Monday, November 26, 2012
Walmart to Pay Dividend in December Instead of January to Avoid Fiscal Cliff
According to an article in Reuters, the dividend that Walmart usually pays in late January will be moved up to late December, so that its shareholders will be able to have their qualified dividends taxed at the current 15% rate, instead of possibly being included in ordinary income (at a top 39.5% rate) if Congress fails to take action to avoid the "fiscal cliff." Stay tuned!
Monday, November 19, 2012
Laurie Hunter Honored by CBA/CLE in Colorado, Inc.
Laurie A. Hunter will be presented with the Richard N. Doyle CLE Award of Excellence at the Colorado Bar Association/CLE in Colorado, Inc.'s annual Reception and Wine Tasting on December 3, 2012. The Award will be presented to Laurie in honor of her dedication and outstanding contributions to CBA/CLE programs and publications. Please join us in congratulating Laurie for this wonderful recognition of her efforts!
Monday, November 5, 2012
Estate Planning and Digital Assets
The digital age has lead us to rely on computers and the internet for storage of many of our important documents and personal information. In an effort to centralize information and reduce the number of papers cluttering our lives, many have moved to digital storage. We purchase books, music, movies, etc. via internet retailers and store these purchases on our personal computers, digital devices or in the cloud. In addition, we manage our financial accounts online and have switched to paperless statements, rarely, if ever, receiving any paper communications. The question now becomes, what happens to these accounts and assets when we die. Conventional wisdom used to be that the personal representative (executor) would simply have the decedent’s mail forwarded and eventually he or she would be able to identify the decedent’s assets and creditors through the correspondence received.
Unfortunately, the ease of the digital age has created unexpected difficulty for personal representatives. How does a personal representative fully identify a decedent’s assets when he or she is not afforded access to the decedent’s online financial and email accounts? To complicate matters, the law is unclear as to whether a decedent actually owns the digital files he or she has purchased and now stores on his or her digital device, personal computer or in the cloud. Many digital content retailers provide that the consumer is simply purchasing a license to use the content, but does not actually own the property. In addition, the use of a cloud service further complicates matters, as it is uncertain as to who owns the stored content, the cloud operator or the consumer.
Further, many retailers do not have policies in place as to inheritance of use licenses, nor termination dates for those licenses. In practice, a personal representative can copy the files and transfer possession as he or she would any other personal property, in accordance with the decedent’s wishes. Transferring ownership, however, is more complicated and as of right now there is no clear answer as to how to properly effectuate the transfer.
With respect to digital accounts such as email and financial accounts, a personal representative may be able to gain access, if he or she is afforded the login and password information prior to the decedent’s death. Accessing these accounts, however, may technically be in violation of terms of service. Further, once the personal representative notifies the account provider of the decedent’s death, future access may be denied, or the account terminated and deleted altogether. Denial of access to email accounts could potentially prevent a personal representative from fully identifying the decedent’s assets and creditors.
Social media websites further complicate matters as each host is free to provide policies as to what happens at a person’s death. Facebook for example turns the decedent’s page into a living memorial in which all aspects of the page are frozen in time, with the exception of the decedent’s wall, which remains available for friends and family to post messages.
The legislature has been slow to accommodate the changing digital landscape. A few states, including Connecticut and Rhode Island have enacted legislation allowing a personal representative to access a decedent’s email account. A few other states, including Idaho, Nebraska, Oklahoma and Indiana have enacted laws allowing heirs to obtain access to digital accounts. In Colorado, the Trust & Estate Section of the Colorado Bar Association is exploring proposing legislation to address digital assets and accounts; however, a clear direction has yet to be determined to address all facets of digital media and provide personal representatives and heirs with the best solution. The main problem facing the legislature is that statutes granting a personal representative or heir with access to the decedent’s digital assets and accounts are often in conflict with the terms of service contracted between the decedent and the company holding the assets/account; thus, there is no guarantee that the company will be required to provide access.
