Wealth Preservation, Trusts and Estates

Are you are a business owner or professional, a real estate investor or
entrepreneur who has been putting off your estate planning because
it’s too time consuming, costly, or complicated?

Have you been promising a spouse, children or other loved ones that
you’re going to “get around to” this but just never do?

Has it been more than five years since your last business and estate
planning?

Do you believe that the changes to the federal estate tax law will now
automatically protect your family and spouse?

If you answered yes to any one of these questions, then you’re probably
ready to hear about moving up from coach to a Business or First Class
Estate Plan(TM).

To us, that is planning that respects that you’re a busy person with many
people relying on you.  That you demand a high ROI from whatever you
are spending time doing,and that you need services that are efficient, with
limited or no risk and that will work to carry out your goals with a high
level of accuracy and at a reasonable price.

Well, you just don’t get that with a coach class ticket or a simple will.

My partner Douglas Kaune and I have developed a plan to help busy
business people just like you. To find out what we can do for you, and
to upgrade your estate planning from “coach” to our Business Class Estate
Plan or our First Class Business Plans(TM) call 610-933-8069.

Mention: Business Class Estate Planning to claim your no cost
and no risk consultation and flat fee pricing.

If you’d like to read a bit more about our
estate planning programs, click here

David Frees is a Pennsylvania lawyer with offices in Malvern,
West Chester and Phoenixvillle Pennsylvania.  His practice is
limited to trusts, estates, wills and probate and related matters
such as elder law and asset protection for your heirs.

He is a Super Lawyer and has been recipient of Main Line Today
Magazine’s Top Lawyer honor for multiple years.  He is the
developer of Business Class Estate Planning and First Class
Estate Planning (TM) which are both designed for families and
individuals who expect high return on their investment of time
and money and who want to pass on family wealth and
values.

He can be reached at dfrees@utbf.com or by calling 610-933-8069.

Mention Business Class or First Class Estate Planning for your no
obligation and no cost consultation.

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Congress Acts On Federal Estate Taxes
The New Estate Tax Law: Problems, Solutions and What You Need To Know

Last night, the House of Representatives passed a bill extending the Bush era tax cuts which were about to expire, and, re-enacting a federal estate tax. And, while the new law looks favorable on it’s face, and may make large end of year gifts less important, it also contains some major pitfalls that you need to know about.

This article and several to follow, will review the essential elements of the new law and and some of the effects that it will have on Pennsylvania residents with estate of $1 million dollars or more.

Below is a summery of the rates and changes, a review of some good things and some problems, and a few strategic suggestions.

Here is a summary of some of the changes and rates:

Estate and Gift Tax under the Tax Relief Act

	2010	2011 & 2012	2013
Estate Tax Exemption	All Exempt	$5,000,000	$1,000,000
Estate Tax Rate	N/A	35%	Top Rate 55%
Gift Tax Exemption	$1,000,000	$5,000,000	$1,000,000
Gift Tax Rate	35%	35%	55%
GST Exemption	$5,000,000	$5,000,000	$1,000,000
Generation Skipping Rate	0%	35%	55%

Some of The Good Things:

So as you can see from the chart above, the estate tax bill’s good points are that we can make gifts to both children and grandchildren over the next two years and up to $5 million dollars without paying tax.

Since GRATS were not eliminated or restricted by this bill, we can continue to use these trusts when you have an asset or assets that are rapidly rising in value.

You can and probably should consider gifting, Medicaid planning and other techniques that would use the liberal provisions for the next two years. This is especially true if you wish to help grandchildren.

The bill also contains a portability provision, that appears to allow a surviving spouse to use the deceased spouses five million dollar exemption as well. However, there are a number of potential problems with this provision that may make it far less useful than it first appears. For example, you will lose this exemption if you ever remarry. So we are also mentioning this below if the problem area.

Potential Problems

The most obvious problem is the fact that these changes only last for two years and then the law goes back to a very high rate and a $1 million dollar exemption. For young couple or for wealthier families where large gifts are not part of the plan in the next two years, your estate planning should and needs to anticipate the possible return of a very nasty estate tax.

Also, while the portability of these $5 million dollar exemptions looks good, there are a number of problems that may still make the use of trusts advantageous for protecting the surviving spouse and children and grandchildren. These issues are important to all families, but are especially important in blended families where there are children from multiple marriages or relationships.

Strategies and Actions

If You Are An Executor:

The executors of estates of those dying in 2010 may now choose to be taxed under the currently existing 2010 law or the Tax Relief Act. Review the best result with your legal adviser.

