Thank Congress if You Made Big Gifts in 2012

Hank Wittenberg has a great article on estateplanning.com on why those of you who did year end planning in 2012 made the right choice, even though Congress extended the generous gift and estate tax exclusions with the American Taxpayer Relief Act. The tax act signed into law by President Obama last week provided some very good estate planning provisions. Surprisingly, I have … [More...]

Thank Congress if You Made Big Gifts in 2012

Hank Wittenberg has a great article on estateplanning.com on why those of you who did year end planning in 2012 made the right choice, even though Congress extended the generous gift and estate tax exclusions with the American Taxpayer Relief Act. The tax act signed into law by President Obama last week provided some very good estate planning provisions. Surprisingly, I have … [More...]

Advice from Jeff Bezos

From the 37 Signals blog (via GeekWire). Jeff Bezos says smart people change their mind. The smartest people are constantly revising their understanding, reconsidering a problem they thought they’d already solved. They’re open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking. This doesn’t mean you … [More...]

Lifetime Bypass Trust

Until December 31, the lifetime gift tax exclusion is $5,120,000 per person. Unless Congress acts, this amount will drop to $1,000,000 on January 1, 2013.  It is usually best to use a tax exemption as soon as possible – use it or lose it. The opportunity, good now through the December 31, is to gift assets out of your estate and forever exempt the assets and all future … [More...]

8. You Can Give Your Children Divorce and Asset Protection

This is part 8 in my series, Estate Planning – What You Need to Know. Part 8 - You Can Give Your Children Divorce and Asset Protection. Of the thousands of clients I’ve worked with, most know how they want to distribute their assets when they die:  For married couples, it’s usually to the surviving spouse and then in equal shares to their children.  For a … [More...]

How We Can Help You

We are an intentionally small California law firm based in Sacramento. We help families with estate planning (things like living trusts, irrevocable trusts, charitable trusts, wills, trust administration and probate), we counsel entrepreneurs and small business owners, set up corporations and LLCs, and we help churches and nonprofits with planned giving. We will treat you like we would want to be treated. This means we will be kind, we will teach you about legal issues- not lecture you.  We will return phone calls and emails usually in a few hours, and we will charge a fair fixed fee (we rarely bill by the hour – we think you should know in advance what it will cost). Our clients like working with us, and almost all our work comes from client referrals.

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Am Tax Rel Act

Thank Congress if You Made Big Gifts in 2012

Hank Wittenberg has a great article on estateplanning.com on why those of you who did year end planning in 2012 made the right choice, even though Congress extended the generous gift and estate tax exclusions with the American Taxpayer Relief Act. The tax act signed into law by President Obama last week provided some very good estate planning provisions. Surprisingly, I have already read and heard complaints from other estate planning attorneys that this new tax act renders the 2012 year end gifting a “waste of time.” This is absurd; quit your whining! These are the same folks who complain that their clients would not make any significant gifts in spite the significant benefits that go with it, … [More...]

cash gift

New 2013 Gift Tax and Estate Tax Rates – Now What?

Congress surprised us again and passed the American Taxpayer Relief Act (don't you love the catchy name) on January 1 to temporarily avoid the fiscal cliff. Overall, the new law is much better than the experts expected. It extends the estate tax and gift tax exclusions of 2012 and even indexes them for inflation. In 2013, you can gift $5,250,000 with no gift tax. In 2013, you can die with $5,250,000 with no estate tax. A married couple can double this amount. The tax rate for gifts or estates greater than $5,250,000 rose to 40% from 35%. But so long as your estate is less than $5,250,000, or $10,500,000 for a married couple, there won't be a tax. So what does this mean for you? We will be … [More...]

Dan Picasso for Barron's

Barron’s on Why You Should Gift Now

Great article from Barron's explaining the lifetime bypass trust and how couples can gift over $10,000,000 to each other (although most gift much less) and avoid estate tax if they act by December 31. For married couples, a popular strategy is for each spouse to create a trust that will ultimately provide for heirs, but that also names the other spouse as a beneficiary. The advantages are clear: Couples can move as much as $10.24 million out of their combined estate, while retaining rights to draw income if they need to. The one hurdle is that the Internal Revenue Service could void your careful planning if you and your spouse create trusts that are too similar. This poses particular problems for … [More...]

