Tax Day is right around the corner! Be sure to get your tax returns squared away before the 18th. On the topic of taxes, we wanted to take the opportunity to discuss estate tax returns and what you may need to know if a loved one has recently passed away. [Read more…]
Potential Tax Law Changes – Imminent
Throughout the year we have been monitoring and communicating about the various discussions regarding potential tax law changes. Although there have been a lot of proposals put forth, we have a little more clarity as the House Ways and Means Committee has forwarded a “bill” (not law) to be considered by the full house that gives us some indication as to what the final law may be. It is important to understand that this is not the law and is subject to change.
New Proposed Tax Law May Dramatically Affect Massachusetts Estate Tax Planning – Part 2: Eliminating the Step-Up in Basis at Time of Death
Last week we addressed how new proposed tax law may lower the federal gift and estate tax threshold and prohibit current gifting strategies to lower Massachusetts estate taxes, as well as the window right now to take advantage of those current strategies. If you did not get a chance to read that blog, go check it out here.
New Proposed Tax Law May Dramatically Affect Massachusetts Estate Tax Planning – Part 1: Lowering the Federal Gift and Estate Tax Threshold
As many of you may know, administrations come and go, and when they do, it is prime time for law changes. Some of these changes do not or only minimally affect estate planning, but others, like the recently proposed federal estate and gift tax changes, have the potential to dramatically affect estate tax planning. This is one of the many reasons we have a client care program designed to take care of our families—so that when the law changes, your plan can change with it.
New Administration, New Congress, and Potential New Laws
Every 4 years, a change in our Presidential elections results in a flurry of literature, workshops, and newsletters regarding potential changes in income and estate tax laws. This year was no exception, as the significant increase in the federal deficit resulting from costs associated with COVID-19 has placed more pressure on tax increases, including potential tax increases in the estate planning realm. The federal exemption amount, which is $11.7 million as of January 1, 2021, will, under the current law, decrease to about $6.7 million in 2026. Many believe that this decrease in the coupon will occur earlier or may even go down below the $6.7M returning to the former $3.5M. All of this is speculation at this point, but we must be prepared to act quickly, as some of these tax law changes may act retroactively.
Vlog: Working With Friendly Institutions Is Better For You
Isabelle shares why working with friendly institutions is better for our clients.
Estate Planning Questions to Ask Yourself at the End of the Year
The end of each year is full of anticipation and trepidation for the next. And nothing quite causes the latter like knowing that the turning of the calendar brings with it all sorts of changes.
While running down the last few weeks in 2019, it’s prudent to look into tax and wealth management strategies worth pursuing before 2020 rolls around. Depending on your age and the stage of life you’re in, you might use this time to maximize your assets, distribute gifts and donations, or reorganize assets to get the most out of your retirement.
With 2020 fast approaching, take some time to ask yourself these questions about the state of your estate plan and any changes that may be required.
Should You Make Lifetime Gifts While Living?
Not everyone gives because they are looking to minimize their taxes. If you’ve reached the age and stage where you have accumulated more than enough wealth to retire on, you may enjoy being generous and seeing the impact your gifts can have on the lives of those you love, or those who are less fortunate.
WMUR’s recent article, “Money Matters: Lifetime non-charitable giving,” explains that lifetime giving means you dictate who gets your property. Remember, if you die without a will, the intestacy laws of the state will dictate who gets what. With a will, you can decide how you want your property distributed after your death. However, it’s true that even with a will, you won’t really know how the property is distributed, because a beneficiary could disclaim an inheritance. With lifetime giving, you have more control over how your assets are distributed.
Here’s How to Donate to Loved Ones and Avoid a Tax Bite
Basic rule: the more you give away, the smaller your estate and, therefore, the smaller your tax liability. If you’ve got a lot of wealth, this is a good time for you and those you want to make gifts to. The sooner you exploit this, the more you can give. It means that there’s less of a chance your estate will have to write a check to the IRS.
The Street’s recent article, “This Is the Golden Age of Tax-Free Gift Giving,” says the federal government has taxed estates since 1924, and as recently as 2001, the threshold when taxes kicked in was $675,000. This exemption level from taxation has been increased ever since. However, a large increase came from the Tax Cuts and Jobs Act, which took effect in 2018. The Act doubled the exemption level and indexed it to inflation. Anything above the new limits is taxed at 40%. It is $11.4 million for singles and $22.8 million for married couples in 2019.
How is My Estate Plan Impacted by the New Tax Law?
Anytime there is a major change in your life or in the law, it is wise to learn if your estate plan needs to be updated. This is particularly true, if your estate plan has not been reviewed since the new tax law went into effect, according to this article, “Talk to estate attorney about impacts of Tax Cuts and Jobs Act,” from The Kansas City Star.
A big change in the tax law is the doubling of the federal estate tax exemption from $5.49 million per person in 2017 to $11.18 million per person in 2018 (or $22.36 million per couple). In 2019, the federal estate tax exemption is $11.4 million per person (or $22.8 million per couple).
You should review any wills or trusts drafted prior to the passing of the 2017 legislation. If the trusts use formulas tied to the federal estate tax exemption, then there could be unintended ramifications because of the new larger exemption amount.