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To Do: Year-End Gifting. Check (or not)

With the end of the year approaching, we thought now would be a good time to re-post and update this blog from the end of 2014.

For 2016, the annual exclusion gift amount will remain the same at $14,000 but the lifetime gift tax exemption will increase to $5,450,000 (up from 2015’s $5,430,000).

With fourteen days left in the year, many people are still planning how to make 2015 gifts, whether by making “annual exclusion” gifts of $14,000 per beneficiary, or by taking advantage of the 2015 gift tax exemption amount of $5,430,000.  Whatever the reason for the last-minute gifting, as the end of the year approaches, people may be tempted to make a “quick and easy” gift to their beneficiaries by simply writing a check. As the year draws to a close, however, if your gift is dependent on utilizing 2015 tax law, beware of the potential trap of making a gift

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.

Let’s Go Over this Again: Remember to Dot Your I’s and Cross Your T’s

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Even though you think you have done everything right, the statute of limitations may not have started to toll if your Form 709, Gift (and Generation-Skipping Transfer) Tax Return, contains errors. Once a properly completed (how much can we stress the words PROPERLY COMPLETED?) Form 709 is filed, the Service must assess the amount of any gift tax within three years of the filing date. Under the Regs, a transfer is adequately disclosed when the return provides the following:

(i) A description of the transferred property and any consideration received by the transferor; [and] … (iv) A detailed description of the method used to determine the fair market value of property transferred, . . . including any financial data . . . utilized in determining the value of the interest.

Treasury Green Book Proposal: Health and Education Exclusion Trusts

459482489The Treasury Green Book 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 is found on page 203 of the Green Book and is re-printed here for your convenience:

MODIFY GENERATION-SKIPPING TRANSFER (GST) TAX TREATMENT OF HEALTH AND EDUCATION EXCLUSION TRUSTS (HEETS)

Current Law

Payments made by a donor directly to the provider of medical care for another person or directly to a school for another person’s tuition are exempt from gift tax under section 2503(e). For purposes of the GST tax, section 2611(b)(1) excludes “any transfer which, if made during the donor’s life, would not be treated as a taxable gift by reason

Treasury Green Book Proposal: Annual Gifts

459482489The Treasury Green Book 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 is found on page 204 of the Green Book and is re-printed here for your convenience:

SIMPLIFY GIFT TAX EXCLUSION FOR ANNUAL GIFTS

Current Law

The first $14,000 of gifts made to each donee in 2015 is excluded from the donor’s taxable gifts (and therefore does not use up any of the donor’s applicable exclusion amount for gift and estate tax purposes). This annual gift tax exclusion is indexed for inflation and there is no limit on the number of donees to whom such excluded gifts may be made by a

Treasury Green Book Proposal: GRATs and Other Grantor Trusts

459482489

The Treasury Green Book 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 is found on page 197 of the Green Book and is re-printed here for your convenience:

MODIFY TRANSFER TAX RULES FOR GRANTOR RETAINED ANNUITY TRUSTS (GRATS) AND OTHER GRANTOR TRUSTS

Current Law

Section 2702 provides that, if an interest in a trust is transferred to a family member, any interest retained by the grantor is valued at zero for purposes of determining the transfer tax value of the gift to the family member(s). This rule does not apply if the retained interest is a “qualified interest.”

To Do: Year-End Gifting. Check (or not)

With the end of the year approaching, we thought now would be a good time to re-post this blog from the end of 2012.  While the Mayan calendar is no longer in play, nor is the fiscal cliff, the rules of completed gifts still apply.  For 2014, however, increase the annual exclusion gift amount to $14,000 (instead of 2012’s $13,000) and the gift tax exemption amount to $5,340,000 (instead of 2012’s $5,120,000).

With nine days left in the year, many people are still planning how to make 2012 2014 gifts, whether by making “annual exclusion” gifts of $13,000 $14,000 per beneficiary, or by taking advantage of the 2012 2014 gift tax exemption amount of $5,120,000 $5,340,000. Maybe they couldn’t make up their mind before now, maybe they were waiting for the election results, or maybe they wanted to see whether the Mayan calendar was accurate before making any gifts. Whatever the

Don’t Get Stuck With a Non-Deductible Conservation Easement

Don’t Get Stuck With a Non-Deductible Conservation Easement

October 3, 2014

Authored by: Andrew Bleyer and John P. Barrie

conservationThe increasingly popular conservation easement charitable deduction allows a landowner to deduct a portion of the value of a piece of land by limiting the land’s use.  In a typical scenario, a landowner records a conservation easement on the land and then donates the conservation easement to a conservation organization.  The landowner receives an appraisal of the value of (i) the developable land and (ii) the land once the conservation easement has been recorded.  The landowner then deducts the difference as a charitable contribution.  In such a scenario, Section 170 of the tax code allows a deduction as long as the easement is perpetual, made to a qualified organization, and for a valid conservation purpose.

The typical scenario is changing, however, as more and more landowners are holding their property in trust.  When

Give the Gift of Education . . . Tax Free!

Originally posted on December 2, 2011 here.

You are allowed to give the gift of tuition to your children and grandchildren. More specifically, you can pay tuition to an educational institution on behalf of a loved one without triggering any gift tax or generation skipping transfer tax.

With the costs of education skyrocketing, more and more tuition bills are ringing in upwards of $20,000 or even $30,000 per year. Making gifts of that magnitude during life through tuition can save thousands down the road. At the end of a four year college education, the student graduates with a college degree, with less student debt, or perhaps even debt free, and you have gifted as much as $120,000 for the benefit of that student without paying any gift tax or

Proponents of Estate Tax Still Estate Plan

Proponents of Estate Tax Still Estate Plan

July 14, 2014

Authored by: Stacie J. Rottenstreich and Karin Barkhorn

ClintonSenateWhile constant attention is being given to Hillary Clinton’s potential decision to run for the presidency in 2016 and the release of her latest book, Hard Choices, last month, news sources recently reported that she and former President Bill Clinton have taken advantage of several of the estate planning techniques recommended by trusts and estates attorneys for high net worth individuals.

This is interesting, in part, because the Clintons support the estate tax and have not been in support of its repeal.

According to reported sources, each of the Clintons created a qualified personal residence trust and each contributed his or her 50% ownership interest in their Chappaqua, New York house to his or her respective trust. A qualified personal residence trust, commonly called by its acronym QPRT, is an IRS sanctioned

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