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Happy New Year! With the closing of 2021, we wanted to reach out and send our best wishes to you and yours! I hope that 2022 holds success and good fortune in any endeavor you pursue.
For 2022, the amount you can gift without filing a tax return is increasing to $16,000, and the federal estate tax exclusion is increasing to more than $12 million per person.
So, anyone who gives up to $16,000 to any individual (anyone other than their spouse) does not have to report the gift to the IRS.
An individual who gives away more than $16,000 to any one person must file Form 709, the gift tax return.
For 2022, the federal estate tax exclusion for the estates of decedents will be $12,060,000 for individuals and $24,120,000 for couples, continuing the historical pattern of annual increases to the estate tax exemption.
The increase in the estate tax exclusion means that the lifetime tax exclusion for gifts should also rise to $12,060,000, as should the generation-skipping transfer tax exemption.
This $12,060,000 million lifetime gift tax exclusion means that even if you are required to file Form 709 because you gave away more than $16,000 to any one person during the year, you will OWE TAXES only if you have given away a total of more than $12,060,000, thus excluding most individuals from having to pay any taxes on their gifts.
A comprehensive Estate Plan provides your loved ones the AUTHORITY, DIRECTION and RESOURCES to Safeguard Your Legacy.
How does one empower another with the AUTHORITY to act on their behalf with respect to their finances when one is disabled, incapacitated or otherwise unable to act for oneself? By means of a Durable Power of Attorney ("POA"), one grants a spouse, sibling, aunt, uncle, child, niece, nephew, friend or any trusted individual of your choice the ability to "step into your shoes" in making financial decisions on your behalf. The POA is the first indispensable component of any effective Estate Plan.
And how does one go about providing DIRECTION to another to act on their behalf so that their wishes regarding how their assets are distributed both during their lifetime and after they die are fulfilled? By means of a Revocable or Irrevocable Trust ("Trust"), one immediately provides this direction to a Trustee, who may be any trusted individual or institution of your choosing. The type of Trust you choose, with our advice and counsel, will be based on your individual circumstances and objectives.
The Trust will also provide your Trustee with the RESOURCES required to fulfill your financial objectives both during your lifetime and after you are gone. By funding your Trust with a combination of personal and/or real property, you ensure that your loved ones are properly provided for and that your legacy is safeguarded. We "hold your hand" through the funding process to make sure your Trust is properly funded, thus becoming an effective and powerful tool in your total Estate Plan.
One may also use a Last Will & Testament ("Will") to safeguard one's legacy. A Will differs from a Trust in that a Will only becomes effective upon your death. A Will is an effective and powerful means of ensuring that you, and not the Court, determine how your estate is distributed to your heirs and loved ones. If you die without having executed a valid Will (referred to as dying "intestate"), the laws of your State of residence will govern how your assets are distributed. To maintain control of how your assets will be distributed and to safeguard one's legacy, one must have a valid Will in place. A Will may also provide for a Guardian or Guardians for a minor child or children should a tragedy befall the parent(s) of such child or children. That is why executing a Will is so important for anyone with a young child or children.
The final essential components of a comprehensive Estate Plan are the Health Care Proxy and Living Will. Taken together, these two documents provide peace-of-mind in the here-and-now, so that if sometime in the future you are unable to make your own health care decisions due to incapacity, disability or incompetence, a trusted relative or friend may make these critical decisions on your behalf. Having a valid Health Care Proxy in place at the appropriate time can be the difference between life and death, while having a Living Will ensures that your wishes regarding the type of life-prolonging medical treatment you wish to receive under certain dire health circumstances are followed and respected.
