As most readers know, the federal estate tax (FET) was repealed for one year at the end of 2009 and it is looking less and less likely that there will be a retroactive application of the FET. However, there is still a gift tax, presently 35%, if you give away more than $1 million in assets during your lifetime. Additionally, the federal estate tax is likely to be reinstituted in 2011 so we should continue to consider ways to transfer assets without using any of our credit against the federal estate tax or gift tax. Check out this Forbes Magazine article on 5 ways to make gift tax free gifts.
Please contact Douglas L. Kaune, Esq. any time at 610-933-8069 or dkaune@utbf.com to discuss your particular your estate planning questions and to review these or other gifting or transfer strategies.
Wills * Trusts * Elder Law * Probate * Asset Protection * Power of Attorney * Estate Planning
Unruh, Turner, Burke & Frees, P.C. is a full service law firm with offices in Malvern, Phoenixville, West Chester, Pennsylvania and serving Royersford, Paoli, Frazier, Chester Springs, Downingtown, Radnor, Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).
David M. Frees III on What To Do About The Federal Estate Tax Problem
Gift Tax Returns Are Due Now!
Gift tax returns are due by April 15th of the year following the gift. You must file a return if you have made a gift of a hard to value asset such as real estate or an interest in a closely held business. You may also need to file a gift tax return if your total gifts to any one person of more than $13,000.00. However, you might not owe any taxes if you’re married and your spouse will “split” the gift but you still have to file a return.
So, if you’re just reading this, in April, you may only have a few days or hours left.
That’s the bad news. However, the good news is that like the individual income tax return, you can file an extension to file the gift tax return and can file up until April.
Note: An extension to file does not mean that payment is not due.
I hope that this is helpful. If you need help filing a return for a trust, or for a gift tax return, please call Donna, Denise, or Beth at 610-933-8069 and mention code: David Frees or 2010TAXES for a appointment with one of our tax lawyers.
Wills * Trusts * Elder Law * Probate * Asset Protection * Estate Planning In a Tax Court case, Price v. Commissioner, T.C. Memo. 2010-2 January 4,2010)
gifts of limited partnership interests by parents to their three children did not constitute present interest gifts that qualify for the gift tax annual exclusion. The court stated that the present interest requirement is satisfied if the donee has immediate enjoyment of either the donated property or the income from the property. In this case, the donees had no ability to withdraw their capital accounts and the partners could not sell their interests without the written consent of all other partners.
PLANNING TIP: For clients that intend to make annual exclusion gifts to an FLP, we will draft a Partnership document and operating agreement in a way that allows the transfers of limited partnership interests to be considered present gifts. It is very imortant that you have an experienced estate planning attorney who can draft the FLP in a way to best suit your needs and take advantage of the maximum tax and asset protection benefits.
Please feel free to contact Douglas L. Kaune, Esq. any time at 610-933-8069 or dkaune@utbf.com to discuss your particular Estate Planning goals, including creating a Family Limited Partnership (FLP) to determine the appropriate structure for you and your family.
Unruh, Turner, Burke & Frees, P.C. is a full service lawfirm with offices in Malvern, Phoenixville and West Chester serving surrouonding communities including King of Prussia, Berwyn, Wayne, Newtown Square, Media and Paoli and the following counties: Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).
If you need more information about planning your estate or acting as a trustee or executor, we have many free resources. Appointments are also available with David Frees by contacting Beth MacNulty, Donna Brownback, or Denise Fox at 610-933-8069.
Attorney David Frees can also be reached by email at dfrees@utbf.com
Mention this blog to get a free report at the time of your appointment or to request that a free report on executors or estate planning be sent to you. You can also request these reports on line at www.PaEstatePlanners.com
David M. Frees III Tiger Woods Prenup and Prenups In Pennsylvania Estate Planning
Are You Remarried or Contemplating Remarriage With Children From A Prior Marriage? The Prenuptial and Postnuptial agreements can be the solution to a tricky problem. By: David M. Frees III
Tiger Woods situation has put the prenuptial agreement back in the news. Following Tiger’s admission of his “transgressions,” many news sources have reported that Tiger and the current Mrs. Woods are renegotiating their prenuptial agreement.
So what does Tiger Wood’s dilemma have to do with prenuptial agreements in Pennsylvania and the use of such agreements in estate planning?
Well, first and foremost, the story reminds me that such premarital agreements are valid and enforceable under Pennsylvania law. And, while the current renegotiation of the pre-nup by Tiger Woods and his wife revolves around divorce, it is important to remember, that prenuptial agreements are a powerful tool for avoiding disputes when you are in or considering are second or third marriage and/or have children from multiple marriages. In short, prenuptial agreements need not focus just on divorce, but can also set forth the parties’ agreements on estate planning so that expensive and destructive family disputes can be avoided.
Many married people want to leave their assets outright to one another but also want to ensure that the children of a prior marriage get some benefit from the estate when the surviving spouse passes. However, if you own all of your assets jointly with your husband or wife, they will transfer automatically to him or her. Likewise, if you have a simple will, and your spouse receives everything, he or she is free to dispose of those assets in any way they desire. And, they can refuse to give any of those assets to your children at death.
So, what are you going to do? If you are remarried or planning to remarry and have children or heirs that you want to protect in addition to your current spouse, then careful planning using a prenuptual agreement or post nup for estate planning purposes and not just to cover the divorce is a major benefit.
The parties agree on a plan in advance. Then, by using the rules of the pre-nip or post-nup and some insurance and/or other trust arrangements you can protect your new spouse and the heirs you want to benefit after the spouse passes.
