Estate Tax Update 2011

  • Estate Tax Update 2011

    Toward the end of December 2010, Congress finally acted to do something about the estate tax.  Unfortunately, the bandage will come off at the end of 2012 and we may be right back to a state of confusion.  BUT, for the next two years, this is what we have – a $5 million reunified estate and gift tax exemption per person (that’s $5 million whether you gift it away during life or have it remaining at your death), a return of step up in basis (that means the assets are revalued at date of death and heirs take the assets at the new basis), a return of the unlimited marital deduction with the added benefit (perhaps) of being able to use a deceased spouse’s unused estate tax exemption, and a $5 million generation-skipping transfer (GST) tax exemption.  So what does this mean?  It means that it is a great time for people with assets well over $5 million to consider advanced gifting strategies to move money out of the estate now without incurring gift or GST tax.  Florida allows a trust to exist for up to 360 years so it is a great time to consider a dynasty trust to continue on for successive generations.  What about the rest of us who are under $5 million?  You still need your basic planning especially since we don’t know what will happen at the end of 2012.  The exemptions could go down and catch you up.  Additionally, establishing trusts either during life or at death has multiple other benefits that have nothing to do with estate/gift/GST tax planning.  Want more info?  Give us a call.

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