Kenneth Vercammen, Esq is Chair of the ABA Elder Law Committee and presents seminars to attorneys and the public on Wills, Probate and other legal topics related to Estate Planning and Elder law. He is author of the ABA's book "Wills and Estate Administration. Kenneth Vercammen is a Central Jersey trial attorney who has published 130 articles in national and New Jersey publications. He was awarded the NJ State State Bar GP Solo Practitioner of the Year. He was a speaker at the recent ABA Annual Meeting attended by 10,000 attorneys and professionals.
Kenneth Vercammen & Associates, P.C.
2053 Woodbridge Avenue - Edison, NJ 08817
(732) 572-0500
http://www.njlaws.com/

Saturday, April 09, 2016

Frequently Asked Questions on Gift Taxes

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Frequently Asked Questions on Gift Taxes

Who pays the gift tax?

The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.

What is considered a gift?

Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.

What can be excluded from gifts?

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.
  1. Gifts that are not more than the annual exclusion for the calendar year.
  2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).
  3. Gifts to your spouse.
  4. Gifts to a political organization for its use.
In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.

May I deduct gifts on my income tax return?

Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions). If you are not sure whether the gift tax or the estate tax applies to your situation, refer to Publication 559, Survivors, Executors, and Administrators.

How many annual exclusions are available?

The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. The annual exclusion for 2014, 2015, and 2016 is $14,000.

What if my spouse and I want to give away property that we own together?

You are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002-2005) or $24,000 (2006-2008), $26,000 (2009-2012) and $28,000 on or after January 1, 2013 (including 2014, 2015, and 2016).

What other information do I need to include with the return?

Refer to Form 709 (PDF), 709 Instructions and Publication 559. Among other items listed:
  1. Copies of appraisals.
  2. Copies of relevant documents regarding the transfer.
  3. Documentation of any unusual items shown on the return (partially-gifted assets, other items relevant to the transfer(s)).

What is "Fair Market Value?"

Fair Market Value is defined as: "The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent's gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate." Regulation §20.2031-1.

Whom should I hire to represent me and prepare and file the return?

The Internal Revenue Service cannot make recommendations about specific individuals, but there are several factors to consider:
  1. How complex is the transfer?
  2. How large is the transfer?
  3. Do I need an attorney, CPA, Enrolled Agent (EA) or other professional(s)?
For most simple, small transfers (less than the annual exclusion amount) you may not need the services of a professional.

However, if the transfer is large or complicated or both, then these actions should be considered; It is a good idea to discuss the matter with several attorneys and CPAs or EAs. Ask about how much experience they have had and ask for referrals. This process should be similar to locating a good physician. Locate other individuals that have had similar experiences and ask for recommendations. Finally, after the individual(s) are employed and begin to work on transfer matters, make sure the lines of communication remain open so that there are no surprises.

Finally, people who make gifts as a part of their overall estate and financial plan often engage the services of both attorneys and CPAs, EAs and other professionals. The attorney usually handles wills, trusts and transfer documents that are involved and reviews the impact of documents on the gift tax return and overall plan. The CPA or EA often handles the actual return preparation and some representation of the donor in matters with the IRS. However, some attorneys handle all of the work. CPAs or EAs may also handle most of the work, but cannot take care of wills, trusts, deeds and other matters where a law license is required. In addition, other professionals (such as appraisers, surveyors, financial advisors and others) may need to be engaged during this time

Do I have to talk to the IRS during an examination?

You do not have to be present during an examination unless IRS representatives need to ask specific questions. Although you may represent yourself during an examination, most donors prefer that the professional(s) they have employed handle this phase of the examination. You may delegate authority for this by executing Form 2848 "Power of Attorney."

What if I disagree with the examination proposals?

You have many rights and avenues of appeal if you disagree with any proposals made by the IRS.  See Publications 1 and 5 (PDF) for an explanation of these options.

What if I sell property that has been given to me?

