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Pennsylvania Asset Protection & Estate Planning Blog Will & Trust Attorney Blog For Unruh, Turner, Burke & Frees

This blog, which is regularly updated by our estate planning attorneys, strives to keep our clients and potiential clients informed, engaged, and connected to the latest news, trends, and current events regarding Penn. asset protection, inheritance dispute resolution, executor and trustee information, will & trust law, and elder trust law. Learn more abou the estate law issues that affect you most in these short, personal, and candid legal blog posts.


Blog Category:
11/7/2009
David M. Frees, III
Comments (0)
End of Year Gifts: 
Avoiding the Mistakes and Maximizing the Benefits to Your Children,
Grandchildren and Heirs

David M. Frees III  Wills, Trusts, and Estates
Law Offices:  Phoenixville, Malvern,
and West Chester - Pennsylvania

Many clients wonder about making gifts for estate planning purposes at this time of year.  This article will review some of the most common mistakes people make with respect to end of year and holiday estate planning gifts and how to avoid them. 

And, unless you're very careful, you might make one of these gifting mistakes that can really cost your family. 

Mistake Number One: The single biggest estate planning gift mistake?  Not making gifts when you can and should.  If you find yourself in the position of saving more than you spend each year during retirement, and, your estate exceeds the federal estate tax limit, then you might want to consider gifting to your heirs.  Since the top marginal federal estate tax rate is scheduled to return to 55% absent Congressional action, gifting can result in a major benefit to your heirs.

Mistake Number Two:  People also make fewer gifts than they can.  Currently, everyone can make gifts or $13,000.00 per year.  However, many people still believe that the old $10,000.00 number still applies.  Check each year, becasue the amount does adjust for inflation.

Mistake Number Three:  Married couples can also make double the gift amount by using both annual gift tax exclusions.  Many people believe that unless each spouse is able to make a separate gift, then they are limited to one.  However, if one spouse is able to make a gift of $26,000.00 the other spose can join in this gift by signing a "split gift tax" return.

Mistake Number Four:  Gifting at the end of the year so that the check isn't cashed.  This is a big one!  If you are giving cash, then it can be gifted up to the end of the year.  However, if you give a check, it must be cashed before December 31st.  This can result in you missing the entire year's gift tax exclusion so be careful and consider making gifts earlier in the year so that the receipient gets the investment growth on the asset during the year and it is out of your estate.

Mistake Number Five:  Failure to Leverage gifts is a serious problem.  What do I mean?  For example, you can give a gift of $13,000.00 of cash or you can give a gift of $13,000.00 of a strong but under valued stock.  If that stock rebounds in value to $30,000.00 then you moved much more value from your estate.

There are many more gifting strategies and tactics but make sure that you consider these important gifting mistakes before the end of the year and before you make gifts to your children and/or grandchildren.

Remeber to leave your questions in the comment area below.

If you need an appointment or telephone conference, call 610-933-8069 and ask for
David M. Frees III.  If David is not available or with another client, Donna, Denise, or
anyone of his paralegals or assistants can help you schedule it.

Category: Estate and Inheritance Tax Planning

10/11/2009
David M. Frees, III
Comments (0)
Time is Money Part II of II                                                                          David M. Frees III Offices in Malvern, West Chester and Phoenixville
By:  David M. Frees III, Esquire  Trust, Estate, and Weallth Preservation
Offices serving Phoenixville, West Chester and Malvern and the
entire Main Line, Chester, Montgomery, and Berks and Lancaster Counties

If you read the first installment of this series, then you already know that we are examining ways that you can work with your attorny and/or finanicial and tax advisors to make your estate plan more efficient and to avoid some of the many problems that delay estate and trust administration and create additional costs and fees for your heirs.  Review part I here.

Now more ideas for protecting your plan and your heirs:

5)  Make sure that you leave memoranda and instruction for your executors, trustees and heirs. 

Now lawyers disagree about this but I am a proponent of leaving instructions to the vrious peolple who will handle your estate and any trusts for children, grandchildren and other heirs.  Often, the disposition of personal effects can be a source of disput and delay.  So, anything that you can say to your heirs to prevent them from fighting, or by way of guidance should be helpful.