Cutting taxes

How the Lifetime Bypass Trust Works: Attention CPAs

Many of my clients are interested in the Lifetime Bypass Trust. And some are vetting the concept through their CPAs. Here is an email (with the names removed) I have sent to several CPAs to clarify this amazing but simple planning strategy. The structure we are proposing is a lifetime bypass trust. The concept is the same as used with an A/B trust, or bypass trust. When a bypass trust is created upon the death of a spouse, it is funded with the deceased spouse's share of property up to the then death tax exclusion amount. The surviving spouse is usually the trustee and the primary beneficiary of the bypass trust. The benefits of the bypass trust are: 1) Assets in it (and all future growth) … [More...]

HiRes

Lifetime Bypass Trust

Until December 31, the lifetime gift tax exclusion is $5,120,000 per person. Unless Congress acts, this amount will drop to $1,000,000 on January 1, 2013.  It is usually best to use a tax exemption as soon as possible – use it or lose it. The opportunity, good now through the December 31, is to gift assets out of your estate and forever exempt the assets and all future appreciation from estate tax. When we explain this to our clients with medium to large estates, they understand the value and urgency of gifting now, but many of them need the assets to live on.  What good is it to give your children your assets when you still need your assets? Enter the Lifetime Bypass Trust, also known as … [More...]

Year end action plan

Act by Dec. 31 to Avoid Estate Tax (click for slide show)

We now know the next President and the composition of Congress. Most likely, the historic estate and gift tax exclusions that end on December 31, 2012, will never be seen again. This may be the best opportunity in your lifetime to remove assets from your estate and forever avoid estate tax. Watch the slide show below to learn more about what you can do in the remaining days of this year to protect your estate. 2012 year-end gift planning from clarkallison … [More...]

Grim reaper

Gift Now and Avoid Estate Tax

If you have a net worth of $1M or more (or as a couple, $2M or more), and act now, you could forever remove the threat of estate tax. But if you don’t act by the end of the year, you will miss a historic opportunity. The 2012 estate tax exclusion and gift tax exclusion are both $5,120,000 - way higher than they have ever been. But unless Congress and the President act, both will crash to $1M on January 1, 2013. If you die with more than $1M after December 31, 2012, every dollar over $1M will be taxed at 55%. If you die with a $2M estate, your children will get $1,450,000 and the government will get $550,000. But here’s your big chance: If you gift assets out of your estate before December … [More...]

S. Cal Est and Tax Pl Forum

Make Gifts Before It’s Too Late

The consensus at the 2012 Southern California Tax and Estate Planning Forum is that recapture or clawback will not occur for gifts made in 2012. And even if it does, the opportunity cost of not making a gift this year will significantly outweigh any potential harm. From Prof. Samuel Donaldson: The short answer is that individuals in a position to make large wealth transfers should most definitely strike now, as the proverbial irons could not be hotter. In addition to the potentially expiring window for utilizing a $5.12 million exclusion amount, two other factors indicate that this is a strategic time for wealth transfers. First, if one believes that asset values have more or less bottomed-out … [More...]

Blattmachr

Recapture Clawback of 2012 Gifts

There is lots of anxiety among attorneys and clients about the scheduled estate and gift tax law change in 2013. In 2012, you can gift up to $5,120,000 without a gift tax. But in 2013, both the gift and estate tax exclusion drop to $1,000,000. The big concern is whether gifts made in 2012 in excess of $1,000,000 will be clawed back or recaptured and subject to estate tax. I'm attending the Southern California Tax and Estate Planning Forum in San Diego. Jonathan Blattmachr just said he does not think clawback or recapture will be an issue next year. He said Harry Ried has, or will, introduce 2 bills that will prevent recapture. If the chief Democrat in Congress wants to avoid recapture, Blattmachr … [More...]

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