Estate Planning in Rhode Island
Rhode Island Estate Planning Attorneys
http://whenwaterwaseverywhere.com/?x=viagra-tablets-in-usa Estate planning is the process of analyzing assets and arranging for their disposal upon a person’s death. Our attorneys assist with this planning by drafting wills and trusts, creating advance directives and click here powers of attorney, discussing appropriate get canadian viagra tax implications, http://whenwaterwaseverywhere.com/?x=viagra-next-day-delivery drafting real estate deeds, and giving advice regarding follow url long term care options. The long term care discussions include information regarding Veterans’ benefits, Medicaid planning, nursing homes, assisted living facilities, reverse mortgage consultations and other resources and programs pertinent to an elder’s particular situation.
Estate planning takes into consideration much more than how much money a person has and what their assets are. A good estate plan includes medical and financial powers of attorney which are necessary in the event of a sudden accident or illness. These documents allow a person to name a person they trust who can “step into their shoes” and act on their behalf in the event he or she is disabled or incapacitated. There are different versions of these types of documents and we assist our clients to decide what will work best for them.
Other topics of discussion in our estate planning consultation include funeral plans, cremation, organ donation, and life insurance. We strongly encourage our clients to discuss these issues with family members. Our attorneys are able to assist with the conversation by providing accurate information in a comfortable, neutral environment.
At the Law Offices of Howe and Garside, LTD, we handle estate planning and administration everyday. If you or your loved ones are in need of experienced counseling for these delicate matters contact the Estate Planning Lawyers at The Law Offices of Howe and Garside at 401-841-5700 or viaEMAIL HERE.
Common Estate Planning Misconceptions
Trying to understand the many components of estate planning which are simultaneously at play can often lead to confusion of some key terms. This article seeks to clarify three of the most common misconceptions.
How much can I gift this year?
This is a federal estate tax question. The federal government imposes an estate tax on persons dying with gross estates larger than $5.34 million in 2014. Gross estates include just about everything you own at death, from cash, real estate and investments, to personal property, and 100% of the proceeds from any life insurance policies you owned. Also includible in your gross estate is the value of any property which you gifted within the three years prior to your date of death.
Estates below the $5.34 million level will not be subject to the federal estate tax. However, if sizeable gifts have been made during one’s lifetime, those gifts might eat into the person’s $5.34 million lifetime exemption. In 2014, gifts under $14,000 to any one person during the calendar year will not eat into the $5.34 million federal estate tax exemption amount. Gifts over that amount will. So in a sense, the $5.34 million figure is a combined estate and gift tax exemption.
While Rhode Island and Massachusetts each has its own state estate tax threshold, neither state imposes a gift tax, and so the above-mentioned annual gift tax exclusion is irrelevant. Gifting is important in the Medicaid planning context, but the $14,000 annual gift tax exclusion has nothing to do with Medicaid rules. For Medicaid planning purposes, gifts of any amount made during a Medicaid applicant’s previous five years will be taken into account when determining whether Medicaid will pay for the applicant’s long term care.
Do I have to report inherited funds on my tax return?
Inherited cash and other property is not includible on your income taxes. Simply put, inheritance is not “income”. However, as mentioned above, estates over a certain size are subject to estate taxes. This means that on the federal level, estates over $5.34 million will be subject to a federal estate tax. Estates in Rhode Island over $921,655 and in Massachusetts over $1 million (2014 figures) will be assessed an estate tax. These taxes are assessed to and payable by the estate prior to distributions being made to the estate’s beneficiaries. Gifts made by the donor and received by the donee while the donor is still alive are not reportable on the donee’s income tax return either.
What if I sell my inherited property?
If you sell inherited property, or sell property received via gift while the donor is still living, you may have to report a “capital gain” on your income tax return. When you receive inherited property, any appreciation in value of the inherited property between the time the person died and the time you sell the property is considered a capital gain, and subject to a tax. Thus, if your father leaves you stock which he purchased for $5,000 (but valued at $20,000 at his date of death), and you sell it for $20,500 after holding onto it for a year, a capital gains tax will be assessed only on the $500 of post-death gain. This, thanks to the benefit of what is referred to in tax parlance as a “stepped-up basis”.
As for property received via lifetime gift, the capital gain can potentially be much larger. A capital gains tax on property received via lifetime gift is assessed on any appreciation in the value of the gifted property over the donor’s life and the donee’s life. Thus, if your father gifts you stock which he purchased for $5,000, and the stock is now valued at $20,500, a capital gains tax will be assessed on all $15,500 of the stock’s gain, should you (the donee) decide to sell it. Here, no stepped-up basis has been received.
These same rules apply to inherited and gifted real estate. Note, however, that real estate received via a life estate deed will receive a stepped-up basis upon the “life tenant’s” death.
If you or your loved ones are in need of experienced counseling for these delicate matters contact the Estate Planning Lawyers at The Law Offices of Howe and Garside at 401-841-5700 or via EMAIL HERE.