We estate planning attorneys have been waiting for a new law since the “old” law went into effect in 2002. Surely the smart people in Washington DC will come up with a new law prior to the sunset of this law at the end of 2010… surely… and time kept ticking on toward December 31, 2010. Now, FINALLY, on December 17, 2010 the new law was signed.
The headlines read that the Bush era tax cuts are continued for two years. This is true in many ways but in the estate planning field the tax cuts were not only continued but, in my opinion, cut more. Starting January 1, 2011 and for the next two years, each of us can give away FIVE MILLION DOLLARS tax free at death. Yes, $5,000,000… and yes, TAX FREE! Plus, you can use a deceased spouse’s unused exemption thus creating a $
I get this call a lot. “My mom died in Sacramento and I need help!” Often the caller or emailer grew up in Sacramento but left and never returned. However, mom and dad stayed behind. Often dad died a few years ago and now mom moved on. These clients do not live here anymore, often do not have reliable contacts here, and thus are left with the Internet to find their attorney. The lucky ones find me!
I have become a specialist in helping people, living around the world, who lost a loved one in California… often right here in Sacramento or Roseville my main stomping grounds. However, I can efficiently conduct probates throughout California.
Often mom owned a modest house, maybe a car, and sometimes a few dollars in the bank. My new client’s goal is to settle the estate with
Did you know life insurance is a taxable asset in your estate? It’s true. A lot of people think life insurance is “tax free” and that’s simply not the case. It does, generally, build in value without income tax. However, at death it is an asset of the deceased’s estate and subject to estate tax at whatever the then prevailing tax rates are. If they do not change the laws in the next three weeks life insurance could be taxed at 55% at your death. Yes, really I said FIFTY-FIVE PERCENT! If not properly owned your two million dollar term life policy might be worth less than one million to your loved ones. Can that problem be fixed?
The good news is that if life insurance is properly owned, in an irrevocable trust, it will not be subject to that horrific tax rate. As long
We still don’t know what the laws will be on January 1, 2011. However, you should remember there IS a tax law in place for January 1, 2011 and it is a one million dollar exemption. Today there is no estate tax and January 1st there is a big tax (up to 55%) with only a one million dollar exemption. Will a new law be agreed to this month? I really don’t know. I thought they would fix this tax loophole a few years ago. What loophole do I speak of? Let me explain.
Let’s say you are a 95 year old guy worth twenty million dollars. If you die in late December your estate passes without any estate tax. There is the potential for some income tax, depending on what type of assets one owns at death but that capital gains tax is usually a pretty low tax rate (let’s call it 20%