, you and your spouse have a very limited time to save a lot of money, because after that it’s very likely that Congress will change the rules now in existence and make dying much tougher on your loved ones in terms of federal estate taxes. That is, of course, unless you take this moment – right now — to do some very creative planning that will lock in what’s called spousal portability.

What is Spousal Portability?

Portability is the ability to pass one’s unused estate tax exemption to his or her spouse upon death. It works like this:

The current estate tax exemption (at least until 2013) is $5 million. That means that if you die with less than $5 million, you pay no estate taxes. Five million is a pretty high number, so this exemption is very favorable. It gets even better. Since each spouse in a marriage has a $5 million exemption, the total exemption available to the couple is $10 million. If one spouse dies and has an estate valued at only $3 million, the unused exemption ($5 million – $3 million = $2 million) “ports” to the surviving spouse. He or she can now leave an estate of up to $7 million without incurring any estate taxes.”

By |2016-12-13T20:33:31-08:00April 18th, 2012|

Estate Tax Basics

Sierra Sun:  The federal estate tax is levied upon a person’s estate at the time of their death. Currently estates under $5 million are not taxed; estates above $5 million are taxed at a rate of 35 percent. Estate planning now is difficult because we are at a time of real uncertainty about what the future holds for estate tax rates, which may make 2012 a good year to do some gifting if you’re fortunate enough to have a sizable estate.

For 2012, the lifetime gift and estate tax exemption will rise to $5.12 million for singles and $10.24 million for married couples. The gift tax exclusion had been frozen at $1 million for many years, so this could make 2012 an excellent opportunity to distribute assets from an estate free from tax.

Read more estate tax basics.

By |2017-10-07T11:14:46-07:00February 23rd, 2012|

Lull in Estate Tax May Trap Wealthy Americans

Investment News: Tax changes that President Barack Obama and Congress hammered out in the final days of 2010 discouraged clients from seeking estate-planning advice last year, even though estate lawyers argue there are many planning opportunities that shouldn’t be missed.

The legislation that set a $5 million estate tax exemption for 2011 and 2012 has all but eliminated “estate tax avoidance” as a motivating factor for clients, according to 32% of estate-planning lawyers and financial advisers surveyed recently by WealthCounsel LLC.

In fact, tax avoidance dropped from being the No. 1 reason in 2010 that clients sought estate planning to fourth last year, according to the survey of 1,085 professionals.

“The Republican-led Congress has done an effective job of vilifying the estate or “death tax’ as unfair,” said Matt McClintock, executive director of WealthCounsel. “So with the $5 million exemption, a lot of people breathed a sigh of relief because they said, “I don’t have that much,’ and it diminished concern for estate planning as motivated by the estate tax.”

Continue reading about the lull in estate tax trapping the wealthy.


By |2016-12-13T20:33:36-08:00January 17th, 2012|

New Estate and Gift Tax Rules A Game Changer

Yuma Sun:  Many of us spent our childhood years playing sports and games. An important part of our development was learning the rules. Once we understood the rules, we could develop creative strategies for winning.

 When the rules changed, our strategies needed to adapt. Estate planning is no different. Late in 2010, President Obama signed into law changes to estate and gift tax rules.

 If you haven’t already, it’s important to review the new rules and make adjustments to existing estate planning and gifting strategies. Here are a few of the changes that may affect your plans:

 • Estate taxes reinstated — In 2010, for a single year there was no estate tax. During 2011 and 2012, the top estate tax rate will be 35 percent and the estate tax exemption amount will be $5 million. In 2013, these temporary changes will end and we may see a return to higher estate tax rates and lower exemption amounts.

 • Generation-skipping transfer tax repealed — Generation-skipping transfers allow one person to reassign ownership of assets to another person who is two or more generations younger. For example, a grandparent might transfer ownership of property, by gift or at death, to a grandchild. Historically, GSTs have been taxed at the highest estate tax rate. However, for 2010, the GST tax was temporarily repealed. As a result, gifts made to grandchildren during 2010 were assessed gift tax and not GST tax.

 The GST tax returned in 2011 with the top rate at 35 percent. Executors of estates for those who died during 2010 chose between the estate tax rules for 2010 and those for 2011 by filing an estate tax return within nine months of the new law’s enactment.

Read more about the new estate and gift tax rules for 2012.

By |2017-10-07T11:14:46-07:00January 9th, 2012|

Questions You Should Ask Your Estate Planning Attorney

US News & World Report:  Because you’ve worked hard to create a secure and comfortable lifestyle for your family, you’ll want to ensure that you have a sound financial plan that includes trust and estate planning. With some forethought, you may be able to minimize gift and estate taxes and preserve more of your assets for those you care about.

