Wills and Estate Planning in Pennsylvania, New Jersey and New York.

2010, the year of no estate tax is over.

2011 and 2012 will
have a 35% flat tax.

For 2011 and 2012 federal estate tax will be imposed at a flat 35 percent rate.

 

Exemption for the first $5 million of assets, indexed for inflation for the first time to married individuals.

1) A married couple will have a $10 million exemption.
The estate tax exemption will be “portable.”

Portable means f one spouse dies with $2 million, the surviving spouse will have his or her own exemption PLUS the unused $3 million from the first spouse.

ALL WILLS FOR MARRIED COUPLES SHOULD BE REVIEWED NOW.

 

2) There will be an increase in the lifetime gift tax exemption from $1 million per person to $5 million per person. This expands greatly the ability of wealthy people to make gifts during their lifetimes.

3) An extension of the ability to do a charitable IRA rollover, a direct transfer of IRA assets to a charity. This is a provision limited in terms of who can make use of it, but it can be useful in the right circumstances.

4) Did you die this year? We hope not.

For those who died in 2010, the year of no estate tax, there will be a choice between paying estate tax or having no step-up in the basis of assets.

5) The generation skipping tax makes such transfers easier to accomplish.

The federal estate and generation-skipping transfer ("GST") taxes are scheduled to be reinstated on January 1, 2011, with a federal estate tax exemption of $1,000,000 and a maximum tax rate of 55%. The GST exemption will be $1,360,000. After years of benefit from a rising exemption (from $1,000,000 in 2002 to $3,500,000 in 2009) and a year of total repeal in 2010, we find ourselves once again facing higher federal estate tax rates.

A proposal to limit the effectiveness of grantor retained annuity trusts, by requiring a minimum 10-year term, did not make it into the final bill.

Call to make an appointment to review your documents and set up your plan to avoid paying unnecessary taxes.