Do Not Delay Planning Your Estate
In a recent study, only 26 percent of 3,105 wealthy individuals in the survey had even tried to completely plan their estate to get their wealth to the next generation. Furthermore, only 54 percent had even created a will, much less a trust, but most had not updated them. Thus, $1.5 trillion of the $3.2 trillion to be inherited is without direction as it goes to the next generation.
Possibly, people avoid planning their estate plan because they are not sure what they want to do with their wealth. However, more likely the cause is simple procrastination or not wanting to face their mortality.
Other than simply doing it, another important part of a good estate plan is to communicate with your beneficiaries the facts so that they can to prepare for an inheritance. The earlier in life these conversations take place, the easier the transfer of wealth will be.
A good article on this topic has been written by Sonia Talati and is found at http://blogs.barrons.com/penta/2017/02/10/dont-delay-planning-your-estate/.
By Kevin Staker
Top Four Estate Disputes of 2016 by Kevin Staker
Several famous people left behind a mess in their estate planning, or better put, lack of estate planning.
The famous author died in 2013 but the fight over his estate, estimated at $80 million, came to a head in 2016. The issue was who should pay the estate tax. His widow just clearly not liable but the question was whether his two children with the widow would bear some of the tax or would only his four children from before would pay all of $11.85 million. They lost. Pity the poor attorney who drafted the codicil at issue. He even testified this is not what Clancy intended. Rather pity his malpractice carrier.
The Miami Marlins crashed his boat in the middle of the night. Appears his mother is sole beneficiary of his trust. His girlfriend, pregnant with his child apparently, gets nothing. However, likely child can argue “pretermitted” status, in other words forgotten in plan, and so would likely get half.
Frank Sinatra, Jr.
The son of Ol’ Blue Eyes, the Chairman of the Board, died in March 2016. What a mess. Divorced wife in 2001, but continued to live together. In 2013, when here stopped paying alimony, she filed for divorce arguing they had a common law marriage. She was correct under Texas law, assume that is where they lived. California no such thing. He appealed. Then died. Appeals court ruled not a common law marriage; keys: filed separate tax returns and bought home as tenants in common. Could have been avoided by following advice of attorney.
This is the worst one. Prince dies without a Will in April. Apparently he would have intended estate to go only to his youngest sister. Instead she has to share with his five half-siblings he apparently was not fond of. Yikes!
Please go see an attorney and get your estate planning done.
By Kevin Staker
The Personal Biography Website of Kevin Staker
The website with the personal biography of Kevin Staker is at http://www.kevin-staker.com/. Kevin Staker is a Camarilo, California, living trust and probate attorney. He also has a practice in Probate Mediation and Trust Mediation. That website is found at http://www.kevin-staker.com/. Kevin Staker brings over 35 years of experience as an estate planning and taxation attorney.
Also, the Visual CV of Kevin Staker is found at https://www.visualcv.com/app/#/cvs/235464.
Estate Tax is Irrelevant for Substantially All Americans but the Step Up in Basis Is Very Valuable for Them
The federal estate tax exemption is 5 million, indexed for inflation since 2010. “Portability” allows a surviving spouse to use the unused federal estate tax exemption of their deceased spouse. The exemption in 2017 is $5,490,000. Thus, a couple can transfer nearly $11 million to their children or other beneficiaries at their deaths without any federal estate tax.
The basis of appreciated assets is “stepped-up” (or down) to fair market value at death. This eliminates any built-in capital gain on these assets. This happens even if the estate is not subject to estate tax. For example, the estate is less than the federal exemption or passes to a surviving spouse.
Even the few taxpayers is estate tax territory should think twice before giving assets to their beneficiaries during their. Even though such transfers would remove the appreciation in the transferred assets from their estate for estate tax purposes, the basis of these assets given away during life is not stepped-up at their deaths. Thus, the donees are stuck with their likely low income tax basis, and so income tax may be paid if the donee sells the asset.
Therefore, the benefit of the estate tax savings achieved by transferring an asset during a taxpayer’s life will likely be outweighed by the cost of subsequent capital gains taxes when the donees later sell the asset.
By Kevin Staker
2017 Will Likely Be an Exciting Year in Estate Planning by Kevin Staker
- Congress with the signature of President Trump is likely to change the estate tax law.
