What Strategies Minimize Estate Taxes?

The gift and estate tax benefits from the Tax Cuts and Jobs Act (TCJA) are still in effect. However, many provisions will sunset at the end of 2025, according to a recent article “Trust and estate planning strategies” from Crain’s New York Business.

The most important aspect for estate planning was the doubling of the estate, gift and generation-skipping transfer tax exemptions. Adjusted for inflation, the current federal estate, gift and GST exclusion is $12.92 million in 2023. This is more than double the pre-TCJA amount, which will return in 2026, unless Congress makes any changes.

While these levels are in effect, there are strategies to consider.

Maximize gifting up to the 2023 annual exclusion of $17,000 per taxpayer, or $34,000 for married couples.
Depending on the value of the entire estate, consider strategies to keep it below the current exemption among of $12.92 million or $25.84 (married). If the estate is less than the exemption amount, no federal estate tax will need to be paid.
Plan charitable giving, including charitable IRA rollovers to make the most of the deduction on 2023 income tax returns. Qualified charitable distributions made directly from an IRA could be used to satisfy Required Minimum Distributions (RMDs) and exclude them from taxable income.
Set up 529 Plan accounts for children and/or grandchildren and consider making five years of annual exclusion gifts. Take into account any gifts made during the year to children and/or grandchildren when doing this.
Submit tuition or any non-reimbursable medical expenses directly to the school or medical provider to avoid having these amounts count towards the annual or lifetime gift tax exemption.
Discuss the use of a Grantor Retained Annuity Trust (GRAT), an irrevocable trust created for a certain period of time. Assets are placed in the trust and an annuity is paid out every year. When the trust expires and the last annuity payment is made, assets pass to beneficiaries outright or remain in a trust for beneficiaries.
Ask your estate planning attorney if a Qualified Personal Residence Trust is a good fit for you. This is an irrevocable trust allowing homeowners to transfer their home at a significantly discounted rate.
Explore intrafamily lending, which is used to transfer partial earnings to family members without lowering the lifetime estate tax exemption or triggering gift taxes.
Re-evaluate insurance coverage, which can provide opportunities to defer or avoid income taxes, or both, and provide assets to pay estate taxes or replace assets used to pay estate taxes.

Not all of these steps will be appropriate for everyone. However, understanding the options and discussing with your estate planning attorney will ensure that you are using the most effective strategies to achieve wealth preservation.

Reference: Crain’s New York Business (Feb. 13, 2023) “Trust and estate planning strategies”

What Recourse Is Available if Inheritance Is Stolen?

State inheritance theft laws typically cover four distinct aspects, says Yahoo’s recent article entitled “Someone Stole My Inheritance. What Are My Options?”

The four are:

Who committed the inheritance theft,
When the theft happened,
What was taken, and
How the theft happened.

As far as the “how” goes, note that inheritance theft can take many different forms. One of the most common examples involves elder financial abuse where someone takes advantage of an elderly person’s weakened physical or mental state to steal from them.

If you think someone’s stolen your inheritance, it’s important to review inheritance theft laws in your state. Again, each state has different guidelines regarding:

What constitutes inheritance theft,
Who has the standing to bring a civil claim or file a criminal complaint concerning a stolen inheritance,
The legal grounds for successfully pursuing an inheritance theft claim, and
Penalties and remedies for inheritance theft.

Speaking with an experienced estate planning attorney can help you see if you have standing and grounds to file a claim for inheritance theft. Your attorney may advise you to take certain steps to develop a case, including:

Taking an inventory of the estate’s assets,
Reviewing estate documents, such as wills or trusts, to look for any potential signs of fraud or forgery, and
Verifying the validity of will or trust documents.

With a larger estate, you may need to hire a forensic accountant. They specialize in examining financial documents, which may be helpful if you’re struggling to create a paper trail to support a claim of inheritance theft.

Inheritance theft laws can help to protect your rights to an estate if you think your inheritance was stolen. You can also take actions to preserve your own estate for your heirs by drafting a valid will, creating a trust and choosing trustworthy individuals to act as your executor, trustee and power of attorney.

Reference: Yahoo (Jan. 18, 2023) “Someone Stole My Inheritance. What Are My Options?”

Beneficiary Battle over Presley Estate Reveals Possible Problems in Estate Planning

This is the situation facing the estate of Lisa Marie Presley, whose estate is being challenged by her mother, Priscilla Presley, as described in a recent article, “Presley beneficiary battle sets example of poor estate planning practices” from Insurance NewsNet. These situations are not uncommon, especially when there’s a lot of money involved. They serve as a teachable moment of things to avoid and things to absolutely insist upon in estate planning.

