Martinson & Beason, P.C.
Alabama families need to make sure that their affairs are in order, regardless of the size of the estate, to ensure that the right people inherit your assets. Developing a sound estate plan early can help minimize taxes for your beneficiaries down the road. The following pieces of advice can help anyone; even those who have already begun to prepare their estate plan. • Clearly Declare Who Gets What
Famous Houston trial lawyer John O'Quinn's estate is nearly at the end of its massive litigation battle, reported the Houston Chronicle. O'Quinn died in 2009 in a car accident. In his will he left his entire estate to the John O'Quinn Foundation. However, his live-in girlfriend was not particularly pleased with his decision to donate his entire fortune to the foundation rather than to her. Darla Lexington claimed she was O'Quinn's common law wife and claimed that she was entitled to more than just the proceeds of the life insurance policy for which she was the sole beneficiary. As such, she filed a lawsuit against the estate.
After the recent attention directed at Republican Presidential candidate Mitt Romney's tax bill, Alabamans may be curious to see the impact of the various Republican's tax plans, especially for those who are lucky enough to share Romney's tax bracket. Time Magazine ran the numbers and found that under his own plan, Romney would save $3.4 million a year given his $22 million income in 2010. Romney's own plan would reduce his tax bill thanks largely to his proposal to permanently lower the tax on investment income to 15%. The vast majority of Romney's income (and that of many wealthy individuals) is derived from such investments and explains why he's able to keep his overall tax rate so shockingly low.
The Christian Science Monitor reports that there will be a substantial increase in the number of estate tax returns filed with the IRS this year. This is despite the fact that there will be fewer than 3,300 estates that will be required to pay federal taxes. The current state of the law encourages estates to file returns even if they do not owe any taxes to the federal government. The result: increased costs and an increased number of returns for the IRS to process. Why do these estates to continue to file returns? The answer lies in the details of the portability provision of the 2010 Tax Relief Unemployment Insurance Reauthorization and Job Creation Act. This provision allows surviving spouses to claim on their own estate tax returns any exemption not used by their deceased spouses.
Forbes reports that Leon G. Cooper, the prominent New York billionaire hedge fund manager, has managed to get out of paying the IRS $5 million in penalties. The IRS filed a complaint against Cooper when his personal private foundation was given a $43 million gift by one of his hedge funds. Cooper provided the start-up money for the fund, but did not personally manage the fund. His family wrote the gift off as a deduction in both 2005 and 2006. This kind of deduction, however, is not allowed by federal law.
Forbes.com reports that Brooke Astor's multi-million dollar estate is now facing an extensive tax bill from the Internal Revenue Service. The estate has recently filed multiple lawsuits in the United States Tax Court. The lawsuits challenge the IRS's demand that the executors of the Astor estate pay another $62 million in fees. There is some discrepancy between the IRS and the estate about the total value of Astor's estate. The IRS claims that the estate is worth some $223 million and the federal government is entitled to $97 million in federal estate taxes.
