Back in December, the law that’s become known as the Tax Relief Act of 2010 (TRA 2010) was signed. In addition to a new estate tax threshold, not to mention quite a list of other provisions, TRA 2010 made changes to the federal gift tax law. Here’s a quick look: There are still two types of exemptions when it comes to the tax: the annual gift tax exemption, and the lifetime exclusion. They work together in determining whether you have to report gifts you’ve made during a particular year, as … [Read more...] about The New Gift Tax Law
Last December, when President Obama signed the Tax Relief Act of 2010 into law, many wealthy and affluent married couples breathed a sigh of relief. One effect of the law was to raise the federal estate tax exemption to $5 million per person. As always, the first spouse to pass away can pass his or her entire estate to the surviving spouse without paying any estate tax (this is known as the unlimited marital deduction). Plus, the law includes a portability provision that allows married couples … [Read more...] about Estate Tax Planning for Nontraditional Couples
With so much focus on the estate tax, the federal gift tax is often an overlooked topic of conversation. Here’s how it works: Annual Exclusion You’re allowed to make gifts of up to $13,000 per year, per recipient who is not your spouse. If you’re married and your spouse is a U.S. citizen, then there’s no limit to the value of gifts you can give him or her. (If you spouse is not a U.S. citizen, then you’re somewhat more limited.) Each grantor has the right to give gifts, tax-free, up to … [Read more...] about What is the Gift Tax?
Some people have a tendency to use the terms “estate tax” and “inheritance tax” interchangeably, but the two are actually very different things. Estate Tax “Estate Tax” refers to a federal or state tax that’s assessed on the estate of a deceased individual, provided that the value of the estate is more than a certain threshold. Not all states impose an estate tax. And, as for the federal estate tax, it’s been repealed for the year 2010, but it’s scheduled to make a comeback on January 1, … [Read more...] about Are Estate Tax and Inheritance Tax the Same Thing?
Of all the uncomfortable things you have to talk to your parents about through the years, probably the toughest is their money. Yet, as your parents age, conversations about their money tend to become more and more necessary. This is especially true as the end of 2010 approaches, and the reality looms that – unless Congress makes a change – the estate tax will return next year with a only a $1 million exemption and a 55% top rate. As an adult child of aging parents, this unprecedented … [Read more...] about Talking To Mom And Dad About The Estate Tax
With the estate tax sure to make a comeback next year, estate tax planning is once again at the forefront of many peoples’ minds. And in calculating your gross estate for tax purposes, the IRS includes the value of any life insurance policies you own. For people whose life insurance policies drive the value of their gross estate into the taxable realm, an Irrevocable Life Insurance Trust (ILIT)can be an effective estate planning tool. How does it work? You establish an ILIT and name a … [Read more...] about The Irrevocable Life Insurance Trust