In the meantime, it is essential that consumers plan ahead. Within the confines of the estate planning process, consumers should create an inventory of their digital assets and ensure that login and password information is readily available to assist their personal representatives and heirs with the estate administration process. Individuals may also consider including specific direction and bequests with regard to their digital assets and accounts in their Wills or other dispositive documents. While it is not clear whether a personal representative will be able to actually transfer ownership to the intended beneficiary, the company holding the asset may be more likely to assist the personal representative in transfer of the assets when there is specific direction provided in the decedent’s Will.
Unfortunately, the ease of the digital age has created unexpected difficulty for personal representatives. How does a personal representative fully identify a decedent’s assets when he or she is not afforded access to the decedent’s online financial and email accounts? To complicate matters, the law is unclear as to whether a decedent actually owns the digital files he or she has purchased and now stores on his or her digital device, personal computer or in the cloud. Many digital content retailers provide that the consumer is simply purchasing a license to use the content, but does not actually own the property. In addition, the use of a cloud service further complicates matters, as it is uncertain as to who owns the stored content, the cloud operator or the consumer.
Further, many retailers do not have policies in place as to inheritance of use licenses, nor termination dates for those licenses. In practice, a personal representative can copy the files and transfer possession as he or she would any other personal property, in accordance with the decedent’s wishes. Transferring ownership, however, is more complicated and as of right now there is no clear answer as to how to properly effectuate the transfer.
With respect to digital accounts such as email and financial accounts, a personal representative may be able to gain access, if he or she is afforded the login and password information prior to the decedent’s death. Accessing these accounts, however, may technically be in violation of terms of service. Further, once the personal representative notifies the account provider of the decedent’s death, future access may be denied, or the account terminated and deleted altogether. Denial of access to email accounts could potentially prevent a personal representative from fully identifying the decedent’s assets and creditors.
Social media websites further complicate matters as each host is free to provide policies as to what happens at a person’s death. Facebook for example turns the decedent’s page into a living memorial in which all aspects of the page are frozen in time, with the exception of the decedent’s wall, which remains available for friends and family to post messages.
The legislature has been slow to accommodate the changing digital landscape. A few states, including Connecticut and Rhode Island have enacted legislation allowing a personal representative to access a decedent’s email account. A few other states, including Idaho, Nebraska, Oklahoma and Indiana have enacted laws allowing heirs to obtain access to digital accounts. In Colorado, the Trust & Estate Section of the Colorado Bar Association is exploring proposing legislation to address digital assets and accounts; however, a clear direction has yet to be determined to address all facets of digital media and provide personal representatives and heirs with the best solution. The main problem facing the legislature is that statutes granting a personal representative or heir with access to the decedent’s digital assets and accounts are often in conflict with the terms of service contracted between the decedent and the company holding the assets/account; thus, there is no guarantee that the company will be required to provide access.
In the meantime, it is essential that consumers plan ahead. Within the confines of the estate planning process, consumers should create an inventory of their digital assets and ensure that login and password information is readily available to assist their personal representatives and heirs with the estate administration process. Individuals may also consider including specific direction and bequests with regard to their digital assets and accounts in their Wills or other dispositive documents. While it is not clear whether a personal representative will be able to actually transfer ownership to the intended beneficiary, the company holding the asset may be more likely to assist the personal representative in transfer of the assets when there is specific direction provided in the decedent’s Will.
