Estate Tax Attorney

How well versed are you in your estate planning options? Even more importantly, can you be assured that your family will be taken care of when you are no longer able to do so?

A qualified estate planning attorney can be an invaluable asset to you and your family, whether your personal wealth is small or extensive. In truth, any amount of personal wealth is at risk if you do not have an estate plan.

In most cases, if you pass away without the protection of an estate plan, will, or trust, the state will decide how to allocate and distribute your assets.

This decision might not always be in the best interest of your loved ones - the ones for whom you worked so hard to provide a solid and secure financial future in the face of much economic uncertainty.

The complicated tangle of estate planning and tax laws, combined with the ever-changing nature of these laws, create a lot of room for error for the average person hoping to secure the assets of his or her estate in the event of death.

Some common mistakes that people often make in doing their own estate planning are:

- Not having an estate plan formally crafted. An estate plan will clearly dictate how your assets are to be divided, and to whom.

This can be in the form of a will, granted power of attorney, letters of guardianship, or a trust.

- Not thinking of the consequences for your family if you pass away. In addition to the emotional loss your family will suffer in the event of your death, have you considered how they will pay the mortgage, go to college, or be provided with life’s basic necessities.

An estate plan in the form of a will or living trust could give both you and your family the added peace of mind in knowing that their futures could be more secure, regardless of what tomorrow might hold.

- Not understanding estate taxes. Depending upon your net worth and where you are located, estate taxes can reduce your assets by as much as 70%.

There are also additional taxes, such as the generation-skipping transfer tax, in which you are taxed for leaving your estate to your grandchildren.

A highly qualified estate planning attorney would be able to offer guidance concerning the estate taxes you should expect, as well as possible ways to avoid them in the first place.

If you would like more information concerning your estate planning options, check out the comprehensive online resources for personal wealth management solutions through wills and revocable trusts.

Whether your estate planning goals are immediate or long-term, a qualified California estate planning attorney will be able to counsel you on the best options available to you to meet your individual needs. For more articles like this, bookmark www.EstateTaxAttorney.info

Author: Kevin Von Tungeln

Many people fail to adequately fund their living trusts. Funding means transferring assets from your own name to the name your trust is in. You can transfer bonds, stocks, bank accounts, life insurance policies, real estate, mutual funds, certificates of deposit, vehicles and more.

If you wanted, say, to transfer your mutual fund account to your living trust, you have to ask your mutual fund company for the correct form and change the name of the account owner. For example, the account used to say “owner - Mark and Freda Jones” but now it should say something like, “owner - Jones Family Trust, Mark and Freda Jones as Trustee”.

It must be recognized, however, that funding a trust can be awkward. There are a lot of forms to fill in and sometimes you will be charged a fee for changing the title/ownership of the property. If the asset is complicated; for example a business, an attorney should draft the transfer documents and attorneys are not cheap.

It can also be more difficult to use certain assets after you have transferred them to the trust. If you are trying to sign a check at the supermarket explaining that you are paying out of your trust fund… well, that will confuse them! It would be best in this case to have a small personal checking account to take care of such matters as day to day checks, grocery shopping etc.

Also, if you want to take out a mortgage on a property that is held in trust, it can be challenging to find a bank that will work with you, but it can be done.

Some businesses which are poorly suited to be in a living trust. A real estate development company would find it difficult to deal with title companies, lenders etc if it were operating as a trust.

However, personally owned out-of-state real estate is a good candidate for a living trust because your estate can avoid out-of-state probate on the property.

You need to think about your personal circumstances before placing assets in your living trust. With real estate, if you are planning to re-mortgage or sell the property soon, it is probably not a good idea to place it in the trust but if you are planning to hang on to it for life, it might be a good idea to put it in the living trust. Your attorney can offer you the best advice about what to put in the trust now, what to put it there at a later date and what to omit altogether.

