Archive for the ‘ Estate & Gift Taxes ’ Category
What About ILITS Now? Insurance Trusts and the 2010 Tax Act
The rules have changed again. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “2010 Tax Act”), signed into law on December 17, 2010, created last-minute, sweeping changes to the estate, gift, and generation skipping transfer (GST) tax landscape, at least for two years. These changes are mostly good, in that [...]
10 Things About the 2010 Tax Relief Act
1. Tax Rate Status Quo. The Act holds steady the 2010 income tax rates for 2011 and 2012. Personal income tax rates will continue to range from 10% to 35%, and long-term capital gain tax rates will again be 0% or 15%. Also, qualified dividends will continue to be taxed at long-term capital gain tax [...]
Responsible Estate Planning
I like seeing estate planning related articles in major news sources. They usually confirm that the practices I preach have real-world application, and they usually explain things plainly. Two recent, short articles–one in The Washington Post and the other in The Wall Street Journal–both fit the bill. In The Washington Post, Rosalind Resnick (Axxess Business Consulting) wrote “The Parental [...]
Tax Free Gifts to Children
Gifts to children can be tax free through the use of a 2503(c) trust (also called a “children’s trust”). These trusts are named after the Internal Revenue Code section that makes these gifts free from taxation. A gift to any person is subject to federal gift taxation unless an exemption or credit applies. The most [...]
Florida Legislature to the Rescue!
A number of sources (including Forbes, most prominently) report that the Florida Legislature will take up a bill aimed at bringing sense to the chaotic 2010 estate tax gap. As I previously wrote (here), the one-year estate tax hiatus may cause many wills and trusts to produce gifting consequences that were never intended by the [...]
No Estate Tax? Think Again.
Much has been made about the fact that there is no Federal estate tax for individuals who die during 2010, but that doesn’t mean that the estate of a 2010 decedent escapes all taxes. The estate is liable for any deficit in Federal (and possibly state) income taxes for income earned by the decedent in [...]
CBS on 2010 Estate Tax
I’ve written a number of posts about the 2010 estate tax mess (most recently, here), but Deborah Jacobs at CBS MoneyWatch has done a nice job of providing the need-to-knows in her article “Estate Tax: What You Need to Know for 2010.” Particularly imporant is what Jacobs writes about formula clauses in wills and trusts, [...]
10 Things About Life Insurance Trusts
1. A Problem of Inclusiveness. The death benefits payable on life insurance that you own is included in calculating the value of your estate subject to Federal estate taxes. Even though you cannot spend the death benefits yourself, you control who will receive them, and that’s good enough for the IRS to tax them. 2. ILITs: Better [...]
New York Times’ Take on the Estate Tax
Yesterday’s editorial in the New York Times–“An Estate Tax Mess“–makes many of the same points as I tried to make in my post on December 24th. In particular, the editorial discusses the new hardship created by repeal of the step-up in basis on inherited property. It’s conclusion: “There will be many more losers than winners [...]
Death, Resurrection and Step-Up
It’s all but certain that Congress will fail to act by the end of the year to stave off the death (albeit briefly) of the Federal estate tax. Since 2001, we’ve been slowly plodding toward what most believed to be the easily avoidable 2010 hiatus and 2011 resurgence of the estate tax. Stated plainly, the [...]