The general rule is that your basis in the property is the same as the basis of the donor. For example, if you were given stock that the donor had purchased for $10 per share (and that was his/her basis), and you later sold it for $100 per share, you would pay income tax on a gain of $90 per share. (Note: The rules are different for property acquired from an estate).
Most information for this page came from the Internal Revenue Code: Chapter 12--Gift Tax (generally Internal Revenue Code §2501 and following, related regulations and other sources)

Can a married same sex donor claim the gift tax marital deduction for a transfer to his or her spouse?

For federal tax purposes, the terms “spouse,” “husband,” and “wife” includes individuals of the same sex who were lawfully married under the laws of a state whose laws authorize the marriage of two individuals of the same sex and who remain married.  Also, the Service will recognize a marriage of individuals of the same sex that was validly created under the laws of the state of celebration even if the married couple resides in a state that does not recognize the validity of same-sex marriages.
However, the terms “spouse,” “husband and wife,” “husband,” and “wife” do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term “marriage” does not include such formal relationships.
Gifts to your spouse are eligible for the marital deduction.
For further information, including the timeframes regarding filing claims or amended returns, see Revenue Ruling 2013-17.
Revenue Ruling 2013-17, along with updated Frequently Asked Questions for same-sex couples and updated FAQs for registered domestic partners and individuals in civil unions, are available today on IRS.gov. See also Publication 555, Community Property.

How do I Secure Gift Tax Account Information?

Get Gift Tax Account Information For Unknown Years

When the tax periods for filed Forms 709 are unknown, a written request may be made to the IRS to secure that information, if any. The written request should include language requesting a determination of all gift tax returns filed for the taxpayer between certain years. Keep in mind that data before 2000 is not available online and may take up to 30 days for a response. Using the “Chart for all other transcripts” on Page 2 of Form 4506-T, either mail or fax your written request to the appropriate IRS office. The signature requirements and required documentation are identical to the requirements for Form 4506-T. No fee applies.
  • Once specific years are known, use Form 4506-T to request an account transcript for each tax period, or Form 4506 to request a copy of a specific gift tax return. Follow instructions below.

Get Gift Tax Account Information Using Form 4506-T or Transcript Delivery Service (TDS)

Form 4506-T, Request for Transcript of Tax Return, is used to request an account transcript for tax periods where a tax return is known to have been filed.  
  • Complete Form 4506-T paying special attention to Line 6. Check the box at Line 6b of Form 4506-T to request an account transcript of specific years you indicate on Line 9. No other option listed under Line 6 on Form 4506-T is available for gift tax.
  • Using the “Chart for all other transcripts” on Page 2 of Form 4506-T, either mail or fax your completed request to the appropriate IRS office. Prior to submitting your request, please note the requirements for signatures of representatives and documentation necessary to be submitted for deceased taxpayers reflected in the instructions on Page 2 of Form
    4506-T.
Another option is for Circular 230 tax professionals to register at IRS.gov to access account transcripts for estate and gift tax matters using the Transcript Delivery System (TDS). TDS can only be used for requests where the tax year is known; it will not assist in determining whether any gift tax returns have been filed.

Get a Copy of a Filed Form 709 Using Form 4506

Form 4506, Request for Copy of Tax Return, is used to request a copy of a specific previously filed tax return with all attachments. A $50.00 fee per tax return applies.
  • Complete the Form 4506 with the taxpayer’s current information. Please be specific with the years in which copies are requested.
  • Using the “Chart for all other transcripts” on Page 2 of Form 4506, mail your completed request to the appropriate IRS office. Prior to submitting your request, please note the requirements for signatures of representatives and documentation necessary to be submitted for deceased taxpayers reflected in the instructions on Page 2 of Form 4506.
  • Make your  check or money order  payable to the “United States Treasury”. Enter the SSN and "Form 4506 Request" on the check or money order.
  • Allow 75 calendar days for the IRS to process the request for a copy of a tax return.

