Category: Estates & Trusts
The Use of Irrevocable Trusts in Long-Term Care Planning
The Use of Irrevocable Trusts in Long-Term Care Planning In Revenue Ruling 2023-2 the IRS has ruled that assets held in a trust that is a “grantor trust” (a trust that is treated for income tax purposes as the alter ego of the grantor to the trust because of the…
IRS proposes new “clawback” regulations
There is a computational quirk (that tax lawyers call “clawback”) in the manner in which the federal estate tax is calculated. What is “clawback” of estate tax? Because the estate tax and the gift tax are accumulated into a single “transfer” tax, a problem occurs when the lifetime exclusion from…
Company Owned Life Insurance and Buy-Sell Agreements
In Connelly v. U.S., USDC ED MO, Case No. 4:19-c-01410, September 21, 2021, the District Court for the Eastern District of Missouri held that company-owned life insurance on the life of a deceased shareholder that was used to redeem the deceased shareholder’s shares increased the fair market value of the…
New Jersey Court Holds Against Arbitration Clause in Last Will & Testament
The New Jersey Superior Court, Chancery Division, Bergen County, in the case of In Re Estate of Hekemian, a case of first impression, invalidated a binding arbitration provision that was included in the Decedent’s Last Will and Testament. The Plaintiff, one of four (4) sons of the Decedent, filed a…
When Gifting to Save Estate Taxes, it is Essential to Consider Loss of Step-Up in Basis
Since the House Ways and Means committee proposed reducing the estate and gift tax exemption from $11,700,000 to approximately $6,000,000 (as adjusted for inflation) effective January 1, 2022, there has been a rush by many wealthy individuals to make gifts by utilizing the $11,700,000 exemption while it is still available…
Could dramatic estate tax changes be looming?
As was reported in our newsletter dated September 16, 2021, House Ways and Means Democrats Proposed Changes (link), the Ways and Means Committee of the United States House of Representatives (the principal tax writing committee) recently proposed substantial tax changes. Several of the provisions in the bill could have a…
Estate and trust deductions on a fiduciary income tax return post 2017, how does it now work?
Tax professionals are often questioned about limitations on tax deductions for income tax purposes and, most of the time, the focus is on the returns of individuals, IRS Form 1040. However, for “fiduciary” returns (a trust or estate) that are filed on Form 1041, there are similar limitations that may…
New Jersey Doctrine of Probable Intent further clarified for charitable gifts
What happens if I make a gift to a charity under my estate plan and the charity goes away? Many clients make charitable bequest under their estate plan. A common question of those clients is what if the charity isn’t around when I pass? New Jersey and most states use…
Estate of Lorraine M. Kelley – Important Lessons for Paying Estate Taxes on Time!
The Estate of Lorraine M. Kelley never paid the estate taxes due despite many years elapsing and those funds passing through a second estate and multiple executors. U.S. v. Estate of Kelley, et al., 126 AFTR 2d 2020-6605, (DC NJ), 10/22/2020. Lorraine M. Kelley died on December 30, 2003. The…
Estate tax planning in 2020, it’s deja vu all over again! Time to consider gifting strategies in some cases
Authored by Glenn A. Henkel and Samantha Heaton Recent developments with the coronavirus have caused some proactive and wealthy clients to consider whether tax law changes may create an increased tax burden in the future. As a result, some are revisiting the tax rules and determining whether immediate action is…