WHAT FOLLOWS IS A BRIEF SUMMARY OF SIGNIFICANT ESTATE TAX CHANGES SIGNED INTO LAW SINCE  JUNE 7, 2001.
THIS IS A BRIEF SUMMARY.

Dear Friends,

On June 7th, 2001, President Bush signed into law new tax legislation that
impacts your estate planning. This legislation lowers the estate tax brackets
eliminating them in 2010 but only for that specific year. Just to be clear, the
estate tax is scheduled to end in 2010 only to return in 2011, under our current
system of taxation. It is not certain at this time whether future legislation would
make this repeal permanent, or change the law again.

Under current law, until  Dec 31, 2008, $2,000,000.00 of your estate is exempt from  a federal inheritance tax.tax. This amount increases to  $3,500,000.00 in 2009. Along with the increased amounts you can give away
"free of estate tax" the estate tax rates gradually decrease from 55% to 45%
in 2007. In 2010, there is no estate tax threshold and in 2011, the threshold for estate tax decreases to $1,000,000.00.

The 2001 law will currently tax gifts over $12,000.00 per person per year. In 2002, the amount you can gift without incurring a tax liability is capped at $1,000,000.00 for your lifetime.

The Pension Protection Act of 2006, has the following provisions to be aware of:  Contributions to IRA's increase to $5,000.00 in 2008. In 2007:

      1. You can direct the IRS to make tax refunds directly payable to your IRA. 

      2. Make a tax free distribution from your IRA to a Charity

      3. Take charitible deductions for contributions of Book and Food Inventory

     4. You may not take charitable deductions for donations clothing and household items

     5.  YOU may take tax free withdrawals from STATE sponsored college savings plans for payment of college expenses

In May 2007, The President and Congress expanded the Kiddie Tax. The 2007 Small Business Tax Act extends the application of the "Kiddie Tax" to all children 19 or younger and  to students under age 24. This is effective for tax years beginning after May 25, 2007.  In order to avoid the reach of the widened tax net most parents and students who file their tax returns on the Calendar year basis who are above the age of 18, will have until  December 31, 2007, to sell investment accounts at the child's or student's  capital gains rate and avoid their parents tax rates.   

    This is a brief summary of the extensive changes made to the estate tax laws.

Should you wish to discuss your personal legal matters with Mr. Eisenberg, you can E-mail him at:

Cordially,
Steven E. Eisenberg, P.A.