However, always make sure that your notes ad memos are intended to be informal and for guidance only to prevent them from conflicting with a carefully constructed plan. When you are going to use a binding memo, make sure to consult the lawyer drafting your will or trust to avoid these conflicts and to make sure that a binding memeo is properly drafted under your state's laws.

Finally, trusts - either created during lifetime, or under a will, can and often do contain very braod language giving the trustee or trustees very wide latitutde to decide on investments and/or distributions from the trust.  For that reason, non binding guidance can be vary valuable.

Use a memo to give guidance on when children should get distributions for cars.  Are you in favor of private, parachial, or public school.  What types of travel and education should be supported or encouraged?

6)  Make distributioms during your lifetime.

Distributions made during lifetime can and often are challenged once a person passes away.  However, these transefers of more difficult to challenge - especially when your capacity to make these gifts and your desire are documented by your lawyer.

However, if you can afford to, and do make lifetime gifts, make sure to consult your counsel to avoid or to minimize gift taxes and to make sure that there has been provision for the payment of taxes if you die within one year and the asets are reincluded in your estate for Pennsylvania Inheritance Tax purposes.

A well constructed estate plan that acknowledges such gifts and such tax consequences is even more proof
that you were able to make such gifts, that the gifts were well thought out, enforceable, and complied with any formailties required by law.

7)  Consider a broad but carefully drafted Power of Attorney.

In the event that you were to become incapacitated, a well drafted power of attorney can be an important way of protecting your assets not only for you but for your heirs.  the modern and Enhanced Power of Attorney(TM) can provide for gifting to certain people, the ability to set up and to fund trusts, guidance on investment mix, and many checks and balances. 

For example, in the event your agent wants to make gifts while you are alive but incapacitated, you can require the consent of another special gifting agent. 

Such powers of attorney can also allow family memebers to be paid for providing medical and other services to you that help to keep you at home rather than in a nursing home.  And, if done properly, such contracts and payments do not consitute gifts for mediciade purposes and can protect your ability to qualify for government programs while still legally moving assets out.

Interested in more techniques?
Leave your comments and questions below ofr email them to dfrees@utbf.com

David M. Frees III, Esquire
David Frees works almost exclusivly in the areas of trust, estate, and will planning.
He also represents executors and trustees.

Frees maintains offices in Malvern, Phoenixville, and West Chester Pennsylvania.
These offices serve communities including Devon, Berwyn, Malver, Willistown Township,
Exton, Chester Springs, Downingtown and many others on and around the Main Line.

Category: Estate and Inheritance Tax Planning

10/10/2009
David M. Frees, III
Comments (0)
Time is Money - Making Your Estate Plan efficient and Cost Effective Part I
By:  David M. Frees III, Esquire  Trust, Estate, and Weallth Preservation

Generally speaking, the longer a trust or estate stays open, the greater the likelihood of problems.  Of course, the estate or trust administration must last long enough to make sure that the bills are paid, the tax returns are filesd and claered by the government, and for certain administrative tasks to be performed.  But, many estates remain open for much longer than necessary.  And, as a result, costs and expenses rise.  So how do you build a plan that saves on time and money and limits the liability exposure of your heirs?

1) Make sure that your beneficiary designations match the beneficiaries of your will or trust.  If they do not, then make sure that you explain why and clarify who is supposed to get what. This is a common area of confusion and dispute.  Furthermore, make sure that you are clear on whether joint accounts are really intended to go to the joint account holder on your death or wether the account is simply joint for purposes of convenience.

2)  Make sure to review and discuss the tax clauses of your will and/or trust with your lawyer.  If one heir is getting a major asset such as a piece of real estate, then who pays the tax on that?  Is the tax paid by the estate or the heir?  Conflicts between heirs regarding taxation can be very costly.  And, if it is not clear and the esecutor or trustee has to seek court approval that can take time and adds expense.

3)  Make sure to consider an Interrorum Clause, also known as a "no contest clause."  These clauses state that if you are an heir under a will or trust, and you challenge the document, then your inheritance is eliminated.  This is a significant deterrent to expensive challenges and disputes.  Also find out if the law of your state permits you to go even further and to eliminate a gift if an heir challenges non probate transfers such as trusts.