A living trust offers lots of flexibility as far as what you choose to fund it with and when. This flexibility is one of the advantages of it. If you are healthy and young, you might prefer to keep your assets in your own name. If you plan to move house in six months, there is not much point putting your house in the trust. Perhaps, when you are a bit older and more settled, you find the cost/benefit analysis has shifted in favor of putting it into the trust.

Some people get living trusts and never put anything into it. They only had the trust drafted in case they wanted to use it at some point in the future. If they experience health problems with age, they might then decide to transfer some assets across, so their family can manage those assets should they be incapable of managing them themselves. In many states, however, a living trust will not be valid unless it contains something, even if it is just $10, before the death of the creditor. Only assets transferred while the creditor was alive will escape probate.

A living trust is very flexible and offers many options. There are plenty of reasons why someone might choose not to fund a living trust at all or not to fund it immediately. However, if you plan to use a living trust to avoid probate, you need to fund it. Sadly, a lot of people assume their living trust will “work” without understanding why and how it must be funded. They either do not transfer assets properly or forget to transfer them.

This problem might not be discovered until after their death when it is too late to do anything about it, in which case the estate will have to go through probate. Depending on the contents of the will, if there is a separate will, the assets might never end up in the living trust and the distribution might not go as you had wished.

Bottom line: if you have a living trust, be sure to discuss the issue of funding the living trust with your estate planning attorney.

Maurice Johnson is an attorney and has practiced estate planning law throughout most of his professional career.

Estate tax attorneys can assist you in understanding all of your options in how to best structure your estate to minimize taxes for your heirs.  Depending upon the size and nature of your estate, there are different choices that will make the process much less painful and costly for your heirs.

If you are considering a living trust as your primary estate planning document, you should be concerned about living trust tax planning if the total estate value for you and your spouse is greater than $3,500,000.00. This figure of $3,500,000.00 is the amount the federal government allows you to pass to your heirs without assessing estate tax. To see if this affects you add the value of your real and personal property along with your financial assets, retirement assets and death benefits on life insurance.

If you are above this amount then you should consider having a Credit Shelter Trust, also called a Bypass Trust included in your trust document as a way to minimize or eliminate estate taxes.

Many married couples have simple wills and leave all their property directly to the other. Under this plan, the first to die does not use their estate tax exemption, therefore they lose it. With wills the estate will also go through the court process called probate. This process often is long and expensive.

With living trusts, you can utilize this exemption AND avoid probate. For example if a husband and wife have $7 million in assets, one-half in each of their trusts, the first spouse to die can leave $3.5 million to the other spouse in a credit shelter trust without estate taxes. The surviving spouse then has $3.5 million in his or her trust and the other $3.5 million in the credit shelter trust of the deceased spouse.

Usually the surviving spouse is the primary beneficiary of the credit shelter trust, and will also be named as trustee. During the remainder of the life of the surviving spouse, the income and the principal of the trust can be used for their health, education, maintenance and support. After the surviving spouse dies, the assets can go to the children and will not be included in the estate of the surviving spouse. The entire $7 million would pass to the family without any estate tax. Now this is great living trust tax planning.

Without using this structure the estate tax on the total estate upon the death of the second spouse would be approximately $1.5 million.

A bypass trust also if drafted properly, will be insulated from the claims of creditors and keeps the property in the family. If the surviving spouse remarries, they will not be able to give trust property to the new spouse.

Whether you have an estate tax issue or not I suggest you use the revocable living trust as your estate planning document of choice. If you are above the federal estate tax threshold, or the threshold of your state if it is lower than the federal limit, you should hire an attorney to help you with your living trust tax planning. If you are below the estate tax thresholds, then I encourage you to learn how and to draft your trust yourself. It is easy if you have the right tools.

Author: Robert Olson

Article Source: http://EzineArticles.com/?expert=Robert_Olson

Contact an estate tax attorney to best understand how to deal with minimizing estate taxes after your death.  You may be able to minimize estate taxes for your heirs by establishing an Irrevocable Life Insurance Trust.  Ask you tax attorney, or a financial planning professional, for more information.

