 |
|
|
|
|
 |
|
|
| How can we help? |
|
|
| Is there a way we can help you or your family? |
|
|
|
|
|
| |
|
|
| |
|
 |
|
 |
By now you have probably
heard the news that Congress and President Obama passed
a new tax bill in the last week of December 2010. For
many, there is still concern over what it means for them
personally. Here is a high level summary.
In 2001, President Bush oversaw massive tax changes with
Congress that were set to expire on December 31, 2010.
Literally, on the eve of the laws reverting back to the
2001 levels, President Obama and Congress extended, and
in some cases expanded, many of the tax laws implemented
by President Bush.
Income Tax
Had the laws reverted back, the top income tax rate
would have gone to 39.6 percent, rather than the current
35 percent, and capital gains could have been taxed as
high as 28 percent, rather than 15 percent as provided
in the new law. Perhaps, the greatest changes in the new
law, however, related to estate taxes.
Estate Tax
The new law provides that each individual can die with
$5 million in assets before they will be subject to tax,
and if subject to tax, the tax rate would be 35 percent.
If the law had gone back to previous levels, the limit
would have been only $1 million in assets before tax
with a 55 percent maximum tax rate.
Gift Tax
The new law also increased an individual's lifetime gift
exemption from $1 million to $5 million. Essentially,
each person can give up to $5 million away in their
lifetime without any gift tax consequence.
The most surprising element in the new law came with the
portability of the estate tax to a surviving spouse.
Prior to the new law, if one spouse died, they would
need to create trusts at their death to utilize their $5
million exemption provided by the government. If they
did not use it, they would lose it. Under the new law,
the use of trusts are no longer required after death to
preserve that exemption, but rather the surviving spouse
may elect to assume the unused credit of the deceased
spouse. In essence, this may permit a surviving spouse
to die with up to $10 million of assets without an
estate tax.
Caution
One of the potential problems with the law change is
that it may give some a false sense of security. Tax
savings is just one reason for creating trusts.
For most people, more important reasons to properly plan
their estate include, ensuring that the assets go where
they are supposed to go, when they are supposed to go
and are protected from lawsuits, claims and
administrative costs and delays. Most want to make sure
that they are not subject to claims such as nursing
homes, predators, creditors, divorces and the like.
In short, proper estate planning isn't just about tax
savings (and there are still a number of tax saving
opportunities for the right client.) Proper planning is
really about control over your assets to make sure
that your goals are met.
Golden Opportunity?
The last thing to keep in mind is that the law change
presents a golden opportunity. Congress, in passing the
law, only saw fit to make it last for two years, meaning
there is a chance that the old tax will still come back
in 2013. Stay tuned.
If you have questions,
click
here to have our office call to set up a time to
discuss this with you.
To return to the newsletter go back to your email
inbox.
|
| |
|
| |
|
| |
|
|
|
|
The information contained on this web page is general by its
nature. For that reason, no one should take any action based on
the information contained in this webpage until having consulted
a competent professional advisor or advisors. Nothing contained
in this web page was intended or written to be used, can be used
by any taxpayer, or may be relied upon or used by any taxpayer
for the purposes of avoiding penalties under the Internal
Revenue Code. No information contained on this webpage relating
to any federal tax matter may be used by any person to support
the promotion or marketing or to recommend any federal tax
matter. Taxpayer should seek advice based on the taxpayer's
particular circumstances from an independent tax advisor with
respect to any federal tax transaction or matter described on
this webpage.
|
|
|
|
|
| , |
|
|
