Last week, I wrote about the reasons I disagree with President Biden's proposal to eliminate the step-up in basis. Here I'll discuss some other tax proposals he has which I can support.
Read MorePosted by Harry S. Margolis on March 9, 2021
Last week, I wrote about the reasons I disagree with President Biden's proposal to eliminate the step-up in basis. Here I'll discuss some other tax proposals he has which I can support.
Read MoreTopics: income taxes, capital gains taxes, estate taxes
Posted by Harry S. Margolis on March 2, 2021
As a candidate, President Joe Biden proposed getting rid of the "step-up" in basis. This is a provision that erases capital gains upon the death of the owner. Here's how it works:
Let's say you bought some stock for $20,000 and today it's worth $50,000. If you were to sell the shares for this amount, you would have to pay tax on capital gains of $30,000. The purchase price is the stock's "basis." The gain is the difference between the proceeds and the basis.
Read MoreTopics: capital gains taxes, estate taxes, step-up in basis
Posted by Harry S. Margolis on December 29, 2020
If you or your spouse (or both) are not U.S. citizens and you live in Massachusetts with a total combined estate of more than $1 million, your estate tax planning could get complicated. This is in large part because non-U.S. citizens are not eligible for the marital deduction which permits unlimited tax free gifts between spouses whether during life or at death.
Read MoreTopics: Massachusetts, estate taxes
Posted by Harry S. Margolis on December 24, 2020
For those dying in 2021, the threshold for federal estate taxes is $11.7 million, $23.4 million for a married couple. Smaller estates, which means virtually all estates, pay nothing. Larger estates pay 40% of everything above the threshold.
Topics: estate taxes
Posted by Harry S. Margolis on August 7, 2020
The case of Phannenstiehl v. Phannenstiehl (475 Mass. 105, 2016) established the rule that if your parents create a trust for your benefit and leave discretion over distributions in the hands of the trustee, the funds in that trust will not be considered part of the marital estate upon your divorce. (See our description of this case: In Pfannenstiehl Case, MA SJC Affirms Use of Asset Protection Trusts.) A recent Massachusetts Appeals Court decision appears to narrow this rule.
Read MoreTopics: asset protection, divorce, estate taxes
Posted by Harry S. Margolis on July 29, 2020
By Harry S. Margolis
Perhaps only of interest to estate planners, but of great interest to them, the Massachusetts Supreme Judicial Court has ruled in Shaffer v. Commissioner or Revenue (SJC-12812, July 10, 2020) that out-of-state QTIP trusts are includible in the Massachusetts estates of surviving spouses if the deceased spouse's estate filed a federal QTIP election for the estate. This is probably relevant mostly for larger estates and for older trusts, since given the current $11.58 million federal estate tax threshold, few estates today need to file a federal QTIP election.
Read MoreTopics: estate taxes
Posted by Harry S. Margolis on January 28, 2020
With the current federal estate tax threshold set at $11.58 million (over $23 million for a married couple) in 2020, fewer than 2,000 estates are expected to pay any tax this year. That's out of more than 2.8 million deaths, or approximately 0.07% of all estates. (The threshold for Massachusetts estates is $1 million.)
Read MoreTopics: Estate Planning, estate taxes, tax law
Posted by Harry S. Margolis on September 24, 2019
That house on the Cape, Martha's Vineyard, or in the Berkshires, what happens when the owner dies and is not a Massachusetts resident? Is it subject to the Massachusetts estate tax?
Yes.
And it's a bit complicated.
Read MoreTopics: Massachusetts, estate taxes, real estate
Posted by Harry S. Margolis on July 31, 2018
How often should you review your estate plan? The answer, like that to many other legal questions, is it depends. It depends on how old you are and whether there has been a significant change in your circumstances. If you are over age 60 and you haven't updated your estate plan in many decades (which is the norm among our clients), it's almost certain that you need to update your documents. After that, you should review your plan every five years or so. But if you're younger, you don't need to do so nearly as often.
Age
Here are a few age ranges and what they mean in terms of estate planning:
Read MoreTopics: Estate Planning, estate taxes
Posted by Harry S. Margolis on April 3, 2018
With the threshold for federal estate taxes now at $11.58 million (in 2020), you probably don't have to worry about it or do any planning to avoid it. Very few Americans have federally taxable estates. But the threshold for Massachusetts residents is $1 million. So, if you live in Massachusetts and your estate is above $1 million—which isn't hard if you own a house in many communities in this state—should you engage in estate tax planning?
Read MoreTopics: estate taxes
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