Billy and Bonnie are working on keeping taxes to a minimum for their family when they inherit Billy and Bonnie’s leftover money and property after their deaths. 

‘Stepped up basis’ means that if Billy and Bonnie’s son, Junior, sells his inherited shares of Happy-Cola stock Billy purchased around the 1950s after Billy’s death, Junior will save capital gains tax. 

In last week’s column, we calculated what Billy would have to pay at least $20,000 in federal and Illinois capital gains taxes if he sold his Happy-Cola holding, because he invested only $1,000 buying his shares in 1952.  They have been an amazing investment.  They are now worth $101,000. 

The $100,000 difference between Billy’s purchase price (his investment or ‘basis’ in the stock) and his sale price is Billy’s profit or ‘capital gain.’ 

But let’s suppose that Billy died today and had left the stock to his son, Junior.  Junior’s investment in the stock would be considered to be whatever the fair market value of the stock was at the date of Billy’s death.  So $101,000 would be Junior’s so-called “stepped up” basis. 

Thus, when Junior sells the stock, he should save at least $20,000 in capital gains tax – and potentially piles of paperwork. 

For advice about “using death” to possibly reduce taxes for your family, call us for an estate planning appointment at (815) 436-1996.

©2014 Gruber Law Office, Ltd.

Billy and Bonnie are working on keeping taxes to a minimum for their family when they inherit Billy and Bonnie’s leftover money and property after their deaths. Although surprised when they added everything up, Billy and Bonnie are millionaires.

Sadly, they are not multi-millionaires, and it is unlikely they will ever have over $2 million. Happily, though, that means they do not have to worry about their family paying estate taxes to Illinois or the U.S. government after their deaths.

Billy wants to save any unnecessary income taxes for his family. And there are certain taxes you can ‘avoid’ by dying. Since he knows he must die eventually, he sees no problem in planning to maximize the advantage for his family.

To understand it, we must calculate the taxes he would pay if he sold all of his Happy-Cola stock shares that he bought in the 1950s for $1,000. Awesomely, after stock splits and price increases, they are now worth about $101,000.

If Billy sells, he will be taxed on $100,000 of profit – capital gain in tax lingo. His capital gains tax bill would be at least $20,000, 15% to the feds and 5% to Illinois.

If he leaves the stock to his son after death, Junior would be able to completely avoid the capital gains tax because of ‘stepped up basis’ rules.

Stepped up basis is not easy to explain in a sentence or two, so will try to do that with our whole column next week. For advice about minimizing estate and related taxes for your family after your death, please call us for an estate planning appointment at (815) 436-1996.

©2014 Gruber Law Office, Ltd.

Billy and Bonnie have been planning for the future of their family by setting up living trusts that could both save costs after their deaths and provide for easier financial management in the event they become incapacitated before their deaths. 

Those two things are good, of course, but Bonnie and Billy have really been looking forward to coming up with planning how to leave their remaining assets after their deaths.  “That’s a fun thing to think about, really, because it’s about what good you can do with your money just when your family is having to live without being able to see you anymore,” Bonnie explains.

Their own children are doing very well for themselves; she and Billy already helped them through college, and they are employed, settled and happy. Billy and Bonnie plan to leave their adult children half of their estate.

The other half is even more fun to plan.  They will create trusts for their grandchildren’s education, where it will also be protected from their grandchildren’s creditors.  Then, half of each grandchild’s leftover trust money will be given to him at age 26, with the other half to be given to him at age 35, “when each one will be old enough to know to invest it wisely, rather than simply spend it,” says Billy.

To begin learning about how you make positive plans for your own family, call our office at (815) 436-1996 for an estate planning appointment with our office.   

© 2014 Gruber Law Office, Ltd.  

For her birthday present, Billy had promised his wife Bonnie that they would plan to take care of their family through an estate plan.  And Billy does not intend to forget about providing easier ways to care for each other while they are doing planning to benefit everyone else.

After talking over the differences between a Will-based plan and plan based on living trusts with his attorney, Billy has realized that with a living trust, he can have peace of mind about what happens if he or Bonnie become disabled.  If they handle the trust properly while they are able, the trust will be the most reliable way to avoid having to go to probate court.

For example, if he were to become incapacitated, his trust would allow Bonnie to take over paying bills and the investment decisions for his trust assets without needing to be appointed his guardian in court.

On the other hand, if Bonnie did not want to be in charge of managing the money, she could resign as trustee.  Then the next person on Billy’s trust’s list would take over those responsibilities. 

