Articles Tagged with staten island estate planning attorney

SOME PEOPLE ARE TRYING TO SIMPLIFY IT

Many people, even in Washington, realize that retirement planning can be a bit complicated at times. There are all kinds of rules about who can do what and when they have to do it and what they have to do it with. Many people have rightfully complained about how the government and bureacracy values form over substance. In an effort to address these issues the Financial Industry Regulatory Authority (FINRA) issued an investor alert on April 7, 2016 to help address some of the larger and more common questions about the law of required minimum distribution (RMD). As such, it is perhaps time to reexamine or address some of these larger issues about RMDs. It is probably best to first explain that a RMD is the legally minimum that the owner of an individual retirement account (IRA) of some sort must take out without incurring a tax penalty. An IRA can be a 401(k), 403(b) or a roth IRA or any number of other retirement investment vehicle that receives preferential tax treatment under the Internal Revenue Code (26 United States Code).

To begin with, the owners of a Roth IRA do not need to take any RMD. Once the owner passes away, his/her spouse or anyone who inherits it must then take RMDs. With respect to non-Roth IRA accounts, the latest that an IRA owner must take his/her first RMD is on April 1st on the year following that they reach 70 and one half years old. So if you reach 70 and a half on January 2, 2016 the latest you must take a distribution is on April 1, 2017.

GIFT TAX LIABILITY

Gift tax liability and estate planning sometimes intersect.  The tax Court case of Steinberg v. Commissioner, 141 T.C. No. 8 (Sept. 30, 2013) deals with an interesting issue, if tax law can ever be interesting, where gift tax liability and estate tax liability intersect.  It is important to note that the opinion deals with gift tax liability and how to measure gift tax liability, it nonetheless deals with some important estate tax implications.  In 2007, Ms. Jean Steinberg gifted approximately $71,000,000 in cash and securities to her four daughters.  In exchange, the daughters agreed to pay the gift taxes as well as the estate tax on the transfer should Ms. Steinberg pass away within three years of the gift transfer.  An appraiser valued that the daughters assumed approximately $6,000,000 in tax liability for the estate taxes alone.  When Ms. Steinberg filed her tax return, the IRS disagreed with the $6,000,000 write off, as the daughter’s assumption of estate tax liability did not increase the value of the estate.  The Internal Revenue Service (IRS) claimed that Ms. Steinberg owed an additional approximately $2,000,000 in taxes and mailed her a notice of deficiency.  

ESTATE TAX LIABILITY

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