Wednesday May 23, 2012
Taxes, including income taxes, estate taxes, gift taxes and the tax forms associated with these taxes, along with probate knocked celebrity estates out of the top five most read Wills & Estate Planning blogs in April 2012, which shouldn't be surprising since millions of Americans had to file their 2011 income tax returns by April 17:
Top 5 Blogs Posted in April 2012
- Do You Need to File an Income Tax Return for Estates and Trusts, Form 1041, For Your Revocable Living Trust?
- S. 2242, Death Tax Repeal Permanency Act, Introduced in Senate
- Top 5 Reasons Probate Takes So Long
- Do You Need to File a Gift Tax Return, Form 709, For Gifts You Made in 2011?
- When is IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Due?
Meanwhile, the most read blogs in April 2012 that were posted at any time were not exactly the same as those that were the most read in March 2012, with Elizabeth Taylor's estate and 2012 estate tax, gift tax and generation-skipping transfer tax changes jumping on to the list for the first time:
Top 5 Blogs in April 2012 Posted at Any Time
- 2011 Gift Tax Exclusion - Annual Exclusion vs. Lifetime Exemption
- 2012 Annual Exclusion From Gift Taxes Remains Unchanged
- When is a Federal Estate Tax Return Required to be Filed?
- Who Will Inherit Elizabeth Taylor's Estate?
- 2012 Estate Tax, Gift Tax and Generation Skipping Transfer Tax Exemption Changes
Read more:
Tuesday May 22, 2012
A recent study has shown that death does not deter identity theft, in fact, in many cases it makes it easy for criminals to strike. The study, conducted by ID Analytics, revealed that the identities of 2.5 million dead Americans are stolen each year and used to do things such as open lines of credit and establish cell phone service. But while it may be obvious that a deceased person can be an easy target for identity theft - who has the legal authority to report the theft of a deceased person's identity and pursue criminal charges? - there are several steps that surviving family members can take to help to prevent this type of crime:
- If a loved one enters a nursing home or similar type of facility prior to death, then it will be important to secure all financial records, checkbooks, credit cards and the like and also limit those who have access to the secure information. Doing this while the person is alive will go a long way to preventing misappropriation of financial information during life as well as after death.
- After death, state agencies such as taxing authorities and health care agencies should be promptly notified of the death and provided with a copy of the death certificate. In addition, all credit card accounts should be promptly closed and the actual cards physically destroyed (see more on this below).
- If the estate is being probated, then the executor will need to review all claims filed against the estate and confirm that each and every expense was in fact incurred by the decedent. A few years ago I assisted with probating an estate in which the decedent's credit card was stolen by a neighbor and several thousand dollars were charged on the day the decedent died. Once this was discovered, the police were contacted and the neighbor was arrested. It was then just a matter of providing the credit card company with copies of the death certificate and police report to get the claim filed against the estate dismissed.
- With so many financial transactions occurring online these days, is important to keep a list of e-mail and social media accounts and their login information. This will give surviving family members what they need to cancel such accounts after death, which will in turn prevent personal and financial information from being stolen and exploited by identity thieves.
Monday May 21, 2012
When Diana, Princess of Wales, died on that warm night in Paris in 1997, she left behind two young princes and an estate valued at approximately £21 million. And of course a woman of her stature had a last will and testament which she signed in June 1993 and then modified with a first and only codicil in February 1996. The original will and codicil left the young princess's estate in equal shares to the young princes when each child reached the age of 25.
Since both princes are over the age of 25 (William Arthur Philip Louis, known as Prince William, is currently 29, and Henry Charles Albert David, known as Prince Harry, is currently 27), one would think that they had already received their inheritances a few years ago, but not so fast. Apparently the executors of Princess Diana's estate, her mother, Frances Ruth Shand Kydd, and her oldest sister, Lady Elizabeth Sarah Lavinia McCorquodale, did not like the provisions of the will because they were able to obtain a variation order from the High Court of Justice in December 1997. Under the terms of "The Arrangement," as it is referred to in the court order, the will was modified to provide that part of Princess Diana's estate will be distributed outright to each of her sons upon turning the age of 30.
With Prince William's 30th birthday fast approaching on June 21, it is speculated that he will have the right to receive a lump sum of £10 million, or about $16 million U.S. dollars. And what will the young prince do with all of that money? Some believe he will use it buy a home for him and his wife, Catherine, the Duchess of Cambridge (the former Kate Middleton who already turned 30 back in January), close to his father's Highgrove retreat. Pure speculation, of course.
Wednesday May 16, 2012
Last week I wrote about the top 10 tax friendly states for retirees: Estate Taxes, Income Taxes, Property Taxes, Sales Taxes - Where to Retire Now. Well, it's quite possible that this list will look different next year as several states consider completely eliminating broad-based taxes such as state income taxes and state property taxes. In fact, on June 12 voters in North Dakota, which has seen an oil boom in recent years coupled with low unemployment and budget surpluses, will go to the polls to decide whether to eliminate local property taxes. Aside from this, in a handful of other states, including Kansas, Oklahoma and Missouri, proposals have been made to completely eliminate each state's income tax.
Currently there are seven states that do not collect a state income tax - Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming - and two states which only tax dividends and interest - New Hampshire and Tennessee. According to NPR's Alan Greenblatt in "States Looking to Make Some Taxes Less Inevitable," the last time a state eliminated its income tax was all the way back in 1980, when Alaska did so after completion of the Trans-Alaska Pipeline System. So how can states afford to do away with huge revenue-raising taxes in these trying economic times? Good question. While politically eliminating property taxes or income taxes will no doubt be a winner at the voting precincts, replacing hundreds of millions in lost revenue will present a different set of challenges. The theory is that less taxes will allow residents to spend more, thereby stimulating the state's economy and increasing the bottom line. But predicting consumer spending is certainly not an exact science as Joe Miller, vice chair of the North Dakota Senate's Finance and Taxation Committee points out, "If [North Dakota's] commodity markets turn around in a major way, we can really be in a hurt bag." Why? Because it is certainly easier to get rid of a broad-based tax than implement one.
While not a broad-based revenue generator like state property taxes and income taxes, Ohio has already moved to eliminate its state estate tax in 2013 and Indiana's state inheritance tax will be phased out by 2022. Aside from this, initiatives are underway in Nebraska, North Carolina and Oregon to eliminate each state's estate tax or inheritance tax, and Tennessee residents are waiting on Governor Bill Haslam to sign into law two bills currently sitting on his desk that will repeal the state gift tax retroactively back to January 1, 2012, and phase out the state estate tax by 2016.
