Gifting to Avoid Estate and Gift Taxes

Going, Going, Gone!
U.S. taxpayers are experiencing a “perfect storm” of opportunity to make tax-free transfers (gifts) of assets such as family businesses, real estate and other wealth from one generation to the next. The gift tax was first enacted in 1932 by the federal government. Over the coming months, we all have what may be the best opportunity since 1932 to gift family assets without a gift tax now and to avoid significant estate taxes later.

Two notable exceptions to the gift tax
Some people are not aware that giving away assets to their children or other individuals may create a taxable event. The “gift tax” referenced above applies to anything of value transferred by one individual to another. There are two notable exceptions to the gift tax. One is an “annual exclusion” which is an exception that allows individuals to gift up to $13,000.00 per year per person without any gift tax consequences.
A second exception is an overall gift tax exemption which historically has been limited to $1M during an individual’s lifetime.

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News Briefs and Emerging Trends with Golden Boomers

Every day my in box fills with information from many sources. Some is from mainstream media, trade journals, special reports and various reviews and findings from the legal and wealth advisory community. Often, while reading an article or report, many people come to mind that I think might also share an interest in the information.

For example, earlier this year I read through a Special Survey Report published by WealthCounsel and Trusts & Estates magazine. I read it again this week. Even though the survey was directed to estate planning attorneys about emerging industry trends within our profession, there were some items that were of interest to me because they addressed those of us who are moving in 2011 from the “Baby Boomer” and “Generation Jones” generations to being “Golden Boomers”.

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Preparing Your Heirs for Their Inheritance

As we counsel clients during the preparation of their estate plans, one concern is usually very evident – parents are worried that their children will squander the funds and assets that they worked very hard to accumulate. This concern can be addressed in many ways, but usually, parents request specific provisions in their estate planning documents that control an heir’s access to distributions based upon age, accomplishments, and certain life choices. Therefore, the assets are distributed largely because a specific milestone has been reached. The thoughtful nature of the distribution planning, however, leaves a primary problem unaddressed – preparing the heirs for wealth transition from one generation to the next.

Studies conducted by various institutes demonstrate that many estate plans that have been completed and then updated carefully and competently throughout the years, successfully address the issues relevant to the parents’ wishes. The attention to detail, however, cannot necessarily fill the gap of the heirs’ lack of direction and instruction that results in chaotic estate administration, family disharmony, and relationships that remain broken forever.

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The Value of Summer Memories at The Family Cottage

It doesn’t matter what time of day you arrive, everything always looks the same. Granted, the trees are taller and wildflowers seem to be growing everywhere. But your family cottage is the same to you today as it’s always been.

Cubby holes filled with trinkets and treasures
While waving hello to neighboring friends you realize every family cottage and summer home is as different as the memories gathered by families every summer. Each cottage has a special cubby hole filled with trinkets and treasures from sandy beaches and hiking adventures through surrounding woods. Weathered hinges guarantee screen doors will squeak open and slam shut right on cue announcing that this is summer. It’s easy to get caught up in the moment of racing down to the lake and assuming every summer will be just like the last.

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Real Estate Taxes and Joint Ownership of Michigan Real Property

The Practical Effect of Michigan Supreme Court’s Decision in the case of Klooster v City of Charlevoix
The Supreme Court’s decision in the Klooster case provides that certain types of joint ownership of real estate in Michigan can prevent property taxes increasing at the time of a joint owner’s death. While the decision is generally favorable to the taxpayer, there are various rules and contingencies that must be satisfied in order to achieve property tax savings.

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