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.


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