Estate Planning For Your Children – It’s Not Just About The Money
Most people near the age of majority do not have large estates (money or property) and many families assume that this means an estate plan is completely unnecessary. This is simply not true. A comprehensive estate plan does much more than protecting property from probate and directing the disposition of assets—estate plans also tell medical and financial institutions who is authorized to make decisions on your behalf. Without current, effective documents, these institutions may refuse to release medical information and will likely not allow family members to make healthcare decisions.
DOMA and Estate Planning
Recently the United States Supreme Court ruled on United States vs. Windsor—a case that argued the constitutionality of the Defense of Marriage Act (DOMA). DOMA’s Section 3 controversially defined a “marriage,” for federal tax law and benefits, as only between one man and one woman, and defined “spouse” as a person only of the opposite sex. Section 2 of DOMA also stated that states that did not allow same-sex marriages did not have to recognize those marriages from other jurisdictions. The Windsor court struck down Section 3 as unconstitutional—removing it from the statute as though it had never existed. Section 2 was not ruled on, leaving some gray area when it comes to states’ recognition of out-of-state same sex marriages. The IRS, following the decision, was decidedly less equivocal—issuing Revenue Ruling 2013-17, stating that same-sex couples, legally married in a state or foreign jurisdiction that authorizes the marriage, will be treated as married for all federal tax purposes. In California, Hollingsworth v. Perry held that Proposition 8, which banned same-sex marriages in the state, was also unconstitutional—allowing California same-sex couples to join into IRS-recognized valid marriages. Notably, this does not apply to civil unions, registered domestic partnerships, or other non-marital relationships, regardless of what rights or privileges are bestowed upon those types of unions by states. So what does this decision mean for same-sex couples in an Estate Planning context? Prior to the Windsor decision, same-sex couples historically faced challenges to planning their estates, including: Persistent need to define property rights by contract. High chance of Will contests. Difficulty enforcing inheritance rights of adopted children. Simply, the IRS ruling...Spring 2014 Newsletter
Portability Explained Preserving Estate Tax Exemptions for Married Couples.
You’ve Been Named Successor Trustee – What Does That Mean?
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What is a 1035 Exchange?
A 1035 exchange is a provision in the tax code that most people have not heard about. It allows for the direct exchange of accumulated funds in a life insurance policy or annuity for another life insurance policy or annuity without creating a taxable event.
Using an A-B Trust to Control your Assets
When there is a blended family with children from multiple marriages, special considerations should be placed into the estate plan.
Without proper planning, the surviving spouse could be left without the means to provide for him or herself. Additionally, we also see lopsided distributions, which typically result in one spouses children suing the others.