January 31, 2013 – Action Checklist for 2013 Estate and Entity/Asset Structuring Update and Beta Readers Wanted for Medical Practice Tax Material Review
There are 14 days left until Valentine’s Day!
If your spouse is not your best friend, something is wrong.
– Gus Stavros
Never go to bed mad — stay up and fight.
– Phyllis Diller
I love being married. It’s so great to find one special
person you want to annoy for the rest of your life.
– Rita Rudner
I loved her at first sight, she was soft with light coloring
and had a beautiful walk and great skin. I knew that fried up she
would be a great meal.
– Colonel Sanders
ACTION CHECKLIST FOR 2013 ESTATE AND ENTITY/ASSET STRUCTURING UPDATE
BETA READERS WANTED FOR MEDICAL PRACTICE TAX MATERIAL REVIEW
We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Ruggiero at Janine@gassmanpa.com.
This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.
ACTION CHECKLIST FOR 2013 ESTATE AND ENTITY/ASSET STRUCTURING UPDATE
We are in the process of developing a checklist of ideas for how to improve client’s estate plans in view of the 2013 income, gift, and estate tax laws.
Our Action Checklist, which we have been developing for our webinar on February 5, 2013, can be accessed by clicking here.
Our ideas include reforming trusts that clients have established to allow the grantor or grantors to become trustees and have control over how assets will pass for their descendants where the clients are elderly and have estates well below the $5,250,000 per person allowance.
A court might also give the grantor the power to appoint assets to creditors of his or her estate on the basis of it being unlikely that the power would be exercised but advantageous to the beneficiaries to receive a stepped-up basis.
The expanded $5,250,000 gift exemption gives children who are beneficiaries of such trusts plenty of gifting ability to return assets to parents, if this is needed in the future.
Clients who have significant confidence in their children and want to allow income to be taxed at the child’s lower bracket might consider gifting income-producing properties or non-voting LLC or limited partnership interests in entities holding income-producing properties to the child to facilitate such income shifting. The child could even gift the ownership interests back to the parents if and when the parents ever need them or the child’s tax bracket increases.
In fact, a parent could gift a non-voting LLC or limited partnership interest to a child, who could in turn gift that interest to an irrevocable trust, having the parent as trustee with the child as the discretionary beneficiary. The trust could be reported as being a defective grantor trust under Internal Revenue Code Section 677 so that the income and deductions of the trust go on the child’s income tax return. If the child has creditor or estate tax concerns, then the trust can be sitused in an asset protection jurisdiction such as Nevada, Alaska, Delaware, Belize, or the Cook Islands.
THE KITTY KIDDIE TAX
The Kiddie Tax taxes a child’s unearned income at the parent’s tax rate when such income exceeds $2,000. Therefore, the first $1,000 of unearned income is not subject to tax, the next $1,000 is taxed at the child’s rate, then any amount of unearned income above $2,000 is taxed at the parent’s marginal rate if the following circumstances exist:
(1) The child meets one of the following age requirements:
(a) The child was under age 18 at the end of the tax year;
(b) The child was age 18 at the end of the tax year and the child’s earned income does not exceed one-half of the child’s own support for the year; or
(c) The child was a full-time student who was under age 24 at the end of the tax year and the child’s earned income does not exceed one half of the child’s own support for the year (excluding scholarships).
(2) At least one of the child’s parents was alive at the end of the tax year;
(3) The child is required to file a tax return for the tax year; and
(4) The child does not file a joint return for the tax year.
The Action Checklist, as it stands today, can be accessed by clicking here. Please suggest improvements to win Kentucky Fried Chicken Buffet line passes. (We won’t tell your partner if you earn one of these on company time).
UPDATED SPREADSHEET PROGRAM
We have been working to improve our spreadsheet program for projecting federal estate taxes, which takes into account the portability allowance, expected CPI increases, and inflation at growth rates that can be provided by the client or advisor.
If you would be interested in beta testing this, please let us know.
BETA READERS WANTED FOR MEDICAL PRACTICE TAX MATERIAL REVIEW
We are in the process of updating tax and healthcare lawyer Don Weinbren’s excellent outline on tax planning for medical practices for the 2013 Florida Bar Healthcare Board Certification Review Course.
Beta readers and contributors are welcome. Please let us know if you would like to receive a copy of this work in process or would like to contribute any charts, memoranda or planning ideas for this. It is due Monday!
“I love deadlines. I love the whooshing sound they make as they fly by.”
– Douglas Adams
APPLICABLE FEDERAL RATES
To view a chart of this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3 please click here.
SEMINARS AND WEBINARS
Don’t miss this incredibly useful live seminar with Jonathan Blattmachr, Samuel A. Donaldson, and many others – if you have never attended an All Children’s Seminar, you have never seen the best there is!
