Hoffman & Associates Announces its Newest Associate

CassandraAtlanta, GA, Oct 15, 2015 – Hoffman & Associates is proud to announce its newest associate, Cassandra Ceron.  Cassandra joined the firm in May 2015 and specializes in the areas of wills, trusts, estate administration and probate, and guardianship/conservatorship of incapacitated adults. Cassandra’s past experience in family and domestic  law enables her to assist blended families in navigating their estate plan. Cassandra graduated cum laude, and with pro bono distinction, from Georgia State University College of Law and has an undergraduate business degree, cum laude, from Kennesaw State University.

Cassandra is a member of both the Estate Planning & Probate and Family Law Sections of the Atlanta Bar Association and the Young Lawyers Division and the Family Law Section of the  Georgia Bar Association. Cassandra lives in Marietta with her husband and two young children.

About Hoffman & Associates

Hoffman & Associates specializes in estate planning for wealthy families, business and tax law for closely-held businesses, and tax compliance.  Expertise in these areas comes from a dedicated staff of both attorneys and CPAs delivering personalized service and sound legal guidance.  Established in 1991, Hoffman & Associates prides itself in having a standalone tax practice and attorneys licensed in Georgia, Florida, North Carolina and Tennessee.

Hoffman & Associates Announces its Newest Partner, Kim Hoipkemier

hoffmankimcolorHoffman & Associates is proud to announce that Kim Hoipkemier has become a partner of the firm effective January 1, 2015.  Kim joined H&A in 2011 bringing with her extensive experience in estate planning and representation of high end clients.  She currently specializes in the areas of wills, trusts, estate administration and probate.

“Kim has become engaged in our practice in a relatively short period of time and helps define our compelling brand to clients, vendors and other professionals”, commented Mike Hoffman, founding and managing partner.  “Kim has built a solid foundation in estate planning and her contributions make us a better firm.”

Mrs. Hoipkemier is a magna cum laude undergrad from the University of Georgia and a cum laude graduate from the University of Georgia School of  Law.  She is a member of the Fiduciary Law Section of the State Bar of Georgia and a member of the Wills Clinic through the State Bar of Georgia Young Lawyers Division.

About Hoffman & Associates

Hoffman & Associates is a boutique law firm established in 1991 specializing in estate planning and probate and tax and business law. Expertise in these areas comes from a dedicated staff of both attorneys and CPAs delivering personalized service and sound financial guidance.   Hoffman & Associates prides itself in having a standalone tax practice and attorneys licensed in Georgia, Florida, North Carolina and Tennessee.

Wealth Transfer Strategies

Kim 1Wealth transfer strategies are at the core of our business.  This recent article featured in Business Week  is an excellent example of various wealth transfer strategies used by billionaire families.  You don’t have to be the Waltons to benefit from such strategies, so let us help you incorporate these strategies into your estate plan today.

How Wal-Mart’s Waltons Maintain Their Billionaire Fortune

For more information regarding this or any other estate planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose. The information contained herein is provided “as is” for general guidance on matters of interest only. Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. Before making any decision or taking any action, you should consult a competent professional advisor.

 

 

 

 

Legal Matters in Starting Your Business

Mike_Hoffman_17Join Mike Hoffman in this 74 minute audio as he hosts the 11th session of the 24 hour MBA in discussing how to get your business off the ground.  There are many different legal options in starting a business, and in this audio session, you will understand the best way to start your business and keep it successful for future generations.  24hrmba-11.mp3

 

Why Purchase a Film Tax Credit?

Perhaps you’ve seen movie cameras, crews, and even movie stars around town.  Maybe you’ve wondered why so many studios would choose Georgia to film.  It all comes down to one of life’s certainties: taxes.

Georgia began offering a tax credit for film studios in 2005 to bring jobs and expenditures into the state.  Companies producing feature films, television series, music videos and commercials, as well as interactive games and animation can receive up to a 30% credit against Georgia income depending on their film activities in the state.  Now how does that affect you?  The Georgia legislature made the credits transferable.  Anyone can purchase them.

