Field Law Firm - August 2021

Field Law Firm - August 2021

Notes From The Field

August 2021

818-369-7900 | FieldLawPC.com

The Shrinking Estate Tax Exclusion

It’s a Matter of When — Not If

To paraphrase Benjamin Franklin, taxes are inevitable. But do you think Franklin ever thought about tax law changes? It’s not as catchy as his famous phrase about death and taxes, but, yes, those are also inevitable, too.

In fact, we’re witnessing that today.

Here’s the good news: In recent years, the estate and gift tax exemption has doubled to $11.7 million for individuals and $23.4 million for married couples. That means you can gift your heirs up to $23.4 million, and they will not have to pay federal estate or gift tax on that sum. Here’s the bad news: This exemption is set to expire in 2025. It’s possible the exemption limit could change before that, too. One proposal would restore estate and gift taxes to the 2009 level, which sat at $3.5 million per person for estate tax and $1 million for gift tax and had a top tax rate of 45%. This uncertainty makes planning ahead difficult — but not impossible. If you’re concerned about reduced estate and gift tax limits due to the amount you plan to leave or gift to your heirs, start a gifting plan now. Just last year, the IRS finalized rules to not “claw back” lifetime gifts if or when the exemption is lowered. Since the present interest annual gift exclusion amount for 2021 remains at $15,000, you can give away $15,000 to as many individuals as you wish with no federal gift tax consequences. In other words, you can do this before you even touch your $11.7 million exemption. Additionally, a couple can each make $15,000 gifts, effectively doubling the amount per recipient. You can also make unlimited payments for medical and tuition expenses, as long as the payment is made directly to the provider. Another option is to make gifts into a trust that allows you to maintain some level of control or discretion over how those funds are eventually used. (You cannot make gifts outright.) These options include a trust that would benefit a spouse and descendants but not be included in either spouses’ estate or creating a so-called Spousal Lifetime Asset Trust (SLAT), which is also sometimes called a Spouse and Family Exclusion (SAFE) trust. Sound complicated? It can be, especially with all the uncertainty surrounding future estate and gift tax exemption limits.

But it’s our job to help! Here’s what we can do.

• We can create short- and long-term plans based on different tax and legal scenarios.

• Another option may be outright gifting.

• We could consider funding a trust, too.

• Another scenario is to make a split-interest gift, or gifting into a life insurance trust. • On the flip side, you may wish to avoid making gifts of highly appreciated assets. Assets in your estate at death get a “step-up” in income tax basis — they’re re-evaluated — whereas, if you gift these items today, they would not get the “step-up” at your death. In short, when things change because of your circumstances, goals, needs, or due to new legislation, we’re here for you. As another old saying goes, “Failing to plan means planning to fail.” And if we could add a qualifier — this is especially true when uncertainty is a given.

Call us today, and let’s make a plan.

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UPCOMING EVENTS

Throughout August, our team members will be on vacation.

Trustee School — Saturday, Aug. 21 at 10 a.m. PDT More details to follow. Investor Coaching Series — Sept. 18 at 10 a.m. PDT More details to follow.

What Parenthood Teaches Us

Here are a few things you may not have known before you had children: • How many seconds it takes to microwave fish sticks • How to change a diaper in the dark on a child who’s standing up in the back of the car • How brightly the moon can shine at 3 a.m. • That you can never own too many sippy cups • What Cheerios sound and feel like when you step on them with bare feet • How to balance a lunch box, an extra coat, a briefcase, a diaper bag, and a baby while opening a minivan door • How much you can dilute apple juice while still retaining its taste • The importance of naps

Client Only Event — September TBD

SCIENCE SAYS: READING MAKES YOU HEALTHIER!

stimulates the brain in ways that other mediums, like watching a movie or listening to music, cannot. The unique way in which reading impacts your brain and the activity associated with it exercises your brain for better memory and Alzheimer’s prevention. Furthermore, an Emory University study found that reading enhances connectivity in the brain. (Strangely enough, the study also found that when a person is reading fiction, their ability to empathize improves.) Reading Increases Creativity Reading allows you to delve into experiences you otherwise may not have had the opportunity to engage with. Without even leaving your living room, you can explore new relationships, ideas, and perspectives. This allows your mind to grow and to understand the world around you in new, exciting ways. Reading Helps You Be Happier This just might be the best finding of all! The Booktrust Reading Habits Survey reported that 76% of respondents said reading improves their lives and helps make them feel good. Other findings of the survey show that reading regularly leads to a happier, more satisfied, and worthwhile life.

Even if you loathed reading in school, your English teacher may have been onto something. Numerous studies examining how reading impacts our lives have found that picking up a book and reading stories — real or fictional — can be a great way to improve our health and well-being. Here is what the experts discovered! Reading Makes You Feel Better According to the New York Times, “Reading has been shown to put our brains into a pleasurable trance-like state similar to meditation, and it brings the same health benefits of deep relaxation and inner calm. Regular readers sleep better, have lower stress levels, higher self-esteem, and lower rates of depression than non-readers.” Reading Improves Your Brain Health Researchers at Yale University’s Haskins Laboratories have found that regular readers have “more complex brains.” Reading

So, what are you waiting for? Go grab a book!

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TAKE A BREAK

Earlier this year, Russia announced it would abandon its missions to the International Space Station in favor of a new, Russia-only station orbiting Earth. At the same time, China has begun working in earnest on its own permanent space installation, raining construction debris down on coastal Africa and other places. With private American interests gaining traction in orbit (and the confidence of our government), things are getting awfully crowded up there — and not by actors that typically play well together. ARE WE HEADED FOR THE FIRST WAR IN SPACE? ‘SPACE LAW’

All of which begs the question: Will the 21st century see the first violent conflict in space?

TOMATO AND WATERMELON SALAD (YES, REALLY!)

We have to delve into “space law” (yes, it’s really called that) to understand this question. It started in the 1940s and ‘50s, when the USSR launch of Sputnik signaled a new ground for scientific competition in the Cold War, as well as fears of more direct, armed conflict. The landmark “Outer Space Treaty’’ of 1967 was the response, and nations continued to deal with space concerns until the end of the century. The general principles were those of cooperation and goodwill, and that made sense in the 20th century, when it was unlikely any power would be able to seriously colonize stations in orbit or the moon itself, nevermind other planets. But in the past 20 years, many countries have been unwilling to seriously commit to more specific agreements or laws. When you see the rapidly increasing presence many countries are seeking in orbit, you start to understand why. Nobody wants to hamstring themselves and compromise their interests when the resources of our solar system are made available through technology. Even though this may be a new arena, the problem is an old one. International Law — of which “space law” is a subset — is not typically enforceable and never has been. Private ventures, like those of Elon Musk, may face crackdown by their governments or the international community. But nations themselves will take what they want, when they want it — and right now, that could make peace on the final frontier a long shot in the 21st century.

Inspired by BonAppetit.com

Bon Appétit magazine calls tomato and watermelon “soul mates,” and they’re right! This surprising gourmet salad will be a hit at your next barbecue.

Ingredients

• 4 cups seedless watermelon, rind removed and cut into 1/2-inch cubes • 2 heirloom tomatoes, cut into 1/2-inch cubes • 8 oz feta cheese, cut into 1/2-inch cubes • Sea salt, to taste

• 1 tsp peppercorns, coarsely crushed • 1 tsp coriander seeds, coarsely crushed • 1/2 tsp cumin seeds • 1/2 tsp turmeric • 1/4 cup coconut oil

Directions

2. Combine the watermelon,

1. In a small saucepan, sauté spices and herbs in the coconut oil for 3 minutes

tomatoes, and feta on a large platter or in a bowl. Drizzle with cooled turmeric oil. Now, simply sprinkle with sea salt and enjoy!

over medium heat to create turmeric oil. Take the pan off of the heat, then let it cool.

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INSIDE THIS ISSUE

Prepare for Tomorrow by Planning Today

Caleb’s Corner 4 Reasons Why Reading Is Great for Your Health

Tomato and Watermelon Salad (Yes, Really!) Are We Headed for the First War in Space?

Fight SAD Early!

Fight SAD Early! Start Taking Vitamin D Now, Before the Sun Goes Away

There are a few ways to combat wintertime SAD. Establishing a regular sleep schedule is important, as is an exercise routine and healthy diet. As mentioned, it’s hard to find vitamin D in foods, but milk and other food products are often intentionally enriched with it during processing. The most common solution, however, is taking a vitamin D supplement, which can be purchased over the counter at drugstores and grocery stores. It is commonly recommended for people living in places with harsher winters,

Do you get SAD? We’re talking about seasonal affective disorder, which affects 1%–10% of the population depending on the state you live in. Symptoms of SAD are similar to symptoms of depression, but unlike chronic depression, which can occur at any time, people with SAD only experience symptoms during a certain time of year, usually winter.

SAD has been strongly linked with shorter days and less sun — although summertime SAD can result from long days that

make sleep difficult, resulting in irritability and mood swings. In most cases, however, winter is the problem season, likely due to a link between less sun and a vitamin D deficiency.

and although there are negative side effects if taken in excess, a regular daily dose of vitamin D is a healthy way to ensure you have the right levels in your system. This month is the perfect time to begin that process. Vitamin D can take several months to build up to effective levels in our bodies. It may be the hottest time of the year in many places, but it’s also the ideal time to start fighting SAD early!

Depression is one common symptom of vitamin D deficiency, especially in patients who aren’t prone to depression due to other circumstances. Unfortunately, very few foods are good sources of vitamin D. The best source is sunlight itself.

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