If you plan to leave a house, car, business, or other property to one of your heirs, and the property is subject to a mortgage or other debt, do you want o leave it with the debt? Or do you want the debt to be paid off from your other assets so the person receives the property debt free? Surprisingly, many people don’t think about this question when they write their will.  But it can have

A trust can’t deduct on its tax return the entire amount it spends for investment advice – at least in most cases, the U.S. Supreme Court has decided. The case involved a trustee who paid $22,000 for investment advice.  He tried to deduct this amount from the $625,000 in income the trust reported on its tax return. For an individual, investment advisory expenses are a “miscellaneous itemized deduction” and they can be deducted only to the

With the cost of education skyrocketing, many people want to contribute to their grandchildren’s tuition costs.  A variety of ways are available to do this, which also have estate-planning benefits. All these ideas apply not just to grandchildren but to grandnieces, grandnephews, great-grandchildren and others. The simplest solution is for grandparents to pay the tuition costs directly.  Not only does this provide a benefit to the grandkids, but it also gets assets out of the grandparents’

A family-owned limited liability company saved a family $14 million in taxes, in the latest ruling from the U.S Tax Court on this technique.  With a family LLC, parents create a company and fund it with valuable assets.  Then they give their children ownership interests in the LLC.  Giving these interests triggers less gift tax than giving the underlying assets, because they are “worth” less on the open market.  That’s because outside investors would be reluctant

An heir to the Johnson & Johnson fortune created a trust to benefit four children.  The trust was set up so that it would provide money to charity for a period of years, then be distributed to the four children and their spouses. By the time the distribution came around, one of the children (named Mary) had died.  Her third husband, Martin, who was married to her when she died, claimed that he was a “spouse”

From 1997 to 2003, a family could take an estate tax deduction of up to $675,000 if more than half of the estate property consisted of interest in a family business.  This law is scheduled to go back into effect in 2010, so it’s wise to be aware of it. In particular, you should be aware that certain business decisions you make now- such as making personal loans to your company as opposed to capital contributions

The IRS has given families a little more flexibility in handling a 401 (K) and pension plans.  According to an IRS announcement, children who inherit a 401 (k) or pension plan can now roll it over directly into a Roth IRA. Before, a spouse who inherited a 401 (k) or pension plan could roll it over into a Roth IRA, but this was not true for a beneficiary other than a spouse, such as a child. 

The recent dip in interest rates has created a golden opportunity to save taxes while giving income-producing assets to your heirs.  You can do this with a “grantor retained annuity trust,” or GRAT.  It allows you to continue receiving income from the property for a number of years, and you can then give it to your heirs while dramatically reducing your estate and gift tax. The amount of taxes you can save is determined by a

Shareholders in closely-held corporations have won an important estate tax battle with the Internal Revenue Service. The issue is how to place a value on a corporation that has a lot of “built-in” capital gains-meaning that if the company’s assets were liquidated, it would owe a hefty capital gains tax.  In this case, a man named Frazier Jelke owned about 6 percent interest in an investment company.  The company had $188 million worth of assets.  However,

It’s hard to imagine that someone could accidentally disinherit their own children, but it happens all the time to people who don’t regularly update their estate plan. It’s important to update your estate plan with a professional every few years, or whenever there is a significant change in your circumstances or in the tax laws. Below are six ways disinheritance can happen:  1)      Harry wrote a will leaving his house and his business to his children,