Articles Posted in Uncategorized

You work your entire life. You wake up, do the right thing, refuse to cheat, play by the rules, pay your taxes, and eventually you’ve accumulated a nice nest egg. You want to live on it for a few years but know that it will ultimately go to your children. Why not, after all. You love them and you’ve lived your life for them for years. But, with new changes to the tax code taking effect on January 1st of 2011 you could find that the government will take up to sixty percent of your life savings, reports an New York Estate Lawyer. By making gifts to your children now many are finding that they’re avoid saddling relatives with hefty “death tax” bills later.

Giving property to family members in the immediacy isn’t always ideal. After all, many want to continue living in their house – the house they worked decades to make and maintain – and giving it away, even to a close relative, can be a difficult proposition, notes an New York Estate Lawyer. And just giving it away doesn’t relieve a person of all duties, as you will still need to pay the fair market rental value while you occupy the home.

Proper planning with an attorney can help alleviate many of these issues, as a trust can be set up to collect the “rental money” – and the beneficiaries of that trust can be almost anyone you choose, says an New York Estate Lawyer. There are a number of trusts available for use, some of which handle all of the dispensing of money and others which allow you to control it yourself, reminds an New York Estate Lawyer. Either way, planning for tomorrow helps ease today’s pains.

Continue reading

No one is entirely sure what the federal estate tax rate will be next year, not even the people who set the rates, says a New York Estate Lawyer. It could be anywhere from 41% to 60%, depending upon how much the estate is worth when its owner dies – and it’s not the wealthiest who pay that highest rate.

A finance writer told a New York Estate Lawyer, “Under current law, come Jan. 1, 2011… the estate tax, defunct for 2010, will spring back to life, grabbing 55% of any assets over $1 million not to left to a spouse or charity.”

A CPA from Michigan, pointed out, however, that the 55% rate only applies to assets over $3 million. It’s 41% for assets between $1 million and $1.25 million. The rate is 43% between $1.25 million and $1.5 million, all the way up to 55% on $3 million estates, according to New York Estate Lawyers.

We tend to think of credit card debt as being a problem for younger generations but today more and more senior citizens are finding themselves saddled with incredibly high credit card debts. And this very high credit card debt is causing many senior citizens to file for bankruptcy, reports an New York Estate Lawyer. It is a sad trend, one that is slowly and quietly sweeping the nation. Unlike many younger Americans, who may use a credit card as a means to live a high lifestyle because they are not used to the responsibility that high credit limits carry, older senior citizens in America are using their credit cards to simply survive, notes an New York Estate Lawyer. These senior citizens have trouble making ends meet and are too ashamed to ask friends and relatives for help, says an New York Estate Lawyer. As such, they compile very very high credit card debts.

Sadly and tragically, the inevitable end for many of these senior citizens is bankruptcy. After maxing out their credit cards they find themselves with too much debt and not enough income, forcing many to file bankruptcy, reports an New York Estate Lawyer. A lifetime of work gone in a few years. Many senior citizens face a myriad of complex problems: they often have high medical expenses, children and grandchildren to provide for, and saddest of all: they do not have the time necessary to climb out of debt. All too often they reach a point where they simply cannot work any longer.

Proper estate planning can help head off many financial woes people face. Contact a New York Estate Attorney today to see what you can do to prepare for tomorrow.

Some of the wealthy elderly people in the United States feel compelled to give away what they would have normally passed on upon death, a New York Estate Lawyer reports. Congress has yet to vote upon the estate tax, which does not exist in 2010, but may come back in 2011, meaning a significant amount of any inheritance could be taken by the government if someone dies after December 31.

There are no taxes on inherited money for 2010, but the rate will go up to 55 percent if Congress does not do something in the post-election session, according to New York Estate Lawyers. So, there are two main things to do to save money: die in 2010, or transfer money to the family at the relatively low tax rate of 35 percent. The gift tax will also rise to 55 percent at the end of 2010 if Congress does nothing.

It is the usual practice of the government to keep estate taxes and gift taxes closely matched so the wealthy can’t use one method or the other to reduce the government’s cut. As of now, Americans can give away $13,000 tax-free, per person, up to a $1 million lifetime maximum. Once it gets past $1 million, gifts are taxed like an estate – except for this year, when the gift tax is only 35 percent, and the estate tax is nothing at all.

