Should We Honor Your Wishes? Your Demands?

New York was the first of many states allowing the modification (decanting) of “irrevocable” trust agreements.  Of course, under the right circumstances, an irrevocable trust can be amended (in NY, and other states) with the consent of the creator.  But the decanting statute allows significant changes to the terms of a trust which the creator (whether by a trust deed or via his or her Last Will & Testament) understood to be irrevocable, and in which he or she has no say.   In modern usage, then, it may not be possible to revoke a permanent trust (other than by distributing it to the beneficiaries or losing all the money), but we can change it, and that seems a curious twist on the plain meaning […]

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Understanding Knowledge Acceleration

It seems pretty clear that we can’t intentionally slow down the “progress” which seems to have overtaken out ability to conceptualize how quickly it now grows, in volume and quality.  If you are in the summer or fall of your career, then perhaps you will find continuing rewards for doing what you are good at.  But for our children and grandchildren, these changes mean that the careers they choose may not exist a few years later, and they are likely learning about subjects and ideas that will be out of date before they graduate. The technological and related social and economic changes are not intentionally embraced-we do not adopt them.  We essentially become them.  Think about how the telephone changed how we live, and now, […]

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The Future is Bright: For Starters: The Knowledge Doubling Curve

The more we know, the faster we know more.  Knowledge volume undergoes exponential growth, doubling and redoubling over time. Buckminster Fuller created the “Knowledge Doubling Curve”. Up until 1900 it was said that the accumulation of knowledge doubled every century. At the end of World War 2 every 25 years.Today – well anywhere from 1 to 1.5 years to – Nanotechnology they say every 2 years – Clinical knowledge every 18 months. And IBM predicts that in the next couple of years, information will double every 11 hours! The Will Doctor is ENTHUSIASTIC about the future in store for our children and grandchildren-and even for us! More on this to come in future posts, to complement the (rather dry) dynamics of estate and tax planning!

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No More Taxes: Don’t Forget to Jump Through the Hoop

We recognize that far fewer individuals who pass away in 2013 will be required to file federal estate tax returns, with the AEA (Applicable Exclusion Amount) at $5.25 million, (before the increase of $90,000 next year to $5.34 million, per person).  Don’t  forget, however, that the AEA remaining to protect the inheritance will be reduced by taxable gifts made during life. Of course, married people can protect twice as much-either through careful planning with trusts (recommended, for many reasons), or through “portability”, the excellent (and long delayed) new tax break which allows the AEA of the spouse who dies first (the “predeceased spouse”, or PD) to “port” or pass over to the surviving spouse, to supplement their own AEA.  This tax benefit is called the […]

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Budget Proposals from Obama Administration-A BIG Step Backward

The probability of these provisions becoming the law of the land is uncertain, at this point, and perhaps unlikely.  “Permanent” in estate tax  lingo is, apparently, a transitory term.  Since the new law does not have a built in expiration, we have called it permanent, and the structure of the transfer tax regime appears settled-but see below! These provisions are significant: A return to the estate tax exemptions of 2009 ($3.5 million at death, with a limit of $1 million during life) Exemptions would NOT be indexed for inflation Estate and Gift Tax rates going from 40% to 45% Limit on the GST Exemption to 90 years Limit on GRAT terms to no less than ten years Limits on retirement plans to $3 million Mandated […]

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Estate Tax Filers: An Exclusive Club

The Congressional Research Service has issued a report concluding that the new estate tax regime is permanent.  They noted that: The estate tax will affect less than 0.2% of decedents over the next decade The estate tax is concentrated among high income taxpayers: 96% is paid by the top quintile, 93% by the top 5%, 72% by the top 1%, and 42% by the top 0.1% About 0.2% of estates with half or more of their assets in businesses will be subject to the estate tax About 65 farm estates (or approximately one per state) are projected to be subject to the estate tax About 94 estates (about two per state) with half their assets in small business with owners who expect their heirs to […]

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The Will Doctor® Notes the Emerging Discipline of Thanatology: the study of Death

As the baby boomers start thinking about old age, the study of death will grow.  Already a specialty with a course of study, there are a few organizations which you should be aware of: ADEC:  The Association for Death Education and Counseling® is an international, professional organization dedicated to promoting excellence and recognizing diversity in death education, care of the dying, grief counseling and research in thanatology.  Based on quality research, theory and practice, the association provides information, support and resources to its international, multicultural, multidisciplinary membership and to the public.   http://www.adec.org//AM/Template.cfm?Section=Home The Center for Thanatology: A publisher, but an interesting site (and museum) for the Will Doctor!  http://www.thanatology.org/home.html The process of dying is still little understood, but I learned a great deal from a […]

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Trending Recognition of our Digital Lives within the Estate Plan

The is a growing group of tools and resources on line (see prior post) to help people express their thoughts and feelings digitally for use at their passing.  Of course, serious problems can arise if the personal representatives of the deceased don’t have access to appropriate logins and passwords.  So, the law is slowly grappling with this:  Adding to the list of states that have passed laws pertaining to digital estates, the Virginia Legislature passed HB 1752 today affording parents of deceased minors access to their social media accounts. The bill’s description reads: Powers of personal representatives; digital accounts. Provides that the personal representative of a deceased minor has the power to assume the deceased minor’s terms of service agreement with an Internet service provider, […]

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2012 Gift Tax Return Tsunami

We expect that 350 estate and gift tax examiners in the IRS will have a hard time reviewing the estimated 500,000 gift tax returns which will be filed for gifts last year.  The Will Doctor will accordingly try to file such returns for our clients on or before the filing date, without extensions.  The thinking is that we should get the three year statute of limitations running early so the IRS can focus on filers between April and October 15, 2013. Of course, the actual number of estate tax returns filed has dramatically decreased in recent years along with the size of the estate and gift tax exemptions.  Of the filed returns, there are a much smaller number of  taxable returns.  So we can expect that […]

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Estate and Gift Planning Safe from Fiscal Cliff II Revenue Raising?

Our relief after learning of the continuation of the existing tax regime on December 32nd (true, right?) is tempered by the recognition that $3.63 Trillion needs to be added to revenues in the coming decade to pay for the tax benefits we enjoy.  Obama’s estate and gift tax proposals in this area are still on the table, including: Elimination of the discounts on fractional gifts of business interests for “marketability”.  Marketability is the largest component by far in our discount planning, and this would be very painful.  Discounts for “lack of control”, also called the minority interest discount, would remain. Unification of the estate/gift and income tax regimes by terminating the use of Grantor Trusts-the foundation of many of our most treasured planning techniques; Limit […]

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