New Estate Tax Proposal - Hits Wealthiest
A new estate tax proposal was introduced yesterday in the Senate. It offers the prospect of retroactive application back to January 1, 2010 - and provides for much higher estate taxes on the wealthiest taxpayers. The proposal was submitted by an independent Senator Bernie Sanders and three Democrat senators.
This proposal exempts from estate taxes the first $3.5 million of assets, and up to $7 million for a married couple. Estates totaling between the exemption amount ($3.5 million for individuals and $7.0 million for married couples) and $10 million would be taxed at 45%. Taxable estates between $10 million and $50 million would pay an estate tax equal to 50% of the taxable estate. Estates over $50 million would pay 55%, and estates over $500 million would pay a 10% surtax on assets above $500 million.
The Sanders proposal will also limit grantor retained annuity trusts (GRATs) to a minimum ten year period (which reduces greatly the effectiveness of "zero grats" that are typically used for the tax efficient transfer of large estates), and includes new more restrictive rules for valuation discounts used in gift and estate planning using family limited partnerships.
However, the Sanders bill also increases the exemption for operating farms and ranches by $2 million to a total of $3 million, and increases the maximum exclusion allowed for conservation easments to $2 million.
The biggest issue with regard to estate taxes remains whether Congress has the ability to agree on anything prior to the automatic return of the $1 million exemption per person ($2 million for a married couple) that is scheduled to appear January 1, 2011.
The bottom line - if your estate exceeds $1 million dollars (your estate includes the fair market value of all of your assets, including the face value of all life insurance insuring your own life that you own or control, you should consider consulting with an experienced estate planning attorney to minimize the estate tax liability exposure you have for the assets over the $1 million. The estate tax rate in 2011, if no action is taken by Congress, is 55% on amounts over about $1.2 million. Given the current concern with the deficit, it is not at all unlikely that the Senate will not be able to muster the 60 votes it needs to make a change before year end.
For more information about the current status of the estate tax, see today's Wall Street Journal , and a recent Forbes.com article .
This proposal exempts from estate taxes the first $3.5 million of assets, and up to $7 million for a married couple. Estates totaling between the exemption amount ($3.5 million for individuals and $7.0 million for married couples) and $10 million would be taxed at 45%. Taxable estates between $10 million and $50 million would pay an estate tax equal to 50% of the taxable estate. Estates over $50 million would pay 55%, and estates over $500 million would pay a 10% surtax on assets above $500 million.
The Sanders proposal will also limit grantor retained annuity trusts (GRATs) to a minimum ten year period (which reduces greatly the effectiveness of "zero grats" that are typically used for the tax efficient transfer of large estates), and includes new more restrictive rules for valuation discounts used in gift and estate planning using family limited partnerships.
However, the Sanders bill also increases the exemption for operating farms and ranches by $2 million to a total of $3 million, and increases the maximum exclusion allowed for conservation easments to $2 million.
The biggest issue with regard to estate taxes remains whether Congress has the ability to agree on anything prior to the automatic return of the $1 million exemption per person ($2 million for a married couple) that is scheduled to appear January 1, 2011.
The bottom line - if your estate exceeds $1 million dollars (your estate includes the fair market value of all of your assets, including the face value of all life insurance insuring your own life that you own or control, you should consider consulting with an experienced estate planning attorney to minimize the estate tax liability exposure you have for the assets over the $1 million. The estate tax rate in 2011, if no action is taken by Congress, is 55% on amounts over about $1.2 million. Given the current concern with the deficit, it is not at all unlikely that the Senate will not be able to muster the 60 votes it needs to make a change before year end.
For more information about the current status of the estate tax, see today's Wall Street Journal , and a recent Forbes.com article .
Posted by Randy Coleman at 6/25/2010 7:47 AM 
Categories: Estate Planning, estate taxes, Grantor Retained Annuity Trusts
Tags: grantor trusts estate tax estate planning
Categories: Estate Planning, estate taxes, Grantor Retained Annuity Trusts
Tags: grantor trusts estate tax estate planning
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