Archive for the ‘Estate Tax and Estate Planning Developments’ category

Good News about Connecticut Estate Taxes (Avoid Accidental Disinheritance of Surviving Spouse)

November 26, 2017

Good News about Connecticut Estate Taxes. Governor Malloy recently signed a new state budget into law, including significant changes to the Connecticut estate tax exemption that will phase in over the next three years.

The current exemption of $2 million will be increased to $2.6 million in 2018; $3.6 million in 2019; and will be set to match the federal estate tax exemption (currently $5.49 million) in 2020. While this is good news for those who are worried about estate taxes at death, it could also cause unintended consequences for those with a particular kind of estate plan designed to avoid or minimize estate taxes.

Warning for Surviving Spouses! In many cases, the surviving spouse could be disinherited as the estate tax exemption increases over time. Under the terms of many Wills and revocable trust agreements, the increasing estate tax exemption will effectively shift more of the estate away from the surviving spouse and to an “Exemption Trust” or to family members other than the surviving spouse.

The Devil is in the Details. Many married couples in Connecticut, who expected their combined estates to exceed the pre-2018 $2,000,000 estate tax “exemption,” chose an estate plan (an “Exemption Trust Plan”) that distributes a portion of the estate that is equal to the estate tax exemption into a trust (the “Exemption Trust”) for the benefit of the surviving spouse and descendants. Usually, in an Exemption Trust Plan, the remaining assets pass either outright to the surviving spouse or to a “Marital Trust” for the surviving spouse’s benefit.

The Exemption Trust Plan eliminates the estate tax when one spouse passes away with the other spouse surviving. By the time both spouses have passed away, two exemptions ($4,000,000—the exemptions of both husband and wife) have shielded up to $4,000,000 from the Connecticut estate tax.

The Exemption Trust Plan uses a formula based on the size of the exemption available at the time of death. As the exemption increases, more passes to the Exemption Trust leaving less to pass to the surviving spouse. For example, suppose that you chose the Exemption Trust Plan when you prepared your documents many years ago and suppose that, when you pass away, your estate is worth $5 million. If you were to pass away in 2017, that would mean $2,000,000 (the 2017 Connecticut exemption) would go to the Exemption Trust, while the remaining $3,000,000 would go to your surviving spouse, either outright or in trust. However, if you were to pass away in 2020. after the new estate tax exemption reaches its maximum, your entire estate of $5 million would go to the Exemption Trust, with nothing left for the surviving spouse.

Avoid Accidental Disinheritance of Surviving Spouse. This accidental disinheritance of the surviving spouse can be avoided with proper planning. For example, documents could be amended to modify the formula described above, perhaps requiring that a minimum amount will pass to the surviving spouse regardless of the estate tax exemption that would apply at death. This would be particularly helpful in plans where the marital share is supposed to pass outright to the surviving spouse, since it would guarantee some kind of outright gift to the spouse.

If you have an estate plan that could be impacted by these new tax changes, or if you simply have not revisited your estate plan in some time, please contact our office to discuss the best way to take care of your family after you pass away.

Posted November 26, 2017, by Chipman, Mazzucco, Land & Pennarola, LLC.  For a related treatment of the topic see: Video on Basic Estate Planning after ATRA Updated for 2017.

Video of October 5, 2017, Seminar Posted to YouTube

November 26, 2017

On November 19, 2017, we posted to YouTube the video of our annual fall estate planning seminar (held on October 5, 2017).

senior couple in parkIn Part I (How to Make Certain Your Estate Plan Works as Everything Else Changes), Richard S. Land covers the reasons why an estate planning review might be necessary. Approximately 40 minutes.

In Part II (Senior Autonomy: A Guide to Families as Roles are Reversed), Alyson Marcucio covers planning to maximize autonomy throughout the elder care continuum: health and ability issues (powers of attorney, living trusts, conservatorships, living wills and other health care directives); home care and alternatives (independent living, assisted living, retirement communities, nursing homes); the cost of care and how to plan for it; and public benefits to help pay for care. Approximately 40 minutes.

Both Part I and Part II include planning strategies for the prevention of financial elder abuse including properly structured estate planning powers of attorney, living trusts and related documents.

Although the turnout was great (as usual), many of you could not attend. Here is your chance to find out what you missed. Click on the images below to go to the presentations.

We hope these videos are helpful.  Please let us know if you have any questions.

Chipman Mazzucco
Attorneys at Law
Matrix Corporate Center
39 Old Ridgebury Road
Suite D-2
Danbury, CT 06810
203-744-1929

October 5, 2017, Seminar: Senior Autonomy for Families as Roles are Reversed

September 2, 2017

Save the Date October 5, 2017
FREE Seminar!