Did you know that your heirs may have to liquidate your home or rental properties immediately after your death, unless you create an Irrevocable Life Insurance Trust (ILIT)?

Most people are interested in passing their wealth to their heirs. With the demise of the baby-boomer generation, an enormous transfer of wealth will occur during the coming years. The government is poised to capture this wealth through the estate tax, which is imposed upon death.

Currently, the Federal estate tax exemption amount is $1.5 million for individuals and $3 million for married couples. Any amount over the exemption will be taxed (Federal estate taxes average around 45%). Furthermore, this tax must be paid within nine months after you die.

Few estates hold the cash reserves required to pay the estate tax. As a result, heirs are forced to sell sufficient assets so the estate tax can be paid. Because of the narrow time constraints, heirs are often rushed into transactions which may be less than favorable.

Parents and offspring might not want or even realize that the family home, which has been in the family for many years, requires immediate liquidation to pay the estate tax. Parents who have invested wisely regarding their portfolio of income properties often desire their children to inherit these properties. Instead, the heirs will be forced to quickly liquidate enough of the property to generate sufficient cash to pay the estate tax. Most often, this is not what parents want or envision for their legacy.

Fortunately, there is a device called the Irrevocable Life Insurance Trust (ILIT) which can reduce or eliminate your estate tax cost. This device can generate enormous amounts of cash for your heirs, which can be used to pay the estate tax. When an ILIT is used to purchase and own the life policy, the proceeds are not included in the estate of the insured, and therefore are not taxed. The proceeds go to the beneficiaries completely income and estate tax free, regardless of the size of the decedent’s estate. The lump sum of cash can be used for any purpose, such as paying off a mortgage/s, but most often to pay the estate taxes, so the family can retain the real property assets.

Unfortunately, the proceeds of an ordinary life insurance policy, owned by an insured, are included in the estate of the insured. If the estate value is well over the exemption amount, the life insurance proceeds are taxed at nearly 50 percent. Consequently, a policy without an ILIT offers only limited benefits.

For tax purposes, the proceeds of the ILIT are not part of the estate because the policy is owned by the irrevocable trust, rather than the insured. The ILIT purchases the policy (a second-to-die policy for a married couple) and pays the premiums. The insured establishes the ILIT and gifts money to it every year, utilizing the annual gift tax exemption. For every dollar spent on premiums, typically more than five dollars in proceeds are generated, completely tax-free. If, however, the money which can be used to pay the premiums instead remains in the estate, it may be taxed at nearly fifty percent before it is inherited. More specifically, for every liquid dollar held within the estate over the exemption amount, the heirs can either receive about fifty cents, or that same dollar can generate up to five dollars or more in tax-free proceeds.

Generating extra cash to pay for the insurance is easier than most people realize. Since qualified retirement funds (IRAs, 401k, or Keoghs) left in the estate at the time of death will be subject to income as well as estate tax, it’s a good idea to use IRA funds (after age 59Ω) to pay the premiums on an ILIT policy, if tax deferred retirement money is not needed for living expenses. This is money well spent since the overall tax rate on inherited retirement plan proceeds can be as high as 85%.

ILITs involve complex tax and estate planning issues. They must be assessed considering the unique requirements and situations of each estate. Therefore, as with any estate planning and asset protection device, it is essential you consult with a qualified attorney who is knowledgeable in these areas, to determine if the Irrevocable Life Insurance Trust is right for you.

Author: Michael Elson

Article Source: http://EzineArticles.com/?expert=Michael_Elson

Contact an estate tax attorney to best understand how to deal with potential estate taxes when you pass on your assets to your loved ones.  You can structure your estate to handle the tax implications for a spouse.

Next to the Alternative Minimum Tax, the Estate Tax is one of the more brutal taxes we have. If you are married, you can get around it.