4)  Be extra cautious about IRA, 401(k) and retirement plans.  Whenever possible, these plans should go directly to younger heirs capable of managing them and making good decisions.  This should ensure the ability of the heirs to take required minimum distributions based on his or her life expectancy.  In this way, you can delay the payment of inheritance taxes and they transfer automatically and without probate.  On the other hand, if they are payable to an estate (and many trusts) then all of the taxes are due right away and probate fees are also due and payable.

For more ways to get your estate lawyer to recognize that time is money check out part two coming soon.

David M Frees III - Time is Money:  Making Your Will and Trust Work

David M. Frees III Wills, Trusts, Estates
Phoenixville, Malvern and West Chester Offices
Serving Chester County, Montgomery County, Philadelphia County
610-933-8069

Category: Estate and Inheritance Tax Planning

9/20/2009
David M. Frees, III
Comments (0)
This brief story about the settlement of a lawsuit against the estate of Michael Jackson points out the need for comprehensive powers in powers of attorney, wills, and trusts allowing the fiduciaries (executors, trustees, and agents) to bring and to settle lawsuits, claims and litigation with or without court approval.  Is the powers clause of your will, trust, or power of attorney good enough or do you need to review that clause?

A well drafted powers clause will allow executors and trustees to do certain things without seeking court approval and may require court approval for other actions.

However, whenever you have trusted executors and trustees it is important to consider giving them the powers that they will need to act without constantly seeking Orphan's Court approval of business and related decisions.

David M. Frees III, Esquire

David is Chairman of the Trust, Estate and Wealth Preservation Section of
Unruh, Turner, Burke and Frees.

For a Free Report on The Ten Most Common Mistakes That Executors Make and How To Avoid Them
Call 610-933-8069 today.

He helps clients to draft wills, trusts, powers of attorney, and related estate
planning documents that carry out their desires with minimal costs, expenses,
and minimal family conflict and court intervention whenever possible.

Category: Estate and Inheritance Tax Planning

9/18/2009
David M. Frees, III
Comments (0)
This brief story about the settlement of a lawsuit against the estate of Michael Jackson points out the need for comprehensive powers in powers of attorney, wills, and trusts allowing the fiduciaries (executors, trustees, and agents) to bring and to settle lawsuits, claims and litigation with or without court approval.  Is the powers clause of your will, trust, or power of attorney good enough or do you need to review that clause?

A well drafted powers clause will allow executors and trustees to do certain things without seeking court approval and may require court approval for other actions.

However, whenever you have trusted executors and trustees it is important to consider giving them the powers that they will need to act without constantly seeking Orphan's Court approval of business and related decisions.

David M. Frees III, Esquire

David is Chairman of the Trust, Estate and Wealth Preservation Section of
Unruh, Turner, Burke and Frees.

For a Free Report on The Ten Most Common Mistakes That Executors Make and How To Avoid Them
Call 610-933-8069 today.

He helps clients to draft wills, trusts, powers of attorney, and related estate
planning documents that carry out their desires with minimal costs, expenses,
and minimal family conflict and court intervention whenever possible.

Category: Estate and Inheritance Tax Planning

8/22/2009
David M. Frees, III
Comments (0)
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Category: Estate and Inheritance Tax Planning

7/29/2009
David M. Frees, III
Comments (0)
Whether you're planning your estate, or you are the executor of an estate, you are concern with the issue of when death taxes must be paid and how you pay for them. Both Pennsylvania inheritance taxes and the federal estate tax liability are due within 9 months of the date of death.  For many estates, this deadline will create problems with the timely payment of the taxes.

In part one (Paying for Inheritance and Estate Taxes) we reviewed the ability to use liquid assets - often not sufficient to pay such a large tax laibility as well as the purchase of life insurance that when structured properly in an ILIT will be untaxed and will provide liquidity.

But what about estates where there a re many illiquid assets such as real estate and insufficient cash to pay?

Executors can sell assets quickly to raise the funds.  However, selling into a down market can be devastating and assets sold at a discount can never be recovered.  Also, the need to sell assets quickly canput you at a negotiating disadvantage even in a greta real estate or stock market.

For those reasons, assets can be used as collateral for loans to borrow the tax laibility so that assets can be methodically liquidated at more reasonable prices.  However, this involves tying up collateral and often a significan interest expense.

Finally, there are a number of sections of the IRC (internal revenue code) that allow for discounts of for the ability to pay taxes on closely held assets over extended terms.  However, these restrictions often mean that the particular assets in your estate may not qualify.

