Need a New Year’s resolutions to kick start 2015? Here is an idea you probably hadn’t considered: review your estate planning documents.
If you are like most people, you are probably thinking that reading legal documents does not sound like an even remotely enjoyable way to start a new year. But, it doesn’t have to be as unpleasant as it sounds. Reviewing your documents does not mean you have to read them cover to cover. If you know what are the most important elements, it is easy to review your will, trust, and powers of attorney regularly to ensure they still comply with your wishes. These documents not only determine who will receive your property when you die, but also likely determine who has the right to make financial and major medical decisions during your lifetime. Needless to say, it is important that you are still comfortable with the designations you have made.
To get you started, below is a basic checklist of items we suggest you review annually (make it a New Year’s tradition!).
1. Assess the changes in your life since you last updated your estate planning documents.
Have you gotten married or divorced? Had a child or adopted a child? Moved to a different state? Had a death in the family? Had a major financial event? Any of these life changes may affect your estate planning, and your documents may need to be revised.
2. Review your will and/or revocable trust.
Some individuals have only a will, others have both a will and a trust. In either case, one of these documents will direct where some or all of your property will go at your death. The following are the elements of these documents that are most important to review. (more…)
The 7520 rate for January has increased to 2.2%.
The January 2015 Applicable Federal Interest Rates can be found here.
London Partner Dyke M. Arboneaux is listed in The International Who’s Who of Private Client Lawyers 2014 publication. She was nominated by her peers as “one of the world’s leading practitioners in the field.” Who’s Who Legal canvasses and analyzes the opinions of clients and private practice lawyers from around the world each year for its list of top lawyers.
Dyke advises individuals, families and financial institutions on international estate planning and U.S. tax matters, with a particular emphasis in planning for clients who are exposed to both the U.S. and UK tax systems.
On Dec. 16, 2014, Congress passed the “Tax Increase Prevention Act of 2014, (“TIPA”, or “the Act”), which the President has now signed into law. The Act extends a host of individual tax provisions, including non-taxable IRA transfers to eligible charities.
Taxpayers who are age 70 ½ or older can make tax-free direct distributions to a charity from an Individual Retirement Account (IRA) of up to $100,000 per year. These distributions aren’t subject to the charitable contribution percentage limits since they are neither included in gross income nor claimed as a deduction on the taxpayer’s return. Under pre-Act law, these rules didn’t apply to distributions made in tax years beginning after Dec. 31, 2013. TIPA retroactively extends this provision for one year so that it’s available for charitable IRA transfers made in tax years beginning before Jan. 1, 2015. Therefore, there are less than two weeks to complete a charitable IRA transfer!
With the end of the year approaching, we thought now would be a good time to re-post this blog from the end of 2012. While the Mayan calendar is no longer in play, nor is the fiscal cliff, the rules of completed gifts still apply. For 2014, however, increase the annual exclusion gift amount to $14,000 (instead of 2012’s $13,000) and the gift tax exemption amount to $5,340,000 (instead of 2012’s $5,120,000).
With nine days left in the year, many people are still planning how to make
2012 2014 gifts, whether by making “annual exclusion” gifts of $13,000 $14,000 per beneficiary, or by taking advantage of the 2012 2014 gift tax exemption amount of $5,120,000 $5,340,000. Maybe they couldn’t make up their mind before now, maybe they were waiting for the election results, or maybe they wanted to see whether the Mayan calendar was accurate before making any gifts. Whatever the reason for the last-minute gifting, as the end of the year approaches, people may be tempted to make a “quick and easy” gift to their beneficiaries by simply writing a check. As the year draws to a close, however, if your gift is dependent on utilizing 2012 2014 tax law, beware of the potential trap of making a gift by check.
A gift is not complete for tax purposes until the gift is no longer revocable. However, if you write someone a check, until that check clears, you could always “revoke” the check by alerting your bank to stop payment, or by emptying your account of sufficient funds to pay on the check. Until the check clears the bank, your gift is still revocable. Therefore, if your beneficiary doesn’t deposit the check in time for the banking system to clear the check, your gift may not be considered irrevocable until
2013 2015, and you have therefore made a gift in 2013 2015 instead of 2012 2014.
If you are planning to make
2012 2014 gifts over the next 9 days by means of a check, be wary and let your beneficiaries know that they need to deposit that check as soon as possible. Better yet, make the gift by means of a cashier’s check, which is considered irrevocable as soon as you hand it over. That way, you don’t have to rely on the promptness of your beneficiaries’ next trip to the bank, and the promptness of the banks in processing the checks.
As we discussed in our January 28 post, IRS Issues Revenue Procedure Regarding Portability Election, Revenue Procedure 2014-18 allows for the filing of an estate tax return for purposes of claiming a portability election for decedents who died after December 31, 2010 and on or before December 31, 2013. The deadline for this extended filing is December 31, 2014 — if this applies to you, don’t miss it!
As we discussed in our second post on this topic on January 31, Update: Rev. Proc 2014-18s Effect on Same-Sex Married Couples and Portability Elections, this can be especially important for same-sex married couples who weren’t considered married for federal tax purposes until this year.
When a will contains a so-called no contest clause or in terrorem clause that would cause a beneficiary to lose his or her interest in the deceased’s estate in the event the beneficiary contests the validity of the will, the court is often called upon to determine whether to enforce the forfeiture against the beneficiary if he or she loses the will contest. Just such an issue faced the Mississippi Supreme Court in Parker v. Benoist.
In this case, Bronwyn Benoist Parker (“Parker”) filed a will contest, contesting the validity of her father’s 2010 will. The 2010 will changed the disposition of the father’s estate from an equal division between Parker and her brother, William Benoist (“Benoist”), to a disposition where Benoist received a significantly greater portion of their father’s estate and Parker received a significantly lesser portion of the estate. (more…)