When planning your estate with your husband or wife, there are key points to keep in mind. Luckily, the IRS has gone a long way in ensuring that the estate of individuals is able to be dealt with after death. While discussing the future, you and your spouse should look into the various federal estate marital tax deductions. Under this tax law, after the death of the first spouse, expenses and interest related to the estate inherited by the surviving spouse is deducted from the passed spouse’s estate. Simply, this prevents the survivor from being taxed an unfair amount.

This helpful tax tool can be made useful in many ways. Depending upon the way your will is set up, this deduction can save the survivor much burden and cost. If following the rules and complying with requirements completely, this can prevent the surviving spouse from being liable for the deceased’s tax liabilities. This gives the surviving spouse the ability to take his or her time in making important decisions for the left estate. It also gives the surviving partner the money that may be necessary to sustain life standards.

When making arrangements for imminent death, there are several ways to transfer the estate into the surviving spouse’s name. You can either transfer by will or transfer by trust. If you transfer by will, it will be an outright transfer of the estate. While this is the most common way to handle estate transfers, it can also get a bit messier. The survivor will have complete control of the estate and outright ownership responsibilities. Although this sounds preferable, it also means that the surviving spouse will typically end up assuming pressures of maintaining and selling the estate.

Transferring by trust is a preferred method by many in law. With a trust, the spouse is given more authority and long term security over the estate. A trust gives the surviving spouse say, but lessens the burden as a will would entail. Either a Qualified Terminable Interest Property Trust or a Power of Appointment trust can be enacted to ensure wellbeing of the estate and the surviving spouse.

Estate taxation can be costly and difficult. Planning ahead of time and making use of marital estate tax education can help put you at ease. The passing of a loved one is difficult without having to worry about paying taxes and other monetary concerns.

Author: Richard Chapo

Article Source: http://EzineArticles.com/?expert=Richard_Chapo

An estate tax attorney can assist you in structuring your estate such that the tax implications and liabilities on your heirs are minimized when you pass along your estate.  While we hate the idea of paying taxes even when we are dead, it is a reality.  You can, however, take the right steps to make this easier and much less painful for your loved ones.

The old saying I hear at family gatherings from older aunts and uncles is you can’t avoid paying taxes or death. Well, higher taxes can continue on your estate, if you aren’t savvy enough to have your assets reviewed by a CPA and/or an attorney. There are things you can do if you can plan ahead to assure the money and assets you have earned go to your loved ones, instead of the government. One option is giving away up to $12,000 a year as a gift to as many individuals as they wish, and if married, the spouse can also give the same amount without incurring a gift tax. Also, leaving an amount to charity can also be subtracted from the bottom line. Mortgages or credit debts outstanding can also be deducted from the total amount of the estate

Estate taxes, aka as death taxes, aka inheritance tax was changed in 2001 during the Bush term. (Before this change, the estate tax was 55% on assets over $1 million.) Starting in 2001 and each year following, the assets over a certain dollar amount of your estate get taxed. In the current 2008 year, anything over $2 million for an individual and $4 million for couples is taxed by 45%. The guidelines continue to grow for 2009 by total assets exceeding $3.5 million will be taxed. As it currently stands, by 2010 the estate tax will be canceled, and reverse back to 2001’s dollar amounts and tax percentages. But many doubt that will actually occur. Our neighboring country (Canada) eventually did away with their estate tax during the 1980’s and treats it as ordinary income.

At the time of your death all assets including real estate, cash, stocks, insurance and business interest are valued at the current market value and are totaled. Additionally, heir(s) must file the proper tax forms within 9 months from the date of death. If you are married and your estate goes to your surviving spouse, it is usually exempt from the estate tax formula, known as the unlimited marital deduction. Back in 2006 the IRS eliminated over 300 of their estate tax lawyers and auditors since the current estate tax threshold limits are much higher, therefore, fewer taxpayers were obligated to pay estate taxes.

