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Treasury Green Book Proposal — Consistency in Values

The Department of the Treasury has released the Treasury Green Book  for Fiscal Year 2017, which provides explanations of the President’s budget proposals.  One such proposal (remember…these are just proposals, not actual changes in the law) that may affect your estate planning, if passed, is found on page 179 of the Green Book and is re-printed here for your convenience:

EXPAND REQUIREMENT OF CONSISTENCY IN VALUE FOR TRANSFER AND INCOME TAX PURPOSES

Current Law

Section 1014 provides that the basis of property acquired from a decedent generally is the fair market value of the property on the decedent’s date of death. Similarly, property included in the decedent’s gross estate for estate tax purposes generally must be valued at its fair market value on the date of death. Although the same valuation standard applies to both provisions, until the enactment on July 31, 2015, of the Surface Transportation and Veterans Health

California’s New Transfer On Death Deed

February 24, 2016

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As of January 1, 2016, California allows the use of a “transfer on death” deed for real property.  A TOD deed essentially allows a person to execute and record a revocable deed, which grants real property to a beneficiary upon the grantor’s death.  Introduced by Assemblyman Mike Gatto (D-Glendale) via AB 139, the TOD is effective by operation of law, the primary purpose of which is to avoid the probate process (which is onerous and expensive in California) and to reduce the need for a revocable trust for certain individuals.

San Bernardino County has posted a sample form.

While the TOD deed may be useful in limited circumstances, it does not supplant the importance of having a revocable trust plan for many individuals.

Treasury Green Book Proposal — Reversion to 2009 Laws

The Department of the Treasury has released the Treasury Green Book  for Fiscal Year 2017, which provides explanations of the President’s budget proposals.  One such proposal (remember…these are just proposals, not actual changes in the law) that may affect your estate planning, if passed, is found on page 177 of the Green Book and is re-printed here for your convenience:

RESTORE THE ESTATE, GIFT, AND GENERATION-SKIPPING TRANSFER (GST) TAX PARAMETERS IN EFFECT IN 2009

Current Law

The current estate, GST, and gift tax rate is 40 percent, and each individual has a lifetime exclusion of $5 million for estate and gift tax and $5 million for GST (indexed after 2011 for inflation from 2010). The surviving spouse of a person who dies after December 31, 2010, may be eligible to increase the surviving spouse’s exclusion amount for estate and gift tax purposes by the portion of the predeceased spouse’s exclusion

You won the lottery, now what?

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With up to $1.4 Billion at stake in Wednesday’s Powerball, those who play the lottery are busy making plans for what to do with all the money they may win.  If you win it, you won’t ever have to worry about money again – right?

Wrong.

HELPING YOUR ADULT CHILDREN

HELPING YOUR ADULT CHILDREN

November 11, 2015

Authored by: Stacie J. Rottenstreich and Karin Barkhorn

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Open up any newspaper or magazine across the county and likely you will read an article about the difficulties facing young adult looking for their first jobs.  More and more young adults are turning to their parents for financial assistance. How can parents help their children? And what are the gift tax implications of such assistance?

Each individual has the ability to gift $14,000 a year to each person without using up any of his or her lifetime exclusion. A married couple can then gift $28,000 to an adult child without any gift tax impact at all. However, you must keep in mind that this $14,000 amount is inclusive of all gifts. You cannot give $14,000 directly to your child and then give them additional withdrawal rights under a trust.

Calling Captain Obvious?

Calling Captain Obvious?

November 5, 2015

Authored by: Kathy Sherby and Stephanie Moll

 

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With some minor exceptions, the facts are the same in PLR 201525002& PLR 201525003. In these PLRs, the Grantor transferred funds to an irrevocable trust for the Grantor’s own benefit and the benefit of several charities. In each case, the trust was created in a state other than the state of residence of the Grantor. In addition to the Trustee, each trust had an Investment Advisor, a Distribution Advisor, a Charity Distribution Advisor and a Trust Protector, none of whom were trust beneficiaries, except that the Charity Distribution Advisor was the Grantor’s spouse who was a potential appointee.

The Distribution Advisor had the power to direct the Trustee as to whether to make Quarterly Distributions, Support Distributions and Special Contingent Distributions to the Grantor, and also had the power to direct the

WHEN IS AN ADOPTION NOT EFFECTIVE TO CHANGE INHERITANCE RIGHTS?

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In Lubin v. AT&T Ret. Sav. Plan (2015 WL 4397703), an adoption was not given effect in determining who would receive the life insurance benefits at issue.

In this case, Austin Hardy participated in a Retirement Savings Plan (“Plan”), which included a life insurance benefit. At his death, he was survived by his sisters, Pauline Lubin and Frances Koryn (Plaintiffs), and his biological daughter, Jennifer Krokey. Although Krokey was Hardy’s biological child, she had been subsequently adopted by a step-father. Under Florida law, a child who is adopted is the child of the adopting parent and ceases to be a child of the biological parent for all purposes.

WHAT DO YOU MEAN THE TRUST IS NOT ASSET PROTECTED?

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In a recent bankruptcy case, Richard Lewiston unsuccessfully attempted to shelter his assets in the Lois and Richard Lewiston Living Trust (the “Trust”) from inclusion in his bankruptcy estate based on the Trust’s spendthrift provision. Here, the bankruptcy court looked to Michigan state law in applying the provisions of the Bankruptcy Code and concluded the Trust property was part of Lewiston’s bankruptcy estate.

Tax Benefits for Many U.K. Non-Doms to Be Reduced

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Last month, the UK government announced sweeping changes to the taxation of “resident non doms,” a classification of individuals who receive favorable tax treatment from the UK government.

The UK tax obligations of an individual depend in large part on the individual’s “domicile” under generally applicable English common law principles. (Unlike the US tax system, the citizenship of an individual is irrelevant under the UK tax system.) The UK income tax and capital gains tax systems (which operate as two separate regimes of tax) take into account the “residence” status of an individual, as well. The residence rules were massively overhauled with effect from 6th April 2013. Note that a UK tax year runs from April 6 to April 5 of the following years.

Because of quirks in the English common

Changes in the Final Portability Regulations

Changes in the Final Portability Regulations

July 10, 2015

Authored by: Andrew Bleyer and Doug Stanley

ThinkstockPhotos-176603977The IRS issued final regulations for electing portability and use of a deceased spousal unused exclusion amount (DSUE) on June 12, 2015. Though the final regulations are fairly technical, they are worth understanding as applying them correctly can mean a $5,430,000 difference in the amount that passes through an estate tax free. The final regulations adopt the temporary regulations that were issued in 2012, with several changes and clarifications:

1. Upon request, the proposed regulations allowed for an extension of time to elect portability for those estates that did not meet the requirements for an automatic extension. It was unclear whether estates that exceed the basic exclusion amount (currently $5,430,000 indexed for inflation) could request such an extension because the filing deadline for such estates is prescribed by statute and thus cannot be modified

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