2010: Estate Tax Uncertainty For 2011

In San Diego, many families are uncertain as to the estate tax which will be imposed in 2011. According to a USA Today article in July of 2010, the federal estate tax for 2011 will impose a levy of up to 55% when the estates are valued at more than $1,000,000. The $1,000,000 is for the gross value of all of the assets of the estate and does not take into account any liabilities. As an example, a residence valued at $500,000 with a mortgage of $400,000 would be valued for federal estate tax at $500,000. With retirements, IRA, KEOGH, savings accounts, checking accounts and other assets, the $1 million will affect many families in San Diego. This is an unsettled area of the law and legislation is currently pending.

Our firm in San Diego has many strategies and techniques to reduce estate tax liability. One example is that a married couple can protect assets up to $2,000,000 if their trust has the appropriate provision. Another example is, in 2010, the annual gift tax exclusion is $13,000 per recipient and this can be gifted to more than one person. A further example is a grantor retained annuity trust in which an irrevocable trust is created to transfer appreciation on assets. A revocable living trust can assist in avoiding probate fees and costs and also expedite the distribution of assets however does not have tax advantages in the planning and is often referred to as “tax neutral”. Family limited partnerships are also used to transfer interests on a yearly basis and these are very complicated. Our firm does not give tax advice and only estate planning advice and works with Certified Public Accountants and other financial professionals in tax matters.

Please do not hesitate to contact us for your confidential and complimentary consultation in our office.