Please join us in celebrating and congratulating John on his new role as Partner at Stewart Law, P.A.
Stewart Law, P.A. is pleased to announce the promotion ofJohn J. Long, Jr., JD to Partner at the firm.
John has served as a dedicated and hardworking team member since 2015. John’s extensive knowledge of Estate Planning and Probate Law, together with his committed and compassionate approach to our clients and team, make him a natural selection for Partner.
“John is a really amazing lawyer, always showing his concern for our clients and keeping his eye on providing services that add great value for them and their families. I’m thrilled to show our commitment to his long-term role here” adds Todd Stewart, the firm’s Managing Partner.
Please join us in celebrating and congratulating John on his new role as Partner at Stewart Law, P.A.
Bar Admissions North Carolina, 2014
Areas of Practice 50% Trust & Estates 50% Corporate & Transactional Law
Education Campbell University School of Law, Raleigh, North Carolina J.D. magna cum laude – 2014 Law Review: Campbell Law Review, Coordinating Editor, 2013 – 2014
University of North Carolina at Chapel Hill, Chapel Hill, North Carolina B.S. Business Administration– 2011 Honors: With Distinction Major: Finance
Professional Associations and Memberships North Carolina State Bar, Member North Carolina Bar Association, Member Mecklenburg County Bar Association Young Lawyers Division of the Mecklenburg County Bar
Past Employment Positions Ingersoll Rand, Billing Law Clerk, 2014 – 2015
When you give assets to someone during your lifetime or through your estate, the gifts are subject to gift and estate taxes. Fortunately, current laws provide for a large gift and estate tax exemption—an amount you can give before you face any tax liability.
Overview
When you give assets to someone during your lifetime or through your estate, the gifts are subject to gift and estate taxes. Fortunately, current laws provide for a large gift and estate tax exemption—an amount you can give before you face any tax liability. In 2018, the Tax Cuts and Jobs Act more than doubled this exemption from $5.49 million dollars to $11.18 million dollars. Today, the exemption amount has been adjusted to $11.7 million dollars. Therefore, an individual can gift $11.7 million dollars before facing any federal gift or estate tax.
Unfortunately for some, the current exemption will expire on December 31, 2025, and the exemption amount will return to $5 million dollars adjusted for inflation. Additionally, many professionals believe that Congress will lower the exemption amount consistent with the Biden Administration’s proposals ($3 to $3.5 million dollars for estate tax and $1 million dollars for gift tax).
Although the gift and estate tax exemption is set to decrease, there is a way individuals can lock in the current exemption amount of $11.7 million dollars. To take advantage of the current exemption amount and secure substantial tax savings, many families are creating Spousal Lifetime Access Trusts (SLATs).
What is SLAT and what does it achieve?
A SLAT is an irrevocable trust that an individual (the “donor”) funds for the benefit of his/her spouse. The donor’s children and grandchildren may also be named as beneficiaries. The donor uses a portion of his/her combined gift and estate tax exemption to transfer assets to the SLAT. Once the donor has transferred assets to the SLAT, the assets will be removed from the donor’s estate. The donor and his/her estate will face no further gift or estate taxes on transferred assets. Therefore, a SLAT allows the donor to gift up to $11.7 million dollars in assets to his/her spouse, children, and grandchildren in trust and tax free. Additionally, any appreciation on the transferred assets will not be taxable to the donor’s estate. For some clients, a SLAT will save millions of dollars in taxes.
A SLAT also offers creditor protection. When a donor transfers assets to a SLAT, the assets are protected from claims against the donor. Additionally, a SLAT will protect undistributed assets held in trust from claims against the spouse and other beneficiaries.
How Does a SLAT Benefit the Donor’s Spouse and Descendants?
The trustee(s) of a SLAT (which can include the donor’s spouse) will make distributions from the trust fund to the donor’s spouse and descendants. The trustee can also acquire and hold assets, such as a vacation home, for the beneficiaries. The donor can continue to make gifts to the SLAT in future years.
After the donor and his/her spouse have passed away, the trust fund will be distributed as directed by the donor and often this is to separate trusts for the donor’s descendants. The trustee(s) of each descendant’s trust (which can include the descendants) will make distributions from the trust fund to the descendant beneficiary.
In sum, the donor’s spouse and descendants will receive funds as appropriate throughout their lives. While the donor and his/her spouse are married, the donor may indirectly benefit from the spouse’s use of the trust fund.
Why act now?
Current tax laws will not exist forever. In fact, 2021 may be the last year to take advantage of the $11.7 million dollar exemption. A SLAT can lock in the current exemption, pass substantial wealth to loved ones tax free, and protect assets from creditors.
*Intended as general guidance only and not as legal advice.
With the current pandemic, election year, and unsettled economy, now is the best time to consider scheduling an annual family meeting.
With the current pandemic, election year, and unsettled economy, now is the best time to consider scheduling an annual family meeting. While many don’t think about holding this in a more formal setting, such as your advisor’s office, it is always a great idea for your family to meet your trusted team. As the Holidays approach, rounding up your family unit in the New Year to review and discuss family values, principles and mission with your team of advisors can help build confidence not only in you, but your family.
Should something happen to you, do your spouse and children know what to do if you are not there? Setting up a family meeting can help family members feel more comfortable with how to handle your passing or incapacity, and you can gain the peace of mind that your wishes will be carried out as planned.
By allowing your team of advisors to facilitate a family meeting, it creates a place where we can focus on being good stewards of business and personal wealth and taking care of your family if something should happen to you.
While there are many more benefits to these gatherings, a word should also be said about confidentiality. A meeting with your advisors allows you discuss the issues most important to you, without disclosing too much information until you’re ready to do so. Family meetings are geared towards a higher level of information and to introduce your team and let your family know that you have thought about, and have a plan for, their long-term wellbeing.
*Intended as general guidance only and not as legal advice.
Lifetime gifting, to children or others, has been a popular technique to reduce estate taxes for a long time. Currently, with estate tax exemption amounts exceeding $11 Million per person, most people do not have an urgent tax savings motivation for making gifts. However, this doesn’t mean that sticking to a gifting program is without value. The ultimate measure is at death and, at that time, your property is likely to be worth more than it is today and it’s entirely possible that the amount exempted from taxes will be less.
Aside from tax savings, our clients see at least 2 other major benefits to gifting. First, it’s a lot more satisfying to watch your kids or other loved ones enjoy the gift, rather than waiting until after you pass away. Second, many gifts are made in a trust or other arrangement and this causes them to be protected, such as in the case of a divorce or business setback. This can mean greater financial security for your children and grandchildren than would be true in the case of an outright inheritance of your property.
Here are some guides for gifting:
1. You can pay tuition bills directly to a school for the benefit of children and grandchildren. These are not treated as gifts for federal gift tax purposes, as long as they are paid directly to the educational institution and meet the other technical requirements. Healthcare costs qualify for similar treatment.
2. Make gifts that take advantage of your gift tax annual donee exclusion, currently $15,000.
3. Double the benefit of this annual donee exclusion by having your spouse join in these gifts.
4. Some gifts can be valued with a discount (e.g., stock in a closely-held company) and this means a larger gift that still fits within the annual donee exclusion and/or unified credit exclusion amount.
5. Make gifts of highly appreciated capital gains property. The tax basis of the gifted property will transfer to the donee. This can save tax dollars if the donee can sell the property and a lesser capital gains tax rate will be applicable.
*Intended as general guidance only and not as legal advice.
