How many estates a year file federal estate tax returns? Consider the following. The number of deaths per year is estimated at approximately 2.6 million people. If the estate tax exclusion was left at the $1 million it was scheduled to be in 2011, approximately 105,000 estates would have filed a federal estate tax and…
• State estate tax planning will remain important for many taxpayers. State estate tax rates were often not the focus of planning primarily because the federal estate tax planning generally reduced state estate tax costs as well. Without the federal estate tax, many estates under the new $5 million threshold will still face hundreds of…
2010 TRA Section 301(a): “In general.—Each provision of law amended by subtitle A or E of title V of the Economic Growth and Tax Relief Reconciliation Act of 2001 is amended to read as such provision would read if such subtitle had never been enacted. “The repeal of the estate tax (i.e., subtitle A) is…
The 2010 Tax Act sets the estate, gift, and GST exemption at $5 million per person and $10 million per married couple. Section 302(a)(1) and (2) of the 2010 TRA: Modifications to estate, gift, and generation-skipping transfer taxes. $5,000,000 Applicable Exclusion Amount.—(2) Applicable exclusion amount.—(A) In general.—For purposes of this subsection, the applicable exclusion amount…
The exemption amount is indexed beginning in 2012. This could also prove an incremental cost that will likely enhance the burden of the congressional estate tax generosity on the federal fiscal budget in future years. Section 302 of the 2010 TRA: (B) Inflation adjustment.—In the case of any decedent dying in a calendar year after…
Thus, the option for estates of those who died in 2010 is for the executor (personal administrator) to choose whether to accept the new default rule that the estate will be subject to the TRA modified estate tax with a $5 million exemption and a full income tax basis step-up (increase) as well. This is…
If an executor makes the decision to have the carryover basis rules apply to the estate of someone who died in 2010, can the estate also take advantage of the favorable TRA rules on the generation skipping transfer (GST) tax? At first some tax experts were not clear, but it now seems that executors can…
GST Tax and Portability For many clients, the decision to use trusts or not might be simplified by the introduction of GST tax considerations. The portability provisions are designed to eliminate the need for the “mere wealthy” to have to incur the cost and complexity of dividing title to assets and having a bypass trust….
Property Must Be “Acquired From” the Decedent to Be Subject to the New Basis Adjustment Rules in 2010 under the optional 2010 carryover basis rules The general rule noted in the preceding section applies to property “acquired from” the decedent. This term must be defined to understand when the new rules will apply. Property acquired…
The unified credit is the amount of estate tax credit that is available to your estate to eliminate the estate tax your estate would pay on the applicable exclusion amount, which includes the basic exclusion amount (i.e., $5 million, indexed, of taxable estate (loosely, assets) and the deceased spouse’s unused exclusion amount. The applicable credit…