After months of private negotiation, President Trump and GOP congressional leaders have revealed the outline of their tax plan. It calls for cuts in both individual and corporate tax rates.
Despite the possible repeal, estate planning attorneys attending their biggest professional conference said they remain optimistic about the need for their services, and see a closer working relationship with financial advisors.
Lifetime gifting can affect your individual income taxes, your individual estate and gift taxes, and the capital gains taxes that potentially are to be paid by the recipient of the gift.
Concerned about estate taxes? You may not have to be.
Measures to completely repeal the Estate Tax are moving through both houses of Congress.
For unmarried couples, making a will is paramount, especially if they are sharing a home owned by just one member of the couple. If the homeowner dies without an estate plan, the other member of the couple could be out on the street. "The state will not protect your significant other," says Russ Weiss, a certified financial planner in Doylestown, Pa. "The children can kick her out right away."
The Washington Post’s Matt O'Brien shines a momentary light on the estate tax, and comes up with some surprising numbers.
Sen. John Thune (R-S.D.) said "a death in the family should not be a taxable event."
Portability is still tripping up surviving spouses and their advisors, and the American Institute of CPAs is calling on the Treasury to help them.
Millions of Americans face a challenge in meeting their budgets every month – not just financially, but also in their time budgets, says investment advisor Reid Abedeen. “Knowledge is power and time is often money, but what if you don’t have the time to empower yourself with knowledge? For many households, that often means losing out on thousands of dollars through tax deductions,” says Abedeen, a partner at Safeguard Investment Advisory Group, LLC (www.safeguardinvestment.com). “As a family man myself, I understand what it means to work hard to provide the best possible for my wife and children. Had I not worked in the financial sector for almost two decades, I might not have understood how to best troubleshoot my tax return, I sympathize.”
Before the days of estate taxes, children simply moved into the family home and took over the master bedroom after their parents died. Unfortunately, it’s not that easy anymore. There are several ways to give a home to your child. And a few are tax-free. But in order for the transaction to work properly, you’ve got to plan ahead. Here is a rundown of your options.
In Private Letter Ruling 201507008 (released Feb. 13, 2015), the Internal Revenue Service addressed whether: 1) a trustor’s contribution to an irrevocable trust was a completed gift subject to federal gift tax; 2) a distribution of income to a beneficiary was a completed gift; and 3) the fair market value (FMV) of the trust property was includible in the trustor’s gross estate. The IRS concluded that a trustor’s contribution wasn’t a completed gift subject to federal gift tax. The IRS did determine, however, that a distribution of income or principal by a distribution adviser to a beneficiary (other than the trustor) was a completed gift and, on the trustor’s death, the FMV of the property in the trust would be includible in the trustor’s gross estate for federal estate tax purposes.
For 2015 you can leave bequests–gifts to other individuals upon your death–worth up to $5.43 million free of any federal estate tax. This is the so-called estate-tax exemption. If you’re married, both you and your spouse are entitled to separate $5.43 million exemptions. If one spouse dies and does not use up his or her full exemption, the leftover exemption amount can be left to the surviving spouse.
When it comes to saving for retirement, many investors already know how well the Roth IRA fends off Uncle Sam. But what they may not realize is that it’s equally effective as an estate-planning tool. Seniors who convert a regular IRA into a Roth account can reduce their estate taxes and eliminate the income tax their heirs would otherwise have to pay on withdrawals taken from an inherited regular IRA. Sound too good to be true? Well, it is true. Here’s how it works.
Most estates don't owe federal estate or gift tax, because you can give away or leave substantial amounts of property tax-free. The federal estate and gift taxes are really one tax, called the unified gift and estate tax. For deaths in 2015, you can leave or give away up to $5.43 million, total, before you need to pay tax. Tax liability isn't assessed until death, unless you make $5.43 million in taxable gifts (very unusual) during your lifetime.
It's a new tax year, and many deductions, exemptions and other Internal Revenue Service provisions have changed. Be aware of them. Some will cost you more, some will help you. Entering 2015, we begin the paper chase leading up to filing tax forms for 2014. As we account for last year, start planning now for 2015. Time flies. This century already is 14% gone. This year, the estate tax exemption increases to $5.43 million with an inflation adjustment. With proper planning, married couples can take advantage of two individual exemptions, passing $10.86 million to heirs free of federal estate taxes. A taxable estate includes the face amount of life insurance owned by the deceased, so flawed insurance planning for a high net worth person can inadvertently subject proceeds to taxes.
In his 2015 State of the Union address, President Obama said his tax reform plan would lower taxes for middle-class families. According to a new analysis from the Tax Policy Center, that’s not quite the case. According to the TPC’s calculation, Obama’s tax proposals would hike taxes on top earners, offer tax relief to low-income Americans—and change little for everyone in the middle.
The federal estate tax exemption rises to $5.43 million per person for 2015, but the annual gift exclusion amount stays at $14,000.
A higher exemption for the federal estate tax is shifting the focus to minimizing capital-gains taxes and state levies. Here are the latest strategies.
About 10 years ago, a politician asked us to find an example of a family farm in the area that had been financially wiped out because of the federal estate tax (or “death tax” as he called it). He was not pleased when we were unable to offer up such an example. Reality conflicted with the theme of his message. I’m not saying estate taxes are irrelevant, insignificant or otherwise unworthy of consideration. At a 40% tax rate, the estate tax is real and has the potential to damage or even destroy a privately-held business. I’m simply stating that what is more important is estate planning. With a properly structured estate plan, estate taxes can be mitigated, funded or eliminated.