Upstate Estate Law, P.C. Blog

If you have read any of my previous posts, surely you know that there is no federal estate tax in the year 2010.  Unsurprisingly, this change in the law can have severe repercussions for your estate plan.

Some estate planners are sounding the alarm with regard to estate plans based on credit shelter family trusts and marital deduction trusts.  These trusts are set up in such a way that the credit shelter trust gets funded with assets up to the amount that will not be subject to estate tax due to the previously existing estate tax exemption, while the marital deduction trust gets everything else.  (This set up eliminates all federal estate tax when the first spouse passes away.)

The problem with this set up is that Click here to finish this post.

In a prior post, I discussed the idea of stepped up tax basis, wherein upon death the tax basis of a person’s assets is set equal to the fair market value of the assets as of the date of death. Thus, if the asset is then sold after death for that same fair market value, there is no taxable gain. 

Alas, with the laws expected to go into effect in 2010, this will no longer be true.  In 2010, the estate tax is slated to be repealed.  Along with the estate tax, the law allowing for stepped up tax basis upon death is being partially repealed.  In 2009, all estate assets receive a stepped up basis.  However, in 2010 there will be a limited step up in basis only to the extent of $1.3 million in estate assets.  For transfers to spouses, there is an additional $3 million that will receive stepped up basis.  But what does this mean in reality?Click here to finish this post.

“Why can’t I just take a copy of the Revocable Trust to the bank and have them give me the money in the account”, asks your client.  “The trust says that I am the beneficiary.”

My answer to this is always Click here to finish this post.

Well, my prediction of last night may prove incorrect.  The House voted today to extend the current federal estate tax law.  This would continue the current $3,500,000.00 exemption and keep the top rate at 45 %.  It will also keep the estate tax in effect for the year 2010.

I am for this legislation.  I would even like to see Click here to finish this post.

Alas, after many months of health care debate (if we can really call it that) in the U.S. Congress seemingly drowning out all other issues, come signs of life on the federal estate tax front.  The House of Representatives is considering an extension of the current estate tax law. 

You may or may not know the current state of the federal estate tax. For deaths in the year 2009, there is a Click here to finish this post.