Explore the Tax-Saving Strategy of Lifetime Giving

Explore the Tax-Saving Strategy of Lifetime Giving

Explore the Tax-Saving Strategy of Lifetime Giving
NOVA Estate Lawyers – Leesburg, VA

Giving money or assets to your loved ones during your lifetime rather than having them wait until after your death to collect, is defined as lifetime giving. It is an estate-planning strategy used to reduce estate taxes by spreading gifts throughout your lifetime using certain exemptions created by the federal gift tax laws in the United States.

Gifting involves one person transferring cash, real estate, or assets to another while receiving nothing in return, rather like giving a birthday present to someone. With gifting, you may have the opportunity to help a loved one with needed cash, or you might make unlimited direct payments for their benefit to cover medical or education bills. Plus, you get to see their appreciation and the benefits of such a gift while you are still alive. To qualify, your gift must be a complete and irrevocable transfer.

For Tax Year 2017, the IRS allows a person to give up to $14,000 per year as a gift, without incurring a gift tax or having to report the gift being made on the giver’s tax return. For parents or spouses, the amount each parent can give becomes a “splitting gift” which allows a total gift to say a child of up to $28,000. The recipient also has no obligation to report the gift, and s/he does not owe taxes for the gift (unless it comes from a foreign source).

Amounts exceeding $14,000 given by a single person in a given year, however, require the giver (person making the gift; not the recipient of the gift) to file an IRS Gift Tax Form 709 with the federal government and pay any taxes owed (if applicable) for each dollar that exceeds the $14,000 limit.  Spouses splitting the gift must also file Form 709. However, there is no separate State Gift Tax for a person making a gift who resides in Virginia.  Gift tax is paid after your death.

Form 709 is merely a reporting mechanism for you to report in each calendar year that you are alive all gifts which then exceeded the annual excluded amount. This is because, under federal law, you have a Lifetime Exemption which is currently $5,430,000 (also known as the allowable amount). This Lifetime Exemption applies to the combined:  (1) value of all gifts made during your lifetime in any calendar year to any person which you reported on Form 709 as exceeding the then annual limit (now $14,000 but expected to increase in coming years); and (2) value of your entire estate passing to your beneficiaries at the time of your death, and any gifts provided from the estate over the yearly deduction are subtracted from that total.

A Helpful Example

For example, if you gift your daughter with $150,000 in a single year, the $14,000 is exempted, and you would need to file a gift tax return and report stating that you used $136,000 of your lifetime exemption of $5,430,000. It then reduces your lifetime exemption amount to $5,294,000. However, you could gift $14,000 per year without affecting your lifetime exemption. In addition, if you made additional payments directly to a medical or educational account, these amounts would also not count against your Lifetime Exemption.

Minimize Taxes

Upon your death, what remains of your Lifetime Exemption is subtracted from the total amount of your estate, thus relieving the estate tax burden upon your Estate and, in turn, those who inherit from your Estate. Using the annual gift exclusion, along with paying directly towards medical or educational accounts or providers of such services, may be a very useful way to preserve your lifetime exemption, and minimize taxes down the road.

Gift Tax vs. Inheritance/Estate Tax

Gift Tax and Inheritance or Estate Tax are often confused with one another. An estate tax takes into account everything you own plus your interests upon your death, and applies the estate tax on your right to transfer such property at your death. A Gift is money or property given during your lifetime and may or may not be subject to tax, depending upon your state. Virginia does not require a beneficiary living in Virginia to pay inheritance taxes, while nearby Maryland does. Virginia also does not have a Gift Tax.

Lifetime Gifting is an effective way to help your loved ones during your lifetime, and preserve your estate from possible future estate taxes, with the caveat to ensure that you retain enough money to support yourself throughout your lifetime.

Work with an Estate Planning Attorney

Working with an estate attorney, like Patricia Tichenor or Camellia Safi at the Law Office of Patricia E. Tichenor, P.L.L.C. can help you avoid making costly mistakes when setting up and implementing your estate plan. If you need an estate planning attorney in Northern Virginia, contact us today.

