Text Box: One Gateway Center - 9 South Pittsburgh, PA 15222 Text Box: Law Firm of Martin J. Hagan LLC Text Box: Improper life insurance ownership If your estate is well over $1,000,000, you probably should not directly own the life insurance policies on your own life, since the death benefit will be subject to federal estate tax. Having current policies and all new policies owned by an Irrevocable Life Insurance Trust will allow the death benefit to pass to your beneficiaries tax free. 4. Failing to consider lifetime gifts to maximize the new $11,000 annual exclusion and $1,000,000 gift tax exemption. The gift tax annual exclusion now allows $11,000 to be gifted to any number of individuals each year. Each $11,000 gifted can possibly save $5,500 in estate taxes. Larger gifts can be made that will result in a reduction of the $1,000,000 exemption with no gift tax having to be paid. Gifting property with the potential for appreciation will remove the appreciation from your estate. Many clients are now looking at leveraging their gifts through the use of qualified personal residence trusts (QPRT’s), grantor retained annuity trusts (GRAT’s), family limited partnerships, and family limited liability companies. Since discounts in the value of the gifts are recognized for these techniques, more assets can be gifted free of any tax. 5. Failure to consider charitable gifts in the estate plan, especially from IRAs. IRAs passing to children or other family members are potentially subject to combined estate and inheritance taxes in excess of 50% and income taxes of 38.6%, leaving only the balance to the beneficiaries. Designating a charity as the beneficiary of an IRA will result in no estate, inheritance, or income tax. Other assets not subject to income taxes can be left to children or a life insurance policy can be purchased to replace the assets passing to the charity. Text Box: Estate planning check-up for the new year Text Box: 412-433-9996 412-433-9980 Fax mhagan@haganlaw.net www.haganlaw.net Text Box:

DISCLAIMER

 

This newsletter is intended for informational purposes only, and is not intended to be used nor should it be relied on as legal advice.

DISCLAIMER

Martin J. Hagan is licensed to practice law in the Commonwealth of Pennsylvania. This website is intended solely for informational use and is not intended to solicit clients. Likewise, any information contained in or obtained from this web site is for informational purposes only and is not intended to be used as legal advice.

IRS CIRCULAR 230 DISCLAIMER:   Pursuant to Treasury guidelines, any tax advice contained in this website (or any link from it) does not constitute a formal opinion. Accordingly, any tax advice contained in this website (or any link from it) is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be asserted by the Internal Revenue Service. You should seek advice based on your particular circumstances from an independent tax advisor.

Send mail to mhagan@haganlaw.net  with questions or comments about this web site.
Copyright © 2007 Martin J. Hagan, One Gateway Center - 8 South; Pittsburgh, PA 15222-1435
Last Updated: 06/29/07