4300 B Street , Suite 400

Anchorage, Alaska 99503

TEL 907.522.2272

EMAIL generat ions@foleyfoley.com

WEB foleyfoley.com

One of the keys to a good estate plan is having the right people serving as your successors in the event

of your death or disability. Your successors include

your successor trustees on your revocable living

trust; your agents under your power of attorney and

health care directive; and your

personal representatives under your will. Typically, the same people are

serving in all of these capacities.

While you can name good and

qualified friends or family to take over

your estate, rarely do they have

experience serving in these roles and

they often wonder what they are supposed to do if something happens

to you.

In order to prepare your successor

trustees, agents, and personal

representatives for the job you are

asking them to perform, we periodically offer a free

workshop to provide training and information.

Topics covered at this workshop include basic train-ing on trusts, probate, powers of attorney, trust

administration, trustee duties and responsibilities, fiduciary duty, and estate and income taxes.

Your successors probably have many questions they would like to ask a lawyer, and this workshop

provides a safe forum for them to ask

their questions. The workshop also

allows you to talk with your children,

beneficiaries, or loved ones about

your wealth and the legacy that you would like to leave.

We are holding this year’s Successor

Trustee Workshop on December 28,

2017. We hope that you and your

family or friends are available during

the holidays to attend this event.

To RSVP for this event, please call our

office at (907) 522-2272 or email us at

dec28workshop@foleyfoley.com. The workshop will be held at 1:30 p.m. in the Aurora II

room at the Crowne Plaza Hotel located at 109 W.

International Airport Road, Anchorage. We hope to

see you there!

Page 4

The Successor Trustee Workshop

Winter 2017

Generations F O L E Y , F O L E Y & P E A R S O N N E W S L E T T E R

By Richard H. Foley, Jr.

Federal estate and gift tax exemptions

are indexed to inflation, so each year

the amount of wealth that can be

transferred free of gift and estate tax is

subject to change. Following are the

major changes in tax law coming up in

2018.

Annual Gift Tax Exemption

Starting on January 1, 2018, the

annual gift tax exclusion increases

from $14,000 to $15,000. This means

that you can give up to $15,000 per

person ($30,000 for married couples)

without having to file a gift tax return.

Gifts in excess of $15,000 to one

person in one year must be reported to

the IRS on April 15th of the year after

the year the gift is made. However, in

most cases no gift taxes will actually

be due because gifts in excess of

$15,000 can be offset during an

individual’s lifetime by utilizing a

portion of the available applicable

exclusion amount, which is also

increasing next year.

Applicable Exclusion Amount

The applicable exclusion amount

(sometimes called the unified credit)

will increase on January 1, 2018, from

$5.45 million to $5.6 million. The

unified credit allows United States

residents to pass $5.6 million during

their lifetimes or at death to anyone

other than a spouse without the

imposition of any estate or gift taxes. A

couple will be able to pass up to $11.2

million to their children by utilizing

“portability,” which allows the

surviving spouse to claim the deceased

spouse’s unused exemption amount

(DSUEA).

CONTINUED ON PAGE TWO

Tax Law Updates Changes Coming in 2018

Estate

Planning

Workshops

Foley, Foley &

Pearson offers two

workshops every

month for people who

want to know more

about wills, trusts,

insurance, children’s

trusts, probate, estate

taxes, and more.

There is no charge

and no obligation.

You can check our

schedule, times, and

location online at

www.foleyfoley.com

Call us to RSVP at

522-2272.

Last year there were only about

5,000 taxable estate tax returns

filed with the IRS, which means

that approximately 1 in every

1,000 people (0.1%), had an

estate in excess of $5.45 million.

Proposed Tax Reform Bill

Congress is considering major

reforms to U.S. tax laws. At the

time of this writing the House

and Senate have passed major

changes to the tax laws, but the

final law has not been reconciled

between the two Houses of

Congress. The House Bill would

repeal the Estate Tax altogether.

The Senate Bill would nearly

double the unified credit to $10

million.

Either way, the major takeaway

is that for the vast majority of

people, estate and gift taxes

have become an irrelevant

consideration in their estate

planning.

Tax Law Updates

CONTINUED FROM PAGE ONE

By Richard H. Foley, Jr.