There are definitely pros and cons on such a tax. This additional tax brings in a large amount to the federal budget. It also assures the very wealthy of our country pay their fair share of taxes. Unfortunately, there are more negative aspects on this tax for the middle class. Should you have an untimely death, your heirs could be penalized by higher estate taxes, since no tax plan was ever created. If you opt to begin to “gift” part of your assets each year, you eliminate investing in company stocks for many years, when can have a negative affect on the economy and the person’s future assets for themselves and their heirs. Also, the estate tax does not take into consideration how many heirs are involved, but is only based on the total dollar amount. Another case in point is taxing on assets that have already been taxed when purchased.

Estate taxes can also be very burdensome on small business owners along with small family farm owners. Since the estate tax is based on asset values, the tax must be paid out of income. Their only solution is to get a loan to pay the estate tax or to sell their farm or business, since the tax must be paid within 9 months. Many of the farm owners and business are forced to sell their inheritance. This makes it difficult for family and business owners acquire family wealth and investments for the next generation.

It’s important for the estate tax limits to increase each year if the middle class is ever going to have a chance to build their assets for the next generation. Without this continual increase, it will be a catch 22 for this group who will get taxed 45% on any investments or assets over 1,000,000 after the year 2010. This will put a limit on the next generation who inherit assets and must sell part of them to pay any estate tax. This next generation will find it more difficult to increase their asset base for themselves and their family. It can limit this group from investing since there are little rewards but higher taxes. This particular tax was started to help the war on independence in the 18th century, and again during the Great Depression, we can be sure that is will not go away any time soon. On the IRS website, it shows in 2006, they processed over 58,000 estate tax returns, collecting over $26,000,000,000 in revenue. When doing away with one tax, and new or revised tax may be created.

Author: Valerie Connors

Article Source: http://EzineArticles.com/?expert=Valerie_Connors

Estate tax attorneys can help you understand either how to best structure your estate so you can minimize inheritance taxes for your heirs, or assist you if you are currently dealing with the process of settling an estate and how to best deal with the tax implications.  Unfortunately, too many people do not properly structure their estates and assets and leave behind tax bills that are tough to manage for their loved ones.

When someone is managing the estate of a person that passed on that executor of a will has to address the challenges associated with estate and/or inheritance taxes. Estate and inheritance taxes are often confused with each other and as a result most people have no idea what the difference is. As a quick class estate taxes pertain to the property or estate and inheritance taxes impacts the beneficiaries of the estate. Another difference is that estate tax is levied by the federal government whereas an inheritance tax is imposed by the state. Rates for inheritance tax can vary from state to state with some states imposing no tax at all. Regardless of the number of beneficiaries, each will be taxed and required to pay his or her own share.

Estate taxes obligate the executor to pay taxes to the federal government from the proceeds remaining from the deceased person estate. In cases where there are no monies remaining, the assets are liquidated to pay the tax. Otherwise the tax will be passed down to the estate’s inheritors. Executors should also be aware that this can arise even when dealing with inheritance taxes owed on the state level.

Taxes are calculated by using the current tax rate as wells as determining the relationship of the heir to deceased. Many times children and spouses will enjoy lower taxation rates than other beneficiaries, which might include other relatives or acquaintances. In some cases the taxation amount may be determined by reviewing the fair market value of the property. As usual if the beneficiary does not have the proceeds to pay the tax bill the assets are to be sold to make the tax payment.

Despite the many challenges that come with estate planning and inheritance taxes there are many advantages. Heirs can navigate the murky waters that face in dealing with inheritance taxes and estate taxes by requesting that all taxes be paid from the proceeds of the estate. By using the services of a certified financial planner who has experience with estate planning a specific and strategic plan can be proposed to provide necessary access to the financial documentation that the government may request. There are several additional choices for minimizing or eliminating inheritance tax completely.

It is important to remember that each state has its unique set of guidelines and instructions that determine the inheritance taxes. However with the help of an estate planner who has expertise in this area in addition to local knowledge as well as knowledge about the ever-evolving tax codes. If you spend time researching estate and inheritance taxes you will find that there are many debates on both sides due to the constant changes with the tax law. There is a word of caution to many who attempt to plan their own estates because they can put their heirs in a very bad tax situation.

