Digesting the Law Changes
Still reviewing and digesting the tax law changes for 2010-2012. A few thoughts come to mind:
(1) I've always thought it unfair that the only way couples could use the exemption of both spouses was to pay a lawyer to do credit shelter trust planning. The introduction in this new law of "portability" is a step in the right direction. Yet, because it can hamstring the remarriage prospects of the surviving spouse AND because the law is only effective for two years, it looks like we'll still be doing credit shelter trusts for most of our married clients.
(2) I have estates that will benefit from the retroactive application of the $5 million exemption, but I have others that are now thrown into a tailspin as we wait to figure out how to elect the law we had been living with for over 350 days of the year. I'm sure Congress thinks it threw us a bone by extending the election deadline to September 2011, but I have estates that could be closed now if Congress would just give us direction on the forms and procedures we need to follow to do it right.
(3) If you were planning on making large gifts, especially gifts to grandchildren, now is the time. Gifting to grandkids before 2010 takes advantage of an "amnesty" of sorts that will likely never occur again. If you or your clients want to gift to grandkids (in trusts or otherwise), talk to me before the end of 2010. Even if your planned gifts are not to grandkids, 2011 and 2012 have a $5 million gift tax exemption that may or may not be extended into future years. If you make the gifts now, outright, in trust or through fractional pieces of real property or entities, the gift will be grandfathered in even if the law changes.
I'll have more to say at the Lunch-n-Learns on January 10, 2011 and January 21, 2011. The January 10th program is full, but there's room on the 21st and I hope to post the materials and maybe a podcast.
(1) I've always thought it unfair that the only way couples could use the exemption of both spouses was to pay a lawyer to do credit shelter trust planning. The introduction in this new law of "portability" is a step in the right direction. Yet, because it can hamstring the remarriage prospects of the surviving spouse AND because the law is only effective for two years, it looks like we'll still be doing credit shelter trusts for most of our married clients.
(2) I have estates that will benefit from the retroactive application of the $5 million exemption, but I have others that are now thrown into a tailspin as we wait to figure out how to elect the law we had been living with for over 350 days of the year. I'm sure Congress thinks it threw us a bone by extending the election deadline to September 2011, but I have estates that could be closed now if Congress would just give us direction on the forms and procedures we need to follow to do it right.
(3) If you were planning on making large gifts, especially gifts to grandchildren, now is the time. Gifting to grandkids before 2010 takes advantage of an "amnesty" of sorts that will likely never occur again. If you or your clients want to gift to grandkids (in trusts or otherwise), talk to me before the end of 2010. Even if your planned gifts are not to grandkids, 2011 and 2012 have a $5 million gift tax exemption that may or may not be extended into future years. If you make the gifts now, outright, in trust or through fractional pieces of real property or entities, the gift will be grandfathered in even if the law changes.
I'll have more to say at the Lunch-n-Learns on January 10, 2011 and January 21, 2011. The January 10th program is full, but there's room on the 21st and I hope to post the materials and maybe a podcast.
I actually wish the US would adopt a more European style of taxation, meaning, that people are taxed as individuals. Individuals have rights; there are no benefits if one is married. If a couple wants to live together or go through the ceremony, it makes no difference in their tax structure. Such a structure would eliminate many of the controversies we face here in the states, such as gay marriage. The only real benefit gays can't have is the tax benefit married couples get.
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