Showing posts with label domestic tax havens. Show all posts
Showing posts with label domestic tax havens. Show all posts
Saturday, March 24, 2012
The Rush to Avoid Gift Taxes
Family Value: The Rush to Avoid Gift Taxes - WSJ.com (JEH: This is an excellent, brief article on several key trust planning concepts related to the potential use of the current $5 million estate/gift/generation-skipping transfer (GST) tax exemption. I have posted other articles on this topic over the past year or so. Many practitioners and commentators have suggested self-settled spendthrift trusts (also known as "domestic asset protection trusts" (DAPTs)), which this article highlights, as part of this type of planning. These trusts are generally not advisable for effective protective planning, but can indeed be useful in the context of making a completed gift for federal transfer tax purposes in this current exemption scenario because they offer added flexibility (though, again, likely little if any actual protection for the grantor(s) (also known as the settlors or makers of the trust)). If you are considering this type of planning, you should commence sooner rather than later. If you wait until November or December 2012, you will probably be too late.)
Monday, January 18, 2010
Domestic tax havens continued
The article that I just shared (via ShareThis -- great tool) is a bit dated but still relevant, as are many other similar articles. What these articles do not clearly illustrate, however, is the stark contrast among states' tax regimes. For example, in Tennessee (which is still dear to our hearts, incidentally!), a married couple will face several additional tax burdens that do not exist in Florida: (1) a state-level inheritance tax (link -- actually applies as an estate tax) and gift tax (link); (2) the so-called "Hall" income tax on taxable interest and dividends as applied to individuals, business entities, and even trusts (link); and (3) a state and local sales/use tax applying at up to 9.25% (link). Those issues alone might justify changing at least one spouse's domicile to Florida, to say nothing of homestead protections and tax benefits, superior tenancy by the entirety (joint marital property) protection, and better protection for annuities and life insurance. I do not think that many of the folks who have left Florida in recent years have considered some of these factors, particularly if they were facing financial difficulties (unless a job in another state resolved their issues). My summary chart/matrix posted on our website compares Florida to several key Southeastern states, which are ironically better than many other states in terms of tax burdens and even protections and estate/trust laws. Florida is truly a domestic tax haven when compared to other states.
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