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Asset Protection

Monday, January 14, 2013

What the New Tax Law Means to You

As you probably know, Congress avoided the so-called “fiscal cliff” by passing - at the 11th  hour - the American Taxpayer Relief Act of 2012 (the 2012 Tax Act), signed into law by the President  on January 2, 2013. The 2012 Tax Act makes several important revisions to the tax code that will  affect estate planning for the foreseeable future. What follows is a brief description of some of  these revisions - and their impact:

  • The federal gift, estate and generation-skipping transfer tax provisions were made permanent as of December 31, 2012. This is great news for all Americans; for more than ten years, we have been planning with uncertainty under legislation that contained built- in expiration dates. And while permanent in Washington only means that this is the law until Congress decides to change it, at least we now have more certainty with which to plan.
     
  • The federal gift and estate tax exemptions will remain at $5 million per person, adjusted annually for inflation. In 2012, the exemption (with the adjustment) was $5,120,000. The amount for 2013 is expected to be $5,250,000. This means that the opportunity to transfer large amounts during lifetime or at death remains. So if you did not take advantage of this in 2011 or 2012, you can still do so - and there are advantages to doing so sooner rather than later. Also, with the amount tied to inflation, you can expect to be able to transfer even more each year in the future.
  • The generation-skipping transfer (GST) tax exemption also remains at the same level as the gift and estate tax exemption ($5 million, adjusted for inflation). This tax, which is in addition to the federal estate tax, is imposed on amounts that are transferred (by gift or at your death) to grandchildren and others who are more than 37.5 years younger than you;  in other words, transfers that “skip” a generation. Having this exemption allows you to take advantage of planning that will greatly benefit future generations.
  • Married couples can take advantage of these higher exemptions and, with proper planning, transfer up to $10+ million through lifetime gifting and at death.
  • The tax rate on estates larger than the exempt amounts increased from 35% to 40%.
  • The “portability” provision was also made permanent. This allows the unused exemption of the first spouse to die to transfer to the surviving spouse, without having to set up a trust specifically for this purpose. However, there are still many benefits to using trusts, especially for those who want to ensure that their estate tax exemption will be fully utilized by the surviving spouse.
     
  • Separate from the new tax law, the amount for annual tax-free gifts has increased from  $13,000 to $14,000, meaning you can give up to $14,000 per beneficiary, per year free of federal gift, estate and GST tax ± in addition to the $5 million gift and estate tax  exemption. By making annual tax-free transfers while you are alive, you can transfer significant wealth to your children, grandchildren and other beneficiaries, thereby reducing your taxable estate and removing future appreciation on assets you transfer.  And, you can significantly enhance this lifetime giving strategy by transferring interests in a limited liability company or similar entity because these assets have a reduced value  for transfer tax purposes, allowing you to transfer more free of tax.    

For most Americans, the 2012 Tax Act has removed the emphasis on estate tax planning and put  it back on the real reasons we need to do estate planning: taking care of ourselves and our  families the way we want. This includes:  

  • Protecting you, your family, and your assets in the event of incapacity;
  • Ensuring your assets are distributed the way you want;
  • Protecting your legacy from irresponsible spending, a child’s creditors, and from being  part of a child’s divorce  proceedings;
  • Providing for a loved one with special needs without losing valuable government  benefits; and
  • Helping protect assets from creditors and frivolous lawsuits.   

For those with larger estates, ample opportunities remain to transfer large amounts tax free to  future generations, but it is critical that professional planning begins as soon as possible. With  Congress looking for more ways to increase revenue, many reliable estate planning strategies  may soon be restricted or eliminated. Thus, it is best to put these strategies into place now so that  they are more likely to be grandfathered from future law changes.   

Further, as is well publicized, the 2012 Tax Act included several income tax rate increases on  those earning more than $400,000 ($450,000 for married couples filing jointly). Combined with  the two additional income tax rate increases resulting from the healthcare bill, income tax  planning is now more important than ever.   

If you have been sitting on the sidelines, waiting to see what Congress would do, the wait is  over. Now that we have increased certainty with relatively “permanent” laws, there is no excuse postpone your planning any longer.  If we can help, let us know.


Saturday, September 17, 2011

An Attorney’s Tips on Preventing Identity Theft

A corporate attorney sent the following out to the employees in his company:

1. When you are writing checks to  pay on your credit card accounts, DO NOT put the complete  account number on the ‘For’ line.  Instead, just put the last four  numbers. The credit card company knows the rest of the number, and anyone who might be handling your check as it  passes through all the check processing channels won’t have access to it.

2. Put your work phone # on your  checks instead of your home phone. If you have a P.O. Box use that instead of your home address. If you do not have a P.O. Box, use your work address.  Never have your SS# printed on your checks.  You can add it if it is necessary, but if you have it printed anyone can get it.

3. Place the contents of your wallet on a photocopy machine. Do both sides of each license, credit card, etc.  You will know what you had in your wallet and all of the account numbers and phone numbers to call and cancel. Keep the photocopy in a safe place.

4. Carry a photocopy of your passport when you travel either here or abroad.

We’ve all heard horror stories about fraud that’s committed on us in stealing a name, address, Social Security number, credit cards.

The corporate attorney who sent his employees the memo was motivated because he had recently had his wallet stolen.  Within a week, the thieves ordered an expensive monthly cell phone package, applied for a VISA credit card, had a credit line approved to buy a Gateway computer, received a PIN number from DMV to change his driving record information online, and more.

Here is some critical information to limit the damage in case this happens to you or someone you know:

5. We have been told we should cancel our credit cards immediately. But the key is having the toll free numbers and your card
numbers handy so you know whom to call. Keep those where you can find them.

6. File a police report immediately in the jurisdiction where your credit cards, etc., were stolen. This proves to credit providers you were diligent, and this is a first step toward an investigation (if there ever is one).

But here’s what is perhaps most important of all:

7. Call the 3 national credit reporting organizations immediately to place a fraud alert on your name and also call the Social Security fraud line number. I had never heard of doing that until advised by a bank that called to tell me an application for credit was made over the internet in my name.

The alert means any company that checks your credit knows your information was stolen, and they have to contact you by phone to authorize new credit.

By the time the corporate attorney was advised to do this, almost two weeks after the theft, all the damage had been done. There are records of all  the credit checks initiated by the thieves’ purchases, none of which the attorney knew about before placing the alert. Since then, no additional damage has been done, and the thieves threw his wallet away (someone turned it in). It seems to have stopped them dead in their tracks.

Now, here are the numbers you always need to contact about your wallet, if it has been stolen:

1.) Equifax: 1-800-525-6285

2.) Experian (formerly TRW):  1-888-397-3742

3.) Trans Union :  1-800-680 7289

4.) Social Security Administration (fraud line):  1-800-269-0271

Please share these tips with everyone you know so we can all prevent identity theft or at least know which steps to take to resolve identity theft.




Aman Law Firm assists clients in the greater Tampa Bay area, including Tampa, Lutz, Land O' Lakes, Wesley Chapel, Hillsborough, Pinellas, Pasco, and Polk Counties, and throughout the State of Florida.



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| Phone: 813-265-0004
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| Phone: 813-265-0004

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