Estate and Gift Tax Changes for 2013
The most important change is that estates under $5,000,000 will not pay estate tax. Congress finally set the estate tax exemption for 2013 at $5,000,000 plus an amount indexed for inflation each year. That means that the current exemption for 2013 will be $5,250,000. The top estate tax rate for amounts over the exemption amount was raised from 35% to 40%. Congress has also finally determined that if one spouse doesn’t use all of his or her estate tax exemption, that the surviving spouse can make use of the unused exemption at her or his death through a process called “portability.” It is also possible to make gifts up to $5,000,000 without paying any out of pocket monies.
Changes in annual exclusion gift taxes include the amount that you can give to each person each year without having to file a gift tax return. It has been raised to $14,000 (or $28,000 for married couples).
Of course, this very simple explanation masks a number of difficult questions. If you are concerned about the possibility of any estate tax or gift tax you should consult with your attorney or accountant.
WHAT TO DO IT YOU'RE IN A CAR ACCIDENT – 10 TIPS:
No one expects to be in a car accident, but many accidents happen every day. Statistics show that nearly all of us will be in a motor vehicle accident at some time or other. Knowing what to do when an accident happens is important. It can make all the difference if you, your family or your friends are hurt and need help. Doing the right things after a crash can also ensure that the insurance companies treat you fairly and compensate you for medical bills, loss of income and any physical injuries.
If you are involved in an accident, the following tips are recommended:
1. GET HELP IF NEEDED. If anyone is injured call 911. Medical care within the first hour after an injury is critical.
2. NOTIFY THE POLICE. This is required by law in most states before you can leave the scene if anyone is injured, or there is any significant property damage. It’s a mistake to just exchange names and phone numbers with the other driver and leave the scene. Call the police. Be sure to get the name of the officer at the scene and write it down.
3. GET CRUCIAL INFORMATION. Get contact information from each of the other drivers involved in the accident. Jot down their name, address and phone number. Make a note of the color, make and model of their vehicle, and get their license plate if you can. The police officer can help you get all this information, and will often have a form for you to exchange with the other driver or drivers involved. Do not be afraid to ask such information or the form.
4. IDENTIFY WITNESSES. Get the names and contact information of anyone who saw the accident. If you can, do this quickly. Often, people who saw the collision will stop for a short time but leave before the police arrive. Other motorists, passengers or pedestrians can be critical witnesses. Get their name and phone number.
5. DO NOT DISCUSS FAULT. Do not blame the other driver even if they were clearly at fault. It may just start an argument. But if another driver admits they were at fault, make a mental note of it. When you get home, jot down precisely what they said. Even if you feel you may have been partially at fault, do not say anything that admits your feeling. Fault is often a complex determination based on the facts and complicated laws. Leave that issue for the police to decide – or an attorney, if necessary.
6. WRITE A NOTE TO YOURSELF AFTERWARDS. After the accident write a note to yourself (and possibly for your attorney if you need one later). Include all the information you have gathered and can remember while it is fresh in your mind. Explain how the accident happened as best you can. Drawing a sketch or diagram of the collision will be a helpful memory aid later. It may be months, or even years, before the insurance companies fully resolve any claims.
7. CALL YOUR INSURANCE AGENT. All insurance policies require you to notify your insurance company. This must be done shortly after the accident. Unnecessary delay in notifying your insurance company about a crash can result in a denial of your right to insurance benefits and protection.
8. STATE ACCIDENT REPORTS. If anyone is injured, or there is significant property damage, you must file a State Accident Report in most states. The form, with directions, can be obtained from a police department. This report must be filed within 10 days after the accident in Colorado.
9. TAKE PICTURES. “A picture is worth a thousand words.” Today most of us have a camera in our cell phones. If you can, and it is safe, take pictures of the vehicles before they are moved. Pictures of the damage and position of the vehicles can be very important. They can prove how the accident happened and document the force of the collision. This can be important evidence if the accident caused injuries. If you’re not able to take pictures, ask one of your passengers who is alright or a witness, to do it for you. After you get emergency care and are home, remember to take pictures of your injuries – any cuts, bruises or bandages, and any casts or crutches. It is particularly important to take a picture of any seat belt bruise on the front of your shoulders and chest. This bruise may not develop right away. Taking a picture of it can keep the other side from claiming that you were not wearing a seat belt.
