Wealth Preservation, Trusts and Estates

Capital Gains Taxes For Trusts, Estates, and Beneficiaries of Estates in 2010 Are The Subject of IRS Attention. By: Attorney David M. Frees III

If you inherited assets from a trust or an estate where the decedent died during 2010 you probably thought that you were spared the worries and expenses of the federal estate tax. And strictly speaking, it appears that you’d be right. But, you may not have completely dodged the tax bullet and even the IRS hasn’t weighed in yet on exactly what you need to do.

Congress unexpectedly allowed the federal estate tax to lapse at the end of 2009 and despite regular threats to impose a retroactive estate tax, it appears that there will be no federal estate tax for this year.

However, since most lawyers, accountants and financial advisers expected Congress to address the situation and even the IRS held off, there are now many unanswered questions about the tax returns for these estates and their beneficiaries.

In particular, there are numerous unanswered questions about the new carry over basis rules and what they really mean for estates and beneficiaries who inherit assets and later sell them.

For more information on the IRS and the tax issues facing trusts, estates, and their beneficiaries from the Wall Street Journal click this highlighted link.

David Frees and Unruh, Turner, Burke and Frees’ Trust, Estate, and Wealth Preservation Section assist families and individuals with their trust, will and estate planning needs ranging from the simple to the highly complex.

David can be reached for consultation at 610-933-8069 or by e-mail at dfees@utbf.com.

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Avoiding The Federal Estate Tax – In 2010 and Beyond
What You Need To Know and Do In Your Estate Plan To Be Ready For 2011

The federal estate tax is currently not in effect.  However, it will return at rates and in amounts
that have not been seen for some time.  As of January 1, 2011 the IRS will be taxing all estates
of over 1 million dollars at rates of 42% to 55% depending on the size of the estate.

However, five billionaires have died since the federal estate tax was eliminated at 12:01 on January 1st 2010.
and as a result, their families will likely owe no tax as opposed to more than half of the estate value.
Since the federal estate tax ranges (when it is in effect) from a rate of 42% to 55% the federal government
has failed to collect billions in tax that it might otherwise have charged the billionaires’ estates.

The the deceased billionaires include, among others,  Mr Bell, the founder of Taco Bell, George Steinbrener, who
needs no introduction, and philanthropist and media billionaire Mr John Kluge.

Kluge, who was well known in media circles, was the oldest member of the Forbes 400 Richest List
and had a net worth estimated to be in excess of $7 million dollars.

For more information on the federal estate tax click here.  For more information on Mr. Kluge, see the
The New York Times which carried an article on Mr. Kluge as well as USA Today, The New York Daily News, and
CBS news.

So short of dying in 2010 what do you need to know and to do before the tax is imposed on your family?

First, stay informed.  When you register for any one of our reports, you’ll be added to a list of smart consumers and you’ll
receive updates through our articles on what Congress is doing about the federal estate taxes. You can also peruse our articles, blogs, videos and checklists
that we provide at www.utbf.com/trust-estate and www.PaEstatePlanners.com.

Next, understand that even if your wills are designed to save on Federal estate taxes, they may no longer work properly and you might need to do more planning
to be prepared for 2011.  Just get advice that applies to your situation.

Finally, be an informed consumer about the options and planning techniques often used by those with larger estates but which might also work for
families with more modest affluence who will be taxed after January 1, 2011. Click here for a selection of our reports for executors, trustees, and those doing estate planning.

David M. Frees III has been awarded the AVVO lawyer rating services highest rating of 10.0 – Superb.

dfrees@utbf.com

610-933-8069

Law Offices In Malvern, Phoenixville and West Chester

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I just posted a quick review of some of my analysis of this problem, as well as the articles by Forbes, The Wall Street Journal, and the Washington Post. Just click here for links to all of this material on the lapse of the federal estate tax.

Please leave questions and comments below.

