Planning Potpourri

Gift Tax Blues: So you filed a gift tax return to report the zillion dollar zeroed out GRAT (say the gift value was a buck so you could report it). Good move (even better move to make the annuity payments on a timely basis!). Your CPA attached so many documents to meet the adequate disclosure rules that a fork lift was used to file the return with the IRS. Good move. But as Charlie Tuna knows not every Tuna gets to be Starkist and toll the statute of limitations (the time period when the IRS can assess a gift tax). Did you report all your charitable gifts? According to some commentators the tax Regulations suggest that the gift tax return charitable deduction requires donations be reported. What if you don’t? Code Section 6501(e) says that if you don’t report more than 25% of your gifts the statute of limitations on the entire return is extended from 3 to 6 years. So the IRS might be given 6 years instead of 3 to bond with you over the gift tax return you filed reporting a zillion dollar GRAT. Avoid this risk by fully reporting gift charitable deductions.

Care Bear: Everyone thinks of their attorney, insurance agent, and CPA when thinking of their estate planning team. But many folks need a bigger cast to make the playoffs. Effective planning may not be achieved, if you’re on in years, have a significant health issue, or don’t have close reliable family members. More is needed. In many instances adding a care manager (RN, social worker, geriatric consultant or similar professional) to your team can be the key to your security. Helping you better present and explain health issues to those you must interact with, even direct consultation with key family members, can be an important role for the care manager to fulfill. A care manager describing the physical and psychological implications of your health status to others on your estate planning team can be invaluable in assuring that documents and planning are tailored to best server your evolving needs. The care manager can help develop a plan for your care for the future, and help your estate planners craft the mechanisms to assure that the plan will be implemented.

 2010 Trusts: If you signed a trust in 2010 but before the 2010 Tax Act was passed (and understood!) call your estate planner and confirm what must be done, if anything, to be sure your trust has the desired GST status. Planners tried to anticipate the unknown tax law in lots of creative ways and some of these require post-2010 Tax Act actions to get the result you want.

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