10. PROTECT YOUR RIGHTS. To protect your rights you must act quickly and correctly after a motor vehicle accident. Deciding fault can be complicated. Insurance coverage, and how to get your medical bills paid, can be very confusing and frustrating. Insurance adjustors may call and ask you to give them a tape recorded statement. Do you have to do that? Should you do that? You may have many questions about your rights, and your obligations to insurance companies and their representatives. You may have questions about whether the insurance companies are treating you fairly. Don’t jeopardize your rights. CALL AN EXPERIENCED ATTORNEY who specializes in accident and injury claims for advice and answers to your questions.
When an accident happens and somebody is hurt, follow the above tips if you can. Afterwards call an attorney for further help and advice. Doing these things will protect your rights, avoid common mistakes that delay or prevent you from getting your medical bills paid or your lost income reimbursed, and help ensure that you are treated fairly by the insurance companies.
Jury Finds for GKH&C Client in Estate Dispute / Will Contest
On January 27, 2011, a Colorado Springs jury returned a verdict for our client. The case involved a dispute over a large number of gifts a mother made to one of her four adult children during the last four years of her life, when she was a widow.
Mother lost her husband in 2002, after more than 50 years of marriage. Her husband was a very successful business man who built a profitable service company. They raised four adult children, who all lived in the area when the husband died. But only one of mother’s daughters visited her frequently, and helped and cared for her needs during the four years that she lived as a widow. The other three children either visited mother somewhat irregularly or infrequently. They did not consistently help their mother with her needs and daily activities, as did the one daughter who was our client.
Mother was wealthy and gave numerous gifts of money and property to the helpful daughter. After mother died, her three other children maintained that 40 to 55 transactions, in which Mother gave money and property to the one daughter who helped her, were invalid. They filed suit against their sister claiming that she had received $1.8 Million in money and property during the last four years of their mother’s life. They pointed to their mother’s Will and estate plan, which left the bulk of her wealth to her four children, equally. They claimed that given the large number of transactions and the high value of the gifts to one daughter, their Mother was either of unsound mind when she made the gifts, or the gifts were a result of undue influence. The also claimed that their sister, who cared for mother, had breached a fiduciary duty by accepting so many valuable gifts from her mother.
Gary S. Craw and Larry R. Gaddis represented the daughter that helped her mother and received the $1.8 Million in gifts before mother died. The case involved three years of highly contested litigation and culminated in a jury trial that lasted nearly two weeks.
Gary Craw tried the case to a jury of six citizens and convinced them that all the transfers made during the last four years of mother’s life were valid gifts, were not because of a lack of capacity or unsound mind by mother, or a result of any undue influence by the helpful daughter. The jury also rejected the three siblings’ claim that the helpful daughter breached a fiduciary duty to their mother. Accordingly, the Court refused to order our client to return the gifts to mother’s estate, and a judgment was entered in favor of our client.
Estate Tax Update
The federal estate tax law has finally been settled - for the next 2 years!
The "2010 Tax Relief Act" increased the exemption amount on all estates for individuals dying commencing January 1, 2011 to $5,000,000 per estate. The Senate also enacted a provision which allows the executor of a deceased spouse's estate to transfer any unused exemption to the surviving spouse. This means between a husband and a wife they can leave $10,000,000 without paying any estate tax.
Also, as somewhat of a surprise, gift tax has been reunified with the estate tax which means that any of you who are so inclined can give away up to $5,000,000 and not pay any gift tax out of pocket.
Both the estate and gift tax for amounts over the $5,000,000 threshold is 35%. This is a decrease from the top of 55%.
There are some more complex provisions for individuals who died in 2010 and others involving the generation-skipping transfer tax exemption.
Finally, as we indicated above, this arrangement is only in effect through 2012. What the law will be following December 31, 2012, is, as they say, anybody's guess.
Colorado continues to have no estate or inheritance tax.
Larry R. Gaddis, Esq.