There is a State Tax Credit Exchange that has been set up specifically for film companies who wish to sell their credits to willing buyers.  Many of the film companies do not have much Georgia income tax liability, so they sell the credits at a discount to those who can use them.  The discounts vary depending on supply and demand, but generally sell at a rate between 8% and 15%.

For example, if your Georgia income tax liability is $10,000 you may be able to purchase a film tax credit for $8,500-$9,200, which would offset your entire liability while costing you less.  There is low risk in this transaction as the Georgia legislature specifically authorized it.  Even if your state income tax liability is not that high, you can carry the credit forward for up to five years.

If you are interested in using Georgia Entertainment Tax Credits, give Hoffman & Associates, Attorneys-at-Law, L.L.C. a call for more information.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose. The information contained herein is provided “as is” for general guidance on matters of interest only. Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. Before making any decision or taking any action, you should consult a competent professional advisor.

Russ Thornton Interviews Kim Hoipkemier

Kim New

Download Audio File

The New Tax Law: Does Your Estate Plan Need to be Updated?

Congress passed the American Taxpayer Relief Act of 2012 (the 2012 Tax Act) in the final hours of 2012.  The 2012 Tax Act means big changes for gifts, trusts and estates tax laws from what was scheduled to occur without any congressional action – something better known as the Fiscal Cliff.

We now have a permanent estate and gift tax exemption amount of $5,000,000, adjusted for inflation annually beginning in 2010.  We also have permanent portability, or the availability of a surviving spouse to use the deceased spouse’s estate tax exemption in certain circumstances.  The estate tax rate is set at 40%, and our annual gift tax exemption amount was raised to $14,000.  In addition, there were a number of changes to the taxation of trusts.

With the new changes in the tax law in place, and some of them “permanent,” does your estate plan need to be revisited?

The most popular estate plan for decades for married couples has been the bypass trust/marital trust or A/B trust combination to ensure the most advantageous tax situation.  With more than $10 million in assets exempt from estate tax, the concern over estate taxes has been all but taken off the table.  These trusts are still fantastic vehicles in an estate plan for reasons other than just tax savings, but it may be a good time to revisit your documents and make sure the trusts or other planning techniques fit your situation.

Dig out the copies of your current estate plan, and review these questions below.  If anything is of concern or may just need a second glance, give us a call.

  1. Is your estate large enough to trigger federal estate taxes?
  2. Does your plan distribute your property outright or in trust?  Do you know why?
  3. Does the plan name the appropriate individuals or entities to make distribution, investment or other important decisions?
  4. Is there a relationship among your beneficiaries that could cause a conflict with the decision maker you appoint?
  5. Are you recently married or divorced?
  6. Is either spouse a non-U.S. citizen?
  7. Are your charitable intentions, if any, properly reflected?
  8. Are your assets properly protected in the case of creditors, judgments or divorce?
  9. Do you have the proper powers of attorney in place in the event of disability or incapacity?  Does the document name your desired agent?
  10. Is your plan just out of date?

For more information regarding estate planning, business law or tax controversy and  compliance, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com or call us at 404-255-7400.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.  The information contained herein is provided “as is” for general guidance on matters of interest only.  Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services.  Before making any decision or taking any action, you should consult a competent professional advisor.

