Posted by & filed under Asset Protection, Estate planning, Inheritance Tax, taxes.

Are you worried about the Estate and Gift Tax limits for 2019?  Confused about the new tax provisions? The IRS has issued tax year 2019 inflation adjustments for more than 60 tax provisions, including tax rate schedules. They also announced the official estate and gift tax limits for 2019 as follows: the estate and gift tax exemption is $11.4 million per individual, up from $11.18 million in 2018. That means an individual can leave $11.4 million to heirs and pay no federal estate or gift tax, while a married couple can shield $22.8 million.  In this article we break down the Estate Tax Exemption, the Gift Tax and what you can do now to minimize your future tax liability.

1. What Is The Estate Tax Exemption?

    The estate tax is a federal tax imposed on estates over a certain value. That value is known as the “estate tax exemption,” “combined estate and gift tax exemption,” or “unified credit.” If an estate is worth more than the exemption amount, the value over the exemption amount will be taxed. If the estate is worth less than the exemption amount, there is no tax liability. The higher the exemption amount, the less estates will have to pay in taxes. The Trump Presidency tax cuts are scheduled to expire after 2025, meaning the estate tax exemption will revert to its inflation-indexed base of $5 million. Estates of decedents who die during 2019 have a basic exclusion amount of $11.4 million; the previous year was $11.18 million. The basic exclusion amount for gift and the estate tax is $11.4 million plus deceased spousal unused exclusion amount. If you live in one of the 17 states or the District of Columbia that levy separate estate and/or inheritance taxes, there’s even more at stake, with death taxes sometimes starting at the first dollar of an estate.  California does not have a State inheritance tax.

2. What Is The Gift Tax “Annual Exclusion Amount” For 2019?

The annual gift exclusion amount for 2019 remains at $15,000 per individual each year, unchanged from 2018. This means you can give $15,000 to as many people you want each year without filing a gift tax return. You can exclude that $15,000 from a gift tax return. For most people, gift taxes will not be a concern since the combined estate and gift tax exemption is so high. However you are still required by law to report gifts over the annual exclusion amount on a gift tax return, IRS form 709. There are few significant changes to Form 706, United States Estate and Generation-Skipping Transfer Tax Return. The one change that will impact all filers is the elimination of the allowable State Death Tax Credit, for decedents dying in 2005 and later years, is a deduction.


3. What Can You Do Now? Minimize Taxes Through Estate Planning

Sometimes gifts can be used strategically to avoid estate taxes or to minimize other problems after death. There are many advanced estate planning strategies available to help reduce or minimize the estate tax. Other times, gifts can have adverse tax consequences. Estate and gift taxes are a complicated estate planning topic. It is always a good idea to talk to an attorney before making a major gift. Misunderstanding these concepts or failing to prepare for them can hold critical consequences for your beneficiaries. As always, our advice is to speak with an experienced estate planning attorney so you are able to choose the best path to protecting your assets.

Are You Worried about Your Estate Plan?

If you are not prepared with a current estate plan then your family could be vulnerable to higher tax bills, extensive legal fees, and familial conflicts. To avoid those obstacles you should visit an Estate Planning Attorney to get professional help, and create a plan that well suits your goals.

At The Law Offices of Joel A Harris located in the cities of Concord, Walnut Creek, Antioch, California, we have worked for over 25 years giving the best guidance our clients need to protect their assets. Have a question about your planning your estate? Feel free to schedule a sit-down meeting where we are happy to patiently answer every question you may have. For your free consultation reach out to us at (925) 757-4605.

Sources

  1. https://www.forbes.com/sites/ashleaebeling/2018/11/15/irs-announces-higher-2019-estate-and-gift-tax-limits/#584449ac4295
  2. https://www.ncfgiving.com/stories/irs-announces-higher-2019-estate-and-gift-tax-limits/
  3. https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax

Posted by & filed under Living Trust, Retirement Planning, Trusts.

4 Common Mistakes People Make AFTER Signing Their Living Trust


Every estate plan has unique features, but after preparing living trusts and wills for the nearly thirty years, we have seen the same problems and mistakes often reoccur. Each of these common mistakes is avoidable as long as you take the care to make sure you been address them correctly. From wills to trusts and beyond, protect your loved ones by avoiding these four costly and common estate-planning mistakes.