Lisa Marie’s estate is being challenged because of an amendment to the trust, which surfaced after she died. The amendment cut out two trustees and named Lisa Marie’s children as executors and trustees.

At stake is as much as $35 million from three life insurance policies, with at least $4 million needed to settle Lisa Marie’s debts, including $2.5 million owed to the IRS.

When this type of wealth is involved, it makes sense to have professional trustees hired, rather than appointing family members who may not have the skills needed to navigate family dynamics or manage significant assets.

A request to change a will by codicil or a trust by amendment happens fairly often. However, some estate planning attorneys reject their use and insist clients sign a new will or restate a trust to make sure their interests are protected. In the case of Lisa Marie, the amendment might be the result of someone trying to make changes without benefit of an estate planning attorney to make the change correctly.

The origins of the estate issues here may go back to Elvis’ estate plan. His estate was worth $5 million at the time of this death, $20 million if adjusted for inflation. His father was appointed as the executor and a trustee of the estate. His grandmother, father and Lisa Marie were beneficiaries of the trust. Lisa Marie was just nine when her famous father died, and her inheritance was held until she turned 25.

When his father died, Priscilla was named as one of three trustees. When his grandmother died, Lisa Marie was the only surviving beneficiary. She inherited the entire amount on her 25^th birthday—worth about $100 million largely at the time because of Priscilla’s skilled management.

Terminating such a large trust and handing $100 million to a 25 year old is seen by many estate planning attorneys as a big mistake. Distribution at an older age or over the course of the beneficiary’s lifetime could have been a smarter move. Lisa Marie reportedly blew through $100 million as an adult and was millions of dollars in debt, despite the estate having plenty of cash because of two large life insurance policies.

In 1993, Lisa Marie established a trust naming her mother and former business manager as trustees. The amendment in question seems to have been written in 2016, removing Priscilla and business manager Siegel as trustees, appointing Lisa Marie’s daughter and son as trustees, and naming her son and her fourteen year old twin sons as beneficiaries.

Priscilla’s attorneys say they had no prior knowledge of the change. Certain changes in estate plans require written notification of people with interest in the estate, which did not occur. They are also challenging the amendment’s authenticity, saying it was neither witnessed nor notarized. Priscilla’s name is misspelled and Lisa Marie’s signature is not consistent with other signatures of hers.

The estate is being contested, with a preliminary hearing on the matter scheduled for April 13.

Any changes to an estate plan, particularly those involving changes to the will, trusts or beneficiaries, should be done with the help of an experienced estate planning attorney. When large changes are made, or large assets are involved, a simple codicil or amendment could lead to complicated problems.

Reference: Insurance NewsNet (Feb. 17, 2023) “Presley beneficiary battle sets example of poor estate planning practices”

What Is Probate Court?

Probate court is a part of the court system that oversees the execution of wills, as well as the handling of estates, conservatorships and guardianships. This court also is responsible for the commitment of a person with psychiatric disabilities to institutions designed to help them.

Investopedia’s recent article entitled “What Is Probate Court?” also explains that the probate court makes sure all debts owed are paid and that assets are distributed properly. The court oversees and usually must approve the actions of the executor appointed to handle these matters. If a will is contested, the probate court is responsible for ruling on the authenticity of the document and the cognitive stability of the person who signed it. If no will exists, the court also decides who receives the decedent’s assets, based on the laws of the state.

Each state has rules for probate and probate courts. Some states use the term “surrogate’s court”, “orphan’s court”, or “chancery court.”

Probate is usually required for property titled only in the name of the person who passes away. For example, this might include a family home that was owned jointly by a married couple after the surviving spouse dies. However, there are assets that don’t require probate.

Here are some of the assets that don’t need to be probated:

IRA or 401(k) retirement accounts with designated beneficiaries
Life insurance policies with designated beneficiaries
Pension plan distributions
Living trust assets
Payable-on-death (POD) bank account funds
Transfer-on-death (TOD) assets
Wages, salary, or commissions owed to the deceased (up to allowable limit)
Vehicles intended for immediate family (under state law); and
Household goods and other items intended for immediate family (under state law).

Investopedia (Sep. 21, 2022) “What Is Probate Court?”

