California Estate Planning Blog by Kevin Staker

December 14, 2017

The Conference Committee of Congress on Tax Reform Reaches Agreement

Filed under: Uncategorized — Kevin Staker @ 7:38 am

Senate-House Conferees Reach Agreement on the Tax Cuts and Jobs Act of 2017, the Republican Version of Tax Reform

Top individual tax rate is lowered from 39.6 percent to 37 percent.

Corporate tax rate is lowered from 35 percent to 21 percent — this rate is 1 percentage point higher than the 20 percent rate initially passed by the Senate and House.

Deduction for pass-through businesses is set at 20 percent.  This deduction when combined with the decreased top rate for individuals makes a top marginal tax rate of 29.6 percent.

Mortgage interest deduction is lowered to $750,000.  This amount is a compromise.  This is half way between the $500,000 limit passed by the House and the prior $1 million limit of the law favored by the Senate.

Estate tax exemption is doubled.  This was the Senate position. Hence for 2018, the exemption will be $11.2 million.  This rate is indexed for inflation from 2010 from $5 m

Income tax exclusion for tuition waivers are preserved for grad students.  This was the Senate position.

Deduction for student loan interest is preserved.

Deduction for medical expenses is preserved.  The House wanted to eliminate the deduction.  However, the floor is actually lowered for two years from 10 percent to 7.5 percent of adjusted gross income. Senator Collins of Maine, a Republican moderate, insisted on this change to assure her vote.

Corporate alternative minimum tax is repealed.

Exemption for the personal alternative minimum tax is raised from $54,300 to $500,000 for individuals and from $84,500 to $1 million for families.

Penalty for not having health insurance is repealed.   This effectively eliminates ObamaCare’s individual mandate.

The Arctic National Wildlife Refuge is opened to energy exploration. This was required to get the vote of Senator Murkowski, another Republican moderate. Adding a non-tax provision was required for it to be a reconciliation bill, so only a majority vote is required in the Senate. Otherwise the Senate filibuster rule of 60 votes would required. This is how Democrats in 2010 got the Affordable Care Act, Obamacare, passed.

Note, not all of the bill has been drafted. They are still working on other details, such as how many tax brackets to have. We shall see.

This article has been written by Kevin Staker. Kevin Staker is found on Twitter at https://twitter.com/kevinstaker. The Superlawyer profile of Kevin Staker is found at https://profiles.superlawyers.com/california-southern/camarillo/lawyer/kevin-g-staker/d9fa5c59-0c2a-4e8f-94e0-682892fe4481.html. Kevin Staker is also on Facebook at https://www.facebook.com/Kevin-Staker-of-StakerLaw-38289441240/. Finally, please note the probate and trust mediation practice of Kevin Staker has completed its first, very successful year. The website is found at http://kevin-staker-mediation.com/.

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December 9, 2017

Differences Between Senate and House Tax Reform Bills by Kevin Staker

Filed under: estate tax,Kevin Staker,Uncategorized — Kevin Staker @ 6:22 am
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Differences Between Senate and House Tax Reform Bills by Kevin Staker

 

The two houses of Congress have passed two separate tax bills:

Major Differences:

  • Medical Expense Deduction – House repeals and Senate actually expands.
  • Mortgage Interest Deduction – House reduces maximum loan amount to $500.000 and Senate keeps at $1,000,000.
  • Graduate Student Tuition Waiver – House treats as taxable income and Senate keeps tax free
  • Pass Through Income – House caps rate at 25 percent but excludes service businesses and Senate adopts a 23 percent income deduction for all businesses, including professionals.
  • Alternative Minimum Taxable Income – House repeals corporate and individual, and Senate retains corporate and retains individual but with higher exemption.
  • Estate Tax – House increases exemption to $10 million indexed for inflation since 2010 with repeal in 2023, and the Senate does the same but no repeal.

The two houses will next have a conference committee to hash out the differences.  I suspect the final bill will be closer to the Senate version because they can afford to lose only one more Republican senator.

We shall see.

By Kevin Staker

December 8, 2017

Kevin Staker is a Probate and Trust Mediator in Ventura County

Filed under: Uncategorized — Kevin Staker @ 10:10 am

Kevin Staker is a Probate and Trust Mediator in Ventura County.

In probate or trust mediation, the parties work with a neutral mediator to try to resolve their disputes without litigation and an eventual trial. Parties may go to mediation before or after filing a lawsuit. The parties and their attorneys meet with the mediator in a private, confidential setting.

The probate and trust mediation website of Kevin Staker is found at http://kevin-staker-mediation.com/.  The website includes a page by Kevin Staker on Principles of Probate and Trust Mediation, this is found at http://kevin-staker-mediation.com/principles-probate-trust-mediation/.  Another page by Kevin Staker is Focus of Probate and Trust Mediation; this page is found at http://kevin-staker-mediation.com/trust-probate-mediation-focus/.