Recreation in the wild and scenic

beauty of the Last Frontier is a

way of life in Alaska. Many

Alaskans own and operate

private aircraft and watercraft so

they can enjoy these recreational

opportunities. But what is the

potential risk to the owners and

operators of the aircraft and

watercraft when they take

friends and neighbors hunting,

fishing, camping, or sightseeing?

Alaska law recognizes that

owners and operators of aircraft

and watercraft want to take

friends, family, and neighbors on

recreational trips, but don’t want

to be liable for potential

accidents. Consequently, Alaska

law has some unique provisions

that can provide liability

protection against claims of

passengers who suffer death or

injury while riding in an aircraft

or watercraft. Let’s look at how

this works in several scenarios.

No Liability Insurance for the

Owner/Operator

Let’s assume that the owner/

operator elects not to have any

liability insurance on the plane

or boat. The owner/operator will

be protected from liability to

passengers under Alaska law if

the passengers are informed

before entering the craft that the

owner and operator are

uninsured. This seems like an

easy way to be protected from

liability, but owners and

operators of aircraft and water-

craft rarely, if ever, announce to

the passengers, “Please be

advised that I do not carry

liability insurance on this

aircraft or watercraft.” Moreover,

when accidents occur, it is

unlikely that injured passengers

are going to remember being told

that there was no liability

insurance, or they may say that

they misunderstood what the

owner/operator was trying to

communicate about insurance.

The alternative to giving a verbal

disclaimer regarding insurance is

to have a written release form

B R I D G I N G

GENERATIONS

Page 2

Aircraft and Watercraft

Liability Protection

“Please be

advised that I

do not carry

liability

insurance.”

tell the passengers that there is

limited insurance or otherwise

have them sign any written

disclosures regarding limited

insurance.

Limited Liability for the Owner

and no Insurance for the

Operator

In the prior examples the owner

and operator were the same

person. But sometimes, the

owner allows someone else to

operate the craft (usually a boat,

which does not require any

special operation permits).

Assume that the owner has

limited liability insurance but

turns over controls of the vessel

to someone else for part of the

voyage. Assume that the

operator (who is not insured)

puts the boat on the rocks and

the vessel sinks with injury and

loss of life to passengers. In this

scenario, the vessel owner is

personally protected from

liability above the insurance

limits, but the operator—who

was not insured—could be liable

where passengers acknowledge

that they understand that the

owner/operator of the aircraft or

watercraft does not carry

insurance. But again, how often

will owners/operators of planes

and boats ask their friends to

sign an acknowledgement that

there is no insurance?

Limited Liability Insurance for

the Owner/Operator

Alaska law provides that an

owner/operator of an aircraft or

watercraft will only be liable to

passengers to the extent of the

insurance that they have

purchased. In other words,

assume that the owner/operator

of a boat purchases insurance

that covers passengers up to a

maximum of $25,000 per

passenger. If there is an accident

where passengers are injured or

killed, the maximum recovery

available is $25,000. The boat

owner/operator is not personally

liable for damages in excess of

$25,000.

This is a very powerful law

because it allows the owner/

operator of an aircraft or water-

craft to choose how much (or

how little) liability insurance that

they want to buy, and all

passengers are thereby limited to

what they can recover in

damages and the owner/operator

is protected from further liability.

In addition, by purchasing

minimal liability insurance the

owner/operator does not have to

to the passengers.

Statutory Limitations

In order for owners and

operators to take advantage of

these protections, there are three

conditions that must be met:

The actions of the owner or

operator cannot be considered

gross negligence, reckless

misconduct, or intentional

misconduct;

The aircraft or watercraft is not

being used as a common carrier

or for commercial purposes; and

The aircraft or watercraft was

not being demonstrated to a

prospective buyer.

In other words, accidents where

alcohol or extreme behavior are

involved, where passengers are

paying to be aboard the craft, or

where the trip is a demonstration

for a potential buyer may not be

protected.

Conclusion

For most recreational aircraft

and watercraft owners in Alaska,

it would seem that purchasing

even a small amount of liability

insurance would be a prudent

choice. This option provides

unlimited protection from

potential liability to friends,

family, and neighbors who are

along for a weekend trip.

Page 3