What the New Tax Law Means to You

As you probably know, Congress avoided the so-called fiscal cliff by passing – at the 12th hour –the American Taxpayer Relief Act of 2012 (the 2012 Tax Act), signed into law by the President on January 2, 2013. The 2012 Tax Act makes several important revisions to the tax code that will affect estate planning for the foreseeable future. What follows is a brief description of some of these revisions – and their impact:

  • The federal gift, estate and generation-skipping transfer tax provisions were made permanent as of December 31, 2012. This is great news for all Americans; for more than ten years, we have been planning with uncertainty under legislation that contained built in expiration dates. And while “permanent” in Washington only means that this is the law until Congress decides to change it, at least we now have more certainty with which to plan.
  • The federal gift and estate tax exemptions will remain at $5 million per person, adjusted annually for inflation. In 2012, the exemption (with the adjustment) was $5,120,000. The amount for 2013 is expected to be $5,250,000. This means that the opportunity to transfer large amounts during lifetime or at death remains. So if you did not take advantage of this in 2011 or 2012, you can still do so – and there are advantages to doing so sooner rather than later. Also, with the amount tied to inflation, you can expect to be able to transfer even more each year in the future.
  • The generation-skipping transfer (GST) tax exemption also remains at the same level as the gift and estate tax exemption ($5 million, adjusted for inflation). This tax, which is in addition to the federal estate tax, is imposed on amounts that are transferred (by gift or at your death) to grandchildren and others who are more than 37.5 years younger than you; in other words, transfers that “skip” a generation. Having this exemption be “permanent” allows you to take advantage of planning that will greatly benefit future generations.
  • Married couples can take advantage of these higher exemptions and, with proper planning, transfer up to $10+ million through lifetime gifting and at death.
  • The tax rate on estates larger than the exempt amounts increased from 35% to 40%.
  • The “portability” provision was also made permanent. This allows the unused exemption of the first spouse to die to transfer to the surviving spouse, without having to set up a trust specifically for this purpose. However, there are still many benefits to proper estate planning using trusts, especially for those who want to ensure that their estate tax exemption will be fully utilized by the surviving spouse.
  • Separate from the new tax law, the amount for annual tax-free gifts has increased from $13,000 to $14,000, meaning you can give up to $14,000 per beneficiary, per year ($28,000 for a married couple) free of federal gift,  estate and GST tax – in addition to the $5 million gift, estate, and GST tax exemptions. By making annual tax-free transfers while you are alive, you can transfer significant wealth to your children, grandchildren and other beneficiaries, thereby reducing your taxable estate and removing future appreciation on assets you transfer. And, you can significantly enhance this lifetime giving strategy by transferring interests in a limited liability company or similar entity because these assets have a reduced value for transfer tax purposes, allowing you to transfer more free of tax.  Gifting to Family Trusts allows the tremendous advantage of gifting to one destination, while using the annual gift exclusions for all of your descendants.

For most Americans, the 2012 Tax Act has removed the emphasis on planning for worst case scenarios and put it back on the real reasons we need to do estate planning: taking care of ourselves and our families the way we want. This includes:

  • Protecting you, your family, and your assets in the event of incapacity;
  • Ensuring your assets are distributed the way you want;
  • Protecting your legacy from irresponsible spending, a child’s creditors, and from being part of a child’s divorce proceedings;
  • Providing for a loved one with special needs without losing valuable government benefits; and
  • Helping protect assets from creditors and frivolous lawsuits; and from estate depletion to fund nursing home costs.

For those with estates less than the $5.25 million exemption amount, trusts should still provide much valued asset protection.  However, those who are less concerned about asset protection may want to review options for unwinding previous transactions to the extent possible and, at a minimum, review their estate plan to ensure proper income tax planning (see below).

For those with larger estates, ample opportunities remain to transfer large amounts tax free to future generations, but it is critical that professional planning begins as soon as possible. With Congress looking for more ways to increase revenue, many reliable estate planning strategies may soon be restricted or eliminated.   REVENUE RAISING PROPOSALS INCLUDE 1) LIMITING THE BENEFITS OF GRANTOR TRUSTS, 2) LIMITING THE DURATION OF ALLOCATION OF GST EXEMPTION, 3) IMPOSING A MINIMUM 10 YEAR TERM FOR GRANTOR RETAINED ANNUITY TRUSTS (“GRATS”), AND 4) REDUCING THE AVAILABILITY OF ENTITY BASED VALUATION DISCOUNTS.  These are all tools that can reduce your estate tax exposure but that may not be available much longer.  Thus, it is best to put these strategies into place now so that they are more likely to be grandfathered from future law changes.