A qualified financial professional and tax professional can help ensure you are minimizing taxes and maximizing gains for your heirs. You can bring this four-part checklist to your initial meeting to discuss how to make your plan comprehensive and up-to-date.

Part 1: Communicating your wishes

•Do you have a will?

•Are you comfortable with the executor(s) and trustee(s) you have selected?

•Have you executed a living will or healthcare proxy?

•Have you considered a living trust to avoid probate?

•If you have a living trust, have you titled your assets in the name of the trust?

Part 2: Protecting your family

•Does your will name a guardian for your children if both you and your spouse are deceased?

•If you want to limit your spouse’s flexibility regarding the inheritance, have you created a Q-TIP trust?

•Are you sure you have the right amount and type of life insurance for survivor income, loan repayment, capital needs, and all estate settlement expenses?

•Have you considered an irrevocable life insurance trust to exclude the insurance proceeds from being taxed as part of your estate?

•Have you considered creating trusts for family gift giving?

Read the rest of this article here.

By |2017-10-07T11:14:46-07:00December 16th, 2011|

No Better Holiday Gift Than Asset Protection!

Law Firm Newswire: It might not be something your children can pull out from under the tree and unwrap this holiday season, but the gift they may appreciate the most is the gift of asset protection.

“With family as the focus of so much attention during the holidays, it’s a natural time to consider their financial security,” said Brandon estate planning attorney Reginald Osenton. “No matter what age your children are, the time is never wrong to plan for the future.”

Even though most people tell their loved ones how they want their estate managed when they are gone, the only way to ensure it is done correctly is to put it in writing. “We put together plans for families so that when the time comes, everybody is taken care of exactly the way you want,” Osenton said.

A properly drafted estate plan with a qualified attorney will save your family money in the long run in future taxes, legal fees and other costs. It can truly be a holiday gift that will pay for itself.

Too many families are consumed by unnecessary stress and tension when it is time to divide an estate. Careful planning can eliminate all of the finger-pointing and he said, she said. “I have seen families fight over the smallest things. And it all could have been avoided if it had been planned out before hand,” Osenton said.

While a detailed will is the cornerstone of a good estate plan, health care issues can be handled before they arise as well. A power of attorney and a health care surrogate designation will let you determine now who will be making the decisions if you become incapacitated.

Estate plans also should include trusts to save taxes, minimize probate and plan for young children.

“There isn’t a more heartfelt gift to give your family at the holidays,” Osenton said. “A quality estate plan will put your family in good shape for years to come.”

By |2011-12-16T13:15:11-08:00December 16th, 2011|

Understanding the Impact in 2012 & 2013 of Federal Estate Tax Laws

Estate planning attorneys Cecil Smith and Carol Gonnella have written an informative article about the coming impact of federal estate tax laws next year and the year after.  The article starts:

“The estate tax laws are in a state of flux, and no one is sure what Congress will do in the near future. This article is about the laws today, and the importance of planning now rather than waiting until Congress may … or may not … act. It addresses tax liability in a broad sense, and does not take into account the impact of state death taxes, if any, or the implementation of advanced estate planning strategies such as LLCs, QPRTs, BERTs, ILITs, GRATs, Charitable Gifts, etc, to not only creditor protect assets during life, but to reduce or eliminate the estate tax bite upon death. . . . There are three ways to reduce (or even eliminate) federal estate taxes just by using Internal Revenue Code exclusions and/or exemptions that are available to everyone

  1. The Unlimited Marital Deduction . . . .
  2. The Basic Exclusion Amount . . . .
  3. Portability . . . . “

By |2017-10-07T11:14:45-07:00December 1st, 2011|

‘Perfect Storm’ For Estate Planning

Investment News:  Politics, the weak economy and low interest rates have combined to create one of the best environments for estate planning in a generation, according to experts. “If individuals are trying to transition assets to the next generation, we currently have a perfect storm — in a good sense — to do it,” said David Scott, vice president of advanced sales for Penn Mutual Life Insurance Co.

The elements of that perfect storm begin with a $5 million exemption from estate taxes ($10 million for married couples), which was part of the Middle Class Tax Relief Act of 2010 enacted in December. The value of real estate assets and securities are at low levels, making it more attractive to give such assets to other individuals. And with interest rates near zero, wealthy clients also can make loans to their children and to trusts at a very low cost.

