Estate Planning

Lessons from Heiting v. the United States: Utilizing Claim-Of-Right Deductions

Published on: February 21, 2022 | by Ettinger Law Firm

In the recent case, Heiting v. the United States, an appellate court denied a claim-of-right deduction in accordance with Section 1341 of the Internal Revenue Code. The case originated from an effort by a taxpayer to receive a tax refund from the Internal Revenue Service. Following a denial of the refund by the Internal Revenue Service, the taxpayer initiated a lawsuit pursuing a tax refund of the taxes paid on an unauthorized stock sale made by the grantor trust.

Claim-of-Right Deductions

The claim of right deduction is a regulation that governs how income recognition is time. The law decides when income is taxed instead of whether it can be taxed. The regulation results from Congress’s implementation of an annual accounting period. If a person who pays taxes receives earnings under a claim of right and no restrictions exist regarding the disposition, the individual has received income to which he or she is required to return. This is true even though the person may claim that he or she has no entitlement to retain the funds.

Making the Most of Estate Planning in 2022

Published on: February 12, 2022 | by Ettinger Law Firm

While some people anticipated otherwise, 2022 started without any new federal regulation or tax changes addressing estate planning. As proposed legislation passed through the legislative process in 2021, major potential changes to federal estate and gift tax were dropped. These potential changes included a decrease in the estate and gift tax exemption as well as the elimination of a step-up basis.

Furthermore, no reports exist that any changes will be made any time soon. This is not a guarantee, though. Potential changes can emerge at any point in the future. While no changes are looming, it’s worth noting that one substantial change will occur in a few years when in 2025, the federal estate and gift exemption will be reduced to $5,000 per person.

Positive Changes to Estate Planning This Year

Taking the Time to Review or Create an Estate Plan

Published on: February 12, 2022 | by Ettinger Law Firm

Each year, it’s important for anyone interested in planning for the future of their assets to either create or revise their estate plan. Taking the time and including loved ones in estate planning discussions is the best thing that you can do to avoid conflict or estate planning disagreements.

Estate planning involves planning for the use of your assets after you become incapacitated or pass away. While many people think that estate plans are written in stone, this is not the truth. In actuality, various life events including births and divorce should lead people to review and ultimately revise the terms of their estate plan.

Acknowledge What You Own

Avoiding Undesirable Estate Planning Situations

Published on: February 12, 2022 | by Ettinger Law Firm

TV shows often depict unpleasant estate planning situations that can arise including a deceased person leaving assets to a former spouse. While these situations often do not occur in the way depicted on TV or film including the recent Netflix film I Care A Lot, a former spouse could end up receiving assets from your assets or other undesirable situations can occur if you are not careful.

For a large number of people in New York as well as the rest of the country, estate planning documents including wills and trusts are a person’s final communication with their loved ones as well as the rest of the world.

Make Sure to Revise Your Estate Plan

Understanding the Role of Federal Taxes in 2022

Published on: February 1, 2022 | by Ettinger Law Firm

As we begin our way through 2022, understanding various federal tax issues can help make the most of your estate planning this year. Because the federal legislature might pass regulations that alter these laws sometime during 2022, it’s important to understand critical federal tax laws you might want to utilize now. Before acting on any of these regulations, however, it’s often wise to speak with an attorney who is up to date with these changes and can make sure that you engage in actions that best benefit your situation.

# 1 – Lifetime Exclusion Amounts

Starting January 1, 2022, the amount of federal estate and gift tax exclusion in addition to the generation-skipping transfer tax has increased to $12,060,000 from $11,700,000. Remember, this amount is doubled for married couples. These threshold amounts are poised to decrease substantially at the beginning of 2026, though.

The Advantage of Utilizing SPA Trusts in Your Estate Plan

Published on: February 1, 2022 | by Ettinger Law Firm

In times of economic uncertainty, estate plans can benefit substantially from flexibility. As the country both continues to recover from the COVID-19 pandemic as well as face the challenges brought on by new strains of COVID-19, it’s a good idea to consider how to make your estate plan flexible. Not to mention, looming changes brought on by changes to tax law also make it a good idea to consider flexibility while creating an estate plan.

What SPA Trusts Do

Special power of appointment (SPA) trusts (or as they are sometimes called SPAT trusts) is a type of irrevocable trust in which either the creator or settlor of the trust grants appointment power to another person. The person who receives these powers functions in a non-fiduciary role to direct the trustee to make distributions to anyone except for the person who made the appointment of powers.

The Status of Estate and Gift Taxes in 2022

Published on: February 1, 2022 | by Ettinger Law Firm

The Status of Estate and Gift Taxes in 2022

In 2021, Congress, as well as the Executive branch, proposed revisions to the tax code that if passed would have substantially changed estate planning. If these changes had been made, some proposals would have been put on the side, while the frequency of use for other estate planning strategies would have increased.

Some estate planning proposals would have lowered the amount of estate and gift tax exemptions from the current level of $12.06 million a taxpayer to around half the amount. While no guarantee exists that such changes will be made at any time in the future, those interested in making the most of their estate plan should still understand how the law is written as well as what steps they can take to anticipate these looming changes.

A Few Important Things to Remember about Digital Asset Planning

Published on: November 28, 2021 | by Ettinger Law Firm

When it comes to planning for how your assets will be managed after you pass away, people often make adequate arrangements in their estate plan in regards to their finances as well as physical property.

In this era, when an increasingly large amount of information that people have is stored online, it’s critical to also create an adequate digital estate plan which makes sure that your loved ones can access your digital assets like social media accounts, subscription services, pictures, and personal files, and digital currency.

One issue that makes planning for digital assets complex is that service, as well as user agreements, often stipulate that a company will terminate a person’s account following that individual’s death without waiting to hear back from the next-of-kin. Many states including New York have established legislation addressing how to handle a person’s digital assets. These regulations frequently contain challenges preventing complete access to digital files. To avoid encountering complications with your digital assets after you pass away, this article reviews some of the most helpful strategies you should follow to adequately plan for digital assets.

Estate Planning for Non U.S. Citizens

Published on: November 24, 2021 | by Ettinger Law Firm

Many myths exist about the rights and responsibilities of U.S. citizens. For example, if you are not a U.S. citizen but are married to a U.S. citizen and have permanent resident status, you might have heard that if your spouse passes away without an adequate estate plan you will be required to pay more taxes on your property than if you were a citizen of the United States.

In reality, if you are the owner of property located in the U.S. but are neither a citizen nor permanent resident, you cannot claim exactly the same advantages in taxes as citizens of the United States. Consequently, you might end up immediately facing estate taxes if your spouse passes away. Various notable estate planning issues occur when either non-citizens or permanent residents are married to U.S. citizens. This article reviews some of the most common ones.

Permanent residents (or holders of green) are viewed as almost identical for tax purposes as United States citizens. These individuals must pay the U.S. tax on income earned anywhere in the world as well as U.S. estate and gift tax on assets owned anywhere in the world.

Estate Planning Issues to Address Before 2021 Is Over

Published on: November 16, 2021 | by Ettinger Law Firm

As we approach the end of 2021, you should remember to consider and approach many aspects of estate planning. There are also several considerations given potential legislative changes. You should make sure to review your end-of-year estate planning concerns now instead of waiting. This article reviews some of the important issues that you should remember while you prepare your estate plan for the future.

Passing on Gifts Before 2022

The rate for federal tax exemptions is currently higher than it has ever been. If a person does not use these high thresholds, they cannot do so in the future. As a result, now is an ideal time to make the most of available valuation discounts. Some of the factors to consider for gifts that are made in 2021 include: