Gift Tax Archives - Taggart Law, LLC

The Donald’s Impact on Estate Planning: Good or Bad?

February 25, 2017 by Gregory Leave a Comment

Jonathan G. Blattmachr & Martin M. Shenkman, two major gurus in the estate planning field, seem to think a Trump administration will lead to the need for most of us to engage in some planning:

The election of Donald J. Trump as President, along with a Republican-controlled House and Senate, may lead to the most radical changes to the estate tax since it was first enacted.

I’ve only read a brief abstract from the article at this link. I’ll report back after I’ve read the actual piece. (I’m not a fan of the online viewing option for this story. Hard to read.)

Filed Under: Estate Planning, Gift Tax, Taxes, Trusts, What I've Been Reading Today, Wills

Just Leave It Alone?

February 21, 2017 by Gregory Leave a Comment

As many will recall, then candidate Trump promised to eliminate the estate tax. That was then. This is now–he’s the President. What will he actually do? Will he also eliminate the estate tax’s two siblings: the gift tax and the generation skipping tax? No one knows, though many people care, especially those who preach tax fairness.

Given that married couples currently have to be worth almost $11 million dollars before the estate tax kicks in–it’s more complicated than that, but still–eliminating the estate tax is going to help only the very, very wealthy. And maybe that’s a bad (or a good) thing.

I’m here to argue for the advisor. Estate planning attorneys, life insurance and investment advisors, CPAs and financial planners. I’m betting that each and every one of them agree with the following:

Because the estate tax generates a meager 0.005 percent of annual tax collections, according to I.R.S. figures, it generates far more political debate than federal revenue. And among many tax planners, the calls aren’t so much for reform as for stability, or at least a period of benign neglect.

“Just leave it alone so we can plan,” Mr. Jenney said. “But every administration seems to want to put their own twist on the estate tax.”

Filed Under: Attorneys, Business Planning, Estate Planning, Estate Tax, Family Business, Farms and Ranches, Financial Advisors, Gift Tax, Insurance, Life Insurance, Tax Court, Taxes, Trusts, Wills

Enforcing Charitable Pledges: Well, You Said You Would Give Them Money. What Did You Expect?

October 10, 2016 by Gregory Leave a Comment

An interesting piece at Wealthmanagement.com about how and why charities seek to enforce charitable pledges and what theories courts use to accommodate their claims. The first two paragraphs are key:

In August, it was widely reported in the media that Duke University had filed a claim against the estate of Aubrey McClendon, the former CEO of Chesapeake Energy Corp., for payment of nearly $10 million in outstanding charitable pledges, once again raising the question of whether and to what extent charitable pledges are legally enforceable.

States typically rely on one of three theories to find that a charitable pledge is enforceable. A pledge may be enforceable as a bilateral contract, as when a donor pledges a sum of money in exchange for the charity’s naming a building after the donor.¹A second theory treats a charitable pledge as a unilateral contract. A donor offers to make a gift in the future that’s accepted when the charity incurs a liability in reliance on the offer.²When the charity provides no consideration for a contract, a pledge may be enforceable under the doctrine of promissory estoppel, an equitable remedy applied when a charity would suffer damages if the pledge weren’t enforced.

The rest of the piece is worth a read, especially if you’re interested in how the law is developing or in why charities should care about those developments.

Filed Under: Charitable Giving, Contracts, Estate Planning, Gift Tax, Wealth Transfer

Gift and Estate Planning Coupons May Worth Less After This Election

September 8, 2016 by Gregory Leave a Comment

When you give money or property to someone while you’re alive, you make a gift. If that gift is beyond a certain size, you will also have to pay a gift tax on it. When die, your money or property will go to those whom you name as your beneficiaries in your will or trust. But yet again, if your estate is beyond a certain size, your estate will have to pay a tax on it, this time an estate tax.

Now Uncle Sam has, of late, been pretty generous**. He’s given each of us coupons* to pay that tax–up to a certain amount. Currently, each of us has a lifetime coupon worth $5,450,000; that is, each of us can give away (or devise or bequeath upon our death) $5,450,000 without having to pay any gift or estate tax. And if we’re married, we can combine these “applicable exclusion amounts” so that as a couple we can give away twice that amount, or $10,900,00 without any gift or estate tax being assessed.

It gets better. In addition to the amounts I just mentioned, each of us can make annual gifts of $14,000–an annual coupon, if you will–to as many people as we want, family, non family, friends, and enemies. Every year! And if we’re married, we can combine our gifts. That’s $28,000. Gift tax free.

And if you finally do have to pay an estate or gift tax? The top rate is 40%.

All that was to tell you this: If Hillary Clinton is elected, she’s promised to reduce the applicable exclusion amount–the large lifetime coupon–to just $3,500,00 for an individual, $7,000,000 for a married couple. That’s almost a $4 million drop from present levels. I’m unsure at this time if she had any plans to reduce the annual gift coupon.

Donald Trump wants to repeal the estate tax.

FWIW, this is not a political post, or at least I don’t intend it to be. Just the facts. And that’s that.

*In addition to the two “coupons” discussed in this post, there’s a third, the unlimited marital deduction, which allows spouses to pass property between one another without tax consequences. Ultimately, the last to die may have an estate tax bill to pay.

**Generous is being generous. We’re talking about money that is not Uncle Sam’s to begin with, but humor me here.

Filed Under: Estate Tax, Gift Tax, Taxes