By Steven J. Oshins, Esq., AEP (Distinguished) The federal estate and gift tax exemption is currently $12,060,000 per person. This number increases (or decreases) each year based on inflation and then is rounded. This article does nothing extraordinary. It simply lays out the projected increases over the next few years based on the most recent inflation rate which is 8.5%. Anybody with a calculator can compute these numbers, but many people have not yet done so, so the numbers outlined herein may come as a shock! Trump Tax Act The Trump Tax Act increases (or decreases) the federal estate and…
Did You Know That Nevada Has Laws Allowing for Larger Valuation Discounts Than in Every Other State?
By Steven J. Oshins, Esq., AEP (Distinguished) Estate planners have been rushing to help clients make large gifts before the gift and estate tax exemption drops in half at the end of 2025. But are estate planners truly maximizing the wealth transfer for their clients? Most are not doing so, simply because they’re failing to take advantage of a legislation I authored that passed and became law in Nevada’s 2009 legislative session. This was likely overlooked because the gift and estate tax exemptions exponentially increased soon after that thereby making it unnecessary for the smaller net worth clients to fully…
IRS PLR Approves Adding Formula General Power of Appointment for Basis Step Up
By Edwin P. Morrow, III, J.D., LL.M., MBA, CFP®, CM&AA® In PLR 202206008, the IRS approved of a judicial modification (approval of settlement) of a GST grandfathered trust to add a formula testamentary general power of appointment that would enable the remainder beneficiaries to receive a step up in basis over such assets at the primary beneficiary (child of settlor) powerholder’s death. The IRS ruled that 1) this addition did not disturb the GST exempt nature of the trust or cause any adverse GST consequences and that 2) it would cause estate inclusion over only the desired amount (more on this…
Basis Bump Planning: Using Grandma to Get a Stepped-Up Income Tax Basis
By Steven J. Oshins, Esq., AEP (Distinguished) The federal estate and gift tax exemption is at an all-time high. In fact, it’s so high that very few people would owe any federal estate tax if they were to die today. Therefore, almost everybody dies leaving unused estate tax exemption on the table. Estate Tax Exemption as Currency Dollar, Euro, Yen, Pound, Franc, Peso, Estate Tax Exemption! Yes, Estate Tax Exemption! Estate Tax Exemption is a form of currency. However, unlike the other currencies, if you don’t use it during your lifetime you can’t pass it to your heirs (other than…
Is 2021 the Greatest Year Ever for Estate Planners?
By Steven J. Oshins, Esq., AEP (Distinguished) History repeats itself. First, there was the fiscal cliff in 2012. Then there was the “threat” of a Biden presidency and an upcoming tax act in 2020. Now we are living through the “threat” of an upcoming tax act as we near the end of 2021. Each of these three years has something in common — a supply/demand ratio that made it impossible for many potential clients to be able to find a capable estate planning attorney to take on their work and be able to complete it by year-end. YEAR 2012 In…
Saving State Income Taxes: NING Trusts and Completed Gift Non-Grantor Options
By Steven J. Oshins, Esq., AEP (Distinguished) Prior to the Trump Tax Act, state income taxes paid were deductible against federal income tax. However, the Trump Tax Act limits the amount of the federal income tax deduction for state income taxes paid, real property taxes paid and sales taxes paid to a cumulative (yes, cumulative!) total of $10,000 per year. The $10,000 is used up for property taxes only for many of our clients. Therefore, state income taxes paid are essentially no longer deductible! This is why state income tax avoidance planning has arguably become the hottest area of estate…
The 2022 Biden Estate Tax Cliff: Preparing After the 1/1/2013 and 1/1/2021 Cliffs
By Steven J. Oshins, Esq., AEP (Distinguished) If you are an estate planner, you likely had your best revenue ever in 2012. Then you likely annihilated your previous revenue record in 2020. This happened because of the so-called “fear of missing out” with different tax “cliffs” expected to occur at the end of those two years, thereby causing a commotion among the wealthy. JANUARY 1, 2013 FISCAL CLIFF Rewind back to the year 2012. President Obama was in office and the $5 million estate and gift tax exemption was scheduled to expire and roll back to only $1 million at…
Protect Against Potential Retroactive Estate Tax Changes
By Martin M. Shenkman, CPA, MBA, PFS, AEP (Distinguished), J.D. The Biden Administration may reduce the exemption retroactively, perhaps even to January 1, 2021! It’s best to protect against a retroactive tax change. Retroactive tax changes sound unfair! Even Taylor Swift said: “It’s hard to fight when the fight ain’t fair.” But we’ll tell you how to fight that unfair tax fight! The law permits a retroactive tax change. See: Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U. S. 717 (1984); United States v. Carlton, 512 U.S. 26 (1994). The need for revenue, or the desire…
Which Type of Trust is Most Important for Top 1% Financial Advisors to Know About?
By Steven J. Oshins, Esq., AEP (Distinguished) Are you a financial advisor? If so, you’re likely compensated in large part based on assets under management. Therefore, your interests are aligned with those of our clients. The better you do for them, the better you do for yourself. THE STATE INCOME TAX DRAG Just as it is frustrating for our clients in states with a state income tax to pay that tax on taxable dividends and capital gains, it must be nearly as frustrating for the financial advisor whose income is also adversely affected by this state income tax drag. What if…
Situs Your Trust in a First-Tier Trust Jurisdiction
By Steven J. Oshins, Esq., AEP (Distinguished) and Mark Dreschler Not all jurisdictions have favorable trust laws. In fact, most jurisdictions’ trust laws are inferior in comparison to those of the first-tier trust jurisdictions. Despite the limitations found in most trust jurisdictions laws, estate planners generally limit their planning to the client’s home jurisdiction. This article will provide multiple reasons not to do so and will explain some of the opportunities that are lost by failing to consider a top trust jurisdiction. COMMON REASONS TO SITUS A TRUST IN A TOP-TIER TRUST JURISDICTION Following are some of the common reasons…