What if you could give your children assets in a trust and they could use them and yet they’d avoid estate taxation at their death? That’s what a “Generation-Skipping Transfer” Trust, or “GST” trust does. It is a trust which is designed to avoid estate taxation at the death of the beneficiary. During the life of the beneficiary, the assets in the trust are used for their health, education, maintenance, and support. After the beneficiary’s death, the assets go to their own children. The … [Read more...] about What is a GST Trust?
Effective January 1, 2018, the Tax Cuts and Jobs Act of 2017 (TCJA) reduces individual and corporate tax rates, eliminates a host of deductions and credits, enhances other breaks and makes numerous additional changes. One thing the TCJA doesn’t do is repeal the federal gift and estate tax, as originally contemplated by the House of Representative’s version of the bill. It does, however, temporarily double the combined gift and estate tax exemption and the generation-skipping transfer (GST) … [Read more...] about How Will Tax Reform Affect Your Estate Plan?
There are many changes for 2018. Congress passed a last-minute tax law, which the President signed the last business day before the Holidays. Congress Passes New Tax Law Last week the Senate passed the new tax law, (which had been called the “Tax Cuts and Jobs Act” and due to Senate parliamentarian objections is now 'An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”) and then the House of Representatives passed … [Read more...] about New Year’s Greetings
As most estate planning attorneys know, if the government is thinking of closing a loophole, it probably means it is an effective strategy. Last week, I discussed the potential closing of the so-called “backdoor Roth IRA” loophole. This week, I’ll discuss “GST” exemption and dynasty trusts in broad terms (there are many technical issues beyond the scope of this blog). For the past several years, the Obama Administration has proposed having GST exemption allocation expire after 90 years, rather … [Read more...] about Another Loophole?
Clients often struggle with how to leave assets to their children or other beneficiaries. This blog will give a brief overview of some of the most common and useful ways and their advantages and disadvantages. Divorce Protection Trust. This trust gives the beneficiary a right to withdraw whatever they choose at any time. This keeps the assets separate from a spouse, but does not provide creditor protection. The assets are included in the beneficiary’s estate. The trust is a grantor trust as … [Read more...] about Helping Clients Decide
Last night, we watched as the ball dropped in Times Square to kick off yet another New Year. To quote from the Great Gatsby: “So we beat on, boats against the current, borne back ceaselessly into the past.” One year ago, we were teetering on the brink of the “fiscal cliff,” before Congress finally voted to come to a partial compromise. On New Year’s Day 2013, Congress passed the “American Taxpayer Relief Act.” My how time flies! So, we have just completed the first year of estate tax … [Read more...] about Here’s to 2014!
Teetering on the brink of the “fiscal cliff,” Congress finally voted to come to a partial compromise. About two hours into the New Year in Washington, the Senate voted 89-8 to pass H.R. 8, the “American Taxpayer Relief Act.” Late into the evening of the same day (January 1, 2013) the House of Representatives followed suit and voted 257-167 to pass the measure. President Obama has indicated that he will sign the legislation. From an estate tax perspective, the measure makes permanent all of the … [Read more...] about Fiscal Cliff Averted
TRA 2010 included a new provision that allowed for the surviving spouse to use the Deceased Spousal Unused Applicable Exclusion Amount (DSUEA). There are a few reasons why the DSUEA should not be relied upon as a replacement for the credit shelter trust. First, (I will not “bury the lead” reason), TRA 2010 sunsets at the end of this year. The DSUEA is part of TRA 2010 and, if TRA 2010 sunsets, the DSUEA sunsets with it. Unless your client and your client’s spouse both plan on dying this year, … [Read more...] about Portability Does Not Replace the Credit Shelter Trust
If you prepare any tax returns, you will need a PTIN beginning in 2011. A “PTIN” is a Preparer Tax Identification Number. Anyone who prepares tax returns for others needs a PTIN for any tax return he or she signs off on beginning on January 1, 2011. This new requirement appears in code section 6109(a)(4) and the following regulation: http://www.irs.gov/pub/irs-utl/td_9501.pdf In many cases, attorneys have been exempted from the registrations and regulations which have been routine for others. … [Read more...] about Get Your PTIN for the Holidays!
As we all know, there is no estate or GST tax in 2010. However, the estate and GST taxes return next year. Without Congressional action, the applicable exclusion will be $1 million. Thus, a wealthy individual who dies on December 31, 2010, will face an entirely different tax outcome than one who dies the following day. Let’s look at someone with $100 million. If they die on this New Year’s Eve, their estate would owe no any estate tax, regardless of to whom the assets were given. If the person … [Read more...] about Having No Estate Tax: Is It an Opportunity to Die For?