You Need a Digital Estate Plan

Laws about intangible assets used to be a legal niche practice area. However, today’s estate planning attorney addresses digital assets as much as tangible assets, according to the article “How to Start Digital Estate Planning in 2023” from yahoo! Social media, emails, websites, photos and even the contents of a hard drive contain a vast amount of digital assets. Managing these assets is known as digital estate planning.

Digital estate planning is the process of including online and digital assets, a simple concept but one which is quite complicated. Assets in your digital estate include (but are by no means limited to):

Social media accounts
Websites and domain names
Online stores and businesses
Software and code
Pictures, video, and other media
Financial records or financial assets owned digitally
Contents of hard drives, phones, tablets and other devices
Contents of cloud storage

Today, your digital assets can be some of the most important assets left behind. Photos are the photo books of today, and websites are often the family’s business. Neglecting to plan for digital assets is the equivalent of putting family heirlooms, photos, stock certificates and cash into a storage unit and neglecting to tell anyone of the existence of the storage unit, or how to access it.

Passwords and logins. The sheer volume of passwords, combined with the increase in two-factor authentication, makes it difficult to keep track of information for users. Imagine what your executor will face when trying to locate digital assets. You need to have a secure record of accounts, including the platform, your user name, login and password information. Keeping an old-school logbook of important user names and passwords is an option, since online password storage sites themselves are occasionally hacked.

Legal authority for access. There are a surprising number of laws about who is allowed to access your digital access. Your last will needs to be clear in directing your executor as to what you want to happen to specific digital assets. Make it clear who is to inherit the account and what you want them to do with it.

Distribution and rights. One of the growing problems with digital assets is that often companies are selling indefinite licenses disguised as purchases. You may think you own something, only to find you simply rented it. On Amazon Prime, the button may say “Buy,” but you are actually downloading a licensed product and the company retains the right to end your access at its discretion. Such licenses typically expire upon the death of the buyer, with no ability to transfer the data or product to anyone else.

Your estate planning attorney will be able to explain how to prepare your digital estate, so it is as protected as your traditional assets. While making a complete inventory of digital assets may be overwhelming, consider the value of such assets as family photos and videos. Chances are, they’re worth passing down to your descendants.

Reference: yahoo! (Jan. 28, 2023) “How to Start Digital Estate Planning in 2023”

Who Inherits TV Broadcaster Barbara Walters’ Estate?

Vim Buzz’s recent article entitled titled “Who Will Inherit Barbara Walters’ Estate?” says American broadcast journalist and television personality Barbara Walters also rose to fame and received praise for speaking with people like Hugo Chavez, Fidel Castro, Anwar Sadat, Menachem Begin, Katharine Hepburn, Sean Connery, Monica Lewinsky and Vladimir Putin.

She hosted a number of television shows, including Today, the ABC Evening News, 20/20 and The View.

Walters was well known for her interviewing skills and popularity with viewers.

Her “coming out of retirement” for a special 20/20 interview with Peter Rodger, the father of the murderer of the 2014 Isla Vista shootings, Elliot Rodger, was announced on June 10, 2014.

She spoke in-depth with presidents and their wives, like Richard and Pat Nixon and Barack and Michelle Obama. In fact, she spoke with every sitting president and first lady of the United States during her tenure.

She also spoke with Joe Biden and Donald Trump, but not when they were president.

The newscaster’s estate will be inherited by her family. Chief among her assets was a Florida retreat she purchased in 2014. That was the same year she announced her retirement.

However, the property was placed on the market shortly after her dementia diagnosis took a turn for the worse.

She purchased the three-bedroom, four-bath waterfront condo in Naples for $3.4 million.

Just two years later, in April 2016, she transferred the unit to her daughter, Jaqueline Dena Guber.

The 54-year-old Guber subsequently listed the home three months later for $6.78 million. The home spent time on and off the market until September 2018, when it sold for $5.35 million.

The complex is called Moraya Bay. This luxury building has a concierge service, a private beach club, a large state-of-the-art fitness center and full security.

However, in New York City, Walters had lived in the same Upper East Side apartment overlooking Central Park since 1989.

An ABC program titled “Our Barbara” aired on January 1, 2023, and a 20/20 senior producer remarked, “For a lot of years, we maintained a close eye on Barbara.

Her final public appearance was in 2016, and her final on-air interview was with Donald Trump for ABC News in December 2015.

Reference: Vim Buzz (Jan. 3, 2022) “Who Will Inherit Barbara Walters’ Estate?”

