Children eighteen years of age and older are legal adults under the laws of most states. As such, the child’s parents are no longer recognized as the child’s legal guardian and can no longer make medical and financial decisions for them. Therefore, children eighteen years of age and older should execute both a Health Care Proxy and Durable Power of Attorney.Your child should execute a legal document giving you, as parents, legal authority to make health care decisions if your child cannot (i.e. Health Care Proxy). Many children going away to college are now legally adults. If they become incapacitated (e.g. car accident, fever induced comma from swine flu) and cannot make emergency medical decisions for themselves, you may not be legally able to make a health care decision on their behalf unless they have a Health Care Proxy. It is common for hospitals not to release any information about your child because of privacy laws. Solving this problem is as easy as calling your estate attorney and asking them to draft a Health Care Proxy.A Durable Power of Attorney is a legal document that enables the child to designate another person to act on the child’s behalf for financial and legal matters. If your child is unable to access a bank account or resolve a credit card problem for any reason (e.g. they are out of the country), you would not be able to help your child unless there is a Durable Power of Attorney in place naming you as the child’s agent.Unfortunately, some parents do not realize this until it is too late. For example, if your child is traveling abroad and cannot access his or her bank account, a Durable Power of Attorney would allow you to speak with the U.S. financial institution to rectify the situation.DisclaimersPlease note that this information is not intended to constitute legal or tax advice.
Initial 2021 Tax Considerations
With the swearing-in of a new President and Vice President, plus convening of the next Congress, affluent Americans are weighing how changes in federal government may financially impact them.
Given that Democrats hold the Presidency and control both Houses of Congress by a slim margin, it now seems likely that tax reform could be passed as a budget reconciliation bill and then signed into law. While there is a remote chance that expected tax changes will be retroactive, it is more probable that they would take effect immediately upon becoming law or even at the start of 2022.
Since 2021 may be a last opportunity to capitalize on current income, capital gains, and transfer tax laws, families are considering key financial & estate planning adjustments, where appropriate.
Income & Capital Gains Tax Proposals
With the swearing-in of a new President and Vice President, plus convening of the next Congress, affluent Americans are weighing how changes in federal government may financially impact them.
Given that Democrats hold the Presidency and control both Houses of Congress by a slim margin, it now seems likely that tax reform could be passed as a budget reconciliation bill and then signed into law. While there is a remote chance that expected tax changes will be retroactive, it is more probable that they would take effect immediately upon becoming law or even at the start of 2022.
Since 2021 may be a last opportunity to capitalize on current income, capital gains, and transfer tax laws, families are considering key financial & estate planning adjustments, where appropriate.
“Be fearful when others are greedy and greedy when others are fearful.”
Responsive Planning
Given the above proposals, there is great uncertainty surrounding future tax policy. Even if some of the more benign tax provisions now in effect are not repealed, many of them are scheduled to sunset at the end of 2025 already.
Phase out the 20% pass-through deduction on qualified business income for people with annual income exceeding $400,000
Eliminate capital gain deferral through like-kind exchanges of business & investment real estate for people whose yearly income exceeds $400,000
Increase the highest corporate income tax rate from 21% to 28% and subject corporate book income of $100,000,000 or more to a 15% alternative minimum tax
Double the tax rate on global intangible low tax income (GILTI) earned by foreign subsidiaries of American businesses from 10.5% to 21%
Impose a 10% surtax for U.S. companies that move manufacturing & service jobs to another country and then provide services or products for sale back to the American market
Create an advanceable 10% “Made in America” credit for manufacturers’ revitalizing, re-tooling and hiring costs
