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Estate Planning Issues


The estate tax question that loomed in previous years was finally settled at the very end of the year by Congress. The estate tax, gift tax, and generation-skipping tax (GST) were all given top rates of 35 percent with a $5 million lifetime individual exemption.

These exemptions for estate and gift taxes are even transferable between spouses, a New York Family Lawyer has learned. Should one spouse pass away, the executor of the estate can transfer any unused portion of this $5 million individual exemption to the surviving spouse.

As the law now stands, this law will only stand through 2012, unless something changes. Matters may be entirely different in 2013. Those who know the laws of estate planning are advising clients to take advantage of this window of opportunity.

The biggest deal is the $5 million lifetime gift tax exemption. When it comes to married couples, the amount is more like $10 million. Compare this to 2010, when this exemption was only $1 million and couldn’t be transferred between spouses.

These leaves many with the choice of holding on to their money and risking high taxes on it or giving it away before 2013 to avoid high inheritance taxes of the future.

Lifetime gifts have the effect of lowering the giver’s taxable estate. If money is given in the proper fashion, their capital gains tax rate could be as low as zero percent through 2012.

The rule of portability – passing on your unused tax exemption – comes with an important rule. The executor of the deceased spouse must file an estate tax return – even if no estate tax is owed. It is the estate tax return that tells the IRS the unused or partially used tax exemption is being passed on. According to a Nassau County Family Lawyer, the estate tax return is due nine months after the death of the spouse, with a possible six-month extension.

Stephen Bilkis and Associates contend with such problems and more, every day. Let them use their experience to benefit you and your family. Don’t let legal questions cost you money and the benefits of your hard work that you want to pass on to your children.

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