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Senate Refuses Repeal
By Children’s Home Society of Florida Foundation
On July 21, 2010, Sen. Jim DeMint (R-SC) offered an amendment to the unemployment bill that would repeal the estate tax. Sen. DeMint noted that the White House is creating a difficult environment for “small businesses that are already facing higher income taxes and higher investment taxes.”
The Proposal
The proposed amendment was defeated on a vote of 39-59. Democratic Senators Blanche Lincoln (D-AR) and Ben Nelson (D-NE) supported the abolition of the estate tax. Republican Senators Olympia Snowe (R-ME), Susan Collins (R-ME) and George Voinovich (R-OH) opposed the abolition of estate tax.
Assessment
Sen. Lincoln and Sen. Jon Kyl (R-AZ) continue to advocate an estate tax compromise. Under the compromise, the $3.5 million exemption from 2009 would be increased over 10 years to $5 million and the top 45% estate tax rate would be reduced to 35% over that same time frame.
[picapp align=”none” wrap=”false” link=”term=tax&iid=5237623″ src=”http://view4.picapp.com/pictures.photo/image/5237623/tax-dollars/tax-dollars.jpg?size=500&imageId=5237623″ width=”346″ height=”491″ /]
Editor’s Note: The political pressure on the Senate continues to rise. Following the March death of Houston oilman Dan Duncan with a $9 billion estate, the news media noted that the government had lost $2 to $3 billion on that estate alone. When New York Yankees owner George Steinbrenner passed away with an estimated $1.1 billion estate, news media suggested that he hit a “home run” by dying in 2010 with no estate tax. While action is not likely before the election, there now seem to be two general patterns to a potential Senate compromise. First, the estate tax exemption will start at $3.5 million and increase to a higher number over ten years. Second, the estate tax rate will begin at 45% and decrease again over that same decade. The House majority has held strongly to a $3.5 million exemption and 45% top tax rate, so the final compromise would also need to reflect their preferences.
Conclusion
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Filed under: Estate Planning, Financial Planning | Tagged: abolition of estate tax, Ben Nelson, Blanche Lincoln, estate tax, estate tax repeal, George Voinovich, Jon Kyl, Sen. Jim DeMint |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
Physicians and Estate Planning
[Controlling Your Legacy: Understand Your Estate Planning Needs]
Affluent investors in Philadelphia remain concerned about the economy’s impact on their ability to meet financial goals, with 53% currently expressing such concerns (50% nationally), compared with 53% one quarter ago and 48% in January 2010 (45% nationally).
This persistent concern could prompt investors to take a renewed look at their investment strategies to help determine how to preserve hard-earned wealth with the goal of creating a family legacy that lasts for generations.
In reviewing ways in which to meet this goal, it’s important for physicians to consider making their estate planning needs a priority.
http://www.physiciansnews.com/2010/09/20/controlling-your-legacy-understand-your-estate-planning-needs/
Charles
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Estate Tax Update
Did you know that although congressional action is not guaranteed this year, Kiplinger’s expects lawmakers to OK a minimum exemption of $3.5 million with a top rate of no more than 45%, either in a lame-duck session this year; or in 2011?
So doctors, be aware!
Gretchen
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Estate Tax Mistakes of Doctors
Charles and Gretchen: did you know that changes in tax laws can catch people off guard, especially the docs? Yes, its’ true!
With most physicians so busy worrying about potential reimbursement reductions, many don’t have the time to address the important challenge of establishing a tax-wise estate plan for their families. Yet, according to these authors, fewer than 5% of doctors have an adequate estate plan in place.
http://www.physiciansmoneydigest.com/your-money/Three-Costliest-Mistakes-Doctors-Make-in-Estate-Planning
This upcoming tax-law change will create even more shortfalls in most physician families’ planning.
Clifford
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Estate Basis Adjustments Guidance Awaited
With the apparent repeal of the estate tax for 2010, attorneys and executors for decedents with estates over $1.3 million are faced with a challenge. Estate taxes may be repealed for 2010, but there is a new and difficult allocation of basis problem for larger estates.
At the American Institute of Certified Public Accountants meeting in Washington on October 27, Catherine Hughes, Attorney-Advisor in the Treasury Office of Tax Legislative Counsel, discussed the forthcoming Treasury guidance on basis allocations.
Attorney-Advisor Hughes noted that Treasury has received multiple requests from estate attorneys for this guidance and that it is a top priority.
Under the Economic Growth and Tax Relief Reconciliation Act of 2001, Sec. 6018 requires an information return to be filed by April 15, 2011 for large estates. Estates with assets over $1.3 million, as referenced in Sec. 1022(b)(2)(B), are required to file the information return.
Ms. Hughes noted that the guidance has not yet been published by Treasury because it addresses very complex issues. Because the new rules are likely to apply only for year 2010 and many decedents have very minimal records to show the cost basis of assets purchased decades earlier, this is likely to be a very difficult area for executors and estate attorneys. Ms. Hughes acknowledged that the IRS may need to extend the April 15, 2011 deadline.
