Saturday, June 12, 2010

Wealth Matters - Confusion Over Estate Tax Keeps Advisers Busy - NYTimes.com


Good discussion in today's New York Times about the current state of estate planning.

If you have the chance to read the whole piece, you'll probably notice that the author raises more questions than provides answers. This unfortunately is where most financial planners are in June 2010 - since there is no clarification on "the rules", it is hard to advise clients how best to structure their affairs.

An excerpt:

The real problem comes for the merely rich — individuals worth more than $1 million and less than $3.5 million and couples with net worths of $2 million to $7 million who previously did not have to worry about the estate tax. If Congress fails to act again this year, the estate tax laws next year will revert to their levels before 2001, and that could snare a host of people who set up the estate plans on the assumption that there would be no tax when they died.

“If Congress does nothing, there would be a sevenfold increase in the number of estates subject to the tax than if the exemption stayed at $3.5 million,” said John Dadakis, partner at the Holland & Knight law firm.

As the law stands, the heirs of a single person who dies next year with more than $1 million would be subject to a 55 percent tax. (For couples, it is $2 million.) Heirs of that same person, with a $3.5 million estate, would have paid nothing in 2009 but could pay as much as $1.375 million in 2011, depending on the level of planning. And while this wealth may seem high in many parts of the country, it has professionals on the coasts grumbling.


The best advice seems to be: Stay Tuned.



Wealth Matters - Confusion Over Estate Tax Keeps Advisers Busy - NYTimes.com