Author: Christoper Rivers

Article Source: http://EzineArticles.com/?expert=Christoper_Rivers

An estate tax attorney can help you understand how you can best structure your estate to minimize the tax implications for your heirs.  Contact a tax attorney in your area for more questions and how to best structure your estate now.

Transfer taxes are excise taxes which are imposed when property is transferred to another person. The transfer can be during life (a gift) or on death (a bequest). The transfer taxes that most of us are familiar with are the gift tax and the estate tax.

The gift tax is imposed each calendar year on the transfer of property by gift made during that calendar year. There are exclusions from gift tax in the amount equal to $12k per person per calendar year. The marital deduction excludes an unlimited amount to your spouse. Any outright gift or transfer to a spouse qualifies for the marital deduction. The property will be included in the spouse’s taxable estate and will be subject to tax when the spouse dies. Gifts made to qualified charities are also deductible. Payments of tuition and medical expenses are excluded as long as they are paid directly to the institution.

There is also the unified credit against gift tax, which is $1 million (this credit takes into account all calendar years that gifts have been made).The gift tax rate is 45%.

The estate tax is imposed on the transfer of the taxable estate of every decedent who is a citizen or resident of the U.S. The unified credit against estate tax is currently $2 million. The estate tax rate is 45%.

The generation-skipping transfer tax is a tax which is imposed on transfers to individuals 2 or more generation below the transferor. This tax is in addition to the estate tax and the gift tax. The GST tax is a flat tax at the highest estate tax level (currently 45%). This tax was designed to prevent wealthy individuals from avoiding the imposition of the estate tax at each generational level by the use of trusts.

Right now there are many unknown factors in estate planning. The estate tax will be gradually phased out by 2010, a sunset provision in the law calls for everything to revert back to prior law on Jan 1, 2011 unless Congress acts to extend the estate tax repeal.

What will happen to the estate tax after 2010 is unclear, but many tax experts expect Congress to reinstate it in some form.

Author: James C

Article Source: http://EzineArticles.com/?expert=James_C

Estate Tax Attorney presents the following information and basics about estate taxes.   If you have more questions about estate taxes, contact a financial planner or a tax attorney.  You can structure your estate to minimize the taxes that your surviving loved ones may have to pay!   

Federal estate tax applies to the transfer of property at death. The estate of a person who died is liable for taxes on the estate.

The executor of the estate must file returns for the deceased person. This return is due nine (9) months after the date of death. (IRS can extend the time for any payments due up to 10 years)

IRS Tax Code Reads As Follows: "Most relatively simple estates (cash, publicly traded securities, small amounts of other, easily valued assets and no special deductions or elections or jointly held property) with a total value under $1,000,000 and a date of death in 2002 or 2003 and $1,500,000 and a date of death in 2004 or 2005 do not require the filing of an estate tax return"

The really good news is that Congress has approved a schedule that increases the amount an individual can leave to heirs tax-free to $2 million in 2006-2008 and to $3.5 million in 2009.

Life insurance proceeds are included in the estate only IF the proceeds are received by the estate in any way.

The gross estate includes the value of ALL property belonging to the deceased at the time of death.

The value of the property is based upon fair market value at the time of death.

The taxable estate is the gross estate minus the following:

* Administration and funeral expenses

* Claims against the estate

* All outstanding obligations

* Casualty and theft losses

* Marital deductions

* Charitable deductions

It is highly recommended that you contact a Tax professional to complete the Estate Taxes, especially if you do not have access to the decedent’s most recent tax returns. All assets are to be listed on the Estate Tax return. If you are not sure of the assets; IRS can help your tax professional with assets that have been reported on previous returns.

If the estate is large; by all means contact an attorney and or CPA or EA to help you sort through the paper work.

For more information visit the IRS web site at irs.gov and put in the keyword: estate taxes; or look up Form 706 or Publication 950.

Author: Cassandra Ingraham

Article Source: http://EzineArticles.com/?expert=Cassandra_Ingraham