People are sometimes confused about estate taxes and inheritance taxes, and rightly so. It would be logical to assume that the two terms describe the same type of tax, but in reality, they are different. Plus, there are taxes on the federal level, and there are also taxes on the state level, so the whole situation can be somewhat perplexing to the layperson. Estate Tax vs. Inheritance Tax An estate tax would be imposed on the entire taxable portion of the estate in question. For example, …
Should I Change My Living Trust When I Acquire Assets?
You may want to consider the creation of a revocable living trust, even if you do not consider yourself to be wealthy. People sometimes think that trusts are only useful for high net worth individuals, but this is not the case when it comes to a revocable living trust. When you create a revocable living trust, you facilitate timely and effective asset transfers to the beneficiaries. These distributions would not be subject to the legal process of probate. On the other hand, if you use a will to …
What Is a CLAT?
In the realm of estate planning, there are some acronyms used that are probably foreign to you as a layperson. We look at them from time to time on our blog, and in this post we will examine the legal device that is called a CLAT. Charitable Giving This acronym stands for a charitable lead annuity trust. A CLAT can be useful as a transfer tax efficiency tool under certain circumstances. To understand the value of a charitable lead annuity trust, you should first know some things about …
What Is a Step-Up in Basis?
To understand what a step-up in basis is all about, you need some background information about the capital gains tax. If you are in possession of an appreciated asset, the gain would be taxable if and when you realize it. The holder of an asset would realize a gain if the asset was liquidated and the appreciation was in hand. Under the tax code, there are short-term capital gains, and long-term capital gains. A gain would be a short-term capital gain if it was realized less than a year after …
IRS Raises Gift and Estate Tax Exclusion for 2015
The federal estate tax exclusion is the amount that you can pass along to your heirs free of taxation. In addition to the estate tax, we also have a federal gift tax. This tax exists to prevent people from giving lifetime gifts to avoid the estate tax. The exclusion is a unified exclusion that covers lifetime gift giving along with the estate that you are passing on to your heirs. There is an unlimited marital transfer tax deduction. You can transfer unlimited assets to your spouse either …
How Does a Power of Attorney Terminate?
Our practice is dedicated to estate planning and elder law. We assist people who want to facilitate effective postmortem asset transfers, and we also help people who are concerned about the eventualities of aging. Incapacity is one of the contingencies that you may face as an elder, and durable powers of attorney are used to prepare for this possibility. Most people are aware of the fact that a power of attorney is a legal document that can be used to name someone to act on your behalf in a …
Who Can Act as a Living Trust Trustee?
Some people think that trusts are only used by people who have very complicated and valuable portfolios. Indeed, there are trusts that are used by people who have estate tax efficiency and asset protection concerns. However, there are trusts that are used for other purposes. The revocable living trust is one of them. Revocable living trusts can be useful for a wide range of people, even those who are not especially wealthy. If you have assets that you want to pass along to your loved ones in a …
Why Is Incapacity Planning Important?
Estate planning can seem like something that is strictly financial in nature, but this is not entirely true. You do want to facilitate timely asset transfers to your loved ones, but you should also consider latter life issues. Incapacity planning is an important piece of the puzzle. Let's look at the facts. Incapacitation Among Elders To be optimally prepared, you should take a sober minded approach to potentially unpleasant circumstances. The stark reality is that a high percentage of …
Are There Different Types of Individual Retirement Accounts?
Retirement planning is a long-term endeavor. It can be hard to wrap your head around a time when you will be in your late sixties when you are younger, but time marches on. Accumulating the resources that you will need to retire in comfort can be difficult, so you should start looking ahead as soon as possible. An individual retirement account can be part of the plan. In this post we will look at the two different types of individual retirement accounts that are widely utilized. Traditional …
What Is Capital Gains Tax?
The matter of taxation is something that is naturally going to come to mind when you are planning your estate. There are various different taxes that can enter the picture, but we will focus on capital gains taxation in this post. Taxes on Gains When you purchase assets that can appreciate, the gains are potentially taxable. For tax purposes, the gains are divided into two categories: long-term capital gains, and short-term capital gains. These two types of gains are taxed at different …
What Is a Medicaid Waiver?
You may not understand why Medicaid would be relevant to you if you are going to qualify for Medicare when you attain senior citizen status. It is true that both of these programs are government health insurance programs. If you have Medicare coverage, you would not need Medicaid at first. Plus, Medicaid is a need-based program. If you retire with some income and resources, you would not meet the eligibility requirements. In spite of the above, Medicaid does become relevant to a …
What Is the Value of a Charitable Remainder Trust?
The process of estate planning can grow into a more comprehensive form of planning called legacy planning. When you are contemplating your legacy, you may decide that you want to set aside something for charitable causes. There are a number of different ways that you can proceed if you have philanthropic aims. Private Charitable Foundations Some people create private charitable foundations. We have all heard of high-profile foundations like the Ford Foundation, the Rockefeller Foundation, …
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