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The Latest Estate Tax Regime

March 1, 2011 The unsettled world of gift, estate and generation skipping transfer taxes was only partially settled when the President and Congress passed a new law in December 2010. The legislation presents confusing rules, many with differing effective dates, and most of which are likely to change again in less than two years. Although the fine points of the law are widely available on the internet, the good news is that you don’t need to know all the details (that's our job). But you do need to be aware of how the new law impacts you, if at all. Anyone who falls within the following categories should seek legal counsel because they are most likely to be affected by the new law:

  • Executors and beneficiaries of those who died in 2010
  • Those who gave or received large gifts in 2010 (especially, but not only, if made to a trust)
  • Those who have not reviewed their wills or trusts in the last three years
  • Spouses who have one or more children from prior marriages

You may also have heard about “portability” of the estate tax exemption. If both spouses die before 2013, it may reduce some taxes, but do not be fooled into thinking that it works as well as good planning. It will not maximize your tax savings, protect your assets, or assure that your property will go to your intended recipients.

A sea change has occurred in the last several months as estate planners have realized that the historic stability of the gift, estate, or generation skipping transfer tax system is gone for now, and maybe forever. Rather than waiting for a permanent fix to the system, we have begun to add even more flexibility to our clients' plans. This way, as both tax laws and the personal lives of clients and their beneficiaries evolve, we maximize the likelihood that the documents will serve both the current and future needs of our clients and their loved ones.