If You Are Single, Divorced, or Widowed:

This act provides a number of opportunities for those who want to make gifts or to preserve assets for children, grandchildren or others. This includes the ability to simplify some documents, and to make gifts, outright, or in trust, and to use GRATS without incurring gift taxes. At Unruh, Turner, Burke and Frees we have a team of estate planning, elder law and tax attorneys to assist you in these matters.

If You Are Married:

Be sure to have your estate planning documents, your beneficiary designations, and your overall existing estate plan reviewed. While there are some unique opportunities for planning, there are a number of potential problems with old documents or dated estate planning strategies that can and should be fixed now.

You should also make sure that your new or updated plans recognize that these changes are for only 24 months and that they are adaptable enough to deal with the change in the law back to the higher rates and lower credits in January 2013.

For more information, call David M. Frees III Chairman: Trusts, Estates, and Wealth Preservation or Douglas Kaune Chairman Elder Law at 610-933-8069.

dfrees@utbf.com

Believe it or not, we have lawyers that advise us too. Here is their disclaimer – The information contained in this article is designed to alert you to changes occurring in the federal estate tax laws which may relate to your personal situation. It is not designed to replace individual consultation with your legal, tax, and investment advisers based on your individual facts and particular circumstances. Interestingly, Unruh, Turner, Burke and Frees ( the very folks who wrote this article) would be please to assist you and to work with your other advisers in developing or modifying your estate planning documents.

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Want to know about an interesting new Federal Estate Tax bill that might get traction in Congress and how you can track it on line? Read on.

A new federal estate tax bill was introduced in the House Ways and Means Committee on October 22, 2009. This bill, known as HR 3905, is called the Estate Tax Relief Act of 2009. While the fate of the federal estate tax is up in the air, this bill might actually stand a chance of getting out of committee as a compromise bill before the end of the year.

It is different than some of the other House and Senate bills. It would slightly raise the exempt amount for next year but will provide for increases thereafter in the exempt estate and also provides for phased reductions in the rate of the tax.

Unlike some bills, it does not address the idea of a husband or wife getting a carry-over also knownas portability of the first spouses exemption.

A review of the bill’s specifics:

The bill will repeal the lapse of the Federal Estate Tax as of January 1, 2010.

It would establish a $3,650,000 exemption equivalent in 2010 (more than the current $3.5 million).

The bill then gradually increases the federal exemption equivalent to $5,000,000 by 2019 and would adjust for inflation thereafter.

This bill also contains reductions in the top estate tax rates over time with continued decreases to 35% by the 2019.

Bottom line? This bill appears to address some of the concerns of both parties and may be a politically viable compromise. If passed and then passed in a similar form by the Senate, it would still require many families to do careful estate tax planning before the death of the first spouse to avoid the tax.

We will continue to keep you posted. And, you can read the bill and track its progress here. Federal Estate Tax News on HB 3905

David M. Frees III has law offices in Malvern, Phoenixville and West Chester
Pennsylvania. These offices serve all of Chester and Montgomery County, Lancaster Berks and
Delaware Counties.

Attorney David M Frees III can be reached by phone at 610-933-8069 or 610-240-0750

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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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In a recent case, the tax payer had a victory over an IRS challenge that sought to include the full value of FLP (family limited partnerships) assets into the decedent’s estate.

Family limited partnerships are often used to manage family businesses, real estate ventures, and even in some cases, publicly traded securities and other more liquid investments. They allow the transfer of assets (in some cases at a discount) while permitting a general partner to manage the assets.

When combined, with other techniques, such as asset protective trusts, they can be a powerful estate and asset protection strategy.

However, because in part of aggressive discounting of asset values and for other related reasons, these arrangements have been attacked by the IRS.

In the recent blog posted on www.paestateplannners.com I have linked to an anlysis of the new case and have given some short, and non technical points to remember when doing this type of planning.

When done correctly, family limited partnerships serve many business, and wealth preservation goals.
To learn more click Family Limited Partnerships – A Partial Victory for the Tax Payer.

David M. Frees III
610-933-8069
dfrees@utbf.com
David and his partners and associates in the Wealth Preservation, Tax,
and Corporate sections work with many clients to develop
and implement Family Limited Partnership and Trust strategies
for our clients in Chester County, Delaware County, Lancaster, Bucks,
Berks and Philadelphia counties and throughout Pennsylvania

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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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