How do we know? Because after 2012 estate tax will not be the same, reports Fidelity. Consider the following:
]]> This makes 2012 an important time for couples to get their estate planning in order.For 2012, the current law provides a generous $5,120,000 per person federal estate tax exemption and taxes estates over that amount at a top rate of 35%. This compares with a $1 million per person federal estate tax exemption and a 55% effective top tax rate scheduled to go into effect on January 1, 2013.
The year 2012 is also particularly important because of the so called estate tax portability provisions that are available this year, as reported by FindLaw's KnowledgeBase.
The portability provision is the IRS's way to make sure that married couples get the maximum benefit of the estate tax exemptions. The provision basically allows for the transfer of an unused exemption of a decedent to his or her surviving spouse, thus allowing for more of the exemptions to be used by the couple's total marital estate.
These new tax laws — like anything tax-related can be extremely beneficial if used correctly and quite harmful if applied improperly. Regardless of whether you have a sizable estate or a humble one, working with an experienced estate planning attorney in this important year for estate tax is the best way to make sure your life's work doesn't disappear.
You know, like the world.
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It turns out that nursing home beds for men are really hard to find, reports The New York Times.
The reason, of course, is not difficult to infer. As The Times states: “Nursing homes are heavily female, like the elderly population itself.”
That second part of the sentence is crucial. It suggests that women are living longer than men and so have a greater population in nursing homes.
]]> This should be a reminder to senior men. First, that they need to take a moment to sort out their nursing home arrangements perhaps sooner than females their age. The second, ancillary reminder they should have, is about their mortality in comparison to women. This means that men need to plan their wills and estates sooner than females their age.But before men get to writing their wills, they should probably look into a living will, as well.
Living wills are not really wills at all. Instead, a living will (which also may be known as a healthcare directive or directive to physicians) is a document that expresses a person's desires and preferences about medical treatment in case he or she becomes unable to communicate these instructions during terminal illness or permanent unconsciousness.
Once this is done, then you can move onto the actual will, which of course, takes effect after death.
Wills are the most common way for people to state their preferences about how their estates should be handled after their deaths. A well-written will eases the transition for survivors by transferring property quickly and avoiding many tax burdens. Despite these advantages, many estimates figure that at least seventy percent of Americans do not have valid wills.
Nursing home space, living wills, and wills -- that's a lot of stuff for the elderly to think about. But all of it is quite essential. Thankfully, the burden can be eased a little by retaining a lawyer. And lawyers are not like nursing home beds for men. They are available to everyone.
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The researchers at FindLaw, while no replacement for a qualified New York estate planning attorney, have put together a list of some general ideas on strategies for reducing estate tax. Five of these estate tax reduction strategies are:
]]>Estate planning to reduce estate taxes is a personal decision. These strategies may not be applicable to everyone, and you will want to speak with an estate planning attorney to help determine which is best for you.
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To identify Joe Paterno's estate tax mistake, Forbes looks back to the much discussed Joe Paterno house sale for $1, as previously reviewed on FindLaw's New York Estate Planning News.
]]> Back when the sale occurred, many people thought that the reason for the Paterno house sale for $1 was to perhaps to save federal estate taxes. However, Forbes points out that the $1 house sale might end up increasing the income tax when the trust does sell the house.Essentially, the argument is that once the trust sells the house down the road, the capital gains taxes will likely be higher. In fact, in some cases it is better for the house to be owned by the spouse that is likely to pass away sooner than the other spouse.
Obviously, most people want to reduce their estate taxes, and there are some standard ways of going about this. Opitions can include marital transfers, lifetime gifts to children, and uniform transfers to minors. Some other people use charitable trusts and private annuities. It can get complicated fast.
And the complexity of the discussion simply underscores a bigger fact about estate taxes -- these are hard legal issues that you need a qualified expert for.
No doubt whatever angle Joe Paterno was going for with his house sale, he had qualified advice. You should seek the same before making a big decision.
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Apparently the most common scenario for celebrity estate wars are second or third marriages with children from multiple marriages. Other celebrity estate wars occur when families were in business together, reports Reuters.
So what should average people take away from reading about celebrity estate feuds?
]]> Well, that planning is important. In fact, one way to distinguish oneself form a few celebrities is by showing some responsibility. One big measure of responsibility is how much time and effort you put into your estate plan.When a person dies without having a valid will in place, his or her property passes by what is called "intestate succession" to heirs according to state law. In other words, if you don't have a will, the state will make one for you. All fifty states have laws of this kind on the books.
The purpose of intestate succession laws is to distribute the decedent's wealth in a manner that closely represents how the average person would have designed his or her estate plan, had that person had a will. However, this default can differ dramatically from what the person really would have wanted. Even where it is known what the person intended, no exceptions are made where no valid will exists. Nor are there any exceptions made based on need or special circumstances.
So, in this case, don't aspire to be like the celebrities who leave a mess behind. Intestate succession might be too big a word for some of our leading ladies and gentlemen, but it need not be so hard for the rest of us.
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The matter was of particular delicacy because the singer had dementia. However, there may yet be good news for her fans, who probably don’t want to see a long fight over assets that she accrued through her talents.
It turns out that her sons, Donto and Sametto, who had gone to court many times to challenge the singer’s husband of 42 years, Artis Mills, may have reached a point of comity, reports Contact Music.
]]> While her fans will be hoping that the reports are indeed true, and that the feud between Donto and Sametto and Artis Mills is over, there are also important lessons for her fans regarding estate planning.Estate planning is one of the most important steps any person can take to make sure that their final property and health care wishes are honored, and that loved ones are provided for in their absence.
Though often overlooked or put off in favor of more immediate concerns, a comprehensive estate plan can resolve a number of legal questions that arise whenever anyone dies: What is the state of their financial affairs? What real and personal property do they own? Who gets what? Does a personal guardian need to be appointed to care for minor children? How much tax will need to be paid in order to transfer property ownership? What funeral arrangements are appropriate?
Remember, you don’t have to be wealthy to have an “estate.” Your “estate” consists of everything including real estate, bank accounts, stocks and securities, life insurance policies, and even personal property like cars and baseball cards.
The Etta James feud should make you stop and think and “at last” get your estate planning done.
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With respect to Mitt Romney's inheritance, Mother Jones recently reported an interesting nugget of information. It turns out that in an earlier interview with Reuters, Mitt Romney made an telling remark:
]]> “What I got from my parents when they passed away I gave away to charity and to my kids.”Mother Jones points out that just passing on inherited wealth is not quite the same thing as giving it all away or “not inheriting the money at all.”
The question then arises if perhaps Mitt Romney or his father used a dynasty trust, which is a generation-skipping estate-tax exempting device that the Wall Street Journal points out is used by quite a lot of wealthier individuals.
A dynasty trust, also called a wealth trust, is essentially a tax-free way of passing your money. You can avoid the estate tax if you leave your assets to heirs who are more than one generation below. One of the recognized consequences of dynasty trusts is that the grandchildren are sometimes believed to become trust fund babies even if their parents don’t want them to be.
If you’re in a position where you’d like set up a dynasty trust, you should speak to a local attorney. Be aware, however, that New York has a law that limits the length of time a non-charitable trust can exist.
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And in the legal arena, Americans do a lot of things on a DIY basis. This includes real estate, fighting traffic violations, small claims court, sometimes divorces, and even going starting the administrative process of filing employment discrimination complaints. And, of course, people write their own wills all the time.
However, perhaps that DIY attitude should be checked a little when it comes to disposing of your estate.
]]> The greatest problem with a do-it-yourself-will is that the creator won't be fully aware of potential problems until it is too late, notes FindLaw's KnowledgeBase. Unlike in other legal actions, with a will you're not going to be around to fix misunderstandings, so you really should be a hundred percent confident about what you're doing.A number of the more complex problems in a do-it-yourself-will include the following:
A will has to be completely unambiguous. Ambiguity is diminished through clear and concise use of language of the sort that lawyers are trained to write.
The provisions of a will depending on changing regulations and laws. For example, the estate tax rate keeps changing from one period to another. Keeping up with this may be difficult for an average person.
Assets and estates change in value because of the economy and other valuations issues.
To be valid and enforceable, a will has to comply with numerous formalities enshrined in the laws of a particular state. Property law is the culmination of hundreds of years of disputes and arguments worked out in the state's case law. It can become difficult tracking every case down.
And the best part of all, in New York, a will execution that is supervised by an attorney is considered to be done according to the formalities of the law. So using a lawyer provides a kind of automatic stamp-of-approval.
Do-it-yourself-will problems can create hurdles for even the most grizzled, street-smart people. If you're going to do it yourself, check the resources at FindLaw. But, otherwise, please speak to an attorney.
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The case provided yet further evidence of the fact that the elders in America can and are taken advantage of by those younger than themselves. Even where the elderly have children and have come up with a plan for how to protect themselves in old age, squabbles between the children can leave the elderly in a lurch, as reported by the New York Times.
]]> The researchers at FindLaw have put together a whole slew of documents detailing the types of abuse that the elderly in America face.This includes:
For those among the elderly that have significant financial resources, financial or material exploitation is often a possibility.
Financial abuse of the elderly covers a broad spectrum of fraud, confidence (or "con") jobs, outright theft and other methods of extracting financial or material gain from vulnerable senior citizens. Common examples of financial elder abuse include cashing checks without authorization; forging signatures; stealing or misusing money or possessions; coercing or deceiving an elderly person into signing a document; and improperly using a guardianship, conservatorship or power of attorney.
Often the perpetrator of financial elder abuse is an unscrupulous telemarketer, confidence (or "con") artist, or any individual who preys on the weaknesses of senior citizens. For example, elderly persons, who are more likely to own their homes outright, sometimes are tricked into signing over the deed to their home in exchange for a future payoff that never comes.
The best protection against such exploitation is to make use of the legal system with planning for the future. Whether it is through setting up trusts, wills, or just getting advice from a competent attorney, protecting yourself in old age is something that must be planned for now.
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One way to lower your estate tax is through carefully transferring your life insurance policy.
If you transfer your life insurance policy away before your death, the insurance proceeds at your death are someone else's property and will not be included in the total value of your estate.
]]> In general, there are two ways that you can accomplish this goal. First, you can transfer ownership of the policy to another adult, even the named beneficiary. Second, you can create an irrevocable life insurance trust and transfer the policy to the ownership of the trust. Be aware, however, that if you get life insurance through a group plan at work, you may not be able to transfer ownership rights of your policy.Although it can be easier than setting up a life insurance trust, transferring ownership of your life insurance policy to another adult has its own drawbacks. Perhaps most significant is that once you transfer ownership of the policy, you can't go back and change your mind. You cannot alter your life insurance policy once you have transferred it, either.
You have to be aware of the IRS, though.
The IRS has promulgated a rule that determines who owns a life insurance policy for the purposes of calculating the total value of an estate. Under this rule, if a transfer of a life insurance policy took place within the three years preceding death, then the transfer is void and the proceeds from the life insurance policy are counted into the estate.
The IRS actually has a number of other rules that kick in when transferring a life insurance to lower estate tax. You should speak to an attorney about them.
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And while there are many theories out there -- including occult meanings -- there is one significant thing that people may not be paying attention to.
Namely, that Blue Ivy's birth is the moment that both mom and dad should update their wills. This is exactly what the researchers at FindLaw recommend when you have a child (or as wills and estates lawyers understand children: "New People").
]]> Each state has its own law which determines how children will receive parts of an estate (which Beyonce and Jay-Z have plenty of) in case there is no will or trust. But many parents don’t want to apply state laws when determining what their children get, which is why a will gets written. Also, a will must get updated so that you can appoint a guardian for a baby should something happen to you.The easiest way of changing a will is simply to make a new will. It is imperative that you revoke the old will. To do this, simply write a statement in the new will that states that you revoke all wills and codicils that you have previously made. This is sufficient to revoke any previous wills, but it is wise to also destroy any of your previous wills in order to avoid confusion or challenges to your new will.
The other way to change your will is by adding what is called a “codicil”. A codicil is like an amendment or addition to your will. You may use a codicil to revoke part of your will or add a new provision. To be valid, they must be dated, signed, and witnessed just like a legal will.
The best thing to do, if you are considering changing or updating or rewriting a will, is to consult with a local attorney.
The specifics of what must be done to revoke an older will are very difficult and hard to understand. Just like little Blue Ivy’s name.
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Normally, when one spouse dies passing on his/her assets in a last will and testament, the estate will be taxed heavily before the beneficiaries receive it. However, to avoid this steep estate tax, spouses can set up an AB trust, where each spouse leaves their property to an irrevocable trust.
That's the short version. Now the long.
]]> Generally it is the case that when the first spouse dies, the beneficiaries (usually the couple’s children) named in the trust receive that spouse’s property.But in an AB trust, the property is to be used for the benefit of the surviving spouse, who does not technically own the property.
It is only once the surviving spouse dies that all the property rights and benefits of the irrevocable trust pass to the surviving beneficiaries of the trust. Because the surviving spouse does not own the property, it is not subject to estate tax.
Setting up an AB trust this way keeps the portion of the surviving spouse’s estate that is taxable half of what it would be without an AB trust.
The ideal situation in which you would set up an AB trust is where you have great confidence in the decision making of your surviving spouse, because there are some powers that a surviving spouse has over the trust.
And who should use the AB trust? Usually, the best kind of married couple that should use the AB trust are those that are over 60 and do not have children from previous marriages.
If you are trying to find creative ways of avoiding the estate tax, consider the AB trust; but also understand its limitations.
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In fact, there are a number of certified space travel agents around the country that will be booking flights to space on Virgin, wait for it, Galactic.
Virgin Galactic, let that sink in.
There is even an insurance company, Allianz, now insuring you against, no, not space travel going wrong (that’s life insurance), but travel cancellation or delay — so a form of travel insurance. Allianz will also be offering medical insurance for before and after a flight.
]]> In other words, as booking a flight to space becomes realistic, more pedestrian issues associated with travel will also crop up.One important matter of significant gravity before you leave for space, is looking over your New York will.
Wills are the most common way for people to state their preferences about how their property should be handled after their death. A will is similar to an instruction booklet for the probate court, the court that oversees estate administration and disputes over the will itself. The will provides the court with guidance as to how to distribute the deceased person's assets in accordance with his or her wishes.
In New York, the will requirements are fairly straightforward, as noted by FindLaw's New York Estate Planning News Blog. But people that are contemplating space flight are probably a little bit wealthier, and will probably have more assets. For such individuals it makes sense to contact an attorney to get their New York will looked over.
Enjoy your flight, passenger, er, sorry, voyager.
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Just as background, an I.R.A. is an account in which a person may deposit up to a stipulated amount each year and that is not taxable until retirement or early withdrawal.
So what do you stand to gain from giving a gift directly from an I.R.A. as opposed to taking the money out and then gifting? Well, the answer is that if you take money out of the I.R.A. you could end up in a higher-tax bracket because it looks like you have a higher income. By giving a gift directly from the I.R.A. (which is a sort of tax-free haven) you would be able to give gifts much larger than those you are otherwise able to give.
]]> Of course, due to various tax related issue, the last day to pull off an I.R.A. gift is Dec. 31.Charitable contributions, also known as charitable donations, are gifts made to qualified organizations that have obtained 501(c)(3) tax status, such as educational institutions, religious organizations, government entities, and other charities. Qualified organizations typically receive most of their funding and support from gifts, grants and contributions from the public.
From a tax perspective, charitable contributions are tax-deductible. Taxpayers may lower their yearly taxes by claiming an itemized deduction on their tax return based on the cash or fair market value of the donation, subject to a few limits. Because charitable contributions are tax deductible, taxpayers often increase their charitable donations during the holidays or before the end of the year.
Or, with an I.R.A. gift, in old age. But, like age, time is running out.
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The researchers at FindLaw have put together a handy bit of advice for people contemplating body donation.
]]> The Uniform Anatomical Gift Act (UAGA) governs the donation of cadavers for science. A whole body donation is a donation of a body without the removal of organs for the purpose of research and instruction after death. Medical schools and private organizations accept whole body donations.You can donate your body by pre-registering the donation with an appropriate medical organization (the local med-schools are the best place). It will be necessary to sign a form consenting to the donation. The donor should arrange for the organization to be contacted upon their death.
The law prohibits medical organizations from paying for whole body donations, but most medical institutions will pay for the costs incurred from the donation. After a whole body donor dies, most medical organizations will pay for the transportation of the body and may file the death certificate. The medical institution will often pay for the disposal of the body through cremation and will return the cremated remains to family members upon their request.
If you intend to donate your body to science, it is important to inform family members. It is best to put the decision in writing in a living will or in a letter to the executor of your estate. This will ensure that family members carry out your wishes. If the intent to donate your body is not made in writing, the law allows the donor’s legal next-of-kin to consent to the donation.
Note, while donating your body to charity is not tax-deductible for you (gallows humor), if your friends or family make a donation in your name to the medical facility, their contribution could provide them a tax credit on their state income tax return.
For a list of New York whole body donations sites, please see below. Remember to talk to your attorney before you sign up.
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