ESTATE PLANNING / ESTATE PLAN REVIEW

From Forbes.com (12/30/2010) “Rewrite Your Will” With couples now able to pass $10 million untaxed, it’s time to redo your estate plan. A new year, a new tax law, and time for a new estate plan – or at least a review of the plan you currently have. Congress has increased the exemption from the federal estate tax to $5 million, leaving fewer than 4,000 U.S. families likely to be affected by the 35% federal estate tax in 2011. This new deal expires in 2012, but experts predict the estate tax exemption will not be reduced. This higher exemption, combined with the new “portability” provision throws new light on many old planning strategies. “Portability” means that if a married person dies in 2011 or 2012 without using their full $5 million exemption, the unused exemption is passed along to the surviving spouse, added to their exemption amount, for a combined exemption of up to $10 million in assets that the surviving spouse can transfer to heirs federal estate tax-free. What do all of these changes mean to you? Forbes recently ran an article in their Money & Investing section with a good summary. Here are three of their top considerations: • Everyone still needs fundamental estate planning. Regardless your age, marital status or net worth, you still need fundamental estate planning such as a will, a living will, health care / medical directives, and a durable power of attorney. • Review your current estate plan. Due to the increase in the applicable exemption amount to $5 million (and a combined $10 million for married couples), some estate tax planning strategies may need to be revised and/or simplified. Especially in light of the new portability provision, some bypass or credit shelter trusts may no longer be necessary, or their terms may need to be changed. Note: Remember that bypass trusts often accomplish important, non-tax goals as well, to include asset protection and estate equalization. • Plan for state estate taxes. Currently, 21 states and the District of Columbia have estate or inheritance taxes, or both, in place for 2011. The typical exemption amount for estate taxes is only $1 million, and inheritance taxes – levied on the recipient of any bequest – can hit the first dollar (no exemptions). You can find an interactive map showing which states impose estate or inheritance taxes, and their details, here. We offer our clients an affordable estate review consultation. Visit our website to learn more about our estate plan review process.