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ESTATE AND TAX PLANNING
(last updated August 6, 2014
(WITH 2014 COMMENTS):
was this "Tax Compromise" anyway? I'm sure you can read
countless explanations of the eleventh-hour tax legislation at the end
of 2010. Here are a few estate tax highlights that may
matter to YOU:
(2011) Update on Retirement Plans. Minimum distributions are back -- since 2010. However, the tax reform bill does allow tax exemption on distributions from retirement plans that pass entirely to a charity. No deduction, but tax exemption, which amounts to a 100% deduction. This doesn't apply to gifts used to purchase charitable gift annuities. Reminders: any beneficiary, not only a spouse, may have the right to "roll out" an inherited IRA or interest in a retirement plan, to his or her own IRA, choosing the account custodian and the successor beneficiaries. Recurring problems, however: CHECK YOUR BENEFICIARY DESIGNATIONS frequently. Custodians have been known to change them without notice, to ignore additional beneficiaries, and to reinstate expired beneficiary designations. And one more thing -- if you have to draw down retirement accounts to pay medical bills, remember that Connecticut does NOT have a medical expense deduction against the Connecticut income tax. (It does, however, have a waiver of tax (PDF) for persons who received Medicaid assistance to pay for long-term care in a nursing home or at home, and who are unable to pay taxes.) (If this doesn't open or has a prior year on it, paste the link in your browser and change the year reference to the applicable year. Or search the DSS site for Form 19IT.)
Med-Ed: Even with an economic downturn, there are still plenty of folks worried about the gift tax (which kicks in at $5.34 million for federal gift tax, only $2 million for Connecticut). Read my article "summarizing" the long-standing tax rule exempting from the whole gift and estate tax regime any direct payment of someone else's tuition or medical care expenses -- the "med-ed" deduction.
you have been sleeping for 9 years.....Connecticut Gift Tax
Repealed (on gifts up to $2 million)! Effective
legislature repealed the gift tax for lifetime gifts totally up to
$2 million. Since there is no penalty for failure to file a gift tax
return when no tax is due, this will relieve many people from the need
to file. Connecticut was formerly the only state that had a gift
tax that operated separately from its estate tax. For gifts over
$2 million, the excess is taxed.
How to Administer a Life Insurance Trust. In these uncertain times, we don't know whether or not there will be more or less estate tax in the future. Life insurance trusts are still relevant: (1) for those who fear future increases in state or federal estate tax; (2) for those who want to protect assets from creditors that may turn up at your death; and even (3) for those who want to "leverage" a gift to heirs that will be protected against long-term care expenses. These trusts often include as a feature the requirement that notices be sent to beneficiaries annually in order to escape inclusion in the total gifts made during life. Here is help for those of you named as Trustees of "life insurance trusts" but unwilling to fork over the fee your attorney or accountant charges to handle the procedures required to get the right tax result. Little do you know that the fee may still represent a loss to your attorney! Click HERE for instructions and a sample notice form.
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The following is my statement of principles regarding the practice of estate planning. I first started writing them in 1997, concerned that the desire to minimize taxes was the only concern given attention by estate planning attorneys. You may also want to look at the pages dealing with planning for the elderly and planning for the disabled, which focus more on entitlement benefits, another part of estate planning for those types of clients. Another page, living trusts, sets out the pros and cons of this popular, but sometimes abused device.
What Is Estate Planning?
This is a
particularly good question in light of the
scaling back of a good portion of our estate tax
laws. However, the core human issues remain the same. "What
if something happens to me?"
The need to plan for the care of family members and the distribution of
one's property when we have left this mortal coil is a basic human
instinct. The desire to minimize taxes payable as a result of
death has been and should be only a secondary concern, an aspect of our
desire to control our own property (because we can never control our
own death). Even with the as-yet unexplored tax bill, there will
still be taxes to plan for, but with this much uncertainty estate
planning must emphasize human, not
accounting concerns. Who will care for the vulnerable people we
love and will leave behind? How can -- and should -- our assets protect
and help them? Whom do we trust to carry out the chores that are
created by our passing, or to administer the plans we set in
motion? We want our worldly goods to benefit the people we love
and the causes we care about -- how can that be accomplished most
For further information on the estate planning process, email your question to email@example.com, or write to me at the address shown. I cannot, however, give specific advice about specific situations without taking you on as a client; writing to me does not create an attorney-client relationship. DO NOT disclose confidential information to me.
THIS INFORMATION IS NOT PROVIDED AS LEGAL ADVICE AND CREATES NO ATTORNEY-CLIENT RELATIONSHIP. NO ENDORSEMENT IS INTENDED BY ANY REFERENCES HEREIN. PLEASE CONSULT YOUR OWN LEGAL AND FINANCIAL ADVISORS BEFORE TAKING ANY ACTION. In compliance with regulations issued by the Internal Revenue Service, please be advised that nothing on this webpage was written to be used or may be used by any person to avoid any penalties under the Internal Revenue Code.
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