Gift tax

Bear Markets and Estate Planning

Published on: June 16, 2022 | by Ettinger Law Firm

Earlier in 2022, the stock market entered what is referred to as a bear market, which happens when the market drops more than 20% lower than a recent high. Financial experts have cited various reasons why the market has declined including, but not limited to, the war between Russia and Ukraine, energy shortages, and inflation. Each of these elements has encouraged investors to avoid losses. The market’s volatility will unfortunately remain for some time, which might make you wonder how this type of market could impact our estate planning.

Bear and Bull Markets

Bear markets are often followed by bull markets, in which losses are recovered. The most substantial growth in the stock market often occurs in what follows a bear market. As a result, people who want to make the most of estate planning should realize that bear markets are an ideal time to make the most of the decline in investment values to make the most of gifts that will be appreciated in the future and to take advantage of existing income tax benefits.

What to Consider Following the Increase in the Annual Gift Tax Exclusion

Published on: March 14, 2022 | by Ettinger Law Firm

In 2022, the annual exclusion for federal Gift Taxes was increased to $16,000 per individual annually. Even though a near-universal acceptance exists that gift-giving can play an important role in estate planning, a person should consider various issues before making gifts.

The way that gifts are made can have a substantial impact on beneficiaries. This is especially true if the party who receives a gift is below the age of 21. Direct gifts made to young people can have their own challenges which include exposure to creditors and limited control over how gifts are made. Consequently, it’s a wise idea in these situations to consider placing gifts in a trust.

The Danger Behind Direct Gifts

Hidden Estate Planning Advantage to This Year’s IRS Filing

Published on: March 10, 2022 | by Ettinger Law Firm

This year’s tax filing season has some hidden advantages. Amidst a backdrop of the Covid-19 pandemic and current tax laws, the Internal Revenue Service has predicted over 160 million Americans could start filing their federal tax returns at the end of January 2022. In regards to gift returns, this does not appear to be as nearly as problematic. The challenges primarily involve individual returns. Among the various tax strategies that clients have been using this year include under-the-radar trusts.

In 2021, donors could give up to $15,000 to another person like a friend or family member without this amount is subject to taxes. Each spouse in half of a married couple could utilize this limit to pass on assets to beneficiaries. Internal Revenue Service returns for many gifts over the threshold (As well as some under this threshold) are due on April 18, which is the same deadline that individual tax returns are due this year. Additionally, tax-payers can pursue an automatic six-month extension for both of these returns.

The Role of Annual Gifts

Making the Most of Estate Planning in 2022

Published on: February 12, 2022 | by Ettinger Law Firm

While some people anticipated otherwise, 2022 started without any new federal regulation or tax changes addressing estate planning. As proposed legislation passed through the legislative process in 2021, major potential changes to federal estate and gift tax were dropped. These potential changes included a decrease in the estate and gift tax exemption as well as the elimination of a step-up basis.

Furthermore, no reports exist that any changes will be made any time soon. This is not a guarantee, though. Potential changes can emerge at any point in the future. While no changes are looming, it’s worth noting that one substantial change will occur in a few years when in 2025, the federal estate and gift exemption will be reduced to $5,000 per person.

Positive Changes to Estate Planning This Year

Will The Government Shutdown Affect Your Estate Planning?

Published on: October 3, 2013 | by Ettinger Law Firm

News this week is dominated by one topic: the federal government shutdown. Like most others, you may be wondering how (or if) the developments out of D.C. will affect you.

The Background

The shutdown itself is caused by Congress’s failure to pass an appropriations bill allowing for the spending of money to fund day-to-day government operations. More specifically, Republicans in the House of Representatives are refusing to pass a bill that includes funding for the Affordable Care Act. Usually disagreements about these issues are handled separately from daily government funding, but the House GOP has combined the issues and refused to budge, leading to the shutdown.

GRATs – A Good Idea in this Low Interest Rate Environment?

Published on: August 6, 2013 | by Ettinger Law Firm

A post over at Think Advisor last week provides some helpful insight into one financial and estate planning tool which might be appropriate for some New York residents. The tool is know as a GRAT – Grantor Retained Annuity Trust. As with many other trusts, one key purpose of the GRAT is to minimize tax liability, particularly for those with significant assets.

How It Works

The basic concept behind the GRAT is straightforward. Assets are placed in trust. The grantor (person creating the trust) then retains the right to receive fixed payments from the trust. Those payment can last either for a set period of time designated in advance or over the grantor’s life. At the end of the trust’s life the assets placed in the trust then fall to the beneficiaries.

Forbes on Gifting – When an Inheritance Can’t Wait

Published on: June 24, 2013 | by Ettinger Law Firm

One of the most common questions that local families ask related to estate planning and assets protection involve gifts: Whether to give them, when to give, how much, and in what form.

Of course, no two situations are identical, and so it is impossible to list a set of rules regarding when and how large-scale gifting should be done in every case. However, a Forbes article this week on the topic provides a good starting point for New York families to familiarize themselves with the basic concept and major issues to consider.

Helping Children Now

Federal “Super Committee” May Target Gift Tax in Deficit Reduction Scheme

Published on: November 1, 2011 | by Ettinger Law Firm

The gift tax has implications in a variety of New York estate planning situations, from deciding the best way to provide aid to loved ones to conducting business succession planning. As with many other tax issues, timing is important because lawmakers at the federal and state level can change these rates. While the risk of rate changes always exists, there has been significant discussion as of late about a variety of potential changes involving the 12-member federal “Super Committee.” The Super Committee has been charged by Congress with reducing the federal deficit by $1.5 trillion over the next ten years. To do so, the group will have to enact a combination of spending reductions and tax changes. No matter what combination they ultimately decide upon, it is highly likely that their work will have effects on local residents crafting their New York estate plan.

For example, last week the Wall Street Journal’s Market Watch published a story explaining proposed changes to gift tax exclusions. The specific committee meetings are mostly private, so some of the recent thoughts on the committee’s actions are speculative. However, it is known that one of the President’s proposed recommendations to the committee includes reducing the estate, gift, and generation-skipping transfer tax thresholds. The proposal would reduce the tax-free gift threshold to its 2009 level of $1 million. Currently the tax-free threshold is supposed to stay at $5 million until the end of 2012. However, many are speculating that the committee may decide to return the exclusion back to $1 million a year early as a cost-saving measure.

The story’s author summarizes the changes by noting, “Overall tax planning and gift tax thresholds that are now available could be at risk for families…not much good can come from the committee’s recommendations from a wealth preservation perspective.” Clearly, the potential actions by this group may make it important for some local residents to take long-term financial actions now. Our New York estate planning attorneys urge all community members who may be affected by these changes to visit with a professional to either create a plan or update an existing one. Depending on the advice received, it may be prudent to accelerate planned lifetime gifts, review estate-tax funding mechanisms, or otherwise revise estate plans.