Monday, October 29, 2012
IRS Confirms Deductibility of Donations to Certain Charity Owned LLCs
In a long awaited pronouncement, the IRS in Notice 2012-52 confirmed what tax-exempt practitioners had expected for many years: that a donation to a single member LLC that is wholly owned by a U.S. charity, where the LLC is acting as a charitable branch or division of the U.S. charity and conducting charitable activities, are tax-deductible as if the donation were made to the U.S. charity directly. Many charities use single member LLCs to isolate its activities that may expose the parent/single member owner to increased liability. For example, real estate owned by a charity is often held in a single member LLC. However, single member LLCs are also sometimes used to expand the scope of charitable services offered or to establish charitable operations in locations outside the charity’s original service area. In these situations, the LLC is really an extension of the parent/single member charity and operates much like a branch or division of the charity. Donors often develop loyalty to and wish to donate directly to the local LLC rather than to the parent charity. For many years the IRS avoided issuing guidance on whether donations to such LLCs were deductible and as a result, conservative practitioners advised donors and charities alike that, to be assured of a deduction, donations had to be made directly to the charity that was exempt under Section 501(c)(3) rather than through any single member LLC, even where the LLC was wholly owned and operated by the charity. With the issuance of this Notice, however, donations can be made directly to the LLC, as a gift to a branch or division of the charity, provided the LLC satisfies the other requirements of deductibility for charities (i.e., it is organized and operated in the U.S., it is organized and operated exclusively for charitable purposes, there is no private inurement of the earnings and it satisfies the lobbying and political campaign restrictions for 501(c)(3) organizations). The Notice states that the U.S. charity is the donee for substantiation and disclosure purposes, and the IRS encourages the charity to disclose in the acknowledgment or another statement that the LLC is wholly owned by the U.S. charity and treated by the charity as a disregarded entity (that is, the charity reports all of the LLC’s activities on its information return and does not treat it as a separate taxpayer). The Notice is effective for contributions made on or after July 31, 2012, but can also be relied on by taxpayers for prior taxable years where the statute of limitations has not yet expired (that is for prior year gifts).
Thursday, October 25, 2012
Year End Deadline for Small Nonprofits
More than 275,000 tax-exempt organizations have lost their exempt status under Section 501 of the Code in the last few years as a result of a fairly recent change in the law. Certain qualifying small organizations that had their exemption revoked have only until December 31, 2012 to take advantage of the IRS’ "transitional relief" that both provides a reduced application fee of $100 (as opposed to the usual $850) and automatically qualifies such organizations for retroactive reinstatement of their tax-exempt status.
The Pension Protection Act of 2006 (the "PPA") required that all tax-exempt organizations, regardless of size, file an annual notice or information return with the IRS, and mandated that those who fail to file for 3 consecutive years (beginning in 2007) automatically lose their exempt status. Those organizations that have lost their exemption must reapply to the IRS to regain tax-exempt status (even if the organization was not originally required to file). The IRS has discretion whether to grant exemption and if granted, whether to retroactively reinstate an organization’s exempt status to the date of revocation if the organization establishes reasonable cause for its failure to file. Prior to the PPA, organizations that normally had not more than $25,000 per year in gross receipts (a number based on a rolling 3 year average) were not required to file any form of annual information return or notice with the IRS. Since the PPA, organizations that normally have less than $25,000 (or $50,000 beginning in 2010) per year in gross receipts (again based on a 3 year rolling average) are required to file an annual information return (the Form 990-N e-postcard). Despite many efforts to notify organizations of this change, the PPA requirements caught many small organizations by surprise.
So many small organizations lost their exemption for failing to file their required annual electronic notices that the IRS issued Notice 2011-43 providing transitional relief for certain qualifying "small organizations." Organizations that qualify will be allowed to pay the reduced user fee and will be treated as having established reasonable cause for failing to file its annual returns for taxable years beginning in 2007, 2008 or 2009. To qualify for the relief, the organization must be a "small organization" - that is it must have average annual gross receipts of not more than $50,000 in its most recent taxable year and the two immediately preceding taxable years. Additionally, the small organization must meet the following criteria: (1) it must not have been required to file an annual information return (i.e., Form 990 or 990EZ) for tax years before 2007; (2) it must have been eligible to file the Form 990-N e-postcard in each of 2007, 2008, and 2009 (both in terms of gross receipts and type of organization); and (3) it must file its application for reinstatement of tax-exempt status (i.e., a new Form 1023, or Form 1024 if organization is other than a 501(c)(3)) no later than December 31, 2012. Organizations seeking this transitional relief must write "Notice 2011-43" at the top of the Form 1023/1024 and on the envelope and must attach a specific statement to its application that essentially confirms that it satisfies the criteria above.
