Estate Tax Escape Hatch
Posted on August 2, 2011 in Advanced Planning
ESTATE TAX ESCAPE HATCH
We are now six months into TRA 2010, the “Bush Era Tax Cut Extender” or what could also be called the Estate Tax Escape Hatch. Over these few months, having gauged the opinions of experts, absorbed the reporting of our still sputtering economy (stock market performance aside), and concluding, with eyes wide open, that we are headed down a path to increased taxes, the time to act on the opportunities this provides is NOW!
The new law simplifies estate planning opportunities, clarifies ambiguities in prior law, and the fact that the law sunsets at the end of 2012 underscores the urgency of acting on this opportunity. What’s so good about this law?
- Retains the previous lower income, capital gain and dividend tax rates
- Increases estate tax exemptions
- Restores the step-up in basis at death rule
The enactment of the law is not only important for what it does, but also for the opportunities that remained untouched. For example, we can still utilize valuation discounts and short term GRATs in planning strategies.
There are only three types of categories of personal wealth capital:
- Personal Capital – for personal or family use
- Social Capital – money or assets that are or would be allocated to charitable aims
- Government Capital – stated simply as: Taxes
People can benefit from this law not only to take direct actions in transferring great amounts of wealth to trust or next generations, but to review all personal estate plans, business succession plans, retirement accumulation and distribution options for future flexibility, asset protection, and tax efficiency.
Effective planning and the use of life insurance permits families to reduce economic and tax risks, and improves or maintains lifestyle and financial independence in the face of economic conditions, tax pressures, or physical/mental impairments. And the benefits can span generations. What are some strategies that can be employed?
Glen Coral
800.422.7536 x3119
gcoral@cbiz.com