[QCWA] Members' Wealth Management

[walt qcwa]

Tony....my personal thanks to the finance committee for providing this
information.   This does require some serious meditation.
walt supina N3WS

On Wed, Jan 27, 2010 at 3:59 PM, thirsch at ameritech.net
<thirsch at ameritech.net> wrote:
> ++++++++++++++++++++++++++++++++++++++++
>              This message is sent to you by
>               the QCWA Finance Committee
>
> Wealth Management
>
> The Estate Tax Is Repealed..._/for Now./_
>                What's Next?
> As you may have heard, Congress failed to
> pass legislation by the end of 2009 to extend
> the federal estate tax rates and exemption
> level. As a result, federal estate and
> generation-skipping tax is repealed for one
> year from January 1, 2010 through December
> 31, 2010.
> So what does this mean for you?
> Since the federal estate tax is repealed (for 2010 only),
> individuals who die during 2010 will not be subject to
> federal estate tax regardless of the size of their estate.
> The repeal applies to federal estate tax only. Many states
> will continue to have an estate tax. For individuals who
> die after 2010, the estate tax is scheduled to return with a
> $1,000,000 maximum exemption and a graduated tax with
> a top rate of 55%. The exemption is the amount free from
> estate tax and amounts over the exemption are subject to
> federal estate tax.
> For example, a taxpayer with a $5 million net taxable
> estate who passes away in January 2010 will not be subject
> to federal estate tax. However, if the taxpayer dies on
> January 1, 2011, his estate will be liable for federal estate
> tax of $2,045,000.
> To offset the loss of the estate tax in 2010, the step-up
> basis in assets inherited is eliminated and replaced with a
> modified carryover basis. Prior to 2010, the tax basis of an
> asset is "stepped up" at the individual's death to equal the
> asset's fair market value at that time. This may result in a
> signifi cant tax savings when you sell the asset because the
> cost basis is based on the date of death value and not the
> lower basis to the original owner.
> In 2010, only $1.3 million of estate property will qualify for
> the step-up in basis. For property passing to a surviving
> spouse an additional $3 million of assets gets adjusted.
> Additional property over these amounts do not get
> adjusted and retain the original owner's basis or the date
> of death value, whichever is lower. Your fi nancial records
> should be reviewed to ensure you have accurate tax basis
> information in case the step-up basis rule does not apply.
> In addition to the repeal of the estate tax and generationskipping
> tax, another major change is to the federal gift
> tax rate. In 2010, the maximum federal gift tax rate is 35%
> compared to 45% in 2009. In 2011, it will increase to 55%.
> The annual exclusion amount continues to be $13,000 in
> 2010 with a lifetime exemption amount of $1,000,000.
> Have Your Estate Plan Reviewed
> With the repeal of the estate tax in 2010, your Will or
> Revocable Trust should be reviewed to ensure the
> distribution of your estate is in line with your intentions.
> If you are married and your estate plan provides that the
> maximum federal estate tax exemption amount will pass
> to your children or other benefi ciaries, your plan may
> disinherit your spouse if you die while the estate tax repeal
> is in effect.
> Some sophisticated estate plans may contain provisions
> related to generation-skipping trusts or direct gifts to
> grandchildren. Since the generation-skipping tax is
> repealed in 2010, these transfers may not be made if the
> generation-skipping tax is not in effect.
> Potential Opportunities
> The current 35% federal gift tax rate is relatively low. If you
> believe that gift tax rates will in the end go back up to 45%
> or even 55% and you want to make some meaningful gifts
> in your lifetime, 2010 may be the best time to do it.
> Currently transfers to a "skip" generation (i.e., grandkids)
> are exempt from generation-skipping tax (GST) which
> was 45% in 2009. As a result, 2010 could be a window
> of opportunity to make signifi cant gifts to grandchildren
> directly, or to a "dynasty trust" which can benefi t multiple
> generations without estate tax consequences. While gifts
> to a "dynasty trust" may be subject to gift tax at a reduced
> rate of 35%, they will not be subject to estate or GST tax.
> Watch Washington this year.....
> Congress will be busy during the first quarter of 2010 to
> enact some sort of estate and GST tax, but the question
> is whether Congress will make the new law retroactive to
> January 1, 2010? If retroactive provisions are approved, it
> could face constitutional challenges in court.
> The repeal of the estate and GST tax in 2010 and
> subsequent reinstatement of both in 2011 will cause
> huge problems.
> Now is a good time to have your estate plan
> and your overall state of affairs reviewed to
> ensure these problems can be minimized.
> ______________________________________________________________
> QCWA mailing list
> Home: http://mailman.qth.net/mailman/listinfo/qcwa
> Help: http://mailman.qth.net/mmfaq.htm
> Post: mailto:QCWA at mailman.qth.net
>
> This list hosted by: http://www.qsl.net
> Please help support this email list: http://www.qsl.net/donate.html
>