David M Frees is a lawyer in Phoenixville, Malvern, and West Chester. These offices serve many communities on the Main Line of Pennsylvania and beyond. Looking for a lawyer to do a will, trust, estate plan, power of attorney, or related work in Collegeville, Exton, Paoli, Malvern, Devon, Berwyn, Daylesford, Wayne, Ardmore, Chester Springs, and the surrounding region?

Unruh, Turner, Burke and Frees and David Frees can be reached at 610-933-8069

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If you are a Pennsylvania resident, your estate is subject to many death taxes including the Pennsylvania Inheritance and Estate Tax as well as the Federal Estate Tax. If you have been watching the news, you know that one of those tax systems – the federal estate tax is due to expire quite soon.

Why?

Congress has yet to act on the pending repeal of the federal estate tax. But, the pressures on our tax system are so great that most commentators feel that they must keep the tax in place. If Congress allows the tax to temporarily lapse, it appears that they might then re-enact it retroactively to the start of 2010.

In addition to being confusing to taxpayers, and raising a difficult constitutional issue, this makes rational estate tax planning almost impossible.

In any case, the question of repeal or repair of the federal estate tax (also known to its detractors as the “death tax”), will almost certainly be the next political hot potato after health care reform is resolved.

Have you made up your mind yet? We try to present many different views on this issue and we welcome your comments. We also encourage you to contact your Congressional representative and Senator to demand action on this vital issue.

Here is an article from the Heritage Foundation on 7 reasons to repeal rather than reform the federal estate tax.

Please leave your comments below.

David M. Frees III
Chairman: Trust, Estate and wealth Preservation Section
Unruh, Turner, Burke and Frees

Offices in: Phoenixville, Malvern and West Chester

wills trusts estates powers of attorney and living wills
estate planning

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This is an alternative view on federal estate tax changes but be aware, not entirely accurate on the facts.

David M. Frees III
610-933-8069

Unruh, Turner, Burke and Frees have convenient offices
throughout the Philadelphia area and serve clients in
Chester County, Montgomery County, Lancaster and Berks Counties,
Bucks and Delaware County.

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There are many views on the issue of estate taxes. The New York Times editorial may not be your view but it is worth a read. Do you think that a tax at your death should not be labeled a death tax? Read the New York Times Death Tax Editorial.

David M. Frees III, Esquire
610-933-8069
dfrees@utbf.com
www.paestateplanners.com

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Both the Senate and the US House of Representatives are now working on bills that would reform the federal estate tax (also known as the death tax) before the end of this year. Both bills contain a $3.5 million dollar exemption per person. This would allow an individual Pennsylvania resident to shelter $3.5 million dollars and couples who planned carefully to shelter up to $7 million dollars. It appears, that these bills will probably still require trust planning under a trust or will to do so.

The Senate bill might also reunify the estate and gift tax systems and this would allow the transfer of more assets during a person’s lifetime.

However, the house bill contains a secret or back door tax increase.

It would make minority discounts illegal. This technique has been approved by the tax courts and has allowed families to move farms, and other illiquid assets out to the next generation for many years now. If this change goes through, it would be a loss for moderately affluent families that have illiquid assets.

Stay tuned for more information.

David M. Frees III, Esquire
David’s 9.4 AVVO Rating of Lawyers is SUPERB.

Contact one of David Frees’ convenient offices for an
appointment for estate planning, or for one of our
free guides for executors.
610-933-8069 Ask For Donna or Denise

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Many articles, websites, blogs and government talking heads have been out in force to reassure tax payers and particularly the owners of family farms and small businesses, that the reforms proposed by the Obama Administration to the death tax will be highly beneficial and pose no dangers to these groups. But see David Frees’recent comment to one of these articles that points out that due to some quite changes in the law, the $3.5 million dollar exemption will not work to protect many families with closely held businesses and real estate.

click the link below and be sure to read the article and Dave frees’ comment to the blog.

http://www.allbusiness.com/legal/tax-law-tax-reform/11802168-1.html?doconfirm=1

David M Frees III, Esquire

For more information on the Death Tax Disinformation campaign being waged against the American tax payer, visit this article.

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