The IRS faces significant issues in trying to estimate the number of returns that will be filed, whether they should be permitted to be filed electronically and how the IRS will administer the program.
The IRS also is responding to requests for clarifications on rules for determining basis. Ms. Hughes noted that there already are rules for determining basis in the income tax and capital gains sections of the code. It is uncertain whether the IRS will create additional basis determination rules for estate information returns.
Source: Children’s Home Society of Florida Foundation
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Estate Tax Battle Continues
Proponents of different estate tax proposals in Congress are digging in their heels, making for a very contentious debate.
http://www.fa-mag.com/fa-news/6457-congress-battling-over-proposed-estate-tax-solutions.html
So I say, let’s get-it-on!
Spencer
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To All ME-P Readers,
The gift that physicians and other high-net-worth investors want most this holiday season is one step closer to reality; imminent congressional action on new estate tax rules. Why?
President Obama just announced a deal with congressional Republicans that calls for a $5 million estate tax exemption and a 35 percent rate—part of a broader package that would extend the Bush-era income.
Any thoughts?
Dr. David Marcinko MBA
http://www.CertifiedMedicalPlanner.com
Publisher-in-Chief
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Temporary Estate Tax Relief
On December 17th, 2010, the President signed into law The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The estate tax section of the bill carries the title “Temporary Estate Tax Relief” and includes Sections 301, 302, 303 and 304. Most gift, estate and GST tax provisions will apply during 2011 and 2012.
Sec. 301 reinstates the estate tax and repeals carryover basis. Executors of decedents who passed away in 2010 are permitted to either file IRS Form 706 and apply the 2010 existing laws; or to elect to use the new $5 million applicable exclusion amount and 35% estate tax rate. Because some decedents passed away early in year 2010 and the normal tax payment date has passed, the required due date for the tax return or payment of tax will be nine months after the date of enactment. For 2010 decedents, the filing date for GSTT returns will also be nine months after date of enactment.
Sec. 302 addresses the gift, estate and GSTT exclusion amounts. The applicable exclusion amount will be $5 million for 2011 and for executors who elect to apply that amount to 2010. This amount will be adjusted for inflation starting in 2012 in $10,000 increments.
The estate tax rate will be 35%. Estate tax equals $155,800 on the first $500,000 and 35% of the excess over that amount, reduced by the unified credit. The unified credit (renamed the applicable credit amount) calculated based on a $5 million estate will be $1,730,800.
The gift tax is again reunified with the estate tax. Therefore, the 2011 estate and gift tax exemptions will be the same.
For generation skipping tax transfers during 2010, the GSTT rate shall be zero. Even if the executor elects the repeal of estates for 2010 decedents, the decedent is treated as a transferor for GSTT purposes.
Sec. 2511(c) is repealed. This eliminates the concern about potential disqualification of 2010 charitable remainder trusts.
There are provisions to calculate the credit for gift taxes paid when the estate return is filed. This is necessary because there have been varying gift tax rates for many decedents. The rates of tax as of the decedent’s death shall generally be used for calculations.
Sec. 303 creates marital deduction “portability.” The applicable exclusion amount for a surviving spouse will be the basic exclusion amount of $5 million with cost of living increment plus the “deceased spousal unused exclusion amount.” The unused exclusion will be the basic exclusion amount of the deceased spouse in excess of the basic exclusion amount used in the estate of that spouse. The unused exclusion amount will not be adjusted further for inflation. In order to benefit from this provision, the deceased spouse must die after 2010 and the surviving spouse must die before 2013, or Congress must extend portability.
If the deceased spouse transfers all assets to surviving spouse using the unlimited marital deduction, then the surviving spouse should have available the full value of both exclusions. However, the executor of the deceased spouse will be required to file IRS Form 706 to establish the amount of unused exclusion. The amount of exclusion cannot exceed twice the basic exclusion amount and only the remaining exclusion of the last deceased spouse may be utilized. The use of marital portability will require the executor to make an irrevocable election on IRS Form 706.
Source: Children’s Home Society of Florida Foundation
Editor’s Note: This bill is the most significant estate planning legislation in three decades. The higher exemptions will result in very few taxable estates. Most estate attorneys and charitable gift planners will focus on the traditional planning strategies to reduce costs, prepare for senior healthcare decisions and make effective transfers to family that achieve a positive result. In the charitable arena, the larger exemptions permit greater use of a testamentary unitrust funded with IRAs or other assets. These testamentary unitrusts will increasingly be viewed as excellent methods to reduce future income taxes and permit tax-free accumulations.
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The Ultimate Estate Planner
This is a website that offers an effective collection of resources for the trusts and estates practitioner.
http://ultimateestateplanner.com/
It includes legal document forms, books and DVDs, various articles and publications, decision making charts, podcasts, information on publications and marketers of products for the estate planning practice, as well as other resources.
Spencer
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Estate Tax Update 2021
https://www.msn.com/en-us/money/personalfinance/biden-wants-to-raise-the-estate-tax-here-are-3-ways-to-avoid-it/ar-BB1g17eF
Clint
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