Many of our clients either are small organizations or are active volunteers with small organizations who may have unknowingly been affected by the PPA changes and automatic revocation. Small tax-exempt organizations should check the IRS’ automatic revocation list using the IRS’ Select Check online tool at http://www.irs.gov/Charities-&-Non-Profits/Automatic-Revocation-of-Exemption-List to confirm they are not on the automatic revocation list. If they are, and they qualify, they should immediately submit a new application for reinstatement using the transitional relief if possible. Additionally, donors should always check the IRS’ current exemption database at the same IRS website to confirm the charity they are giving to is eligible to receive tax-deductible contributions if deductibility of the gift is important. Donors should also be aware that organizations who had their exemption revoked but were reinstated will remain on the automatic revocation list. However, if the charity is now on the list of organizations the IRS recognizes as "eligible to receive tax-deductible contributions" (which may occur if the organization’s exemption was revoked but it successfully sought reinstatement), the gift should be deductible.
If charities or donors have any questions about the automatic revocation and reinstatement process, or about deductibility of a gift, please feel free to call us. However, given the very busy year end we are anticipating, charities seeking reinstatement under the transitional relief must contact us immediately, and no later than mid-November
if they would like our assistance filing for reinstatement.
The Pension Protection Act of 2006 (the "PPA") required that all tax-exempt organizations, regardless of size, file an annual notice or information return with the IRS, and mandated that those who fail to file for 3 consecutive years (beginning in 2007) automatically lose their exempt status. Those organizations that have lost their exemption must reapply to the IRS to regain tax-exempt status (even if the organization was not originally required to file). The IRS has discretion whether to grant exemption and if granted, whether to retroactively reinstate an organization’s exempt status to the date of revocation if the organization establishes reasonable cause for its failure to file. Prior to the PPA, organizations that normally had not more than $25,000 per year in gross receipts (a number based on a rolling 3 year average) were not required to file any form of annual information return or notice with the IRS. Since the PPA, organizations that normally have less than $25,000 (or $50,000 beginning in 2010) per year in gross receipts (again based on a 3 year rolling average) are required to file an annual information return (the Form 990-N e-postcard). Despite many efforts to notify organizations of this change, the PPA requirements caught many small organizations by surprise.
So many small organizations lost their exemption for failing to file their required annual electronic notices that the IRS issued Notice 2011-43 providing transitional relief for certain qualifying "small organizations." Organizations that qualify will be allowed to pay the reduced user fee and will be treated as having established reasonable cause for failing to file its annual returns for taxable years beginning in 2007, 2008 or 2009. To qualify for the relief, the organization must be a "small organization" - that is it must have average annual gross receipts of not more than $50,000 in its most recent taxable year and the two immediately preceding taxable years. Additionally, the small organization must meet the following criteria: (1) it must not have been required to file an annual information return (i.e., Form 990 or 990EZ) for tax years before 2007; (2) it must have been eligible to file the Form 990-N e-postcard in each of 2007, 2008, and 2009 (both in terms of gross receipts and type of organization); and (3) it must file its application for reinstatement of tax-exempt status (i.e., a new Form 1023, or Form 1024 if organization is other than a 501(c)(3)) no later than December 31, 2012. Organizations seeking this transitional relief must write "Notice 2011-43" at the top of the Form 1023/1024 and on the envelope and must attach a specific statement to its application that essentially confirms that it satisfies the criteria above.
Many of our clients either are small organizations or are active volunteers with small organizations who may have unknowingly been affected by the PPA changes and automatic revocation. Small tax-exempt organizations should check the IRS’ automatic revocation list using the IRS’ Select Check online tool at http://www.irs.gov/Charities-&-Non-Profits/Automatic-Revocation-of-Exemption-List to confirm they are not on the automatic revocation list. If they are, and they qualify, they should immediately submit a new application for reinstatement using the transitional relief if possible. Additionally, donors should always check the IRS’ current exemption database at the same IRS website to confirm the charity they are giving to is eligible to receive tax-deductible contributions if deductibility of the gift is important. Donors should also be aware that organizations who had their exemption revoked but were reinstated will remain on the automatic revocation list. However, if the charity is now on the list of organizations the IRS recognizes as "eligible to receive tax-deductible contributions" (which may occur if the organization’s exemption was revoked but it successfully sought reinstatement), the gift should be deductible.
