ILIT An existing insurance policy can be transferred into an irrevocable life insurance trust (ILIT), or the trustee of the ILIT can purchase an insurance policy in the name of the trust. The donor can make gifts to the ILIT that qualify for the annual gift tax exclusion, and the trustee will use those gifts…
USING SPOUSAL LIFETIME ACCESS TRUSTS (SLAT) TO PROTECT YOUR ESTATE TAX EXEMPTION With the threat of a lowered estate and gift tax exemption amount, a spousal lifetime access trust (SLAT) allows donors to lock in the current, historic high exemption amounts to avoid adverse estate tax consequences at death. The donor transfers an amount up…
Installment Sale Installment Sale to an Irrevocable Trust – This strategy is similar to the intrafamily sale. However, the income-producing assets are sold to an existing irrevocable trust instead of directly to a family member. In addition to selling the assets, the donor also seeds the irrevocable trust with assets worth at least 10 percent…
Swap Power Swap Power for Basis Management – Assets such as property or accounts gifted or transferred to an irrevocable trust do not receive a step-up in income tax basis at the donor’s death. Gifted assets instead retain the donor’s carryover basis, potentially resulting in significant capital gains realization upon the subsequent sale of any…
Notes and Sales Intrafamily Notes and Sales – In response to the COVID-19 crisis, the Federal Reserve lowered the federal interest rates to stimulate the economy. Accordingly, donors should consider loaning funds or selling one or more income-producing assets, such as an interest in a family business or a rental property, to a family member…
Strategies to Consider in an Election Year Wealth Transfer Strategies to Consider in an Election Year – With a push by the Democratic party to return federal estate taxes to their historic norms, taxpayers need to act now before Congress passes legislation that could adversely impact their estates. Currently, the federal estate and gift tax…
Probate 101 Understanding Probate 101 – Most individuals aren’t sure what the term “Probate” actually means. They think of it only as a lengthy, costly, and drawn-out legal formality that takes place to handle a deceased person’s stuff. Technically, what Probate means is to prove the Will in a Probate Court proceeding. Some time ago,…
Estate Planning in 2020 The Tax Cuts and Jobs Act, called The Act signed into law in 2017, provides excellent estate planning opportunities. The lifetime exemption amount for the gift, estate, and generation-skipping transfer taxes increased from $11.4 million to $11.58 million on January 1, 2020. The annual gift tax exclusion amount remains at $15,000…
Transferring Assets Transferring Assets to the Next Generation – With the current estate tax exemption at $15.8 million per person, you might be asking, do I transfer the property now or wait? It is generally advised to make gifts of assets with a high tax basis and retain assets that have been significantly appreciated. Retaining…
Bill Ab3182 Would Restrict Homeowners in an HOA to Vote to Prohibit or Limit Rentals. This Bill Ab3182 Has Passed in the House and the Senate. It is Waiting on Governor Newsom’s Approval. Assemblyman from San Francisco, Phil Ting, authored the Bill. In his original proposal was a heinous bill, later amendments improved it from…