Winter 2017 Generations - Foley & Pearson · insurance.” limited insurance or otherwise have them...
Transcript of Winter 2017 Generations - Foley & Pearson · insurance.” limited insurance or otherwise have them...
4300 B Street , Suite 400
Anchorage, Alaska 99503
TEL 907.522.2272
EMAIL generat [email protected]
WEB foleyfoley.com
One of the keys to a good estate plan is having the right people serving as your successors in the event
of your death or disability. Your successors include
your successor trustees on your revocable living
trust; your agents under your power of attorney and
health care directive; and your
personal representatives under your will. Typically, the same people are
serving in all of these capacities.
While you can name good and
qualified friends or family to take over
your estate, rarely do they have
experience serving in these roles and
they often wonder what they are supposed to do if something happens
to you.
In order to prepare your successor
trustees, agents, and personal
representatives for the job you are
asking them to perform, we periodically offer a free
workshop to provide training and information.
Topics covered at this workshop include basic train-ing on trusts, probate, powers of attorney, trust
administration, trustee duties and responsibilities, fiduciary duty, and estate and income taxes.
Your successors probably have many questions they would like to ask a lawyer, and this workshop
provides a safe forum for them to ask
their questions. The workshop also
allows you to talk with your children,
beneficiaries, or loved ones about
your wealth and the legacy that you would like to leave.
We are holding this year’s Successor
Trustee Workshop on December 28,
2017. We hope that you and your
family or friends are available during
the holidays to attend this event.
To RSVP for this event, please call our
office at (907) 522-2272 or email us at
[email protected]. The workshop will be held at 1:30 p.m. in the Aurora II
room at the Crowne Plaza Hotel located at 109 W.
International Airport Road, Anchorage. We hope to
see you there!
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The Successor Trustee Workshop
Winter 2017
Generations F O L E Y , F O L E Y & P E A R S O N N E W S L E T T E R
By Richard H. Foley, Jr.
Federal estate and gift tax exemptions
are indexed to inflation, so each year
the amount of wealth that can be
transferred free of gift and estate tax is
subject to change. Following are the
major changes in tax law coming up in
2018.
Annual Gift Tax Exemption
Starting on January 1, 2018, the
annual gift tax exclusion increases
from $14,000 to $15,000. This means
that you can give up to $15,000 per
person ($30,000 for married couples)
without having to file a gift tax return.
Gifts in excess of $15,000 to one
person in one year must be reported to
the IRS on April 15th of the year after
the year the gift is made. However, in
most cases no gift taxes will actually
be due because gifts in excess of
$15,000 can be offset during an
individual’s lifetime by utilizing a
portion of the available applicable
exclusion amount, which is also
increasing next year.
Applicable Exclusion Amount
The applicable exclusion amount
(sometimes called the unified credit)
will increase on January 1, 2018, from
$5.45 million to $5.6 million. The
unified credit allows United States
residents to pass $5.6 million during
their lifetimes or at death to anyone
other than a spouse without the
imposition of any estate or gift taxes. A
couple will be able to pass up to $11.2
million to their children by utilizing
“portability,” which allows the
surviving spouse to claim the deceased
spouse’s unused exemption amount
(DSUEA).
CONTINUED ON PAGE TWO
Tax Law Updates Changes Coming in 2018
Estate
Planning
Workshops
Foley, Foley &
Pearson offers two
workshops every
month for people who
want to know more
about wills, trusts,
insurance, children’s
trusts, probate, estate
taxes, and more.
There is no charge
and no obligation.
You can check our
schedule, times, and
location online at
www.foleyfoley.com
Call us to RSVP at
522-2272.
Last year there were only about
5,000 taxable estate tax returns
filed with the IRS, which means
that approximately 1 in every
1,000 people (0.1%), had an
estate in excess of $5.45 million.
Proposed Tax Reform Bill
Congress is considering major
reforms to U.S. tax laws. At the
time of this writing the House
and Senate have passed major
changes to the tax laws, but the
final law has not been reconciled
between the two Houses of
Congress. The House Bill would
repeal the Estate Tax altogether.
The Senate Bill would nearly
double the unified credit to $10
million.
Either way, the major takeaway
is that for the vast majority of
people, estate and gift taxes
have become an irrelevant
consideration in their estate
planning.
Tax Law Updates
CONTINUED FROM PAGE ONE
By Richard H. Foley, Jr.
Recreation in the wild and scenic
beauty of the Last Frontier is a
way of life in Alaska. Many
Alaskans own and operate
private aircraft and watercraft so
they can enjoy these recreational
opportunities. But what is the
potential risk to the owners and
operators of the aircraft and
watercraft when they take
friends and neighbors hunting,
fishing, camping, or sightseeing?
Alaska law recognizes that
owners and operators of aircraft
and watercraft want to take
friends, family, and neighbors on
recreational trips, but don’t want
to be liable for potential
accidents. Consequently, Alaska
law has some unique provisions
that can provide liability
protection against claims of
passengers who suffer death or
injury while riding in an aircraft
or watercraft. Let’s look at how
this works in several scenarios.
No Liability Insurance for the
Owner/Operator
Let’s assume that the owner/
operator elects not to have any
liability insurance on the plane
or boat. The owner/operator will
be protected from liability to
passengers under Alaska law if
the passengers are informed
before entering the craft that the
owner and operator are
uninsured. This seems like an
easy way to be protected from
liability, but owners and
operators of aircraft and water-
craft rarely, if ever, announce to
the passengers, “Please be
advised that I do not carry
liability insurance on this
aircraft or watercraft.” Moreover,
when accidents occur, it is
unlikely that injured passengers
are going to remember being told
that there was no liability
insurance, or they may say that
they misunderstood what the
owner/operator was trying to
communicate about insurance.
The alternative to giving a verbal
disclaimer regarding insurance is
to have a written release form
B R I D G I N G
GENERATIONS
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Aircraft and Watercraft
Liability Protection
“Please be
advised that I
do not carry
liability
insurance.”
tell the passengers that there is
limited insurance or otherwise
have them sign any written
disclosures regarding limited
insurance.
Limited Liability for the Owner
and no Insurance for the
Operator
In the prior examples the owner
and operator were the same
person. But sometimes, the
owner allows someone else to
operate the craft (usually a boat,
which does not require any
special operation permits).
Assume that the owner has
limited liability insurance but
turns over controls of the vessel
to someone else for part of the
voyage. Assume that the
operator (who is not insured)
puts the boat on the rocks and
the vessel sinks with injury and
loss of life to passengers. In this
scenario, the vessel owner is
personally protected from
liability above the insurance
limits, but the operator—who
was not insured—could be liable
where passengers acknowledge
that they understand that the
owner/operator of the aircraft or
watercraft does not carry
insurance. But again, how often
will owners/operators of planes
and boats ask their friends to
sign an acknowledgement that
there is no insurance?
Limited Liability Insurance for
the Owner/Operator
Alaska law provides that an
owner/operator of an aircraft or
watercraft will only be liable to
passengers to the extent of the
insurance that they have
purchased. In other words,
assume that the owner/operator
of a boat purchases insurance
that covers passengers up to a
maximum of $25,000 per
passenger. If there is an accident
where passengers are injured or
killed, the maximum recovery
available is $25,000. The boat
owner/operator is not personally
liable for damages in excess of
$25,000.
This is a very powerful law
because it allows the owner/
operator of an aircraft or water-
craft to choose how much (or
how little) liability insurance that
they want to buy, and all
passengers are thereby limited to
what they can recover in
damages and the owner/operator
is protected from further liability.
In addition, by purchasing
minimal liability insurance the
owner/operator does not have to
to the passengers.
Statutory Limitations
In order for owners and
operators to take advantage of
these protections, there are three
conditions that must be met:
The actions of the owner or
operator cannot be considered
gross negligence, reckless
misconduct, or intentional
misconduct;
The aircraft or watercraft is not
being used as a common carrier
or for commercial purposes; and
The aircraft or watercraft was
not being demonstrated to a
prospective buyer.
In other words, accidents where
alcohol or extreme behavior are
involved, where passengers are
paying to be aboard the craft, or
where the trip is a demonstration
for a potential buyer may not be
protected.
Conclusion
For most recreational aircraft
and watercraft owners in Alaska,
it would seem that purchasing
even a small amount of liability
insurance would be a prudent
choice. This option provides
unlimited protection from
potential liability to friends,
family, and neighbors who are
along for a weekend trip.
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