You have to be concerned about the potential for legacy erosion if you have been very successful from a financial standpoint. There is a federal estate tax with a 40 percent maximum rate, so it can have a significant impact on your family’s future. Estate Tax Exclusion Right now, the federal estate tax exclusion is $11.7 million. This is the amount that can be transferred tax-free before the estate tax would be imposed on the remainder. The current level is the highest it has ever been, and it …
Are Assets In a Trust Out of Your Reach?
You may assume that you would not be able to access assets that you convey into a trust because the whole idea is to create separation. This is true to some extent, but there are different types of trusts, and we will provide an explanation in this post. Irrevocable Trusts The notion that you cannot reach assets in a trust stems from the fact that there are irrevocable trusts. Though there are very limited exceptions, you cannot dissolve the trust, and you cannot act as the trustee if you …
Does Your Estate Plan Include a Letter of Last Instruction?
A lot of people look at estate planning as the act of stating your wishes in writing regarding the way that you want your monetary assets to be transferred after you die. This is certainly at the core of the matter, but it is also important to think about the practical side. If you use a will as your primary vehicle of asset transfer, you would name an executor in the document to serve as the administrator. Simply stating the way that you want the pie to be cut up is great. But where are …
Is There a New York Gift Tax?
You should understand the taxes that can potentially enter the picture when an estate is changing hands. An inheritance is not considered to be taxable income, so this is a positive, and inherited appreciated assets get a step-up in basis. To explain through the use of an example, let’s say that you inherit stock from your uncle. It is worth $100,000, but he paid $10,000 for the shares many years before his death. If he would have sold the stock before his death when its value was …
Vacation Homes and Ancillary Probate
If you own a vacation home, you have opportunities to get away with people you care about to enjoy quality time. You get all of the benefits of vacations, and you are making a good investment, so you may actually turn a profit before all is said and done. There is a lot to like about vacation home ownership, but from an estate planning perspective, you have to consider the estate administration implications. Probate Process When a simple will is used to transfer assets, the administration …
How Are Estates Taxed?
Some of the most common questions that people have about estate planning revolve around the matter of taxation. Surprisingly, some of the news is rather good, but there is one looming threat that can impact wealthy families. We will provide all the details in this post. Income Taxes If you were to receive an inheritance from someone, you would not have to report the income when you file your tax returns. This also applies to life insurance proceeds. You would be paid directly by the company, …
Your Inheritance Plan May Require Revisions
Estate planning is not a one-time event, and you should view it in this light from the start. Circumstances inevitably evolve over time, and you should react to them so your estate plan is up-to-date at all times. Life Stages You should have an estate plan in place as soon as you are a self-supporting adult. Many employers provide life insurance as a benefit, and this is one piece of the puzzle that may be automatically put into place. An asset transfer vehicle like a will or a living trust …
Real Estate Boom Can Have Estate Tax Implications
The housing market has been white-hot for a number of years, and this has put a smile on the faces of investors and ordinary homeowners. Wealth building is a very good thing, but there is a looming threat from an estate planning perspective. Federal Estate Tax If you have enjoyed a great deal of financial success, you have to be concerned about the federal estate tax. It carries a 40 percent top rate, and it is applicable on transfers that exceed $11.7 million in value. This figure is called …
You Can Learn From These Celebrity Estate Planning Errors
If you are leaving behind significant resources, they may continue to be viable for generations as income accumulates faster than it is distributed. For entertainers, this can include royalties and licensing rights. The estates of some deceased individuals continue to earn extraordinary sums of money year in and year out for decades after their passing. This is certainly true with Marilyn Monroe and Jim Morrison. Let’s look at where all the money went and learn something in the …
What Is the 2021 New York Estate Tax Exclusion?
You may be surprised to hear that you do not have to report an inheritance that you receive through the terms of a will when you file your state and federal income tax returns. This also applies to life insurance proceeds. Distributions of the principal that is held by a revocable living trust would not be taxable, but you would have to report distributions of the earnings. If you inherit assets that appreciated during the life of the person that left you the inheritance, they would get a …
For the 99.5 Percent Act Would Broaden Estate Tax Exposure
The federal estate tax can take a significant bite out of your legacy if you are exposed. It carries a 40 percent top rate, but most people do not have to pay this tax because there is a rather high exclusion. This is the amount that you can transfer before the estate tax would be applicable on the remainder. When the Tax Cuts and Jobs Act was enacted in December of 2017, it established a record high exclusion for 2018. It was $11.18 million at that time, and there have been adjustments to …
These Trusts Satisfy Advanced Estate Planning Objectives
When you are planning your estate, you may want to consider trusts and acts of charitable giving. Generosity is its own reward, and there are many causes and institutions that can always use help. In addition to the emotional rewards, you can also gain some tax advantages under certain circumstances when you engage in acts of philanthropy. With this in mind, let’s look at the estate planning structure called a charitable remainder trust. Annuity Payments When you create a charitable …
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