2010 Tax Relief Act
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reinstated the estate and GST taxes for decedents who died and transfers made after December 31, 2009.
|
Federal |
2010 |
2011 - 2012 |
2013 |
|
Gift Tax Exemption |
$1,000,000 |
$5,000,000 * |
$1,000,000* |
|
Maximum Gift Tax Rate |
35% |
35% |
55% |
|
|
|
|
|
|
Estate Tax Exemption |
$5,000,000 |
$5,000,000* |
$1,000,000* |
|
Maximum Estate Tax Rate |
35% |
35% |
55% |
|
Other Estate Notes |
Executor can elect modified carryover basis rules instead of the estate tax rules |
Executor may elect to pass the deceased spousal unused exemption amount to surviving spouse |
|
|
|
|
|
|
|
GST Tax Exemption |
$5,000,000 |
$5,000,000 |
$1,300,000 |
|
GST Tax Rate |
Zero |
35% |
55% |
|
|
|
|
|
* Indexed for inflation after 2011
Under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), there was no estate tax for decedents dying in 2010, but estate and other transfer taxes were scheduled to rise substantially for post-2010 transfers. The 2010 Tax Relief Act signed into law on December 17, 2010, provides temporary relief. Among other changes, it reduces estate, gift, and generation-skipping transfer taxes for 2011 and 2012, and continues other estate and gift tax relief provisions that were set to expire after 2010. It preserves estate tax repeal for 2010, but in a roundabout way: estates wanting zero estate tax for 2010 must elect that option, along with the modified carryover basis rules that were set to apply for 2010. Otherwise, by default, the estate tax is revived for 2010, with a $5 million exemption, a top tax rate of 35%, and a step-up in basis. Also, for estates of decedents dying after December 31, 2010, a deceased spouse's unused exemption may be shifted to the surviving spouse. However, much harsher rules are slated to return after 2012.
This leaves estate planning in a confused state. Wills and Trusts using formula clauses that worked well in the pre-2010 estate tax environment may produce unintended consequences under existing law -- such clauses could be construed to leave spouses with far less than the decedent intended, and in some cases, even nothing.
If you have not reviewed your estate planning documents recently with your attorney or professional advisor you should set up an appointment immediately to be sure that the documents still accomplish your plans and goals under the current law.
For more information, see the following Blogs:
http://www.hhcpa.com/blogs/income-tax-accountants-cpa/new-estate-and-gift-tax-signed-into-law-on-december-17-2010/
http://www.hhcpa.com/blogs/income-tax-accountants-cpa/dont-let-poor-estate-planning-tear-your-family-apart/
How Do You Protect Your Estate After You're Gone?
Henry & Horne's estate planning professionals can assist you in your estate and business succession planning, no matter what stage you're in. If you don't know where to begin, we will assemble a team of Arizona's most respected estate planning attorneys and other financial advisors tailored for your situation. We can help conduct family meetings to address your family business succession objectives.
If you've already started your planning, we will work with your existing advisors to help you meet your goals. We can maximize the chances that the IRS will accept your estate planning strategies, from the administration of family limited partnerships to reporting your gifts with adequate disclosure necessary to start the statute of limitations.
Maybe you have charitable intentions. We can find creative ways to maximize the impact of your charitable gift both on your tax return and to the recipient charity. We can advise you about running your private foundation and offer alternatives for reaching your charitable goals.
When our clients lose a loved one, they turn to Henry & Horne. Our compassionate advisors guide you through the many required tax filings and post-death transfers. Using our inventive post-mortem planning strategies, our clients have saved millions.
Income Tax Planning for High Net Worth Individuals
As a high net worth individual, your needs go beyond annual income tax preparation. You need sound income tax planning advice coupled with a strong knowledge of how everything fits together with your estate plan.
That's why we take a look at your complete financial picture to better advise you regarding complex tax planning. We also vigilantly avoid estate tax traps, which we identify through the process of serving as your income tax advisor.
Commitment
Our commitment to excellence is equaled only by our dedication to client service. We provide our clients with current, cost-effective and practical advice based on today's available estate planning techniques. We work closely with some of Arizona's most respected estate planning attorneys and trust officers through our active involvement in the Central Arizona Estate Planning Council, Valley Estate Planners, East Valley Estate Planners, and other estate planning study groups.
Estate, Trust & Gift Services: