QDOT-ting I’s and Crossing T’s: Estate Tax Planning for Non-United States Citizen Spouses
Good examples in this article on QDOT planning: The examples above illustrate the general rules applicable to gratuitous lifetime transfers of property, or gifts. The following examples illustrate the general rules applicable to transfers at death: Source:...What Is Community Property, and What Are Community Property Trusts?
Community property is treated preferentially by the tax code — it gets a full step-up in basis at death, instead of only stepping up the decedent’s half as in joint tenancy. (Could also step down if the market timing is unlucky, but that is rare.)...Tax Havens Can Be Surprisingly Close to Home
Nations lose hundreds of billions of dollars every year through tax evasion and avoidance facilitated by havens. Gabriel Zucman, an economist at the University of California, Berkeley, has estimated that as of 2013, about 10 percent of the world’s...New Commodity ETFs Structured to Avoid Need for K-1 Filing
ETF Securities Group, a U.K.-based asset manager, launched three ETFs on the NYSE Arca exchange that track the Bloomberg Commodity Indices, on March 31. The funds are among thousands traded on the exchange but stand out because they are broad-based and...The flexibility of stretch IRAs: Learn how your IRA can benefit your spouse and other beneficiaries
IRA stretch is great in theory, but your beneficiary can withdraw the principal at any time and there is no asset protection. As an estate planning attorney, I can make the stretch real by using an asset-protected standalone IRA Beneficiary Trust, separate from...States With the Highest (and Lowest) Taxes for Retirees
In general, the most tax-friendly states for retirees are, in order, Alaska, Delaware, Georgia, Nevada, and Wyoming, according to the J.P. Morgan report. The least tax-friendly states, in order, are New Jersey, Connecticut, New York, Maine, and Vermont. Property taxes...Should you use your retirement savings to pay for kids’ college? – MarketWatch
The kids can work their way through college like we did. ‘Should I dip into my retirement account to pay for college?’People do it, but most financial professionals advise against it. At the very least, experts say, you should limit such withdrawals, so as not...IRS Recognizes Retroactive Validity of GRAT Based Upon Court Reformation
In this matter, the draftsman failed to include language prohibiting the trustee from issuing a note, other debt instrument, option or other similar financial arrangement in satisfaction of the annuity obligation as required by § 25.2702-3(d)(6) of the Gift Tax...Estate Planning Pitfall: You reside in a state with high estate tax
Sacramento is at this moment plotting to bring back the estate tax here. Also, you might own property, or plan to retire, in one of these states. Do you have a flexible estate plan? Reforms being debated by Congress could repeal the federal estate tax with...Conflicted Art Appraisals Lead to $1.77 Million Estate Tax Deficiency
Recently, in Estate of Kollsman v. Commissioner (T.C. Memo. 2017-40), the U.S. Tax Court held that an art collector’s estate significantly underreported the value of two artworks for estate tax purposes. The problem: the estate relied on appraisals by an...Make GRAT Payments to Avoid Subjecting Assets to Gift Tax
A GRAT must be drafted to comply with the requirements set forth in the applicable Treasury Regulations under Section 2702. Unfortunately, the regulations don’t resolve all issues, such as whether there’s a minimum or maximum term for a GRAT, or whether a GRAT...Do You Still Need An Estate Plan If There Is No Estate Tax?
In other words, a repeal of the estate tax would really only impact those clients with a net worth north of $11 million. That’s why Natanya told me that most of her moderately wealthy clients have already rounded the corner from thinking about taxes to focusing...Dynastic Gamesmanship: Did David Rockefeller’s Crafty Trust Work Leave the IRS Holding the Bag?
The trust rules have evolved over the last eight decades. For one thing, depending on the state, a trust created now for David’s own grandchildren and beyond may never need to terminate.It could theoretically run forever, eternally beyond IRS reach if run...Term Life Insurance and Pre Liquidity Planning
From a planning perspective, illiquid shares provide a challenging dilemma. Restricted shares can generate a high balance sheet net worth and high estate value, but oftentimes without the corresponding liquidity to fund the shareholder’s estate tax liability....FATCA Repeal On Agenda Of U.S. Republicans
“FATCA has wrecked [sic] havoc on the global financial system, turned 8 million Americans overseas into financial pariahs, violates other countries’ sovereignty, and is damaging for American jobs and therefore the American and global economies,” he said....Tax Reform Bill On the Front Burner
In short, the ground has been laid for quick action in the House of Representatives the moment the health care debate concludes. Source: Tax Reform Bill On the Front BurnerCharitable Divorce Planning?
