The season of giving is almost upon us, but will generosity to friends and family trigger a gift tax return filing requirement? The main tax advantage of gifting during your lifetime is the removal of assets that would otherwise be included in your gross estate and be subject to federal estate tax upon your passing. But even if your estate is under the current estate tax filing threshold of $5.49 million per taxpayer for 2017 (or $5.6 million in 2018), you may still be required to report gifts you made during the tax year. The annual gift tax return, IRS Form 709, is due April 15th following the calendar year the reportable gifts were made.
A common misconception is that once you have a will and a living trust in place, nothing else needs to be done in order for your assets to be distributed at your death according to your wishes. The mere listing of an asset in the trust agreement does not make it a trust asset. Actually, assets have to be held in the name of the trustee, (i.e. the title of the asset has to be transferred to the trustee of the trust,) in order for the asset to be subject to the terms of the trust agreement. At the same time, certain types of assets pass by other means, irrespective of whether or not a will or trust is in place. You will want to understand these differences in order to appropriately title your assets to make sure they are transferred as you intend at death.
As promised during his campaign, on April 26, 2017 President Trump unveiled a new broad tax-cut plan. Besides slashing business and individual tax rates and eliminating the net investment income tax and the alternative minimum tax, the proposal also includes eliminating certain itemized deductions such as the state and local income tax deductions. However, deductions for mortgage interest and charitable giving are expected to stick around. (more…)
Estate tax repeal is on the wish list of both the Republican party and the new President and is an idea that is generally popular with voters. However, a repeal of the existing transfer tax system would likely impact taxpayers in ways they are not aware of. In 2015, only 4,918 estates paid estate taxes, but the beneficiaries of all estates benefited from the income tax savings of a higher tax basis for the assets they inherited. Historically the repeal of an estate tax has been accompanied by changes in income tax rules that could reach far more taxpayers than the estate tax itself. (more…)
By Julie Malekhedayat, Principal
ASL Family Wealth and Individual Tax Planning Group
Qualified personal residence trusts (QPRTs) are an estate planning technique that can provide both tax and non-tax benefits to certain taxpayers looking to gift a principal residence, second home, or vacation home slowly over a number of years using a discounted gift value. However, before entering into a QPRT, you should consider the advantages and disadvantages in order to determine if it is right for you. (more…)
In planning their estates, married couples now have an option that could make it simpler for spouses to share their lifetime estate tax exemptions, or port from one spouse to the other, without the use of a traditional credit shelter trust in their estate plan. In recent years, lifetime exemptions have become even more valuable as the standard amounts have increased dramatically from $675,000 per taxpayer in 2000 to $5,450,000 each in 2016. Thus, a married couple now has a potential combined estate tax exemption of $10,900,000 to shelter their combined assets from estate tax at their deaths. But without proper planning, fully half of this amount could go unused, exposing the estate to estate taxes. (more…)
By Julie Malekhedayat, Principal
Trusts are a fundamental part of most estate plans — do you have one? Do you need one? If you do have one, do its provisions create even more trusts at your death? And if so, are they still a good idea?
Most everyone with assets will benefit by holding those assets in a revocable trust, commonly known as a living trust. Living trusts allow your heirs to transfer your assets after your death according to your wishes as outlined in the trust document, without the need for probate court oversight and approval. As the name implies, a revocable trust can be changed or completely revoked at any time before your death. It will also maintain your privacy at your death, whereas probate court proceedings are public information.