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Are Holiday Gifts Subject to Federal Gift Tax?

Web Admin - Thursday, December 21, 2017
Barrington estate planning and tax lawyerThe holiday season is a time of giving, but as you celebrate this time with your family and friends, you may need to be aware of a certain omnipresent aspect of American life: taxes. While it will likely only apply to people who earn a high income or have large financial assets, it is still a good idea to understand the Federal gift tax and the impact it may have on the gifts you give and your estate.

What Is the Gift Tax?

When a person transfers property to someone else without receiving something of equal value in return, this is considered a gift by the Internal Revenue Service (IRS), and it may be subject to gift taxes. The person who gives the gift to someone else (known as the donor) is responsible for filing tax forms for the gift and paying the gift tax.

Gift Tax Exclusions

Certain types of gifts are excluded from taxes, including gifts given to one’s spouse, gifts given to a political organization, and tuition or medical expenses paid on someone’s behalf. For other gifts, an annual exclusion threshold applies. That threshold is $14,000 for 2017, and the threshold for 2018 will be $15,000.

The annual exclusion applies to gifts given to an individual person, so if a donor gives multiple people gifts of less than $14,000 each, they will not owe any gift taxes. For spouses, the exclusion is doubled, so a married couple can give a gift of up to $28,000 without owing gift taxes.

In addition to the annual exclusion, everyone is entitled to a lifetime exemption known as the basic tax exemption. For people who die in 2017, that exemption is $5,490,000, and in 2018, the exemption will increase to $5,600,000. The taxable amount of gifts greater than the annual gift tax exclusion threshold can be applied toward this lifetime exemption, and taxes will not be owed on these gifts. However, any amount of the basic exemption used during one’s lifetime will be deducted from the amount of their estate that is exempt from estate taxes upon their death.

Contact a Schaumburg Estate Planning Attorney

Determining how gift taxes will affect your finances and your estate can be a complex undertaking. If you want to make sure you are protecting yourself and providing for your family’s financial security, the skilled attorneys at Drost, Gilbert, Andrew & Apicella, LLC can work with you to ensure you have met your legal requirements and have the financial resources in place that your family needs. Contact our Rolling Meadows estate planning attorneys today at 847-934-6000 to schedule a personalized consultation.

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.



Source:
https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes

Revised Uniform Fiduciary Access to Digital Assets Act: Illinois Provides Guidance on What Happens to Your Digital Assets After Death

Web Admin - Thursday, September 15, 2016
Barrington IL estate planning lawyersDigital assets, such as email accounts, online banking accounts, phone and computer applications, photos stored in cloud accounts, and digital music have been a legal thorn in the sides of families and estate executors. Many loved ones simply overlooked or failed to consider the importance of granting access to these digital accounts in their estate plans, and their executors were left with no form of legal recourse when it came to gaining that access. Others permitted access but failed to keep their information updated, or had their accounts closed upon death. In these instances, too, executors were denied access.

Sadly, this lack of access created numerous problems for estate executors. Final bills went unpaid. Precious family photos were lost. Wishes could not be fulfilled. Illinois has finally stepped in and provide a provision for estate executors. They may now access digital assets, with or without explicit permission, giving them the ability to close out the estate in a timely and efficient manner. However, this new law also has its drawbacks for the deceased. Understand what the Revised Uniform Fiduciary Access to Digital Assets Act means for your estate, and learn what precautions you may want to take.

Why an Executor May Need Access to Your Digital Assets

The executor of your estate – generally a person who is close to you (an adult child, a spouse, a parent, etc.) – is tasked with wrapping up your affairs upon your death. They take care of your final expenses, notify any potential beneficiaries, obtain death certificates, sell any property that is not going to be distributed, and close up all other matters of your estate. At first glance, access to your digital accounts may not seem necessary for completing these tasks, but there may be some “loose ends” that they may need to tie up online. For example, your executor may need to:

- Pay your bills online,

- Obtain phone numbers and/or addresses stored in online accounts,

- Make administrative changes to a blog or social media account,

- Terminate subscriptions that may continue to incur costs,

- Pay or manage insurance premiums, and

- Access online storage accounts to print or transfer important photographs.

How the Act Ensures Executors Have Access to Your Accounts

There are two ways that you can provide easy access to your online digital accounts. You can either use the online tool, which gives you a way to disclose (or not disclose) important account information, or you can provide instructions within your will. You can prohibit access to accounts that you do not wish anyone to access, and you can leave final wishes on how the information will be used. Your executor does not have an “all access” pass. The things they do should still be in your best interest, and they do not receive expanded user rights under the Revised Uniform Fiduciary Access to Digital Assets.

If you do not disclose information to an account, your executor can press the account custodian for access. This is not the optimal option, however. The custodian can grant only partial access, which may leave important assets out of your executor’s reach. Alternatively, your executor may be granted access to an account that you wanted to remain private or undisclosed. For this reason, every person should consider including a digital asset provision in their estate plan. Contact an experienced estate planning lawyer to ensure yours is properly and effectively executed.

Contact Our Barrington, Illinois Estate Planning Lawyers 

When it comes to crafting an estate plan, there are many considerations to make. Your digital assets are just one. The experienced Barrington, Illinois estate planning lawyers at Drost, Gilbert, Andrew & Apicella, LLC provide the knowledge, experience, and insight you need to ensure your wishes are carried out within the guidelines of the law. Get started today by calling 847-934-6000 to schedule your consultation.

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.


Source:
http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3728&ChapterID=60






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