Tag Archive for Estate Tax

Tax Proposal Including Switch To A Territorial Tax System

Ron Marini, trump, tax proposal

According to a plan released by the White House on April 26, 2017, creating a 15% tax rate for corporations, cutting the top individual tax rate from 39.6% to 35%, reducing the number of rates from seven to three, and repealing a 3.8% tax on net investment income are the top priorities in the Trump administration’s tax reform agenda.

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The 5 Ways To Create A Texas Trust

Hale Stewart

I regularly use trusts as part of my legal practice. These are the exact same methods stated in §10 of the Restatement of Trusts. And save for number 5, they are consistent with the methods outlined in § 401 of the Uniform Trust Code.

Under Texas law, there are 5 methods of creating a trust:

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Minimizing The Estate And Gift Tax Consequences

Ron Oddo

The key to transferring large amounts of wealth was discussed 2000 years ago by the patron saint of estate planning attorneys, Archimedes.

Regarding leverage he observed, “Give me a place to stand and I will move the earth.” Using leverage to move the earth—or to move your wealth—is the key to achieving noteworthy results. Each U.S. resident can give away, during lifetime, $5 million as well as the current annual gift exclusion.

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A New President With Promises Of Tax Reforms

Barry Fowler

It’s a new dawn, a new day, and we have a new President.
Whether we enjoy the benefits of the reforms he has promised remains to be seen. For those of you who are not aware of the promises Trump has made regarding tax reform, I’ve provided them for you below.

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Time to Compare Candidate’s Tax Plans Again!

Ron Marini

On July 19, 2016, we previously posted Time to Compare Candidate’s Tax Plans! where we discussed both the Clinton Tax Plan and the Trump Tax Plan. Now with the first debate, we thought it would be a good time to revisit their tax positions.

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Have A FLP Or LLC With Valuation Discounts? Talk With Your Tax Advisor!

Ron Marini

We previously posted “Is This the End of Discounting Transfer Taxes with LLC’s and FLPs?” where we discussed that the Internal Revenue Service issued a proposed regulation which would beef up IRC Section 2704 of 1986 to preclude many of the presently available discounting techniques. In addition, this proposed regulation would expand the purview of section 2704 to include not only partnerships and corporations but LLCs, S corporations, and other family “business” transfer entities.

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Federal Estate Tax Returns: IRS Says No Closing Letters!

Tax Advisor - Ron Marini

The IRS is the federal agency which has the most direct contacts with Americans. Dealing with the IRS is never easy when addressing federal estate tax returns. The starting point is 75,000 pages (in fine print) of the Internal Revenue Code and Regulations which Americans must somehow master to file accurate tax returns including estate taxes.

To make life even more difficult, irrespective of the IRC and Regulations, the IRS creates a number of procedural requirements necessary to complete various tasks involving the IRS’ contacts with taxpayers. One such situation involving the filing of Federal Estate Tax Returns (forms 706 and 706-NA) has been the automatic issuance of closing letters (IRS Letter 627, catalogue # 40285J) when the IRS has completed reviewing these forms. Under Section 6324 of the IRC, the IRS has a 10 year lien on all property which appears on an estate tax return. In order to avoid personal liability, the executor of the estate and anyone else who had contact with either the assets or proceeds of the estate (see Section 2203) can be held liable for any unpaid tax unless one receives a form 5173, Federal Transfer Certificate which frees everyone from this potential liability.  Form 5173 was always issued in tandem with with the automatic issuance of the federal closing letter. Read more

Issues Concerning Filing a Form 706NA?

On September 23, 2015, we posted “Some Nonresidents with U.S. Assets Must File Estate Tax Returns” where we discussed that deceased nonresidents who were not American citizens are subject to U.S. estate taxation with respect to their U.S.-situated assets.

Many foreigners owning property or assets in the United States are in violation of 706-NA filing requirements because of a number of misunderstandings. The basic rule is pretty clear-if a foreign decedent has assets in the United States with a gross value in excess of $60,000, the estate is supposed to file a tax return with the Internal Revenue Service.

Many people think of numerous reasons not to file. The main one relates to mortgages or liens against the US property. Assume that a property in Florida is worth $150,000 and there is a $100,000 mortgage held by Bank of X. Read more

US Citizens Living Abroad Are Required To File A US Estate Tax Form

American citizens are subject to U.S. estate taxation with respect to their worldwide assets. An estate tax return, Form 706, United States Estate (and Generation-Skipping) Tax Return, Estate of a citizen or resident of the United States, is required for a deceased American citizen, if the fair market value at death of the decedent’s worldwide assets exceeds the “unified credit exemption” amount in effect on the date of death. However, if the U.S. citizen made substantial lifetime gifts, and used the applicable “unified credit exemption” amount to eliminate or reduce any gift tax on the lifetime gifts, a U.S. estate tax return may still be required even if the value of the decedent’s worldwide assets is less than the “unified credit exemption” amount at the date of death (due to the decrease in the “unified credit exemption” for the lifetime gifts). To determine the “unified credit exemption” amount for American citizens Read more

Own A Villa In South of France? Some Pleasant News For Estate Tax!

Property ownership in continental Europe is often fraught with some unique issues upon death. Most countries including Italy, Spain and France impose “forced heir-ship” rules. Accordingly, a portion of the property must pass to the children of the decedent at the time of death; spouse of the decedent can not be made the sole beneficiary of the Estate. As a result spouse cannot sell the property at his or her own will and must obtain consent form the children prior to selling. This causes many issues for the U.S. beneficiaries in terms of Estate tax.

Effective from August, 2015, the EU have decided to change these rules. The new EU rules envisage that the citizens of the U.S. can make a choice in their will that the U.S. law would apply to foreign property in an EU state. This would enable them to bequeath the Read more

The Smart Choice! Durable Power of Attorney

Today I received a frantic telephone call from the adult daughter of a senior citizen client for whom I prepared an estate plan 10 years ago. Unfortunately, the man, who is a widower, had a serious stroke. He is alive but is not communicative. The daughter called and asked if I had prepared a Durable Power Of Attorney. Even though I had prepared a Will and a Living Will, the client had insisted that he did not want a Power Of Attorney.

Specifically, this client is a very private person and wanted to be in complete control of all of his assets. I had suggested that we establish a Trust, with him being the Trustee and having one of his children as a Co-Trustee who could take over if he came incapacitated. That was rejected. Read more

Special Rules In The Canada-US Tax Treaty Apply To Cross-Border Death Tax Issues

Canada and the United States have very different regimes for imposing taxes on death. The United States imposes a Federal Estate Tax; however, Canada has not imposed any Estate Tax since 1971. Rather, Canada taxes accrued, but unrealized, capital gains on death, as part of its income tax system.

Most tax practitioners are not aware of the fact that there special rules found in Article XXIX-B of the Canada-United Tax Convention (“the Treaty”) that are aimed at providing relief in connection with certain cross-border death taxes issues.

Some of these are summarized below:

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