If you have suggestions or comments (or suggested FAQs) for the Estate and Gift Tax website, please contact us: CONTACT ESTATE AND GIFT TAX.  We will not be able to respond to your email, but will consider it when making improvements or additions to this site.
source: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes

Estate and Gift Tax 2016

What's New - Estate and Gift Tax

Consistent Basis Reporting Between Estate and Person Acquiring Property from Decedent

On March 23, 2016, the IRS issued Notice 2016-27, which provides that statements required under section 6035, regarding the basis of property distributed from the estate of a decedent, need not be filed or furnished until June 30, 2016. Other notices had previously delayed the filing of such statements. See Notice 2016-19 (PDF), Notice 2015-57 (PDF), and temporary regulations, T.D. 9757.
In addition, proposed regulations, REG-127923-15, provide guidance regarding the requirement that a recipient's basis in certain property acquired from a decedent be consistent with the value of the property as finally determined for Federal estate tax purposes.
The statements noted above are required by H.R. 3236, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, which was signed into law on July 31, 2015.
The law created Section 6035, which requires the executor of an estate required to file an estate tax return to also provide certain statements to the IRS and to beneficiaries receiving inherited property. This also applies to 6018(b) filers.
The law also adds Section 1014(f), which requires consistent basis reporting between an estate and the beneficiary receiving certain property from a decedent.
These changes apply to any estate tax return filed, and to property with respect to which an estate tax return is filed, after July 31, 2015.

Form 706 Changes

The basic exclusion amount (or applicable exclusion amount in years prior to 2011) is $1,500,000 (2004-2005), $2,000,000 (2006-2008), $3,500,000 (2009), $5,000,000 (2010-2011), $5,120,000 (2012), $5,250,000 (2013), $5,340,000 (2014), $5,430,000 (2015), and $5,450,000 (2016).
For Estate Tax returns after 12/31/1976, Line 4 of Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, (PDF) lists the cumulative amount of adjusted taxable gifts within the meaning of IRC section 2503. The computation of gift tax payable (Line 7 of Form 706) uses the IRC section 2001(c) rate schedule in effect as of the date of the decedent's death, rather than the actual amount of gift taxes paid with respect to the gifts.
With the top bracket tax rates decreasing from 55 percent (in 2001) to 35 percent (in 2010), and then increasing to 40 percent (in 2013), the IRS has encountered situations where gift taxes paid were greater than the tax calculated using the rate in effect at the date of death.
It appears that some Form 706 software used by practitioners require a manual input of the gift tax payable line. Some preparers are reporting gift taxes actually paid rather than calculating the gift tax payable under date of death rates. These errors result in underpayment of estate tax due. Cases with this issue will involve estates where large gifts were made during life and at a time when tax rates were higher than at date of death. (Posted 6-5-06)
Beginning January 1, 2011, estates of decedents survived by a spouse may elect to pass any of the decedent’s unused exclusion to the surviving spouse. This election is made on a timely filed estate tax return for the decedent with a surviving spouse. Note that simplified valuation provisions apply for those estates without a filing requirement absent the portability election. See the Instructions to Form 706 for additional information.

Exclusions

  • The annual exclusion for gifts is $11,000 (2004-2005), $12,000 (2006-2008), $13,000 (2009-2012) and $14,000 (2013-2016).
  • The basic exclusion amount (or applicable exclusion amount in years prior to 2011) for gifts is $1,000,000 (2010), $5,000,000 (2011), $5,120,000 (2012), $5,250,000 (2013), $5,340,000 (2014), $5,430,000 (2015), and $5,450,000 (2016).

Federal Transfer Certificates (International)

For more information about securing a transfer certificate, please see:

Form 706 Filing Instructions

The instructions (which include rate schedules) may be found on the Forms and Publications - Estate and Gift Tax.
There are few significant changes to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. The one change that will impact all filers is the elimination of the allowable State Death Tax Credit; for decedents dying in 2005 and later years, it is a deduction.
If you are filing a request for an extension of time to file an estate or gift tax return, remember that the request must go to the Cincinnati Service Center, even if you file your income or other tax returns elsewhere.
The instructions to Form 706 contain detailed guidance on completing the form and the required documentation to include with estate tax returns being filed solely to elect portability.
source; https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Whats-New-Estate-and-Gift-Tax

Wednesday, April 06, 2016

Metuchen Library Wills, Estate Planning & Probate Seminar April 11 at 7:00pm Free community program

Wills, Estate Planning & Probate Seminar
April 11 at 7:00pm Free community program
480 Middlesex Ave, Metuchen, NJ 08840