So, what are we to do?

Advanced planning and the use of ILIts, GRATs, and irrevocable trusts and gifting can significantly reduce the overall tax liability.  Furthermore, moving to more liquid investments through time and/or purchasing non-taxable assets such as life insurance can be combined to creat a plan that allows the executor to pay the taxes timely and to avoid fire sales, interest and penalties.

David M. Frees III
610-933-8069

David Frees Chairs the Trust, Estate, and Wealth Preservation Section of Unruh, Turner, Burke and Frees
with offices located in Chester County Pennsylvania.  His practice focuses on representing families interested in
preserving family wealth, closely held businesses, and the officers and directors of corporations in a full range of estate planning strategies.

Category: Estate and Inheritance Tax Planning

7/29/2009
David M. Frees, III
Comments (0)
When a person dies, the Executor of the estate has a very limited time to pay for the taxes due to the IRS with repect to federal estate tax and to the Pennsylvania department of Revenue with respect to inheritance taxes.  How long does the executor have to pay and where does the money come from?

Ideally, in a well planned estate, the decease party has made provision for the payment of taxes.  However, taxes are due within 9 months of the date of death (with a tax credit for early payment of any taxes paid to Pennsylvania within three months of the date of death.

As youcan see, that tax deadline of nine months comes pretty quickly and with federal rates of 42% or more, the liability can be substantial.  Generally, the following options for payment exist:

First, the estate can pay using available cash.  This generally requires advanced planning and most estates subject to federal estate tax will no be liquid enough to pay te full amount of cash within the nine month deadline.

Second, in a well planned estate, some life insurance can provide the liquidity to pay such taxes.  If your estate is subject to federal estate tax, you would want to have the insurance owned by an ILIT (Irrevocable life insurance trust).  In this way, the insurance will not be taxable and the trust can purchase assets from the estate to provide liquidity to pay taxes, or can loan the executor and the estate the funds to promptly pay the tax until the assets can be methodically liquidated without substantial discounts.

For more see Paying For Estate Taxes Part 2 of 2.

David M. Frees III, Esquire
David Frees is an attorney who limits his practice to trusts, estates, wills and related estate
planning strategies.   He has offices located in Malvern, Phoenixville, and West Chester.
His offfices serve clients throughout Pennsylvania, and Chester County, Montgomery County and Lancaster County including Chester Springs, Ardmore, Bala Cynwyd,
Exton, Spring City and Royersford.


Category: Estate and Inheritance Tax Planning

7/6/2009
David M. Frees, III
Comments (0)
A tax payer has won a seventh case (or at least achieved a partial victory) in a family limited partnership where the IRS was asserting a claim under section 2036 of the Internal Revenue Code.

I am including a link to analysis of the flp (family limited partnership) case but this analysis is somewhat technical.

The key points to take away from the series of cases related to family limited partnerships:
Avoid personal property which continues to be utilized by the creator
Carefully document the business purposes of the partnership
Observe the business entity and purposes of the FLP
Carefully select the assets to manage and to include

For more information on Famnmily Limited Partnerships as a tool to pass on wealth, to manage "gifted" property, and for providing creditor and litigation protection, follow this blog.

David M Frees III is an attorney practicing in the areas of Pennsylvania Estate Planning, Asset Protection Planning, Wealth Preservation and Estate Administration.  David's partners and associates practice in many related areas of the law.

610-933-8069
dfrees@utbf.com

Category: Estate and Inheritance Tax Planning

7/1/2009
David M. Frees, III
Comments (0)
Updating your will and having clear instructions and information for your executors are vitaly important - as the Michael Jackson situation has revealed. 

According to the Wall Street Journal, Jackson's estate is highly complex.  His debts are over $500,000,000.00 dollars but his assets may exceed that by $200,000,000.00.  He has three children (from various complicated arrangements).  Currently, his mother is the guardian pending a hearing in July.

Yet, his last will was drafted in 2002 and it's location and existance were unclear.

His mother even petitioned the court believing that he might have died intestae (without a will).  Clearly, his family and executors did not have the information that they needed in the event of his death.

