Tax Issues Archives - Page 2 of 2 - Law Offices of Daniel Timins

Why Trusts are Still Relevant in a Post-Estate Tax World

Posted on December 21, 2016

The Trump Administration is about to join forces with a Republican Legislature, meaning there is a huge chance that the federal gift and estate taxes could be repealed. I have heard many of my colleague bemoan the fact that their bread-and—butter (complex estate tax-saving trusts) will become irrelevant, their careers are over, and how they wish they went into Medical School or they are moving to Canada in January or something else equally insane. While trusts have been useful devices to preserve a spouse’s estate tax exemption for Credit Shelter Trust purposes, this has by no means ever been their only purpose. Indeed, plenty of people already have trusts for a multitude of other purposes that shall continue to

Assets Good, Income Bad: Taxes, Government Programs, Planning

Posted on March 18, 2016

Here is a surprise for you: America favors people who have money already, not people building their wealth. If you want to build and preserve wealth in modern day America I can boil down the correct methodology in words a caveman could understand: Assets good, income bad. Example 1: Income Taxes versus Capital Gains & Estate Taxes. While your assets are private information, the government (and sometimes the public) has full knowledge of your (legal) income. Try it: Google your favorite sports star and see how much income they earn, then find out how much they are actually worth; I will be shocked if you see a net worth that is not noted as an “estimate.” Governments also know people

THE SILENT TWIN: How State Estate Taxes Have Replaced Federal Estate Tax Planning

Posted on July 17, 2015

To any one of a number of government entities the average person can be boiled down to one category: We are revenue-generating machines. Federal, state and local government entities know how to get their funding, as it seems almost every aspect of life (and yes, death too) is now taxable. And next to actually having to pay all these taxes, the most frustrating thing about taxes are that they are never as intuitively straight-forward as one would suspect. I met with a couple recently who is domiciled in New York. Their net worth is approximately $8,000,000, they are semi-retired, and their retirement income is substantial. Assets include a nice Manhattan apartment, a large sum of money in several retirement plans,

Commercial Annuities: Medicaid Giant Killers

Posted on June 19, 2015

In a brief past career I was an annuity marketing specialist at an independent brokerage firm. I consistently reviewed and explained over 800 different brands of annuities to financial planners. Most annuities may offer income for life or a set period of time, some have guaranteed living benefits or guaranteed death benefits, some have up-front bonuses or stock market indexing. I bring this up to show that I am well aware of many of the features and benefits of annuities. However, for Medicaid planning there is nothing more potentially ruinous than owning an annuity outside of a retirement plan. Remember that Medicaid planning is an “asset game”: While we can do little to influence our beneficiary’s income, we can

Tell Your Estate Attorney About All of Your Assets

Posted on June 8, 2015

Some people are naturally secretive about their finances. People either feel judge by the level of their assets if they believe they don’t have enough, or they don’t trust anyone enough to say where all of their assets are. And so stock certificates are held in file cabinets, cash is stuffed in loose books, funds are held overseas, and random banks and passbooks hold small account balances. My message to you: Secrecy may cost you dearly when you pass away. Whenever you earn interest, the IRS receives a 1099 from the financial institution. When I have a recently deceased client whom I suspect has withheld account information (despite my urgings to let me know during her lifetime) I ask the

ESTATE PITFALLS: Simple Things that Will Save Your Estate Money

Posted on March 24, 2015

I will not belabor the point: It costs far less time and money to fix things while you are alive than after your passing. I cannot tell you the number of estate cases I have personally fielded that simultaneously frustrated and burdened beneficiaries and padded my own wallet with no real necessity to do this from the beneficiary side. Here are some things you can do to pass more money to your beneficiaries and less to the attorney administering to your estate: STOCK CERTIFICATES: Yes, these still exist. Some stocks may have split, some may have been merged into another company, some certificates may be lost or not in a convenient place for your beneficiaries to find them. Transfer these

Requiem for ILITs (Irrevocable Life Insurance Trusts)

Posted on February 24, 2015

My study group of like-minded Trusts and estates attorneys recently got together to discuss the ins-and-outs of ILITs. After a somewhat half-hearted review of the features and benefits of these trusts, we slowly realized the sad truth: It was time to bury these time-honored tax-saving mechanisms. An Irrevocable Life Insurance Trust (“ILIT”) is—surprise—an irrevocable trust that both owns and is the beneficiary of a life insurance policy. When estate tax exemptions were much lower several years ago, meaning that more people were paying a “death tax,” these trusts were ideal because, at death, the life insurance policy was paid to the trust and, when done correctly, transferred the proceeds free from estate taxes. This, coupled with the absence of income

2015 Medicaid Series: Beware of Transferring Too Much Too Early

Posted on January 13, 2015

My next several posts will be centered on Medicaid planning. This will cover topics affecting people who are planning for future transfers to their children, people with ailing parents, as well as those who have neither living parents nor natural beneficiaries. Let’s start from the top. People preparing precautionary Medicaid planning for themselves are typically (hopefully) planning several years in advance: They have reached their mid-late seventies and are starting to enjoy a less frenetic lifestyle, or may have long-term health concerns that are just starting to manifest. They have worked hard for their money, have a possible surplus of assets, and have no desire to use these asset to pay for what they perceive Medicaid will cover in the

2015: The Year Trusts and Estates Goes Elder

Posted on December 23, 2014

A new year is upon us, and for those of us in the estate planning world it is time to define who we are and what we shall do in the coming months. The modern concept of the American attorney who specializes in tax, trusts and estates dates back to 1913, the year the Sixteenth Amendment of our Constitution was ratified, allowing the federal government to tax people’s income. This was followed by the Revenue Act of 1916, allowing a “death tax” on people’s estates. For one hundred years the profession has concerned itself with using exemptions, loopholes and other transfer mechanisms focused primarily on maintaining intergenerational wealth by saving money on taxes. For the umpteenth year in a row