Good News in New Law

Finally Congress did something. It extended the Bush era tax cuts for another 2 years. This included raising the estate tax exemption to $5 million per person, or $10 million for a married couple. Other good news: along with the increased estate tax exemption, the tax rate is lowered to 35% and the exemptions are made “portable,” meaning that husband and wife share them even if one does not have enough assets to fully use the exemption. Even more good news: the federal gift tax exemption is raised from a $1 million lifetime exemption to a $5 million lifetime exemption and a 35% rate.  [Read more…]

It’s all in the details: property titles and beneficiary designations

Property titles and beneficiary designations are an important part of an estate plan. Make sure they are current and coordinated with your planning documents. As part of the estate planning process, I ask clients for a list of their assets and how those assets are titled. The title to assets can determine who gets the property when the owner dies. Property that is owned by two or more people with joint rights of survivorship or by husband and wife will pass automatically at the death of one owner to the surviving owner. When real property is held by two or more people as tenants in common, each is considered to own a separate share of the property and to be able to dispose of that share in his or her Will.  [Read more…]

Gift-giving as a means of estate planning

We have all heard the saying that it is better to give than to receive. This is especially true if you are a wealthy person who wants to minimize estate taxes. Giving away money or investment assets, whether to charities or to family members, reduces the size of your estate and therefore reduces the amount of estate and inheritance taxes that your estate will pay later.

The advantage of giving gifts during life is that you get the pleasure of seeing your loved ones enjoy the gift. It is a relatively low cost means of reducing your estate and can be as simple as writing a check. You don’t have to pay an estate planning lawyer to help you do it. However, you should get some initial guidance from an accountant or estate planning attorney on the laws covering these types of gifts so that you don’t inadvertently run up a big gift tax liability. Gift taxes are paid by the donor, not by the recipient of the gift.  [Read more…]