WEDNESDAY, FEBRUARY 13, 2013: 15th
Annual All Children’s Hospital Estate, Tax, Legal and Financial Planning Seminar in St. Petersburg, Florida. All Children’s Hospital Foundation is hosting the Estate, Tax, Legal and Financial Planning Seminar at the All Children’s Hospital Education Conference Center in St. Petersburg. Programs and presenters include Samuel A. Donaldson presenting A Federal Tax Update, Jonathan Blattmachr on Myths & Realities of Charitable Trusts and Some Really Cool Generation Skipping Tax Ideas, Tami Foley Conetta on Investments in Trusts: Charting a Prudent Course, and Alan S. Gassman on the topic of Avoiding Disaster in the Sunshine State – Tricks, Traps, and Nuances That Make Florida Planning Interesting and Unique.
FREE WEBINARS OF INTEREST:
MONDAY, FEBRUARY 4, 2013, 12:30-1:00 p.m.:
Please join us for Lunch Talk, a free monthly webinar series sponsored by the Clearwater Bar Association and moderated by Alan S. Gassman. This month’s topic is the second part of the two part series with Shannon Waller on Accelerating Law Office Teamwork with Interesting Tools You Can Use Immediately. To register for the webinar, please visit www.clearwaterbar.org.
TUESDAY, FEBRUARY 5, 2013, 5:00-5:30 p.m.:
Please join us for a free 30 minute webinar entitled Estate Planning for 2013 – Beyond the Obvious. This webinar will discuss planning considerations for estate and financial planners, including realities of portability, eliminating discounts, use of the joint trusts, completed gift trusts under which the client is a beneficiary, and the biggest mistakes that planners will make in 2013. This webinar will be hosted by Alan S. Gassman, Esq., Kenneth J. Crotty, Esq., Christopher J. Denicolo, Esq., and Thomas J. Ellwanger, Esq.
THURSDAY, FEBRUARY 7, 2013, 12:00-12:50 p.m.:
Please join us for Avoiding Disaster on Highway 709, hosted by Kenneth J. Crotty, Esq. which will discuss how to avoid disastrous errors on gift tax returns and will demonstrate how to complete a Form 709, with an example.
MONDAY, FEBRUARY 11, 2013, 5:00-5:30 p.m.:
Please join Alan S. Gassman, Esq. for a 30 minute webinar entitled The Physician’s Guide to the 2013 Tax Laws. This free webinar will cover income tax, estate tax, the new 3.8% Medicare tax, and planning for these taxes. Planning considerations will include practice entity planning, pension planning, rental arrangements, and special mention of creditor protection and capital gains tax planning.
Christopher Denicolo, J.D., LL.M. is a partner at the Clearwater, Florida law firm of Gassman, Crotty & Denicolo, P.A., where he practices in the areas of estate tax and trust planning, taxation, physician representation, and corporate and business law. He has co-authored several handbooks that have been featured in Bloomberg BNA Tax & Accounting, Steve Leimberg’s Estate Planning and Asset Protection Planning Newsletters, and the Florida Bar Journal. He is also the author of the Federal Income Taxation of the Business Entity Chapter of the Florida Bar’s Florida Small Business Practice, Seventh Edition. Mr. Denicolo received his B.A. and B.S. degrees from Florida State University, his J.D. from Stetson University College of Law, and his LL.M. (Estate Planning) from the University of Miami. His email address is Christopher@gassmanpa.com.
Kenneth J. Crotty, J.D., LL.M., is a partner at the Clearwater, Florida law firm of Gassman, Crotty & Denicolo, P.A., where he practices in the areas of estate tax and trust planning, taxation, physician representation, and corporate and business law. Mr. Crotty has co-authored several handbooks that have been published in BNA Tax & Accounting, Estate Planning, Steve Leimberg’s Estate Planning and Asset Protection Planning Newsletters, Estate Planning magazine, and Practical Tax Strategies. Mr. Crotty is also the author of the Limited Liability Company Chapter of the Florida Bar’s Florida Small Business Practice, Seventh Edition. He, Alan Gassman and Christopher Denicolo are the co-authors of the BNA book Estate Tax Planning in 2011 & 2012. His email address is Ken@gassmanpa.com.
Thank you to our law clerks that assisted us in preparing this report:
Alexandra Fugate earned her B.A. in English from the University of Florida and J.D. from Stetson University College of Law in 2012. She has been a Guardian ad Litem for the past two and a half years, a judicial intern for the Twelfth Circuit in Bradenton, and was recently admitted to the Florida Bar. She wants to pursue a career in employment and labor law. Her email is Alexandra@gassmanpa.com.
Eric Moody is a third-year law student, scheduled to graduate in December 2012, at Stetson University College of Law and is considering pursuing an LL.M. in estate planning upon graduation. Eric is also an Articles and Symposia Editor for Stetson Law Review. In 2009, Eric received a B.S. in Business Management from the University of South Florida. Eric’s email address is Eric@gassmanpa.com.