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Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
Federal Estate Tax Abyss Presentation
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Federal Estate Tax Abyss Presentation

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The bad news first: The inaction of Congress to deal with the federal estate tax has created an estate planning nightmare for many Americans. …

The bad news first: The inaction of Congress to deal with the federal estate tax has created an estate planning nightmare for many Americans.

What’s the good news? You can implement plans, today, to protect your estate and your family. And we’re here to show you how.

Published in: Economy & Finance
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Transcript

  • 1. The Federal Estate Tax Abyss Navigate the Estate Tax Headache to Protect What’s Yours
  • 2. Five Things You’ll Learn From this Program 1. Current status of estate & gift law 2. Potential legislative changes under discussion 3. Tax issues facing a 2010 estate 4. Necessary changes to existing wills & trusts 5. Current planning ideas 2
  • 3. Today’s Presenters  Cynthia (Cindi) Turoski, CPA/PFS, CFP® - Managing Director of Bonadio Wealth Advisors cturoski@bonadio.com  Jack Capron, Esq., CPA,/PFS, CFF – Principal, Bonadio & Co., LLP jcapron@bonadio.com  Jean Bedell, CPA/PFS, CFP® - Manager, Bonadio Wealth Advisors jbedell@bonadio.com 3
  • 4. The State of the Estate Tax Estate & Year Estate & Gift Tax GST/Lifetime Basis Rate Gift Exemption Full basis step-up to 2009 45% $3.5M/$1M FMV at death Carryover basis to heirs (ugh!), except: 2010 Whatever the top Unlimited/$1M • Heirs can receive a individual income $1.3M step-up tax rate is (currently 35%) • Spouse can receive an additional $3M step-up Full basis step-up to 2011 55% $1M/$1M FMV at death 4
  • 5. What are the legislative possibilities? 1. Congress takes no action 2. Congress changes the 2010 law – retroactively or prospectively 3. Choice: Congress allows executors of 2010 estates to choose which rules 5
  • 6. Potential Consequences if Congress Does Not Change 2010 Law 1. Assets could flow to the wrong trusts/individuals, completely disinheriting some 2. More or less may flow to charity than intended 3. Estates could be tied up because executor is unsure on how to administer 4. Executors may decline to serve due to liability exposure 5. Heirs cannot substantiate the cost basis on inherited assets 6
  • 7. Have NYS Estate Tax Laws Changed? 1. NYS exemption remains the same at $1M – 16% rate 2. Unsure if carryover basis rules would apply to NYS 3. Unsure if certain trusts would qualify as marital trusts for NYS 7
  • 8. What Should You Do in the Interim? 1. Review wills and living trust agreements a. Clearly depict your intent b. Make sure assets would flow as intended (formulas) c. Consider flexible provisions for potential law change scenarios d. Give executor discretion on how to allocate step-up 8
  • 9. What Should You Do in the Interim? 1. Review wills and living trust agreements (cont.) e. Ensure trust provisions qualify for spousal step-up f. Consider spousal trusts vs. outright bequests 2. Gather and organize your cost basis records 9
  • 10. Periodically Review Overall Estate Plan – From a Tax, Financial & Legal Perspective Review all the pieces/details of your estate plan – not just legal documents 1. How & where assets will flow 2. Beneficiary designations 3. How & where estate taxes will be paid from 4. How assets are titled 5. Coordinate business agreements with estate plan 10
  • 11. Periodically Review Overall Estate Plan – From a Tax, Financial & Legal Perspective Examples of unintended consequences 1. Wrong beneficiary (ex-spouse, deceased parent, special needs child, 2 out of 3 children) 2. Thinking the will controls distribution of all assets 3. Assets being distributed to children too young 11
  • 12. Periodically Review Overall Estate Plan – From a Tax, Financial & Legal Perspective Examples of unintended consequences (cont.) 4. Disinheriting a child because of where estate tax gets paid from 5. S Corp stock to certain trust – inadvertently terminating S election 12
  • 13. Other Planning Strategies Under Current 2010 Law 1. Consider making taxable gifts at chance of 35% rate 2. Consider making distributions from GST trusts now 13
  • 14. Other Timely Planning Opportunities (based on current economic environment) 1. Low Interest Rates: a. Intra-family loans b. Grantor Retained Annuity Trusts (GRATs) c. Charitable Lead Annuity Trusts (CLATs) 2. Low Values a. Lifetime gifting (stock, real estate, business interests, etc.) 14
  • 15. The Five Things We Want You To Take Away 1. Need to determine how assets will pass under your current estate plan 2. Need to review current wills & trusts & create appropriate documents 3. Importance of working with a qualified, professional team to ensure your wishes are carried out 15
  • 16. The Five Things We Want You To Take Away 4. Importance of being aware of legislative developments 5. Planning ideas in a low interest rate environment 16
  • 17. Questions? 17
  • 18. Thank You We appreciate you taking the time to attend today’s program! Please follow us at: 18

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