There is a unified tax exclusion in California that separates those who must pay transfer taxes from those who are exempt. The lifetime unified exclusion at the present time is $5.34 million in 2014. There is a gift tax and an estate tax. The two taxes are unified. As a result of this unification, the exclusion applies to gifts that you give while you are living, coupled with the value of your estate as it is being transferred to your heirs after your passing. It should be noted that there is … [Read more...] about Should You Use Your Unified Tax Exclusion in California While You Are Still Alive?
Tax efficiency strategies are a must for high net worth individuals who are engaged in the process of estate planning in California. Fortunately, we don't have a state level estate tax here, though there are a number of states that do have their own estate tax. This is a break, but the federal estate tax can do more than enough damage on its own. You can pass along a certain amount of money to people on your inheritance list before the estate tax becomes a factor. This is why it is only … [Read more...] about California Estate Planning: What Is the Marital Deduction?
There are many people who do not think that the federal estate tax is necessary or fair. They make a number of points. One of them is the fact that the estate tax is imposed on assets that remain in your estate after you have paid taxes on your income throughout your life. While you are living, there is no reason to impose a hefty tax on these assets by virtue of their existence. However, for some reason these assets are taxed after you die if they exceed a certain amount. This is why many … [Read more...] about How Large of an Estate Can Pass Federal Estate Tax Free in California?
Many wealthy families in California would do well to consider the creation of family limited partnerships. These estate planning devices can be useful for asset protection, and they can also facilitate asset transfers at a tax discount. Asset Protection First we would like to take a look at the asset protection that is afforded by family limited partnerships. If you were to be targeted by a creditor or litigant, your personal assets could be vulnerable if you do not take steps to protect them. … [Read more...] about What Is a California Family Limited Partnership?
It is possible to utilize a grantor retained annuity trust or GRAT to transfer assets in a tax efficient manner under the right circumstances. Before we get into the zeroed out grantor retained annuity trust strategy, let's look at the estate tax parameters. The maximum rate of the tax in 2014 is 40%. The gift tax is unified with the estate tax, and it too has a 40% top rate. The current amount of the estate tax exclusion in 2014 is $5.34 million. Those in possession of assets that exceed … [Read more...] about Consider a GRAT When Interest Rates are Low
The accumulation of wealth is largely considered to be a good thing, but unfortunately some bad things can go along with it like federal transfer taxes. When you bequeath assets to your loved ones, or give them gifts while you are still alive, the transfers could be heavily taxed. This is a serious matter, and you should take the appropriate steps to position your assets with tax efficiency in mind. Let's take a glance at a few frequently asked questions about federal asset transfer … [Read more...] about Frequently Asked Questions About Federal Transfer Taxes
Some people think that the only reason that you would want to speak with an estate planning attorney would be to take steps to gain estate tax efficiency. They find out that the estate tax exclusion is a relatively high $5.34 million in 2014. Their assets don't exceed this amount, so they decide that they don't need to speak with an attorney. The truth is that the estate tax is only part of the equation. There are a number of other considerations, and it is certainly wise to go forward in an … [Read more...] about The Estate Tax Is Only Part of the Equation
We have an unlimited marital deduction in the United States that applies to the estate tax. If you are married, you can bequeath money to your spouse in any amount without incurring estate tax liability. Transfers to everyone else are potentially taxable at a maximum rate of 40%. We say "potentially" because there is a $5.34 million exclusion in 2014. Your assets must exceed this amount before the tax would kick in. The powers that be expect to be able to collect their taxes eventually because … [Read more...] about Foreign Spouse Not Entitled to Unlimited Marital Estate Tax Deduction
People who are in possession of a great deal of wealth have a lot to lose via the imposition of estate taxes. There is a federal estate tax that is applicable to everyone in all of the states, and some states have a state-level estate tax. In California, there is currently no state estate tax, but the people in New York are not as fortunate. In the Empire State, there is an estate tax that tops out at 16%, and the exclusion is just $1 million. The federal estate tax carries a 40% top rate, and … [Read more...] about Gandolfini of Sopranos Fame had Flawed Estate Plan
The acronyms that are used in the field of estate planning can sometimes leave the layperson scratching his or her head. Because of this, we often examine commonly used acronyms to take the mystery out of them. In this installment, we will highlight the irrevocable life insurance trust or ILIT. The estate tax on the federal level carries a 40% maximum rate, and the 2014 exclusion amount is $5.34 million. If you inventory your assets and find that your net worth exceeds this figure, you would do … [Read more...] about Demystifying the ILIT