Page 7 - April 2019

SSUES REGARDING THE LAW
SSUES R REGEGARDINGARDING THETHE L LAAWW
SSUES
I I I I ISSUESSSUES R REGEGARDINGARDING THETHE L LAAWW TIMEL
TIMELY TY TAX TAX TALKALK
TIMELY TY TAX TAX TALKALK
TIMEL
TIMELY TAX TALK
by Margaret Heine
IT’S TAX TIME ~ have different can only claim the capital gains exclusion them if you start early enough in the
INFORMATION FOR NOW AND thresholds than the once every two years. year. Again, a financial advisor can
FOR THE FUTURE federal limits. If you have investment property, help you with any questions that you
There are some Another change before selling, check with your financial may have.
significant changes for 2019 with which could impact advisor regarding capital gains and As a simple disclaimer, we are
regard to taxes. Changes as a your estate planning depreciation recapture so that you have a not financial advisors, and the
result of the 2017 Tax Cuts and Jobs Act decisions is the use of 529 college plans for full picture of what the net proceeds of information provided herein is for
will kick into place this year, and there children or grandchildren. Under the the sale would be. informational purposes only and not
will be some significant impact on changes in the tax law, you can now use up With the changes in the standard financial advice. Have a prosperous
estate planning. to ten thousand dollars ($10,000) in the 529 deductions, many people will not be 2019!
Margaret A.M. Heine is the principal
There is a significant change in plan to pay for tuition and expenses for itemizing on their taxes any more. It is a counsel at Heine Law Group in Fullerton,
the estate tax deduction amounts for school for children in K through 12. The good idea to consult with a financial California. She is licensed in California and
2019. Two aspects of the law have limitation is for each account, so, if you have planner if you are anticipating making Washington, and has authority to practice
changed on a federal level. First, the separate accounts for each child that is up to large changes in your income or asset before the Supreme Court of the United States
annual gift amount that can be given to ten thousand dollars ($10,000) per child. ownership before you sell off or purchase and the United States Court of International
any individual by any one person is That would allow the 529 to grow tax free, so that you can fully evaluate the tax Trade. Her practice includes estate planning,
fifteen thousand dollars ($15,000). That and still be utilized for the children’s consequences of your proposed plans. wills, trusts, and probate as well as business,
real estate, and civil litigation. Email:
means that a couple can give up to education before they reach college. This You can, in some instances, plan nbylegas@gmail.com or visit company website
thirty thousand dollars ($30,000) to any would be a great discussion to have with your capital gains and how to minimize www.margaretamheine.com.
one person without the necessity of your financial planner if you consider using
filing a gift tax return or having it the funds before the child goes to college.
claimed on anyone’s taxes. That is the This also provides a method for
typical question, “If I give this money grandparents to set aside funds for their
to my children do they have to claim it grandchild that would permit usage for their
on their taxes?” Simple answer, “No.” primary education as well as secondary
This is a simple and effective manner education.
in which to spread the wealth to other The tax change with regard to
individuals, if you have the cash alimony payments does not affect estate
reserves to do so. planning per se, but does have a significant
A second change is an increase effect on the payor and recipient. If you are
in the lifetime exclusion amount up divorced after January 1, 2019, the payment
from $5.59 million in 2017 to $11.4 of alimony is no longer a tax deduction nor
million in 2019. As taxation for estates taxable income to the recipient. Now, the
begins at a 40% tax rate, that is a law provides that if you were divorced prior
significant change in tax liability for to January 1, 2019, then the old law applies
high worth individuals. In essence, a to the deductibility and income reporting of
couple will be able to exclude up to the alimony. For payors this is a loss of a
$22.8 million in assets from federal usually significant deduction.
estate tax. That would mean that most Another change which does not
high worth properties, income affect your estate plan per se, but can be
properties, second homes, would be important in planning your asset allocations,
able to be excluded from the is that mortgage interest deduction is only
assessment of estate taxes. There is still available on home loans not exceeding
an unlimited exemption for property $750,000.00. So, even if you pay more, the
passing to a spouse, but that spouse amount of interest you can deduct is capped.
would be limited to passing $11.4 This is another good reason to talk to your
million on without taxation. This financial advisor to make appropriate
increase is only temporary at this time planning for 2019 if you are considering
and is scheduled to return to the $5.59 purchasing new property.
million threshold in 2025 unless We have seen more mature clients
extended. selling their homes and moving into other
In your estate planning living arrangements. Here is something to
considerations, California presently keep in mind, if you sell your home, you can
follows the federal law with regard to exempt $250,000 in capital gains from the
the application of estate taxes; sale if you are single. If you are married,
however, with proposed changes in then you can exempt $500,000 in capital
health care benefits and other state gains. If you had a rental property and want
provided benefits, it has been discussed to make it a personal residence for tax
that California would start to purposes, then you must reside in that rental
implement an estate tax which would property for two of the last five years. You

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