If charities or donors have any questions about the automatic revocation and reinstatement process, or about deductibility of a gift, please feel free to call us. However, given the very busy year end we are anticipating, charities seeking reinstatement under the transitional relief must contact us immediately, and no later than mid-November
if they would like our assistance filing for reinstatement.
Tuesday, October 23, 2012
Year End Tax Planning
As we have discussed in our prior newsletters, and as summarized in numerous news articles about the impending "fiscal cliff," important tax changes will occur January 1, 2013 unless Congress takes action
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$5,120,000 Gift and Estate Tax Exemption Ends. In 2012, each U.S. citizen and resident has a $5,120,000 gift and estate tax exemption. In 2013, that exemption will be $1 million unless Congress acts. If one makes a $5 million gift (assuming no prior taxable gifts) in 2012, no gift tax would be due, but that gift will be taken into account in computing the estate tax at the donor’s death. If the exemption had decreased, estate tax would be due. However, such a gift will be effective to remove all future income and appreciation on the gifted assets from the donor’s estate. We had suggested that clients may want to consider the creation of a "Lifetime Credit Shelter Trust" that could benefit the donor’s spouse and children. If each spouse wants to create such a trust for the benefit of each other, they must be careful to avoid the "Reciprocal Trust Rule" because if the rule were applied and a donor is deemed to create a trust for the donor’s benefit, all of the trust property would be included in the donor’s estate under Code §2036(a). Usually, in order to avoid the Reciprocal Trust Rule when both spouses create an irrevocable life insurance trust, we have recommended creating the two trusts at least six months apart. That is no longer possible at this late date in 2012. It would still be possible for one spouse to create an irrevocable trust for the benefit of spouse and descendants, and the other spouse to create an irrevocable trust only for the benefit of the descendants. IF YOU WANT US TO WORK WITH YOU TO CREATE SUCH A TRUST, YOU MUST CONTACT US BY NOVEMBER 15, 2012. Preparing the trust agreement(s) with the desired terms and obtaining necessary appraisals of the gifted assets require time. DO NOT WAIT UNTIL THE HOLIDAYS TO CONTACT US.
Generation-Skipping Transfer Tax Exemption. If Congress fails to act, the GST exemption will be $1,430,000 based upon increases for inflation from 2001. The tax rate will be 55% (the 2013 top estate tax rate), up from 35% in 2012.
Increase in Capital Gains tax rates. In 2012, the tax rate on capital gains is 15%. In 2013, if Congress fails to act, the maximum long-term capital gain rate will be 18% on assets held more than five years and 20% on assets held less than five years, but more than one year.
Increase in tax rate on dividends. In 2012, qualified dividends are taxed at a 15% rate. In 2013, if Congress fails to act, all dividends will be taxed as ordinary income. Because dividends are taxed in 2012 at the same rate as long-term capital gains, it was not important whether a distribution from a corporation was characterized as a dividend or a redemption. That distinction will again become important when the rates are different.
Increase in tax rates generally. The Bush tax cuts will expire at the end of 2012. The tax rates under the 2001 Act ranged from 10% to 35%. In 2013, if Congress fails to act, the rates will range from 15% to 39.6%.
3.8% surtax on investment income. In addition, starting in 2013, a 3.8% surtax will apply to the lesser of (1) net investment income or (2) the excess of modified adjusted gross income over the threshold amount: $250,000 for joint filers, $125,000 for married filing separately and $200,000 for other taxpayers. For estates and trusts, the tax is 3.8% of the lesser of (1) undistributed net investment income or (2) the excess of adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins (Only $11,650 in 2012).
Annual Exclusion Gifts. For some good news, the gift tax annual exclusion that is $13,000 per donee in 2012 is expected to increase to $14,000 per donee in 2013. DON’T WAIT TO MAKE YOUR ANNUAL EXCLUSION GIFTS FOR 2012. Go ahead and make them now, and then make your 2013 annual exclusion gifts in January.
Estate Tax Statistics. As reported by Jonathan Blattmachr to the ACTEC listserv, 4,600 estate tax returns were filed in 2011, down nearly 70% from 2010, which was down 55% from 2009. Net estate tax receipts was $3 billion in 2011, down from $13 billion for 2010 and $20+ billion for 2009.