This situation points out the need to:
1) update your will regularly
2) have clear instructions for your executors in the event of your death
3) update guardianship provisions and trusts for children and minors
4) store your will in a safe place and let your executor(s) know its location

Michael Jackson's estate will no doubt have other lessons for us and we will keep you posted.  If you would like to read more about Michael Jackson's estate in the wall street journal click here.

David M. Frees III
Chairman:  Trusts, Estates and Wealth Preservation
Unruh, Turner, Burke and Frees
610-933-8069

Category: Estate and Inheritance Tax Planning

5/18/2009
David M. Frees, III
Comments (0)
This article explains the new federal tax credits that have been put in place to reward homeowners for adding energy- efficient home products. Energy-efficient home products include replacing storm windows, adding insulation, replacing a heating system, and adding central air.
To read the full article click here to see how you can be rewarded for Thinking Green!

Category: Estate and Inheritance Tax Planning

5/18/2009
David M. Frees, III
Comments (0)
  Estate planning is the process of working with your legal, tax, and financial professional to arrange your financial affairs so that you have sufficient assets to meet your lifetime needs. This article breifly describes some essential estate planning techniques. With baseball season in full swing who doesn't like a baseball analogy. So step up to the plate  and round the bases with these financial tips. Covering all the bases will help you reach home plate and a successful retirement plan.
To read the article please click here.


Category: Estate and Inheritance Tax Planning

5/13/2009
David M. Frees, III
Comments (0)
The WSJ recently ran an article reviewing the fate of GRATs (Grantor Retained Annuity Trusts) and FLPs (Family Limited Partnerships) following the proposed elimination or changes under the Obama proposals.  The Journal suggests and I agree, that these techniques might remain viable and useful for many people planning to pass long term wealth to heirs.  For more read this WSJ article.

David M. Frees III
dfrees@utbf.com

David Frees is a Pennsylvania attorney practicing in the areas of trusts,
estates, probate, estate and asset protection planning, and estate tax planning.

For more information about how to protect your heirs from litigation and divorce,
or how to protect your own assets or inheritance, click here
or call Donna at 610-933-8069
for an appointment or teleconference with David Frees.

Category: Estate and Inheritance Tax Planning

5/13/2009
David M. Frees, III
Comments (0)
In our efort to bring you a variety of views on the federal estate tax and the many proposed "solutions" to our current dilema, we recently found a piece on the effect of the estate tax on job creation.  I've never really heard this view articluated in just this way, but McClatcy cites "the former director" the non partisan Congressional Budget office on the issue.  To read more about the estate tax and jobs click here.

David M. Frees III
610-933-8069

Please leave your questions and comments below.

Category: Estate and Inheritance Tax Planning

5/11/2009
David M. Frees, III
Comments (0)
You may be hearing about the many unique planning opportunities due to historically low interest rates and depressed stock, business and real estate values.  And, there are some truly awesome and powerful planning opportunities to move large and small family fortunes to the enxt generation.  However, this article examines the other factors and dangers that you must consider as you move forward with these opportunities to protect yourself.  To read more on the hidden opportunities and estate planning dangers click here.

David M. Frees III Chairs the Trusts, Estates and Wealth Preservation Section
of Unruh, Turner, Burke and Frees

David M.Frees III, Esquire

The firm has offices in West Chester, Malvern, and Phoenixville and serves
Chester County, Montgomery County, Deleware, Lancaster, and Philadelphia counties
as well as individuals throughout Pennsylvania with Trusts, estate planning, estate administration and asset
protection planning.

Category: Estate and Inheritance Tax Planning

4/27/2009
David M. Frees, III
Comments (0)
Death is hard. Disorganized or inefficient estate plans can make death even harder on surviving family members. The best way to avoid more work for your loved ones is to get organized.  If you do not have an estate plan make one. Make sure you tell someone where your will and other important documents are. Make sure your financial documents are in order and able to be found.  Communicate with your family as to where assets are and how to access them.
To read The Mess They Left by Suzanne Barlyne in The Wall Street Journal click here.

Category: Estate and Inheritance Tax Planning

4/27/2009
David M. Frees, III
Comments (0)
Creating a blended family can be complicated. When two families join by remarriage, there are many issues that arise ranging from "Who gets who for what holidays?" to What is my role with your children as a step parent?"  For many of the same reasons (as well as some additional ones) estate planning for  blended families can also be complicated.