By Kevin Staker

November 30, 2017

The Professional Bio Website of Kevin Staker, www.kevinstaker.com, is Back Online

Filed under: Kevin Staker,Uncategorized — Kevin Staker @ 3:23 pm
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The Professional Bio Website of Kevin Staker, http://www.kevinstaker.com, is Back Online.

The http://www.kevinstaker.com website, the professional biography website of Kevin Staker is back online.  This website of Kevin Staker can me found at kevinstaker.com.

Kevin Staker is a living trust attorney and probate and trust mediator in Camarillo, Ventura County, California.

See also https://twitter.com/kevinstaker

By Kevin Staker

November 6, 2017

Estate Planning and the The Tax Cuts and Jobs Act, 2017 Tax Reform by Kevin Staker

Filed under: estate tax,estate tax news,Kevin Staker,Uncategorized — Kevin Staker @ 4:56 pm
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Estate Planning and 2017 Tax Reform

The Republicans in Congress have introduced the The Tax Cuts and Jobs Act, H.R. 1.  The is the 2017 attempt at tax reform by the Republicans in Congress.

The changes proposed include the following:

  • The exemptions from the Estate Tax and the Generation-Skipping Transfer Tax are doubled from $5 million (as of 2011) to $10 million, which is indexed for inflation. This provision would apply to tax years beginning in 2018.  Hence, with inflation the exemptions for 2018 will be $11.2 million.
  • Beginning in 2024, the estate and generation-skipping taxes are repealed.
  • The step up in income tax basis is maintained.
  • The gift tax is lowered to a top rate of 35 percent and retains a basic exclusion amount of $5.6 million for 2018, again indexed for inflation.
  • The annual exclusion of $14,000 increases to $15,000 in 2018 and is also indexed for inflation.

The stated reasons are:

• The estate and generation-skipping taxes impose additional levels on tax on income and
assets that have generally already been subject tax. By repealing the estate and
generation-skipping taxes, family businesses that would pass from one generation to the
next would no longer be subject to double or even triple taxation.
• By repealing the estate and generation-skipping taxes, a small business would no longer
be penalized for growing to the point of being taxed upon the death of its owner, thus
incentivizing the owner to continue to invest in more capital and hire more employees.

Current law provides property in an estate is generally subject to a top tax rate of 40
percent before it passes to the estate’s beneficiaries. When property is transferred during the life of a donor, it is subject to a top gift tax rate of 40 percent, with the first $14,000 being excluded from the gift tax on a per-donee, annual basis. Additionally, property that is transferred beyond one generation, whether by bequest or by gift, is subject to an additional generation-skipping tax
Transfers between spouses are excluded from these taxes, and when an individual dies
without his or her assets exhausting the basic exclusion amount, any unused basic exclusion amount passes to his or her surviving spouse, with a top basic exclusion amount of $10.98 million for 2017. When a beneficiary receives property from an estate, the beneficiary generally takes a basis in that property equal to its fair-market value at the time the decedent dies, which is known as taking a step-up in basis. However, when a donee receives a gift from a living donor, that donee generally takes the donor’s basis in that property, which is known as taking a carryover basis.

Please note: for the Act to pass, only two Republican senators can oppose it.  Otherwise, the Act will be defeated just as was Obamacare repeal.

By Kevin Staker

June 13, 2017

IRS Extends Missed Deadlines for Estate Tax Portability by Kevin Staker

To transfer the unused estate tax exemption of a deceased spouse, the transfer must be done in an estate tax return filed for the deceased spouse.  The deadline for such a return is nine months after the death of the deceased spouse.  That deadline cannot be extended by the typical extension for filing an estate tax return.

Many surviving spouses have missed that deadline.  Such a spouse up until June 9th had to apply for an expensive private letter ruling from the IRS to be allowed to file the estate tax return after the nine month deadline had been missed.  That entailed a filing fee of thousands of dollars and attorney’s fees of thousands and thousands of dollars to fill out the amazingly complex paperwork applying for a simple extension.

The IRS has come to its senses and on June 9th in Revenue Procedure 2017-34 (https://www.irs.gov/pub/irsdrop/rp-17-34.pdf) has ruled such a late return may now be filed by the later of January 2, 2018, or two years after the death of the decedent.

I personally had one client I called immediately.  I had recommended he go through the private ruling process because it would have saved tens of thousands of dollars in estate tax if he were to die in the near future.  Lucky for him he did not follow my advice.

See also http://www.journalofaccountancy.com/news/2017/jun/portability-election-extension-201716844.html

By Kevin Staker

 

April 21, 2017

The Future of the Gift Tax by Kevin Staker

Filed under: Kevin Staker,Uncategorized — Kevin Staker @ 8:17 pm
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Allyson Versprille in an article at bna.com, Gift Tax Tweaks Could Lead to Unsavory Avoidance Tactics, speaks of the reasons for or against repeal of the Federal Gift Tax if the estate tax is repealed as part of the Republican’s tax reform effort in 2017.

