Author: WB Admin

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Tuesday October 18, 2022.

The Spousal Lifetime Assess Trust (SLAT) is a common strategy for tax savings that is used by married couples. The spousal lifetime access trust is an irreversible trust that is created by one spouse to benefit another spouse. The donor spouse makes a gift to the SLAT by using their gift tax exemption and then the spouse who will benefit is named as the beneficiary.

The SLAT offers married couples a way to take advantage of the federal lifetime gift and estate tax exclusion whilst keeping restricted access. It is possible for either one spouse to fund the SLAT for another spouse or each spouse may opt to fund the SLAT.

SLAT 101

It is vital to remember that the trust is irrevocable and this means that when contributing spouse transfers assets to the SLAT, they are forever parting with the use of those assets and any income from it.

However, the contributing spouse can only gain benefits from the funds and property given to the trust if the benefactor of the trust is still legally wedded to the donor. This is subject to the terms of the SLAT, the spouse who is to benefit from the SLAT could receive distributions of income from the SLAT, which allows the benefactor spouse together with the donor spouse indirectly, to access the assets if they needed to.

Advantages and disadvantages of SLAT

An advantage of SLAT is that it enables the contributing spouse to donate up to their available exemption amount without gift tax. If the contributing spouse dies, the value of the assets in SLAT will not be subjected to federal estate tax since it is excluded from the contributing spouse’s gross estate because the SLAT is funded with a gift made during the contributing spouse’s lifetime.

The downside to a SLAT is that if the benefactor of the trust dies, then that would mean that the donor of the trust will no longer have indirect access to the SLAT. The donor of the trust will have no choice but to terminate the trust. They can either choose to distribute it or continue it for the donor’s children or perhaps other family members.

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Tuesday September 13, 2022.

It takes much thought and planning to decide where to contribute your hard-earned money. A wise charitable giving plan takes into account your giving style, timing, and content. 

Your giving strategy and the timing of your donations can optimize their impact on your favorite charity while lowering your tax burden. The following two strategies can help reduce your tax burden. 

It’s Not Just Cash

Direct charitable giving may be more advantageous than selling non-cash assets like a mutual fund or stock shares and donating the after-tax proceeds. If you’ve had the assets for more than a year, you’ll receive two important advantages. In most cases, you’ll be able to deduct the full fair market value from your taxes — neither you nor the charity will owe any taxes on the gain. As a result, you will be able to donate up to 20% more to the charity than you would have given if you had sold the asset and donated the after-tax revenues.

You can also acquire more of the same stock after donating any that has dramatically increased in value, thereby “resetting” the cost basis to a more significant sum.

While stock awards can generate a sizable income, they can also have unanticipated tax repercussions after they are exercised or vested. As a clever strategy to lower your tax exposure, think about using vested shares from prior years or other long-term appreciated assets for charitable giving.

Consider a QCD

A qualified charitable distribution, or QCD, is another tactic that can lower your taxable income. These are contributions paid to your preferred charity straight from your IRA. The gift amount isn’t considered as a charitable deduction, but it doesn’t count as taxable income either. It essentially reduces your taxable income by the amount donated to charity, even if you weren’t otherwise itemizing deductions.

If your required minimum distribution (RMD) for the year has not yet been satisfied, QCDs can count toward it. Reducing your taxable income can also be beneficial when figuring out how much Medicare premiums will cost you. Make sure to speak with your accountant first because there are a few rigorous criteria you must follow in order to take advantage of this method.

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Wednesday August 10th, 2022.

Living wills and other advance directives are legally binding documents that outline your preferences for medical treatment if you become incapacitated. 

Advanced directives are not only for those in their advanced years. All people should create these documents since unexpected end-of-life circumstances might occur at any age.

By making arrangements in advance, you can receive the medical treatment you desire and prevent needless suffering. The document also frees up caregivers from the pressure of making decisions during trying or grievous times. 

What Can Go In a Living Will

Be specific about your wishes for medical procedures while drafting your living will. Take into account your options for each of the following:

Cardiopulmonary Resuscitation (CPR): using a defibrillator or someone performing chest compressions to restart your heart.

Life Support: maintaining your life through artificial nutrition, hydration, medicine administration, and ventilator support.

Mechanical Ventilation: a device that takes over breathing by supplying the lungs with air.

Artificial Nutritional Feeding: a tube that extends into the stomach and delivers nutrients.

Dialysis: a process where blood is cleansed by passing through a machine.

Intravenous: injections of medication, antibiotics, or antivirals using a tube or needle into the veins.

End-of-Life/Palliative Care: Healthcare professionals can manage your pain to make you comfortable while respecting your preferences for medical treatment, such as avoiding intrusive procedures.

Organ Donation: You must be briefly put on life support if you choose to donate your organs. You will need to obtain an exemption for the organ transplant operation if you decide not to be put on life support.

What You Can’t Include in Your Living Will

You need a few things in conjunction with your living will, but they are not included as part of it. 

Do Not Resuscitate (DNR): Although you might have said in your living will whether you wish to be revived, a DNR is a particular directive that a doctor must write and sign. 

Orders for Life-Sustaining Treatment (OLST):  An OLST is primarily used for those who have been told they have a severe or fatal illness, are elderly, or both.

Health Care Proxy: A Health Care Proxy or other Medical Power of Attorney document must be used to designate the person you want to act as your Health Care Proxy (also known as a Power of Attorney for Health Care and a Health Care Representative) to make decisions on your behalf if you become incapacitated.