By: David M Frees
Unruh, Turner, Burke and Frees
Feel like you've been reading these lawyer articles about changes in the estate tax for years on end? Feel like it just changed? Well, you feel that way for a good reason. They have been changing and are scheduled to change again. But ignore these changes at your own peril. Keeping up can be worth thousands to millions saved for your heirs.
The federal estate tax (also known as the death tax) and related gift tax laws often guide you in making changes in your gifting, wills, trusts, and other estate planning documents such as wills, trusts, and powers of attorney. To make matters worse, these laws have changed every year since 2008 and are scheduled to chnage again soon.
The chart below summarizes many of these changes since 2009 and can be helpful in planning a meeting with your own attorney about the most recent changes and how they will relate to your own planning and documents.
Remember when reviewing this chart, that these laws are constantly changing, this is a very general overview, and your personal facts and circumstances matter very much and should be the most important part of your plan.
However, the changes in the state and gift tax laws for 2011 and 2012 are dramatic and important. Your older formula documents might no longer work as planned. I hope that this chart helps you.
Please also note the following:
*Although the default is a $5,000,000 exemption, with a 35% tax rate, an election can be made to have no estate tax apply with respect to decedent’s dying in 2010, but the income tax “stepped-up” basis is limited for larger estates.
**In addition to the above, the amount that passes estate tax free ($10,000,000 per couple) will increase with the cost of living beginning in 2012 in $10,000 increments.
***Please note that “portability” will require the surviving spouse (or the Executor if not the spouse) to file an estate tax return at the death of the first spouse.
David Frees limits his practice to trusts, estates, wills and related estate planning matters. He also assists executors and trustees. His practice, located in Chester County Pennsylvania has offices in Paoli, Phoenixville, and West Chester.
Dave Frees can be reached at 610-933-8069 or at [email protected]