President Obama Delays Estate Tax Uncertainty For At Least Two More Years
In a wise, but surprising turn of events, the President has agreed with the Republican Congress and adjusted the estate tax levels for 2011 and 2012.
For the next two years, the estate tax will be levied on all estates over $5 million for an individual and $10 million for a married couple and at a rate of 35 percent.
Historically, Republicans have often been known for their disdain of excessive taxes and Democrats have been known as the party that favors big government and higher taxes.
With the referendum against the Democrats in the last election and the heavy shift to a Republican House and Senate, the President had no choice but to cave to the Republican demand for a lower estate tax.
If not, the amount of estate taxes paid by the families of middle-income voters would have been a hot button topic during the 2012 Presidential election, and could have been the cause of a loss of the White House.
So where does this leave us?While the estate tax is held in check for the next two years, there is no definitive answer as to where it goes after that.
In 2013, we could have another year of no estate tax or we could have a 55 percent estate tax on everything over $600,000.
Who knows?The only thing that we can do is hope for the best and prepare for the worst.
A trust-based estate plan will ensure the most tax savings no matter what the estate tax number is in the year you die.
In addition, there are more advantages to having a trust than just estate tax protection.
While the estate tax garners the most publicity, it is actually the probate process that tortures and bankrupts most families.
Probate is a lengthy process that can tie up your assets for years and cost your beneficiaries hundreds of thousands of dollars.
Probate is necessary when you die owning assets in your own name, whether or not you have a Will.
Probate will include everything from real estate to jewelry to vehicles to baseball card collections.
If you own any tangible asset in your own name at the time you die, it will be included in the probate process.
Bank accounts and brokerage accounts will also have to be probated if there is no valid beneficiary designation on file with the bank or brokerage house.
Only a Revocable Trust can avoid Probate.
In addition to probate avoidance, a Florida trust offers the benefits of controlling your assets for up to 360 years after you die, limiting access to the trust based on age, graduation or other accomplishments you wish your children to reach, and provides your beneficiaries with instant asset protection if drafted appropriately.
You can use an Irrevocable Trust to protect assets from creditors, a Special-Needs Trust to provide for a child with special needs while protecting their Federal aid, and a Charitable Remainder Trust to leave a legacy with a charity after you are gone while reaping the income tax benefits of the contribution while you are alive.
No matter what the estate tax level is in 2011, 2012, or any year going forward, every person should consider a trust as the centerpiece of their foundational estate plan.
Setting up a trust today will save your family time, money, and frustration in the future.
For the next two years, the estate tax will be levied on all estates over $5 million for an individual and $10 million for a married couple and at a rate of 35 percent.
Historically, Republicans have often been known for their disdain of excessive taxes and Democrats have been known as the party that favors big government and higher taxes.
With the referendum against the Democrats in the last election and the heavy shift to a Republican House and Senate, the President had no choice but to cave to the Republican demand for a lower estate tax.
If not, the amount of estate taxes paid by the families of middle-income voters would have been a hot button topic during the 2012 Presidential election, and could have been the cause of a loss of the White House.
So where does this leave us?While the estate tax is held in check for the next two years, there is no definitive answer as to where it goes after that.
In 2013, we could have another year of no estate tax or we could have a 55 percent estate tax on everything over $600,000.
Who knows?The only thing that we can do is hope for the best and prepare for the worst.
A trust-based estate plan will ensure the most tax savings no matter what the estate tax number is in the year you die.
In addition, there are more advantages to having a trust than just estate tax protection.
While the estate tax garners the most publicity, it is actually the probate process that tortures and bankrupts most families.
Probate is a lengthy process that can tie up your assets for years and cost your beneficiaries hundreds of thousands of dollars.
Probate is necessary when you die owning assets in your own name, whether or not you have a Will.
Probate will include everything from real estate to jewelry to vehicles to baseball card collections.
If you own any tangible asset in your own name at the time you die, it will be included in the probate process.
Bank accounts and brokerage accounts will also have to be probated if there is no valid beneficiary designation on file with the bank or brokerage house.
Only a Revocable Trust can avoid Probate.
In addition to probate avoidance, a Florida trust offers the benefits of controlling your assets for up to 360 years after you die, limiting access to the trust based on age, graduation or other accomplishments you wish your children to reach, and provides your beneficiaries with instant asset protection if drafted appropriately.
You can use an Irrevocable Trust to protect assets from creditors, a Special-Needs Trust to provide for a child with special needs while protecting their Federal aid, and a Charitable Remainder Trust to leave a legacy with a charity after you are gone while reaping the income tax benefits of the contribution while you are alive.
No matter what the estate tax level is in 2011, 2012, or any year going forward, every person should consider a trust as the centerpiece of their foundational estate plan.
Setting up a trust today will save your family time, money, and frustration in the future.