That gives her the option, depending on Billy’s condition, to concentrate more fully on what is most important to her, being with and taking care of Billy.

To begin learning about how estate planning can make some things easier for you or your family in the event of incapacity, call our office at (815) 436-1996 for an estate planning appointment with one of our estate planning attorneys.   

© 2014 Gruber Law Office, Ltd.  

Billy’s special gift this year for his wife, Bonnie, was an estate plan.  That means he has decided to plan for the possibility that either or both of them become disabled and for what happens after either or both of their deaths. 

He and Bonnie will need to work together to decide what will work best for them.  First, they need to figure out how much they actually have after 40 years of hard work.

To do this, they need to check their bank, investment and retirement statements, plus they need to look at their life insurance policies, list the stocks they own and estimate the value of their house, vehicles and any other property they own.  When they add up the amounts, they need to include the death benefit amount on the life insurance policies.

Billy and Bonnie were surprised to learn that they are actually millionaires, technically speaking.  When they add in Billy’s $350,000 life insurance policy and the value of their 40-year home, they have over one million dollars worth of assets. 

However they are well under the $5 million plus federal government estate tax exemption and are even under the $4 million Illinois estate tax exemption.  Although it would be lovely to be richer, not being so wealthy means they can have a simpler and more flexible estate plan. 

For advice to consider how to prepare for your family’s future, call our office at (815) 436-1996 to schedule an appointment.  

© 2014 Gruber Law Office, Ltd.  

For all King Fear's anger at two of his daughters, Goneril  and Regan, who were behind the intentional blinding of his best friend, Duke Loyal, Fear realizes he has reason to be thankful.  His other daughter, Delia, and Loyal continue to stand by him, even though they know his Will leaves all to Goneril and Regan.

Fear knows Delia and Loyal's love for him is true, because they don't even know about his secret plan to leave them everything.  He's thankful they've passed the test he set for them, but he doesn't want him to know about the plan yet. 

So he plans to give each of them special birthday gifts this year to show his appreciation and deep love without tipping them off about his plan.  But, as you may remember, Fear has now divested himself of formal title to nearly all his assets.  On the other hand, he is not poor in any way.  He has the beneficial interest in numerous valuable land trusts that he can sell off or give away anytime.

Plus, all of the assets he has put into his living trust also remain his to sell, give away or use as he pleases.  He can do anything with the trust assets that he could have done before he created the trust, except now he act and signs "as trustee" instead of as King Fear.

Therefore, Delia will think she and Loyal have received a unique Faberge egg from Fear, but they will actually be receiving them from King Fear's Living Trust.  

It makes no difference to them now.  But it will make a world of difference after King Fear dies, and the rest of the things in his Trust go to Delia and Loyal rather than Delia’s two nasty sisters. 

To set up a well-thought plan that is simpler or even more complex than King Fear’s, please call our office to schedule an estate planning consultation. 

©2014 Gruber Law Office, Ltd.

King Fear feels at peace now that he has made detailed provisions for what will happen to his property after his death. His evil daughters Goneril and Regan will receive a shed full of coal and his luggage set by inheriting "everything" under the terms of his Will. 

And good daughter Delia and his friend Duke Loyal will actually inherit everything under his Living Trust, but their generous natures will be reined in by the provisions of the Trust.  The Trust prevents them from giving any of the property they inherit from the Trust to Goneril and Regan. 

Fear took the time to catalog all of his assets and who was on the title to each.  Then, he changed the title designations and bought and sold property to fit what he wanted to do now.  Having put just about everything in his Living Trust, he has been able to designate in one place just who is to get what, and how much. 

He can also change who will receive his property in just one place, the Living Trust.  Most important, he can deal with his property while he is alive just like he did before he had his Trust.  As both Trustee and Beneficiary, he can spend and save money, sell property, buy property or even give it away. 

Having fully planned for the present and future, Fear has nothing left to fear, except maybe himself.

For a Living Trust tailored to your situation and wishes for the future, call our office at (815) 436-1996 for an appointment. © 2014 Gruber Law Office, Ltd.

King Fear now wants to simplify.  One way would be to put all his land trust real estate either into his new Living Trust by naming the Trust the beneficiary instead of himself, or instead naming the Living Trust as successor beneficiary.

In his Living Trust, he can prevent his successor (after-death) trustees from giving any of the Trust assets to Goneril or Regan.  Right now, his loving daughter Delia and his friend Duke Loyal are named as successor trustees to his Living Trust and also as successor beneficiaries on all of his many land trusts.

