RobRoy's blog

What to Expect from Estate Planning in Utah and Salt Lake County Part I

This is the first in a series of articles on what to expect when you work with your Utah County estate planning lawyer. Each article will cover several of the topics that you will need to consider to make a plan that works for your needs.

When To Contact a Trust and Estates Lawyer In Provo, UT

There are times in life when it is obvious that people in the Provo, UT area should start meeting with a trust and estates attorney. For example, it’s more obvious that seniors need to get their estates in order than younger people do. While some situations are more urgent than others, there are actually quite a few indicators that you’re ready to start estate planning with an attorney.

Estate Planning Thoughts for Unmarried Couples | Trust Lawyers In Utah County

Trust lawyers in Utah County work with unmarried couples to help protect their assets and their partners’ interests should one of them pass away. The way that federal and state laws are set up, it is customary for a spouse to receive assets of an estate through the Utah County probate process. Unfortunately, things are far less cut-and-dry when it comes to settling the estate of an unmarried partner.

The Downside to Annuities From A Utah Trust Lawyer’s Perspective

When it comes to annuities, trust lawyers in Utah do at times recommend these financial products for their clients…and they may be a great choice for you.

Proactive Planning With a Probate Lawyer In Utah County Helps To Avoid Will Contests

Probate lawyers in Utah County work with their clients to put together plans that clearly explain what the client wants. At least, that’s the hope. When it comes to the administration of a will, however, there are several instances where a will is contested, often by an adult child of the decedent.

Ask a Provo Estate Planning Lawyer: What Is An Annuity?

There are so many considerations to make when doing your estate planning, and it can get downright confusing. Suddenly you’re talking about assets and investments, wills and trusts, life insurance and death taxes. No wonder people turn to their estate planning lawyers in Provo and surrounding areas for help. In order to de-mystify at least one of these estate planning tools, today we’re going to take a moment to ask and answer the question “What is an annuity?”

A HIPAA Waiver: Do I Need One?

It has happened to all of us. You make a visit to the doctor’s office and while checking in, the receptionist asks you to read and sign something about HIPAA. HIPAA? You came in for fever and a sore throat, your hip feels just fine, thank you very much. So what is the receptionist talking about? HIPAA stands for the Health Insurance Portability and Accountability Act of 1996.

Your Buy-Sell Might Be Great If You Die, But What Happens If You Live?

In the previous issue of this newsletter, we looked at what happens to a company when one owner becomes disabled. In our example, the company had a buy-sell agreement that covered the death of an owner, but failed to adequately address the cash flow implications of a lifetime event (divorce, disability, bankruptcy or retirement of a shareholder).

Few owners (or their advisors) give much thought or analysis to the likelihood of a lifetime transfer. Instead they focus all of their attention on dealing with the least likely event—an owner’s death. Yet, in our experience, lifetime transfers occur much more frequently, and when they do can cause huge problems.

Lifetime Buyout of a Co-Owner

When disability strikes an owner, the company will endure substantial hardships, both economic and operational. More importantly, in the absence of a buy-sell agreement, the disabled owner’s income stream from the company also may evaporate. This problem confronted Steve Hughes, one of three equal shareholders in a growing advertising agency.

At age 38, Steve suddenly had a stroke. As with many stroke victims, his recovery was incomplete. Physically, he was the picture of health (his golf game even improved!); but he totally lost his ability to speak and read. Doctors told Steve he would never be able to return to work.

Steve’s firm had a buy-sell agreement, but it covered only a buyout at death and an option for the company to buy Steve’s stock if he were to try to sell it to a third party. Trying to find and sell closely held stock to a third party is a difficult proposition anytime; Steve’s disability made it impossible. Even if his fellow shareholders had wanted to continue his salary, they did not have the resources to do so indefinitely.

2013 Estate Tax Law Updates

The New Year has arrived with all of its attendant changes.  Although Congress couldn’t seem to get its act together until after the deadline passed, they have ultimately settled on a few things, which is very good news for those of us who are trying to understand what our options are.  Here is a quick summary of some of the highlights of the 2013 American Taxpayer Relief Act that are particularly relevant to our clients:

 

     The gift and estate tax exemption amounts will be at least $5.12 million per person.  This amount will likely go up this year to $5.25 million due to inflation adjustments.  Thus, an individual may still gift or devise as much as $5.25 million  without incurring any transfer tax liability.

     The estate tax rate changed from 35% in 2012 to 40% in 2013 for those who die having more than the $5.25 million in their estates.  This means that if your estate is larger than this, additional planning strategies will need to be implemented to avoid paying the IRS $0.40 on the dollar for every dollar over this amount when you die.

     “Portability” will remain between spouses on the use of their estate tax exemption.  This means that a surviving spouse can use the other spouse’s unused estate tax exemption if the $5.25 million is not sufficient at the second spouse’s death.  However, portability is not automatic as the surviving spouse must make this election on a Form 706 after the first spouse’s death.  Such a filing must be made shortly after the first death or this benefit may be lost.  Although this benefit is certainly a good thing, it can lull people into a false sense of security regarding their estate tax liability and prevent them from doing the kind of planning that is much more certain to ensure that estate taxes are not a problem.

     The GST Tax (Generation Skipping Transfer Tax) stays at the same rates as the estate and gift tax.  This tax is imposed upon transfers of wealth over $5.25 million to individuals 37.5 years younger than the individual making the transfers, either through testamentary transfers or lifetime transfers.

     The annual Gift Tax exemption amount increased from $13,000 per person to $14,000.

 

Most of these changes to the estate, gift, and GST tax laws have been passed as “permanent” changes rather than under the “sunset” provision conditions that we’ve been dealing with for the last 10 or so years.  Thus, there is some measure of certainty going forward that this is going to be the law for some time.  I hope that is the case.  Nevertheless, Congress can change any of the laws just as soon as they decide it is prudent to do so.  So, any real permanence in these laws may in fact be illusory.  For the moment, however, I will operate under the assumption that these laws will remain permanent.

Syndicate content RSS