1. Neglecting to Update Your Estate Plan

Many people become passive in the presence of an estate planning attorney. They rely on the attorney to make sure everything in the plan is what they need and is done properly. Part of the estate planner’s job is to be sure you understand the basics of how the plan works, what you need to do to implement or maintain the plan, and how it works for you and your beneficiaries. It is not your job to know all the legal angles and why certain language is used.

Often people make decisions after a discussion with their estate attorney but then later on details become hazy. Insist that your attorney simply explain your documents. You may wish to take notes about key decisions and why you made them. Each time the law or your family changes, you need to make it a part of your check-list to revisit your estate plan. These changes may require alterations in both new and old estate plans.

2. Not Updating Powers of Attorney

Every estate plan should include powers of attorney. You need at least two, one for financial matters and one for medical care, often called an Advance Heath Care Directive in California. Unfortunately, many people don’t have either of these documents, and others haven’t kept them up to date or given the details much thought.  Be sure you have these completed these documents and that they have been reviewed recently. Your financial power of attorney agents normally mimic your Executors and Successor Trustees.

3. Not Updating Beneficiary Designations

Failure to update beneficiary designations means an asset might go to your parents, siblings, or even an ex-spouse because of what the original form states. Your asset may be designated to a deceased person, or other unintended beneficiaries – we’ve seen it all. Other times someone is inadvertently excluded because they were born or married into the family after you completed the form. Review your beneficiary designations every couple of years and after every major life change in your family.

4. Not Updating Asset Ownership

You might own some assets in your own name and others in joint title with your spouse, adult child, or someone else. Some assets might be in your trust, limited partnerships, or other vehicles. When you have a living trust, the trust only protects assets that it owns. Normally all real estate, partnerships, brokerage accounts, stocks, bonds, mutual funds, notes, bank accounts and personal property will be owned by your trust. Life insurance policies will name your trust as beneficiary (except for special policies created to pay estate taxes). IRA, 401K and similar tax deferred retirement accounts cannot be owned by the trust – it is critical to name the right beneficiary on these accounts.

The Tax Cuts and Jobs Act made significant changes in income and estate taxes. If you have a trust or established estate plan created before 2012, you should have them reviewed to see if they are obsolete, or add unnecessary costs and complexity. To help your beneficiaries avoid unnecessary stress, ensure that you are distributing the right assets to the right people. You would be surprised what we find in old estate plans!

Are You Worried about Your Estate Plan?

If you are not properly prepared and with a well-planned will, then your family could be vulnerable to higher tax bills, extensive legal fees, and familial conflicts. To avoid those obstacles you should visit an Estate Planning Attorney to get professional help, and create a plan that well suits your goals.

At The Law Offices of Joel A Harris located in Antioch, California (here is a convenient map), we have worked for over 25 years giving the best guidance our clients need to protect their assets. Have a question about your planning your estate? Feel free to schedule a sit-down meeting where we are happy to patiently answer every question you may have. For your free consultation reach out to us at (925) 757-4605.

Sources

  1. https://www.nytimes.com/2017/08/25/realestate/estate-planning-home.html
  2. https://www.aarp.org/money/estate-planning/info-01-2011/4_costly_estate_planning_blunders.html
  3. https://www.forbes.com/sites/bobcarlson/2018/04/20/avoiding-7-deadly-estate-planning-mistakes/#4e0fbd936160

Posted by & filed under Asset Protection, Estate planning, Retirement Planning, Rich & Famous.


Estate Planning Mistakes Of The Rich & Famous You Can Learn From - Joel HarrisEveryone knows there are two things in this life that you can be sure of – Death and Taxes – even if you are a rich and famous celebrity. Over the nearly 30 years of being in practice I have witnessed countless horror stories of families fighting over the estate of the deceased, people stuck with millions due in taxes, and loved ones being left out of the will or trust. Many of the rich and famous – the most recent of which being Aretha Franklin – have had their estate planning failures go public.  This gives us an opportunity to learn from their mistakes. In this article we’ll look at the cases of some famous people who have had their outdated wills and improper estate planning become public so we can learn from their mistakes.


