Your Estate Plan: Could This Happen To You?

The combination of reduced asset values and the increase in the estate tax exemption between 2008 and 2009 has created a situation in which the “Law of Unintended Consequences” may cause devestating consequences for the surviving spouse. Assume that in 2008, a married couple had a net worth of $10M and instituted a very common estate plan, wherein at the death of the first spouse the then applicable estate tax exemption amount ($2M in 2008) is allocated to the children or a trust established […]

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Mortgage Over Basis Problems? Not Anymore… How To Deal With Phantom Income

If you (or your clients) have owned real estate for a long period of time, you are most likely faced with mortgage liabilities in excess of your adjusted tax basis in the real estate.1 Excessive depreciation deductions and mortgage refinancing have created what is commonly referred to as “phantom gain,” which is the excess of the mortgage liability over adjusted basis (also known as a “negative capital account”).2 If the value of the property has declined to a point where the mortgage is […]

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