Tag: estate-taxes
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Five Tax Traps for Resident Noncitizens (and Their Attorneys!)
More and more people from different countries are moving to Florida for better opportunities. But when they become residents in the U.S., they have to be careful about taxes. They might have to pay taxes on their income and assets from their home country, which can be a surprise. They also have to follow specific…
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Navigating the Minefield of Settlements: A Primer on Tax Issues for the Probate and Trust Litigator
In tough economic times, there are more disputes over wills and trusts. This is because more people know their rights and the legal documents are more complex. As a result, lawyers who handle these cases are seeing more business. I’ve helped these lawyers with tax issues in these cases. This article is meant to help…
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Foreign Investment in U.S. Real Property: Navigating Through the Income, Estate, and Gift Tax Traps
Foreign investors are investing in Florida real estate because of the great deals available. However, they need to be aware of the tax implications. The IRS considers foreign investors as nonresident aliens, and they need to be aware of federal income taxation, transfer taxation, and FIRPTA withholding requirements. This is a complex area of law,…
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Pre-immigration Tax and Estate Planning: Utilization of Code Section 121 Exclusion
If a foreign person is moving to the U.S., they should consider the tax benefits of selling their foreign home before they move. They may be able to exclude up to $250,000 (or $500,000 if married) of the profit from the sale of their home from U.S. taxes. This applies even if the home is…
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Estate Planning: The Clock is Ticking Use it or Lose it Before 2013
In 2010, President Obama signed a law that changed the estate, gift, and generation-skipping transfer (GST) tax rates and exemptions. These changes will end in 2012, and if new laws aren’t passed, the old tax rates and exemptions will come back in 2013. This means that people should consider using the new tax laws to…
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Estate Planning with Portability in Mind, Part I
Before 2011, if someone died without using all of their estate and gift tax exemption, it was lost forever. In 2010, a law called the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act was passed, allowing for “portability” – the ability for a surviving spouse to use their deceased spouse’s unused exemption amount. This…
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Identifying and Reporting the Proper Taxpayer in International Structures
One of the main issues in U.S. tax law is figuring out who is responsible for paying taxes on certain income. It can be tricky when dealing with non-U.S. entities, as their classification for tax purposes is really important. Sometimes, the person or company getting the income isn’t actually the one responsible for paying taxes…
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State of the Same-sex Union: A Tax Perspective
The U.S. Supreme Court decided that same-sex married couples can now enjoy the same federal benefits as opposite-sex married couples. This means that same-sex couples can claim tax benefits and other rights previously unavailable to them. The decision also stated that same-sex marriages performed in any U.S. or foreign jurisdiction will be recognized for federal…
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Personal Use of Florida Residential Realty by a Nonresident Alien Shareholder of a Foreign Corporate-related Structure
Non-US citizens who don’t live in the US can use a foreign company to buy property in the US. They or their family can live in the house, but there are tax and legal rules they need to follow. The foreign company can directly own the property, or it can own a US company that…
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After Death Does Us Part: Surviving Spouse as Fiduciary and Beneficiary
When spouses name each other as the person in charge of their will and estate, it can create conflicts of interest, especially in blended families. In these situations, it might be better to appoint an outside person, like a bank or trust company, to help. This can be more expensive, but it can help prevent…
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Rethinking I.R.C. §2701 in the Era of Large Gift Tax Exemptions
For individuals or couples with a net worth of $5-10 million, there are new opportunities to transfer assets and minimize taxes as the tax exemptions have increased. One way to do this is through a “freeze partnership,” which allows for transferring appreciation of assets to younger generations while keeping control and access to income. This…
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Are Tax Expenditures Reaching Their Goals? A View from the Fiscal Cliff
Taxes help pay for things that make our society better, like roads and schools. The government gives tax breaks to encourage people to spend money. But sometimes these tax breaks don’t work as planned and end up costing the government money. Tax breaks for things like buying a house or going to college are examples…
