Litherland, Kennedy & Associates, APC, Attorneys at Law

Approximately forty years into their relationship, Edith Windsor and Thera Clara Spyer were married in Canada. Two years into their marriage, Thera passed away. After Thera’s death, Edith paid estate tax of approximately $363,000 to the federal government. The reason that tax was paid is that federal law, in the form of the Defense of Marriage Act (“DOMA”), does not recognize Edith and Thera’s marriage for federal estate tax purposes. Edith was greatly upset at having to pay the estate tax, … [Read more...] about Estate Planning for LGBTQ Couples: Possible Changes on the Horizon

This month’s alert focuses on the narrowing window to lock-in the current $5.12 million estate and gift tax exemption by gifting prior to year-end. The alert also examines why it may not be possible to wait and do this planning at the last minute. 2010 Tax Law Leads to 2012 LitigationAppraisal firms all across the country have been inundated with business. They are being swamped by taxpayers attempting to implement last minute estate planning strategies prior to January 1, 2013, when the amount … [Read more...] about Last Chance for Estate Tax Savings?

This month’s Alert focuses on the increased trust litigation arising from the unintended consequences of the temporary repeal of the estate tax in 2010. The estate tax was repealed for much of the year in 2010. While taxpayers with large estates benefited from the lack of the estate tax, the change in the law has caused litigation with inconsistent results. Estate planning attorneys have traditionally employed a strategy for married clients with large estates: dividing the contribute share of … [Read more...] about 2010 Tax Law Leads to 2012 Litigation

The Alert this month examines "portability" and the steps necessary to take advantage of it under newly-released regulations. For many years estate planning attorneys have had to draft complicated provisions into the estate plans of married couples in order to make maximum use of the applicable exclusion amount (the "AEA"). The AEA is the amount that can pass free from estate tax at the death of an individual. Technically, even without “portability,” a married couple can pass twice the AEA to … [Read more...] about IRS Issues “Portability” Guidance

This month's Alert examines the importance of proper IRA beneficiary designations. The Alert examines a case in which the stretch of IRA distributions was not maximized because of the beneficiary designation. A parent with a large retirement account often doesn't want to name a child as the direct beneficiary of the retirement plan. This might be because the child is a minor. It could be because the child has a disability and is receiving government assistance. Other reasons include the … [Read more...] about Planning Blunder Leads to Increased Income Taxes

With more than half of marriages ending in divorce, an increasing number of families are “blended families.” The Alert this month examines the unique issues faced in planning for blended families. Approximately 50% of first marriages, 60% of second marriages, and 75% of third marriages end in divorce. With those statistics in mind, it is not surprising that many couples doing estate planning have children from previous relationships. This can add complexity to the estate plan. One or more of … [Read more...] about His, Hers, or Ours? – Estate Planning for Blended Families

This month's Alert examines how effective use of disclaimers can save millions in taxes. The Alert examines a ruling request presented to the IRS involving such a situation. Often parents do not consider the potential future success of their children in structuring their own estate plan. If a child is fortunate enough to have a taxable estate (over $5,120,000 currently, scheduled to drop to $1 million in 2013), giving the child an inheritance will only increase the tax burden of the child's … [Read more...] about Double Disclaimer Saves Millions in Estate and GST Tax

This month's Alert reviews the inflation adjustments applicable to federal taxation in 2012. It examines changes in the estate, gift, and generation skipping transfer taxes, as well as income taxes.Many changes have occurred with regard to the income, gift, estate, and generation skipping transfer tax in 2012. Most of these changes have come about due to indexing for cost of living.Estate Tax The applicable exclusion amount (the amount that can be given free of estate tax at death) has … [Read more...] about Tax Changes for 2012

This month’s Alert examines when the income of a trust may be considered available to creditors. The Alert examines a case involving the availability for purposes of determining alimony.The New Jersey case of Tannen v. Tannenhas drawn national attention. Mark and Wendy Tannen were married for nearly eighteen years. During the marriage, Wendy’s parents created and funded an irrevocable trust which was a third-party defendant in the suit. Wendy was the trust’s sole beneficiary and Wendy and her … [Read more...] about Income from Trust Excluded in Determining Alimony Payments

This month’s Alert examines the continuing uncertainty with the Estate and Gift Tax and the unique, limited-time opportunities which are available now. The Congressional “Super Committee” failed to reach bipartisan agreement in structuring a deficit reduction plan. This means that unless Congress takes action in 2012, there will be automatic budget cuts totaling $1.2 trillion over ten years, beginning in January 2013. Given that 2012 is an election year, both parties will be weighing whether it … [Read more...] about Fate of Estate and Gift Taxes Remains Uncertain – But, Many Planning Options Remain Available For Now