taxes

Estate Planning Advice for People Nearing Tax-Exemption Limits

Taxes are often said to be one of the few unavoidable parts of life. The degree to which you end up paying taxes, however, can change substantially. Even though it is currently set at $11.7 million for singles and $23.4 million for a married couple, the estate tax exemption is set to expire in 2026. Following the government’s decision to create various pandemic recovery programs, it is likely that tax rates will increase.  The uncertainty generated by estate tax exemptions means that anyone with over $5 million in assets is likely to be curious about various strategies that can be utilized to minimize taxes. The following reviews some estate planning strategies that you might consider if you are close to estate tax exemption limits.  Make the Most of Annual Exclusions One of the best ways to reduce your taxable estate is to maximize your annual exclusion limit, which is currently set at $15,000 a year for each individual who receives a gift. Remember, it is possible to make gifts to as many people as desired provided the amount is less than $15,000 without facing tax consequences.  Set up an Irrevocable Life Insurance Trust An irrevocable life insurance trust involves a [...]

2021-05-05T03:02:49+00:00Tags: , , |

How to Anticipate Tax Changes with a Potential Administration Change

In a Wall Street Journal article published last month, Philip DeMuth commented that Americans currently live in an ideal age of taxes due to President Trump’s 2017 Tax Cuts and Jobs Acts. Unfortunately, however, the tax advantages offered through various regulations passed by the current administration are scheduled to end on December 31, 2025.    Potential Changes to Estate Planning Laws   It is a good idea to review each estate planning during such uncertain times to make certain that assets are not placed at risk of unnecessary taxation. Some of the potential changes that could occur include:   Increasing the maximum estate tax rate from 40% to 77% Placing substantial limits on estate planning techniques like Grantor Retained Annuity Trusts and Defect Grantor Trusts Reducing estate and gift taxes as well as generation-skipping transfer tax to $3,500,000 from $11,580,000 Restricting the $15,000 annual gift exclusion afforded to unlimited donees to only two donees a year    Even though it can be difficult to predict what regulations might be passed into law, due to both the significant federal deficit and current political government, at least some of these regulations are likely to come to pass.   Estate Planning Techniques During [...]

2020-08-19T03:02:17+00:00Tags: , , , |

Four Essential Inherited IRA Rules That Beneficiaries Should Know

If you are like one of many people who inherited an individual retirement account (IRA) this year, you likely have countless questions involving estate planning and taxes. While it can be a financial advantage to inherit an IRA account, there are still taxes to worry about, and making one wrong decision can raise the attention of the Internal Revenue Service. Some people decide not to make any decisions on how to handle an IRA account without first speaking with a knowledgeable estate planning attorney. It can also help to understand some vital but often overlooked rules addressing how IRA accounts must be handled.    Do Not Forget About Year-of-Death Distributions   One challenge presented by IRAs is deciding if its creator took a required minimum distribution in the year that he or she passed away. If the creator failed to take a required minimum distribution this year, the beneficiary must make sure this requirement is met. Remember, however, if the creator had not reached the age of 70 and a half by the time he or she passed away, there is no year-of-death required distribution.    Your Situation Influences How You Handle the IRA   If you inherited an IRA, [...]

2020-07-27T17:38:03+00:00Tags: , , , |

Estate Planning for Small Business Owners

Estate planning methods offer significant benefits for all business owners. By establishing a strong estate plan, a person can safeguard not just a business, but employees and potential heirs, as well. This article will review some of the most important elements about how estate planning applies to people who own businesses. Create a Will Wills that are properly written help provide strong directions about how assets associated with a business should be managed or distributed when the business owner dies. Revocable Trusts Revocable trusts are much more complicated wills and allow an entity to hold assets for the business owner while they are alive. A business owner need not die for a trust to become effective. Instead, a designated party can also assume management of a trust if the business owner or trust creator becomes incapacitated. A revocable trust facilitates the transfer of assets, which helps to avoid extended legal proceedings as well as expenses that are commonly associated with legal cases. Power of Attorney Documents Powers of attorney allow a designated representative to make medical decisions on a business owner’s behalf in case he or she becomes unable to make decisions. Financial powers of attorney are important and let [...]

2018-01-15T14:30:30+00:00Tags: , , |