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Estate Planning in 2015 and Beyond: No Longer a One-Size-Fits-All Approach
In the past, estate planning for lawyers was focused mainly on reducing estate taxes, without considering other important factors like income taxes, asset protection, and charitable planning. However, recent changes in laws and the economy have made estate planning much more complex. Before 2000, estate and gift tax exemption was only $675,000 and the top…
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Florida Family Trust Companies: Tax and Nontax Considerations
If a family-run investment company wants to avoid SEC regulation, it can qualify for exemptions. One way is if it only serves family members and is owned and controlled by family members. Another way is if it follows state regulations instead of SEC rules. Using a family-run investment company for family trusts can cause tax…
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Pay Early, Pay Less: Maximizing TPT Credit Availability for Married Couples
The federal estate tax credit allows married couples to save on taxes when one spouse dies within 10 years of the other. This happens because some of the property transferred from the first spouse to the second spouse is not subject to tax in the second spouse’s estate. As a result, the combined estate tax…
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Buying America! Foreign Investment in U.S. Real Property: Recap and New Developments
In 2011, an article was published about foreign investment in U.S. real estate and the tax implications. Since then, there have been changes in U.S. tax laws and the economy, as well as how foreign governments share tax information. The U.S. real estate market has also changed, with more foreign investors buying property. This article…
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The Tax Cuts and Jobs Act: Still Waiting for That Postcard
President Donald Trump signed the Tax Cuts and Jobs Act into law in December 2017. It made changes to the tax system, with the goal of making it simpler. Some parts of the tax code are easier, but others, especially for businesses, are more complicated. Many of the changes will expire in 2026. So, filing…
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International Tax and Estate Planning: Use of Check-the-Box Election in the Foreign Corporate-Trust Context
The check-the-box election is really important for international tax and estate planning. One common strategy is to use a foreign corporation owned by a trust to avoid U.S. estate tax on the death of the grantor. But with recent tax law changes, this strategy needs to be adjusted to avoid other tax issues. One way…
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Navigating I.R.C. §2036 Tax Planning with Florida Law
For many years, a common technique in estate planning has been to create a partnership or LLC to hold valuable property and then transfer ownership interests to a trust to avoid estate tax. However, the IRS may challenge these transfers as an attempt to pass untaxed wealth to future generations while still maintaining some control…
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Creating a Florida Irrevocable Homestead Trust for Ad Valorem, Income, and Transfer Tax Purposes
Parents can help their kids buy a home by transferring the home or money to an irrevocable trust. This can help the child avoid taxes and protect the home in case of divorce. The trust needs to be set up in a certain way to work properly. Here are some sample provisions for the trust.…
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Funding the Estate Tax: Defusing the Liquidity Time Bomb
It seems like the rules around estate taxes might be changing soon. If they do, more people might have to pay taxes on their estates when they die. As lawyers, we help our clients figure out how to pay as little tax as possible and in the least disruptive way. In this article, we talk…
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Designing Trust Systems for Florida Residents: Planning Strategies, Things You Should Know, and Traps for the Unwary
Trusts are commonly used for estate and financial planning. They help avoid probate and protect assets. There are different types of trusts and it’s important to understand the implications before funding one. For unmarried individuals, a revocable trust is often used to avoid probate and maintain control over assets. However, in some cases, it may…
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Foreign Grantor Trust Planning: A Flexible Planning Structure for U.S. Income Tax
Tax specialists help families with members in multiple countries set up special trusts to avoid certain U.S. taxes and keep tax advantages. This can be really useful for families where a parent is not from the U.S. and has kids and grandkids who are. The trust helps the family save money on taxes and deal…
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Drafting Wills for the Remarried Spouse
Forms used for the traditional marriage are not suitable for second marriages, especially when children are involved from a previous marriage. Attorneys need to make sure that their clients have updated wills that take into account the unique circumstances of a second marriage. The estate planner should educate their client about the potential conflicts between…