2020 has been a year to remember for so many reasons: a global pandemic, the race to a vaccine, and an election with record-breaking voter turnout.

President-elect Joe Biden and his running mate Vice President-elect Kamala Harris campaigned on a platform of detailed proposals, including changes to certain areas of tax law. Here are some reforms that we might see during a Biden presidency, and the effects those changes might have:
Continue Reading Election Results – What Could They Mean to You? Tax Updates for a Biden Presidency

You may have heard by now that the Gift and Estate Tax exemption amount was increased by the Tax Cuts and Jobs Act of 2017, which became effective on January 1, 2018. This article is to highlight some of the key estate planning issues under the new tax law.

In 2019, the Gift and Estate Tax exemption as adjusted for inflation is $11.4 million, and in 2020, the exemption amount will be increased to $11,580,000. Historically, this is the highest the exemption has ever been. The exemption will continue to increase incrementally due to a built-in inflation adjustment until January 1, 2026, when, absent an act of Congress, the exemption will be decreased to about $6 million. The value of a decedent’s estate in excess of the available exemption upon death will be subject to a 40% estate tax.

This dramatic increase (and future expected decrease) in exemption poses a range of estate planning issues which affect all clients, regardless of the amount of your wealth. There are also some opportunities for tax savings.
Continue Reading With New Tax Law, Your Estate Planning May Need Some Revisions

Last Thursday, the United States Supreme Court ruled in Clark v. Rameker that funds held in inherited individual retirement accounts (IRAs) are not “retirement funds” for bankruptcy purposes.

In October 2010, the Clarks filed for bankruptcy and claimed that Heidi Clark’s $300,000 inherited IRA was exempt from their bankruptcy estate under Section 522 of the Bankruptcy Code (which provides that tax-exempt retirement funds are exempt from a bankruptcy estate). The bankruptcy trustee and creditors objected to this, taking the position that the funds were not “retirement funds” within the meaning of Section 522. The Bankruptcy Court agreed with the trustee and creditors.

The district court ruled that inherited IRAs are exempt because they retain their character as retirement funds, but the US Court of Appeals for the Seventh Circuit reversed that ruling. The Supreme Court agreed with the Seventh Circuit, holding that the funds in an inherited IRA are not set aside for the debtor’s retirement and, thus, are not “retirement funds” under the exemption in Section 522.


Continue Reading U.S. Supreme Court Ruling Regarding Inherited IRAs Highlights the Benefits of IRA Trusts