Let’s discuss the gift tax rules for the United States in 2023:

Lifetime Exemption: You can gift $12.92 million (up from $12.06) over the course of your lifetime without incurring any gift tax. As a married couple, you can combine this amount for $25.84 million gifted before tax.


Gift Tax Rate: Any gift made in excess of your lifetime exemption will be subject to a 40% tax. In other words, if you are unmarried, the $12,920,000 and first dollar gifted will be subject to 40 cents tax.

More fun? There are additional gifts that are excluded from your lifetime exclusion.

Gift Tax annual exclusion: You can gift up to $17,000 a year (up from $16,000) to any number of individuals without eating into your $12.93 million lifetime exemption. If you are married, you and your spouse can combine to gift up to $34,000 per person, per year. This is in addition to your lifetime exclusion.

Even more fun? There are additional gifts that are excluded from both your lifetime exclusion and your annual exclusion.

Gifts to a Spouse: You can make unlimited tax-free gifts to your US citizen spouse.

Gifts to Charities: You can make unlimited tax-free gifts to qualified charitable organizations.

Gifts for Medical Expenses: You can make unlimited tax-free gifts for someone else’s medical expenses paid directly to the provider.

Gifts for Educational Expenses: You can make unlimited tax-free gifts for someone else’s tuition expenses paid directly to the educational institution. Not lab fees. Not housing. Not books or computers or athletic fees charged by the educational institution – only tuition is the freebie.

Here is an example to maximize your gifting each year.

Let’s assume your son Boo is the father of your darling granddaughter, Gracie. First, pay Gracie’s health insurance premium directly to the provider. Second, pay all other of Gracie’s medical costs by giving Boo a credit card that you pay, with which Boo can charge Gracie’s other medical expenses. Third, pay Gracie’s tuition directly to Gracie’s school. Finally, write Gracie a check for $17,000 and let Gracie pay for her books and athletic fees and lab costs.

You would be delighted to know of the many, many techniques I have available to leverage your gifting if you have a taxable estate. It is magic.


How do you ‘import’ a common law marriage from one state to the next? What do you have to show to prove you were married by common law? Krystal and Merrell discuss all of this, and the argument for just getting married.

Show Notes:

Let’s start by defining common law marriage –  A common law marriage is a legally recognized marriage between two people who have not purchased a marriage license or had their marriage solemnized by a ceremony. Not all states have statutes addressing common law marriage. In some states case law and public policy determine validity.

We have heard the stories and have clients ask us, if I live with my partner/significant other for 6 months or some other period of time, are we common law married?  The answer is not so simple.

States that statutorily recognize common law marriage: Colorado, Iowa, Kansas, Montana, New Hampshire, South Carolina, Texas and Utah, and the District of Columbia. Without getting into the particulars of the laws surrounding common law marriage in each state, it is worthwhile to note that each state’s statutes are different and you should consult legal counsel in your particular state to get more information.

Several states recognize common law marriage through case law as well, including Rhode Island and Oklahoma, as well as the District of Columbia.

There are also several states that used to allow common law marriage:  Pennsylvania, Ohio, Indiana, Georgia, Idaho, Oklahoma, Florida, and Alabama.  Each of these states has a statute that identifies the date on which common law marriages are no longer recognized.  For example, Florida’s law states that no common law marriage may be entered into after January 1, 1968, and Alabama’s is January 1, 2017.

There is no hard and fast rule or rules that “prove” common law marriage.  There are many factors that Courts look at when making a determination, including:

  • You must live together (the amount of time varies by state)
  • You must have the legal right, and the capacity, to be married (age, sound mind, not married to someone else, etc.)
  • You must consent/be in agreement that you are “married”
  • You must have a reputation in the community that you are married – holding yourself out to family and friends as a married couple, referring to each other and introducing each other as spouse/husband/wife, hold joint accounts and credit cards
  • Filing joint tax returns
  • Holding bank accounts jointly
  • Holding real property jointly
  • Having and raising children together
  • Sharing a common surname
  • Identifying a party as a spouse on insurance or benefit forms
  • Wearing rings

Ultimately, it is a judge that will make the determination, based upon the evidence presented.

How does common law marriage affect estate plans and trust/estate administration?