WILLS & ESTATE ADMINISTRATION-PROTECT YOUR
FAMILY AND MAKE PLANNING EASY

SPEAKER: Kenneth Vercammen, Esq. Edison, NJ (Author-Answers to Questions About Probate)

         The NJ Probate Law made a number of substantial changes in Probate and the administration of estates and trusts in New Jersey.
Main Topics:
1. The New Probate Law and preparation of Wills
2. 2016 changes in Federal Estate and Gift Tax
3. NJ Estate Tax on estates over $675,000
4. Power of Attorney
5. Living Will
6. Administering the Estate/ Probate/Surrogate
7. Questions and Answer

 COMPLIMENTARY MATERIAL: Brochures on Wills, "Answers to
Questions about Probate" and Administration of an Estate, Power of
Attorney, Living Wills, Real Estate Sales for Seniors, and Trusts.

Metuchen Library 480 Middlesex Ave, Metuchen, NJ 08840
You do not have to be a Metuchen resident to attend but registration requested
(732) 632-8526
http://www.metuchenlibrary.org
https://www.facebook.com/events/186548045057052/

    Free Will Seminars and Speakers Bureau for Groups
         10 years ago the AARP Network Attorneys of the Edison/Metuchen/Woodbridge area several years ago established a community Speakers Bureau to provide educational programs to AARP and senior clubs, Unions and Middlesex County companies. Now, Ken Vercammen, Esq. and volunteer attorneys of the Middlesex County Estate Planning Council have provided Legal Rights Seminars to hundreds of seniors, business owners and their employees, unions, clubs and non-profit groups. For additional information on the Legal Seminars, contact our Coordinator, Kenneth Vercammen's law office at (732) 572-0500, email VercammenLaw@njlaws.com 
Details on free programs available

These quality daytime educational programs will educate and even entertain. Clubs and companies are invited to schedule a free seminar. The following Seminars are now available:
1. WILLS & ESTATE ADMINISTRATION-PROTECT YOUR FAMILY AND
MAKE PLANNING EASY
2. POWER OF ATTORNEY to permit family to pay your bills if you are temporarily disabled and permit doctors to talk with family
       All instructors are licensed attorneys who have been in practice at least 25 years. All instructors are members of the American Bar Association, New Jersey
State Bar Association, and Middlesex County Bar Association. All programs include free written materials.

       You don't have to be wealthy or near death to do some thinking about a Will. Here is your opportunity to listen to an experienced attorney who will discuss how to distribute your property as you wish and avoid many rigid provisions of state law.

      Topics discussed include: Who needs a Will?; What if you die without a Will (intestacy)?; Mechanics of a Will; "Living Will"; Powers of Attorney; Selecting an executor, trustee, and guardian; Proper Will execution; Inheritance Taxes, Estate Taxes $14,000 annual gift tax exclusion,  Bequests to charity, Why you need a "Self-Proving" Will and  Estate Administration/ Probate.

       Sample materials: Hand-outs on Wills, Living Wills/Medical Advance Directive, Power of Attorney, Probate and Administration of an Estate, Real Estate, Working with your Attorney, Consumers Guide to New Jersey Laws, and Senior Citizen Rights.

SPEAKERS BUREAU

At the request of senior citizen groups, unions, and Middlesex County companies and organizations, the " Speakers Bureau " is a service designed to educate citizens about how laws affect their lives and how the judicial system operates. We have attorneys available to speak to businesspersons, educational, civic and social organizations on a wide range of topics during business hours.

In today's complex world, few people can function successfully and safely without competent legal advice. In order to insure your estate plans are legally set up, you need to know exactly where you stand so that you can avoid possibly catastrophic mistakes impacting both you and your family.