Prenuptial agreements are not just for divorce. They are also a valuable state planning tool.
Stay tuned for more on prenuptial and postnuptial agreements in estate planning.
Are you remarried or contemplating remarriage with children or others heirs that you would like too protect? If you need a consultation about a prenuptial or post-nup agreemnt please call Donna Brownback or Denise Fox at 610-933-8069 for an appointment with David M. Frees III. Mention this article to receive additional articles and information on estate planning strategies and tactics for remarriage.
By: David M. Frees III Review David Frees’ AVVO Lawyer Rating.
Wills * Trusts * Estates * Estate Planning * Asset Protection Planning
Malvern, Phoenixville, and West Chester Law Offices
It is that time of year when we start to get questions about gift taxes, the gift tax exemption, and about how much you can give to your children and grandchildren.
This year we are getting a new question for the first time, “I thought that the amount goes up every year so how much can I give this year?”
Well, the reason many people believe the amount of the gift tax exemption (the amount that you can give without paying gift tax or filing a gift tax return) goes up every year is that it is indexed for inflation and has gone from the original amount of $10,000.00 to $11,000.00 and recently, to $13,000.00.
However, the amount does not go up every year. And, because the rate of inflation is so low (or perhaps non existent), the amount will remain the same for 2009 and 2010 unless Congress acts to change it as part of the review of the estate and gift tax that is still pending in Congress.
Quick Facts and Reminders about Gift Taxes:
Each person can give up to $13,000.00 for 2009.
A married couple can give $26,000.00 to each recipient even when one spouse has the assets and the other does not. (This is called a split gift and may require your spouse to sig the gift tax return)
If your child or grand child is married, you can also make a gift to the spouse. However, that gift is not protected in the event of a divorce.
You can make gifts of property, real estate, Limited partnership interests, stock or cash. However, the recipient acquires your basis in the asset and may have to pay capital gains taxes on the gift if the specific property is later sold for more than your basis.
David M. Frees III on Information About Gifting At The end of The Year
David M Frees III
Will, trust, and estate planning lawyer
Chairman: Trust, Estate, and Wealth Preservation Section
You can find out more about David Frees and the trust, estate, and asset protection lawyers in the firm at Unruh, Turner, Burke and Frees.
* Note: In Pennsylvania, there are no legal specialties. Lawyers may not refer to themselves as “experts” or “specialists” in trusts, estates, wills, or other practice areas. Therefore, when we make reference to ourselves as will or trust lawyers, we mean only that we focus our practice to the areas of wills, estates and related matters.
David M. Frees III on Information About estate Tax Repeal
If you are a Pennsylvania resident, your estate is subject to many death taxes including the Pennsylvania Inheritance and Estate Tax as well as the Federal Estate Tax. If you have been watching the news, you know that one of those tax systems – the federal estate tax is due to expire quite soon.
Why?
Congress has yet to act on the pending repeal of the federal estate tax. But, the pressures on our tax system are so great that most commentators feel that they must keep the tax in place. If Congress allows the tax to temporarily lapse, it appears that they might then re-enact it retroactively to the start of 2010.
In addition to being confusing to taxpayers, and raising a difficult constitutional issue, this makes rational estate tax planning almost impossible.
In any case, the question of repeal or repair of the federal estate tax (also known to its detractors as the “death tax”), will almost certainly be the next political hot potato after health care reform is resolved.
Have you made up your mind yet? We try to present many different views on this issue and we welcome your comments. We also encourage you to contact your Congressional representative and Senator to demand action on this vital issue.
Make sure that your gifts work, that they count, and that you maximize them without making some of the horrible mistakes that can cost your heirs dearly. Read: End of Year Gift Tax Mistakes and How To Avoid them.
David M. Frees III
Offices: West Chester, Phoenixville, Malvern
Serving Chester County, Montgomery County and
All of the Counties in the Greater Philadelphia Area
For appointments call: 610-933-8069
dfrees@utbf.com
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publications.
In a recent case, the tax payer had a victory over an IRS challenge that sought to include the full value of FLP (family limited partnerships) assets into the decedent’s estate.
Family limited partnerships are often used to manage family businesses, real estate ventures, and even in some cases, publicly traded securities and other more liquid investments. They allow the transfer of assets (in some cases at a discount) while permitting a general partner to manage the assets.
David Frees and Ivanka Trump
When combined, with other techniques, such as asset protective trusts, they can be a powerful estate and asset protection strategy.
However, because in part of aggressive discounting of asset values and for other related reasons, these arrangements have been attacked by the IRS.
In the recent blog posted on www.paestateplannners.com I have linked to an anlysis of the new case and have given some short, and non technical points to remember when doing this type of planning.
David M. Frees III
610-933-8069
dfrees@utbf.com
David and his partners and associates in the Wealth Preservation, Tax,
and Corporate sections work with many clients to develop
and implement Family Limited Partnership and Trust strategies
for our clients in Chester County, Delaware County, Lancaster, Bucks,
Berks and Philadelphia counties and throughout Pennsylvania
With the cost of 4 year college educations continuing to soar
David M. Frees III Esquire on 529's and How The President Save For College
and, to out pace inflation, many of us are wondering how to save for our children. There are a variety of tools ranging from multiple 529 plans to UTMA accounts, to trusts, and outright savings in the parent’s own names.
Thank you for visiting our blog, make sure to add our rss feed (located below) to your favorite news reader. If you have a question about this area of the law, please drop us an email, we might even post your answer on this blog.
