Michigan Estate Planning Blog

Do Single Childless People Need an Estate Plan?

A single person without children can focus on their personal goals, including philanthropy. However, it takes planning to ensure that their assets are distributed according to their wishes. A recent article, “I’m an Estate Planner: 8 Ways Single and Childfree People Can Manage Their Assets” from AOL, provides tips for singles with no children and notes that they need an estate plan.

One of the challenges facing singles is the need to have an estate plan in place earlier in their lives than marrieds or parents. If the state is unable to identify a next of kin, the state will take the assets as unclaimed. This is probably not what anyone has in mind for their property.

Consider the people and organizations that have meaning for you. Have an estate plan prepared by an experienced estate planning attorney, who will help you clarify who might be a suitable heir. It may be a close friend, charitable organization, niece, or nephew. Remember to update your will as life changes occur.

For some singles, the preferred option is to “die with zero.” The concept is not to leave any generational wealth behind but to live their lives to the fullest, including philanthropy and gifting while they are living. This lets them see the good work done by charities and the benefits to those they choose to give assets to.

A challenge for some singles is identifying a person to serve as their executor, who will administer their estate, including distributing assets, after their death. If no executor is named in a will or there is no will, a court will name an administrator, and assets will be distributed according to the state's laws.

Do single people need to establish trusts? Trusts are extremely useful in the event of incapacity, which no one wants to think about but needs to be addressed. If you become incapacitated, the trustee can use the funds in a trust to keep your bills paid and your household running. There are also trusts used in charitable giving to meet your philanthropic goals or trusts to protect assets if you need long-term care.

Designating people to serve as your Power of Attorney and Healthcare Proxy is especially important for singles with no children. This way, people of your choosing can oversee your day-to-day financial and legal matters and be involved in your medical decisions.

Finally, don’t leave any of this to chance. Have conversations with people you’ve chosen to fulfill various roles, including executor, power of attorney, healthcare proxy and trustee. Make sure that they understand what you are asking them to do, and be sure they are willing to take on the tasks.

A consultation with an estate planning attorney is the first step to implementing a plan.

Reference: AOL (June 7, 2024) “I’m an Estate Planner: 8 Ways Single and Childfree People Can Manage Their Assets”

Now Or Later? When Do You Give It Away To The Heirs? Saginaw MI

When is the right time to give to your children? Should you gift them assets now or wait to give it all away only after you’ve passed? It’s a good question and can be a difficult calculus. Forbes recently tackled this difficult issue a short while ago in an article titled “Should I Gift Money To My Children Now Or Later?” The original article is a sort of evolving discussion between two advisers who end up giving solid points to support either option. And, that’s fair. There really are two ways to approach this dilemma because there are different motivations in either direction. Giving now is simple and can be an entirely different act – emotionally, financially, and legally – from giving at death. It raises issue of control (how much and when), issues of need (who needs it most now and later?), trust (can they be trusted to act wisely?) and, yes, mortality (do you wish to be there to see them enjoy and make good use of your generosity?). One thing is for certain. The longer you delay making this decision, the longer time you have to mull it over. For many it will be an important transition if they choose to gift in life, emotionally or financially, and it will likely be a gift worth making wisely and to the greatest advantage of all. Competent counsel can help think with you, identify the legal or financial consequences of either option, and help you structure the best transition for you and your family.

Reference: Forbes (April 23, 2014) “Should I Gift Money To My Children Now Or Later?”

For more information, see www.jerryreiflawyer.com

 

Graduation Gifts: Gifting For A Good Future And Not Just A New Car

As we move from spring into summer, many of our young loved ones are entering their own transition periods and marking some of their first real life milestones. It is graduation season, which means it is graduation gift-giving season. If you hope to mark your loved one’s accomplishment with a sizeable gift, then how do you ensure that such gift is not squandered? To mark a milestone with a financial gift can be something of a carrot-and-stick opportunity. If that is the case, then the trick is to ensure that the gift encourages positive possibilities instead of some shiny mess with a new car smell. Reuters recently provided some advice on this timely topic in an article titled “Four ways to influence how new grads handle money.” In some ways, the advice for giving money to young adults does not hinge on the number of dollars involved. In fact, from $100 to $100 million, and however you slice it, the goal is to ensure a responsible use of the funds. Then again, with high-value gifts or full inheritances in the mix, there is that much more that can go wrong. Fortunately, there are more tools at your disposal to structure a successful gift. The advice in the original article is well worth thinking about, whether your potential gift is imminent or not for another four years of high school, college, or an advanced degree. Knowing full well the value of an approaching milestone, it is the sort of thing you can begin to plan for well in advance and doing so in the midst of this advice can really make the best of your gift.

Reference: Reuters (May 14, 2014) “Four ways to influence how new grads handle money”

Now Or Later? When Do You Give It Away To The Heirs? Mid-Michigan

When is the right time to give to your children? Should you gift them assets now or wait to give it all away only after you’ve passed? It’s a good question and can be a difficult calculus. Forbes recently tackled this difficult issue a short while ago in an article titled “Should I Gift Money To My Children Now Or Later?” The original article is a sort of evolving discussion between two advisers who end up giving solid points to support either option. And, that’s fair. There really are two ways to approach this dilemma because there are different motivations in either direction. Giving now is simple and can be an entirely different act – emotionally, financially, and legally – from giving at death. It raises issue of control (how much and when), issues of need (who needs it most now and later?), trust (can they be trusted to act wisely?) and, yes, mortality (do you wish to be there to see them enjoy and make good use of your generosity?). One thing is for certain. The longer you delay making this decision, the longer time you have to mull it over. For many it will be an important transition if they choose to gift in life, emotionally or financially, and it will likely be a gift worth making wisely and to the greatest advantage of all. Competent counsel can help think with you, identify the legal or financial consequences of either option, and help you structure the best transition for you and your family.

Reference: Forbes (April 23, 2014) “Should I Gift Money To My Children Now Or Later?”

For more information, see www.jerryreiflawyer.com

 

Understanding Estate Tax “Portability” Protocol Mid-Michigan

The devil truly is in the details when it comes to much of life. So it is with taxes and tax planning. This is especially the case with new changes to the federal estate tax laws. It seems experts and taxpayers alike are grappling with the ins and outs of “portability.” How and when can it be used? The temporary regulations governing portability are now on the books. While there is some guidance regarding how a “Deceased Spouse Unused Exemption” (DSUE) actually works, a recent Forbes article, titled “Estate Tax Portability - Date DSUE Amount May Be Taken Into Account,” provides some practical advice. As many know, “portability” refers to the new ability of a deceased spouse to pass along their unused unified exemption amount (the amount in a lifetime that you can either transfer without gift tax or can pass through your estate without estate tax) to their surviving spouse without implementing traditional estate tax planning techniques. The question many surviving spouses might face is when to make use of the exemption. What if they have a gifting strategy, especially if there is little time to spare? Does the DSUE pass immediately or does the estate tax return have to be filed? As a rule of thumb, the DSUE passes immediately. In turn, this can buy some time given how long it could take to file an estate tax return. As with all tax matters, be sure to consult with your professional advisors before making a move you cannot undo later.

Reference: Forbes (January 14, 2014) “Estate Tax Portability - Date DSUE Amount May Be Taken Into Account”

For more information, see www.jerryreiflawyer.com

Giving The Illiquid

Have you considered your annual, year-end charitable gift strategy? While it is sometimes tricky to figure out to whom you are going to give – there are so many worthy causes and only so much to go around – also remember to consider what you are going to give to charity. In addition to your time and/or your money, there are other special (yet common) assets to give for a great advantage to everyone involved. Most seasoned donors are already well acquainted with the fact that there are many great tax advantages to charitable giving. In that spirit, keep in mind that those appreciated securities you have may be the perfect gift to benefit your charities rather than the IRS. This was the subject of a recent Forbes article titled “Gifting Appreciated Securities: A Win-Win-Win Scenario.” Read the original article for details regarding the accounting, securities-talk and the would-be story of our hero, Mr. Benevolent. In essence, however, “appreciated” assets are those that are worth more now than they were when you bought them. In turn, the increase in value represents a net gain – a capital gain – and that can translate into a capital gains tax upon transfer. In the charitable giving context, you can perform some tax magic. If you sell an appreciated asset, you must first pay the capital gains tax. Thereafter, you may give the after-tax proceeds to charity. You may only claim the value of this after-tax gift for charitable deduction purposes. On the other hand, if you give the same appreciated asset to charity, then 100% of the value goes to work for the charity. Why? The charity pays no income taxes! Even better, the tax code allows you to claim the full appreciated value when calculating your charitable contribution. Smart, savvy giving is worth planning – for you and your charities.

