Monday, December 6, 2010

It's that time of year... so what tax issues do I need to worry about with giving gifts.

There is a federal tax on gifts... that being said, you obviously don't need to file a gift tax return or pay gift tax on every gift you make. If that were the case, we'd all be guilty of violating tax law.

Here are the rules of the road. Each year, each person can give up to the annual gift tax exclusion for each person they are giving gifts to, without incurring a gift tax. This year, that amount is $13,000.00. However, even if you give your adult child a car valued at more than that, you likely won't have to pay taxes.

For gifts that exceed the annual exclusion, the person making the gift can use a part of their lifetime unified transfer credit to avoid taxes. So, if you gift more than $13,000.00 to another person, file the return but consider taking a part of your lifetime unified credit.

Another point to consider, if you are gifting for tax purposes and want the gift to happen this year, you have to make sure the gift is fully transferred by year end. That means if you give a fat check to your favorite nephew on Christmas morning, make sure it gets cashed by 2011.

If you are giving large gifts this year, talk to your CPA and attorney to make sure you avoid unintented tax consequences.

Wednesday, June 16, 2010

Taking a Break

Minnesota Estate Planning and Probate is taking a hiatus for a few months. I'm running for the Minnesota House of Representatives and focusing my attention on the race. I'll still get comments and will try to respond in a (somewhat) timely manner. See you in November!

Thursday, April 15, 2010

Unintended Consequences of Putting Off Estate Planning

The Sacramento Bee has an excellent article today about how the recession is effecting estate planning and how putting off estate planning can have unintended consequences.

http://www.sacbee.com/2010/04/11/2668226/personal-finance-estate-planning.html

One of the major issues that can arise is when siblings fight over usually inexpensive but emotionally valuable items. This can easily be prevented through a will. In Minnesota, a personal property list can be created that explicitly states who gets what item. There are some requirements for a valid personal property list and some limits on what it can cover.

If you want to prevent a deterioration of family relationships after you've gone, speak with a licensed attorney in your state

Monday, March 29, 2010

What is an international will?

Just like different US states have different rules about what it takes to make a writing a valid will, different countries have different rules regarding what it takes to make a writing a will. For individuals who reside in a country other than their country of citizenship or own property in another country, these differences can create major headaches when it comes time to probate a will.

In order to prevent just those type of headaches, the 1973 Convention providing a Uniform Law on the Form of an International Will provides for unified requirements to cause a writing to be valid in any signatory country. Following these requirements allows for a one-document fits all affected jurisdictions approach to drafting a will, assuming all the jurisdictions are signatory countries. The convention is a great help for those living in an increasingly globalized society and can be found at http://www.unidroit.org/english/conventions/1973wills/1973wills-e.htm

However, because probate law is ruled by the states and not the federal government, the benefits of this treaty only clearly apply to residents of those states which have adopted the provisions of the treaty into their probate code. Luckily for Minnesota residents, Minnesota has adopted the provisions in Minnesota Statutes 524.2-1001 et al.

Some of the major additions to a normal will that are requirement for international wills, is for each page to be numbered, for each page to be signed by the testator, and for the will to be witnessed by an "authorized person" in addition to the standard witnesses required under state law. An "authorized person" in Minnesota is anyone licensed to practice law in the state of Minnesota.

If you reside in a country and have citizenship in another or have property in other countries, speak with an attorney licensed in your jurisdiction of residence who has experience with international wills.

I did my will... now where do I put it?

Okay, so you finally got it together and got a will signed. First of all, good for you! Far too many people put it off, never get around to it and their friends and family are eventually left to clean up an intestate mess. Now, what do you do with the binder, file or otherwise fancy document you left the attorney's office with? Here are some options.

1. Leave it with the attorney. Some offices provide this service and it sounds good, what better place to put it than your attorney's office? However, I wouldn't necessarily recommend it. The main reason is that hopefully you won't need the will for many, many, many years. In that time, the attorney could retire or close shop or the firm could merge with another. This could leave your loved ones scrambling to find the original. Sure, you may have a copy, but many probate courts will put up additional hoops if you can't provide the original.

2. Put it in your safe deposit box. It is secure, but consider that you will not be around to open it up. Check into how your love ones can get access when you're gone. There have been far too many instances where a will is in a deposit box with no one able to get access to it.

3. Check your county courthouse. In my county, Fillmore County, Minnesota, you can deposit your will for a one time minimal fee of around $20.00. This is a great, cost-effective option, because you know the county courthouse isn't going anywhere.

Of course, you can always keep the will in your home, but you should keep it in a waterproof and fireproof safe and let your love ones know how to get access to it if you're not there to do it.

Congratulations on getting that will done, now make sure your investment is taken care of.

Monday, February 1, 2010

Dealing with your E-Estate

Estate planning and probate generally deal in concepts that have been around for centuries, like life estates and fiduciary duties. However, there's a new frontier in estate planning, your digital estate.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/01/31/BUEV1BPKAR.DTL

Some companies have popped up to offer services to email your contact list upon your death, provide access to your usernames and passwords to your next of kin, and closing out your facebook account.

As the twitter generation grows older, we may see many people who find this to be a useful service.

Theft from Estate

The Chicago Tribune is reporting on an alleged $140,000 theft from an Iowa estate.

http://www.chicagotribune.com/news/chi-ap-ia-iowa-estatetheft,0,7766795.story

Unfortunately, theft from estates can happen. When you get your will together, you will name a "personal representative", which is also known as an executor. This person will have the responsibility and access to deal with your financial affairs after your death. This person has a lot of power, so be sure to name someone who you trust with your finances.

If you think a personal representative is not entirely on the up-and-up in dealing with an estate, there are some things you can do if you are a creditor, family member or other interested person. Some examples are requesting an accounting of the estate from the personal representative or petitioning the court to supervise the personal representatives actions. If you are concerned about a personal representative's conduct, contact a licensed attorney.