Estate Tax May Survive Federal Tax Reform

Congress is in the midst of debating tax reform which features an attempt to possibly repeal the federal estate tax (also referred to as the "death tax"). This tax typically effects high value estates that can result in a whopping 40 percent estate tax. In fact, the 40 percent estate tax affects approximately 0.2 percent of estates in America. That translates to 5,460 estates in 2017, according to the nonpartisan Tax Policy Institute. Though, there are sizable exemptions to the estate tax under current law. For example, in 2017, the estate tax exemption is $5.49 million per individual. This means an individual can leave $5.49 million to their heirs and pay no federal estate or gift tax, according to Forbes. There has been long-held criticism behind the premise of the federal estate tax, especially in conservative circles. They point out that the estate tax is essentially a double-tax on hard-earned income and harms...

16 August

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Multiple States Reducing Estate Tax Threat for Families and Businesses

Posted by Bobby Feisee

in Bobby's Blog

Since 2014, approximately nine states have eliminated or lowered their estate taxes. This was accomplished primarily by modifying and increasing specific exemptions thereby reducing the number of households that could be hit with a large estate tax bill. For example, Maryland is planning to raise its current $3 million estate tax exemption to $4 million in 2018. The District of Columbia is ahead of the game. In 2014, D.C. passed a major tax reform deal that included increasing its estate tax exemption amount from $1 million to $2 million at the start of 2017 and to ultimately match the generous federal exemption level ($5.49 million for 2017, indexed for inflation), starting in 2018, according to Forbes. Other states are going even further. For example, New Jersey plans to eliminate its estate tax entirely, according to the Wall Street Journal. Currently, six states have repealed their estate taxes over the past 10 years, including Virginia. Why...

03 December

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New Administration May Mean Major Estate Tax Changes

Posted by Bobby Feisee

in Bobby's Blog

The estate tax (also known as the "death tax") may be on the proverbial chopping block with President-elect Donald Trump ascending to Commander-in-Chief, along with a Republican-controlled Congress. Most, if not all, Republicans oppose the estate tax. President-elect Trump’s tax plan expressly calls for an outright repeal of the tax and imposing a capital gains tax on assets left to heirs above $10 million, according to Forbes.com. The estate tax is generally not an issue for most people due to the sizable exemptions afforded under the tax code. However, people often make the mistake that estate planning is the same thing as estate tax planning. Rather, estate tax planning is one component of estate planning but there are many other issues your family must deal with on death as it is a major life event and you still will need to deal with local governments, financial institutions and family dynamics. Here is...

29 December

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Estate Planning Tip: Watch Out for State Taxes

Posted by Bobby Feisee

in Bobby's Blog

When people begin estate planning, they probably think about the federal estate tax (commonly referred to as the “death” tax). However, a lesser-discussed tax issue is state estate and inheritance taxes. This is a complex, state-based issue and it’s advisable for you to sit down with an experienced estate planner to make sure your plan takes into consideration potential state taxes. Some states collect estate taxes and while other states collect inheritance taxes (some actually collect both). You may be thinking, “what the heck is the difference between an estate tax and an inheritance tax?” Well, an inheritance tax is based on who receives a deceased person's property and how the beneficiary is related to the deceased person. An estate tax is based on the value of the deceased person's estate and not on who gets what, according to the Memphis Daily News. State tax laws are always changing, so...

11 November

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Will The Money You Leave Behind Ruin Your Children or Grandchildren?

Posted by Bobby Feisee

in Bobby's Blog

It’s one of those fears many individuals (especially wealthy individuals) have, but rarely speak about. They aren’t worried about the “death tax” or other inheritance taxes. In fact, the concern isn’t heirs receiving too little money; it’s receiving too much. The concern is that inherited wealth can have adverse effects on the people inheriting the money. The beneficiaries could treat it as though they won the lottery and splurge on reckless, irresponsible purchases. Imagine, the money you worked so hard to accumulate ends up being blown on a fleet of fancy cars or, even worse, a drug habit or multiple divorces. People like Warren Buffett, Bill Gates, and T. Boone Pickens have gone on record stating that they do not plan to leave their vast fortunes exclusively to their children. In fact, Mr. Pickens has stated, “I’m not a big fan of inherited wealth. It generally does more harm...

20 January

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The Government Grim Reaper Wants Your Money – States With Terrifying Death Tax Laws

Posted by Bobby Feisee

in Bobby's Blog

Some people think the estate tax is simply a creature of the federal government. Wrong. There are numerous states – 16, along with Maryland and D.C., to be exact – that impose an estate tax. Even more surprising is that some states actually impose an estate tax on estates that are valued at less than one million dollars. At less than one million dollars, these state-enforced estate taxes will be a problem for many middle class families. If you’re frugal and have good savings practices, a middle class family has the ability to save and wind up with an estate close to one million dollars, or more. With proper planning these state estate taxes can be deferred, minimized and potentially eliminated. The taxing authorities look at all of your assets when determining the value of your estate with some surprising valuation methods. For example, many people believe that proceeds from...

16 September

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Creative Estate Planning for Clients No Longer Subject to the Federal Estate Tax

Posted by Bobby Feisee

in Bobby's Blog

When Congress passed the American Taxpayer Relief Act (ATRA), roughly 99.8 percent of U.S. taxpayers became shielded from the federal estate tax (aka the "death tax"). So what does this mean for estate planning? Post-ATRA estate planning appears dramatically different than in years past. For the first time in U.S. history there is a “permanent”, inflation-adjusted and portable exemption amount that essentially excludes the extremely wealthy, from gift, estate and generation-skipping transfer (GST) tax. This is extremely important since, for the past decade, there was a great deal of uncertainty in estate planning. Prior to ATRA, there had been a phased-in repeal of the gift, estate and GST taxes, a “sunset” of that same repeal, then a temporary two-year reinstatement of the taxes, but with a $5 million exemption and a 35% top rate. After the two-year temporary reinstatement, the exemption was set to drop all the way down to $1...