Tuesday, April 5, 2011
Minnesota Estate Planning and Probate a LexisNexis Top 25 Blog!
I'm honored to announce that Minnesota Estate Planning and Probate has been named a top 25 estate planning blog in the nation by LexisNexis. http://www.lexisnexis.com/community/estate-elderlaw/blogs/topblogs/archive/2011/03/31/the-lexisnexis-top-25-estate-planning-and-elder-law-blogs-of-2011.aspx Click on the link to find other top 25 blogs and to vote on your favorite. They'll announce the top blog on April 20th. I know I'm going to check out the competition and find some new blogs to follow.
Monday, March 14, 2011
You Don't Have to be American to Fear the Tax Man.
As Ronald Reagan said, “If it moves, tax it.” This statement is no more appropriate than in the case of those who make movement between nations a way of life. Obviously, American citizens have to deal with estate taxes, or at least know whether their estate isn't big enough to have to pay taxes. However, as a recent article on the Wall Street Journal reminds us, even non-citizens... and, in fact, non-residents may have to be concerned with US estate taxes.
Non-resident, non-citizen decedents, who have real property, personal property or securities located in the United States are liable for estate tax for those assets if the total fair market value of the assets located in the US exceeds $60,000.00. This is unlike American citizens or residents who are liable for their worldwide estate. In fact, if the decedent made significant gifts during their lifetime, that $60,000.00 exclusion could be even lower.
However, that doesn't mean that every non-resident, non-citizen whose US assets exceed $60,000.00 will have tax due. Tax treaties may reduce the amount owed. For example, if you are a German national, the 1998 Protocol Between the US and Germany amending the 1980 tax treaty allows for an exemption equal to the greater of the ratio of property situated in the United States included in gross estate to property included in gross estate wherever situated times the unified credit allowed for citizens in that year or the $13,000 credit allowed to all non-resident non-citizens. The IRS has a handy link to the current tax treaties in force.
If you are a foreign national with American assets, speak to an attorney versed in US estate tax and international tax treaties to determine how you may be affected.
Non-resident, non-citizen decedents, who have real property, personal property or securities located in the United States are liable for estate tax for those assets if the total fair market value of the assets located in the US exceeds $60,000.00. This is unlike American citizens or residents who are liable for their worldwide estate. In fact, if the decedent made significant gifts during their lifetime, that $60,000.00 exclusion could be even lower.
However, that doesn't mean that every non-resident, non-citizen whose US assets exceed $60,000.00 will have tax due. Tax treaties may reduce the amount owed. For example, if you are a German national, the 1998 Protocol Between the US and Germany amending the 1980 tax treaty allows for an exemption equal to the greater of the ratio of property situated in the United States included in gross estate to property included in gross estate wherever situated times the unified credit allowed for citizens in that year or the $13,000 credit allowed to all non-resident non-citizens. The IRS has a handy link to the current tax treaties in force.
If you are a foreign national with American assets, speak to an attorney versed in US estate tax and international tax treaties to determine how you may be affected.
Tuesday, February 22, 2011
Why does my estate planner need to know if I'm a citizen?
When I put an estate plan together, I always start out with a will questionnaire so that I have all of the information I need to determine what documents are needed and to draft those documents. One of the questions is the client's citizenship and place of birth. I've had quite a few clients ask why I have that on the questionnaire.
One of the big reasons that your planner needs to know your citizenship is to know what estate tax rules apply to you. I've posted about this issue before, but the basic concept is that the estate tax exemption is not always available to non-US citizens. Another reason is to know if an international will is appropriate and to know if foreign law may apply to certain portions of your estate and plan accordingly.
A basic reason is Minnesota law requires that, for any decedent either born in a foreign country or leaving heirs or devisees who reside in a foreign county, notice for any probate proceeding must be provided to the consul or other representative of that country. Giving proper notice is important, because it starts the window that creditors or possible heirs can bring claims. If proper notice isn't given, claims can be brought against the estate long after the family and personal representative thought the matter was closed. I include a reference in my wills regarding the client's citizenship and location of birth, if in a foreign country, in order to give the personal representive and their counsel a head's up so they can give correct notice.
If you have foreign citizenship or were born in a foreign country, be sure to let your estate planner know. Also, be sure to work with a planner who knows the consequences that your citizenship or place of birth will have on your estate plan.
One of the big reasons that your planner needs to know your citizenship is to know what estate tax rules apply to you. I've posted about this issue before, but the basic concept is that the estate tax exemption is not always available to non-US citizens. Another reason is to know if an international will is appropriate and to know if foreign law may apply to certain portions of your estate and plan accordingly.
A basic reason is Minnesota law requires that, for any decedent either born in a foreign country or leaving heirs or devisees who reside in a foreign county, notice for any probate proceeding must be provided to the consul or other representative of that country. Giving proper notice is important, because it starts the window that creditors or possible heirs can bring claims. If proper notice isn't given, claims can be brought against the estate long after the family and personal representative thought the matter was closed. I include a reference in my wills regarding the client's citizenship and location of birth, if in a foreign country, in order to give the personal representive and their counsel a head's up so they can give correct notice.
If you have foreign citizenship or were born in a foreign country, be sure to let your estate planner know. Also, be sure to work with a planner who knows the consequences that your citizenship or place of birth will have on your estate plan.
Tuesday, January 4, 2011
The 2010 Tax Cut Compromise and Estate Planning.
Recently, as part of the 2010 tax cut compromise, the President and Congress agreed to put some certainty back into estate planning. As I've addressed in past posts, the federal estate tax exemption increased over the past few years, with a full repeal of the tax in 2010. However, a sunset provision in the tax code meant that the tax was set to return in 2011, with the exemption going back to $1 million. That created some uncertainty for estate planners.
However, the recent compromise brought some certainty back to estate planning. The exemption for the next two years is $5 million at a maximum rate of 35%. However, the compromise also has a sunset provision, which means in two years the exemption will go back to $1 million.
Even if the federal exemption becomes set on a long term basis, that doesn't mean you're in the clear if your estate is approaching $1 million. Many states have their own estate tax and may have their own exemption that does not match the federal exemption. Minnesota's estate tax exemption, for example, has been $1 million for many years and there is no talk of an increase. If your estate is nearing a value of $1 million (and remember that your taxable estate includes most life insurance), speak with an experienced estate planning attorney in your state.
However, the recent compromise brought some certainty back to estate planning. The exemption for the next two years is $5 million at a maximum rate of 35%. However, the compromise also has a sunset provision, which means in two years the exemption will go back to $1 million.
Even if the federal exemption becomes set on a long term basis, that doesn't mean you're in the clear if your estate is approaching $1 million. Many states have their own estate tax and may have their own exemption that does not match the federal exemption. Minnesota's estate tax exemption, for example, has been $1 million for many years and there is no talk of an increase. If your estate is nearing a value of $1 million (and remember that your taxable estate includes most life insurance), speak with an experienced estate planning attorney in your state.
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.
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
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
Subscribe to:
Posts (Atom)