The annual exclusion for gifts made in 2012 will remain at $13,000.
Rev. Proc. 2011-52
Thursday, December 29, 2011
Monday, August 8, 2011
Client Alert: Debt Ceiling Bill Could Threaten Your Estate Plan
On August 2, 2011 President Obama signed the Budget Control Act of 2011 (the "debt ceiling bill". This law calls for a new Joint Committee to review year-end tax legislation. New changes might be proposed, not just those in the Budget Control Act. While we don't know what the results of this review will be, it is worth noting that many effective estate tax planning devices could be on the "chopping block." Techniques like short term GRATs, discounted sale transactions, and dynasty trusts have all been previously discussed for restriction or elimination, so it stands to reason that the Joint Committee will reexamine them closely.
What does this mean for you? Quite simply, you must consider acting now on any serious estate tax planning you have been putting off. Time is of the essence. We very well could see tax legislation that goes into effect the day it is signed, leaving us with no chance to implement these effective tax savings devices before the door slams shut. At best it seems we are looking at November 2011, not December 2012 as the next major turning point for estate tax planning.
Bottom line: Act Now. You should consult with your qualified legal and tax advisers as soon as possible to review your estate plan and examine the benefits and drawbacks of the tax savings techniques most likely to be eliminated.
As always, you are invited to contact me directly with any questions or concerns. I am always happy to help.
All the best,
Joe Donlon
The estate planning law firm of Donlon & Associates, PC provides high quality, focused legal counsel to clients of all ages and wealth levels in the following areas:
Wills & Trusts
Asset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
Donlon & Associates, PC serves clients throughout New York City, Long Island, Westchester, and Northern New Jersey. These areas include Nassau County, Suffolk County, Westchester County, Queens, Brooklyn, Manhattan, Staten Island, Hoboken, Jersey City, Hudson County, and Bergen County.
What does this mean for you? Quite simply, you must consider acting now on any serious estate tax planning you have been putting off. Time is of the essence. We very well could see tax legislation that goes into effect the day it is signed, leaving us with no chance to implement these effective tax savings devices before the door slams shut. At best it seems we are looking at November 2011, not December 2012 as the next major turning point for estate tax planning.
Bottom line: Act Now. You should consult with your qualified legal and tax advisers as soon as possible to review your estate plan and examine the benefits and drawbacks of the tax savings techniques most likely to be eliminated.
As always, you are invited to contact me directly with any questions or concerns. I am always happy to help.
All the best,
Joe Donlon
The estate planning law firm of Donlon & Associates, PC provides high quality, focused legal counsel to clients of all ages and wealth levels in the following areas:
Wills & Trusts
Asset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
Donlon & Associates, PC serves clients throughout New York City, Long Island, Westchester, and Northern New Jersey. These areas include Nassau County, Suffolk County, Westchester County, Queens, Brooklyn, Manhattan, Staten Island, Hoboken, Jersey City, Hudson County, and Bergen County.
Thursday, May 26, 2011
Asset Protection for Business Owners podcast
Nina Kaufman, Esq., of Ask the Business Lawyer recently interviewed Donlon & Associates founder Joe Donlon about Asset Protection for Business Owners.
The podcast is about 15 minutes long and done in a conversational Q&A format. We invite you to head on over to Nina's blog and give a listen:
Asset Protection for Business Owners Podcast
While you're there, be sure to take a look at the other entries in Nina's blog and peruse her website, Ask the Business Lawyer. Nina has a lot of great information available for business owners.
If you have any additional questions about asset protection, please don't hesitate to contact Joe directly by calling 516-522-8900 or visiting the firm's website: Donlon & Associates, PC
Donlon & Associates, PC provides high quality, focused legal counsel to clients of all ages and wealth levels in the following areas:
Wills & Trusts
Asset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
Donlon & Associates, PC serves clients throughout New York City and Long Island, including Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and Staten Island.
The podcast is about 15 minutes long and done in a conversational Q&A format. We invite you to head on over to Nina's blog and give a listen:
Asset Protection for Business Owners Podcast
While you're there, be sure to take a look at the other entries in Nina's blog and peruse her website, Ask the Business Lawyer. Nina has a lot of great information available for business owners.