It sometimes comes as a surprise to heirs just what they’ve inherited. An estate can be a murky thing, even for people who plan them, a New York Estate Lawyer reports.

A good estate plan should theoretically show everything a particular person owns, but this doesn’t always happen. The owner of the estate might not even know exactly what he or she possesses, or may not be entirely forthcoming about the details for whatever reason.

A New York Estate Lawyer notes a case in which the children of a supposedly wealthy man learned their father was actually not worth very much at all. They knew he had some valuables stored in a safe deposit box, but when the box was opened only some old papers were inside. “We never did find out what happened to them,” an attorney told a New York Estate Lawyer.

New York Estate Lawyers have noticed something: Both financial planners and collectors do not tend to count the value of collections when it comes to looking at financial resources, including estate planning.

This often results in a parent instructing children to come and take the collection once the parent has passed on. If the collection is valuable and sold, the IRS is going to take note, which means the surviving children had better have some documentation that can prove they weren’t somehow circumventing tax law, a New York Estate Lawyer warns.

Should the collection be impossible to split equally between multiple children, that can be another problem. There is no way three people can split that classic car their father loved so much. Or they could not be especially interested in cars and decide to sell it and the rest of the collection – getting maybe 30 cents on the dollar for sale after taxes are paid.

Continue reading

The federal estate tax is still scheduled to return on January 1, 2011, which will affect a great many families, New York Estate Lawyers report.

No one knows what Congress is going to do about it, including, apparently, Congress, which means financial planning is very tricky. Retirees have to find a way to balance who much they need to live on and how much they should give away to avoid estate taxes. New York Estate Lawyers know several strategies to help protect estates from the possibly 55 percent bite they might receive starting in 2011.

Giving it away is always an option. $13,000 a year to any amount of people is tax-free gifting. Spouses can give jointly for $26,000 per recipient. It doesn’t have to be given directly, either. The money can be granted to a trust, as well.

Continue reading

Senator Max Baucus, chairman of the Senate Finance Committee, is soon to introduce a bill that would create permanent tax cuts for the middle-class and reduce estate taxes, New York Estate Lawyers has learned.

The tax cuts for families that earn more than $250,000 a year will be allowed to lapse, a source told New York Estate Lawyers. President Barack Obama set his own terms for the tax standards in a televised town hall meeting in which he would not consider extending the Bush tax cuts for the rich. “Obama drew a line in the sand,” a source told a New York Estate Lawyer. “He’s raised the stakes.”

The House is waiting for the Senate to introduce its own tax bill before showing off its own. “This would be the biggest tax policy change in 10 years,” the source told a New York Estate Lawyer. It is unknown as of yet whether there is enough support among Democrats in the Senate to pass it and if Republicans will attempt to block it.

Continue reading

The Senate has yet to come to a real decision regarding the estate tax. Currently, there is no estate tax, but it is likely to return in 2011, according to New York Estate Lawyers. That may not be good news for heirs who decided to sell their inherited gains, however, thanks to higher capital gains taxes.

Before 2010, an heir could count on what’s called stepped-up basis on inherited property. This means capital gains taxes would be based on how much the asset was worth at the time the owner died, rather than the original purchasing price. Selling an item for what it’s worth currently would mean getting taxed on the difference between the current price and the selling price, rather than the difference between the purchasing price and the selling price.

This year, things are different, New York Estate Lawyers say. The new law of the land is the carry-over basis. Capital gains are now paid on the difference between sale price and the value of the asset when it was purchased, no matter how long ago that may have been. Not only does this mean higher taxes, but the heir would have to find out just how much the item was bought for whenever it was bought.

Continue reading

Texas is one of the top tax havens for retirees, according to New York Estate Lawyers.

New York Estate Lawyers have discovered since Texas has no state personal income tax and a low 6.25 percent sales tax (which local taxes can raise up to 8.25 percent), it is a popular place for people looking to avoid taxes. Homeowners 65 or older can exempt $10,000 of the property’s value from school taxes and $3,000 is exempt from other local taxes. This doesn’t even count the standard $15,000 homestead exemption that all homeowners get in that state.

There is also no inheritance tax in the state, and the estate tax is limited to federal estate-tax collections. There are number of other states that qualify as retiree havens when it comes to taxes, including Washington, Florida, Nevada, Colorado, South Dakota, Tennessee, and New Hampshire.