For instance whose child gets what and what do future children get can be difficult questions. The Wall Street Journal, The Right Steps by Michaela Cavallaro , examines some tools and other steps parents of blended families can use to make thier estate planning less complicated and less stressful on you and your surviving heirs.

The single best tool any blended family can use is communication. How much or how little financial information you disclose is up to you.  However, the parents of blended families should consider discussing thier estate plans with one another, their children, and financial advisor so everyone understands and can ultimately cooperate to the greatest extent possible.  It is also important to review your estate plan periodically or when there is a life change such as divorce, marriage, and death. An estate plan that is outdated may not accurately represent your wishes today or may even still name ex-spouces to inherit your estate.

It is also essential, but particularly so for those in blended families to review all beneficiary designations with your lawyer, and financial advisor to ensure that they match and are coordinated with the estate planning documents.

To read  The Right Steps article in its entirety click here.

David M. Frees III, Esquire



Category: Estate and Inheritance Tax Planning

4/21/2009
David M. Frees, III
Comments (0)
I try to bring both arguments to the table for you to consider.  This article is not alawys accurate on the death tax (federal estate tax) provisions.  For example, the tax credits don't shelter $7 million dollars they shelter $3.5 million and a couple has to do some fancy planning to make them work.

Also, his argument that it should be ok to tax estates for a second time because we're already taxed multiple times during life doesn't really convince one as being sound logic or overly persuasive.

Anyway, this is a good overview of the keep the death tax talking points.

Whatever happens make sure to update your planning to maximize your control over your financial legacy.  For Pennsylvania residents, be sure to coordinate your asset protection planning, federal estate tax planning and your state inheritance tax planning in your wills and trusts.

David M. Frees III, Esquire
David's firm, Unruh Turner Burke and Frees has offices conveniently
located in Phoenixville, West Chester and Malvern, and they
serve the greater Philadelphia region including Bucks and Berks counties,
Deleware County, Montgomery and Chester County and Lancaster County.


Category: Estate and Inheritance Tax Planning

4/16/2009
David M. Frees, III
Comments (0)
I try to bring you great articles and resources for Pennsylvania residents interested in estate planning, asset protection, and federal and state inheritance and estate tax planning.  Often, I write the articles myself so that they are customized to the Pennsylvania resident.

However, this brief nwespaper article on the basics of estate planning is so good, and the thoughts and strategies of estate planing that it reviews are so relevant to Pennsylvania that I wanted to get it to you as soon as I read it.

Now of course, as  a lawyer I'd like a news piece that recommends getting professional help with your wills, trusts, and related documents.  But, this article is great becuase it advocates something that I have been championing.  Advanced thought about your plan and communication between or amoung your advisors to make sure that the paln is agreeable to all, effective to carry out your desires and that it actually gets implemented.

Please enjoy the artcile and leave us any comments or questions.

David M. Frees III, Esquire
Avvo Rated 9.5 Superb!
610-933-8069 Davis assistants are Tara, Donna, Denise and Whitney.



Category: Estate and Inheritance Tax Planning

4/13/2009
David M. Frees, III
Comments (0)
It's time to file your state and federal income tax returns. 

But, if you haven't already done it you might also want to file a gift tax return, or an extension.  For the calendar year 2008, you should (and must) file a gift tax return when your gifts (of any type of asset) exceed $13,000.00 to any one person.  A married couple can each make gifts of this amount.

There are also certain exceptions for the payment of tax deductible medical payments, and tuition, when those payments are made directly to the institution.

Otherwise, be sure to file a return.  Even if you have gifted more than the annual gift tax exclusion amount, you may not owe any tax because each person currently has a lifetime exemption of $1 million dollars.  This amount, to the extent it is used during life, reduces the $3.5 millio dollar exemption.

Finally, if you set up a GRAT, gave away real estate, corporate or business interests or other hard to value assets, be sure to get an accurate appraisal and file when required. If you don't have one yet just file an extension and get the appraisal ASAP and file.

