IS THERE AN ESTATE TAX IN 2010?

In 2001, President Bush signed major tax legislation which the full impact was not felt until January 1, 2010. Under the 2001 Act, the estate tax exemption, the amount of assets someone can die with without having to pay estate tax, was gradually raised from $675,000 to $3.5 million. The 2001 legislation further provided the estate tax was eliminated January 1, 2010, but reverted back to the 2001 rules on January 1, 2011. Lots of dates and confusion; what does this all mean? Well, Congress since 2001 had assured us the law would never revert back in 2011 as originally anticipated. In addition, they also assured us we would never have estate tax eliminated in 2010. What has occurred? The January 1, 2010 estate tax, as we know, it is no longer in effect. Instead, what has occurred is, a modified adjusted basis for assets of decedents dying in 2010. What does this all means? If your clients had a stock they paid $10,000.00 for that is worth $100,000.00 upon death, there would be $90,000.00 of unrealized gain. Under the 2010 tax law, each person dying would have $1.3 million in unrealized gain to add to their assets they distribute to their beneficiaries. If that doesn’t make sense to your clients, anything more said will just confuse them more.

So what can you do? Let me explain. This Congress has stated it does not like this law because they are afraid the rich will die and not pay taxes. Congress has said many times it is going to eliminate the 2010 law retroactively to January 1, 2010. Will they? I don't know. They've been saying that for seven years; it still has not happened. But more importantly, if they do, what will happen in 2011? Will the law revert back to the levels they were in 2001 ($1 million), 2009 ($3.5 million), or will it be a whole new law in place? We don’t know. This is the importance of ensuring your current estate plan addresses the tax law as we know it.

A properly drawn estate plan will provide language in any scenario. Do your clients plans? You must properly and simply inform your clients on estate taxes as they are most likely paying more taxes than need be. Join us Monday October 18th at 4PM EST for an Exclusive Webinar to “Learn How the Upcoming Estate Tax Changes Effect your Practice”, Space is limited. Reserve your Webinar seat now at:
https://www1.gotomeeting.com/register/948292049