A trust may be taxed as either a grantor trust or a nongrantor trust. Each type of trust has advantages and disadvantages. This article examines a grantor trust and situations in which it might be useful. Grantor Trusts Provide Flexibility and Ease … [Read more...]
Are All Asset Transfers Subject to Probate?
Probate is the legal process of estate administration. If you arrange for the distribution of your personally owned property through the terms of a last will, the probate court would provide supervision. Creditors are given an opportunity to come forward seeking satisfaction during probate, and interested parties would have the opportunity to challenge the validity of the will. This process serves a purpose, but it is not necessarily positive for the rightful heirs to an estate. In Vermont, … [Read more...]
New Estate Tax Exclusions for 2019
Many people are pleasantly surprised when they learn that, for the most part, inheritances are not subject to taxation. You do not have to claim an inheritance on your personal income tax return, and if you inherit appreciated assets, you get a step up in basis. This means that you do not have to pay capital gains taxes on gains that accumulated during the life of the decedent. That’s the bright side, but in addition to income taxes, there are other forms of taxation that can enter the … [Read more...]
2019 Estate Tax Change Can Affect Albany Residents
If you have been successful from a financial standpoint, you are in a favorable position when you are crafting your legacy. On the other side of the ledger, you have to address looming forms of asset erosion. There are death taxes that can take a toll on your family, and they can be considerable. Why do we use the term “taxes” in the plural? There is a federal estate tax that can impact people all over the country. At the time of this writing, it carries a whopping 40 percent maximum … [Read more...]
Can You Give Gifts to Avoid the Estate Tax?
We have a federal estate tax in the United States, but most people do not have to contend with it, because there is a relatively high credit or exclusion. This is the amount can be transferred before the estate tax would be applied. Before the beginning of this year, it was somewhere in the vicinity of $5 million. This was the figure that was installed in 2011, and there were ongoing adjustments to account for inflation. When the new tax laws went into effect in 2018, the estate tax exclusion … [Read more...]
Why Would You Use an Irrevocable Trust?
In the field of estate planning, there are trusts that can be revoked, and others that cannot be dissolved. If you are thinking about the possibility of creating a trust, you would probably feel more comfortable if you knew that you could revoke it if you change your mind. This makes sense on the surface, but there are some very good reasons why an irrevocable trust would be the better choice under some circumstances. Incidents of Ownership To gain an understanding of this subject, you have to … [Read more...]
Reducing Estate Tax in Vermont
Few of us have to worry about estate taxes or gift taxes as the exemption for 2013 is $5.25 million. That means for those who have access to this level of assets, they can give away right at $5.12 million without worries of federal taxes. For a married couple, that limit is $10.5 million. That said, there are state taxes that must be considered and because the laws vary, finding a Vermont estate planning lawyer is your first best decision. Reducing Estate Tax in Vermont If you are, however, … [Read more...]
Marriage Equality After United States v. Windsor
The recent United States v. Windsor decision overturned a key aspect of the Defense of Marriage Act. The portion of the act that was overturned defined marriage as only between a man and a woman. The decision will open a wide range of federal benefits to legally married same sex couples. Social Security benefits, access to military benefits and estate tax laws will treat same sex couples equally to traditionally married couples. If you are part of a legally married same sex couple in a state … [Read more...]
Vermont Estate Tax Liability
Vermonters have two estate tax liabilities. The Vermont estate tax applies on estates over $ 2.75 million, substantially less than the federal estate tax floor of $5.25 million for 2013. This applies to your net estate which is the gross estate minus allowable deductions. Your gross estate includes real and personal properties, annuities, stocks, bonds and other securities, cash and the value of any business interests. Allowable deductions include any charitable contributions and gifts to a … [Read more...]
Slight Estate Tax Changes After Cliff Deal
There was a lot of hand-wringing within the estate planning community as the country prepared to go over the fiscal cliff. If this would have taken place a significant number of Americans would have suddenly become exposed to the federal estate tax. And, many who were already exposed would be faced with the prospect of even more severe asset erosion. This is because the estate tax exclusion would have gone down from $5.12 million to $1 million on New Year's Day, and the maximum rate of the … [Read more...]
