Susan M. Graham, Certified Elder Law Attorney,

Accredited Attorney with the Veterans Administration.

 

The “Temporary” Tax Relief Act of 2010 has created the most favorable estate planning opportunity in modern history.  

 

First let me highlight two parts of the law that directly relate to estate planning.

 

     •  The death tax free estate is now five million dollars ($5,000,000) for each individual.  That means if someone dies in 2011 or 2012 and the value of their estate is less than $5 million, there is no federal or state of Idaho death tax.  A simple definition of the “value of an estate” is the fair market value of all the assets owned by the decedent on the date of that person’s death. So add the value of the home, cabin, cars, bank accounts, stocks and bonds, life insurance and other investments and if the number is less than $5 million there is no death tax.  If it is over $5 million the excess will be taxed with the highest rate of 35%.  

 

    Once the law expires on January 1, 2013, the death tax free estate is set to return to $1 million, with the excess over the $1 million being charged at 41-55%.

 

     •  In addition, under the new law, a married couple can have a combined estate of $10 million with no death tax if they follow a few additional steps.

 

How can this new “temporary” law benefit you even if you have less than a $5 million dollar estate?

 

     •  You can change your estate plan to require upon the first death certain assets pass into an asset protection trust for the surviving spouse so those assets will be protected from creditors, a new marriage, lawsuits and bankruptcy.

 

     •  You can gift some of your assets now into an irrevocable asset protection trust for your children.  If the law changes after January 1, 2013, to allow only $1,000,000 as a death tax free estate, you will be “grandfathered in” and can protect more than $1 million from death taxes.

 

Is all this confusing?  That is understandable.  My suggestion is talk to your estate-planning attorney, or call and schedule an appointment with me to discuss how this new law impacts on your estate planning goals.

Remember the law is temporary and will expire January 1, 2013 so you need to act now if you want to lock in the benefits.

 

P.S.  Our next public presentation is set for Thursday, February 3, at 10 a.m. and 2 p.m. at the AmeriTel Inn, 7965 W. Emerald, Boise, Idaho.  If you want to come, call and make a reservation 344-0375.