Written by Allan B. Cutrow and Jeffrey K. Eisen On September 15, 2021, the House Ways and Means Committee passed a tax bill designed to raise revenue for President Biden’s “Build Back Better” plan. It contains significant changes to the estate and gift tax laws, and the income tax laws related to them. Of course, this is only another step down a very uncertain road. … Continue reading House Ways & Means Committee Passes Tax Bill With Potentially Significant Effects on Estate Planning
Written by Rachel Ronca On November 3, 2020, Californians will vote on Proposition 19, the “Property Tax Transfers, Exemptions, and Revenue for Wildlife Agencies and Counties Amendment,” a measure that seeks to amend the California Constitution with respect to the current property tax system. If the proposed constitutional amendment passes, it will significantly narrow one of the most commonly used exemptions from property tax reassessment: … Continue reading Time to Make Gifts of California Real Property May be Running Out
Preparing and properly executing estate planning documents requires much care and consideration under “normal” circumstances. The COVID-19 pandemic, with its attendant shelter-at-home orders and social distancing guidelines, has made the estate planning process a logistically complicated necessity. Under the California Probate Code, the execution of estate planning documents requires a combination of notarization and witnessing. How can this be accomplished when non‑essential businesses are closed or working off‑site, and people are increasingly cautious of interactions outside of their homes? The Trusts & Estates department at MSK is prepared to assist you through the preparation and execution of your estate planning documents, allowing you peace of mind in these uncertain and difficult times. Continue reading “Estate Planning in the Time of COVID-19”
Written by Allan B. Cutrow
Unfortunately, the current health and economic crises have significantly and negatively affected asset values. However, these depressed asset values create significant planning opportunities to consider. One is the conversion of a traditional IRA into a Roth IRA.
Many investors often consider converting their traditional IRA into a Roth IRA as part of their overall retirement planning. Investments in a Roth IRA have the potential to not only grow tax-free (in the same manner as a traditional IRA), but also do not have required minimum distributions during the lifetime of the original owner and his or her spouse. Continue reading “COVID Conversion”
Estate Planning Opportunities in a Volatile, Low Interest Rate Environment
The recent dramatic decline in the value of the stock market, and overall economic volatility, has left us all worried about our financial health, not to mention the COVID-19 virus creating fears regarding our general health. In these uncertain times, there are steps to take for those who are in a position to transfer wealth to future generations now, as well as steps to take even if you do not wish to transfer wealth currently.
First, for everyone, if you are spending more time at home than ever, use some of it to review your basic estate plan to make sure it is up to date, and reflects your current desires.
Second, if you have been procrastinating in making lifetime gifts to your heirs while we have a temporarily generous estate, gift and generation-skipping transfer tax exemption now may be the time to pull the trigger.
“Portability” is the ability of a surviving spouse to use not only his or her own estate tax exemption, but also some or all of the exemption of the first spouse to die, as long as the first spouse died in 2011 or later. With the estate tax exemption for 2017 at $5,490,000, this can allow estates of nearly $11,000,000 to escape estate tax. While a full discussion of portability is beyond the scope of this post, suffice it to say that portability can save the day in one or more of these situations: if proper estate planning has not been done, if life insurance, IRAs or retirement plans left to the surviving spouse constitute a very large portion of a couple’s assets, or if a couple’s assets of any type are worth near the value of one exemption but less than both (e.g., $4,500,000 to $10,500,000).
The catch is that if the deceased spouse’s assets are worth less than his or her exemption amount, the deceased spouse’s executor has to file a federal estate tax return (Form 706) for the deceased spouse to “claim” the deceased spouse’s unused exemption and thus invoke “portability.” This is the direct opposite of the normal rule that if a decedent’s estate is worth less than the estate tax exemption amount (after taking lifetime gifts into account), no estate tax return filing is necessary. But if the deceased spouse’s executor does not file a timely estate tax return for the deceased spouse (nine months after the date of death, or an additional six months thereafter if a request for an extension was properly filed by the nine month deadline), the ability to use portability is permanently lost. Continue reading “IRS Gives Surviving Spouses a Second (or Third) Bite at the Portability Apple”
Donald Trump is now the President, and both chambers of Congress are under Republican control. Thus, we appear to be poised for potentially substantial changes in the estate tax, gift tax, generation-skipping transfer tax, and income tax laws. However, as with all other aspects of political life in America today, it is impossible to predict at this time what ultimate changes will materialize. The only clear thing is the lack of clarity.
- Is the Estate Tax History? First, there is the perpetual Republican promise, supported by the President, of “repealing” the estate tax. Last time the estate tax was “repealed” (in 2001), it really meant eight years of gradually increased exemptions and gradually decreased rates, followed by one year of repeal (2010), followed by the return of the estate tax with even greater exemptions and lower rates, which is where we are today. Will this happen again? Will the estate tax just disappear retroactive to 1/1/17 or perhaps on 1/1/18? Will deficit hawks decide that even the relatively tiny revenue generated by the estate tax is worth keeping to avoid a political fight with Democrats? Continue reading “Estate Planning – When the Only Certainty is Unpredictability”
Several of the events surrounding the initial administration of Prince’s estate provide lessons applicable to all estate plans, not just celebrity estate plans.
- If You Don’t Have an Estate Plan, the State Will Write One For You. Prince died without a Will. Because he was not married at the time of his death and he had no surviving parents, children or grandchildren, his sister, and his five half-brothers and half-sisters each will inherit one-sixth of his estate. Two other half-siblings died before Prince, apparently leaving no children of their own; otherwise, they would be entitled to part of the estate as well.
Many headlines have been generated over recent attempts to recover highly desired data from a locked smart device after the death of the device’s owner. While the legal battle between Apple and the FBI over information stored by one of the San Bernardino shooting suspects in an iPhone pitted law enforcement against the technology community, it should also serve as a high profile reminder of the need to address digital passwords as part of an estate plan. Continue reading “No Password? See You In Court?”