 

We invite you to a free seminar on October 5, 2017, at the Ethan Allen Hotel in Danbury, Connecticut (21 Lake Avenue Ext).

Topic: Senior Autonomy: A Guide for Families as Roles are Reversed

Including: How to Make Certain Your Estate Plan Works as Everything Else Changes

The presentation will start at 6:30 PM. For more information, click here:  Seminar October 5.

To register, call 203-744-1929 (please provide your email address) or email us at rsl@danburylaw.com.  You also can register here: Seminar Registration.

The presenters and their topics:

Make Certain Your Estate Plan Works as Everything Else Changes

Richard S. Land, Attorney

As everything around you changes, you may not recognize the impact the changes have on your estate plan.

Laws change; your health and financial condition change; the health and financial condition of your beneficiaries change; maybe your beneficiary designations change as your assets change; and the fates of the people you are depending on to act as your Executors, Trustees, agents under a power of attorney and health care representatives change.

Attorney Richard S. Land will discuss how to make certain that such changes will not interfere with, or totally disrupt, your estate plan.

Preserving Autonomy as Independence Declines

Alyson R. Marcucio, Attorney

How do you plan to maintain autonomy as your independence declines?

To help guide our clients, last year we invited Attorney Alyson R. Marcucio to join us as a Member of the firm after an exhaustive search for an attorney with her skills, knowledge and experience performing long-term care and estate planning services for seniors and the chronically disabled.

Alyson’s presentation will cover planning techniques designed to preserve autonomy as independence declines with aging including home care options, resources available to help create and maintain a safe home environment, planning techniques to maintain control through properly prepared trust agreements, powers of attorney and health care directives, and the relationships necessary to protect your independence when you are most vulnerable.

No Admission Charge

Our seminars are always strictly educational and well attended.  Space is limited so please let us know if you plan to attend.

Light snacks, desserts and beverages will be offered.

To register, click on this link: Seminar Registration..

Please join us at the Ethan Allen Hotel (21 Lake Avenue Ext., Danbury, CT) on October 5, 2017.

We look forward to seeing you.

Chipman Mazzucco
Attorneys at Law
Matrix Corporate Center
39 Old Ridgebury Road
Suite D-2
Danbury, CT 06810
203-744-1929

Basic Estate Planning Video Updated for 2017

December 18, 2016

richard
Richard S. Land, Attorney

To help you face your estate planning challenges, we have updated our Basic Estate Planning video presentation for 2017.  You can take a look at the video here (Basic Estate Planning Updated for 2017) or below.

Here is a very brief summary of what the videos cover:

Parts 1 and 2:  No matter where you live (or die), your estate plan can be destroyed if you don’t know the difference between probate property and non-probate property.  We cover this distinction in Part 1.  We also cover what a trust is and how a trust can help accomplish certain estate planning goals:  protecting assets from the beneficiary’s creditors and risks; asset management for a beneficiary who needs management help; estate tax reduction; and more.  We acknowledge that the unfortunate Connecticut estate tax exists (and many other states do not have an estate tax) but, in most cases, we can help with effective workarounds.  Part 2 covers Connecticut and federal estate taxes (also New York estate taxes) including how life insurance death benefits are taxed for estate tax purposes.

Parts 3 and 4:  Your Will can include provisions that reduce or eliminate estate taxes.  Parts 3 and 4 describe such Wills.  Danger:  Existing Wills with old estate tax provisions can have the unintended effect of disinheriting a spouse.  We cover how to deal with such a risk.  We also cover new rules allowing one spouse to give his or her federal estate tax exemption to the surviving spouse.  The surviving spouse’s federal estate tax exemption could be almost $11,000,000.  In addition, we cover Will provisions that can protect assets from a beneficiary’s long term care costs.

Parts 5 and 6:  Not all trusts that are designed to save estate taxes are the same.  Part 5 compares the different types of trusts.  As Part 5 ends, we begin a discussion of common estate planning mistakes and Part 6 continues the discussion.

Parts 7 and 8:  These parts cover estate tax and income tax planning for retirement accounts such as 401(k) accounts and IRAs.

Part 9 to Part 13:  These parts include a complete discussion of revocable living trusts with a comprehensive comparison between a plan that uses a revocable trust and a plan that relies on a Will without making use of a revocable living trust.  Part 13 ends with a description of how Connecticut probate court fees are calculated.

Part 14:  This part covers the basic gift tax rules and techniques.

Part 15:  This is the final part and covers gifts of life insurance policies with brief mention of other advanced gift techniques.

We hope our updated basic estate planning videos help you.  If you have questions about any of the estate planning concepts mentioned in the video, please call.

