A “new” federal tax was passed to help pay for the cost of the Affordable Care Act. This tax has been in effect since January 1, 2013. The tax is an additional 3.8% tax on “net investment income.” Net investment income (“NII”) is the income received from investment assets such as bank accounts, bonds, stocks, mutual funds, loans, and other investments. This would include interest, dividends, annuities, royalties, and rents which are not derived in the ordinary course of trade or business. NII … [Read more...] about Benefit Charity and Save Taxes Too

Over the past fifteen years, the amount that could pass free of estate tax at death has ranged from $675,000 to an unlimited amount. Prior to 2010, if the first spouse to die did not utilize his or her estate tax exclusion amount, that amount would be lost forever. Special estate planning, usually in the form of an A/B or A/B/C Revocable Trust was needed in order to utilize the exemption amount of the first spouse to die. In a joint trust, the A Trust is most often referred to as the Survivor’s … [Read more...] about IRS Grants Relief for Late Election of Portability

In the case In re Estate of Karter Wu (Supreme Court of Queensland, Australia), Mr. Wu created and stored his Last Will and Testament on an iPhone, along with a series of other documents, most of them final farewells. Wu’s iPhone Will named an executor and successor, set forth how he wished to dispose of his assets at death, dealt with his entire estate, and authorized the executor to deal with his financial affairs. The Will began with the words “This is the Last Will and Testament … [Read more...] about The Case of the iPhone Will

Not much more than a decade ago, taxpayers would flock to estate planning seminars to learn about ways to reduce or eliminate the federal estate tax. With the rise of the federal estate tax applicable exclusion amount (the amount that can pass free of estate tax) to $5,340,000 ($10,680,000 for married couples) in 2014, fewer than two out of every thousand deceased individuals will pay a federal estate tax. Many more estates, however, will be subject to a state estate or inheritance tax. … [Read more...] about A New Paradigm: Planning for State Estate Taxes

Charitable Planning Ideas When we reflect on the blessings we have received, often we show our gratitude by our desire to contribute to our community and those less fortunate than ourselves. There are many ways that clients can “give back,” including engaging in lifetime or testamentary charitable giving. Charitable giving can not only benefit society, but it can also provide valuable income tax, gift tax, and estate tax savings. According to the Giving USA Foundation and the … [Read more...] about Charitable Planning Ideas

Adult children with disabilities often qualify for government assistance. Some of these assistance programs are needs based. Others are not. Many adult disabled children receive Supplemental Security Income, or “SSI.” Qualification for SSI requires that the child have less than $2,000 in countable resources and have income below guideline levels (in addition to being found to be unable to engage in gainful employment by the Social Security Administration). The maximum SSI … [Read more...] about Planning for Children with Special Needs

Joseph “Pop” Preuschoff acquired the Preuschoff Ranch, a 2,345 acre cattle ranch in Madera, California in the early 1900s. Joseph had a daughter, Mary Valen Alen. Mary had a son, Joseph. Joseph inherited a 13/16th interest in the ranch at his mother’s death. Joseph married three times and had six children, four by his first marriage and two by his second marriage. His Will left his four children by his first marriage small gifts and left the bulk of his estate, including the ranch, to his two … [Read more...] about Tax Court Says Taxpayer Cannot Have it Both Ways

Some clients have the view that an inheritance should be left outright and unencumbered to children and other beneficiaries, because they don’t want to be perceived as “ruling from the grave.” Leaving an inheritance in trust for a child or other beneficiary can sometimes be viewed as ruling from the grave, but, depending on the terms of the trust, the child or other beneficiary can have substantial control over the inheritance without losing the benefits a gift in trust … [Read more...] about Protecting an Inheritance as Opposed to Ruling from the Grave

New Rules for Same-Sex Couples Bruce and Bill were married under the laws of New York, where same-sex marriage is legal. Bruce was offered an executive position at Wal-Mart and the couple moved to Arkansas. Same-sex marriage is banned by a state constitutional amendment in Arkansas. Thus, Bruce and Bill’s New York marriage is not recognized by the state of Arkansas and they are considered legal strangers under Arkansas law. In United States v. Windsor, the United States Supreme Court held … [Read more...] about New Rules for Same-Sex Couples

Estate of Hurford: a Taxpayer’s Tale of Woes In Estate of Thelma Hurford v. Commissioner of Internal Revenue, T. C. Memo 2008-278, Judge Holmes wrote: It is a truth universally acknowledged that a recently widowed woman in possession of a good fortune must be in want of an estate planner. Thelma Hurford had devoted her life to family and friends, leaving the management of finances to her husband Gary. When he died suddenly, she had to learn what they owned and decide what to do with it. … [Read more...] about Estate of Hurford: a Taxpayer’s Tale of Woes