Here's to a successful recovery in 2009.  Make the most of your gifting.  If you have questions, be sure to ask your advisor.  But here is an IRS publication on gifting that might also be helpful.
Dave Frees On The Gift Tax Return and Extension Issues
David M. Frees III, Esquire
610-933-8069
dfrees@utbf.com


Category: Estate and Inheritance Tax Planning

4/13/2009
David M. Frees, III
Comments (0)
It is important to periodically review your estate plan. The current economic climate being uncertian and the Obama Administration's priority to change the estate tax make now a good time to review your estate plan. There are six things to consider while reviewing your estate plan: Formula Clauses/ In Your Will Or Trust, Bypass Trusts, State vs. Federal Estate Tax, GRATs, Family Limited Partnerships, and Beneficiary Designation Forms.  This article explains these six impotant things t consider while reviewing your estate plan.
Click here to read the full article.

Category: Estate and Inheritance Tax Planning

4/13/2009
David M. Frees, III
Comments (0)
The stars hav all aligned for wealthy or moderately wealthy families to consider a GRAT - Grantor Retained Annuity Trust.  If you have assets above $3.5 million doallrs, the timing is perfect for a GRAT.  Read more from the Wall Street Journal on the whys of doing a GRAT.

For more information on why or how contact David M. Frees III through one of his convenient Pennsylvania offices below.

David M. Frees III
610-933-8069
dfrees@utbf.com

Category: Estate and Inheritance Tax Planning

4/11/2009
David M. Frees, III
Comments (0)

I try to be democratic and open minded on the issue of debating the federal death tax.  I have posted a number of recent editorials and information from both sides of the argument on various proposals and proposed bills and events in the house and Senate.  My personal bias is that the exemption is too small and represents a radical tax increase since 1981 that is unfair to many families who have real esatte or closley held businesses.  I also think that a rate of 42 to 55% is confiscatory and is just too high.  It discourages intergenerational business planning and encourages consumption by each generation - which isn't good for a society.

And for the most part, the readers of this blog feel that the death tax is unfair, a double or triple tax, and/or that it should be limited to very large estates.  The New York Times recently ran a tortured piece on why the death tax is not really a double tax.

Here is an alternative view in a recent editorial.  Salt Lake Tribune Editorial.  This writer cites the New York Times as the source for the argument (a paper with a strong bias against the repeal of the death tax and one that favors taxes generally).

This writer says that most of the businesses taxed are not "small."  Well, that is correct depending on your view of small. Many of the businesses are family businesses that were created within three generations and which are narowly held and often illiquid even though they exceed a few million doallrs in value.  This means that just to pay the tax, families have to borrow or sell and often dillute the value of something that they have created and grown.

Fair?  I do see value in preventing the collection of wealth in small numbers of families or corporations.  The problem that I have is who gets to redistribute this wealth and to whom does it go during redistribution.

Also, the argument in the Salt Lake Tribune (and the New York Times) is flawed becauuse even a hold at $3.5 million rather than a larger exemption would mean a real increase in the tax since the last major change in 1981.  In that year, $600,000.00 was sheltered.  Adjust that for inflation since 1981 and you get a number higher than $3.5 million.  So the government wants to take more now not less.  And, if they also eliminate a valid technique approved by the tax courts (the minority discount)  they will be taxing even more family wealth.

For many of our clients in Pennsylvania and in particular, the Philadelphia area, hasn't your real estate or the value of your business or your personal real estate increased over the last three decades?  Family Limited Partnerships and the minority discount were the solution to eliminating or limiting this very high tax.  If it goes away that's the definition of a tax increase.

Finally, here's an editorial on why the Government's death tax approach punishes the savers.  Is that a good idea?  Fair?  Beneficial?  Click here to read another view on the federal death tax in the Concorde Monitor.

Let me know where you are and what you think.

David M. Frees III


Category: Estate and Inheritance Tax Planning

4/3/2009
David M. Frees, III
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Of interest to clients concerned about the federal estate tax, is thatthe United States Senate voted today today by a slim margin to approve an ammendment to a Senate Budget bill that would actuallt increase the size of estates that are exempt from Federal Estate Tax (also known as the death tax).  However, this is merely a budget bill and only in the Senate, so it does not have the effect of law.  The Obama administration wants to exempt estates up to three and one half million dollars (which includes life insurance).. This new bill would raise that amount to five million dollars.  Read more about the Senate Death Tax vote.

David M. Frees III
610-933-8069
www.utbf.com/trust-estate
www.paestateplanners.com



Category: Estate and Inheritance Tax Planning

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