 Estate planning is especially important for couples in common law marriages because this type of marriage is unusual and may be not acknowledged when it matters most — like during a health crisis or after an unexpected death. In a health care crisis, if a marriage is not recognized, a common law spouse may not get to make critical health care or financial decisions for their partner.  They may not have access cash or property needed to pay necessary bills such as a mortgage or rent.

In the event of the death of a partner, the surviving party may have to fight to receive their partner’s property. And if you live in a state that doesn’t recognize common law marriage, then even if you live together in a relationship for 50 years and consider yourselves married, the surviving partner will not receive any portion of the deceased party’s estate unless they have an estate plan in place.

On the other hand, if you do not want your relationship to be deemed a common law marriage at your death, it is important to make that acknowledgment in your estate planning documents to prevent another party from claiming a common law marriage and request a spousal share of your estate.

If you are in, or have clients in a committed, long-term relationship who have not officially married or obtained a marriage license, have the conversations with them about incapacity and death planning.  Help them through the process of how they want to define their relationship and prepare the property documents to make their decision clear.

How will the Biden Administration’s Proposed Tax Plan affect me?

Merrell and Krystal discuss the proposed tax plan under the Biden administration and the importance of getting the information out to clients.

Most proposed changes affect those individuals with taxable income rates over $400,000. There are also substantial changes for investors and corporations, and changes to the gift and estate tax codes. Among other tax credit changes, Biden’s first time homebuyers’ credit would provide up to $15,000.


:45 – We know our clients want to know if their estate plans will need revision

1:10 – The proposed changes affect individual income tax rates, corporate income tax rates, federal estate taxes and lifetime gifting limits. Most changes affect those with taxable income over $400,000

1:49 – The donut hole in the Social Security payroll tax

2:55 – Top taxable income rate changes from 37% to 39.6% (applies to income over $400,000)

3:35 – What about itemized deductions?

4:06 – Long term capital gains changes are a BIG change to investors

4:33 – Qualified business income deductions (Section 199A) will be phased out

4:47 – Real estate opportunity zones and capital gains exemptions

5:43 – Tax benefits for renewable energy and expiring solar energy credit

6:38 – Corporate income tax rate increases from 21% to 28%

6:55 – Estate tax and gift tax changes. One proposal involves restoring them to the 2009 level

8:54 – Additionally, the step-up in basis could be eliminated. This is problematic for a number of reasons

10:21 – Implications of losing step-up in basis when it comes to inheriting property

13:27 – Because Congress will make the rules, we probably don’t want to make changes until we see what happens

14:10 – Merrell pleads with Biden to 1) not to make anything retroactive 2) or make the gift tax exemption and the estate tax exemption bifurcated and 3) take away the step-up in basis

15:00 – Krystal discusses strategic gifting for clients with a large combined net worth before the end of the year

16:56 – Additional changes include expanding the Earned Income Tax Credit, Child Dependent Care Tax Credit, and re-establishing the First Time Homebuyers’ Tax Credit.

17:35 – Brief discussion of the current housing market

Tax Bosses’ detailed notes:

