Congress treated us to a holiday gift by passing the Tax Relief Act of 2010. The hallmark of the new tax bill for estate planning is a federal estate tax exemption of $5,000,000 per person. Also, a positive about this exemption is that it is portable, which means it can be shared among spouses. In 2011 and 2012, estate gift and generation-skipping transfer tax exemption amounts and rates are unified under the new bill, and the rate of tax above the exempt amount on all such transfers is 35%.
The potential use of generation-skipping transfers may be something to consider before the end of 2010, particularly if it is intended that total generation-skipping gifts would exceed $5,000,000. In addition, fiduciaries of estate of persons dying in 2010 may choose to be taxed under the current 2010 law or the Tax Relief Act.
The bad news with the passage of the Act is that these new rules are only effective for 2011 and 2012 as the $1,000,000 credit and 55% tax rate return in 2013. Consequently, this short-lived gift presents complex issues to be considered concerning estate planning and administration.
Our estate planning and probate group looks forward to advising you in this historic and ever-changing estate planning era. We welcome your questions and are ready to be of service concerning your personal planning needs.