Fear can meet his goal of keeping the real estate from benefiting his evil daughters Goneril and Regan by means of his Living Trust, without changing the Will that has convinced them that they will inherit everything he has when he dies. 

Plus, if his Living Trust will end up controlling almost all his assets after his death, it will be simpler while he's alive to keep track of exactly who will end up with how much and to change the beneficiaries if he wants.

You see, one of Fear's shortcomings is impulsiveness.  He long remembers his grudges against people, but he also constantly tests those he trusts. 

So if after his next test, he decides to cut Delia's share of his assets down and give some to his grandson, Edmund, he only has to amend his Living Trust, not change dozens of land trusts.

For a Living Trust tailored to your situation and wishes for the future, call our office at (815) 436-1996 for an appointment. © 2014 Gruber Law Office, Ltd.

King Fear now has actual title to only two properties, his luggage and a small shed full of coal, which he is leaving in his Will to his daughters Goneril and Regan.  But he is still rich, as the beneficiary of his land trusts and Living Trust. 

Fear does not regret his decision to leave all other assets to his daughter Delia and his friend Duke Loyal by naming them the successor beneficiaries of his land trusts and the successor beneficiaries and co-trustees of his Living Trust. 

But Fear worries that Delia's bottomless capacity to love and forgive might thwart his plan to keep Goneril and Regan's hands off his riches.  Even though Loyal hates Goneril and Regan after being brutally blinded by them, he would not be able to withstand Delia's desire to be kind to her sisters for very long.

By writing in the proper provisions, Fear can prevent Delia and Loyal from giving anything from his Living Trust to Goneril and Regan, even after his own death.  On the other hand, if he simply names Delia and Loyal as the successor beneficiaries of his land trusts, he cannot prevent them from giving the land to Goneril and Regan.  

To fix this, Fear could instead name his own Living Trust as the successor beneficiaries of his land trusts.  Then, he can portion out all his property to whomever he chooses in his Living Trust and also exert some control over the property from his grave.

For an estate plan tailored to your situation and wishes for the future, call our office at (815) 436-1996 for an appointment.

©2014 Gruber Law Office, Ltd.

King Fear has put many of his assets into his own Living Trust. As we explained last week, he still has full control over all of those assets, because he is the named trustee who manages his assets and makes all decisions about them.

Plus, he is the beneficiary of the trust, which means all the assets in it are there for his benefit.  But, as we know from his secret decision to leave almost nothing to two of his three daughters, King Fear is very worried about losing control in his life. 

His attorney had already explained that he could change his trust anytime by going through certain formalities.  But King Fear needed more – he just had to know whether he could “kill” his trust if he wanted to later.  His trust is fully revocable, which means he does have that ultimate control.  He can revoke, or cancel, the trust any time he wants to. 

To do that, he would destroy the original signed trust and then work to change the title on all those assets back to his own name.  That would restore his status as owner of the assets as himself rather than as trustee.  It would not increase or lessen his power over his property.  But knowing he could go back comforts King Fear. 

Most estate plans allow for plenty of changes if you want them later.  After all, life is uncertain and throws us plenty of curves.  For help creating your own estate plan, please call my office at (815) 436-1996 for an appointment.

©2014 Gruber Law Office, Ltd.

King Fear has put his real estate into land trusts and the rest of his assets into his own Living Trust. He still has full control over all of the assets owned by his Living Trust, because he named himself trustee of the trust.  As trustee, he manages his assets and makes all decisions about them. 

Plus, he’s also the beneficiary under his Living Trust.  So as trustee, all of his decisions have to be, in his own judgment, in his own best interest.  This all sounds a lot like the power he had over his assets before he transferred them into his Living Trust, which is no coincidence.  That’s exactly what he intended when he created his Living Trust. 

He’s simply using his Living Trust to pass his assets after his death outside of probate court procedures and outside of what is written in his Will.  That way, he can continue to trick his vicious daughters, Goneril and Regan, into pampering and catering to him in order to remain in his Will. 

Of course, the only things he plans to have in his probate estate at his death to be given to the daughters named in his Will is a coal shed and his suitcases. The rest will go to his loving daughter and his good friend Duke Loyal under the terms of his Living Trust and his land trusts. 

Estate planning can help you make sure your money goes were you want it to go after your death, in whatever way you decide is fair.  For help creating your own estate plan, please call my office at (815)436-1996 for an appointment.

© 2014 Gruber Law Office, Ltd.