Most of the proposed income tax changes affect those individuals with taxable income over $400,000 and include:
  • Imposing a 12.4 percent Social Security payroll tax on income earned above $400,000, evenly split between employers and employees. This would create a “donut hole” in the current Social Security payroll tax, where wages between $137,700, the current wage cap, and $400,000 are not taxed.
  • Reverting the top individual income tax rate for taxable incomes above $400,000 from 37 percent under current law to the pre-Tax Cuts and Jobs Act level of 39.6 percent.
  • Capping the tax benefit of itemized deductions to 28 percent of value for those earning more than $400,000, which means that taxpayers earning above that income threshold with tax rates higher than 28 percent would face limited itemized deductions.
  • Imposing a limitation on itemized deductions for taxable incomes above $400,000.
  • Phasing out the qualified business income deduction (Section 199A) for filers with taxable income above $400,000.
  • Taxes long-term capital gains and qualified dividends at the ordinary income tax rate of 39.6 percent on income above $1 million
Proposed corporate income tax changes include:
  • Increasing the corporate income tax rate from 21 percent to 28 percent.
  • Creating a minimum tax on corporations with book profits of $100 million or higher. The minimum tax is structured as an alternative minimum tax—corporations will pay the greater of their regular corporate income tax or the 15 percent minimum tax while still allowing for net operating loss (NOL) and foreign tax credits.
  • Expands the New Markets Tax Credit and makes it permanent. The NMTC Program attracts private capital into low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called Community Development Entities (CDEs). The credit totals 39 percent of the original investment amount and is claimed over a period of seven years.
  • Offers tax credits to small business for adopting workplace retirement savings plans.
  • Expands several renewable-energy-related tax credits, including tax credits for carbon capture, use, and storage as well as credits for residential energy efficiency, and a restoration of the Energy Investment Tax Credit (ITC) and the Electric Vehicle Tax Credit. The Biden plan would also end tax subsidies for fossil fuels.
Proposed federal estate and gift tax changes include:
  • Restoring the federal estate and gift tax rates and exemption to the 2009 level. In 2009, the federal estate tax exemption amount was $3.5 million and the lifetime gift exemption was $1 million. The maximum tax rate was 45%.  There is also talk that the exemption amount might be in the $3.5 – $6 million range, but even on the highest end, that is ½ of what we currently have.  And the lifetime gifting may no longer be tied to the federal estate tax exemption.
  • Eliminating step-up in basis at death for capital gains taxation.
Some additional proposals that may be of interest to advisors and our clients include:
Expanding the Earned Income Tax Credit (EITC) for childless workers aged 65+; provides renewable-energy-related tax credits to individuals.
Expanding the Child and Dependent Care Tax Credit (CDCTC) from a maximum of $3,000 in qualified expenses to $8,000 ($16,000 for multiple dependents) and increases the maximum reimbursement rate from 35 percent to 50 percent.
For 2021 and as long as economic conditions require, increases the Child Tax Credit (CTC) from a maximum value of $2,000 to $3,000 for children 17 or younger, while providing a $600 bonus credit for children under 6. The CTC would also be made fully refundable, removing the $2,500 reimbursement threshold and 15 percent phase-in rate.
Reestablishing the First-Time Homebuyers’ Tax Credit, which was originally created during the Great Recession to help the housing market. Biden’s homebuyers’ credit would provide up to $15,000 for first-time homebuyers.

Details and Analysis from the Tax Foundation

Summary of Changes from the Wall Street Journal

Higher Taxes on Corporations and the Wealthy

Can you pay an employee their salary and a consulting fee?

Advisors, have you had a client ask you if the technique of paying consulting fees is better than paying payroll or gift tax? Krystal and Merrell discuss what is legal and tax efficient, using the following example.

The New York Times matched a consultant payment of $747,622 deducted by President Trump to an income item on Ivanka Trump’s disclosure forum. The payments allegedly were for consulting work on projects that Ivanka already was being paid for as an employee.


:45 – Family owned businesses have recently asked if they can pay family members on the payroll as executives, and also pay the same family members a consulting fee for the same project.

1:12 – Families very often are looking for ways to transfer wealth from one generation to the next. Only a couple of ways to do this. You can pay a family member compensation which is subject to income taxes and payroll taxes but may be deductible as a business expense, or you can gift money to a family member, subject to gift tax.

1:50 – Krystal discusses her experience with families wishing to pay salary and gift but not layer salary and consulting fees.

2:19 – Merrell reviews President Trump and the fees to Ivanka.

3:30 – Using a $1m salary example, we look at deductions, payroll taxes, the child’s income taxes and payroll taxes. Is it less than the gift tax if they’d have made a gift of a $1m? It depends on whether or not it’s a taxable estate.

6:10 – What if the estate tax rate goes down under President Biden?

7:15 – Krystal and Merrell examine the business deductions assuming an example of an unreasonable payment (in excess of $1m). Breaking compensation into different categories doesn’t help.

8:50 – It’s about sitting down with clients and helping them work through the math. What is legal, and what is the most tax-efficient way to transfer wealth?

9:20 – It takes a village. We, the CPAs, the estate tax attorneys, the business tax attorneys, the financial advisors – we need to work together to do the math to get the best result for our clients. Each of us has a piece of the puzzle, and when we put the pieces together, it is so much better for our clients.


NYT Trump tax records

CNN Ivanka Trump’s categorization as a consultant

Is your consultant really your employee?

Florida Payroll Tax Calculator

Net Investment Income Tax

2020 Tax Brackets

Section 162(m) Proposed Regulations 

Limits on Deductions for Executive Compensation

Young adults. They’re still your children, but legally they’re not (under the law). What are your options? Krystal and Merrell cover legal documents for young adults, and issues for them to consider.


1:09 – In Florida, a parent’s legal right to be in charge of their children is severed at eighteen years old.

2:33 – Durable Power of Attorney and why we recommend it for young adults. (It will allow your child’s college to talk to you about grades, tuition and other things.)

4:30 – Why we also recommend the Health Care Surrogate.

6:50 – Adult children may be in a broken family, where contact is limited with another parent, and guardianship issues in worst case scenarios.

8:10 – Funeral arrangements, example of a UCF student’s parents arguing for over 5 years over his ashes.

11:45 – Pre-need guardianship – going back to the issue of splits in the family. (Britney Spears as example, and her father Jamie Spears being appointed as her guardian.) Merrell also explains her admittedly strange obsession with the National Enquirer.

14:34 Krystal discusses Living Wills and Medical Power of Attorney. Ensuring the person you name as agent understands your wishes.

22:20 The sad case of Bobbi Kristina Brown and her live-in boyfriend, estranged parents, and who was in charge? Would she have chosen differently?

24:20 Why we speak to the (adult) child without the parents present.

25:00 On your college student’s packing list, make sure you include this list of legal documents. (See ebook below.)


Free ebook from Your Caring Law Firm, 18 and On Your Own

Merrell and Krystal give examples of common real estate fails and how they show up in probate. It’s important to get in front of the right attorney, one who practices in their area predominantly.


:48 – Example 1: Dad is getting ready to move into assisted living, and wants to sell his condo. But there are some major issues with the deed (as in, Dad doesn’t own the condo because of a quit claim deed from 1994 that conflicted with his mom’s will from 1996.)

2:44 – Life Estate definition

3:30 –  Example 1 – Incredibly, the same attorney who prepared the quit claim deed was the same one who prepared Mom’s will and created the mess. Krystal explains how Dad’s siblings also own this property. Two have passed away. Each sibling’s interest passed according to their will, or laws of intestacy. Someone has to open probate for the deceased siblings before the property can be sold.

5:20 – Example 2 – A piece of Florida land owned by 59 people that took multiple probates to clear it up.

6:50 – Example 3 – Mom and Dad had separate trust-based plans, so the homestead was owned 50% by each. But Dad’s half never went into his bypass trust when he “got on the bus.”

7:50 – Clean up a title before passing a mess on. Or it will be costly, and several people/multiple generations of family will need to find a way to come to an agreement.

9:25 – Deed swaps are complicated and create taxable events.

10:05 – Why it’s important to meet with all of your documents so that an attorney can get the whole picture.

11:10 – Merrell’s frustrations about “threshold law” (as in, ‘anybody who crosses the threshold of the door, we can do it.’) Also, shout-out to attorney Joe Seagle in Orlando, and why we outsource all deeds work to his office – because he’s really good at that.

12:35 – Back to example 1, Grandma thought she was doing everything she should have been doing. Unfortunately, it looks like she was, but she was getting it done by someone who didn’t know what they were doing.

12:50 – Example 4 – YCLF looked at four wills a few weeks ago. Not one had a residuary clause. No excuse, because three of four of those wills were prepared by attorneys.


If you haven’t done your estate planning (which includes legal documents that allow someone to handle your affairs in the event of an emergency) don’t panic; however, now is a really good time to get them done.

We talk about remote options and some of your most common concerns during the coronavirus pandemic.


:40 We’re getting a ton of calls about what can people do if they kept putting off writing their wills and other documents. What you can do to get prepared in a hurry.

2:30 Planning in advance is far less expensive overall than trying to manage affairs in a crisis, and it’s much easier on your loved ones.

3:20 Legal services and firms are still an essential business, and we’re all still open to help you.

4:45 Krystal explains that before this crisis, they didn’t usually do remote meetings. However, everyone is adapting, and there are ways to get an estate plan done without being physically present.