If you have any additional questions about asset protection, please don't hesitate to contact Joe directly by calling 516-522-8900 or visiting the firm's website: Donlon & Associates, PC
Donlon & Associates, PC provides high quality, focused legal counsel to clients of all ages and wealth levels in the following areas:
Wills & Trusts
Asset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
Donlon & Associates, PC serves clients throughout New York City and Long Island, including Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and Staten Island.
Tuesday, December 21, 2010
Estate Taxes 2010
Nothing like the last minute.
Congress finally acted to provide some certainty for taxpayers and their advisors on the gift tax, estate tax and generation skipping transfer tax. The new law, The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, sets up the following scheme for tax years 2010 - 2012:
2010 Estate Tax
Exclusion amount: $5,000,000
Maximum tax rate: 35%
Option to elect carryover basis instead of Estate Tax
2010 Gift Tax
Exclusion amount: $1,000,000
Maximum tax rate: 35%
2011 Estate Tax / 2012 Estate Tax
Exclusion amount: $5,000,000 (indexed by CPI 2012+)
Maximum tax rate: 35%
2011 Gift Tax / 2012 Gift Tax
Exclusion amount: $5,000,000
Maximum tax rate: 35%
2013 Estate Tax
??????
Unless Congress acts in 2012, this new law will sunset and 2013 will revert to the old rates ($1M exclusion and 55% top rate)
So, now we know what the big debate during the 2012 Presidential Election season will be -- taxes.
The other important change is the portability of the exclusion amounts between spouses. Under prior law, smart tax planning often required the creation of a Credit Shelter or Bypass Trust to receive the exclusion amount of the first spouse to die. The new law doesn't require such techniques. Even a couple with a so called "sweetheart will" that leaves their entire estate to each other with no other tax provisions will still benefit from a combined estate tax exclusion of $10,000,000.
Unfortunately, while this provision seems to simplify things for clients and their advisors, "exclusion portability" could actually be a trap for the unwary for numerous reasons, including:
1) The deceased spouse's exclusion is not indexed to inflation so the deceased spouse's assets are likely to continue to grow and thereby suffer unnecessary tax at the second spouse's death. Placing those assets in a Credit Shelter Trust would have avoided this major issue.
2) Asset held directly in the surviving spouse's name are subject to subsequent lawsuits, marriages/divorces, mismanagement, creditor attacks, etc. Assets in a Credit Shelter are insulated from all of this.
3) Credit Shelter Trusts ensure the funds eventually wind up benefiting the children, grandchildren, friends or charities the deceased spouse wanted to help. Funds left directly to the surviving spouse are subject to his/her whims and planning (or lack thereof). Those funds could wind up going to the survivor's new spouse or children in the event of remarriage.
4) The current law will automatically disappear in two years without Congressional action. Relying on any unusual provision of this new law (like portable exclusions - something unheard of until now) might be asking for trouble given the uncertain future and unstable political and financial situation of the country.
The new law certainly creates a tremendous opportunity for smart planning. Unfortunately, there is a real danger that it will lead to complacency amongst clients and advisors who focus solely on the larger exclusion amounts and assume estate planning is unnecessary. This could be disastrous.
All clients should seek out qualified legal counsel to plan their estate, regardless of age or wealth. Estate taxes are but one reason for smart estate planning. Don’t forget about:
* guardianship for minor children
* asset protection planning
* family business succession
* liability protection
* legacy management
* special needs planning
* planning for second marriages or troubled family situations, etc.
In addition, the New York State Estate Tax has NOT changed, and it applies to estates of $1,000,000+.
As always, you are invited to contact me directly with any questions or concerns. I am always happy to help.
All the best,
Joe Donlon
The estate planning law firm of Donlon & Associates, PC provides high quality, focused legal counsel to clients all ages and wealth levels in the following areas:
Wills & Trusts
Asset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
Donlon & Associates, PC serves clients throughout New York City and Long Island, including Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and Staten Island.