Charitable planning coordinated with dissolution planning merits serious examination. The work involved is well worth the effort to assure divorcing parties have maximized the use of all marital assets in a tax-efficient manner. The four techniques are...Tax Law Update: April 2017
The loss of income tax revenue would be the product of income tax saving strategies that would become viable in the wake of gift tax elimination. For example, without a gift tax, the use of a “straw taxpayer” would likely become a prevalent income tax planning...Avoid Taxable Gifts in 2017
Even though in our current environment, paying gift taxes could save estate taxes, and is therefore a rational strategy, our clients won’t view it this way if, this year or next, the estate tax is repealed. And this is so, even if the estate tax is repealed...Re-examining Your Client’s Trust-Owned Life Insurance Policy
Unfortunately, many wealth management professionals fail to view the underlying asset inside the trust—the life insurance policy itself—the same way they would consider other assets (e.g., stocks, bonds and real estate) and rarely re-examine the life insurance...McConnell: Tax reform unlikely by August
Senate Majority Leader Mitch McConnell (R-Ky.) on Thursday poured cold water on the Trump administration’s goal of completing tax reform by the August recess. Source: McConnell: Tax reform unlikely by August | TheHillAmericans Give Up Citizenship at Record Rates, Primarily Over Taxes
Giving up citizenship over taxes? There’s something strangely American about that. But always remember that if you give up your US citizenship, you are barred for life from possessing a gun or even hiring an armed guard. “To some degree it is President...The Future Of Proposed IRS § 2704 Modifications Is UNCERTAIN
In estate planning these days, there is uncertainty and there is UNCERTAINTY. Over the last few years we’ve gotten pretty good at developing techniques to deal with uncertainty, but the UNCERTAINTY surrounding the proposed regulations related to 26 USC §...Basis Consistency and Reporting for Property Acquired from a Decedent
Significant coverage was devoted at the recently concluded 51st Annual Heckerling Institute on Estate Planning in Orlando, Fla. to the Internal Revenue Service’s proposed regulations (proposed regs) concerning basis consistency and reporting for property...Who Gives to Charity and Why
Over 2,300 years ago, Aristotle commented on the challenges one faces when considering how to make larger charitable gifts:To give away money is an easy matter and in anyone’s power, but to decide to whom to give it, how much to give, when to give, and to give for the...The Biggest Lie in Life Insurance
Valid point, especially now that the estate tax beast so rarely bites and may soon be destroyed. The article points out a few reasons for having life insurance, but omits some important ones such as estate creation for young families. Thus, the biggest lie in...Arguments for Keeping Death Tax Weak, BUT…
The arguments set forth in this Bloomberg article for keeping the death tax are weak (compare this other recent Bloomberg article pointing out the role inheritance plays in keeping whites richer than blacks), but the article comes close to making an important point so...Tailoring the Trust Protector’s Role
The Bespoke Trust Protector – Tailoring the Protector's Role from Matthew McClintock WealthCounsel VP Matt McClintock has been at the forefront in this cutting edge planning area — adapting the age-old concept of trust protector, commonly used in...Calif. Lawmaker Readies Estate Tax Plan if Congress Repeals
The name is Wiener, of course. SACRAMENTO, Calif. (CN) – Warding against the possibility of Congress nixing a lucrative federal estate tax, a California lawmaker on Tuesday announced a measure to ask voters to approve a mirroring state version. Source: Calif....Wife Has No Gain, Loss or Estate Inclusion on Transfer of Trust Assets Pursuant to Divorce Settlement Agreement
In Private Letter Ruling 201707008 (released Feb. 17, 2017), the Internal Revenue Service ruled that a wife wouldn’t recognize gain or loss from her husband’s transfer of property to a trust for her benefit under a proposed divorce settlement agreement....How do recent updates to estate tax laws impact your future?
Utility indeed, especially with added flexibility of the Clayton election and other precautionary provisions. Many of our married clients have structured their estate plans to apply the federal estate tax exclusion amount to create a trust for the benefit of their...Americans Renouncing Citizenship at Record High
Tax savings aside, keep in mind that citizenship renunciants are not only prohibited from possessing firearms, but also are prohibited from hiring armed bodyguards. Why? It all goes back to the Civil War, and to a tax meant to deter potential draft dodgers from...Is a donor-advised fund right for you?