6:15 Florida’s remote notarization laws. They weren’t supposed to go into place for wills and trusts until July. Florida still requires two witnesses, and Florida has no provision currently for remote witnesses.

8:00 Colorado allows remote notarization due to an emergency directive.

10:00 What happens if you don’t have any legal documents and you end up in the hospital?

10:45 Health care surrogate and living will documents. Most hospitals will provide a health care surrogate and living will form…which isn’t ideal, but they are better than nothing.

12:00 A Do Not Resuscitate order or DNR – hospitals provide this, not lawyers. This ONLY addresses if the heart stops. What’s the difference between a DNR and a POLST?

13:12 A case example: an older woman changed her Living Will to explain that she did not want a respirator/ventilator if they were in short supply. Merrell argues that this would have been better placed in the Healthcare Surrogate form.

14:45 Capacity: If you can communicate, we never get to these documents. But they are a good place to inform everyone of your boundaries and wishes.

16:00 Because of Coronavirus, if your loved one goes to the hospital, you may not be able to go with them. So, you may be someone’s health care surrogate, but the hospital may have the right to refuse you; doctors may communicate by phone.

17:00 Merrell discusses the right to make funeral arrangements and how important it is to include this in an estate plan. Krystal explains what this form looks like in Colorado.

20:30 Hospitals CANNOT provide the essentials: Durable Power of Attorney and others. Good attorneys are out there to help you now.


The SECURE Act of 2020 (Setting Every Community Up for Retirement):

  • is changing retirement, and it may change how your wealth is distributed;
  • it may require a check-in with your estate planner to adjust your estate plan’s language and/or structure to do what you originally intended;
  • or if you’re an advisor, it may require a check-in with the estate planner and other financial professionals in your client’s sphere


:30 Krystal and Merrell introduce the impacts to qualified retirement plans and what changes after the planholder passes away. What should advisors expect from other advisors in response to the SECURE Act?

1:30 The rules before 2020…inherited IRAs, rollover IRAs, and ability of a beneficiary to stretch distributions over their life expectancy

2:33 As estate planning attorneys we considered passing wealth to another generation in IRA trusts. (A two-year old grandchild as example)

3:38 Krystal outlines the rules now, as of January 2020. If you inherit an IRA and are not a spouse, the entirety of the retirement plan must be paid out within ten years (and associated income tax)

5:00 Merrell discusses the SECURE Act in context of leaving wealth to grandchildren…

5:52 Exceptions to the ten year rule include: a surviving spouse; and person that fits the SECURE Act’s definition of  disabled and chronically ill persons; a beneficiary that is fewer than ten years younger than the planholder; and a minor child – not grandchild – until the age of majority

7:30 Krystal talks about revisiting client goals and trust provisions with CPAs and financial advisors

8:30 Merrell compares beneficiary possibilities – either as a trust or as a human, and the respective tax rates for each; she explains how the trust may need to have accumulation language so as not to force distributions and give the trustee some discretion

10:52 Common trusts (aka pot trusts, multiple beneficiary trusts) vs. Separate trusts; spreading the IRA tax hit

14:43 Explaining to the client how the 2020 SECURE Act laws are different than when we did their initial planning, and opening up the possibility of letting other assets appreciate

16:00 Merrell compares the relative risk of setting up a structure that requires the trustee to distribute wealth that will harm the beneficiary vs. taking the tax hit under the new law

17:28 Takeaways for estate planning clients as well as their advisors; revisiting your plan with your estate planning attorney to make sure it still makes sense and if an advisor, reaching out to make sure the client has the option to make changes


Other provisions of the SECURE Act 

If you like charts, National Association of Planners’ summary points of SECURE Act


When is estate planning through beneficiary designations and/or payable on death designations a good idea? Merrell and Krystal discuss the very particular situations and criteria that makes this a safe estate planning tool.


:30 Merrell discusses her perfect client for this kind of estate plan – life insurance, homestead, checking account, and a retirement account, a modest estate and two adult children that are in good places in their life.

1:47 Krystal elaborates on additional things she looks for in trying to plan outside of a will, recommending estate planning through beneficiary designations: children that get along and have a good relationship if they will inherit assets together; no special needs issues, and more

3:08 The estate planning quadrant (take a trip inside Merrell’s head). “The Asset Action Plan” is divided into 1) own it with someone else, joint tenants, rights of survivorship, 2) assets that have beneficiary designations, 3) in their own name, not owned with anyone else and without a beneficiary designation (this kind of asset would go through probate), and 4) if a revocable living trust, the things that are titled in there.

