At the end of 2010, Congress passed a new law that changed the way inheritance taxes are levied in the United States for the next two years. The changes in those wealth-transfer taxes – which include estate tax, gift tax, generation-skipping tax and income tax that results from capital gain on inherited property – appear to be extremely friendly to taxpayers.
But some dangerous pitfalls exist in this complex new law, and it’s safe to say that it’s a trap for the unwary and a boon for those who are wary enough to plan carefully. A little knowledge can be your salvation.
Estate-planning attorney Steve Gammill has scheduled a workshop about the new law from 7 to 9 p.m. Thursday, March 31, at the new Fruita Community Center. If you’re interested in attending, please contact May-Investments at 263-5126 for more details.
The workshop will focus on several aspects of the new law. For example, the new law:
• Allows personal representatives of people who died in 2010 to choose between paying estate tax or passing capital gain tax liability on to the kids.
Question: What about those who already chose no estate tax before knowing there would be a choice? What are the real ramifications of the capital gain recognition choices?
• Allows a surviving spouse to utilize the unused portion (if any) of the deceased spouse’s tax exemption.
Question: Does this really mean a large exemption and no need to set it up in planning documents? Does it survive a change in the law lowering the exemption in two years?
• Establishes a $5 million exemption for gift tax.
Question: Should you gift a large amount now in case the exemption is lowered in two years? What happens if you die when lower gift and estate tax exemptions are in place?
• Reunifies the gift and estate tax exemptions.
• Establishes a $5 million exemption for both estate and generation-skipping tax.
• Will expire in two years unless a new law is passed, which would usher in another period of uncertainty for estate planners and their clients.
Question: What happens to your tax plan if it provides for today’s exemptions and you are still alive in two years when the exemptions may be lowered?
Steve Gammill is a Fruita-based estate-planning attorney who teaches nationally to attorneys and other professionals in the estate and business planning field. He has presented on the topics of irrevocable life insurance trusts, business and investment asset protection, marketing, business succession and exit strategies, and disability planning. His practice is limited to estate and wealth strategies planning, including legacy planning, business exit and asset protection planning, and family and business strategic vision planning.
But some dangerous pitfalls exist in this complex new law, and it’s safe to say that it’s a trap for the unwary and a boon for those who are wary enough to plan carefully. A little knowledge can be your salvation.
Estate-planning attorney Steve Gammill has scheduled a workshop about the new law from 7 to 9 p.m. Thursday, March 31, at the new Fruita Community Center. If you’re interested in attending, please contact May-Investments at 263-5126 for more details.
The workshop will focus on several aspects of the new law. For example, the new law:
• Allows personal representatives of people who died in 2010 to choose between paying estate tax or passing capital gain tax liability on to the kids.
Question: What about those who already chose no estate tax before knowing there would be a choice? What are the real ramifications of the capital gain recognition choices?
• Allows a surviving spouse to utilize the unused portion (if any) of the deceased spouse’s tax exemption.
Question: Does this really mean a large exemption and no need to set it up in planning documents? Does it survive a change in the law lowering the exemption in two years?
• Establishes a $5 million exemption for gift tax.
Question: Should you gift a large amount now in case the exemption is lowered in two years? What happens if you die when lower gift and estate tax exemptions are in place?
• Reunifies the gift and estate tax exemptions.
• Establishes a $5 million exemption for both estate and generation-skipping tax.
• Will expire in two years unless a new law is passed, which would usher in another period of uncertainty for estate planners and their clients.
Question: What happens to your tax plan if it provides for today’s exemptions and you are still alive in two years when the exemptions may be lowered?
Steve Gammill is a Fruita-based estate-planning attorney who teaches nationally to attorneys and other professionals in the estate and business planning field. He has presented on the topics of irrevocable life insurance trusts, business and investment asset protection, marketing, business succession and exit strategies, and disability planning. His practice is limited to estate and wealth strategies planning, including legacy planning, business exit and asset protection planning, and family and business strategic vision planning.
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