DAF pros and cons Here are the advantages and disadvantages of using a DAF: Immediate tax deduction. Your contribution to the DAF is deductible in the tax year in which the initial contribution is made. You don’t have to wait until the fund makes distributions...IRS’ “Won’t Rule” List
How comforting — as dictators go, the IRS plays very fair in telegraphing its hand-wringing (chop-licking?): Every year, the Internal Revenue Service updates its list of topics on which it will:(1) not issue rulings, (2) ordinarily not issue rulings, and (3) not...A Better Way To Say “I Love You”
As Valentine’s Day brings heart-shaped chocolate boxes and roses by the dozen into your clients’ imaginations, seize the moment to educate them about the drawbacks of “I love you” wills and introduce them to the estate planning move that’s actually going to...Executors Personally Liable for Tax Liabilities of Estate Under Federal Priority Statute, 31 U.S.C. 3713
This is an appeal of summary judgment by the personal representative (the “PR”) of an estate. The lower court found the PR to be personally liable under the federal priority statute, Section 3713, for tax liabilities due from an insolvent estate. Under the...Life Insurance: It Was Never Just About Taxes
This article raises important points — plan for the long-term and don’t let taxes direct the planning over more important goals — plus it’s a good review of the many benefits of life insurance. But as I’ve previously noted, the...Taxation of Aliens Trying to Leave America – Don’t Go Home without your IRS Sailing Permit or You Aren’t Coming Back
Article authored by my friend Brian Dooley, a top international tax expert: Before leaving the United States or any of its possessions permanently or for an extended amount of time, all U.S. resident aliens and nonresident aliens (with certain exceptions) must...Wealth Planners Are Not Afraid of Estate Tax Repeal
In fact, some attorneys see repeal as potentially being a boon for their businesses, especially if the tax is replaced with a capital gains tax such as the one proposed by President Donald Trump on the 2016 campaign trail. Source: Wealth Planners Are Not Afraid...Utah Jazz Owners Demonstrate Power of Dynasty Trusts
Utah Jazz Owner, Gail Miller, recently made basketball news by announcing that she and her family had transferred the NBA team and the Vivint Smart Home Arena into a dynasty trust. Gail Miller and her late husband, Larry Miller, bought the franchise in 1985 for...CPAs: Top 10 list for fiduciary income tax returns and planning
As we near tax season, below are some tips for CPAs when planning and preparing tax returns for trusts, along with a link to an upcoming webinar on this very topic.Remember, trusts with 2016 taxable income over $12,400 pay regular income tax at the top income...COGNITIVE AGING AND THE CAPACITY TO MANAGE MONEY
While Americans often worry about not having enough money in retirement, they seldom worry about their capacity to manage that money.1 At first glance, this lack of concern appears justified because many financial activities are so routine – like paying the monthly...Did San Francisco Eliminate its Transfer Tax Exception for Certain Gifts?
This past November, San Francisco voters approved Proposition W, a ballot measure that increased real property transfer tax rates and made certain other changes to the language of the San Francisco transfer tax ordinance. One of the changes provides that any...Tax Deductions for Estate Planning Fees – Epilawg
If you are stuck doing your own allocation, here are some things to consider when calculating the tax deduction. Attorney’s fees paid in connection with drafting a credit shelter trust, formulating generation skipping tax provisions, marital deduction planning,...Poor planning means government will take half of Prince’s estate
Prince’s estate has until Saturday to file an estate tax payment for the late rock superstar, and the taxes are expected to ultimately swallow nearly half the estate’s estimated $200 million value, meaning a likely windfall of roughly $100 million for the...Income Sprinkling to Minimize Tax Liability
Income sprinkling is often a good strategy to avoid such high tax rates. In such a scenario, the income accumulated in a trust is distributed before December 31st of the year, and it is counted as income for the beneficiary. Unless the beneficiary is also in...Some Firms Apparently Not Yet Planning for Possibility of Repeal
While it is true that there is uncertainty in tax planning now (there always is) and there is a distinct possibility that the estate tax will be repealed and we should of course urge our clients to update after such a major change, it is not true that we cannot...New Regs re Dead But Not Forgotten IRC 1022
Think I’m noticing a trend here. A few months ago, IRS finally came out in support of using Clayton election for portability planning, after years of silence led to suspicion otherwise, and now years after repeal of 1022, the IRS decides to issue regs...Trumpian Carryover Basis Regime to Heat Up Life Insurance?
“Estate freeze” is a term that’s so commonly tossed around in the estate planning community that it’s actually become fairly useless shorthand, as it can be used to describe such a wide variety of techniques. However, as discussed by Jeffrey N. Pennell in his...
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