Congress finally acted to provide some certainty for taxpayers and their advisors on the gift tax, estate tax and generation skipping transfer tax. The new law, The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, sets up the following scheme for tax years 2010 - 2012:
2010 Estate Tax
Exclusion amount: $5,000,000
Maximum tax rate: 35%
Option to elect carryover basis instead of Estate Tax
2010 Gift Tax
Exclusion amount: $1,000,000
Maximum tax rate: 35%
2011 Estate Tax / 2012 Estate Tax
Exclusion amount: $5,000,000 (indexed by CPI 2012+)
Maximum tax rate: 35%
2011 Gift Tax / 2012 Gift Tax
Exclusion amount: $5,000,000
Maximum tax rate: 35%
2013 Estate Tax
??????
Unless Congress acts in 2012, this new law will sunset and 2013 will revert to the old rates ($1M exclusion and 55% top rate)
So, now we know what the big debate during the 2012 Presidential Election season will be -- taxes.
The other important change is the portability of the exclusion amounts between spouses. Under prior law, smart tax planning often required the creation of a Credit Shelter or Bypass Trust to receive the exclusion amount of the first spouse to die. The new law doesn't require such techniques. Even a couple with a so called "sweetheart will" that leaves their entire estate to each other with no other tax provisions will still benefit from a combined estate tax exclusion of $10,000,000.
Unfortunately, while this provision seems to simplify things for clients and their advisors, "exclusion portability" could actually be a trap for the unwary for numerous reasons, including:
1) The deceased spouse's exclusion is not indexed to inflation so the deceased spouse's assets are likely to continue to grow and thereby suffer unnecessary tax at the second spouse's death. Placing those assets in a Credit Shelter Trust would have avoided this major issue.
2) Asset held directly in the surviving spouse's name are subject to subsequent lawsuits, marriages/divorces, mismanagement, creditor attacks, etc. Assets in a Credit Shelter are insulated from all of this.
3) Credit Shelter Trusts ensure the funds eventually wind up benefiting the children, grandchildren, friends or charities the deceased spouse wanted to help. Funds left directly to the surviving spouse are subject to his/her whims and planning (or lack thereof). Those funds could wind up going to the survivor's new spouse or children in the event of remarriage.
4) The current law will automatically disappear in two years without Congressional action. Relying on any unusual provision of this new law (like portable exclusions - something unheard of until now) might be asking for trouble given the uncertain future and unstable political and financial situation of the country.
The new law certainly creates a tremendous opportunity for smart planning. Unfortunately, there is a real danger that it will lead to complacency amongst clients and advisors who focus solely on the larger exclusion amounts and assume estate planning is unnecessary. This could be disastrous.
All clients should seek out qualified legal counsel to plan their estate, regardless of age or wealth. Estate taxes are but one reason for smart estate planning. Don’t forget about:
* guardianship for minor children
* asset protection planning
* family business succession
* liability protection
* legacy management
* special needs planning
* planning for second marriages or troubled family situations, etc.
In addition, the New York State Estate Tax has NOT changed, and it applies to estates of $1,000,000+.
As always, you are invited to contact me directly with any questions or concerns. I am always happy to help.
All the best,
Joe Donlon
The estate planning law firm of Donlon & Associates, PC provides high quality, focused legal counsel to clients all ages and wealth levels in the following areas:
Wills & Trusts
Asset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
Donlon & Associates, PC serves clients throughout New York City and Long Island, including Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and Staten Island.
Tuesday, October 26, 2010
What to Do When a Relative Dies
If your relative just died, you’re likely feeling confused and overwhelmed with all the tasks that must get done – personal, legal and financial. Given the emotions involved your first inclination may be to just rush through your responsibilities so you can feel a sense of closure. Unfortunately, there are legal consequences you must consider.
Your first priority is the funeral – and with it comes an often large expense. In some cases, your relative may have left a prepaid funeral contract or instructions on how to handle the memorial service. In a situation where you end up paying for the funeral, keep a record of all expenses and burial costs. You can seek reimbursement from the estate afterward.
Another important issue that requires immediate attention is the securing of your loved one’s property. Make sure the home and any other real estate are locked and maintained (e.g., don’t let mail pile up, cut grass, etc.) to avoid vandalism and burglary. If he or she had a car, it should be parked somewhere safe and not driven by anyone during the estate administration process. Finally, any items of significant value (e.g., jewelry, collections, etc.) should be accounted for and secured from loss or theft.