Further, as is well publicized, the 2012 Tax Act included several income tax rate increases on those earning more than $400,000 ($450,000 for married couples filing jointly).  Combined with the two additional income tax rate increases resulting from the healthcare bill, income tax planning for individuals is obviously now more important than ever.

What hasn’t been as publicized is that trusts (only those trusts not taxed as grantor trusts) and estates will be subject to these new taxes and higher tax rates on income above $11,950.   Proper income tax/distribution planning for trusts and estates will be essential going forward to minimize these burdensome tax increases.

Income tax basis planning will also be more important.  Many trusts hold highly appreciated, low tax basis assets. Reverse DGT transactions – purchasing low basis assets back from grantor trusts – can be used to obtain a step up in basis at death.  Trusts may be able to be amended and/or restated to allow a Trust Protector to identify low basis assets and take certain actions that would cause them to get a step up in tax basis at your death.   For assets not already in trust, Alaska Community Property Trusts can be utilized to get a double step up in tax basis at both spouse’s deaths.

The good news is that if you have been sitting on the sidelines, waiting to see what Congress would do, the wait is over.  We have increased certainty with “permanent” laws and you can have some comfort that the rules won’t drastically shift from year to year.  Unfortunately, for those of you with larger estates, planning techniques that can be utilized to reduce estate tax exposure are still on the chopping block – so don’t wait to plan.  For all clients, income tax planning, including income tax basis planning, should be a focus this year.  As always, the ultimate goals of estate planning, including protecting family assets and providing for loved ones, do not change.  Make sure you have a good plan to meet these goals. Schedule an appointment today by calling us at (404) 255-7400.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.  The information contained herein is provided “as is” for general guidance on matters of interest only.  Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services.  Before making any decision or taking any action, you should consult a competent professional advisor.

2012 Year End Newsletter

Dear Tax Clients:

With the year coming to an end, as always, there becomes a heightened sense of emphasis on financial and tax planning. This is true now more than ever with the future of America’s tax code being so uncertain and with many tax cuts taxpayers have taken for granted for over a decade set to expire in 2012.  Knowing this, we at Hoffman & Associates, would like to help you by providing some general reminders, items of interest for the current tax year and some valuable planning tips for changes we are likely to see in the future. We hope these notes, as well as some general estate planning and business items that are of importance, will help you prepare for your 2012 taxes as well as for the future. However, as every taxpayer paints a different picture, we recommend contacting one of our tax and legal experts for reassurance or with any question you may have.

Individuals

Tax planning for individuals for both the 2012 year-end and forward will be complicated for a multitude of reasons, with the most important being that most of the Bush-era tax cuts are set to expire at year end.  This casts doubts about the renewal of many tax extenders, like the AMT patch, and makes the possibility of across-the-board tax hikes, including the new 3.8 percent “medicare” tax on investment income and .9 percent increase one earned income, a likelihood. Individual taxpayers will want to be sure to make the most of the favorable tax savings opportunities while they are available in 2012 because they may not see such favorable tax rules in the coming years.  Although Congressional action between now and the end of the year may cause more tax changes, we have summarized below some year-end tax reminders and tips.

Annual Reminders

  • Estimated Payments – Make your 4th Quarter Georgia estimated payment in December instead of waiting until January 2013, unless you are in an AMT situation (see “Current Year Items of Interest”).
  • Tax Withholdings – If you have not had enough withheld from your 2012 pay, or you have missed an estimated payment, you can opt to have more tax withheld from your paycheck before year end in order to cover this potentially costly mistake.
  • Sell Your “Losers” – Don’t forget to offset any 2012 capital gains. Married taxpayers can take up to a $3,000 capital loss ($1,500 for single filers). Be careful to avoid “wash sale” rules by not buying the same stock within 30 days before or after the original sale; otherwise the losses won’t count.
  • Retirement Plan Contributions – Have you made your contributions to your retirement plans for 2012? The deadline for all types of IRA contributions is April 15th, 2013, you can make these contributions before the end of the year.