 

Is Your Will Outdated? Paul Walker’s Story

It is advisable to update one’s wills and trusts after every major life changing event. This means revising your will after things such as divorces or marriages, the birth of a child, or an accumulation of a large sum of money. As we learned from Paul Walker’s passing, an outdated will can have a massive effect on your family. Paul Walker, star of “The Fast and the Furious” movie franchise, made his will in 2001, the same year the first “Fast and the Furious” movie debuted. He died in 2014 in a tragic car crash, and a lot of things had changed in his life since the writing of his will. Because his will was not up-to-date, his teenage daughter was left out. If he would have kept his will up to date, then he would have had a chance to leave some of his estate to his daughter without the legal complications and fees she and her family experienced.

 

Has Your Estate Planning Been Properly Done? Lesson from James Gandolfini

Proper estate planning can save you and your family  money and stress. Unfortunately James Gandolfini, known for his role in “The Sopranos” was not as thorough with his estate planning as he could have been. Gandolfini’s will provided for his wife, daughter, and two sisters. However, he did not plan for taxes properly. Gandolfini’s estate ended up having to pay both federal and state estate taxes at 55%.  Another well known celebrity suffered from the same mistakes. Academy Award Winning actor Philip Seymour Hoffman was adamant about not turning his children into “Trust-Fund Kids”. Because of that, he ended up leaving everything to his children’s mother without any tax planning. By doing this his estate was subject to a massive estate tax bill. If he were to have met with an estate planning attorney, they would have found a way to achieve both his goal of not having “Trust-Fund Kids” and not losing so much money unnecessarily to taxes. If you want to familiarize yourself with estate taxes and need help planning your will and trust, visit The Law Offices of Joel A Harris for help. You’ll find all the resources you need to plan for the future.

 

Not Having a Will Can Cost a Lot – The Stories of Prince and Aretha Franklin

If you were to die without having a will you will have died “intestate,” which means the state will dictate how your assets will be distributed.  Sounds like a nightmare, right? Both Aretha Franklin and Prince, the singer most known for “Purple Rain” died without a will. In Prince’s case he did not have any known children so there were no obvious heirs to his estate. 45 people had tried to claim some part of his estate by saying they are his proper heirs! For the state to find rightful heirs and then divide his estate cost Prince’s estate a huge amount of legal fees.  In Aretha Franklin’s case, as of this writing five different people have filed papers with the court listing themselves as “interested parties” wishing access to her estate. The question of what happens to her sizable estate remains murky.

 

Are You Worried about Your Estate After Your Passing?

 

If you are not properly prepared with a well-planned living trust, then your family could be vulnerable to higher tax bills, extensive legal fees, and familial conflicts. To avoid those obstacles you should visit an Estate Planning Attorney to get professional help, and create a plan that well suits your goals.

 

At The Law Offices of Joel A Harris located in Antioch, California, we have worked for over 25 years giving the best guidance our clients need to protect their assets. Have a question about your planning your estate? Feel free to schedule a sit-down meeting where we are happy to patiently answer every question you may have. For your free consultation reach out to us at (925) 757-4605.

 

Sources

 

  1. https://www.thinkadvisor.com/2014/03/13/10-big-estate-planning-mistakes-of-the-rich-famou/?slreturn=20180911150626
  2. https://tickertape.tdameritrade.com/personal-finance/estate-planning-mistakes-celebrities-15232
  3. https://www.aarp.org/money/taxes/info-2016/celebrity-estate-mistakes-photo.html#slide1
  4. https://www.washingtonpost.com/business/2018/08/23/i-wasnt-surprised-that-aretha-franklin-didnt-have-will-you-probably-dont-either/?noredirect=on&utm_term=.c30880aecd1f
  5. https://www.cnn.com/2018/08/22/entertainment/aretha-franklin-will/index.html
  6. https://www.kiplinger.com/article/retirement/T021-C032-S014-estate-flops-michael-jackson-prince-whitney-housto.html