Tax Cuts and Jobs Act Update

The full text of the Tax Cuts and Jobs Act was released on November 2nd . Although the changes have not been finalized, the following are some of the highlights that might affect you if it passes as currently written:

The Act would reduce the number of tax brackets from 7 to 4:

For married filing jointly 12% (0-$90,000), 25% ($90,000-$260,000), 35% ($260,000-$1,000,000), 39.6% (greater than $1,000,000).
Elimination of the personal exemption.

Estate and Gift Tax

The Internal Revenue Service has announced updated numbers for 2018 relating to estate and gift taxes (as well as numbers on income tax and retirement plan rules). For 2018 the annual gift tax exclusion will be $15,000, an increase from the prior limit of $14,000. The estate and gift tax exemption amount is raised to $5,600,000, or $11,200,000 for a married couple, which is an increase from the prior limits of $5,490,000 and $10,980,000. This latest update may also be viewed on the IRS website, under the heading “Form 706 Changes.

I AM A BENEFICIARY AND I WANT TO REMOVE THE TRUSTEE: PART II

A “breach of trust” arises when a trustee violates any duty that the trustee owes the beneficiary. This is a broad definition, and can be either negligent, willful, and/or fraudulent depending upon the circumstances. What defines a “breach” may be circumscribed by the trust itself, but generally can, again depending on the circumstances, include actions such as failure to account, misappropriation of funds, failure to invest, threats to beneficiaries, failing to pursue legal action, commingling trust and personal assets, withholding copies of the trust or certain other information, failing to treat the beneficiaries fairly and impartially, mistakenly selling land held by the trust, selling shares owned specifically by a beneficiary, having private interests conflict with those of the trust, etc.

LEGAL CAPACITY

In law, we often refer to one’s legal “capacity.” In this context, it refers to one’s mental capabilities. There are several levels of legal capacity, including but not limited to contractual capacity, testamentary capacity, and the capacity to marry.

INHERITING UNDIVIDED INTERESTS – PARTITION ACTIONS

A partition action or proceeding is an action to divide multiple legal interests in – usually – real property. A partition action is usually appropriate where: a decedent owned an undivided interest in commonly owned property, or; the decedent left undivided interests in property to more than one heir or beneficiary, and they do not want to co-own the property.

COMMON LAW MARRIAGE

Common law marriage is the recognition of a legal relationship between two people who did not actually or formally marry. Many people think that living together for several years will give rise to a common law marriage, resulting in the right to spousal support (alimony) or other rights, including inheritance of property.

POWER OF ATTORNEY – 101

A power of attorney is a written authorization for one person to represent or act on someone else’s behalf in business or other legal matters, and private affairs. The person authorizing the other to act is the principal, grantor, or donor (of the power). The individual granted the power of attorney is the “agent,” or the attorney-in-fact.

FAMILY ALLOWANCE DURING PROBATE

What happens when the wage earning spouse dies? Probate, and settlement of the estate, can take months, or even years. What are the family’s options in the short term?

The decedent’s spouse and minor children can petition the probate court to receive a family allowance.

HOMESTEAD PROPERTY

What happens when a parent and/or spouse, dies, and all of the property is in their name? Probate proceedings can take several months, and sometimes years, before estate property can be distributed. A probate homestead allows a grieving family to remain in the residence, as well as retain household furniture, apparel, and other property (some jewelry, health aids, recent wages, retirement), up to a certain dollar amount within each category.