About the speaker: Kenneth A. Vercammen is a trial attorney in Edison, NJ. We is the author of the American Bar Association’s book “Wills and Estate Administration”
He is co-chair of the ABA Probate & Estate Planning Law Committee of the American Bar Association Solo Small Firm Division.  He is a speaker for the NJ State Bar Association at the annual Nuts & Bolts of Elder Law & Estate Administration program.
He was Editor of the ABA Estate Planning Probate Committee Newsletter. Mr. Vercammen has published over 150 legal articles in national and New Jersey publications on litigation, elder law, probate and trial topics. He is a highly regarded lecturer on litigation and probate law for the American Bar Association, NJ ICLE, New Jersey State Bar Association and Middlesex County Bar Association. His articles have been published in noted publications included New Jersey Law Journal, ABA Law Practice Management Magazine, and New Jersey Lawyer. He established the NJlaws website www.njlaws.com which includes many articles on Estate Planning, Probate and Wills. He is a member of the AARP and often lectures to groups on the importance of an up to date Will, Power of Attorney and Living Will.


KENNETH  VERCAMMEN & ASSOCIATES, PC
ATTORNEY AT LAW
2053 Woodbridge Ave.
Edison, NJ 08817
(Phone) 732-572-0500
 (Fax)    732-572-0030
www.njlaws.com
www.CentralJerseyElderLaw.com


Saturday, March 12, 2016

Wills & Power of Attorney Seminar South Brunswick Library March 21, 2016

South Brunswick Library

March 21, 2016 at 7pm

SPEAKER: Kenneth Vercammen, Esq. Edison, NJ
                (Author- Answers to Questions About Probate)

     The NJ Probate Law made a number of substantial changes in Probate and the administration of estates and trusts in New Jersey.
Main Topics:
1. The New Probate Law and preparation of Wills    
2. 2016 changes in Federal Estate and Gift Tax 
3. NJ Inheritance taxes on estates over $675,000
4. Power of Attorney               
5.  Living Will                                  
6.  Administering the Estate/ Probate/Surrogate    
7. Questions and Answer          

             Open to the Public. You do not need to be a South Brunswick resident.
      COMPLIMENTARY MATERIAL: Brochures on Wills, "Answers to Questions about Probate" and Administration of an Estate, Power of Attorney, Living Wills, Real Estate Sales for Seniors, and Trusts.
South Brunswick Library 
110 Kingston Lane        
Monmouth Junction NJ 08852
732-329-4000  x 7637

Can’t attend?  We can email you materials Send email to VercammenLaw@Njlaws.com

FREE WILL SEMINARS AND SPEAKERS BUREAU for community groups
         The AARP Network Attorneys of the Edison/Metuchen/East Brunswick area had established a community Speakers Bureau to provide educational programs to AARP and senior clubs, Unions and Middlesex County companies. During the past year, volunteer attorneys of the Middlesex County Estate Planning Council have provided Legal Rights Seminars to hundreds of seniors, business owners and their employees, unions, clubs and non-profit groups. These quality daytime educational programs will educate and even entertain. Clubs and companies are invited to schedule a free seminar. For other organizations to schedule a Will Seminar, please call Kenneth Vercammen Law Office at (732) 572-0500, email VercammenLaw@njlaws.com

         Kenneth Vercammen is a trial attorney in Edison, NJ. Ken is author of the ABA’s book  Wills and Estate Administration. He is co-chair of the American Bar Association’s Probate & Estate Planning Law Committee of the American Bar Association Solo Small Firm Division.  Ken is a speaker for the NJ State Bar Association at the annual Nuts & Bolts of Elder Law & Estate Administration program.
        
Mr. Vercammen has published over 150 legal articles in national and New Jersey publications on litigation, elder law, probate and trial topics. He is a highly regarded lecturer on litigation and probate law for the American Bar Association, NJ ICLE, New Jersey State Bar Association and Middlesex County Bar Association. His articles have been published in noted publications included New Jersey Law Journal, ABA Law Practice Management Magazine, and New Jersey Lawyer. He established the NJlaws website www.njlaws.com which includes many articles on Estate Planning, Probate and Wills. He is a member of the AARP and often lectures to groups on the importance of an up to date Will, Power of Attorney and Living Will.
KENNETH  VERCAMMEN & ASSOCIATES, PC
ATTORNEY AT LAW
2053 Woodbridge Ave.
Edison, NJ 08817
(Phone) 732-572-0500
 (Fax)    732-572-0030
www.njlaws.com
www.CentralJerseyElderLaw.com