So You Just Won the Lottery…Now What?

So You Just Won the Lottery…Now What?

So You Just Won the Lottery…Now What?
NOVA Estate Lawyers – Leesburg, VA

You may have heard people say, “If you win the lottery, one of the first things you should do is contact a lawyer.” Well it’s true. But not just for the lottery. Any time you come into a windfall, whether through winnings like the lottery or an inheritance, it is a good idea to double check with an attorney regarding your options, legal rights, and responsibilities. Any income needs to be properly saved, spent, and even preserved to pay taxes.

Hold Off on Spending
First, resist the temptation to rush out and buy a house, car, vacation, or even waste the money with out-of-control spending. Of course, you’ll want to have a little bit of fun with the money, so a small splurge is okay. However, you’d be better served doing a financial review first with a certified financial planner and considering a trust plan with an experienced estate planning attorney.

Decide if it’s prudent to pay off some debts now or not; set-up investment accounts or not; write a revocable or irrevocable trust; invest in real estate, etc. in order to preserve, grow, and make the most of your winnings for yourself and your heirs. Having a plan from the get-go may allow you to have your winnings last throughout your lifetime or the lifetimes of your loved ones as well.

Understand the Tax Requirements
You’ll need to consider any possible taxes that come in the form of final income, gift, death or inheritance taxes as well as any applicable tax credits or exemptions, and even FDIC insurance for accounts holding your winnings. At present, Virginia does not impose either a death or inheritance tax. However, the latter is based on where your beneficiaries reside, so, if your beneficiaries live in another state which has an inheritance tax, they could be liable for inheritance taxes for what you leave to them depending on the plan you implement.

Create a Will or Trust
Virginia, just like all states, has laws governing estate and trust planning, probate, and inheritance. This is why it is so important to consult with a local attorney where you live and draw up a will or trust in order to properly designate the distribution of your assets following your death as well as legally avoid certain taxes and other costs which might reduce what you are able to leave to your beneficiaries. A good estate planning lawyer can help you feel confident that your plan addresses all these issues and implement it for you.

Develop an Estate Plan
Finally, when thinking about your overall estate plan, consider whether you might want to leave a legacy that benefits more than your family members, such as an endowment, foundation, or charitable donation made in your name and memory. An estate planning attorney can help you customize a plan that fits your specific needs and address any unique issues for your heirs, such as special-needs or spendthrift trust planning for children with drug addiction, money, mental health or other issues who might not readily be in a position to handle receiving a direct inheritance from you, or a trust plan based on the relative age of a child or grandchild, focusing on funding education first before direct distributions of cash to that child or grandchild are made.

No matter what type of inheritance or winnings you acquire, it is always best to seek the advice of an estate attorney before doing anything. You certainly don’t want to make a big, expensive mistake simply because you didn’t know your options.

For advice and counsel on what to do when you have acquired a large amount of money, contact attorneys Patricia Tichenor or Camellia Safi at the Law Office of Patricia E. Tichenor, P.L.L.C. located in Leesburg, Virginia. Contact us today to set your appointment.

The Pros and Cons of Marriage Counseling

The Pros and Cons of Marriage Counseling<br>NOVA Estate Lawyers - Leesburg, VA

The Pros and Cons of Marriage Counseling
NOVA Estate Lawyers – Leesburg, VA

Once couples realize that something is wrong with their marriage, there are a number of choices they can make: they can read self-help books and try to fix it themselves, they can seek advice from friends and family, they can engage with a professional marriage counselor, or they can do nothing—each with varying results, with doing nothing having the least chance for success.

Most couples do not have the experience to know how to navigate through tough times. They fall in love and expect the fairytale life, while in reality, they repeat patterns and dynamics that are not productive and often hurtful, and wonder why the problems never seem to get fixed.

The purpose of marriage counseling overall is to teach couples effective methods of working together to resolve conflict in a marriage so they can function independent of a third party. By facing old habits and patterns, and making efforts to establish new and healthier ones, couples can learn to identify problem areas and learn new and better ways of communication.