Reference: Forbes (November 6, 2013) “Gifting Appreciated Securities: A Win-Win-Win Scenario”

For more information, see www.jerryreiflawyer.com

 

Avoiding The 2013 Capital Gains Gotcha Mid-Michigan

Did you know there's a new tax bite effective January 1, 2013? For example, unless you have been paying close attention to capital gains and your expected tax hit for 2013, then you might not realize the pain until tax season. For those in the know, however, there is still time to beat the capital gains tax in 2013 and beyond. For some ideas to consider before it is too late, take a look at a recent Forbes article titled “How To Beat The Big 2013 Capital Gains Tax Hike.” The Great Capital Gains Tax Hike of 2013 was essentially the double-pronged effect of the eclipse of certain tax cuts mixed with a brand new surtax. More specifically, the gains tax was allowed to bounce from 15% to 20%, and Obamacare added to the pain with a new 3.8% surtax to high earners. If you are doing the math, then that equates to a new rate of 23.8% for many (a near 60% increase from the year then ended). So how do you beat it? Here are 11 strategies to consider, according to Forbes: 1. Invest in your primary residence. 2. Manage your tax bracket. 3. Harvest losses. 4. Gifts to family members. 5. Gifts to charity. 6. Feed retirement accounts. 7. Open a 529 college savings account. 8. Buy and hold. 9. Move to a tax-friendlier state. 10. 1030 exchanges. 11. Charitable trusts. Each of these strategies has merit. Nevertheless, the key is to evaluate them (and others) with your professional advisors in the context of your medium and short-term financial and estate planning goals. The tax “tail” should never automatically control the planning “dog.”

Reference: Forbes (September 13, 2013) “How To Beat The Big 2013 Capital Gains Tax Hike”

For more information, see www.jerryreiflawyer.com

 

Entrepreneurs Asking For An Early Inheritance Mid-Michigan

If your parents are retiring or already retired, then likely they will need their own retirement savings to maintain their lifestyle. On the other hand, as an entrepreneur you might be on the verge of rolling out the next big thing in the marketplace. Should you ask your folks for an early inheritance? The Wall Street Journal considered this matter in an article titled “Cash-Strapped Entrepreneurs Seek Early Inheritances,” with ideas for parents and their entrepreneurial heirs alike. In an economy starting to show some signs of life, many business plans that have been mothballed are being reconsidered. As an heir, is it ok to want your inheritance now? As a parent, is it ok to give it up early? Well, yes to both. All parties concerned must be mindful of tax issues, as well as future financial needs that include planning for retirement, old age, health issues and even the rest of the estate. The original article explores the emotional aspects of this issue, too. Indeed, it can be difficult to ask for an early inheritance and, conversely, it can be difficult being asked for an early inheritance. Regardless, whether you are asking or being asked, you will need competent legal, accounting and financial counsel to guide you. You do not want the potentially competing dreams of business success and a secure retirement to turn into nightmares for all concerned.

Reference: The Wall Street Journal (August 19, 2013) “Cash-Strapped Entrepreneurs Seek Early Inheritances”

For more information, see www.jerryreiflawyer.com

 

Entrepreneurs Asking For An Early Inheritance Saginaw MI

If your parents are retiring or already retired, then likely they will need their own retirement savings to maintain their lifestyle. On the other hand, as an entrepreneur you might be on the verge of rolling out the next big thing in the marketplace. Should you ask your folks for an early inheritance? The Wall Street Journal considered this matter in an article titled “Cash-Strapped Entrepreneurs Seek Early Inheritances,” with ideas for parents and their entrepreneurial heirs alike. In an economy starting to show some signs of life, many business plans that have been mothballed are being reconsidered. As an heir, is it ok to want your inheritance now? As a parent, is it ok to give it up early? Well, yes to both. All parties concerned must be mindful of tax issues, as well as future financial needs that include planning for retirement, old age, health issues and even the rest of the estate. The original article explores the emotional aspects of this issue, too. Indeed, it can be difficult to ask for an early inheritance and, conversely, it can be difficult being asked for an early inheritance. Regardless, whether you are asking or being asked, you will need competent legal, accounting and financial counsel to guide you. You do not want the potentially competing dreams of business success and a secure retirement to turn into nightmares for all concerned.

Reference: The Wall Street Journal (August 19, 2013) “Cash-Strapped Entrepreneurs Seek Early Inheritances”

For more information, see www.jerryreiflawyer.com

 

Economy Down, But Generosity Up Saginaw, MI

Charity is at once the easiest, most joyous of human acts. Charity can be amongst the trickiest acts to pull off financially, however, especially when economic times are tight. Remarkably, despite tough economic times in 2012, Americans actually increased their charitable giving. As recently noted by CNN Money, “Americans were much more charitable last year.” Charitable giving was up in 2012 to the tune of a 4% increase in individual donations and a 12.2% increase in corporate giving. While there are many reasons for this, it is a positive fact. So what of 2013? What are your plans, for example? If you have high hopes and good intentions for a large gift, then consider obtaining competent counsel to make the most of the opportunity for yourself and your charity.

Reference: CNN Money (Junes 21, 2013) “Americans were much more charitable last year”

For more information, see www.jerryreiflawyer.com

 

Giving While You Are Living Great Lakes Bay Region MI

Much of estate planning means planning for where and to whom assets are to go after you are gone. On the other hand, some people want to see their plans take effect and their loved ones enjoy their generosity. So how do you begin moving the estate within your own lifetime? A recent article in Forbes titled “Best Ways To Give Your Heirs Money While You're Alive,” explored this subject. The short answer is “giving” while you are living. However, there are certain limitations to giving, largely because of a screen of taxation. You want to duck under the gift tax itself, most likely, which means giving less than the annual exclusion (i.e., currently $14,000 per child). In addition, you may want to consider leveraging your lifetime gift/estate tax exemption to its greatest effect. To make already complicated matters a bit more complicated, don’t forget there also are taxes based on to whom you are giving. For example, there is the generation-skipping transfer tax and, with certain assets, the kiddie tax. To be sure, lifetime wealth transfers can be a great benefit to those on either end – the givers and the receivers. Seek qualified professional counsel in advance to ensure that all is done according to Hoyle.

Reference: Forbes (June 18, 2013) “Best Ways To Give Your Heirs Money While You're Alive”

For more information, see www.jerryreiflawyer.com

 

Why Are Charitable Donors Charitable? Saginaw, MI

You might say the “head” versus the “heart” is an age-old dynamic and dilemma. This is true whether in literature, art, or – yes – charity. The head vs. the heart, as it occurs in charitable planning, was the topic of a recent article in The New York Times titled “Two Paths for Charitable Giving: From the Head or From the Heart.” The key question posed by the author: “Is it better to give in response to an emotional need or feeling, or are dollars better spent when tied to a metric that measures how effective they are?” So, do you give charitably simply because it feels good and perhaps has a positive impact to which you can personally relate based on your own life and experience? Alternatively, do you give with a focus on doing the most measurable good with the assets gifted? For many donors, giving is a matter of “and” – it is a matter of the head and the heart. The original article is worth reading, especially if you want to have a better understanding of the motivations behind generosity.

Reference: The New York Times (June 28, 2013) “Two Paths for Charitable Giving: From the Head or From the Heart”

For more information, see www.jerryreiflawyer.com

 

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Old Age Disability And The Long Goodbye Saginaw, MI

The Valuation of Art … Or the Art of Valuation? Saginaw, Michigan

Giving things rather than dollars can be tricky, especially come tax time. Consequently, you really need a qualified appraisal on board to make it all work. When it comes to art valuations, however, you should know that the IRS certainly will not take your word for it, or even the word of a decent appraiser, until they get their own expert opinion from their own experts: the Art Advisory Panel. A fair question to ask, then, is how fair is the Art Advisory Panel? The question of the Panel and fairness was addressed in a recent Forbes article titled “Is Art Advisory Panel Giving Taxpayers A Fair Shake?” Here’s how the competing interests play out. First, if you are a taxpayer giving art to a loved one or bequeathing it as a part of your estate, then you likely want a lower valuation. Why? Because you want a lower tax bill. On the other hand, if you are selling that very same piece of art, then you will want to command the absolute top dollar. Likewise, a body in charge of taxation is pretty much always going to be interested in a high valuation because it triggers a higher tax bill. So, statistically, how much of taxpayer appraisals does the government Panel accept? Would you believe only 51%? In addition, the Panel “adjusts” the other 49%, and of that adjusted percentage generates a net 47% increase on items in estate and gift appraisals. Of whom are you more cynical, the IRS or the taxpayer? The takeaway is that any gift of art is something to be fully considered with your valuation ducks in a row. Remember: there’s nothing an expert likes better than disagreeing with another expert - and the IRS keeps them on staff.

Reference: Forbes (February 6, 2013) “Is Art Advisory Panel Giving Taxpayers A Fair Shake?”

For more information, see www.jerryreiflawyer.com

 

How to Pass On the Family Home

For many families, the family home is the single most important estate asset, imbued with all the memories, hopes and dreams that make it irreplaceable. Family homes also may be the most valuable estate assets, and estate taxes may complicate plans for passing them along to the next generation. If this is your goal, however, don't give up. There are tax-savvy strategies to make it happen, but they require you to plan ahead. For a good overview of this topic, turn to a recent article in SmartMoney, “Passing Your Home to Heirs.” The article is pretty easy reading on a fairly complex subject, and includes a run-down on some effective strategies: from the simple bequest in your will, to variously structured sales, to more sophisticated trust-based strategies. Which planning strategy will work best for you depends upon your unique circumstances. This definitely is not a do-it-yourself undertaking. There are many factors to be considered and legal land mines to avoid. If passing a family home to your heirs is one of your goals, be sure to discuss this with your estate planning attorney, who can guide you to implement a strategy that will work for you.

Reference: SmartMoney (February 5, 2013) “Passing Your Home to Heirs”

For more information, see www.jerryreiflawyer.com

 

The Valuation of Art … Or the Art of Valuation? Saginaw, Michigan

Giving things rather than dollars can be tricky, especially come tax time. Consequently, you really need a qualified appraisal on board to make it all work. When it comes to art valuations, however, you should know that the IRS certainly will not take your word for it, or even the word of a decent appraiser, until they get their own expert opinion from their own experts: the Art Advisory Panel. A fair question to ask, then, is how fair is the Art Advisory Panel? The question of the Panel and fairness was addressed in a recent Forbes article titled “Is Art Advisory Panel Giving Taxpayers A Fair Shake?” Here’s how the competing interests play out. First, if you are a taxpayer giving art to a loved one or bequeathing it as a part of your estate, then you likely want a lower valuation. Why? Because you want a lower tax bill. On the other hand, if you are selling that very same piece of art, then you will want to command the absolute top dollar. Likewise, a body in charge of taxation is pretty much always going to be interested in a high valuation because it triggers a higher tax bill. So, statistically, how much of taxpayer appraisals does the government Panel accept? Would you believe only 51%? In addition, the Panel “adjusts” the other 49%, and of that adjusted percentage generates a net 47% increase on items in estate and gift appraisals. Of whom are you more cynical, the IRS or the taxpayer? The takeaway is that any gift of art is something to be fully considered with your valuation ducks in a row. Remember: there’s nothing an expert likes better than disagreeing with another expert - and the IRS keeps them on staff.

Reference: Forbes
(February 6, 2013) “Is Art Advisory Panel Giving Taxpayers A
Fair Shake?”

For more information, see www.jerryreiflawyer.com

 

Valuations Matter – Making Your Gifts Count Saginaw, Michigan

Qualifying for the charitable tax deduction is not simply a matter of giving, then claiming the deduction. No, there are a few steps to take and items of proof to gather if you want your generosity to count at tax time. Fundamentally, you need to prove the value of what you have given, but that can get complicated when you are giving in the form of things. You need an appraisal of any thing you give (e.g., art, a house, an easement, or a service), and you need that appraisal to answer all the tax man’s questions even before he asks them. In short, appraisals can get tricky. For example, if you give art you need an art appraiser, and if you give real estate you need a real estate professional. However, what if you give interest or stock in a company? Then the appraisal becomes even trickier. When you are giving less than obviously valued interest, then you might want to consider the advice given in a recent Forbes article titled “It's Hard To Satisfy The Qualified Appraisal Requirement For A Charitable Contribution If You Appraise The Wrong Property.” The problem with interest or stock in a company is that the interest or stock is different than the things the company owns. So, 10% of the stock in a company with $5 million in assets is not (necessarily) equivalent to 10% of $5 million. Such is the case, even when the sole purpose of the company is to hold well-documented and appraised assets worth $5 million. In a “simple case,” the IRS likely will provide leniency and determine that such and such an appraisal was “substantially compliant” if not fully so. Nevertheless, the greater the business complexity, the greater the risk of misstep and attending (and costly) determination of insubstantial compliance. An appraisal is a very necessary step when recognizing the tax implications of any transfer of property that is more than simply money itself. In the end, when giving to charity or to loved ones it just stings all the more when your attempted good deed is punished.

Reference: Forbes (February
5, 2013) “It's Hard To Satisfy The Qualified Appraisal
Requirement For A Charitable Contribution If You Appraise The Wrong Property”

For more information, see www.jerryreiflawyer.com

 

The Beauty and the Beast of the Estate Tax Rules Saginaw, Michigan

We certainly have been through some uncertain times regarding estate taxes over the past several years. From changing exemption amounts, to a one-year repeal, to “band-aid” fixes, the only thing certain about the federal estate tax was its uncertainty. Until now. Congress finally gave us permanent estate tax rules; and by permanent, I mean that except for a built in inflation factor for the estate and gift exclusion, the provisions don’t expire or change with the passage of time. Interestingly, despite its potentially onerous tax bite, the federal estate tax remains largely a voluntary tax. As Forbes points out in a recent column, “Want to Avoid the Estate Tax Cliff? Five Ways to Help,” the new provisions still allow savvy planners to substantially reduce, or even eliminate, federal estate taxes -- even on estates that far surpass the $5.25 million exemption. Forbes goes on to list five powerful strategies for reducing federal estate taxes: Gifting. The new provisions allow you to make tax-free lifetime gifts up to an amount equal to the federal estate tax exemption, currently $5.25 million. Straightforward gifting of assets while you are alive removes them -- and their future growth or appreciation -- from your estate tax-free. Discounting. There are still a myriad of techniques that can be used to discount the value of stock for transfer purposes. These techniques center on lack of control/minority interest and/or lack of marketability, and can create a substantial valuation discount. Loans. Family business owners can take advantage of historically low interest rates for loans used to execute sales of stock. As Forbes points out, “currently, a parent can sell shares of the family-owned business to the child for a fixed long term interest rate as low as 2.52%, and not incur a gift tax because of the loan rate.” Insurance. Properly purchased and owned, life insurance can be used to provide the cash needed to pay any federal estate taxes that may remain after other planning strategies are exhausted. Remember, the cash-call on federal estate taxes is due within nine months of the business owner's death. Charitable Giving. If the family is not interested in the business, but is interested in the wealth it has generated, a charitable gift of a business interest may be a savvy way to dispose of the business while also saving on taxes. As Forbes points out, “there are still a number of tax-smart ways to transfer the business to a nonprofit organization, and fulfill your estate planning goals.” The beauty of the new estate tax rules is their permanence. The beast is their sting -- 40 percent on the first dollar over the exemption amount (currently $5.25 million). Failure to wisely plan for a potential estate tax liability can be disastrous for your family and/or your business.

Reference: Forbes (January 30, 2013)
“Want to Avoid the Estate Tax Cliff? Five Ways to
Help”

For more information, see www.jerryreiflawyer.com

 

When Gifts Become a Burden Saginaw, Michigan

It’s an awkward thing to give away or sell a gift made to you. However, it can be even more awkward when you can’t hold onto a gift. No, this is not a post-Christmas catastrophe, rather it’s the very real problem so many museums face every year. One museum currently on the hook is the Brooklyn Museum in New York. The New York Times recently reported on its plight regarding a gifted collection in an article titled “Brooklyn Museum Finds Some Problematic Gifts Can’t Be Returned.” It seems that in 1932, Colonel Michael Friedsam gave a massive collection to the then fledgling museum. Nevertheless, since then the museum has grown and has too much to put on its walls, no longer displays items like historic battle axes, and half the Colonel’s collection turned out to be fakes or “not of museum quality.” Bottom line: the museum wants to give or sell the artworks and stop paying the exorbitant storage and restoration fees. Now, it’s not that the museum is unappreciative. No, it’s more complicated even than that. Unfortunately, the Colonel’s will legally excludes any option the Colonel’s estate executor hasn’t signed off on. Even more unfortunately, the last executor died in 1962. The lesson for those with artworks worth preserving for future generations is to include alternatives permitting like-minded individuals (executors) to further your objectives for your gifts in the future. The Colonel and his estate planners couldn’t have foreseen the next 90 years, but therein lies the challenge. Predicting the future can be a very tricky thing and, certainly, a very inexact science. So, how are your gifts structured?

Reference: The New York Times (January 15, 2012) “Brooklyn Museum Finds Some Problematic Gifts Can’t Be Returned”

For more information, see www.jerryreiflawyer.com

 

The Alarm Will Sound on the Estate Tax Clock Saginaw, Michigan

If you have been following national politics and the impending fiscal (tax) cliff, now is the time to make your move! There are important estate planning opportunities expiring on December 31, 2012. Don’t hold your breath that the White House and Congress will come to the rescue in the nick of time. As a recent MarketWatch article sums it up, there’s “No playing chicken with estate tax deadline.” The present estate planning laws offer an unprecedented and generous gift tax exclusion. That is worth thinking about, too. The exclusion amount of the estate tax is tied to the gift tax amount and is therefore just as generous (but not many taxpayers are keen to qualify for that before year’s end). Gifts, on the other hand, are easy to make. This especially is true as the holiday season is nearly upon us. With the current exclusion set to $5.12 million, you can give that much in your lifetime over and above the annual exclusion amount of some $13,000. Better yet, you can give this entire amount before December 31 if you so choose to secure the full exclusion amount. Why? Because the exclusion is automatically set to drop to $1 million unless the White House and Congress take action. The article cautions if you wait too long to begin the process, you may miss out on the wealth transfer jackpot as it can be too difficult to complete these transfers in a matter of weeks. So make your move before the Estate Tax alarm sounds!

Reference: MarketWatch
(October 2, 2012) “No playing chicken with estate tax deadline”

For more information, see www.jerryreiflawyer.com

 

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Don't Delay! Time Is Expiring for Tax Planning Options Saginaw, Michigan

The Alarm Will Sound on the Estate Tax Clock Saginaw Michigan

If you have been following national politics and the impending fiscal (tax) cliff, now is the time to make your move! There are important estate planning opportunities expiring on December 31, 2012. Don’t hold your breath that the White House and Congress will come to the rescue in the nick of time. As a recent MarketWatch article sums it up, there’s “No playing chicken with estate tax deadline.” The present estate planning laws offer an unprecedented and generous gift tax exclusion. That is worth thinking about, too. The exclusion amount of the estate tax is tied to the gift tax amount and is therefore just as generous (but not many taxpayers are keen to qualify for that before year’s end). Gifts, on the other hand, are easy to make. This especially is true as the holiday season is nearly upon us. With the current exclusion set to $5.12 million, you can give that much in your lifetime over and above the annual exclusion amount of some $13,000. Better yet, you can give this entire amount before December 31 if you so choose to secure the full exclusion amount. Why? Because the exclusion is automatically set to drop to $1 million unless the White House and Congress take action. The article cautions if you wait too long to begin the process, you may miss out on the wealth transfer jackpot as it can be too difficult to complete these transfers in a matter of weeks. So make your move before the Estate Tax alarm sounds!

For more information, go to my website www.reiflawyer.com

Reference: MarketWatch
(October 2, 2012) “No playing chicken with estate tax deadline”

Racing the Clock on 2012 Mega Gifts

When it comes to 2013 taxation, the future may be catastrophic for estate tax planning. As each day of 2012 passes us by, incredible wealth transfer opportunities are dwindling away. Can you beat the clock before time runs out? These last few months are either a time to seize the unprecedented gifting opportunity of a $5.12 million gift tax exemption, or a time to run out the clock on this opportunity perhaps for the rest of your lifetime. The gift tax exemption is scheduled to return to $1 million. If you are looking to seize the opportunity in 2012, then you will find encouragement in a recent Forbes article titled “Romney Wants No Estate Tax - Case For 2012 Mega Gift Remains Compelling.” In short, the article notes that there are ways to give now without spoiling future opportunities, if you think carefully about the right kinds of assets to give. The author of the article calls such strategic assets “legacy assets,” and offers this quote from an attorney comrade: Legacy assets are ideal for the “megagift” for several reasons: 1. art, real estate, family business interest and other Legacy Assets are secular investments, that is held for more than 10 years, and so the gifting of an asset does not substantially reduce the lifestyle or disposable financial wealth of the client, 2. The financial value of Legacy Assets is not correlated to the investment market, 3. The personal and social value of legacy assets is both real and significant, 4. Since there is both a financial and a social value to the ownership of legacy assets, they work well with charitable split interest trusts that can significantly leverage the Unified Credit, and 5. There are techniques that can be used with legacy assets that cannot be used for investment assets. In terms of a Mega Gift, legacy assets are definitely worth considering. Remember, the time is now to act on these amazing wealth transfer opportunities. Don’t wait until it’s too late and the ball is already dropping in Time’s Square.

Reference: Forbes (October 14, 2012) “Romney Wants No Estate Tax - Case For 2012 Mega Gift Remains Compelling”

Buffett “Gives” Instead of “Gets” on His Own Birthday

When we think of birthdays, we are used to the tradition of receiving gifts. So it almost seems backwards to give something instead, an idea that often doesn’t come to mind when celebrating another milestone of life. We all can learn from Warren Buffet’s example, however, and the so-called “reverse birthday.” In an article titled “Buffett gives $3 billion to his kids' foundations,” CNN Money reports how the Oracle of Omaha celebrated his most recent birthday “in reverse.” While Mr. Buffett already pledged some 17.5 million Class B shares of his firm, Berkshire Hathaway, to each of his three children and their respective charitable organizations back in 2006, now, in an open letter to his children, he has doubled down to about 29.7 million Class B shares. Mr. Buffett himself even estimates that the annual distribution will average more than $100 million each. Whether there’s an approaching birthday or other occasion to celebrate, there may be something to take away from the Oracle’s example. Mr. Buffett is giving to his children and working to charitable ends in the same moment. So if you find yourself wanting to give instead of receive, ask yourself what you and your loved ones are passionate about.

Reference: CNN Money (August 30, 2012) “Buffett gives $3 billion to his kids' foundations”

Estate Planning and the Annual Gift Exclusion

"Given the uncertainty about next year's estate taxes, using this exclusion is often a good idea," says Beth Kaufman, an estate-tax attorney at Caplin & Drysdale in Washington. The uncertainty of estate taxes may make you feel uneasy, but rest assured – there is still one safe bet for your wealth transfer plans in the form of the annual gift exclusion. The Wall Street Journal recently took up the praises of the annual gift exclusion in an article aptly titled “The Gift That Keeps Giving.” Indeed, gifts will keep giving, and it’s important to know how they work and how to give them appropriately. Currently you can give up to your annual exclusion to as many parties as you wish each calendar year, without any corresponding reduction in your lifetime gift/estate tax exemption. The current annual gift exemption is set to $13,000 and will expand with inflation. Don’t forget, if you are married, “gift splitting” is a way to give $26,000 to your loved ones. This is especially important in blended families when the entire $26,000 will be coming from separate resources of one spouse to his or her own children. Note: there is some simple IRS paperwork required to make this work. Maximizing the annual gift exclusion truly is a simple yet important way to transfer your wealth. Your professional counsel can help guide you through this gifting process.

Reference: The Wall Street Journal (August 17, 2012) “The Gift That Keeps Giving

The IRS Wants to Know About Your Gifts from Foreign Sources

If you have received a gift or inheritance from a loved one in a foreign country, the IRS wants to know about it. The recent Forbes article, “Beware IRS Reporting Of Foreign Gifts Too,” states that you will need to file an IRS Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, if you receive: More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; or More than $14,375 from foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships) that you treated as gifts. You are required to report these bequests on Form 3520 when you actually or constructively receive them. Late reporting penalties are high – five percent of the gift’s value for each month the gift is not reported, up to 25 percent of the total value. One way to avoid penalties is to consult with your estate tax attorney for counsel on your individual circumstance. Remember that income from abroad is taxable, and the IRS is looking at foreign accounts ever more closely under the Foreign Account Tax Compliance Act (FATCA). To learn more, read the Forbes article, “How to Report Foreign Gifts and Bequests to IRS.”

Reference: Forbes (August 13, 2012) “Beware IRS Reporting Of Foreign Gifts Too”

Gift Tax Exclusion

Giving gifts to loved ones is a great thing for many of us. Knowing the basics of the gift-tax exclusion is important when making these plans for the coming year. For some welcome straight answers on gifts and gift taxes, The Wall Street Journal recently examined the “Basics of the Gift-Tax Exclusion.” While the original article doesn’t offer exhaustive advice, it provides practical pointers you can use. For example, you can give away a total of $13,000 to your recipients. But remember, anything related to tax planning can have hidden complexities. After you’ve reviewed the fundamentals of the gift-tax exclusion, a gifting program can be one of the most simple wealth transfer strategies in your estate planning.

Reference: The Wall Street Journal (August 4, 2012) “Basics of the Gift-Tax Exclusion.”

Are Family Loans (Taxable) “Gifts” in Disguise?

Sometimes ensuring that a loved one has the assets they need – for a project or just for general use – will mean that you’ll be treading a fine line between making a “gift” and making a “loan.” The problem is that these are very different concepts, especially as far as the IRS is concerned. In brief, if you’re going to make a family loan, make it a real one or else consider an outright gift to be taxed by the IRS accordingly. The fine line between a loan and a gift is not a new one. This topic was explored in a recent article in SmartMoney titled “Making a Tax-Smart Family Loan.” Essentially, you need to remember that “loans” are what you make when when you aren’t interested in losing money and are probably trying to gain. To be a loan, the transferred amount must come with a standard interest rate. In fact, to be considered a “loan” the interest rate must be at least equal to the “applicable Federal Rate,” as determined monthly by the IRS. If you don’t charge the objective rate of interest, then you’ve essentially given that much away. Not surprisingly, that’s exactly how the IRS chooses to view the situation and, in return, it will hold you accountable for the interest not charged. As a result, this imputed interest can eat into your gift tax exemption amounts, whether annual or lifetime. Essentially, no loan to a family member should be considered a strictly off-the-books and casual affair. If you find yourself caught between making a gift or a loan, then you must choose one or the other and properly frame the transfer as such.

Reference: SmartMoney (June 13, 2012) “Making a Tax-Smart Family Loan”

The Clock is Ticking on a Gift Tax Exemption Bonanza

A few poignant reminders never hurt anybody, especially when the issues are this pressing. Case in point: There are fewer than six months remaining to make use of the $5.12 million gift tax exemption. If you have not noticed, communication between Congress and the White House is rather contentious. After all, it is an election year and the stakes are high regarding the future of our country. Who will control the levers of power in 2013? That question will not be answered until November 6. In the meantime, the future of the gift tax (and the estate tax) hangs in the balance. Against the backdrop of this uncertainty, one known is that the $5.12 million gift tax exemption is available through December 31, 2012. That amount (or $10.24 million, if married) is yours to give – in liquid assets, unappreciated stock, real estate, or what have you – but only until the end of the year. The New York Times recently addressed this issue in a recent article titled “To Give or Not to Give, Up to $5.12 Million.” In the end, you may find yourself in this very real tax predicament. You could be stuck between the known and the unknown, 2012 and 2013 gifting exemptions, or, a rock and a hard place.

Reference: The New York Times (June 22, 2012) “To Give or Not to Give, Up to $5.12 Million”

Elderly Senior’s Extravagant Gifts Spark Litigation

Are you planning your estate or perhaps caring for an elderly loved one who is planning his or her own? If yes, then you can learn some important lessons from Huguette Clark’s case, as recently reported in the San Francisco Chronicle. In the article, titled “Copper heiress' huge gifts spotlighted in NY court,” Ms. Clark was cast as either an oddball or a thoughtful “eccentric.” Such was the description of one side to the litigation over her estate. The other side, however, painted her as a “poor, manipulated old woman.” In case you haven’t followed the case, Ms. Clark was a wealthy heiress to a copper fortune, and she died recently at the age of 109 after two decades of hospitalization. Before dying, however, Ms. Clark gave extravagant gifts to her staff: Her nurse was showered with almost $28 million in gifts, including three Manhattan apartments, two homes elsewhere and a $1.2 million Stradivarius violin. Her doctors' families received more than $3 million in presents. A night nurse received a salary plus money to cover her children's school tuition and to help buy two apartments. Now, after her death, a court-appointed official has begun to demand the return of these gifts, valued at $37 million, to her $400 million estate. The basis for the demanded return is that the recipients received the gifts through manipulation. The case is ongoing. When it comes to estate planning, however, old age and wealth are a dangerous combination. Some wealthy seniors are generous by nature, but others kept the first nickel they earned. Regardless, expect extra scrutiny of any gift or inheritance from a wealthy senior when the object of such bounty is not someone with a family tie or a long relational history.

Reference: The San Francisco Chronicle (June 17, 2012) “Copper heiress' huge gifts spotlighted in NY court”

A Graduation Gift that Keeps on Giving

If you have a newly-minted graduate in your family, consider giving him or her a gift that will keep on giving. With the generous $5.12 million gift tax exemption, in addition to the $13,000 annual gift exclusion, 2012 is the year of gifting. Giving a substantial gift in life, rather than a bequest at death, not only means seeing the fruits of your decision, butalso perhaps being there to guide it to the best use. A recent article in The Wall Street Journal titled “Give a Graduate the Gift of Becoming an Investor,” discussed the gift of stock to a recent graduate. You might say there are gifts that provide the means and then there are gifts that provide the tools, or the know-how. If you are there to assist and teach, then a gift of stock may very well be a gift that accomplishes both objectives. The stock itself has value, especially if it has been your own, and it can lead to financial security. Furthermore, teaching the financial secrets behind choosing and maintaining your portfolio is an even greater tool and life lesson. Choosing the stock to give is another matter. You can work together to buy something and thereby make a direct gift, or you also could give a stock you’ve owned for some time and hope to pass on. This second route is altogether more rewarding since it kills two birds with one stone. In addition, this move may even help keep the tax-man at bay if you’ve determined the basis and are working with a “temporarily depreciated” stock (i.e., the kind that abound these days). For more ideas on the kinds of financial assets to give and the lessons to teach, I highly recommend the original article as a prelude to a fuller investigation.

Reference: The Wall Street Journal (June 2, 2012) “Give a Graduate the Gift of Becoming an Investor”

A Graduation Gift that Keeps on Giving

If you have a newly-minted graduate in your family, consider giving him or her a gift that will keep on giving. With the generous $5.12 million gift tax exemption, in addition to the $13,000 annual gift exclusion, 2012 is the year of gifting. Giving a substantial gift in life, rather than a bequest at death, not only means seeing the fruits of your decision, butalso perhaps being there to guide it to the best use. A recent article in The Wall Street Journal titled “Give a Graduate the Gift of Becoming an Investor,” discussed the gift of stock to a recent graduate. You might say there are gifts that provide the means and then there are gifts that provide the tools, or the know-how. If you are there to assist and teach, then a gift of stock may very well be a gift that accomplishes both objectives. The stock itself has value, especially if it has been your own, and it can lead to financial security. Furthermore, teaching the financial secrets behind choosing and maintaining your portfolio is an even greater tool and life lesson. Choosing the stock to give is another matter. You can work together to buy something and thereby make a direct gift, or you also could give a stock you’ve owned for some time and hope to pass on. This second route is altogether more rewarding since it kills two birds with one stone. In addition, this move may even help keep the tax-man at bay if you’ve determined the basis and are working with a “temporarily depreciated” stock (i.e., the kind that abound these days). For more ideas on the kinds of financial assets to give and the lessons to teach, I highly recommend the original article as a prelude to a fuller investigation.

Reference: The Wall Street Journal (June 2, 2012) “Give a Graduate the Gift of Becoming an Investor”

Good News For Transferring Business Interests

Just between us, isn’t it nice when the IRS loses a case to a taxpayer? For example, the little-guy victory in the landmark case of Wandry v. Commissioner affirms and simplifies a very powerful tool for passing on wealth, especially for the business owner. While the case and the estate planning tool in the crosshairs have been the subject of previous articles, The Wall Street Journal provided a new explanation of the two in an article appropriately titled “Shielding the Family Business.” The basic plan for wealth transfer when there is a business involved is to give it in pieces, and that’s precisely the plan that benefits from Wandry v. Commissioner. Giving away the entire business outright is a good way to take a tax hit, since it will invoke a gift tax when you cross certain thresholds during the year and in your lifetime. There’s currently a lifetime exemption of $5.12 million and an annual exclusion of $13,000. Nevertheless, it’s easy for a business to be worth more than $5.12 M, and using that exclusion in full will drain what you have available against the estate tax later at death. However, by their very nature and structure, business interests are especially amenable to piecemeal ownership transfer. This is because ownership of the business, and therefore the underlying assets owned by the business, is an abstraction, and you can simply gift your interests in the business without a tax hit. For example, you can chip away by giving a usefully small amount, say, $13,000 per year per individual (or whatever number Congress and the IRS set for that year), without gift taxes. Of course, gifting business ownership is not entirely ideal. Fortunately, that’s what the Wandry v. Commissioner case tries to fix. Gifting exactly $13,000 is pretty easy by simply writing out the figures and name on a check. On the other hand, with an abstraction like business ownership, the gift depends on the value of the business and, more to the point, on the value that you and the IRS agree or disagree about. If you give $13,000 of ownership on the basis of your valuation, but the IRS adds up $15,000 based on its own valuation, then the IRS might also think you owe a tax (or, alternatively, that your gift/estate tax exemption should erode by that much). As you might have guessed, that’s exactly what happened in the Wandry case. Unfortunately for the IRS, the court held that the Wandrys had clearly intended to give their annual exemption amount and, if there is a new appraisal and higher valuation of the gift, then the excess wasn’t intended to be gifted in the first place. Obviously, there is much more to this case and more guidance to be gleaned for the business owner. I would recommend reading the original article if you are or will be transferring interests in your business. As always, make sure you engage qualified legal counsel before taking action.

Reference: The Wall Street Journal (April 30, 2012) “Shielding the Family Business”

Maximizing Gift Tax Exemption May Loose Monsters

Lately, writing about estate law is a lot like writing commentary on a monster movie. This estate law “monster” should be known as the dreaded “Unknown 2013.” It’s the unseen and unknowable creature that lurks just after the upcoming election, after the expiration of current laws, and, most ominously, just after the fall of the New Year’s globe in Time’s Square. But that’s not the sole monster on the loose. No, its terrible twin should be known as dreaded “Clawback” on 2012 gifts. The legal community itself is not entirely certain what Clawback is, if it actually will rear its ugly head, or just how to plan for it, but it’s nonetheless an instructive concept. The latest warning came out over at Forbes and so I thought it was worth sharing. As a monster, the Clawback is something of a ghost in that it haunts people from the grave and does so because of decisions made during life, and yes, it is the offspring of the Unknown 2013. To drop the comparison, “Clawback” is the effect of estate laws that unify the gift tax exemptions and the estate tax exemptions, and the other estate laws that change those amounts based on Congressional whim or the party in charge during that cycle. For example, if you made a mega gift in 2012 and under 2012 laws (the lifetime gift tax exemption is $5.12 million this year), but then died in 2013 and under 2013 laws (the “default” is $1 million) when the exemption may be much lower, then you may have used up the entire exemption simply because the laws keep changing! And, to make matters worse, the taxes will kick in and “clawback” those assets that were gifted upon the beneficiaries of your largesse to pay for the tax that was generated at death. That’s bad enough, but what if yours is a blended family? What if the beneficiary inheriting your estate at death and paying the estate tax was not the same beneficiary receiving your mega gift while you were alive? What if your “inheriting” beneficiary and your “gifting” beneficiary don’t like one another? That’s an unfortunate tinder box. It is hard to pin down whether these twin monsters will show up and, if they do, what form they will take (they are master “shape-shifters”). The point is that there are ways of planning that avoid this potential pitfall. If you’re savvy enough to take advantage of 2012 gift laws, then you’re savvy enough to see your planning through.

Reference: Forbes (March 12, 2012) “Should Threat of Clawback Discourage 2012 Mega Gifts

Gift Annuities – Giving and Receiving

In charity, as in all matters, the greatest gifts are the ones that keep on giving. This is especially true when the gift actually gives back to you after you make the gift. It comes as no surprise then that “gift annuities” are rather popular right now. That noted, gift annuities are not perfect for everyone and there are some risks. A recent article in SmartMoney titled Charitable Gifts That Give Back addressed both sides of the gift annuity coin. The essential idea behind any annuity is to transfer a large sum of money in exchange for regular and equal payments over a specified period of time (to include over the remainder of your life). As such, annuities can be a powerful source of predictable income late in life under the right circumstances. Commonly, you establish an annuity with a large financial institution because it can make enough money off of your money (and the money of other annuitants) to honor its commitment to make the current and future payments back to you. On the other hand, should you establish your annuity with a charity, the annuity works the same way with a few twists. First, at the end of the annuity, any remaining funds will pass to the charity. Second, because the charity ultimately will benefit, your initial lump sum funding counts as a charitable gift and is deductible as such in the year made. [Note: There is a rather sophisticated calculation that determines the actual amount of the deduction.] As with most financial decisions, caveat emptor (i.e., “let the buyer beware”). Not all charities offer gift annuities and, if they do, you should be sure to evaluate their ability to make good on the payment stream. Note: Large financial institutions are able to offer annuities because they intend to make a profit, but a nonprofit only intends to break even or, at best, use the money elsewhere. While the gift annuity process can be uniquely satisfying, and is therefore worth consideration, be sure to look carefully before you leap.

Reference: SmartMoney (April 6, 2012) “Charitable Gifts That Give Back”

Inheriting International-Style

There has been a recent spate of news regarding foreign accounts and foreign taxation, even in expatriation and becoming a foreigner. However, very little has been written regarding how to accept foreign gifts and bequests. Thankfully, there is some small guidance in a recent Forbes article that I thought was worth pointing out. In many ways it’s difficult to be both an American Citizen and a Citizen of the World, but certainly one of the most punishing difficulties is the IRS itself. Of course, in an era of globalization, the intersection with international citizens and loved ones of different citizenship is all the more common. The global village also complicates the world of estate planning and with it, international wealth transfers and taxation. What if you are the recipient of a gift or an inheritor of assets from an international estate? To remain square with the IRS, you’ll want to file a Form 3520 with the IRS and affirm the recently received assets for what they are – foreign gifts or bequests and not taxable income. As gleaned from the original article, you’ll want to file a Form 3520 if: You receive either of the following during the tax year: 1. More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; or 2. More than $14,375 from foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships) that you treated as gifts. But do not tarry! If you delay filing the Form 3520 when required, then expect penalties to apply.

Reference: Forbes (January 27, 2012) “How To Report Foreign Gifts And Bequests To IRS”

Capital Gain Conundrum

A new tax season and a new tax reporting rule for capital gains. It’s not a big change but, as Robert Wood writing for Forbes reminds us, any change to something as important as the capital gains tax is worth noting, especially with tax season upon us. From the IRS news release: New Way to Report Capital Gains and Losses In most cases, taxpayers now use new Form 8949 to report capital gain and loss transactions. Schedule D, the form traditionally used to show these individual transactions, is now used as a summary sheet, reporting amounts for total sales price, basis and other adjustments for all individual transactions, and for figuring the tax. For securities both bought and sold in 2011, the Form 1099-B, issued by the broker, normally shows the taxpayer’s basis. The information on this form will help taxpayers correctly fill out Form 8949. See the instructions for Form 8949 and Schedule D for details. If nothing else, let this practical change remind you of the very practical reality of capital gains and losses, and what they mean to your estate planning strategies. Your goal, after all, is to leave your assets to your loved ones. However, depending on how you manage your planning, you also may be incurring unnecessary gift or estate taxes on your end… and inheritance or capital gains taxes on the recipient’s end. Accordingly, bearing this in mind can allow more precise footwork with your overall wealth transfer planning (especially when it comes to the taxable basis of the assets).

Reference: Forbes (January 11, 2012) “New Capital Gains Tax Reporting For 2011 Returns”; IRS.GOV news (January 2012) “2011 Changes Offer Tax Benefits to Almost Everyone; Special Tax Payment and Reporting Requirements Apply to Many”

New Lexus Under Your Christmas Tree? Mind The Gift Taxes!

Christmas is over and you might have even gotten all the tinsel out of the house by now, but that doesn’t mean you’re done giving gifts. It’s likely you’re just now turning to the largest “gifts,” as your think about taxes and your estate plan. To that end, an article about the “5 Common Tax Myths About Gift Giving” came out recently in Forbes. Myth: You have to pay taxes on gifts that you receive. False. You pay gift taxes on the gifts you give, not on what you receive. The reason for the gift tax is to keep people from avoiding the estate tax by simply “giving” it away while they are alive. Accordingly, the person that does the giving accepts the tax liability. (That said, the receiver may then owe other taxes since they now own the assets, but that’s all in the course of ownership). Myth: You pay a tax on gifts you make that are over $10k. This is not entirely true since there are a number of other factors. For starters, the amount is now closer to $13k worth of gifts in a year. However, gifts to spouses (so long as they are citizens) and approved charities don’t count against that limit. If you do exceed that amount, it will first count against your lifetime exemption of $5 million. Remember to file a gift tax return with your 2011 income tax filing. Myth: You can give freely by offering them as loans and then forgiving the loans. False, the IRS is out in front of you on that, too. Loans are loans anad gifts are gifts. Should the IRS feel you’re treating a loan as a gift, it will consider it as such. Myth: Charitable deductions can always be deducted against your taxable income. Not quite. First, charitable deductions can only be claimed if the IRS recognizes the charity as a charity. Second, you can only deduct the effective amount given. So, if you receive anything of value in return, then such value counts against the value of your charitable contribution (e.g., a $100 gift is only a $60 charitable deduction, if you receive a $40 steak dinner in return). Finally, one other myth is that you need not worry about how your home state treats gifts, independent of the IRS. No, each state has its own quirks regarding deductions and ownership. For that matter, too, it’s worth noting that these amounts and rules are subject to evolving tax law which is in the cross hairs of 2012 politics and may, therefore, change within a year.

Reference: Forbes (December 27, 2011) “5 Common Tax Myths About Gift Giving”

 

GIVING / COLLEGE 529 PLANS

Whether you’re a parent or a grandparent, one of the hallmark ways of preparing for the upcoming generation is the college savings 529 plan. There’s a bit of bittersweet news there nowadays: overall funds are down, but the alternatives even lower. According to a recent Wall Street Journal article, and Morningstar research, investments in 529 plans fell an average of 9.5% in the third quarter and are now down 5.9% this year through Sept. 30. This marks the worst setback since the market crash in early 2009. Of course, thanks to market volatility and several rounds of bad news from around the globe, the Standard & Poor's 500-stock index fell 14% and 10% over the same periods. Further, while the S&P has been fairly flat over the past five years, the average 529 plan has returned 4.6%, and accumulated earnings are still tax free. It just may be, as many uphold, that the 529 is still a great option if you have a future student for whom you need to plan. Indeed, especially for grandparents, the current tax environment might be especially helpful. Whatever investment vehicle you choose, your help and proper planning may be more important now than ever before as the last five years also have seen tuition and fees increases by as much as 38% for in-state, public college students and 30% for private college students.

Reference: The Wall Street Journal (October 18, 2011) “Bad Marks for College-Savings Plan May Not Call for a Time Out”

Valuation Discount Strategies

Oftentimes, proper planning is about the ability to offer proper proof. That’s my primary take-away lesson from the Ninth Circuit Court of Appeals and the case of Estate of Petter v. Commissioner, as assessed in a recent Forbes article. As many of you appreciate, when giving away assets it is important to get the most bang for your buck and that can be achieved by generating “discounts.” This was the plan of Ms. Petter when she transferred $22 million of UPS stock to a limited liability company (LLC) and then gave or sold units of the LLC to her heirs. Note: An LLC can help diffuse ownership and effectively transform the taxable value of the underlying assets. This transformation of value hinges on the “marketability” of the interests held by the LLC members and their degree of “control” over the assets. As a result, the lack of marketability and control makes the interests held by the LLC members less valuable. Accordingly, such interests are “worth less” than the face value of the underlying assets and their value inside the LLC may be “discounted.” Such was the case with the LLC established by Ms. Petter. Ms. Petter claimed a whopping 51% discount on the underlying assets of the LLC. Unfortunately, she was unable to support this discounted value and the IRS rejected that figure and approved a far more conservative discount of 36%. Not to be defeated, Ms. Petter tried another approach. She built a provision into her planning that were there a valuation dispute with the IRS, then any discounted percentage denied would automatically go to her chosen charity… instead of to her estate or an heir. Why? She wanted to avoid any gift or estate taxes. Naturally, the IRS challenged this fall back position, but the Ninth Circuit upheld it.

Reference: Forbes (September 30, 2011) “Fancy Appraisals Can Defeat IRS”

CRTs – More Benefits Of Giving And Receiving

Sometimes, giving an asset to charity doesn’t mean you can no longer enjoy benefits from it. Yes, it’s true. And, the magical legal tool that affords this wonder is the “Charitable Remainder Trust (CRT).” Recently, Reuters cast another spotlight on this powerful tool with an eye to the future. A CRT, as many of you may be aware, is a specific type of irrevocable trust set up to give an asset away to charity at the time of death, but to allow you to receive income from the asset for your lifetime, another’s lifetime or even a period of years. The CRT allows you to do good, receive an income, and avoid some hefty taxes. As Reuter’s puts it: “In essence, the trust takes advantage of the tax-exempt status of the nonprofit it benefits.” The important thing about the CRT these days, at least as far as taxes are concerned, is the future. The returns on a CRT are similar to any investment in accordance with the market. And, with the market as it is, that’s not great. It follows then that the tax reduction might not be that great either. But many taxpayers are concerned about increased taxation in the future. President Obama already has called for further taxation with the new idea of the so-called Buffet Rule, not to mention the closing of Bush-era tax cuts and stricter estate taxes. For as many in Congress as are calling for tax reduction there are those calling for tax increases… and the super-committee might be turning the latter direction. If the Bush-era tax cuts expire, and in particular if the capital gains tax rises back up to 24% instead of 15%, the CRT will be quite the advantageous machine. In the end, a CRT is an irrevocable trust. It can’t be undone once it is created. More background and insights can be gleaned in the original article. Whether a CRT is right for you and your circumstances will require competent legal counsel. As always, look before you leap.

Reference: Reuters (Sepetember 30, 2011) “Charitable remainder trusts: how the wealthy give it away and get it back”

GIVING AND RECEIVING: THE CHARITABLE GIFT ANNUITY

Remember the good old days, you know, when you could invest in a certificate of deposit (CD) and the bank would actually pay you something called “interest” on your deposit? No, really, I kid you not. Obviously, I am being a bit factitious, but you get the point. It is hard enough to make money these days, let alone accumulate wealth. Let’s say you are retired and are looking for a place to put your money to work. And, you need more of a return on that money than the banks are paying on their CDs. Also, you are intending to leave a bequest from your estate to support your favorite charity. Here is a win-win idea to consider, especially if you are charitably-inclined – invest in a charitable gift annuity. Recently, none other than The Wall Street Journal ran an article on this very subject, entitled “Earning income by Making a Gift.” Here is how it works: Give the money to your favorite charity… instead of to your favorite bank. However, you may “give and receive” when you make the gift to charity in exchange for a charitable gift annuity. Ultimately, you’ll be giving what remains of that charitable gift to the charity at the time of your death. However, in the interim, you’ll receive a fixed and predictable stream of income over your lifetime. The most important detail is that the “annuity rate” is determined by your age, rather than national interest rates. That means a couple at age 65 would receive around a 4.7% yield and a couple at age 75 would get 5.7% (individuals at age 65 and 75, respectively, would receive even higher yields at 5.3% and 6.5%). Further, the money is tax friendly. The yield is largely tax-free and the initial chartable donation offers a sizable upfront tax deduction. Some savvy life insurance planning can even replace the value of the asset contributed to the annuity for your loved ones. How? With the increased return on your money via the charitable gift annuity, you may find enough left over to pay the life insurance premiums. A charitable gift annuity can help you support yourself, provide for your heirs (via the life insurance “wealth replacement”), and your favorite charity, all in one fell swoop. Nevertheless, it can be a little tricky. Ensure that your charity can support a charitable gift annuity. Not all can. Look before you leap is good advice here. Check out The American Council on Gift Annuities website (acga-web.org.), but remember two important caveats. First: a charitable gift annuity locks you into that rate for your lifetime. So, what is competitive now may not be should national interest rates rise and the yield will no longer be as competitive. Some regard this as unlikely, especially in the short term (i.e., Ben Bernanke, Chairman of the Federal Reserve Bank has said interest rates will be suppressed for another two years). Second: if the charity itself could suffer economic hardship and thereby be unable to meet their annuity obligations and cease payments. This is a real possibility. Charitable gift annuities are not backed by the government like CDs. Clearly, then, if a charitable gift annuity is right for you, then it will take some research and proper planning to pull off well.

Reference: The Wall Street Journal (September 17, 2011) “Earning income by Making a Gift”

Opportunities And Traps: Non-Citizen Gifting Gotchas

Often, American citizens aren’t the only ones subject to American taxes. So, it isn’t only American citizens who have something to gain from the recent tax law changes. We’ve all been given a generous tax windfall for 2011 and 2012 when it comes to gift and estate taxes, and, according to a recent article in Private Wealth, it may be an especially windfall for wealthy non-citizens. For a wealthy non-citizen residing in the U.S., the problem is their possible tax liabilities lie within a hazy zone between a “domiciled resident” and a “non-domiciled resident.” The initial guidelines for determining domicile status are (1) they must reside in the U.S. and (2) they intend to reside in the U.S. indefinitely. While the fact of residence is fairly easily ascertained, it is the “intent” issue where a number of factors come into play (like residence size, organizational memberships, and the location of burial plots). Oftentimes, it is difficult to predict what the IRS will conclude. Accordingly, you might never know with certainty whether you are or are not a domiciled resident. The difference in taxes is vast. A domiciled resident is subject to U.S. gift and estate taxes on all assets, whereas a non-domiciled resident is only subject to taxes on U.S.-based assets (physical ones, usually, such as art). If you know you are a non-domiciled resident, then you can transfer massive amounts of wealth without U.S taxation – and it might be wise to do so. However, if it is later determined that you were, in the opinion of the IRS, domiciled, then you’ll be subject to tax, interest, and possible penalties. That wouldn’t be a pleasant surprise, to say the least. The idea, then, is to play it safe. Hedge your bets by transferring assets as though you were domiciled. You’ll still be transferring assets, but you’ll be safer doing so. The sooner the better for domiciled, non-domiciled, and citizen alike, however, since we’re only guaranteed the present exemptions until the end of 2012. The original article goes into far more depth, and certainly more information can be found there. Nevertheless, if this issue may touch or concern you, then you should meet with counsel to assess your potential liability… and the best way to hedge your bets.

Reference: Private Wealth (July 2011) “Foreigners and the Gift Tax”

ESTATE PLANNING / GIFTING REAL ESTATE

New tax rules make big gifts to family members popular this year. If you made a gift of real estate (or are considering making one) be warned – the IRS is scrutinizing land-transfer records looking for folks who may have made a reporting error. As The Wall Street Journal reports, the IRS has begun requesting state land-transfer records and checking them against reports of the past few years to find if there are any discrepancies. Congress raised the limit on how much a person can give in a lifetime to $5 million without having to pay gift tax. Still, any time you give one person a gift of more than $13,000, you are supposed to let the IRS know by filing a Form 709. Land transfers can easily exceed the $13,000 limit, which could explain why the IRS is so interested in examining them. States that have already handed over information on gift-like transactions include Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin, generating several hundred cases for review, with 12 cases resulting in taxes or penalties. In fact, according to IRS documents, the failure-to-report rate is “extremely high.” Taxpayers need to be aware that there is no special exception to the rules when making a transfer to a family member. If the property is valued at more than $13,000, a gift-tax return must be filed. Even if the transfer falls within the lifetime exemption amount – currently $5 million – it must be reported. You can learn more about gift and generation-skipping-transfer taxes in the Estate Tax Practice Center on our website. You can even use our handy Estate Tax Calculator to estimate your future estate tax liability.

 

Tax-Smart Giving

As many have written, 2011 and 2012 just might be great years for gifting, but that doesn’t mean there aren’t fundamentals worth considering, as Benny Kass points out in a recent piece for the Chicago Tribune about gifting property. You likely know that property transfers can be made as outright gifts while you are living or post-mortem after your death. One of the key considerations is the tax consequences. Lifetime gifting raises the issue of “tax basis,” since "the tax basis of the giver of the property (the giftor) becomes the tax basis of the recipient of the gift (the giftee)." If the property has significantly appreciated in value (and, yes, even in this economy some real estate has appreciated greatly), the recipient receives the same tax basis as the giver. For example, a $100,000 home that has appreciated to $500,000 at the time of its gift still has only a $100,000 tax basis. Further, if the recipient doesn’t own and live in that home for two of the following five years before selling it, then this tax basis will make the ensuing profit from sale a prime target for capital gains upon and other taxes (i.e., the difference between the tax basis and sale price in this example). It’s a tricky arithmetic. If the recipient is going to turn around and sell appreciated property, then simply gifting a capital gains tax bill might not be efficient. Perhaps other transfer options might make more sense. Regardless, if you decide to gift, remember to file a gift tax return. Should you wish to take a “belt and suspenders approach,” you may want to file a gift tax return even if you aren’t likely to incur gift taxes upon the transfer. As the Chicago Tribune article points out, the IRS is in the middle of a campaign to uncover unreported but taxable gifts… by looking specifically at real estate transfers.

Reference: Chicago Tribune (July 29, 2011) “Giving property as a gift requires careful tax planning”

Dynasty Trusts Offer a Unique Estate Planning Opportunity

There are many strategies – or tools – available to the savvy estate planner to help protect and preserve the fruits of a lifetime of accomplishment, and pass them along to future generations. Bloomberg recently wrote about a specific type of trust known as the Dynasty Trust – a little known strategy that you might have thought was only suitable for the ultra-rich. However, in today’s tax environment, Dynasty Trusts are gaining popularity as a valid strategy for those of more modest means.

Trusts can be powerful tools for overcoming transfer taxes to include the estate tax, the gift tax, and the generation-skipping transfer tax – but there are always limitations. A dynasty trust is used to pass money on to multiple generations of descendants while paying as little in taxes as possible. The trusts have no expiration date and there are no required minimum distributions, meaning their assets may grow for an unlimited number of future generations.

This year represents a pretty good opportunity to set one up too, thanks in no small part to the generous gift tax exemptions in effect until the end of 2012. Currently the exemption is set at $5 million, and effectively $10 for married couples, which is a nice hefty amount to begin a trust. Since the trusts last indefinitely and avoid taxes, the money can simply accumulate over the remainder of your lifetime, offering a huge advantage over other transfer methods.

Bloomberg offers some math:

A dynasty trust funded with $10 million from a couple today could be worth as much as $184 million in 50 years, assuming no intergenerational transfer taxes and a 6 percent annual return, and before subtracting any federal income or capital-gains taxes paid on the trust’s investment returns. By comparison, assets not placed in a trust and taxed twice as an estate in that period could be worth $39 million at the end of 50 years, assuming a $1 million exemption and 55 percent top rate.

Because of their unique nature, dynasty trusts can’t be set up in all states – most states have restrictions on the life of a trust – so setting one up might mean doing so across state lines. Still, if you are looking to set up this kind of family wealth, or transfer a large family business, then this planning strategy may make sense for you.

Reference:  Bloomberg (July 28, 2011) “Dynasty Trusts Let U.S. Wealthy Duck Estate, Gift Taxes Forever”

ESTATE PLANNING

The Tax Relief Act of 2010, passed in December, opens a number of new estate planning opportunities – some of which may be short-lived, since the law expires at the end of 2012. Of course, with the change in the law comes the possibility that your current estate planning may need some updates, both to reflect the new rules and perhaps to take advantage of opportunities that were not previously available to you. In their article The New Rules of Estate Planning, Smart Money focused on a few of the most common issues to consider. • Gifting as a Means of Asset Protection. The new law raises the gift tax exemption from $1 million to $5 million, which means you can give away up to $5 million of your estate without paying gift taxes. Under the previous law, sheltering significant holdings from potential creditors required sophisticated planning, legal entities and valuation discounts. Now, especially with the market-induced valuation discounts, transferring significant holdings is much less complex, and you can much more easily shift up to $5 million to someone else. If you have asset protection concerns, this may be a strategy to discuss with your estate attorney. • Formula Clauses. Certain wording in older estate planning documents could have unintended consequences in today’s generous tax-exemption environment. For example, it was not uncommon for documents to call for “an amount up to the federal estate tax exemption” to be transferred to a trust for the benefit of your children, with the balance passing on to your spouse. This, when the exemption amount was $675,000, may have made sense. But with a $5 million exemption, the same language could easily result in unintentionally disinheriting your spouse. • Dynasty Trusts. The new rules also make certain types of trusts more attractive, like the Dynasty Trust, which can shelter assets from estate taxes for generations. More than half the states and the District of Columbia now allow such trusts, and there is talk that these types of trusts could be curtailed in the future. So now may be a good time to explore the possibility. • State Taxes. Sixteen states and the District of Columbia have decoupled from the federal estate tax guidelines and enacted their own estate tax laws. And, given the revenue-fix many states are in, who knows what will happen next? To help avoid a future state tax bite, an aggressive gifting strategy now might be a good strategy to consider. You can learn more about estate and gift taxes on the Estate Tax Practice Center on our website. And, be sure to sign up for our free monthly e-newsletter to stay abreast of changes that could affect you, your family and your estate plan. Reference: Smart Money (July 14, 2011) “The New Rules of Estate Planning”

ESTATE PLANNING / GIFT TAXES

If you own private business interests or other rapidly appreciating assets, and would like to gift those to the next generation at the lowest possible tax cost, you may want to act sooner rather than later. The Tax Relief Act of 2010 included a 400 percent increase in the lifetime gift tax exemption, from $1 million in 2009 to the current $5 million ($10 million for a married couple). These provisions are due to expire on the last day of 2012. If you are considering a gifting strategy, you are wise to start exploring your options now, while you have time to carefully consider, since giving away assets requires careful thought and planning, There are several strategies we could use to maximize the value of the exemption, to include an advanced strategy known as an installment sale to an Intentionally Defective Grantor Trust (IDGT). Gavin Morrissey of Commonwealth Financial recently wrote in detail about how this strategy works. The bottom line is that this complex strategy, when properly executed in the proper circumstances, can result in quite significant tax savings. As Morrissey points out, the strategy works best when the assets to be transferred are rapidly appreciating – such as private business interests or pre-IPO stock.

Reference: ADVISORONE.COM (June 15, 2011): Estate Planning: Time Running Out on $5M Gift-Tax Exemption.

ESTATE PLANNING / GIFT TAXES

If you own private business interests or other rapidly appreciating assets, and would like to gift those to the next generation at the lowest possible tax cost, you may want to act sooner rather than later. The Tax Relief Act of 2010 included a 400 percent increase in the lifetime gift tax exemption, from $1 million in 2009 to the current $5 million ($10 million for a married couple). These provisions are due to expire on the last day of 2012. If you are considering a gifting strategy, you are wise to start exploring your options now, while you have time to carefully consider, since giving away assets requires careful thought and planning, There are several strategies we could use to maximize the value of the exemption, to include an advanced strategy known as an installment sale to an Intentionally Defective Grantor Trust (IDGT). Gavin Morrissey of Commonwealth Financial recently wrote in detail about how this strategy works. The bottom line is that this complex strategy, when properly executed in the proper circumstances, can result in quite significant tax savings. As Morrissey points out, the strategy works best when the assets to be transferred are rapidly appreciating – such as private business interests or pre-IPO stock.

Reference: ADVISORONE.COM (June 15, 2011): Estate Planning: Time Running Out on $5M Gift-Tax Exemption.

ESTATE PLANNING / GIFTING REAL ESTATE

New tax rules make big gifts to family members popular this year. If you made a gift of real estate (or are considering making one) be warned – the IRS is scrutinizing land-transfer records looking for folks who may have made a reporting error. As The Wall Street Journal reports, the IRS has begun requesting state land-transfer records and checking them against reports of the past few years to find if there are any discrepancies. Congress raised the limit on how much a person can give in a lifetime to $5 million without having to pay gift tax. Still, any time you give one person a gift of more than $13,000, you are supposed to let the IRS know by filing a Form 709. Land transfers can easily exceed the $13,000 limit, which could explain why the IRS is so interested in examining them. States that have already handed over information on gift-like transactions include Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin, generating several hundred cases for review, with 12 cases resulting in taxes or penalties. In fact, according to IRS documents, the failure-to-report rate is “extremely high.” Taxpayers need to be aware that there is no special exception to the rules when making a transfer to a family member. If the property is valued at more than $13,000, a gift-tax return must be filed. Even if the transfer falls within the lifetime exemption amount – currently $5 million – it must be reported. You can learn more about gift and generation-skipping-transfer taxes in the Estate Tax Practice Center on our website. You can even use our handy Estate Tax Calculator to estimate your future estate tax liability.

Link: http://online.wsj.com/article/SB10001424052702304066504576345672097256428.html?mod=WSJ_Taxes_Taxes_8_1 From The Wall Street Journal Online (May 26, 2011) “IRS Scrutinizes Gifts of Real Estate

ESTATE PLANNING / CHARITABLE GIVING

The idea of giving to charity would seem to be a simple, but the simple methods aren’t always the best ones. Sometimes a bit of financial finesse can go a long way, helping both your charity of choice and your own finances. I refer to that as “doing well by doing good.” If you want to be a tax-savvy philanthropist, consider using a time-honored strategy known as a “charitable remainder trust” (CRT). The Times-Herald Record recently offered a crash course in their article, “Protecting Your Future: Trust option for leaving assets to charity.” A CRT allows you to give assets to charity in a tax-savvy manner that may even provide an income stream that helps both you and your charity. When the CRT is established, the assets you’ve chosen to donate are transferred to the trust. The charity you’ve chosen is the trustee, and manages the assets. They may pay you and/or your beneficiaries a portion of the income generated by the trust either for a certain number of years, or your entire life. At the end of the term, depending on the type of payout you’ve chosen, the charity receives the remainder of the principal in the trust. This strategy works best when the underlying assets are highly appreciated, and by donating them to charity you can avoid a significant capital gains tax. Of course, your family members may not be too happy to see those assets going to charity – so you may want to consider replacing their value for your heirs with life insurance. You can learn more about charitable trusts in the Charitable Planning Practice Center on our website, and in the September 2010 issue of our estate planning newsletters, “Charitable Opportunities.” Link: http://www.recordonline.com/apps/pbcs.dll/article?AID=/20110508/BIZ/105080322 From Recordonline.com of the Times Herald-Record (May 8, 2011) “Trust Options for Leaving Assets to Charity”

ESTATE PLANNING / GIFTING & COLLEGE PLANNING

If you are a grandparent wanting to help your grandchildren with the future costs of college tuition, pay attention now. Recent tax law changes are making it easier for you to help pay education bills for your grandchildren – and even future generations. As the Wall Street Journal recently explained, generous exemption increases in the federal gift and generation-skipping taxes are in effect now through 2012. Most experts believe this federal generosity may be short-lived, so now may be an excellent time to plan. Tuition rates are rising steadily, and helping your grandchildren (or great grandchildren) obtain a good education without the burden of hefty loans is an excellent way to give them a “leg up” in the world. Finding a tax-savvy way of doing it is even better – especially for you! Directly paying tuition is the simplest technique, and the most efficient. A grandparent is allowed to pay an unlimited amount of their grandchild’s tuition directly to the school without incurring the gift tax or eating away at their gift tax exemption and, if you’re looking at a school like Harvard, this also could be a potent estate reduction technique. Some schools also allow you to pay upfront for all four years, lock-in tuition rates, and avoid future increases (pre-paying tuition does not guarantee admission). A less direct route comes in the form of 529 college-savings plans, by which you plug money into a trust especially designed for education. The advantage here is that the 529 plan can outlive you when you’re not around to pay directly, and for that reason can serve as the better model if you are funding a toddler’s future education. This grants greater leverage but there are, of course, wrinkles to explore in terms of tax liability and ownership. The WSJ article is a good starting point, but you are well-advised to seek competent counsel before giving away any assets or establishing any type of irrevocable planning. Link(s): http://online.wsj.com/article/SB10001424052748704729304576287401735858710.html From The Wall Street Journal Online (April 30, 2011) “Paying Grandkids’ College Bill”