Items Set to Expire in 2012

  • Consider Converting Your IRA – With an expected tax increase post-2012 and into the future, you may want to consider converting your Traditional IRA to a Roth IRA. You would owe tax on the IRA amount currently, to the extent it exceeds basis, but upon retirement when tax rates are expected to be higher, all the distributions from the Roth, if the holding period is met, would be tax free.   The conversion of traditional IRA’s to Roth IRA’s is not an all or nothing proposition.  Also, the maneuver is particularly attractive if you are experiencing an extraordinary low income or loss year.
  • Alternative Minimum Tax – Unless action is taken in Congress, the exemption for AMT in 2012 will decrease to $33,750 for individuals and $45,000 for married couples. Favorable legislation passed in the House and Senate earlier in the year indicating action will be taken to increase these amounts has yet to be enacted. Therefore, taxpayers should not assume this change will take place and should be prepared if there is no increase.
  • American Opportunity Tax Credit – This enhancement to the Hope Education Credit that allows for a credit of up to $2,500 per student for the first four years of post-secondary education expires after 2012.  If not made permanent by Congress in 2013, it will revert back to the less generous Hope Scholarship credit (maximum credit of $1,950 and available for only two years).  In contrast, the still available Lifetime Learning Credit is a per taxpayer per year credit and can be claimed for an unlimited number of years.
  • Student “Above-the-Line” Expense – The Qualified Higher Education Expense deduction for tuition and fees expired last year.  For those who will are paying off student loans, the student loan interest deduction after 2012 will be limited to five years and phased out at lower AGI levels.
  • Social Security Payroll – Most taxpayers can expect a smaller paycheck in 2013 due to Social Security Payroll taxes withheld reverting back to their normal amounts. The social security wage base for this additional 2 percent is $113,700 in 2013 (up from $110,100 in 2012) and also applies to self-employed individuals, whose self-employment tax on social security will revert back to 15.3 percent in 2013 (up from 13.3 percent in 2012).

Tax Planning Opportunities

  • Child Tax Credit – The child tax credit for 2012 is $1,000 per eligible child, but going forward will be reduced to $500. Taxpayers should plan ahead for this reduction as the refundable amount also will be limited for those with at least three qualifying children in 2013.
  • Increasing Tax Rates – The current percentage rates of 10, 15, 25, 28, 33 and 35 are set to  revert to the pre-Bush tax cut rates of 15, 28, 31, 36 and 39.6 percent. President Obama has  proposed to keep the current structure, but replace the 33 and 35 percent rates with the 36 and 39.6 percent rates for higher income tax payers. Because of potential tax hikes across the board, taxpayers should discuss their income projections and tax plan for 2013 with both their financial advisor and tax preparer to ensure adequate estimates and withholdings, especially since the 39.6 percent top rate does not include the 3.8 and .9 percent Medicare taxes.
  • Capital Gains/Losses and Dividends – Beginning in 2013, the tax rates for long-term capital gains and qualified dividends will change. The rates will move from zero percent for taxpayers in the 10 and 15 percent brackets and 15 percent for everyone else to 10 percent for taxpayers in the 15 percent bracket and 20 percent for everyone else, respectively. Dividends will be taxed at ordinary income tax rates (top rate of 39.6 percent, or 43.4 percent if the 3.8 percent Medicare tax applies.  Individuals should consider accelerating capital asset sales and C Corporations may want to declare and distribute special dividends before year-end).
  • 3.8 Percent Medicare Contribution Tax – 2013 also brings a new 3.8 percent “unearned income Medicare contribution” tax. The tax will target higher-income individuals, estates and trusts and will be assessed on the smaller of net investment income (NII), which is investment income minus allocable expenses, or the amount by which  an individual taxpayer’s modified adjusted gross income (MAGI) is over $200,000 ($250,000 for married couples). For estates and trusts, this tax applies to the lesser of undistributed NII or adjusted gross income (AGI) in excess of $11,950 for 2013. Estates and trusts should consider distributing NII to beneficiaries whose MAGI threshold is much higher.  Individual taxpayers, and certain estates with passive rental income, whose NII exceed MAGI and AGI thresholds, should re-do their triple net leases so they can actively participate in the management of their rental properties and avoid this 3.8 percent tax.  Income from taxable IRAs, social security and alimony is not investment income, but increases MAGI and could subject your NII to this tax.  Consider investing in tax-exempt bonds or funds which are neither included in AGI nor MAGI for investment income purposes.
  • Personal Exemption Phaseout and Pease – The personal exemption phaseout (PEP) and Pease (a limitation on itemized deductions) were repealed through 2012, but could be reinstated in 2013. A reinstatement of the PEP and Pease means taxpayers that have an adjusted gross income of certain amounts (estimates of the phaseout are said to begin at $178,150 for singles and $267,200 for those married filing jointly) will lose any advantage of personal exemptions and itemized deductions. Note that medical and investment interest expenses, gambling and casualty or theft losses are not subject to the Pease limitation.  Therefore, taxpayers should consider making additional gifts to charity this year.  Paying state income or real estate taxes in 2012 is a good idea too, unless you are subject to the AMT.
  • Medical Expense Deductions – As provisions for personal exemption phaseouts and limitations on itemized deductions are set to kick in, so is an increase to the threshold for the itemized medical deduction. Currently, medical expenses must exceed 7.5 percent of a taxpayer’s adjusted gross income (AGI) before they qualify as a subtraction to AGI. Beginning in 2013, the threshold will increase to 10 percent of AGI; however, individuals who are age 65 and older will be exempt from this increase through 2016.  If possible, taxpayers under 65 years old should take advantage now of the current 7.5 percent of AGI threshold by accelerating elective unreimbursed qualifying medical expenses.

Estate Planning

Estate planning is another important aspect of your financial well-being. This is an area of tax that is often convoluted and constantly changing. Some important and potentially drastic changes are set to expire in 2012. We have listed below the changes that we believe will have the most impact on our clients.

  • Estate and Gift Tax – The 2012 estate and gift tax rate is 35 percent with an exemption of $5.12 million. This will revert back to $1 million in 2013 as the maximum tax rate reverts back to 55 percent. Also, the portability rule allowing an individual’s estate or spouse to make the election on a timely filed federal estate tax return to utilize the “deceased spouse’s unused exclusion” amount (DSUE Amount) is set to expire.  If made, the surviving spouse’s unused estate and gift tax exemption amount available for gifting before the 12-31-12 expiration date, could be in excess of $10,000,000.  Therefore, individuals with significant assets should consider taking advantage of the higher gift and generation-skipping exclusions now.
  • 2012 Annual Gift Tax Exclusion – The annual exclusion for gifts free of any gift tax is $13,000 this year ($14,000 beginning in 2013) (married couples can gift up to $26,000) to each individual. Married donors can gift up to $26,000 in 2012 ($28,000 in 2013) per donee.
  • Year End Donations – When gifting to charitable organizations consider gifting securities that have appreciated. As long as you have held the securities more than a year, you take a deduction for their market value.

Business Planning

Business tax planning, like individual tax planning, will become just as difficult to plan for in the coming years because of the expiring tax incentives. The tips and changes we believe will be the most significant to our clients are listed below.

