Wealth Preservation, Trusts and Estates

The inheritance tax is a tax on the assets owned or controlled by a decedent at the time of his or her death and applies to assets individually owned, jointly owned and with beneficiaries designated. The tax does not apply to life insurance on the decedent’s life. It also applies to assets the decedent gifted within one year of the date of death. The tax rates are dependent on the relationship of the decedent to his or her beneficiaries. The inheritance tax return is due within 9 months after the date of death. A discount can be achieved for the portion of the tax paid within 3 months after date of death. A six month extension for the filing of the tax return is available during which interest will accrue against any unpaid portion of the tax ultimately due.

Douglas L. Kaune, Esquire dkaune@utbf.com

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There are still people arguing for the elimination of the federal estate tax. However, it appears that it is here to stay. This article in the New York Times makes some interesting points. But, if the tax remains, there are some unique planning opportunities and it will be good to know what we have to work with. That news should be forthcoming soon as congress and Obama seem set on getting a bill together very soon. We will keep you posted.

David M. Frees III, Esquire

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At Unruh Turner Burke and Frees, the Trust Estates and Wealth Preservation section has developed a number of valuable resources for our clients to both understand and to manage their federal estate tax liability. We represent many affluent and moderately affluent clients and families who want to minimize or eliminate this tax, reduce inheritance taxes, pass on vacation homes, real estate and family businesses.

And one of our most popular reports – How To Be an Executor In Pennsylvania is available to any clients or those considering our firm. Just call the office and you can receive this valuable resource. 610-933-8069 and ask for our Executor Paper. It contains over 13 pages of valuable information about the duties of executors in Pennsylvania and how to avoid getting into trouble or litigation. In fact, many executors don’t know that they are personally liable for many of their acts.

We also try to alert you to other resources that you can use as a savvy consumer of legal services. And if you enjoyed our brief articles or news alerts on Federal Estate Taxes, then you might also want the IRS consumer guide to the federal estate tax and related publications. These publications are available for download at no charge just by clicking this link.

If this guide raises more questions than it answers, you are not alone but it is a valuable resource, very complete and a great place to learn more. And, we are happy to answer any of your questions and to keep you advised of the expected changes in this vast body of law as those changes occur.

Pleas leave your comments and questions below and register for the RSS feed to get alerts when we update the blog.

David M. Frees III, Esquire

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Effective as of January 1, 2009, the federal estate tax has a new exemption amount.

Currently, estates are exempt if they are below $3.5 million Dollars. That’s the good news. The bad news is that many people may still be subject to the tax even though they think that they and their families are free of that very large burden.

First, the estate subject to that tax exemption includes assets such as the death benefit of most life insurance policies, retirement accounts, joint accounts, and many trusts and other assets as well as assets that pass outside of an estate by beneficiary designation. In other words, non probate or life insurance does not mean tax exempt. Also, if a married couple has assets and life insurance that exceed that number they may still need significant planning to eliminate the tax. The current top rate of the tax is 42% which is scheduled to return to 55%.

Also, the tax is currently scheduled to return to a $1 million dollar exemption in 2011. So individuals or spouses with assets that exceed $1 million dollars should still consider estate tax planning.

Congress is currently considering a change to the tax and may or may not make the $3.5 million dollar exemption “permanent.” See my earlier article on Obama and the estate tax. And, that would be great for clients. In that way, you only need federal estate tax planning when your assets exceed that amount.

However, if the tax no longer applies to you, then you can and should focus your planning and spend planning dollars on protecting your spouse in the event or remarriage and divorce, protecting your children and grandchildren from divorce and lawsuits, and in minimizing state death taxes. Our enhanced Estate Planning(TM) and Family and Friends Plans(TM) focus on these issues and how to avoid family disputes, how to pass on the personal assets and how to make sure that your family history, values and wisdom are also preserved.

These planning approaches were often made more expensive and complicated when the federal estate tax applies. So, elimination of the tax for you may open some new planning options without breaking the bank. And, gifting stock, real estate and other assets in a bad economy with low interest rates may offer real planning opportunities. See my article on effective planning in tough economic times.

For now, make sure that your plan really works and is coordinated with the way you hold your assets, and make sure that you have the right tax planning, the right executors and trustees. And, if for fun you want to see if the Federal Estate Tax applies to you, be sure to check out this little tool from SmartMoney. Just click the link.

But remember that an estate planning check up from your professional advisers, focused on you and your family is the best and that no general calculator will replace that personalized attention.

David M. Frees III, Esq.
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David Frees dfrees@utbf.com
Doug Kaune dkaune@utbf.com
Also be sure to leave us comments and questions below about what you want and what you need in these articles to help you get the most from your estate planning, for you and your family.

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If you are interested in the status of the federal estate tax and how it may affect your planning as a resident of Pennsylvania please read more of the brief article that I posted this morning summarizing the Wall Street Journal’s analysis of the President and Congressional views on the need to move quickly on this issue.

The article briefly reviews what they plan, how you need to react, and what you will need to do.

Obama Will Keep The Estate Tax – What Do You Do Now?
by David M. Frees III, Esquire Chairman Trusts, Estates, and Wealth Preservation
610-933-8069
dfrees@utbf.com

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Yes. Believe it or not the current economic down turn presents some serious estate and asset protection planning advantages.  Now I never encourage clients to give away or to give up control over assets that they might need.  But, once your core assets reach a point where you feel secure in maintaining your lifestyle, the excess may be available for outright gifts, gifts in trust, gifts to UTMA accounts, or to fund 529 plans.

And many stocks values are quite depressed now.  So, they can be transferred with little or no tax consequences.  Then, when the rebound, the growth will benefit your heirs and will not be taxed in your estate.  Likewise, real estate such as shore or vacation home can be transferred at historically low values and trusts such as QPRT’s and GRATS will use historically low interest rates.

For more information David Frees can be reached at 610-933-8069.

His email is dfrees@utbf.com

Appointments and telephone conferences can be set by contacting Donna, Tara, Denise or Whitney at 610-933-8069.

Please feel free to comment below.

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