Tag: family-member
-
Negligent Infliction of Emotional Distress: Where Are We Now?
In Florida, if you want to sue someone for causing you emotional distress, you need to have also been physically injured by their actions. This is called the “impact rule.” However, there are some exceptions to this rule, such as for defamation, invasion of privacy, and wrongful birth cases. There is also a special rule…
-
Time Waits for No One: The Death of a Litigant
When someone involved in a lawsuit dies, their lawyer and the other side’s lawyer have to deal with a lot of issues. If they don’t handle the situation quickly, they could end up in trouble. If someone involved in a lawsuit dies, the court needs to be informed, and the party’s representative or the other…
-
The Parental Immunity Doctrine: Is Insurer Bad Faith an Exception or Should the Doctrine Be Abolished?
A boy and his dad got hurt in a car crash in Florida. The dad’s wife’s car was involved, and the boy’s mom tried to get money from their insurance. The insurance company wouldn’t pay even though the crash was partly the dad’s fault. After a long court case, the insurance company was found to…
-
Invoking the Rule During Depositions? Absolutely Maybe
When someone invokes the rule during a trial or deposition, they are asking for the rule of sequestration to be implemented. This means that certain witnesses must stay outside of the room while others are testifying, so that their testimony isn’t influenced by what they hear. However, the rule doesn’t apply to parties involved in…
-
Pension Simplification: The Ultimate Oxymoron?
The Tax Reform Act of 1986 made big changes to retirement plans, making things more complicated and expensive for employers. But in 1996, the Small Business Job Protection Act was signed into law, addressing concerns and making changes to simplify 401(k) plans. One change was using data from the previous year for testing, instead of…
-
Be Alert for Financial Exploitation of the Elderly
After World War II, the U.S. has seen a huge amount of money accumulated. Now, a lot of that money is being passed down to the next generation, with estimates predicting over $60 trillion transferred in the next few decades. This isn’t just about the super rich; there are millions of millionaires in the U.S.…
-
Planning for Large Estates After TRA 97: A New Look at Some Old (Charitable) Friends
The Taxpayer Relief Act of 1997 didn’t actually provide relief for many rich people because the estate tax credit is only available for estates worth less than $10 million. This means that larger estates still face a 55 percent tax rate, just like before. As a result, estate planning techniques like life insurance trusts and…
-
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…
-
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.…
-
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…
-
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…
-
Making Principal Invasions under Florida Law when an Interested Party is Serving as Trustee
Sometimes, a client may want to name a family member, like a spouse, to be in charge of a trust they’re setting up. In the past, there were tax concerns and worries about fairness when a family member was named as trustee. But now, there’s a law in Florida that helps address the tax issue.…
-
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…
-
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…
-
Intermediate Sanctions Under 4958: An Overview of the Proposed Regulaitons
Last year, new rules were proposed that would impose taxes on people in leadership positions at nonprofit organizations who receive too much money from the organization. These rules have been criticized for making it more complicated for anyone who works with a nonprofit to understand how they might be affected. For a long time, the…
-
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,…
-
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…
-
Family Limited Partnerships: To Qualify or Not to Qualify for the Bona Fide Sale for Full and Adequate Consideration Exception Under §2036
The recent cases have looked at whether certain rules apply to FLPs, and how to avoid those rules. The focus is on a specific exception that allows for a genuine sale of property. This article will analyze those cases and discuss ways to plan to avoid the rules by meeting the exception. This exception is…
-
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…
-
Profits Interest Converting Compensation to Capital Gains and Other Planning Ideas
Profits interest, also called carried interest, gives a person the right to receive a percentage of profits from a partnership without having to put in any money. Some hedge fund managers have received huge amounts of money through profits interest and paid lower taxes on it. This article explains how profits interest is taxed and…
-
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…
-
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.…
-
Achieving Capital Gains Treatment on Predevelopment Real Property Appreciation
Real estate values are going up, so property owners are choosing to develop their own projects instead of selling to someone else. When they sell the units, they have to pay taxes on the profit they make. But if they plan carefully, they can save money on taxes by treating the profit as a capital…
-
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…