Wealth Preservation, Trusts and Estates

David M. Frees III Chairman: Trust, Estates, and Wealth Preservation
Unruh, Turner, Burke and Frees
David Frees Has Offices in Malvern, Phoenixville, and West Chester

No one ever thought that this would happen. Congress cannot just let this lapse. They will lose too much tax revenue. It doesn’t make sense.

But, that’s the conclusion of the Wall Street Journal after a review of trust and estate lawyers at a recent gathering. And those of you who are my clients know that for years we have been waiting for Congress to act to fix the deeply flawed estate tax. And, no one ever really believed that congress would let the tax go away. I still don’t believe that they will.

They seem to be totally pralyzed by health care reform. However, they seem to be considering a one year “fix.” Under this plan the law will stay as it is for one more year and then fall back to the old $1 million dollar exemption. But, if they let it lapse, they will probably re-enact it shortly after in 2010 and make it retroactive to the start of the year. Sound unfair or unconstitutional? Read this Wall Street Journal Article on the retroactive estate tax issue.

The bottom line: If the tax disappears, millions of wills will no longer make sense as they are drafted according to formulas linked to the law. If Congress doesn’t act soon call your estate planning lawyer or attorney.

Please leave your questions and comments below.

David M. Frees III, Esquire: wills, trusts, powers of attorney, living wills and
all related estate planning issues.

Attorney David Frees has offices in Phoenixville, Malvern, and West Chester which serve all
of Chester County, Montgomery County, Deleware County as well as Berks, Bucks and
Lancaster Counties.

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Read this just posted an article on the Federal Government’s claim that the proposals circulating in congress are a decrease in the tax and are quite reasonable. For competing views on this controversial tax and how to plan for it read this article by Chester County based will, trust, estate and asset protection lawyer David M. Frees III

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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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Have you ever heard of a GRAT or a “Walton GRAT”? The Grantor Retained Annuity Trust is a powerful estate planning and asset protection technique that allows wealthy families and modestly wealthy families to move a great deal of value without incurring gift taxes at the time of the transfer. The GRAT also allows you to move assets out of your estate but to get some of the assets returned to you. This ability to gift and to use assets is very rare in the estate planning world.

The GRAT can be quite complicated and you will need to consult counsel. However, in the current environment where stocks, real estate, and business values are at historic lows, and, where interest rates are also low the GRAT is a tool that can really help families to protect and preserve assets for the next generation. In this brief video David Frees explains how it can work.

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

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information on the best estate planning and asset protection techniques for Pennsylvania residents.
Just click here.

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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.
Follow David on Twitter for more legal updates or for more information on family communications skills and business skills

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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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