Monday, August 25, 2014

Originally posted on December 2, 2011 here.

You are allowed to give the gift of tuition to your children and grandchildren. More specifically, you can pay tuition to an educational institution on behalf of a loved one without triggering any gift tax or generation skipping transfer tax.

With the costs of education skyrocketing, more and more tuition bills are ringing in upwards of $20,000 or even $30,000 per year. Making gifts of that magnitude during life through tuition can save thousands down the road. At the end of a four year college education, the student graduates with a college degree, with less student debt, or perhaps even debt free, and you have gifted as much as $120,000 for the benefit of that student without paying any gift tax or generation skipping transfer tax! It may not be as tangible, but that is a much better deal than the sweater you were eyeing!

This tax-free tuition gift is not limited to paying college tuition and graduate school tuition. Often, nursery school, private elementary school, and high school tuition will qualify as well. So long as the primary purpose of the organization is formal instruction and the organization normally maintains a regular faculty and curriculum and has a regularly enrolled student body, the educational organization should qualify and you can pay the tuition as a gift.

Of course, there are some restrictions. The tuition must be paid directly to the qualifying institution. It may not go to the student, or to the student’s parents for reimbursement of tuition already paid. Also, the tax-free gift can only cover the actual tuition. It must not be used for room and board, books and supplies, or other expenses associated with the student’s education. Best of all, a gift of tuition has no impact on your ability to take advantage of other methods of gifting, like annual exclusion gifts, or lifetime cash gifts as discussed earlier in our Methods of Gifting post.

Friday, August 22, 2014

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Originally posted on August 18, 2011 here.

It’s back to school time, and if you have college-age children, you’re probably busy helping them get organized to leave home.  While most packing lists include extra-long twin sheets and expressly forbid hotplates, there’s something else your budding intellectual shouldn’t leave home without: basic financial and medical estate planning documents.  If your children are over 18, federal privacy laws protect their financial and medical information.  Three basic estate planning documents will authorize you to act on behalf of your child, in the event that your child cannot make such decisions for him- or herself.

A Durable Power of Attorney for financial purposes designates an attorney-in-fact to act on your child’s behalf in all financial, tax, legal, investment, and insurance matters if your child becomes incapacitated and is no longer able to make decisions for him- or herself relating to those matters.  (more…)

Thursday, August 21, 2014

The 7520 rate for September is holding steady at 2.2%.

The September 2014 Applicable Federal Interest Rates can be found here.

Wednesday, August 20, 2014

453779831 (1)In our previous posts, Estate Planning for Digital Assets and Bitcoins and other Hidden Assets, we discussed how to protect online assets with a digital estate plan.  Administering an estate with digital assets such as e-mail, online accounts, social media accounts, and online photo albums is an ever-growing issue among estate planners. As the digital age continues to grow, a client’s online presence has become another asset of value, but how such assets pass remains elusive to many. Although digital assets are a form of personal property, ownership rights and privacy controls are governed by a myriad of federal laws, state laws, privacy laws, copyright laws and intellectual property laws. (more…)

Monday, August 18, 2014

krsCongratulations to our own, Kathy Sherby, on being named “Lawyer of the Year” for her specialty in Trusts and Estates by Best Lawyers in America, the oldest lawyer-rating publication in the U.S.

Best Lawyers names a single lawyer in each specialty in each community as ‘Lawyer of the Year.’  Those honored have received particularly outstanding ratings in the surveys by earning a high level of respect among their peers for their abilities, professionalism and integrity.

Monday, August 11, 2014

casey-kasem-reuters-208x300More than a month after his death at age 82, Casey Kasem’s body still has not been buried and now is missing from the Washington state funeral home where it was being held, according to a recent statement from the publicist for his daughter, Kerri Kasem.

Kasem’s body disappeared around the same time that Kerri Kasem was granted a temporary restraining order she sought to prevent Casey Kasem’s second wife (and the step mother of three of his four children, including Kerri), Jean Kasem, from cremating Casey’s remains or removing them from cold storage. Kerri was seeking a court order allowing Kerri to obtain an autopsy of her father’s body. Kerri has stated that in light of threats by Jean to sue Kerri for elder abuse and wrongful death she is concerned about how the results of any autopsy that Jean may have commissioned might be used.

According to news reports, Casey’s three older children believe Jean had his body moved to a funeral home in Canada, but do not know if his remains have been disposed of. (more…)

Monday, July 21, 2014

The 7520 rate for August is holding steady at 2.2%.

The August 2014 Applicable Federal Interest Rates can be found here.

 

Monday, July 14, 2014

ClintonSenateWhile constant attention is being given to Hillary Clinton’s potential decision to run for the presidency in 2016 and the release of her latest book, Hard Choices, last month, news sources recently reported that she and former President Bill Clinton have taken advantage of several of the estate planning techniques recommended by trusts and estates attorneys for high net worth individuals.

This is interesting, in part, because the Clintons support the estate tax and have not been in support of its repeal.

According to reported sources, each of the Clintons created a qualified personal residence trust and each contributed his or her 50% ownership interest in their Chappaqua, New York house to his or her respective trust. A qualified personal residence trust, commonly called by its acronym QPRT, is an IRS sanctioned estate planning technique.  The creator of the trust places a residence or interest in a residence in the trust, retains the right to live in the trust for a term of years, and after the term the trust asset or the residence passes to a beneficiary.

The Internal Revenue Code has special rules which help calculate the value of the “gift” made by the creator to the QPRT. The gift portion, which could offset some of the $5,340,000 exemption allotted to individuals in 2014 is not the entire value of the residence, but the value of the residence when transferred reduced by the value of the retained use by the creator for the trust term.

By having each of the Clintons create a separate QPRT with only a 50% interest in the residence, the value of such interest may also be eligible for a discount for owning less than a majority interest.

In order for a QPRT to work, the creator of the trust must outlive the trust term.  But for a relatively healthy individual, it is quite likely for this to happen.

(more…)

Wednesday, July 9, 2014

465435421POLST, or Physician Orders for Life-Sustaining Treatment, is an approach to end-of-life care that encourages discussions between patients and their health care providers. The goal of POLST is to enable patients to choose the treatment they want or do not want, and to ensure that those preferences are honored. (more…)

Monday, July 7, 2014

153437909Frequently, taxpayers are surprised by the fact that the ownership or receipt of a life insurance policy can result in taxable income, as was the case in Gluckman v. Commissioner.

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