Estate Tax

January 1, 2016   Estate Administration

What's Happening in Estate Planning

On December 17, 2010 President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.This legislation had some surprises for those who had been following the process. In addition to extending unemployment benefits, current income tax rates (the Bush tax cuts) were extended for all taxpayers for two years, and the estate tax was also extended for two years -- with a $5 million exemption and 35% tax rate.Here are the highlights of this law and how these changes can affect your estate planning through 2012.Estate Tax Exemption and Tax RateYour estate will have to pay federal estate taxes if its net value when you die is more than the exempt amount in effect at that time. For 2011 and 2012, the individual exemption is $5 million (adjusted fo...
October 3, 2012   Trusts,   Estate Planning

How to Transfer More than $5 Million to an Irrevocable Spousal Access Trust

By James G. Blase, CPA, JD, LLM
Background   Many clients are scrambling to implement significant gifting plans and trusts prior to year-end, when the current $5 million lifetime gift tax exemption and $5 million generation-skipping transfer tax exemption are both scheduled to sunset, with the lifetime gift tax exemption potentially being reduced to its previous $1 million level. For many married couple clients, the goal is to double the amount of this current gift, to up to $10 million, again either outright or in trust.   Reciprocal Trusts   It is of course a simple matter for one spouse to establish a $5 million irrevocable spousal access trust (or “SAT,” for short) for his or her spouse, and for the other spouse to establish a $5 million trust or trusts for the benefit of the chil...
September 20, 2012   Estate Planning

Yes, Time IS Running Out to Save Unprecedented Amounts in Taxes

For the rest of 2012, every American can transfer up to $5.12 million free of federal gift, estate, and generation-skipping transfer tax. In the estate planning community this is a big deal, and estate planners are doing everything they can to motivate you to act before year end so you can take advantage of this unprecedented opportunity.   To understand why it is such a big deal, we only have to look at recent history. From 1987 through 2001, the federal estate tax exemption—the amount of assets an individual can leave to others without having to pay estate taxes—increased from $600,000 to just $675,000. Then the Bush tax cuts went into effect, and the exemption increased from $1 million in 2002 to $3.5 million in 2009. When Congress failed to change the law, the estate t...
August 13, 2012   Estate Planning

Take Advantage of the $5.12 Million Dollar Gift Tax Exemption . . . Before it’s too late.

There has been a lot of media coverage about the Bush tax cuts that are set to expire on December 31, 2012 and whether they will be extended for all taxpayers or if they will be discontinued for top earners. But not nearly as much has been said about the current estate and gift tax rates that are also due to expire on December 31.   What we have for the next few months is, indeed, an historic opportunity in estate planning, one we have never had before and likely will never see again.   You may remember that, at the end of 2010, Congress put in place a two-year estate tax provision, probably with the assumption that two years would give it time to do something more permanent. In this provision was a huge gift that no one had been expecting: a $5 million gift and estate tax exempt...
December 28, 2011   Estate Planning

How to Get The Most Out of the Estate Tax Exemption

Your estate will have to pay federal estate taxes if its net value when you die is more than the exempt amount set by Congress at that time. In 2011 and 2012, the federal exemption is $5 million (adjusted for inflation in 2012) and the tax rate is 35%. If Congress does not act again before the end of 2012, the exemption in 2013 will be $1 million and the top tax rate will be 55%. Some states have their own death tax, so your estate could be exempt from federal tax and still have to pay state tax.Year of Death Exempt AmountTop Tax Rate2011 and 2012$5 million (Adjusted for inflation in 2012)35%2013 and thereafter$1 million55% To determine the current net value of your estate, add your assets then subtract your debts. Be sure to include your home, business interests, bank accounts, investment...
October 17, 2011   Estate Planning

The Debt Ceiling Debate and the Estate Tax, Pets, Guns, and Alimony.

. . .What Could They Possibly Have in Common? Actually, they do have something very important in common: your estate plan.We will look at what the recent debt ceiling debate can tell us about the estate tax. Then we will look at several specialized trusts designed to solve particular estate planning problems, including trusts for pets, registered firearms and alimony.What the Debt Ceiling Debate Can Tell Us about the Estate Tax The recent debt ceiling debate showed us a lot about how Congress works. There is public posturing and blaming, to be sure, but there is also negotiation behind closed doors that we do not see. There are a variety of elements that are constantly shifting and being discussed until things finally do come together, but there is not a deal until the last piece falls int...
January 17, 2011   Estate Planning

Highlights of the New Estate Tax Legislation

On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "2010 Tax Act"). In a nutshell, it did five things: extended current unemployment benefits to 99 weeks, extended current income tax rates (the Bush tax cuts) for all taxpayers for two more years, made significant changes to the estate tax applicable to those dying in 2010, 2011, or 2012, modified the gift tax for 2011 and 2012, and modified the Generation Skipping Transfer Tax for 2010, 2011, and 2012.In this article, we will look at how these temporary changes can affect your estate planning.Estate Tax Exemption and Tax Rate Your estate will have to pay federal estate taxes if its net value when you die is more than the exempt amount in...
April 15, 2008   Estate Planning

Planning for the Zero Percent Tax Bracket

There was a recent change in the tax law that you might not be familiar with - yet it may entitle you to significant tax savings. Beginning January 1, 2008 and continuing through December 31, 2010 (unless extended by Congress), a zero tax rate may apply to long-term capital gain and dividend income that would otherwise be subject to the lowest federal income tax rates, 10% and 15%.The new zero tax rate creates the opportunity for eligible individuals to sell certain appreciated assets at no tax cost. By working with you to ensure that you take advantage of this new opportunity, if available, we can help you pay less tax and preserve more of your wealth.The Zero Tax Rate There are two questions we must ask to determine whether a taxpayer is eligible for the new zero tax rate.Is the taxpayer...
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