Back in April, we noted that the Ray Charles Foundation-an estate that has encountered numerous financial and legal problems since the singer's death in 2004-was involved in a dispute with seven of Charles' children. Specifically, the Ray Charles Foundation-established to fund education for hearing impaired children-had sought as much as $3.5 million in compensation for Charles' children's decision to terminate the transfer of copyrights to dozens of Charles' songs to the foundation. That termination, the foundation argued, violated an agreement Charles had made with his children in 2002.
Under the American Taxpayer Relief Tax Act of 2012, passed by Congress in the eleventh hour, an important but not well known provision allows married couples to take advantage of one another's leftover estate tax exemption. This is an important thing to know, because while estate tax "portability" is available to all, it is only available if it is claimed in a timely manner.
Having the responsibility of winding up an estate can be intimidating, particularly for those who have little experience with legal or financial matters or for those dealing with a complex estate. The executor, the person responsible for making sure the will is carried out properly, involves gather all the information for the assets and making sure they are divided up properly.
Since the beginning of the New Year, we've noted that long-standing uncertainties about the estate tax have been resolved by the American Taxpayer Relief Act of 2012 (ATRA). The law, as we've noted, makes permanent the system that has been in place over the last two years. This means that taxpayers will continue to enjoy an exemption of over $5 million.
According to the Mayo Clinic, nearly three-quarters of Americans eventually find themselves in a medical situation where they are unable to communicate their wishes regarding health care to their providers. Both young and older persons encounter this problem. Fortunately, having an advance directive can help clarify your wishes so that providers know what steps to take when this happens.
In our last post, we informed our readers about the new gift and estate tax rules that came out of the recent fiscal cliff deal. As we noted, the potential change has been a huge issue in the estate planning world for some time, attorneys not knowing what the future would hold and clients not sure what to do with their wealth. The bottom line is that the system that has been in place over the last two years was extended indefinitely.
We want to update our readers on how the fiscal cliff deal will affect gift and estate tax planning in the coming year. This has, as our regular readers know, been a big issue in the estate planning world, and had many people taking last minute precautions over the last several months, so let's take a look at what happened.
In our last post, we spoke briefly about pet trusts, and how they can be excellent vehicles for ensuring a pet is cared for once its owner is gone. As we noted, pet trusts are probably the most reliable way to provide for a pet in estate planning, but they are not the only way.
For many people, family pets are not just pets, but family. As such, they deserve to be part of a family estate plan. Even for those who have a less dignified view of pets, however, should consider making them part of their estate planning. One doesn't have to be rich to make such planning worthwhile. There are a number of ways to provide for pets once one is gone.
In our previous post, we mentioned that the ever changing gift and estate tax law is set to change again in a couple weeks. Now there is now only a tiny window of time to take advantage of the current very favorable conditions for passing on wealth. Once again, if Congress doesn't act in the next weeks, the combined estate and gift tax exemption is set to drop from over $5 million with a 35 percent tax on gifts and bequests exceeding that amount, to a $1 million exemption with a top tax rate of 55 percent.