The Estate Tax and Gift Tax: The Impact on your Estate

31 Tuesday May 2016

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Estate Tax and Gift TaxThe estate tax and gift tax work together to form a complex tax structure. Presently, both taxes share a $12,920,000.00 basic exclusion amount for each individual and a 40% estate tax rate for 2023. Furthermore, the IRS created the applicable credit amount (also known as the unified credit) that must be used to offset any assessed gift tax or estate tax. Because of this tax structure, very few individuals will pay a gift tax or estate tax. However, the impact of the estate tax and gift tax on your estate depends on the size of your estate.

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Good Record Keeping: Crucial for an Executor

04 Wednesday May 2016

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Record KeepingAs executor, you will need a good record keeping system to handle all the documents of the estate that will come your way. An efficient filing system and good record keeping will keep you from wasting time searching for information when needed. Moreover, beneficiaries, insurance companies, banks, and other organizations may hit you with questions; therefore, it would save time if you had the necessary documents on hand. So, a good record keeping system will help you administer the estate smoothly.

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Tips to Minimize the Estate Income Tax

28 Thursday Apr 2016

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Filing the Estate Income Tax ReturnFiling the estate income tax return is a complex undertaking for the common executor. Fortunately, at the federal level, the executor must file the estate income tax return only if the earned income after death reaches $600.00 or more. So, with proper planning, you could minimize the income earned by the estate after death and possibly avoid the estate income tax entirely.

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Plan for the Distribution of Personal Possessions

23 Saturday Apr 2016

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Distribution of Personal PossessionsPlanning for the distribution of personal possessions is essential to your estate plan. This part of the estate plan is often overlooked at the expense of the executor and the beneficiaries. In the article The Distribution of Personal Possessions, the executor found himself in a chaotic position because there was no plan in the will to distribute the vast amount of personal possessions. To avoid such chaos, give some thought to how you want your possessions distributed.

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The Letter from the Homeowner’s Association

19 Tuesday Apr 2016

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Homeowner's AssociationThe homeowner’s association threw me a curve ball on my plan to distribute the personal possessions. In a letter sent by the homeowner’s association, the association President wanted to know when the spare garage would be available for the next homeowner. This is when I found out that the spare garage was available for rent to each homeowner, based on need, for no longer than three years. My Uncle rented the garage for six years. In the end, I asked for one more month and the President of the homeowner’s association agreed. I had only one month to execute the plan I described in the article The Distribution of Personal Possessions.

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The Distribution of Personal Possessions

11 Monday Apr 2016

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personal possessionsThe distribution of my Uncle’s personal possessions was a frustrating task because there wasn’t a distribution plan mentioned in the will. Except for a couple of items he left to me, a plan didn’t exist for the rest of the possessions. So, I asked the attorney about distributing the personal possessions. The attorney advised me that distributing the personal possessions is at my discretion since there wasn’t a plan in the will.  So, I knew then that this part of the estate would take some thought.

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Estate Income Tax Rates and your Estate Plan

02 Saturday Apr 2016

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Estate Income Tax RatesThe structure of the estate income tax rates are similar to the individual tax rates. The difference is that the estate income tax brackets are much more compressed than the individual income tax brackets. As a result, the estate will pay a higher tax on lower estate income levels because of the compressed estate income tax rates.

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Common Types of Beneficiaries in an Estate

28 Monday Mar 2016

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types of beneficiariesThere are a few types of beneficiaries that are common in most estate plans. When planning an estate, you can list anyone you want as a beneficiary. However, keep in mind that beneficiaries can come with some complexities. For instance, a minor listed as a beneficiary will require adding guardians to the estate plan. In addition, if you name an elderly person as a beneficiary, naming an alternate beneficiary or two may be wise. So, certain types of beneficiaries can present some complexities by expanding the estate plan.

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How an Executor Distributes 1099 Income as a Nominee

22 Tuesday Mar 2016

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Form 1099 for NomineeAn executor becomes a nominee when the estate receives a 1099 showing income for the entire year and a part of that income belongs to other parties. In the article How to Report 1099 Income on the Final Return, the “Nominee Distribution” represents the earned income after death. Therefore, excluding the nominee distribution from the final return becomes necessary because that income goes to the estate or to the beneficiaries. As a result, the executor becomes the nominee and must distribute the income labelled nominee distribution to the rightful owners. Otherwise, the executor will face fines for non compliance.
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