As with anything, marriage counseling has its pros and cons:

Pros
The overall goal of marriage counseling is to resolve issues and improve and strengthen the relationship between a married couple or those involved in a committed relationship. It uncovers perhaps-unseen ways of interacting that are detrimental, as well as brings buried anger to light so that it can be resolved.

Through regular counseling sessions, couples share frustrations and truths before a neutral third party, who offers methods to move past them and ways to better handle disputes and problems when they arise. The use of personality assessments or other testing by a therapist, when effective, can aid couples in developing a better sense of their partner’s communication style and lead to learning ways to build a stronger foundation and more enriching marriage.  This can also translate to improved parenting skills for couples with children.

How well couples relate with their counselor can be more important that the treatment they provide. Couples should treat the selection of a therapist like a job interview, understanding that each of them must feel comfortable with the person selected in order to build trust in that person, and to then make real progress.  Do not be afraid to change counselors if one or both of you realize the person is not the right fit.

Cons
Marriage counseling doesn’t always work for everyone, and can uncover issues that cannot or will not be resolved.

It also requires both people in the marriage to commit to making a positive change, and, often, one spouse may seem less committed to the use of therapy and unmotivated to put in the work it takes for therapy to be most beneficiary to the marriage. It’s important to remember:  One spouse cannot fix a broken marriage; it takes both spouses to dedicate effort to looking at, acknowledging, and taking steps to resolving issues with a common goal, although there are times when only one person in a marriage may choose to work with a counselor alone. It depends on the circumstances. However, both partners must take responsibility for their role in the problems.

In addition, couples therapy is not a quick fix; it takes time, over many counseling sessions. Some couples cannot afford the cost of ongoing therapy, and eventually drop out or try to fix their problems themselves. Help may still be available through local couples-support groups or places of worship which offer counseling free of charge or at a significantly lesser expense than a private therapist.

Taking the first step to counseling is always the hardest one, but with an open mind and a dedication to making it work, many couples go on to have successful marriages.

Contact Your Family Law Attorney

If you have questions about marriage counseling, or wish to talk to your attorney about a possible separation or divorce, your legal rights, or child custody issues, contact attorneys Patricia Tichenor and Camellia Safi at the Law Office of Patricia E. Tichenor, P.L.L.C. We specialize in Family and Estate law. Contact us today.

Legally Establishing Paternity

Legally Establishing Paternity<br>NOVA Estate Lawyers - Leesburg, VA

Legally Establishing Paternity
NOVA Estate Lawyers – Leesburg, VA

A new baby always creates excitement within a family, with doting parents, grandparents, siblings and extended family members sharing the joy.

In most cases, parentage is well known and accepted. However, in others, the identity of the father might be in question. Under Virginia law, only one man can possess paternity of a child at one time, and as a child’s biological father may not necessarily be the child’s legal father, the question of paternity exists. Here are some methods to establishing paternity.

Father’s Name on Birth Certificate
When a child is born to a married couple, paternity is presumed under Virginia law, and normally a mother’s and father’s name is listed on the birth certificate. For unmarried couples, paternity may not always be clear. In order to place the father’s name on the birth certificate a Paternity Statement should be prepared. In Virginia, paternity can be established in the hospital by signing and notarizing a no-cost form called the Voluntary Acknowledgement of Paternity (AOP) prior to being discharged from the hospital.

Establishing paternity itself can be more of a challenge, and there are several acceptable methods that are simply defined here. For more details, please contact your family law attorney.

Genetic Testing

A scientifically-reliable genetic test, consisting of a blood test or genetic test, can establish or disprove paternity with at least a 98% accuracy rate. In the Commonwealth of Virginia, a Motion for Genetic Testing is generally filed with the Juvenile & Domestic Relations District Court and possibly the Circuit Court.

Written Statement
The mother and father can create a written statement, taken under oath, that acknowledges paternity. This process also confirms that both parties were provided with oral and written descriptions of the right and responsibilities of acknowledging paternity, and any consequences of signing the acknowledgement, and includes the potential right to rescind within 60 days.

