About the New Tax Proposal Republicans in the U.S. House released their new tax proposal yesterday. The full text of the document is available on the web. It's 429 pages and proposes to simplify the tax code, repeal the alternate minimum tax, and reduce corporate taxes. Of course, this bill is a first draft and is in the early stages of the legislative process. It is fair to say that this version of the bill will not become law, though many of its proposals might. So, how will the new tax ...
Add your child to your deed? No!
I get asked often why you shouldn't just add your child to your deed on a house or vacation home. Doing so is an awful idea and should never be done. And, listen, if you can get a lawyer to say you should never do something, it's probably a really bad idea. Here's why: Gift Tax When you add a child to your deed, you are gifting a 50% share of the house to that child. That gift is subject to the gift tax, and you would be required to file a Form 709 with the IRS to declare that gift. If ...
New Section 2704 Regulations
The IRS has issued some proposed regulations for comment regarding Section 2704 of the U.S. Tax Code. If you aren’t up to speed on your tax sections, Section 2704 is a provision that applies to (among other things) the concept of the family limited partnership (FLP), a tool for families to use to pass wealth to the next generation. For years, high-wealth families (and the lawyers that represent them) have been using a technique known as a “valuation discount” to obtain tax savings for the ...
Check Your Beneficiary Designations!
Please, right now, stop what you are doing and take a few minutes to log into your retirement accounts and call your insurance broker to check your beneficiary designations. The theme this week has been people who have passed with no beneficiary designated or with the incorrect beneficiary designated. In one case, a man designated his wife as the beneficiary on his retirement account. They divorced, he remarried, and lived another twenty years. But he never changed his beneficiary from ...
Star Trek Actor Left No Will
Anton Yelchin is best known for playing Clumsy Smurf in The Smurfs (oh, yeah, and Pavel Chekov in the new Star Trek movies). At the age of 27, he died in an accident. News media are reporting that his parents have filed probate, claiming that he did not have a will. His estate (which is a legal word that just means “everything you own at the time of your death”) is already worth about $1.4 million. Because he died in an accident (his Jeep rolled down the driveway and killed him), that ...
Probate And Taxes Are Two Unrelated Things
I frequently teach classes on the basics of estate planning. (I do it for free, because I enjoy it, so if you want me to speak to a group of yours, please contact me!) As part of that, I often hear misconceptions about estate planning. One big one that keeps coming up is a perceived link between filing probate and paying estate taxes. Probate and taxes are two unrelated things (well, mostly unrelated anyway). Probate is the legal process for wrapping up a deceased person’s financial ...
Your Trust May Be Costing You Money
Estate planning clients often seem to hold the misconception that once they have completed their estate plan, they are done. Nothing left to do but wait until they need to use it. Of course, for some, that “use it” date does not arrive for many, many years. In the interim, everything has changed, rendering their once state-of-the-art estate plan ineffective at best or harmful at worst. If you have a trust-based estate plan that was designed prior to a major change in estate tax law in 2012, ...
Squandered Opportunities
Many people scrimp and save in the hopes of having something left over for their children at their death. But as an estate planning attorney, I know that often times that hard-earned-by-mom-and-dad inheritance turns into a squandered opportunity for the kids. The money (much like lottery winnings) is quickly used on a new flat screen TV, that motorcycle they always wanted, a two-week cruise to the Caribbean, or the worst possibility: to fuel an addiction to drugs, alcohol, or ...
Legalzoom’s “$50,000 Peace Of Mind Guarantee” — The False Allure Of The Diy Legal Service
In my prior post, I talked about some dangers in using DIY estate planning services such as LegalZoom. One of those dangers is the fact that, if you use an insured estate planning attorney and he screws up, your survivors are protected by his malpractice insurance. Services such as LegalZoom, though, are not your attorney and therefore cannot commit malpractice. LegalZoom happily tells you, in its disclaimer: LegalZoom is not a law firm, and the employees of LegalZoom are not acting as ...
Create A Financial Cheat Sheet
In my last post, I urged you to write down your wishes for a funeral or memorial service. This week, I’m encouraging you to create a financial cheat sheet for use by your loved ones should something happen to you (either death or disability). Write down or type up the following: The location of important legal documents: will, trust, insurance policies, car titles, property deeds, etc.; A list of your financial assets including savings and checking accounts, stock accounts, IRAs, ...
