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Wednesday, January 12, 2022

Generations Estate Tax Summary: The Year Ended the Way It Started


At the start of 2021, I did not antici-pate writing a year-end estate tax summary that ended the year the way it started with no substantial changes to the estate and gift tax. With the incoming Biden administration, there was a great deal of discussion related to a possible decrease in the estate tax exemption, an increase in the estate tax rate, an overhaul or elimination of the step-up in basis for appreciated holdings, the elimination of Grantor Trusts, new limitations on the use of discounting, and other changes to the estate and gift tax. However, as of the writing of this article, it appears that there are no significant changes in the tax rates as we enter 2022. What does this mean going forward?

Currently the estate tax exemption inflation adjustment is set to increase on January 1, 2022, to $12,060,000 per person, meaning that for a married couple the estate tax exemption is double that amount: $24,120,000 can pass estate tax free. However, this exemption is set to sun-set January 1, 2026.
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Friday, August 27, 2021

Gifting as an Estate Planning Tool

A change in the makeup of Congress is a good time to review your estate planning strategy. One consideration is whether gifting, sometimes referred to as “lifetime gifting,” would be an appropriate addition to that strategy.

All United States citizens are permitted to make a gift of up to $15,000 in value per person, per year, without incurring any tax liability or being required to disclose the gift to the IRS. For example, you could give your child a gift of $15,000. That child would not have to file anything with the IRS, and neither would you. If you also gave $15,000 each to your other children in that same year, you would still not be taxed or required to disclose those gifts to the IRS because you would not have exceeded the $15,000 per person, per year limit. But what would happen if you exceeded the $15,000 limit because you gave a child $115,000? Two things.


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Monday, April 26, 2021

Implementing Portability Into Your Estate Planning

The estate tax has changed and will continue to evolve over time. The same goes for the estate planning tools available to clients. In 2010, Congress implemented an estate planning tool called a “portability election,” whereby a surviving spouse could use the deceased spouse’s unused estate tax exclusion. This allowed a couple that failed to plan for the estate tax with traditional trust-based planning to potentially have a second bite at the apple by filing an estate tax return and making the portability election to carry over the deceased spouse’s exemption amount.


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Monday, January 11, 2021

Planning for 2021: Top Five


The turn of the calendar is a great time to consider whether your estate plan needs updating. With frequent changes in the law, the estate tax exemption, and your own portfolio, even recent plans should be reviewed. Here is a list of the top five items that you should consider when coming in for your Generations trust review.


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Monday, September 14, 2020

Should I Make My IRA Payable to a Charitable Remainder Trust?

Prior to the enactment of the SECURE Act on January 1, 2020, the tax deferment benefit for a non-spouse beneficiary of an IRA was substantial. For example, a child could be the beneficiary of an IRA and receive the economic benefit of the payments stretched over their life expectancy. A significant advantage of this stretch was that the beneficiary could have considerable control over the timing and amount of the distributions. If a parent passed away when a child was in their higher income earning years, the child could wait until retirement to take larger distributions, thereby leveraging the tax-free compounding of the IRA with tax-efficient timing of the distributions.


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Monday, May 18, 2020

Transitions in the Era of COVID-19

I am writing this article in mid-April. It is likely that by the time this goes to publication, much of it will be out of date. Yet all I can do is put pen to paper and tell you what measures Foley & Pearson has taken to facilitate our clients’ estate planning needs and our experiences over the last few months in response to the COVID-19 pandemic. 


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Wednesday, April 1, 2020

Beneficiary Form Check-Up

Beneficiary designation forms are a crucial piece of your estate planning. Designating  beneficiaries on accounts allows you to plan for distribution of your assets to specific individuals, or to your Trust, by allowing you to choose the people or entities you want to receive the asset when you die.  Retirement plans like 401(K) plans, IRAs, etc. pass by beneficiary designation, as do life insurance policies.  But even regular bank accounts and investment accounts often come with the option to designate a beneficiary.  These accounts may pass by “pay-on-death” (“POD”) or “transfer-on-death” (TOD) designations.

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Wednesday, April 1, 2020

What Happens to Your Social Security Number When You Die?

Even if you have an up-to-date estate plan, there are some logistical quirks to be aware of whenever someone passes away.  Clients frequently ask if they need to notify the Social Security Administration of the loved one’s passing.  The short answer is “no.” 

When a person dies, their death is verified by the Medical Examiner (in other states it may be a coroner or similar authority).  That verification is documented by the formal death certificate, which is processed by the state’s Department of Vital Statistics.



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Wednesday, October 30, 2019

Business Succession Planning is a Process, Not an Event

Starting and building a successful business can be a very rewarding vocation.  The satisfaction that comes from overcoming obstacles that establish the right business culture, with the right people, and a quality brand name cannot be fully appreciated unless you have done it. But even successful entrepreneurs often fail to consider their exit plan even as they build and grow their enterprise.

The fact is, if you own a business, some day you will no longer be part of your business.  You will exit your business in one of four ways:


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Tuesday, January 15, 2019

Considerations Regarding Disinheritance

On July 20, 2018, the Alaska Supreme Court issued an opinion in the Estate of James V. Seward that held that an unknown child, who was not identified as an heir in the decedent’s Last Will and Testament, can still make a claim of paternity in a probate case for the purpose of sharing in the Statutory Exempt Property Allowance of $10,000. The holding affects the estates of all Alaska residents with children – regardless of whether those residents are aware that they have children or not.  The basic facts are as follows:



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Tuesday, January 15, 2019

The Real Problem of Incapacity

Having the proper legal documents can avoid the time and expense of guardianship proceedings.  (See article “What is a Living Probate” in this issue).  But the reality of aging creates challenges that legal documents alone cannot easily solve.

Here is the problem.

Alaska law and your estate planning documents typically have a definition of “incapacity.”  The definition might say something like, “I will be deemed incapacitated when two independent licensed physicians determine that I can no longer manage my own financial affairs.” That seems simple enough.  But in most cases “incapacity” does not happen overnight.

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