What You Need to Know About Inheritance

Receiving an inheritance is a mixed blessing. It usually comes after a loved one has passed, while you are grieving and trying to figure out how to navigate finances. If you have received or anticipate receiving an inheritance, a recent article titled “Getting an Inheritance? Here are 4 Things to Consider” from Kiplinger, has some helpful information.

It takes time to settle an estate and distribute assets. When a decedent’s affairs weren’t prepared properly in advance, it takes even longer. A recent Gallup poll found less than half of all Americans have a will.

The probate process can be avoided if assets are held in trust. However, even trust distributions may have time-consuming complexities. It can take several months to a year or more to settle an estate.

Being aware of this will help manage heirs’ expectations. Plans for a big purchase should never be keyed to an inheritance, until after the assets are received.

The executor, the person named to administer the estate, must notify beneficiaries and interested parties, pay outstanding bills, close accounts, make an inventory of assets and discern how many of the assets must pass through probate.

They also have to file tax returns with the IRS for the estate and for the decedent’s last year of life. Only after all of this is completed can assets be distributed.

Getting an inheritance often leads to spending the money, not always wisely. Factors such as where the money came from and its intended use influence how it’s spent. However, every dollar inherited should be valued as much as every dollar you earn. Many people treat their inheritances like “fun money” and spend it without careful consideration. Consider using it to bolster your emergency fund, pay off high-interest debt and put some towards long-term savings goals. If there’s still money left over after you’ve covered the basics, then it may be time to spend it on a family trip or support a cause you believe in.

Seek professional advice. Inheritances often come with complications. For instance, there are times when an heir may have a step-up-in-basis provision for taxes. This allows heirs to have the valuation of their inheritance property be equal to its fair market value at the date of death, instead of the lower price at which it was first purchased. This helps minimize capital gains taxes on inherited assets that have appreciated over time. An estate planning attorney will be able to confirm whether this potential benefit applies to you, and what you’ll need to do to navigate any tax issues.

Take time to review your own estate plan. As an heir, or as an executor, you’re likely to be learning a lot about the estate planning process. This should motivate you to address your own estate planning and make it as easy as possible for your own heirs.

This includes keeping clear records of all accounts, along with creating any necessary estate planning documents, including wills, trusts, powers of attorney and advance health care directives. Keeping documents in a place accessible to those administering your estate will help your heirs, as will talking with your family while you are living about your finances, your estate plan and your wishes. The best inheritance of all is one that results from proper planning with an experienced estate planning attorney.

Reference: Kiplinger (Jan. 3, 2023) “Getting an Inheritance? Here are 4 Things to Consider”

What Is Needed in Estate Plan Besides a Will?

Having a will is especially important if you have young children, says FedWeek’s recent article entitled “Estate Planning Doesn’t Stop with Making a Will.” In your will, you can nominate guardians, who would raise your children in the event neither you nor your spouse is able to do so.

When designating a guardian, try to be practical.

Remember, your closest relatives—like your brother and his wife—may not necessarily be the best choice.

And keep in mind that you’re acting in the best interests of your children.

Be sure to obtain the consent of your guardians before nominating them in your will.

Also make sure there’s sufficient life insurance in place, so the guardians can comfortably afford to raise your children.

Your estate planning isn’t complete at this point. Here are some of the other components to consider:

Placing assets in trust will help your heirs avoid the hassle and expense of probate.
Power of Attorney. This lets a person you name act on your behalf. A “durable” power will remain in effect, even if you become incompetent.
Life insurance, retirement accounts and payable-on-death bank accounts will pass to the people you designate on beneficiary forms and won’t pass through probate.
Health care proxy. This authorizes a designated agent to make medical decisions for you, if you can’t make them yourself.
Living will. This document says whether you want life-sustaining efforts at life’s end.

Be sure to review all of these documents every few years to make certain they’re up to date and reflect your current wishes.

Reference: FedWeek (Dec. 28, 2022) “Estate Planning Doesn’t Stop with Making a Will”

What Happens When Property Is Owned Jointly and an Owner Dies?

When property is owned jointly, the property may pass automatically to the other owner, passing without going through probate, according to a recent article titled “Everything you need to know about jointly owned property and wills” from TBR News Media

Your will only concerns assets in your name alone without a designated beneficiary. Let’s say you have a joint checking account with another person. On your death, the account automatically becomes the property of the surviving owner. This is outside of probate, and any directions in your will won’t apply.

