Hundreds of leaders of charities are descending on Washington, D.C., on December 4th and 5th to lobby Congress to retain the current charitable deduction that motivates donors to support colleges, hospitals and other nonprofits. Find out how YOU can contact your congressional representative to help save the charitable deduction!
Showing posts with label federal estate tax. Show all posts
Showing posts with label federal estate tax. Show all posts
Federal Estate Tax Modified
The gradual phaseout of the federal estate tax begun in 2001 was modified and extended by Congress late in 2010. The amount that is exempt from tax per person has increased from $3.5 million in 2009 to $5 million in 2011 and 2012, and the top tax rate has been reduced from 45% to 35%. In addition to increasing the exemption amount, the new law introduced a new portability provision that generally allows any unused exemption amount at the death of the first spouse to be available to the surviving spouse and added to his or her own $5 million exemption. This increase in the exemption amount and the portability of any unused exemption between spouses should eliminate the threat of the federal estate tax for all but a small number of the wealthiest Americans. These two changes now allow a married couple to transfer up to $10 million free of transfer tax and thus free most individuals from having to resort to sophisticated transfer-tax planning techniques designed to reduce the impact of the transfer tax: Thus, the emphasis has shifted to focusing their primary planning on the who, what, when, and how of asset distribution.
Does this mean that tax consequences will no longer be a consideration in estate planning?
Does this mean that tax consequences will no longer be a consideration in estate planning?
Federal Estate Tax: Where Art Thou?
by André R. Donikian, JD, President and Editor in Chief
Congress left Washington in December without extending the federal estate tax (FET). Result: There is no FET in 2010, at least perhaps not until Congress tackles this politically charged hot potato this year. And the talk is that when they do, they will make the law retroactive to January 1 to capture taxes from all those who died and who would have been affected.
The retroactive application is not a simple issue and is fraught with constitutional pitfalls. Indeed, the Supreme Court upheld the retroactive application of an increase in the FET rate in 1994. But the issue Congress is expected to adopt this year is the retroactive application of a new law, not a mere rate change. This may be too much of a stretch for the Court.
Congress left Washington in December without extending the federal estate tax (FET). Result: There is no FET in 2010, at least perhaps not until Congress tackles this politically charged hot potato this year. And the talk is that when they do, they will make the law retroactive to January 1 to capture taxes from all those who died and who would have been affected.
The retroactive application is not a simple issue and is fraught with constitutional pitfalls. Indeed, the Supreme Court upheld the retroactive application of an increase in the FET rate in 1994. But the issue Congress is expected to adopt this year is the retroactive application of a new law, not a mere rate change. This may be too much of a stretch for the Court.
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