Some of her points are as follows:

Changes to the gift tax could create unintended consequences or make it easier to avoid income or other taxes using new and existing techniques. Republicans’ proposals vary—from ignoring the gift tax, retaining it as is, or repealing it altogether. Some of the impacts are as follows:

Repealing both the estate and gift taxes—with no other changes—could impact the most. Many think if the estate tax is repealed, the gift tax should be as well. But there are several reasons not to do it.

First, the gift tax backstops the federal income tax. Without a gift tax, an individual could give property to another, such as a child, probably resulting its income being taxed at a lower rate, even if sold.

Second, there would be more gaming the system.  People would give away assets, but not really giving them away until death.  For example, instead of giving a child $1,000,000 it could be a loan with the note given to the child at death. Neither the House GOP’s tax blueprint nor President Trump’s campaign proposal mention the gift tax. However, Trump has proposed replacing the estate tax with a capital gains tax on estates over $10 million.   This would include an exemption for small businesses and family farms.  (Oh, the planning possibilities start to dance in my head already.) If this change is made, it would make sense a gift would also trigger a capital gains tax.

However, how this would affect trusts set up for generations makes my head hurt. Repealing both the estate tax and the gift tax could accelerate gift-giving if it appears the estate tax is about to be reinstated. On the other hand, if estate tax repeal appears it will be permanent, Congress keeps the gift tax is retained and the “step up in basis” at death, the wealthy may not make gifts. In this case, the wealthy would hold onto their assets until death, get the step up in basis, and then allow the asset to go to the next generation with an estate tax .

Note: estate tax repeal will likely only be temporary for 10 years.  This happens because of “reconciliation”.  The bottom line is only 51 votes needed in the Senate as compared to 60 if will be permanent (needed to avoid a filibuster in the Senate).

February 10, 2017

Top Four Estate Disputes of 2016 by Kevin Staker

Filed under: Kevin Staker,Uncategorized — Kevin Staker @ 5:11 pm
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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.

Tom Clancy

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.

Jose Fernandez

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.

Prince

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!

Conclusion

Please go see an attorney and get your estate planning done.

 

By Kevin Staker

October 17, 2016

Yelp Listing of Kevin Staker

Filed under: Kevin Staker,Uncategorized — Kevin Staker @ 12:40 pm

The Yelp listing of Kevin Staker is now found at https://www.yelp.com/biz/kevin-staker-at-stakerlaw-tax-and-estate-planning-law-corporation-camarillo.  Kevin Staker is a living trust attorney in Camarillo, California.  Yelp is a fairly good source of reviews on Kevin Staker.

He is also beginning a practice as a mediator of probate and trust disputes.  His focus will be caring for the parties and really listening to what are their concerns in the matter.

By Kevin Staker

September 19, 2016

Various Updated Sites for Kevin Staker

Filed under: Uncategorized — Kevin Staker @ 2:39 pm
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LinkedIn

Kevin Staker has updated his profile at Linkedin. The Kevin Staker profile on Linkedin is found at https://www.linkedin.com/in/kevinstaker.

Some success has come from this profile on Linkedin.  Hopefully more will occur.

Lawyers.com

Kevin Staker came be found on lawyers.com at http://www.lawyers.com/camarillo/california/kevin-g-staker-82942-a/.  There are 11 peer reviews with a score of 4.7 out of 5.  There are 25 client reviews with an outstanding score of 4.8 out of 5.0.  Clients have given a positive review of Kevin Staker 96 percent of the time.  Kevin Staker is “AV” rated by his peers as reported by Martindale-Hubbell.

Yelp

The Yelp reviews of Kevin Staker are at https://www.yelp.com/biz/stakerlaw-tax-and-estate-planning-law-corporation-camarillo.  There is only one review, but it is 5 out of 5 stars.  Kevin Staker is a living trust attorney in Camarillo, California.

SuperLawyers

SuperLawyers rates Kevin Staker as the “Top Rated Estate Planning & Probate Attorney in Camarillo, CA”.  The Superlawyers profile of Kevin Staker is at http://profiles.superlawyers.com/california-southern/camarillo/lawyer/kevin-g-staker/d9fa5c59-0c2a-4e8f-94e0-682892fe4481.html.  Superlawyers has a patented selection process.

California State Bar Listing

The California State Bar profile of Kevin Staker is located at http://members.calbar.ca.gov/fal/Member/Detail/101400.  This profile also discusses how Kevin Staker has two certified legal specialties: Estate Planning, Trust & Probate Law (State Bar of California) and Taxation Law (State Bar of California)

Blog on Federal Deficit Reduction

The Kevin Staker Blog on Federal Deficit Reduction is found at http://kevinstaker.tumblr.com/.  Kevin Staker has some frank opinions on this topic.

Twitter

The Twitter feed of Kevin Staker is at https://twitter.com/kevinstaker. Kevin Staker does tweet on occasion.

 

 

 

 

 

 

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