Real estate is most commonly owned jointly, in several different ways and each with its own set of laws.

Joint Tenancy or Joint Tenancy with Rights of Survivorship. On the death of a joint owner, the owner’s share goes to the surviving joint owner. Simple. The main advantage is the avoidance of probate, which can be costly and take months to complete.

Tenancy by the Entirety. This type of joint ownership is only available between spouses and is not used in all states. A local estate planning attorney will be able to tell you if you have this option. As with Joint Tenancy, when the first spouse passes, their interest automatically passes to the surviving spouse outside of probate.

There are additional protections in Tenancy by the Entirety making it an attractive means of ownership. One spouse may not mortgage or sell the property without the consent of the other spouse, and the creditor of one spouse can’t place a lien or enforce a judgment against property held as tenants by the entirety.

Tenancy in Common. This form of ownership has no right of survivorship and each owner’s share of the property passes to their chosen beneficiary upon the owner’s death. Tenants in Common may have unequal interests in the property, and when one owner dies, their beneficiaries will inherit their share and become co-owners with other Tenants.

The Tenant in Common share passes the persons designated according to their will, assuming they have one. This means the decedent’s executor must “probate” the will and file a petition with the court. However, a Tenant in Common may be able to avoid probate if their share of the property is held in trust, in which case the terms of the trust and not their will controls how the property passes at death. In this case, there’s no need for any court involvement.

There may be capital gains consequences when transferring ownership interests during and after life. Such gifts should never be made without speaking with an estate planning attorney. One of the more common errors occurs when the testator fails to account for the different types of ownership and how assets pass through the will. A comprehensive estate plan, created by an experienced estate planning attorney, ensures that both probate and non-probate assets work together.

Reference: TBR News Media (Dec. 27, 2022) “Everything you need to know about jointly owned property and wills”

Is Estate Planning and Writing Will the Same Thing?

An estate plan is a broader plan for your assets that may apply during your life as well as after your death. A will states where your assets will pass after you die, who will be the guardian of your minor children and other directions. A will is often part of an estate plan, but an estate plan covers much more.

Yahoo’s recent article entitled “How Is Estate Planning Different From Will Planning?” says that if you’re thinking about writing your will or creating an estate plan, it can be a good idea to speak with an experienced estate planning attorney.

A will is a legal document that describes the way you want your assets transferred after your death. It can also state your wishes when it comes to how your minor children will be cared after your death. Wills also nominate an executor who’s in charge of carrying out the actions in your will.

Without a will, your heirs may spend significant time, money and energy trying to determine how to divide up your assets through the probate court. When you die intestate, the succession laws where you reside determine how your property is divided.

Estate planning is much broader and more complex than writing a will. A will is a single tool, and an estate plan involves multiple tools, such as powers of attorney, advance directives and trusts.

Estate planning may include thinking through topics even beyond legal documents, like deciding who has the power to make healthcare decisions on your behalf while you’re alive, in addition to deciding how your assets will be distributed after your death.

Therefore, wills are part of an estate plan. However, an estate plan is more than just a will.

A will is just a first step when it comes to creating an estate plan. To leave your family in the best position after your death, create a comprehensive estate plan, so your assets can end up where you want them.

Reference: Yahoo (Oct. 20, 2022) “How Is Estate Planning Different From Will Planning?”

Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas

What Strategies Minimize Estate Taxes?

What Recourse Is Available if Inheritance Is Stolen?

Beneficiary Battle over Presley Estate Reveals Possible Problems in Estate Planning

What Is Probate Court?

You Need a Digital Estate Plan

Who Inherits TV Broadcaster Barbara Walters’ Estate?

What You Need to Know About Inheritance

What Is Needed in Estate Plan Besides a Will?

What Happens When Property Is Owned Jointly and an Owner Dies?

Is Estate Planning and Writing Will the Same Thing?

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What Strategies Minimize Estate Taxes?

What Recourse Is Available if Inheritance Is Stolen?

Beneficiary Battle over Presley Estate Reveals Possible Problems in Estate Planning

What Is Probate Court?

You Need a Digital Estate Plan

Who Inherits TV Broadcaster Barbara Walters’ Estate?

What You Need to Know About Inheritance

What Is Needed in Estate Plan Besides a Will?

What Happens When Property Is Owned Jointly and an Owner Dies?

Is Estate Planning and Writing Will the Same Thing?

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