Monday, January 31, 2022

Annual Gift Tax and Estate Tax Exclusions Are Increasing in 2022

The amount you can gift to any one person without filing a gift tax form is increasing to $16,000 in 2022, the first increase since 2018. The federal estate tax exclusion is also climbing to more than $12 million per individual.

The IRS’s announcement that the annual gift exclusion will rise for calendar year 2022 means that any person who gives away $16,000 or less to any one individual (anyone other than their spouse) does not have to report the gift or gifts to the IRS. Any person who gives away more than $16,000 to any one person is required to file Form 709, the gift tax return.

The basic federal estate tax exclusion amount for the estates of decedents dying during calendar year 2022 will be $12,060,000 for individuals and $24,120,000 for couples, up from $11.7 million and $23.4 million for calendar year 2021. 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 more than a total of $12,060,000 million in the past. As a result, under current rules the filing of Form 709 is irrelevant for most people because the vast majority do not have $12,060,000 million to give away. Still, Congress could change the exclusion limit, and the lifetime exclusion is slated to drop in half in 2026, causing some additional estates to be taxable. To stay within the IRS's rules without the bother of filing a gift tax return or the (small) risk of a much lower threshold, consider gifting up to the $16,000 limit to multiple family members or other individuals.

For details from the IRS on many of these and other inflation adjustments to tax benefits, go to: https://www.irs.gov/pub/irs-drop/rp-21-45.pdf

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Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

Wednesday, January 12, 2022

Who Makes Health Care Decisions If You Can't?

Being able to make health care decisions for ourselves is so important to us, but what happens if you become incapacitated and are unable to voice your opinion? If you don’t have a health care proxy or guardian in place, state law chooses who can make those decisions.

In an emergency, medical providers can take measures to keep us alive, but once the emergency has passed, the medical providers will look for someone to make the important medical decisions. If you are unable to make your own health care decisions, either temporarily or permanently, and you have nothing in place to allow someone else to make those decisions for you, then most state laws dictate who has the right to act on your behalf.

The list of surrogates who can make medical decisions for you usually goes in order of priority, starting with your spouse and adult children. Parents, siblings, grandchildren, and close friends may also be surrogates. These may not be the people you want making decisions for you, and not having your wishes spelled out can cause dissension among your family and confusion for medical professionals.

A few states (Massachusetts, Missouri, Nebraska, and New Jersey) do not have laws dictating who can act in an incapacitated person’s place. In those states, your family may have to go to court to get a guardian appointed. Even in states with surrogate laws, family members on the surrogate list may disagree over treatment and end up in court, asking the court to appoint a guardian. Guardianship is a legal relationship between a competent adult (the "guardian") and a person who because of incapacity is no longer able to take care of his or her own affairs (the "ward"). The guardian can be authorized to make legal, financial, and health care decisions for the ward. The guardianship process is expensive, time consuming and very restrictive, so it is almost always a last resort.

The best way to avoid the state choosing who acts for you or the difficulty of guardianship is to have a health care proxy (or health care power of attorney) in place. A health care proxy is a document that allows you to appoint someone you trust to act as your agent for medical decisions. By executing a health care proxy, you are authorizing your agent to carry out your wishes. Doctors and other medical professionals will defer to the person named in the document to act on your behalf.

Contact your attorney to draw up a health care proxy.