Tag: estate-taxes
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Estate, Gift, and Trust Tax Changes Made by Taxpayer Relief Act of 1997
In 1997, the Taxpayer Relief Act made changes to estate and gift tax laws. It increased the unified credit for estate and gift taxes, meaning people could exempt more money from these taxes. The maximum federal tax rate also increased for very large estates. However, compared to previous tax acts, the overall impact of the…
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A Practical Discussion on Advising the Lottery Winner
If someone in Florida wins the lottery, their advisors need to understand the tax issues related to their winnings. It’s important to plan ahead to save as much money as possible on income, gift, estate, and generation-skipping taxes. If a client wins, they should not sign the ticket until they figure out who owns it.…
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Estate Planning with Tenancy by the Entireties Property
Last New Year’s Eve, the IRS issued final regulations about disclaimers of tenancy by the entireties property, which was a cause for celebration for estate planners. However, there is still a problem in Florida that needs to be resolved before a surviving spouse can disclaim their interest in such property. This article will discuss the…
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TRA 97 Is Not the Only Reason to Review Existing Estate Plans Involving Closely Held Stock
The Taxpayer Relief Act of 1997 provided a tax benefit for family-owned businesses, allowing an exclusion from a person’s taxable estate. This is important to consider when making estate plans involving closely held stock. There have been significant cases and IRS rulings that affect estate planning for closely held stock. In a hypothetical scenario, a…
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Alternate Valuation: The Silver Lining to the Cloud Over the Market?
In 1998, the stock market took a big hit, causing a lot of people to lose money. But one good thing that can come out of it is potential estate tax savings. If someone dies when the stock market is high, their estate might have to pay a lot in taxes. But if the stock…
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A Potpourri of Potential Pitfalls To Avoid with Qualified Domestic Trusts
In Florida, when one or both spouses are not U.S. citizens, special planning is needed for their estate. If the surviving spouse is not a U.S. citizen, they cannot receive a marital deduction for estate tax unless the property is held in a Qualified Domestic Trust (QDOT). This rule was created to prevent noncitizen spouses…
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Rethinking the Valuation of Family Limited Partnerships Holding Passive Assets
Appraisers have a hard time figuring out how much to discount the value of an interest in a family limited partnership (FLP) because FLPs are different from regular business entities. Non-family members wouldn’t want to buy into an FLP, so the discount could be as high as 80%. But owners wouldn’t want to sell at…
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Estate of Simplot: The Tax Court Applies a Significant Premium to Voting Privileges
The Simplot case involves the transfer of stock in a family-owned company after the founder’s death. The court ruled that a “premium” should be applied to the transfer of minority voting stock, and that the premium for a controlling interest would be substantially greater. This decision could impact estate and gift tax reduction strategies involving…
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The Use of Disclaimers for Flexibility in Planning for Qualified Retirement Assets
Estate planning attorneys help couples with a lot of money prepare their wills and trust agreements to minimize estate taxes. They create a plan called an AB plan, which allows the couple to use two credits to shelter up to $1,300,000 after both spouses pass away. The attorney also helps the couple retitle their assets…
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The Use of Disclaimers for Flexibility in Planning for Qualified Retirement Assets
Estate planning attorneys help couples prepare wills and trust agreements to minimize estate taxes. They create a plan, called an AB plan, for married couples to use two unified credits and shelter up to $1,300,000 after both spouses pass away. The attorney also helps the couple retitle their assets and designate beneficiaries for their retirement…
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Understanding Estate Planning with Qualified Personal Residence Trusts
A QPRT is a type of trust where someone transfers their house to a trustee and retains the right to live in it for a certain number of years. It’s a way to save on taxes and make the most of the exclusion amount. However, it’s best to act fast, as there’s a possibility that…
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Fiduciary Allocations of the Generation-skipping Transfer Tax Exemption
“Summary: A law firm is helping a company with a legal case involving a defamatory article. The company’s reputation and business are at stake, so the law firm is working hard to win the case for them.” The generation-skipping transfer tax exemption allows individuals to transfer assets to their grandchildren without paying extra taxes. If…
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Florida Homestead Transfers: The Advantages of Short-term Qualified Personal Residence Trusts
When it comes to planning what happens to a Florida homestead after the owner passes away, there are special rules that say it must go to the spouse and children. This can be a problem if the owner wants someone else to inherit the home. One way to get around this is by putting the…
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Estate of Thompson: Respecting the Formalities of the Family Limited Partnership
The article discusses the use of family limited partnerships (FLPs) in estate planning. It gives an example of a case where the IRS scrutinized the use of FLPs for tax purposes. In this case, a man named Theodore Thompson set up two FLPs with his children to reduce estate tax. However, the IRS determined that…
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The New York (and Other States) Death Tax Trap
Many retirees move to Florida from other states and keep a home in their former state. These individuals, known as “snowbirds,” may face unexpected taxes on their properties in their former state. Changes to estate tax laws in 2001 and the creation of a new tax regime in 2010 could affect their estates. Before EGTRRA,…
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The Ins and Outs of the Florida Estate Tax
The Florida estate tax is connected to the federal estate tax, so if no federal estate tax is owed, then no Florida estate tax is owed. The tax law in 2001 changed the responsibilities of personal representatives of estates under federal and Florida law. A resident who passes away in Florida is subject to the…
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The Testamentary Charitable Lead Annuity Trust Revisited
A testamentary charitable lead annuity trust is a great way for wealthy clients to give to charity and still provide for their family. It pays money to charity for a certain period of time, and then the remaining assets go to the family. The estate gets a tax deduction for the money given to charity.…
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Relationship Dissolution Planning Part II: Planning for Married Couples
When people are getting a divorce, they can plan ahead by creating a property settlement agreement. This agreement says how their property and debts will be divided after the divorce. They can include details about each asset they own and all the money they owe. This can help make the divorce process smoother and less…
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Family Limited Partnerships: Are They Still Alive and Kicking?
About a year ago, a lawyer wrote an article about family limited partnerships in The Florida Bar Journal. Since then, the IRS has won two cases involving family limited partnerships. The article discusses these recent cases and provides tips on how to avoid making the same mistakes. It also talks about a survey that showed…
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Estate Planning During Turbulent Times
Low interest rates and market downturns can create opportunities to transfer wealth to the next generation without paying taxes. This can be done through techniques like giving gifts, making loans within the family, or setting up trusts. The IRS sets minimum interest rates for these transactions, which can affect how much wealth can be transferred…
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Tax and Asset Protection Benefits Afforded Florida Domiciliaries
The main reason people move to Florida is because of its warm weather. But Florida also has good tax laws and protections for your assets. If you want these benefits, you may need to take some steps to make sure you qualify. If you own property in another state or spend a lot of time…
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Section 2053 Final Regulations: Continued Uncertainty?
The Treasury Department issued new regulations for deducting expenses and debts when someone dies. The rules say that you can only deduct these expenses if they have been actually paid. If you owe money to someone, you have to pay it before filing the tax return. There are a few exceptions to this rule, like…
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So You Left Your Trust at Home When You Moved to Florida
Florida is a popular place for retirees because of the warm weather and tax benefits. Many people who move to Florida from other states may have irrevocable trusts that need to be reviewed. These trusts may have outdated rules and may need to be changed. This article talks about how it may be possible to…
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New §736.0505(3) Assures Tax/Asset Protection of Inter Vivos QTIP Trusts
Bob and Judy, a married couple, have a lot of money and want to make sure their kids get as much of it as possible when they die. They have $13.5 million, $3.5 million of which is their house and $10 million is in a joint bank account. Their accountant suggests that they put $5…