Credit Shelter Trusts Aren’t Just for the Super Wealthy

Credit shelter trusts are a way to take full advantage of state and federal estate tax exemptions. Although such trusts may appear needless unless you are a multi-millionaire, there are still reasons for those of more modest means to do this kind of planning, and one of the main ones is state taxes. The first $11.7 million (in 2021) of an estate is exempt from federal estate taxes, so theoretically a husband and wife would have no estate tax if their estate is less than $23.4 million. The estate tax is also “portable” between spouses. This means that if the first spouse

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Paying Taxes When Selling an Inherited Vacation House

While it may seem great to inherit a vacation house, in actuality it may not be practical to keep the property, especially for tax reasons. There are many factors to consider when inheriting property, including taxes, any mortgage, and other owners. But if you know you do not plan to keep the property, it is better to sell it sooner, rather than later. Property like a house or stocks usually appreciates in value and is worth more than it was when the original owner purchased it. If you were to sell the property, there could be huge capital gains taxes.

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End-of-Life Care Decision Making

Just as we create estate plans for our eventual demise, we also need to plan ahead for the possibility that we will become sick and unable to make our own medical decisions. Medical science has created many miracles, among them the technology to keep patients alive longer, sometimes indefinitely. As a result of many well-publicized “right to die” cases, states have made it possible for individuals to give detailed instructions regarding the kind of care they would like to receive should they become terminally ill or are in a permanently unconscious state. These instructions fall under the general category of

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Watch Out for These Potential Problems with Life Estates

Life estates can be an excellent tool for Medicaid planning, probate avoidance and tax efficiency, but there are potential problems to look out for. Knowing the implications and risks of a life estate is essential in determining whether it is appropriate for your situation. In a life estate, two or more people each have an ownership interest in a property, but for different periods of time. The person holding the life estate — the life tenant — possesses the property during his or her life. The other owner — the remainderman — has a current ownership interest but cannot take possession

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Special Tax Deduction for 2020 Allows Donations of $300 to Charity Without Itemizing

As we enter the giving season, there is an additional reason to be charitable. Congress enacted a special provision that allows more people to easily deduct up to $300 in donations to qualifying charities this year. Since the increase in the standard income tax deduction in 2018, only 11 percent of taxpayers itemize deductions, so fewer taxpayers take advantage of the charitable deduction. But to both encourage and reward giving in this difficult year, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act Congress created a one-time $300 charitable deduction for people who do not itemize on their tax

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Gifts to Grandchildren: What Do UGMA and UTMA Have to Do With Grandma?

When to Modify Your Divorce Agreement How long has it been since you terminated your marriage? Have your circumstances changed since then? While your divorce may last forever, your divorce agreement can change over time. There are many reasons to consider modifying your divorce agreement. Some examples include: a significant change in income that will impact child support or alimony payments a job change requiring a move needs of aging children the remarriage of the party awarded the alimony Child Support Modifications With regard to child support, you can request to modify your original order if there has been a

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