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 ...
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, ...
Should We Get Married?
In the wake of the recent Supreme Court decision affirming the right of same-sex couples to marry, it is time to discuss some legal and economic factors a couple might consider (in addition to the religious, societal, and emotional ones) when thinking about whether they should tie the knot: Taxes: Married couples typically get a reduction in taxes. However, if the two would-be spouses have similar incomes, they may incur the dreaded “marriage penalty” and end up paying more in taxes. ...
Myth Busting: Portability Does Not Eliminate Need For Good Trust-Based Planning, But It Does Change It
There seems to be a myth circulating on the Internet created by changes in the estate taxation rules from the American Tax Relief Act of 2012 (“ATRA”): that because of “portability,” there is no longer a need for the “traditional” A-B Trust planning. Although I agree with that statement for some couples, there are many groups of people for whom this advice is woefully inadequate. (Sorry in advance — this is long and kind of dense. If you don’t want to read the details, my point is that good ...
Do I Still Need A Trust?
It used to be very common for estate plans to include a two-part trust scheme, often called an AB trust, designed to avoid or minimize estate taxes. In 2012, Congress finally passed “permanent” estate tax legislation, with the estate tax exemption set at $5,000,000 per person adjusted for inflation. In other words, married couples who have less than $10,000,000 in assets no longer face serious estate taxation concerns. It might be tempting to think that the once-common trust is now a relic ...