185775_1745456110853_1072275011_31952001_6630745_n[1]Posted by Richard S. Land, Attorney, Chipman, Mazzucco, Land & Pennarola, LLC, Attorneys at Law, Danbury, CT, 06810, 203-744-1929 x29, rsl@danburylaw.com.

 

A Seminar: Planning to Protect Seniors & Remedies for Financial Elder Abuse

September 2, 2016

Join Us September 22, 2016

To Our Clients, Clients’ Advisers and other Friends of Chipman Mazzucco:

We invite you to our September 22 Seminar.  For details click here: September 22 Seminar.

We added another segment on Powers of Attorney to our seminar.

A Power of Attorney is an essential part of any plan related to protecting seniors.

The grant of broad powers to the right person can be a lifesaver.

The grant of any power to the wrong person can be tragic.

In addition to the other seminar segments Attorney Richard Land will be making a short presentation on Connecticut’s new wer of Attorney law which is effective October 1.

To register, call us at 203-744-1929 (make certain you give us your email address) or email us at rsl@danburylaw.com.

You also can register by clicking here: REGISTER.

Location: Ethan Allen Hotel (21 Lake Avenue Extension, Danbury, CT) on September 22, 2016, at 7:00 PM (doors open at 6:30).

We look forward to seeing you on September 22.

Posted 2/11/2016 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC, 39 Old Ridgebury Road, Suite D-2, Danbury, CT 06810.

P.S.  See below for brief descriptions of the rest of the program:

Alyson Marcucio presents: What Seniors Need to Know about Long-Term Care but Would Never Think to Consider (a/k/a traps for the unwary) regarding Medicaid and planning for long-term care.

Christopher J. Gawley presents: FINRA Rules Designed to Protect Seniors: Warning signs of elder abuse; best practices for financial professionals when serving aging clients; the special responsibility of financial institutions and professionals when encountering seniors with signs of diminished capacity.

Timothy H. Herring presents: Legal Remedies for Financial Elder Abuse Victims (A Case Study):  What can litigators do when asked to make things right after something has gone wrong?

No admission charge.

Our seminars are always strictly educational and well attended.  Space is limited so please let us know if you plan to attend.

Light snacks, desserts and beverages (even wine and cheese) will be offered.

Please join us at the Ethan Allen Hotel (21 Lake Avenue Extension, Danbury, CT) on September 22, 2016, at 7:00 PM (doors open at 6:30).

Video Review of LegalZoom’s Estate Planning Document Preparation Service

July 10, 2016

richardAs reported in 2015, LegalZoom has provided do-it-yourself online legal services for more than 2,000,000 customers.  In 2014, LegalZoom was reportedly earning annual revenue of $200,000,000.

LegalZoom claims to assist its customers as they prepare their own do-it-yourself legal documents and that LegalZoom does so without practicing law.

LegalZoom advertises heavily on television, radio and online.

In light of LegalZoom’s visibility, Richard S. Land reviewed LegalZoom’s estate planning services in the video below.  We thought you might be interested.

How does Richard rate LegalZoom’s Estate Planning document preparation service?

Excellent?   Good?   Fair?   Poor?

In Part 1 of this review, he takes you through the LegalZoom estate planning experience from login to the end of the online interview.  Not only will you learn a lot about the LegalZoom process, you will learn a lot about basic estate planning.

Part 2 will be posted when Richard has received and analyzed the LegalZoom documents.

Legal Zoom Review

Other Educational Videos on Related Topics

Basic Estate Planning after ATRA

Estate Settlement and Trust Administration

Trusts and Trust Administration

Long Term Care Issues and Medicaid

We hope these videos add to your understanding.

Published by Chipman, Mazzucco, Land & Pennarola, LLC, Attorneys at Law, Danbury, Connecticut.

185775_1745456110853_1072275011_31952001_6630745_n[1]Posted 7/11/2016 by Richard S. Land, Member, Chipman, Mazzucco, Land & Pennarola, LLC, 39 Old Ridgebury Road, Suite D-2, Danbury, CT 06810.

 

Achieving a Better Life Experience (ABLE)

June 27, 2016

There is welcome news for people with disabilities and their families.

In December 2014, President Obama signed the Achieving a Better Life Experience (ABLE) Act into law.  Since 2014, the ABLE Act, which sailed through Congress with overwhelming bi-partisan support, has been signed into law in a record 47 states, including in Connecticut and New York.

As those with disabilities and their families know all too well, qualifying for means-based public benefits programs requires the recipient to be poor – one can have no more than $2,000 in assets ($1,600 in CT).  While public programs such as SSI and Medicaid provide vital services, they cannot nearly provide for all of the needs of a disabled person.  Living with disabilities is expensive, and many families fret about how to meet the supplemental needs of their disabled loved ones.