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$5,120,000 Gift and Estate Tax Exemption Ends. In 2012, each U.S. citizen and resident has a $5,120,000 gift and estate tax exemption. In 2013, that exemption will be $1 million unless Congress acts. If one makes a $5 million gift (assuming no prior taxable gifts) in 2012, no gift tax would be due, but that gift will be taken into account in computing the estate tax at the donor’s death. If the exemption had decreased, estate tax would be due. However, such a gift will be effective to remove all future income and appreciation on the gifted assets from the donor’s estate. We had suggested that clients may want to consider the creation of a "Lifetime Credit Shelter Trust" that could benefit the donor’s spouse and children. If each spouse wants to create such a trust for the benefit of each other, they must be careful to avoid the "Reciprocal Trust Rule" because if the rule were applied and a donor is deemed to create a trust for the donor’s benefit, all of the trust property would be included in the donor’s estate under Code §2036(a). Usually, in order to avoid the Reciprocal Trust Rule when both spouses create an irrevocable life insurance trust, we have recommended creating the two trusts at least six months apart. That is no longer possible at this late date in 2012. It would still be possible for one spouse to create an irrevocable trust for the benefit of spouse and descendants, and the other spouse to create an irrevocable trust only for the benefit of the descendants. IF YOU WANT US TO WORK WITH YOU TO CREATE SUCH A TRUST, YOU MUST CONTACT US BY NOVEMBER 15, 2012. Preparing the trust agreement(s) with the desired terms and obtaining necessary appraisals of the gifted assets require time. DO NOT WAIT UNTIL THE HOLIDAYS TO CONTACT US.
Generation-Skipping Transfer Tax Exemption. If Congress fails to act, the GST exemption will be $1,430,000 based upon increases for inflation from 2001. The tax rate will be 55% (the 2013 top estate tax rate), up from 35% in 2012.
Increase in Capital Gains tax rates. In 2012, the tax rate on capital gains is 15%. In 2013, if Congress fails to act, the maximum long-term capital gain rate will be 18% on assets held more than five years and 20% on assets held less than five years, but more than one year.
Increase in tax rate on dividends. In 2012, qualified dividends are taxed at a 15% rate. In 2013, if Congress fails to act, all dividends will be taxed as ordinary income. Because dividends are taxed in 2012 at the same rate as long-term capital gains, it was not important whether a distribution from a corporation was characterized as a dividend or a redemption. That distinction will again become important when the rates are different.
Increase in tax rates generally. The Bush tax cuts will expire at the end of 2012. The tax rates under the 2001 Act ranged from 10% to 35%. In 2013, if Congress fails to act, the rates will range from 15% to 39.6%.
3.8% surtax on investment income. In addition, starting in 2013, a 3.8% surtax will apply to the lesser of (1) net investment income or (2) the excess of modified adjusted gross income over the threshold amount: $250,000 for joint filers, $125,000 for married filing separately and $200,000 for other taxpayers. For estates and trusts, the tax is 3.8% of the lesser of (1) undistributed net investment income or (2) the excess of adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins (Only $11,650 in 2012).
Annual Exclusion Gifts. For some good news, the gift tax annual exclusion that is $13,000 per donee in 2012 is expected to increase to $14,000 per donee in 2013. DON’T WAIT TO MAKE YOUR ANNUAL EXCLUSION GIFTS FOR 2012. Go ahead and make them now, and then make your 2013 annual exclusion gifts in January.
Estate Tax Statistics. As reported by Jonathan Blattmachr to the ACTEC listserv, 4,600 estate tax returns were filed in 2011, down nearly 70% from 2010, which was down 55% from 2009. Net estate tax receipts was $3 billion in 2011, down from $13 billion for 2010 and $20+ billion for 2009.
Monday, October 22, 2012
Another Appeals Court Strikes Down DOMA
The Second Circuit in Edith Schlain Windsor v. U.S. (CA 2 10/18/2012) Docket No. 12-2335-cv(L), held that a surviving spouse in a legally married same sex couple is entitled to the federal estate tax marital deduction, and therefore a refund of estate taxes paid. The Court struck down the Defense of Marriage Act (DOMA) that prohibits the federal government from recognizing legally married same sex couples for federal benefit purposes. A few other courts this year have also found DOMA to be unconstitutional, but some court watchers believe that this is the case that the U.S. Supreme Court may accept for review. One reason is that Justice Elena Kagan may have had to recuse herself from the other cases, but she was not involved in this one when she was White House counsel.
Wednesday, September 26, 2012
2013 Gift Tax Annual Exclusion
According to RIA Checkpoint’s analysis of the inflation numbers, the gift tax annual exclusion amount will increase to $14,000 per donee in 2013. Keep that in mind as you are planning your annual exclusion gifts. You can make gifts of $13,000 per donee in 2012, and in January, it looks like you can make gifts of $14,000 per donee. The IRS is required to officially release the 2013 inflation adjustments by December15, 2012.
Monday, September 24, 2012
Orange Book Forms - The Must Have Tool for Colorado Trust & Estate Practitioners
Laurie Hunter and Josie Faix are speaking at the October 4, 2012 CLE hosted by CLE in Colorado, Inc. and the Colorado Bar Association entitled "Orange Book Forms - The Must Have Tool for Colorado Trust & Estate Practitioners". Laurie is speaking on the "Most Commonly Used Forms" including Financial Powers of Attorney, Parent's or Guardian's Delegation of Powers, Appointment of Guardian by Signed Legal Writing, Medical Durable Power of Attorney, Advance Directive for Medical/Surgical Treatment, and Gifting Issues to Watch Out for When Using These Forms. Josie is speaking on Revocable Trusts including Single Person, Married Couple and Joint Trusts, and Issues to Watch Out for When Using These Forms.
Thursday, September 20, 2012
Tax Changes 1/1/2013
As a reminder, if Congress fails to act, there will be significant tax changes in 2013. If you want to meet with us to plan in advance of these changes, do NOT WAIT UNTIL DECEMBER. The most important changes include the following:
Individuals: 10% bracket disappears, and 15% bracket is smaller; top rate is 39.6%. Long-term capital gain max rate is 20% (18% for assets held more than 5 years) – instead of 15% now. Dividends are taxed at same rate as ordinary income (instead of 15%). Standard deduction for married filing jointly will be 167% (instead of 200%) of single taxpayers’ deduction. Itemized deductions for higher income taxpayers will be reduced by 3% of AGI. Personal exemptions are phased out for higher-income taxpayers.
Estate Tax: $1 million exemption (instead of $5.12 million); top tax rate of 55% (instead of 35%); 5% surtax on higher estates; reinstated state death tax credit; reinstated QFOBI deduction; and the more favorable installment payment rules will disappear. No more portability of the deceased spouse’s exemption.
Gift Tax: $1 million exemption (instead of $5.12 million); top tax rate of 55% (instead of 35%).
Generation-Skipping Transfer (GST) Tax: $1,430,000 exemption (adjusted for inflation; instead of $5.12 million); tax rate of 55%; the more favorable automatic allocation rules and severance of trusts will disappear.
Individuals: 10% bracket disappears, and 15% bracket is smaller; top rate is 39.6%. Long-term capital gain max rate is 20% (18% for assets held more than 5 years) – instead of 15% now. Dividends are taxed at same rate as ordinary income (instead of 15%). Standard deduction for married filing jointly will be 167% (instead of 200%) of single taxpayers’ deduction. Itemized deductions for higher income taxpayers will be reduced by 3% of AGI. Personal exemptions are phased out for higher-income taxpayers.
Estate Tax: $1 million exemption (instead of $5.12 million); top tax rate of 55% (instead of 35%); 5% surtax on higher estates; reinstated state death tax credit; reinstated QFOBI deduction; and the more favorable installment payment rules will disappear. No more portability of the deceased spouse’s exemption.
Gift Tax: $1 million exemption (instead of $5.12 million); top tax rate of 55% (instead of 35%).
Generation-Skipping Transfer (GST) Tax: $1,430,000 exemption (adjusted for inflation; instead of $5.12 million); tax rate of 55%; the more favorable automatic allocation rules and severance of trusts will disappear.
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