Your next priority is to search for your loved one’s Last Will & Testament. This document will name an “executor” who will be tasked with carrying out your loved one’s wishes and settling the estate (including hiring an attorney and handling the probate process). When searching for the Will, look in personal papers, household records, safes and bank boxes. If you find a photocopy of the Will but no original, contact the drafting attorney (he often holds the original for safekeeping). If you can’t find the original Will but think one was drafted, contact your attorney for advice.
The executor named in the Will does not have any legal authority to act on behalf of the estate until a legal proceeding known as “probate” begins. Guidance from an attorney who is experienced in probate law is almost always necessary because the distribution of assets often requires a court process that can lead to legal and tax issues (especially on large estates). Selling, distributing or changing title to a decedent’s property before authorized by a court in a probate/administration proceeding is illegal. Even something as seemingly straightforward as filing for life insurance benefits or IRA payouts can cause legal and tax issues. Your attorney’s advice on these issues is invaluable.
The documents you’ll need when you meet with an attorney include:
• Original Will
• Original death certificate
• List of your relative’s assets and debts with approximate value and ownership
• Copy of the decedent’s most recent income tax return (if readily available)
• Family tree for decedent showing parents, siblings, spouse(s) and children/grandchildren
These items aren’t always necessary for an initial appointment. In fact, some information may not be available at all until the legal probate process is started. However, making an effort to gather these items up front will enable your attorney to provide you with the best possible advice. Gathering any missing paperwork or information will be your first bit of “homework” after the meeting.
The time and effort needed to gather this information, however, shouldn’t deter you from seeking an immediate legal advice. You’re better served by getting together with your attorney as soon as possible and having “homework,” as opposed to spending several weeks gathering the documentation and then having your initial meeting.
Keep in mind, because each situation is different, a single article can’t provide everything you need to know in the days following a death. Establishing an early relationship with your attorney will help ensure all matters are properly addressed and save you from making costly mistakes in the future.
Joseph P. Donlon is a New York estate planning & probate attorney and the founder of Donlon & Associates, PC. He is a frequent lecturer on estate planning topics and is routinely invited to speak before financial institutions, civic groups and business gatherings. Get more of his free tips and insider information about how to protect your family, reduce estate taxes and safeguard your assets at http://www.donlonlaw.com.
Your first priority is the funeral – and with it comes an often large expense. In some cases, your relative may have left a prepaid funeral contract or instructions on how to handle the memorial service. In a situation where you end up paying for the funeral, keep a record of all expenses and burial costs. You can seek reimbursement from the estate afterward.
Another important issue that requires immediate attention is the securing of your loved one’s property. Make sure the home and any other real estate are locked and maintained (e.g., don’t let mail pile up, cut grass, etc.) to avoid vandalism and burglary. If he or she had a car, it should be parked somewhere safe and not driven by anyone during the estate administration process. Finally, any items of significant value (e.g., jewelry, collections, etc.) should be accounted for and secured from loss or theft.
Your next priority is to search for your loved one’s Last Will & Testament. This document will name an “executor” who will be tasked with carrying out your loved one’s wishes and settling the estate (including hiring an attorney and handling the probate process). When searching for the Will, look in personal papers, household records, safes and bank boxes. If you find a photocopy of the Will but no original, contact the drafting attorney (he often holds the original for safekeeping). If you can’t find the original Will but think one was drafted, contact your attorney for advice.
The executor named in the Will does not have any legal authority to act on behalf of the estate until a legal proceeding known as “probate” begins. Guidance from an attorney who is experienced in probate law is almost always necessary because the distribution of assets often requires a court process that can lead to legal and tax issues (especially on large estates). Selling, distributing or changing title to a decedent’s property before authorized by a court in a probate/administration proceeding is illegal. Even something as seemingly straightforward as filing for life insurance benefits or IRA payouts can cause legal and tax issues. Your attorney’s advice on these issues is invaluable.
