Archive for Taxes

Perspective on GOP Plan to Eliminate Estate Tax

One of the more controversial proposals in the 2017 GOP tax cut plan being debated currently includes the potential elimination of the federal estate tax. Under current federal estate tax law, the federal estate tax only applies to amounts above an “excluded” dollar amount.

For persons dying in 2017, only assets above $5,490,000 are subject to the federal estate tax. Up to nearly $11 million may be excluded for a couple.

For some historical perspective, note that for several years in the 1990s, the exclusion was $600,000. In 2001, the federal exclusion was $675,000. The federal estate tax exclusion jumped to $1 million in 2002; $2 million in 2006, and $3.5 million in 2009. Since 2010 or so, it has been $5 million or a bit more. » Read more..

Is an Estate Plan Necessary?

estate-planThe sentiment – “I don’t care what happens after I die because, after all, I’ll be gone.” – typically doesn’t work well in reality.

Creating a well-thought-out estate plan is really your last gift to your family. Without such a plan, your relatives may be cursing you for the unnecessary mess that you left behind rather than having sufficient time to grieve your death and navigate ways to cope without you. » Read more..

Estate Planning: Gifts & Gift Taxes

Cash pileJust as gifts come in all shapes and sizes, so do the tax rules and regulations regarding the gifts of your assets that you make during your lifetime or at death. Generally speaking, the donor of the gift is responsible for paying any gift taxes owed.

The Internal Revenue Service (IRS) first states that any gift is a taxable gift, but then applies exceptions to that general rule. » Read more..

Historical Estate Tax Perspective

Tax TimeThe dollar value of assets that can be owned by a Minnesotan at death without incurring federal or Minnesota estate taxes has changed significantly over the past several years.

Thus, many Minnesotans will not owe any Minnesota estate taxes, and fewer still will owe a federal estate tax.

The exclusion from federal estate taxes for a person dying in 2017 is $5,490,000. As recently as 1997, the exclusion was $600,000.  In 2001, the exclusion from federal estate taxes was $675,000. » Read more..

Does Your Estate Plan Need a Tune Up?

Your estate plan — like your car — needs a tune-up occasionally.

If you don’t get that tune-up, either your estate planning goals may not be met, and/or you may be paying hundreds — if not thousands — more for legal services and/or other costs than would have been the case if you had timely asked a lawyer to review your estate plan and suggest necessary adjustments based on current laws and your current goals. » Read more..

Have a Trust? You Still Need a Power of Attorney

Given that both trustees and your hand-picked agent under your Power of Attorney document can deal with your financial matters, do you need both?

Yes! First, your trustee only has authority over your financial assets that are held in your Revocable Trust, and chances are not all of your financial assets are in your Revocable Trust. » Read more..

Will My Inheritance be Taxed?

Assets inherited by a surviving spouse are not taxed, but the inheritance of others may be.

Some states – such as Iowa — impose an inheritance tax. Other states – such as Minnesota – have an estate tax but not an inheritance tax. Still other states have neither an inheritance nor estate tax. The tax laws of the state where the deceased lived determines which state law applies. » Read more..

Tax Returns Multiply at Your Death

When you die, the tax returns that your survivors file with the Internal Revenue Service multiply. » Read more..

Claiming Residence in Another State to Flee Minnesota’s Taxes?

If you’re trying to avoid Minnesota’s estate, gift and income taxes by claiming another state as your state of residence, Minnesota’s tax collector – the Minnesota Department of Revenue – will be watching. » Read more..

Don’t Confuse Probate Assets With Assets Subject to Estate Taxes

The value of the assets that you hold at your death is viewed two different ways: one way by the Probate Court and another way by taxing authorities. It’s easy to confuse the two versions. » Read more..