  • 2012 Section 179 Expense – Typically, for business property with a useful life of more than one year, the cost must be depreciated (deducted ratably over several tax years).  IRC Section 179 allows the business to fully expense the cost of eligible-tangible personal property in the year purchased.  The maximum amount in 2012 that may be expensed is $139,000 with a $560,000 investment ceiling placed on the purchase of all otherwise qualifying expenses.  In 2013, both the Section 179 expense and investment ceiling are scheduled to drop to $25,000 and $200,000, respectively.
  • Bonus Depreciation – Fifty percent first year bonus depreciation is allowed for the cost of new qualified property with a recovery period of 20 years or less placed in service (i.e., ready for use and not merely purchased) in 2012, but will expire at year end. Businesses should take advantage of these favorable expensing rules now while they are still available.
  • Dividends – Closely-held C Corporations may want to declare and distribute special dividends this year so shareholders may take advantage of the lower expiring tax rates and to avoid the 3.8 percent Medicare tax on investment income.

Additional Items to Note

  • IRS “Phishing” Scams – As was noted in last year’s letter, the IRS continues to battle cons taking advantage of taxpayers. They stress that the IRS does not solicit taxpayer information via e-mail and that any emails received from the “IRS” requesting personal information should be deleted immediately.
  • Audits – Taxpayer audits continue to be a problem for individual taxpayers. As the Federal government continues to struggle financially, the automatic notices for audits and penalties are sent out at a staggering rate. Please let us know if you receive any notice from the IRS as we are prepared to help you if you have any issues.

 As always, we encourage you to feel free to contact us with any concerns or questions you may have about your taxes.

HAPPY HOLIDAYS!

HOFFMAN & ASSOCIATES, ATTORNEYS-AT-LAW, L.L.C.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.  The information contained herein is provided “as is” for general guidance on matters of interest only.  Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services.  Before making any decision or taking any action, you should consult a competent professional advisor.

Last Will and Testament

A Will is a basic estate planning document that provides for the distribution and disposition of property and personal assets of an individual after death.  A Will becomes effective upon death; therefore, it may be changed at any time prior to death.  It should also be periodically reviewed to be sure it applies to the maker’s current personal and family situation.  A Will may contain general or specific provisions regarding the care and distribution of property, the distribution of disclaimed property, recommendations for guardians of minor children, the appointment of executors to administer the Will and express desires and guidance regarding the administration of the estate.  Finally, the Will may establish trusts for the benefit of loved ones or charities and trustees to manage these trusts.

The design of our preferred Will for single-marriage clients creates two trusts at the death of the first spouse:  a Marital Trust and a Credit Shelter Trust.   At the death of the first spouse, the Credit Shelter Trust is funded with enough assets to capture the first-to-die spouse’s federal estate tax exclusion amount, and the remaining assets, if any, fund the Marital Trust.

The Marital Trust is funded with any amounts over the exclusion amount because the (100%) Marital Deduction allows an unlimited amount of assets to be transferred to a spouse upon death tax-free.  This structure provides for the benefit of both estate tax exclusions:  initially the federally-provided exclusion, whatever that may be in the year of death, and the marital exclusion for all assets above that amount.  Thus, no estate taxes are due at the death of the first spouse.

While it seems complicated, please keep in mind that the surviving spouse may have control over all of the assets of each Trust, as the Trustee of the Trusts, and would also be the primary beneficiary of the Trusts.

In the event one or both spouses are not U.S. Citizens, additional language must be added to the Will to ensure the couple receives the full benefits of the U.S. estate tax laws.

When children inherit property, we prefer a descendants’ trust created by the Will at the death of the second spouse.  This allows the assets to pass, in trust, to children and future descendants.  This format protects the assets from future estate taxes, creditor issues, divorce or other claims against the descendants.  The descendant, just like the surviving spouse above, upon reaching a certain age, may be the trustee of their trust and will be the primary beneficiary of his/her trust.

 

For more information regarding estate planning, business law or tax controversy and compliance, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com or call us at 404-255-7400.

 

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.  The information contained herein is provided “as is” for general guidance on matters of interest only.  Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services.  Before making any decision or taking any action, you should consult a competent professional advisor.

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