According to a New York Family Lawyer, President Obama signed an estate tax overhaul last December. This new law will allow certain upper class couples, who are on their first marriage, to leave their possessions in such a way that will greatly reduce or eliminate taxes.
Under the new law, you are allowed to leave your spouse an unlimited amount with no tax. There are a couple of changes in this new law. First, your lifetime tax exemption is now raised to $5 million from $3.5 million. A widowed spouse can also now transfer any unused amount from their spouse to their selves. So now a total of $10 million could be left tax exempt.
This new law is not retroactive. If your spouse died before 2011 then you can’t claim the new changes. The first spouse to die has to file an estate tax return in order to claim this benefit even if no tax is due. The widowed spouse needs to file this return even if the dollar amount left seems to be low. Since this new law keeps the exemption from skipping a generation, a very rich person is forced to use the exemption to avoid tax for their grandchildren.
A New York Criminal Lawyer said that this new law will expire in December 2012 unless Congress makes some changes. If allowed to expire, the $5 million allowed in exemption would go back down to $1 million.
Even though this new law will help some people avoid tax, there is still a need to look at your estate plan if you have a bypass or family trust set up. If that trust is funded to maximum then a spouse could be left without anything outside the fund. A few key changes need to be made. You may even need to do away with a traditional trust in order to take full advantage of this new law, as said by a Nassau County Family Lawyer.
If you have been remarried, then you may still need to use a trust fund in order to protect your children from a new spouse being able to claim all your money once you pass away.
State laws vary and have to be considered as well. Be sure and have Stephen Bilkis and Associates look at your situation. These laws can be complicated and are constantly changing. A qualified legal counsel can help you make sure that everything is set up in such a way to maximum your tax exemption.
For your convenience, we have offices located throughout New York City, including locations in the Bronx, Brooklyn, Staten Island, Queens and Manhattan. We also have locations in Westchester County, and Nassau County and Suffolk County on Long Island. Come in today for a free consultation.