March 13, 2014 –
Family Wealth Compass: 2014 tax brackets; ID thieves target deceased; choosing a trustee | March 2014

Here is your copy of the most recent Family Wealth Compass.

This publication offers a timely roundup of estate and trust planning tips, information and news, courtesy of Gunster’s private wealth services attorneys; please contact any team member for more information.

In this latest issue, you’ll find information on the following topics:

2014 tax brackets (inflation-adjusted)

Each year, IRS tax figures are adjusted for inflation based on the average consumer price index for the 12-month period ending August 31. The following figures are the adjusted exemption and exclusion amounts, tax rates and estate and trust tax brackets for 2014, based on the August 2013 consumer price index released by the Labor Department….

Read the entire article: 2014 inflation-adjusted estate and trust tax brackets; surtax on investment income and gains (Family Wealth Compass, March 2014)

How to choose a trustee

Choosing a trustee is an important decision. A trustee stands in a special relationship to the grantor of a trust and to the trust beneficiaries. At least one trustee must be named when a trust is established. This may be an individual or a corporate entity having trust powers under applicable law. How do you choose?

Read the entire article: Choosing a trustee: individual or corporate? (Family Wealth Compass, March 2014)

Beneficiary designations

Beneficiary designations generally trump the provisions of your last will and testament or revocable trust.

When choosing your beneficiaries you should consider, among other things, the effect the designation will have on the beneficiaries’ eligibility for government benefits and the age of the beneficiaries.

Read the entire article: Do you know where your assets are going? (Family Wealth Compass, March 2014)

Identity thieves target the deceased, too

The deceased are vulnerable for many reasons, but primarily because information about their death is readily available through public death notices and obituaries in the newspaper. It is not as difficult as one might think to use that information to obtain the deceased’s social security number and other personal information. The thieves then use that information to open credit card accounts, apply for loans, file tax returns and obtain goods and services like cellphones.

You can protect your deceased loved ones from identity thieves by….

Read the entire article: Protect your deceased loved one from identity theft (Family Wealth Compass, March 2014)

Tax consequences of trust administration

Failure to properly administer an irrevocable life insurance trust (“ILIT”) can result in scrutiny by the IRS and unintended tax consequences. In particular, improperly reported gifts to ILITs can result in the imposition of additional federal and state gift taxes upon audit by the IRS. Moreover, failing to comply with trust ownership and administration rules can trigger possible income tax consequences, as well as the inclusion of insurance death benefits for estate tax purposes.

Read the entire article: Best practices for administration of insurance trusts (Family Wealth Compass, March 2014)

Gift taxes now offer overall transfer tax savings

You may already know that making gifts during your lifetime reduces the value of your estate for estate tax purposes upon your death. However, some of those gifts may be subject to gift taxes that are normally paid by the donor. It is possible for the donee to agree to pay the applicable gift taxes. In such case, the donor is making a “net gift,” where the donee assumes responsibility for gift taxes attributable to the gift. Net gifts can reduce the amount of gift tax payable upon making a gift, but do not result in any overall transfer tax savings.

On September 30, 2013, the tax court in Steinberg v. Commissioner allowed for a reduction in the value of a taxable gift both for the gift taxes assumed by the donee (under a net gift) and the value of the contingent liability assumed by the donee (under a net, net gift) for any increase in estate taxes if the donor dies within three years of making the gift. Thus, a net, net gift results in an overall transfer tax savings, even if the donor dies within three years of making the gift.

Read the entire article: Net, net gift reduction upheld! (Family Wealth Compass, March 2014)

Mystery man image courtesy of Idea go / FreeDigitalPhotos.net

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