NJBIZ.com: Letter to the Editor


Check out John McManus’s letter to the editor regarding the gift tax exemption on NJBIZ.com:

Move fast to reap tax advantage

As part of the extension of the Bush tax cuts, Congress recently brokered a deal to include the single greatest “gift” tax relief of our lifetime. For many, it’s an unknown secret that up to $5 million can now be gifted away without the payment of any tax. However, this opportunity is set to expire in short order: the $5 million gift tax exemption only stretches to 2012.

Estate planners often recommend that clients push assets into their loved ones’ names to minimize estate tax and ensure that the future growth of such assets is off the client’s balance sheet. Until this year, a roadblock was quickly hit, as gifts in excess of $1 million suffered significant tax levies at confiscatory rates of up to 50 percent.

To take advantage of this unique environment, business owners and fortunate families should now gift assets, including company interests, into trust for their loved ones. Being a gifting donor does not necessarily mean gifting control.

It’s also important for business owners not prepared to gift away portions of their company to know that they have another option: Selling a non-controlling portion of one’s company to one’s children, in trust, will allow the children to utilize the revenue from that transferred portion to pay off the parent and business owner over a period of time.

An additional advantage of transferring non-controlling interests is that the business owner may enjoy a discount on this value. President Barack Obama has already indicated that he wants to radically cut back or eliminate valuation discounts when the transfer of business interests is between family members.

Move quickly, assess the relative advantages of these strategies and act resolutely thereafter. Missing this twilight period could prove to be taxing on your mind and your balance sheet.

John O. McManus, founding principal
McManus & Associates
New Providence

WalletPop: McManus on Estate Planning


John McManus is quoted throughout “Neglecting Estate Planning Is a Grave Error”:

Many people don’t bother to create an estate plan because they don’t think they have enough money to make it worth the effort, but John O. McManus, an estate attorney and founder of New Jersey-based McManus & Associates, points out that you don’t have to be a billionaire for your estate to add up. If you have a 401(k), life insurance, and a house that appreciated in value despite the downturn, your estate is likely to surpass $1 million. If you’re a small business owner, that total can skyrocket.

[ … ]

Avoiding estate taxes and probate fees is where smart estate planning comes in. McManus says that whether you want to leave your money to your spouse or your dog, getting expert advice to spell out your wishes in a will — and possibly a trust — is a smart idea.

There’s more. Read the rest on WalletPop.com.

Forbes: “How To Make The Most Of Your Inheritance”


Forbes’ Living Well in Retirement article, “How To Make The Most Of Your Inheritance” quotes John McManus:

John O. McManus, an estate lawyer in New Providence, N.J., has clients who used an inheritance to buy a beach house, an asset the couple viewed as appreciating, and as a memorial of sorts to their parents. His clients’ thinking, he explains: “This is place for the extended family to congregate and reminisce, and it supports the family values that grandma and grandpa espoused.”

Read the rest here.

Avenue Magazine: “Is your estate protected in 2011?”

The January, 2011 issue of Avenue Magazine features an article by John McManus, Is your estate protected in 2011?:

Now that the estate tax debate in Congress is over (for now), there is no better time for individuals and families to take action and optimize their estate plans. As we embark on a new year, we must resolve to capitalize on estate planning strategies that will not only spur asset growth for our heirs, but also ensure that a legacy of values continues for our loved ones.

[…]

Financial Advisor Magazine: “GRATs Dodge Regulatory Bullet”


Financial Advisor Magazine quotes John McManus for their story, “GRATs Dodge Regulatory Bullet”:

In March, the U.S. House of Representatives passed a bill with a provision that would have limited some of their tax benefits. A bill that failed in the Senate earlier this month would have required that GRATs be set up for a minimum 10-year term, making them much less attractive.

While many people did set up GRATs this year, others were on the fence, waiting to see how Congress would weigh in. Nevertheless, President Barack Obama signed the bill into law Friday.

Now, some hedge-fund and private-equity executives who sat on GRAT plans during the estate tax repeal this year, are “moving forward because they see more certainty on the horizon,” says John O. McManus, an estate lawyer in New York.

Read the rest here