Posted by: dougdumler | October 12, 2011

Still no certainty in estate tax laws

The new estate tax law, signed in December, 2010, reinstated the federal estate tax after a one year repeal. The new law, effective for estates after January 1, 2011, gives each person an exemption from the federal estate tax of $5 million. This exemption is “portable” in that a surviving spouse can use her deceased spouse’s exemption as well as her own, without having to create an elaborate estate plan with marital and family trusts. That’s the good news. The bad news is this law will expire on December 31, 2012, unless Congress acts to extend it, or modify it in some way. If allowed to expire, the exemption from federal estate tax will return to just $1 million, and the exemption will no longer be “portable”.
I am recommending that my clients utilize a disclaimer provision in their Wills or Trusts, to allow sheltering of the first spouse’s exemption, but only if it is necessary. This gives my clients more flexibility in their estate plans, and avoids the mandatory family trust/marital trust funding.
Call me for more information.

Posted by: dougdumler | September 23, 2010

Competing Estate Tax Proposals in Congress

The Wall Street Journal reports that there are at least two competing estate tax proposals being floated in Congress.  Some Democrats (Harkin, Whitehouse, Franken, Brown) and Socialist Bernie Sanders have proposed bringing back the federal estate tax with a top rate of 65%.  It is not clear whether they would exempt any portion of a decedent’s estate from this tax (remember, the exemption was $3.5 million in 2009, and is scheduled to be $1 million in 2011 if Congress takes no action).

On the other side of the coin, Republican Kyl and Democrat Lincoln have proposed an estate tax with a top rate of 35% and an exemption of $5 million.  Senator Reid wouldn’t allow the Senate to vote on this proposal.

Stay tuned.

Posted by: swansondumler | September 21, 2010

Bush Tax Cuts Still in Limbo

As of September 21, 2010, we still don’t know what will happen to the Bush tax cuts that are set to expire at the end of this year.  Most people and politicians are focusing on the income tax rates, and often forget that the estate tax is included in the tax reform package from 2001.  If Congress does nothing and allows the tax cuts to expire, the estate tax law from 2000 will automatically be reinstated as of January 1, 2011, with an exemption from tax of $1 million and a top tax rate of 55%.  Here’s hoping that Congress will at least raise the exemption to $3.5 million, as it was in 2009.

Posted by: dougdumler | September 2, 2010

Estate tax still in limbo

           Congress allowed the federal estate tax law to expire as of January 1, 2010, for one year.  It now appears that Congress will likewise allow this one year hiatus to expire on December 31, 2010.  This will automatically bring back the prior estate tax law on January 1, 2011.  Under this new (old) law, the exemption from estate taxation will be set at $1 million, instead of the $3.5 million exemption that was in force in 2009.  As a result, more estates will be subject to estate taxation beginning in 2011 than before, and estate tax planning will be more important than ever.  Properly drafted wills and trusts can minimize the effect of  the return of the federal estate tax.  I’ll provide more information in future blogs.

Posted by: swansondumler | July 9, 2010

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The lawyers of Swanson & Dumler have over fifty years of experience in a wide variety of practice areas.

Our clients range from the elderly and persons with disabilities, to small businesses and non-profit organizations, persons seeking bankruptcy protection, and professional athletes, including Denver Broncos, Colorado Avalanche, and Colorado Rapids players.  We also have personal involvement with the agricultural community and are uniquely equipped to serve the special needs of farmers and ranchers.