The ABLE Act will provide a new tool for supplementing income of a disabled person receiving public benefits, without jeopardizing eligibility for those public benefits.  Similar to the 529 Education Savings Plans, where families can set aside money for higher education, the new ABLE 529A plan enables the creation of tax-free savings vehicles for qualified individuals with disabilities.

Basic facts are presented below in a question and answer format.

  1. How much can be contributed annually to an individual ABLE account? Total annual contributions to an individual’s account by the beneficiary, family or friends may not exceed $14,000, or the current annual gift exclusion amount.  Contributions must be made in cash.
  2. How can a person qualify to be a beneficiary under an ABLE account?  An individual who has a documented and diagnosed significant disability, or is blind, PRIOR to turning 26 is eligible providing (1) he or she currently receives SSI or SSDI; or (2) the beneficiary can certify, under penalty of perjury, that he or she meets the qualification standards (stated above in this paragraph), and has a signed physician’s diagnosis that can be provided to the ABLE program or the IRS upon request.  While the disability must have been diagnosed before age 26, an ABLE account may be opened at any age, including for those above age 26.
  3. How much money can be put into an ABLE account?  Although the amount that may be contributed to an ABLE account is equal to the limit for State higher education related 529 accounts (currently $300,000 in CT and $375,000 in NY), SSI benefits will be suspended once the account reaches $100,000.  Should the account go below $100,000 at a later date, SSI benefits will be reinstated.  Medicaid benefits, on the other hand, continue and remain in effect even after the $100,000 mark is reached.
  4. What sorts of qualified expenses can the ABLE account pay for?  Broadly, qualified expenses are any expenses related to the Beneficiary as a result of living with a disability.  Such expenses may include education, transportation, housing (but distributions for housing may reduce SSI payments), employment support and/or training, assistive technology, personal support services, health and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, and funeral and burial expenses.
  5. Who will be taxed on the money in the ABLE account?  Assets in the ABLE account grow tax-free, just as they do in 529 accounts.  No gift tax is due for contributions, because the total annual contribution may not exceed the gift tax exclusion amount.   As long as the payouts are used for qualified expenses (see 4 above), the payouts are tax free.  These are the basic rules that apply if contributions are kept within annual and overall limits.
  6. Who will administer the ABLE accounts?  In most states, the accounts will either be administered by the State Treasurer or by the State 529 Plan Administrator.  Connecticut has not yet set up an ABLE account mechanism, and it is rumored that it may join a consortium of other states to run its program.
  7. Who owns the ABLE account?  The designated beneficiary owns the ABLE account.  The account must be set up and controlled by the designated beneficiary, legal guardian or through a Power of Appointment.
  8. Can a person benefit from more than one ABLE account?  No, a person may only have one ABLE account for his or her benefit.
  9. Where can I set up an ABLE account? An ABLE account can be set up in any State that runs a 529A program and authorizes out-of-state persons to set up a an account.  On June 1, 2016, Ohio became the first state in the nation to launch its own ABLE account.  Eligible individuals nationwide (including Connecticut and New York residents) may set up an online account through the Ohio program at http://www.stableaccount.com.  Once ABLE programs become available in multiple states, as is widely expected, one will be able to shop around for a program that offers competitive terms.
  10. Once an ABLE account is established, may I roll it over it into another ABLE account?  Yes.  Although a beneficiary may have only one account, transfers can be made by establishing a new qualifying ABLE account, and rolling over the assets, free of penalty, to it.  Similarly, assets may be transferred from an ABLE account to that of another qualifying relative.

All in all, this is good news.

Is there a downside?  Yes, the ABLE Act contains a payback provision.  Any funds remaining in the 529A account at the death of the beneficiary must be used to repay the State for any Medicaid assistance received by the beneficiary after the account was created.  Medicaid expenses, however, are paid only after other qualified expenses, such as funeral expenses, are paid.

With an estimated 5.6 million people eligible to become beneficiaries of an ABLE account, these accounts are a welcome addition to help plan for the needs of a disabled person.   Once ABLE accounts become widely available, they will add an attractive option to families or individuals who seek to supplement the lives of a disabled person without sacrificing needs-based government benefits.  With lower costs, fewer administrative burdens, as well as favorable tax-free growth within the account, the ABLE account offers a good alternative or additional option to a Special Needs Trust.

Please note that the federal government and state regulations are still evolving and there will be ongoing modifications to the information provided above.

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Posted on June 27, 2016
by Mary Dale Lancaster
Chipman Mazzucco

 

 


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