Click here to read the full Dow Jones Newswire article "An Estate Plan Designed for Reversal" quoting Perry Moore, Director of Wealth Planning at Payne Wealth Partners.
Showing posts with label estate tax. Show all posts
Showing posts with label estate tax. Show all posts
Wednesday, August 31, 2011
An Estate Plan Designed for Reversal
Click here to read the full Dow Jones Newswire article "An Estate Plan Designed for Reversal" quoting Perry Moore, Director of Wealth Planning at Payne Wealth Partners.
Wednesday, December 22, 2010
Last Minute Race
Last Friday President Obama signed into law the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.” The implementation of this bill signaled the end of a last-minute race at the end of this year to avoid significant tax increases scheduled to occur January 1, 2011. There are a number of ramifications of this bill, none of which are insignificant.
One outcome was a temporary, two-year “fix” of the federal estate tax. There are many details of this provision although a few points are; the federal estate tax exemption, generation skipping transfer tax exemption and lifetime gift tax exemption have all been “reunified” and set at $5 Million per person, and the federal estate tax exemptions are now “portable” (i.e. a spouse can use their deceased spouses unused federal estate tax exemption amount). There are many planning opportunities created by these changes that must be addressed in the next two years and evaluating those opportunities in context of a broad wealth plan will be more important than ever.
One outcome was a temporary, two-year “fix” of the federal estate tax. There are many details of this provision although a few points are; the federal estate tax exemption, generation skipping transfer tax exemption and lifetime gift tax exemption have all been “reunified” and set at $5 Million per person, and the federal estate tax exemptions are now “portable” (i.e. a spouse can use their deceased spouses unused federal estate tax exemption amount). There are many planning opportunities created by these changes that must be addressed in the next two years and evaluating those opportunities in context of a broad wealth plan will be more important than ever.
Saturday, October 30, 2010
Grantor Trusts
We just attended one of the top estate planning conferences in the country. Held October 28th and 29th the Notre Dame Tax and Estate Planning Institute had speakers from around the country who presented as to the most current thinking on estate planning issues. In this era of legislative uncertainty there is one wealth transfer strategy with significant appeal for high net worth families-- grantor trusts.
Grantor trusts require the grantor (Dad) to pay the income taxes on the trust earnings while the full amount of the trust may accumulate for next generation beneficiaries (children and grandchildren). Structured properly, the income tax paid by Dad on a grantor trust represents transfer to next generation free of estate and gift tax. There are many possible enhancements to the strategy, however at the core stands the grantor trust as a powerful strategy that high net worth taxpayers should consider using.
Grantor trusts require the grantor (Dad) to pay the income taxes on the trust earnings while the full amount of the trust may accumulate for next generation beneficiaries (children and grandchildren). Structured properly, the income tax paid by Dad on a grantor trust represents transfer to next generation free of estate and gift tax. There are many possible enhancements to the strategy, however at the core stands the grantor trust as a powerful strategy that high net worth taxpayers should consider using.
Thursday, July 15, 2010
The Ultimate Home Run
The recent death of NY Yankees owner George Steinbrenner makes for the 4th billionaire to die in 2010 and pay no estate tax under current law. Mr. Steinbrenner's estate has been estimated at $1.2 billion and absent some action from Congress, the expiration of the estate tax effective January 1, 2010 will permit his heirs to receive the full estate assets free of tax.
The as yet unresolved question of where the estate tax law will end up has caused much concern for estate planners and their clients. In the meantime, each passing day with no estate tax fix makes any law that Congress might eventually pass that much more of a constitutional question should the fix be retroactive to the beginning of 2010. You can bet the estates of the 2010 deceased billionaires will vigorously contest any efforts at retroactive effective date.
Had Mr. Steinbrenner died in 2009 or 2011 the estate tax would have been about $500 million. This has prompted some observers to call the timing "the ultimate home run."
The as yet unresolved question of where the estate tax law will end up has caused much concern for estate planners and their clients. In the meantime, each passing day with no estate tax fix makes any law that Congress might eventually pass that much more of a constitutional question should the fix be retroactive to the beginning of 2010. You can bet the estates of the 2010 deceased billionaires will vigorously contest any efforts at retroactive effective date.
Had Mr. Steinbrenner died in 2009 or 2011 the estate tax would have been about $500 million. This has prompted some observers to call the timing "the ultimate home run."
Friday, December 18, 2009
Could the 2010 Estate Tax Rate be Zero?
Little noticed in the Washington furor over healthcare legislation is the scheduled reduction to zero of the estate tax effective January 1, 2010. Presently the first $3.5 million of an estate is not subject to tax, with the maximum rate of 45% for amounts in excess of this exemption. Under the terms of present federal statute (brought about by the 2001 Tax Act commonly known by its acronym EGTRRA) the estate tax will automatically be repealed effective January 1, 2010 unless Congress acts very soon (note the House of Representatives is scheduled to start it's holiday break after session today, Friday December 18th and not return until after the first of the year).
Most estate planners, including this writer, were of the opinion that Congress would not allow the repeal to occur. Since EGTRRA has only 2010 as a year of no estate tax with a "sunset" provision that provides for reinstatement of estate tax effective January 1, 2011 with exemption of $1 million and maximum rate of 55% (60% counting surtax on estates over $10 million up to about $17 million), having one year with zero estate tax is unbelievably bad social policy. Wealthy families would benefit tremendously from a death and resultant inheritance in 2010 only. Gallows humor has described this environment as "Throw Mama from the Train".
We are at the precipice of such a 2010 with no estate tax and all that comes with that. Sad that our political "leaders" have allowed it to come to this. What happens (or doesn't happen) with estate tax legislation now bears extremely close scrutiny.
Most estate planners, including this writer, were of the opinion that Congress would not allow the repeal to occur. Since EGTRRA has only 2010 as a year of no estate tax with a "sunset" provision that provides for reinstatement of estate tax effective January 1, 2011 with exemption of $1 million and maximum rate of 55% (60% counting surtax on estates over $10 million up to about $17 million), having one year with zero estate tax is unbelievably bad social policy. Wealthy families would benefit tremendously from a death and resultant inheritance in 2010 only. Gallows humor has described this environment as "Throw Mama from the Train".
We are at the precipice of such a 2010 with no estate tax and all that comes with that. Sad that our political "leaders" have allowed it to come to this. What happens (or doesn't happen) with estate tax legislation now bears extremely close scrutiny.
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