4:08 How the Asset Action Plan works to avoid probate – moving all assets into box 1 or 2. Caution – this does not provide asset protection to the next generation.

4:36 What about business ownership transfers upon death?

5:30 If you’re going to do estate planning like this, you MUST have a good Durable Power of Attorney. A good one!

6:14 When other advisors tell you to use beneficiary designations and screw up a carefully crafted trust-based estate plan. (Advisors and estate planners, this is why we need to work together.)

7:22 For example, financial advisors, our mutual client may not be comfortable discussing her daughter’s bad marriage and why I have things set up so that she won’t inherit everything outright.


When is not making a last will and testament a bad idea? See Your Caring Law Firm’s article about jointly owned accounts and Quit Claim deeds.



Thinking about gifting DNA testing for fun this holiday season? What if you find new relatives – or if they find you?
How does that impact your estate plan?
How can you take ownership of, and control, your test results?


:30 A story about an entire family doing 23andMe DNA testing

1:35 How does it affect your estate plan if you have a relative out there you were unaware of? How can you take control of your DNA test results?

2:15 Would you want to include new relatives in your estate plan? Is it on your radar if you’re planning on taking one of these tests?

3:00 Legally, are unknown, biological children heirs under state law? Generally, heirs at law are your biological child, not adopted out. Or, someone you have adopted, who isn’t your biological child.

3:45 What if your client doesn’t know they have a child – how can they be legally adopted out? Family attorneys, private investigators are helpful for that question. A good estate plan is more helpful.

4:40 State intestacy laws and other children popping out of the woodwork

5:25 Law enforcement using DNA test results to find criminals through relatives

6:00 What do you do if you find out your dad is not your dad? (Michael Jackson as an example) A child born of a marriage is considered to be a child of both parents, and an heir at law, even if not biological.

7:10 DNA testing and multi-generational asset protection trusts – “I’m an heir at law!”

8:08 Who get the information about your DNA when you die? DNA tests as a digital asset

9:55 Concluding thoughts – if you’re planning on gifting DNA testing for the holidays, you may want to revise your estate plan…just in case.




In this episode of Tax Boss, we discuss gift tax and how to help your clients make friends by giving their wealth away.


Marilyn Monroe estate plan

IRS Gift Tax FAQs


1:17 Gift reporting and gift tax rules; when drafting a will to leave everything to one person with instructions to divide it further

2:30 The burden of gift reporting requirements

3:10 Gifts in excess of $15,000 in any calendar year need to reported to the IRS (married couples may gift up to $30,000 in a calendar year between the two of them)

3:30 Exceptions

4:20 Gifts and lifetime exclusion

4:39 Back to burdening one individual with reporting, and why her ‘actual’ gift would be less than what counts toward her lifetime exemption amount

6:10 Explaining why a Personal Representative solution is much better

6:42 What if your friend doesn’t gift out your estate the way you plan? What if she is in the middle of a divorce? Or is being sued?

7:17 Marilyn Monroe’s estate planning fail – why a woman she never met inherited everything

8:17 Leaving assets to one person in the hope they’ll gift to another person is a very, very bad idea




In this episode of Tax Boss, we discuss solvency certificates and why attorneys request them.


Solvency explained


1:17 What is a Solvency Certificate? Why is a solvency certificate used?

3:04 Evidence of use of asset protection structures as estate planning measures and not measures against avoiding creditors

3:40 Risks of co-signing on student loans


In this episode of Tax Boss we discuss portability and estate planning, transfer taxes between married couples, prenups and generation-skipping transfer tax.


IRS form 706 (Revised November 2018)


1:43 Portability and transfer taxes between married couples (11.2 million dollars exemption currently, 22.4 together)

2:43 “I love you” Wills

3:50 how portability works and filing an estate tax return form 706

5:12 capturing the portable amount before Congress changes their mind

6:20 what about getting re-married? How would the IRS handle the prenup?

8:07 the generation skipping transfer tax is not portable