Although paternity must be proven, other evidence that may be considered for establishing paternity includes:
Cohabitation: evidence of living together or sexual relations between the known parent and the alleged parent at the time conception should have occurred.
Conduct: common use of the father’s name, references acknowledging the father, or conduct conducive to assuming fatherhood.
Claims: claiming the child on legal documents such as tax returns or documents filed with the local, state or federal government, or their agencies.

Adoption
Proof of legal adoption to establish paternity outside of being a biological parent.

Petitioning for Paternity
A petition to establish paternity must be created and filed with the Juvenile and Domestic Relations Court, with the Circuit Courts having concurrent jurisdiction in matters pertaining to paternity.

Contact Your Family Law Attorney
Paternity can be complicated, especially if multiple potential fathers are involved, and knowing your rights, options, and responsibilities are important. If you have questions concerning paternity, ask your family lawyer, like Patricia Tichenor or Camellia Safi, the attorneys at The Law Office of Patricia E. Tichenor, P.L.L.C. in Leesburg, Virginia. We are the caring professionals families can turn to when they need answers, guidance, or defense. Contact us today.

You May Want to Consider Holding Power of Attorney for Your Adult Child

You May Want to Consider Holding Power of Attorney for Your Adult Child

You May Want to Consider Holding Power of Attorney for Your Adult Child
NOVA Estate Lawyers – Leesburg

Your child is always your child, except in the eyes of the law where an 18 year old is considered to be legal adults. However, as many parents know, at this age, or even beyond, many children are still not ready to be on their own and may need your input or assistance in major life decisions or managing finances. Even though they may be off to college, or entering military service, and you still may be paying their way, you may not have any say in their affairs should something happen and they need your help.

At age 18, children are also deemed emancipated for HIPAA purposes. This means that their privacy is protected under the law—even from their parents—unless they have a medical directive or medical power of attorney in place.

If an unfortunate circumstance should occur, as for example, your child was injured in campus violence incident or had a serious car accident, you, as parents, would have no access to health-related records, or would not be able to make decisions on their behalf if needed, unlike when they were minor children. With the increase of gun violence on campuses and distracted driving, pre-determining a plan might just help put your mind to rest, and offer protection for all parties.

Every 18-year-old needs these two essential documents

That is why we at the Law Office of Patricia E. Tichenor P.L.L.C. highly recommend creating two essential estate planning documents: a durable general power of attorney (for financial matters) and a durable medical power of attorney (for health-related matters). Encourage your child to put one in place after they turn 18, so they can ensure that you will be able to make decisions as to your child’s finances and health care in the event they are unable to do so themselves. Doing so will avoid the greater expense, stress and delay, if they are not in place, of seeking those rights for your child through a guardianship or conservatorship proceeding in the courts. Even though you most often hear about these two documents for older people, they should be considered for younger folks as well.

A financial power of attorney can be customized to your child’s needs, general (covering all financial matters) or specific (relating to just one aspect of the adult child’s finances). Your child can appoint these responsibilities as well to different family members or trusted advisors as alternates or successors to you.

A power of attorney can be useful in other ways too, such as if your child is traveling abroad and requires money wired from the adult child’s bank account, or needs to have legal documents like a lease signed in the child’s absence. The small fee you pay to set up proper powers of attorney will be well worth it in the end.

Contact your estate planning attorney

At the Law Office of Patricia E. Tichenor, P.L.L.C., we are specialists in estate planning and can help you protect your family members. Please call to set an appointment at our convenient Northern Virginia office with either Patricia Tichenor or Camellia Safi, attorneys at law.

The Law Office of Patricia E. Tichenor, P.L.L.C.
Professional Legal Services or Legal Representation
(703) 669-6700

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  • High quality service with both personal and a professional touch. I would highly recommend their services, they helped prepare my estate in the event of my demise. They also prepared the necessary documents to complete my wife's estate after her passing, both with outstanding results. - Jim D.
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