As part of a compromise to extend the income tax rates in effect from 2003 to 2010 (sometimes described as the “Bush tax cuts”) and unemployment benefits, Congress has finally resolved uncertainties in the estate, gift, and generation-skipping transfer (“GST”) taxes. The new law makes the most significant changes to these taxes since 2001, including a generous increase in exemptions and a significant reduction in tax rates for 2011–2012. In order to take advantage of some one-time wealth transfer opportunities, action is required before the end of 2010. For nearly all high-net-worth persons, the next two years will bring extraordinary estate planning opportunities. Unfortunately, and contrary to many media claims, 2011 and 2012 will also bring added complexity and uncertainty. Surprisingly, estate planning for married persons with estates of less than $10,000,000 may actually be more complicated than planning for married persons with larger estates. Accordingly, all estate plans should be reviewed early in 2011 to determine whether the plan will work as intended under the new tax laws.
- Income Tax Rates Continued for 2011–2012
- Estate Tax Made Optional for 2010
- Transfer Tax Exemptions Increased, Tax Rate Reduced
- Generation-Skipping Transfer Tax Rate Is Zero for 2010
- Unused Estate Tax Exemption Transferable to Surviving Spouse
- Bullets Dodged
- Direct Gifts from IRAs to Charities Reinstated for 2010–2011
For a detailed discussion of the most noteable new developments, download the bulletin below.