Use the Exclusion or Lose It

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November 2, 2020Estate Planning, Legal Education

Currently, each person can give $11.58 million during life or at death. However, that amount will be cut in half by January 1, 2026. It may go down even sooner. Read on to learn why and how you should use it before you lose it.

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Allison Manning

Latest posts by Allison Manning (see all)

Updating Your Plan: Beneficiary Designations - February 1, 2021
Updating Your Plan: Powers of Attorney - January 18, 2021
How Will You Pay for Long-Term Care? - December 28, 2020

In this day and age it is very rewarding and comforting to make a major decision for the long-term security of your family. Over 14 years ago we decided upon the Kinghorn Heritage Family to create our family trust. Through the years it became very evident that this decision was a major and necessary step for a secure future in an ever-changing legal climate. The Kinghorn Family has been a close friend that has always been there to serve our family.

Gary and Velma T. Client Review September 8, 2020

We appreciate the programs presented that keep us informed and updated in today’s internet and financial world. It is a comfort to know that you are only a phone call away if questions arise.

Robert and JoAnn H. Client Review September 8, 2020

We enjoyed meeting all the behind-the-scenes people on your team and want to thank you for the peace of mind you’ve given us and our children.

M.D. Client Reveiw September 8, 2020

What an amazing law firm, where the people I refer to them are handled as good friends, family, and confidantes.

Eileen E. Client Review September 8, 2020

Thank you Allison and Kinghorn Law family for everything you have done to make our end-of-life decisions a reality and stress free. When we think of Kinghorn: trust, peace of mind, professional. Outstanding Law Firm!

Ken and Cheryl V. Client Review September 8, 2020

Very satisfied with your company and staff.

Robert and Britt O. Client Review September 8, 2020

For current Estate and Gift tax figures, click here.
Annual Gift Tax Exclusion:
Technique to allow gifts without the imposition of estate or gift taxes and without using lifetime exclusion.
Children's or Grandchildren's Irrevocable Education Trust:
A Trust used by parents and grandparents for a child's or grandchild's education.
Charitable Remainder Interest Trust:
A trust whereby donors transfer property to a charitable Trust and retain an income stream from the property transferred. The donor receives a charitable contribution income tax deduction, and avoids a capital gains tax on transferred property.
Family Limited Partnership:
An entity used to:

Provide asset protection for partnership property from the creditors of a partner

Provide protection for limited partners from creditors

Enable gifts to children and parents maintaining management control

Reduce transfer tax value of property

Federal Estate Tax:
A tax levied by the federal government upon the estate of a deceased person. The federal government gives certain exclusions and deductions and then taxes everything above a set level.
Fractional Interest Gift:
Allows a donor to transfer partial interests in real property to donees and obtain fractional interest discounts for estate and gift tax purposes.
Funding:
Is the process that entails transferring assets you own as an individual into the name of your Trust.
Generation Skipping Tax:
This is a tax levied on assets that are given to individuals who are more than one generation away from the donor. An example would be a grandparent giving an asset to a grandchild either during the grandparent’s life or at death. Effective use of generation-skipping exemption allows the assets to avoid estate tax inclusion in the child’s taxable estate.
Guardianship/Conservatorship:
Is a court-supervised proceeding which names an individual or entity to manage the affairs of an incapacitated person. A guardianship may also include the duty to care for the incapacitated person.
Health Care Power of Attorney:
Instrument used to allow a person you name to make health care decisions for you should you become incapacitated.
Irrevocable Life Insurance Trust:
A Trust used to prevent estate taxes on insurance proceeds received at the death of an insured.
Joint Tenancy:
When property is held in joint tenancy with rights of survivorship by two or more people, upon the death of one of the owners, all of his or her interest in the property is transferred immediately to the surviving owners.
Living Will:
Sometimes called a physician’s directive, is a document in which you give directions for life sustaining treatment should you become unable to communicate your wishes. Some states have combined this into the advanced health care directive.
Pour Over Will:
Is used first to name a guardian for minor children. Second, it protects against intestacy in the event any assets have not been transferred into the Trust at the death of the Trustor/Owner. Its function is to “pour” any assets left out of the Trust into it so they are ultimately distributed according to the terms of the Trust.
Private Foundation:
An entity used by higher-wealth families to receive charitable income, gift, or estate tax deduction while allowing the family to retain some control over the assets in the foundation.
Probate:
Is the court procedure used to change title to assets from the name of an individual who has passed away into the name of the beneficiaries. It is also where all creditors of a decedent file claims to collect their debts and where interested parties can “contest” the Will. An individual who passes away with a Will or no estate plan will go through this process.
Property Power of Attorney:
Instrument used to allow an agent you name to manage your property.
Revocable Living Trust:
A device used to avoid probate and provide management of your property, both during life and after death.
State Estate or Inheritance Tax
A state estate tax is a tax levied by a state government upon the estate of a deceased person. It is levied in much the same way as the federal estate tax. A state inheritance tax is a tax levied by a state government that varies depending upon the relationship of the inheritor to the deceased person. Nearly half the states have a separate state estate or inheritance tax which kicks in at a lower level than that of the federal government.
Step-up in Basis:
A step-up — or step-down — in basis is an adjustment for income tax purposes to an asset's fair market value at the date of the death of the owner of the asset. For example, if you bought a share of stock for $100 that increased in value to $500 at the time of your death, your tax basis was $100 but increases to $500 at the time of death.
Trustee:
The person or entity in charge of the assets in a Trust. While you are alive, you may act as Trustee. For married couples, either one or both spouses may act as Trustee or co-Trustees. The successor Trustee is an individual or corporation fiduciary whom you designate to be in charge of your Trust in the event of disability or upon death.
Will:
A legally enforceable declaration of how a person wishes his or her property to be distributed after death. In a Will, a person can also recommend a guardian for his or her children.

Chandler V. Client Review September 8, 2020

Estate Planning attorneys are sometimes criticized for offering needlessly complex, 'canned' solutions. This never has been the case with Kevin. The documents he created were comprehensive when appropriate and surprisingly simple when suitable. In every case, they were individually crafted to meet our unique needs.

Rich D. Client Review September 8, 2020

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Annual Gift Tax Exclusion:

Children's or Grandchildren's Irrevocable Education Trust:

Charitable Remainder Interest Trust:

Family Limited Partnership:

Federal Estate Tax:

Fractional Interest Gift:

Funding:

Generation Skipping Tax:

Guardianship/Conservatorship:

Health Care Power of Attorney:

Irrevocable Life Insurance Trust:

Joint Tenancy:

Living Will:

Pour Over Will:

Private Foundation:

Probate:

Property Power of Attorney:

Revocable Living Trust:

State Estate or Inheritance Tax

Step-up in Basis:

Trustee:

Will:

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