The documents you’ll need when you meet with an attorney include:
• Original Will
• Original death certificate
• List of your relative’s assets and debts with approximate value and ownership
• Copy of the decedent’s most recent income tax return (if readily available)
• Family tree for decedent showing parents, siblings, spouse(s) and children/grandchildren
These items aren’t always necessary for an initial appointment. In fact, some information may not be available at all until the legal probate process is started. However, making an effort to gather these items up front will enable your attorney to provide you with the best possible advice. Gathering any missing paperwork or information will be your first bit of “homework” after the meeting.
The time and effort needed to gather this information, however, shouldn’t deter you from seeking an immediate legal advice. You’re better served by getting together with your attorney as soon as possible and having “homework,” as opposed to spending several weeks gathering the documentation and then having your initial meeting.
Keep in mind, because each situation is different, a single article can’t provide everything you need to know in the days following a death. Establishing an early relationship with your attorney will help ensure all matters are properly addressed and save you from making costly mistakes in the future.
Joseph P. Donlon is a New York estate planning & probate attorney and the founder of Donlon & Associates, PC. He is a frequent lecturer on estate planning topics and is routinely invited to speak before financial institutions, civic groups and business gatherings. Get more of his free tips and insider information about how to protect your family, reduce estate taxes and safeguard your assets at http://www.donlonlaw.com.
Friday, October 22, 2010
Donlon & Associates Founder Recognized as "One to Watch in Estate Planning"
Donlon & Associates, PC is proud to announce that firm founder Joseph P. Donlon, Esq. was recently featured in Long Island Business News' "Retirement & Estate Planning: Ones to Watch" section. Of the six short spotlights, Joe was one of only two attorneys highlighted. The profile was published in the October 15th edition of LIBN.
The estate planning law firm of Donlon & Associates, PC provides high quality, focused legal counsel to clients all ages and wealth levels in the following areas:
Wills & Trusts
Asset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
Donlon & Associates, PC serves clients throughout New York City and Long Island, including Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and Staten Island.
The estate planning law firm of Donlon & Associates, PC provides high quality, focused legal counsel to clients all ages and wealth levels in the following areas:
Wills & Trusts
Asset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
Donlon & Associates, PC serves clients throughout New York City and Long Island, including Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and Staten Island.
Monday, September 20, 2010
New York's "New" New Power of Attorney
It was just one year ago, September 2009, that New York instituted sweeping changes to its financial Power of Attorney ("PoA") law. Many of those changes were valuable and well received, by both clients and their advisors attorneys. Unfortunately, the new PoA form was complex and unwieldy, and had certain provisions that were either unclear or potentially troublesome. Since the law was brand new, there was little guidance from the legislature or the courts as to its exact interpretation or implementation, which left estate planning attorneys more than a little concerned as to how our clients would be affected. To address some of these concerns New York State has recently enacted a revision to the September 2009 Power of Attorney law, effective September 12, 2010.
As always, I invite you to contact me if you have any questions about the applicability of this new law to your personal situation
The estate planning law firm of Donlon & Associates, PC provides high quality, focused legal counsel to clients all ages and wealth levels in the following areas:
Wills & Trusts
Asset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
Donlon & Associates, PC serves clients throughout New York City and Long Island, including Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and Staten Island.
Amongst the various "technical corrections" made by the new law are three important changes/clarifications:
- Signing the default Power of Attorney form no longer automatically revokes all prior PoAs
- The provisions of the new Power of Attorney law explicitly exempts business or commercial PoAs (including certain real estate deals, corporate matters and hedge fund transactions) from its terms
- Without a separately signed Statutory Gifts Rider (formally called the Statutory Major Gifts Rider), the named agent is limited to giving away no more than $500 total in gifts per year (the prior law was unclear if the $500 limit was an aggregate or "per person.")
The provisions of the new PoA law are retroactive to September 2009, and do not invalidate PoAs signed since then. However, the "old" PoA form (from 9/09) can no longer be signed after 9/12/10 and new forms have been issued.
All the best,
Joe DonlonAsset Protection Planning
Estate Tax Planning
Elder Law
Special Needs Trusts
Probate & Estate Administration
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