By |2016-12-13T20:33:38-08:00November 8th, 2011|

Does The Estate Tax Hurt The Poor?

Estate of Denial:  I’m sure there’s a lot to be said for rich people, but they sure do consume a lot of resources. I wish they’d leave more for the rest of us. That’s why I oppose the death tax.

The death tax sends a powerful message to rich people: “You can’t leave everything to your heirs, so spend now, before it’s too late. Burn more fuel. Demand more timber for your mansions, more steel for your private planes, and more fiberglass for your yachts.”

Then all those resources—the fuel and timber, the steel and fiberglass—become unavailable to build factories, so the rest of us get worse jobs at lower wages. Those resources are unavailable to build farm equipment, so we all pay higher food prices. They’re unavailable to build roads and schools and hospitals.

I don’t begrudge anyone the fruits of his labor. But the death tax encourages people to pick extra fruit, leaving the trees a little barer for the rest of us.

By |2011-11-01T10:00:32-07:00November 1st, 2011|

IRS Gives Relief From Filing Deadline For 2010 Heirs On September 13, 2011, the IRS released Notice 2011-76, which gives executors of estates of 2010 decedents more time to make an informed decision about whether to stay in the default estate tax regime for 2010 or opt out of the estate tax entirely.

The estate tax was repealed for most of 2010. But on December 17, 2010, President Obama signed a law that reinstated the estate tax retroactive to January 1, 2010. This law set the estate tax at a rate of 35% and provided an estate tax exemption of $5 million.

In a move that helped wealthy beneficiaries, including the beneficiaries of some billionaires, lawmakers made the estate tax in 2010 an optional, default regime. Executors of the estates of 2010 decedents can opt out of the estate tax by filing a special form—Form 8939 (Allocation of Increase in Basis for Property Acquired From a Decedent).

By |2011-09-15T08:51:07-07:00September 15th, 2011|

Annuities And Estate Planning

Wealth Strategies Journal:  The Law of Unintended Consequences generally holds that human conduct will produce at least one unintended consequence over a course of time and during a series of activities or transactions.

Disclaimer: Material is presented here for general information purposes and does not constitute legal or tax advice. The intent of the material is to provide some insights into the issues which can arise when proper due diligence and qualified counsel may be somewhat absent during the annuity sales process.

The law of unintended consequences is an adage or idiomatic warning that an intervention in a complex system always creates unexpected and often undesirable outcomes. [] In the financial world there are few better examples of a “complexity” than annuity contracts.

When annuities intersect with trust drafting by estate planning attorneys, expect the unexpected. A few case histories from the file will illustrate the point and serve as harbinger of advisory challenges.



By |2017-10-07T11:14:45-07:00September 1st, 2011|

Estate Planning Steps To Start Today

Tulsa World: Everybody’s going to die – so why not think about estate planning now and beat the rush?

Even if you’re not wealthy, it’s still important to plan for what will happen to your valuables and property after your death.

All the legal terms you’ll run into along the way to understanding the estate planning process will confuse and even overwhelm you – unless you use the Federal Citizen Information Center to bone up on the lingo and get ready to protect your wealth for your family.


By |2017-10-07T11:13:36-07:00August 4th, 2011|

Ways to Steer Clear of State Death Taxes

Wills, Trusts & Estates Prof Blog:  Twenty-two states and the District of Columbia currently impose a death tax on their taxpayers. These taxpayers have options when it comes to avoiding paying these taxes, however.

One option is to make a large lifetime gift. The current federal law grants taxpayers a $5 million gift exemption ($10 million for married couples). Another option is to make annual exclusion gifts. Taxpayers can give an unlimited number of people gifts up to the annual exclusion amount ($13,000, currently) without incurring a gift tax.

By |2011-07-19T08:17:04-07:00July 19th, 2011|

Estate Planning in 2011-2012

Smart Money:  You have to hand it to Congress: It’s doing its best to turn one of the more wearying parts of retirement planning — getting your estate in order — into something of a party. The challenge for you and me is to stay clearheaded.

The Tax Relief Act of 2010, passed in December, made headlines primarily for retaining the Bush-era income tax cuts. But lawmakers also approved changes in estate and gift taxes that left lawyers and accountants gushing. (“Unprecedented.” “Historic.” “Astonishing.”) Most notably, the gift-tax exemption jumps from $1 million to $5 million, which means Americans can now bequeath the latter amount without paying a dime in taxes. This exemption is separate from the annual gift-tax exclusion, currently $13,000.

By |2016-12-13T20:33:45-08:00July 8th, 2011|
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