- President Trump will likely have his IRS change a number of Treasury Regulations regarding the Estate Tax.
- Take into account the Federal legislative process.
- There will be many tax legislative proposals and arguments regarding the estate tax in 2017.
- Get advice on your estate and succession plans as well as business and investment planning.
- The proposed law and regulatory changes will affect your business and investment entities, trusts and intra-family transactions.
- Fully document intra-family transactions and tax plans so as to minimize challenges by the IRS.
- By Kevin Staker of StakerLaw
The Retirement Enhancement and Savings Act Would Limit the Stretch Out of Inherited IRA Distributions
On September 21, the Senate Finance Committee unanimously approved an important retirement bill. The Retirement Enhancement and Savings Act (the “RESA”) would ease the rules for nondiscrimination for closed defined benefit plans, allow open multiple employer plans, increase the limits in saving in automatic enrollment arrangements, and promote options for lifetime income.
None of the above would affect estate planning. However, to pay for the revenue losses of the Act, it would also require beneficiaries of any IRA or other retirement account of over $450,000 to take all distributions from account or plan over the five year period after the death of the plan participant. This would apply to inherited individual retirement accounts (IRAs) and defined contribution (DC) plans.
The bill was not approved in the final flurry of legislation in Congress in December. However, it is anticipated the bill will be reintroduced in the Congress in the next session in 2017.
Kevin Staker is a member of the California state bar. His listing is found at:
He is an active attorney and may practice law in California. For more details see: http://members.calbar.ca.gov/fal/Member/Detail/101400
Kevin Staker is also found on Avvo.com at
He has a rating of 7.9/10 – Review by Avvo
By Kevin Staker
Estate Tax May Be Repealed, Believe It or Not
by Kevin Staker
Since the estate tax exemption was raised to $5,000,000 in 2010 I had told clients I thought the estate tax would never be repealed. I believed that there would never be 60 Republican senators, the number needed to overcome a filibuster in the Senate by the Democrats. It appears I was wrong.
Turns out only 51 Republican senators are needed if tax reform is enacted under “budget reconciliation”. This is how the Democrats passed Obamacare, the Affordable Health Care Act, by a mere majority in 2010.
The Republicans have 52 votes in the Senate. The Republican majority House of Representatives favors estate tax repeal. Their plan, “A Better Way”, states they want to “repeal the Death Tax so that the loss of a family member will no longer be a taxable event. See https://abetterway.speaker.gov/_assets/pdf/ABetterWay-Tax-Snapshot.pdf
President (presently elect) Trump favors estate tax repeal:
The Trump Plan will repeal the death tax, but capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms. To prevent abuse, contributions of appreciated assets into a private charity established by the decedent or the decedent’s relatives will be disallowed. (See https://www.donaldjtrump.com/policies/tax-plan/).
Hence, I, Kevin Staker, must admit I was wrong. The federal estate tax will now be likely repealed.
By Kevin Staker
The mediation website of Kevin Staker is now online at http://kevin-staker-mediation.com/ . Kevin Staker is a probate and trust attorney in Ventura County, California. He has been certified by the California Board of Legal Specialization as a specialist in both Taxation as well as Estate Planning, Probate, and Trust Law. Kevin Staker has been practicing law for over 35 years.
He will conduct probate mediations and trust mediations.
Kevin Staker can be reached at 805-482-2282.
Federal Estate Tax Exemption for 2017
The Internal Revenue Service has announced in IRS Revenue Procedure 2016-55 that the federal estate tax exemption for 2017 will be $5,490,000. The IRS also announced the gift tax exclusion will remain at $14,000.
The IRS never makes these things easy. It would have been nice if the exemption had gone to $5,500,000 to make the math easier for us. But alas the IRS was bound to the strict inflation adjusting formula of the Internal Revenue Code. This formula adjusts for inflation applied to the $5,000,000 exemption since 2010.
The Rev Proc is found at https://www.irs.gov/pub/irs-drop/rp-16-55.pdf. This technically is not official because it has not yet been published in a formal Internal Revenue Bulletin. The full IRS announcement released on October 25, 2016, is found at https://www.irs.gov/uac/newsroom/in-2017-some-tax-benefits-increase-slightly-due-to-inflation-adjustments-others-are-unchanged. This announcement lists the slight increase in a number of inflation adjusted figures under the federal tax law.
By Kevin Staker