Monday, September
6 2010
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Monday, September
6 2010
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Announcing a new acquisition!!
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What's New at Forte for the year 2008 January 2008B - It's Time to Start Thinking About the Estate Tax Again By Forte News Department Back in
2001, the Economic Growth and Tax Relief Reconciliation Act triggered a gradual
increase in the dollar threshold of estates subject to the estate tax. In tax
years 2007 and 2008, estates valued at more than $2 million may be taxed as
much as 45 percent, while in tax year 2009, the threshold will increase to $3.5
million. The year after that, the tax will be repealed for a year. However,
in 2011, unless Congress acts, the party’s over. The estate tax will be reset
at up to 55 percent on estates at a significantly lower threshold – $1 million. While
bills continue to swirl around Congress and many expect a Band-Aid of some sort
before 2011, no one seems to believe that the so-called “death tax” is likely
to be eliminated altogether. That makes it tough for individuals to set a clear
course for their own estate planning. If you suspect your estate or the estate
of relatives you might inherit from may fall prey to the estate tax, it makes
sense right now to enlist the help of experts. Assets may be expected to grow
over time, and your estate may turn out to be larger than you may think. You should be talking to estate and tax
specialists as well as financial advisors such as Certified Financial Planner™
professionals. Here are
some things to keep in mind as you plan those conversations: Think about a life insurance trust: Whether you need it for estate
liquidity or for other purposes, an irrevocable life insurance trust can be
created to keep the proceeds of the insurance out of your taxable estate. An
added benefit is that such trusts may permit spousal access to the cash value
of the policy. Yet note the word “irrevocable” – it means a decision that
cannot be changed. If your assets are expected to
increase: A
grantor-retained annuity trust, or GRAT, is an irrevocable trust that is
popular among families with assets that are expected to increase, because such
appreciation can be passed on to heirs with minimal tax consequences. Prepare a gifting strategy: Under current law, unlimited
amounts can be left to a spouse or to charity free of federal estate tax. Other
heirs can receive a total of $2 million, tax-free, when deaths occur in 2007 or
2008. If your assets are over the estate tax limit, it might make sense to
devise a gifting strategy that spends down your total taxable estate while
still allowing you a comfortable lifestyle. You might, for instance, consider
making direct payments for someone else’s medical bills or education tuition.
No gift tax applies for these items, so payments can be unlimited. January 2008 — This column is
produced by the Financial Planning Association, the membership organization for
the financial planning community, and is provided by David W. Henion, CPA, a
local member of FPA. | ||||||||||||||
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