January 15, 2010
Estate Planning Alert!!!! Review!!! Review!!!! Review!!!
Dear Friends
AS OF January 1, 2010 there is no estate or generation-skipping tax, for now. IF Congress DOES NOTHING IN 2010, IN 2011 ESTATE TAXES WILL KICK IN AT 1 MILLION DOLLARS AT A 55% MARGINAL RATE. Your existing estate plan may be vulnerable to unintended consequences, because of the current law and should be reviewed. In addition, to a review based upon a law change, your Estate and Financial Plan should be reviewed for economic reasons. I have listed a few points that should motivate you to review your Estate and Financial Planning.
Estate Tax law as now exists may unexpectedly impact formerly taxable estates that utilize a formula to allocate between the amount exempt from estate tax and the residue of the estate going to the surviving spouse. Under the law as it now exists the surviving spouse could receive nothing. This mandates a review especially in multiple marriage situations. Since there is no estate tax, the language in your documents could compel the fiduciary to transfer all of the estate to the exempt trust leaving nothing to allocate to the surviving spouse’s share or to charity. In a second marriage this could be devastating.
As of this writing, the Generation Skipping Transfer Tax("GST") has been repealed for one year. The GST taxes will come back into effect on Jan. 1, 2011, but with only a $1 million exemption for estate tax, a $1.1 million exemption for GST tax (indexed for inflation), and a top rate of (generally) 55 percent for each tax. So for 2010, it appears that the GST has been replaced by a flat 35% gift tax rate. So now may be the time to make gifts to grandchildren.
The stepped up basis on assets to date of death value that was unlimited in value is now limited. As of today, stepped up basis in assets is limited to $1,3000,000 to non spouses and $4,300,000 to spouses(Spouse gets 3 million plus 1.3 million). The rest of your assets pass to your heirs at your tax basis and will trigger income taxes (capital gains? hopefully) when your heirs sell.
Due to the drop in the stock market and the drastic decline of interest rates, the viability of certain life insurance policies you own should be reviewed to see if they still make economic sense or will implode. We can offer you a review of your existing life insurance products.
THESE ARE 4 SOLID REASONS WHY YOU SHOULD REVIEW YOUR EXISTING ESTATE PLAN AND INSURANCE POLICIES. PLEASE FEEL FREE TO CONTACT MY OFFICE AT 954 981 6533 FOR AN APPOINTMENT.