Articles Posted in Estate Planning

Senate passes the House proposed extension to the time requirement of 10 years for Grantor Retained Annuity Trusts (GRAT’s). This extension is to amend section 2702 of the Internal Revenue Code of 1986. Along with that change, comes the mandate that a GRAT’s fixed amount cannot “decrease relative to any prior year” during the first 10 years of the required annuity time period. The third mandate is a GRAT has to have a value greater than zero “at the time of transfer” in order to be valid.

Even though setting up this type of trust may be more risky and more difficult, it may still be a great option for your specific needs. A person wanting to pursue this avenue can still get the benefit of donating large sums of assets to the trust without paying a gift tax on those assets. You should discuss and compare the potential positives and negatives of setting up a GRAT with a Jacksonville, Florida Estate Planning attorney who knows the in’s and out’s of Grantor Retained Annuity Trusts.

While estate taxes are not a compelling reason for most of us to make an estate plan this year, there are many other reasons that provoke strong emotions and the need to do proper planning. Below is reason number 10. If you know someone who needs an estate plan, please send them a link to this page.

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With the current Gift tax exemption at 5 million dollars + 13,000 per person per year, many people are not concerned about making gifts or the taxes. It is important to remember that unless a gift tax return is filed with annual gifts to an individual exceed $13,000 there could be penalties and interest for the unreported gifts. Talk to your CPA about filing a gift tax return if you are giving an individual more than the exempt $13,000 per year.

In addition, gifts keep the current basis so to the extent that you give an appreciated asset, the recipient will have to pay the capital gains based on your cost. If they inherit the asset, there the beneficiary receives the asset as the cost basis as of your date of death. This can have significant advantages to highly appreciated assets.

Lets say you have Apple stock you purchased at $14 a share 12 years ago. It has split 3 times since then so your cost is less than $5 a share. With a value today of $350 / share and a value of $500 when you die.

The estate tax exemption has increased to $5 million dollars for the years 2011 and 2012. Why would this effect you? Many Florida Wills are drawn up to distribute your spouse’s assets to your children in an amount equal to the federal exemption amount, and the remainder of the assets to you. In other words, if the total assets of your husband is $5 million and his Will directs that the federal estate exemption amount goes to your kids, with the remainder to you, and your spouse dies (in 2011 and 2012),that would leave you with 0 (ZERO).

Florida Estate Planning Lesson: Make time to not only talk to your accountant about the tax laws and exemptions and how they may effect you, but schedule an appointment with a Ponte Vedra Estate Planning Attorney. An experienced Estate Planning Attorney can review your Wills and give you and your spouse the necessary advice to make sure you are protected from future loss of inheritance.

Ponte Vedra Wives who may not have a spouse worth millions, don’t relax. You also need to consult with Florida Attorneys who specialize in Estate Planning to ensure that whatever assets you and your husband do have, are distributed according to your wishes and plan.