Sunday, January 10, 2010

NYT Article: "A Bizarre Year For The Estate Tax Will Require Extra Planning"

Given the uncertainty in the estate tax this year which I have written about previously, estate planning may require new strategies for various wealth levels.

Paul Sullivan has authored an article in the January 8, 2010 New York Times entitled "A Bizarre Year For The Estate Tax Will Require Extra Planning." This article is a good summary of current thinking on this issue and includes some common sense advice such as having one's will and estate plan reviewed in these uncertain times.

The consensus among estate planners is that Congress will revive the estate tax and make it retroactive to Jan. 1, 2010. As the New York Times article noted having an expired estate tax is unsettling since "[t]he situation has thrown a wrench into the core tenet of estate planning: set up everything as if you would die tomorrow. What happens if the law changes by then?" This is the question all of us should ask ourselves.

The article gives one excellent example using the gift tax. Presently, the gift tax is down to 35 percent, from 45 percent, and the generation-skipping tax on assets passed to grandchildren is gone. In 2009, if a wealthy businessman wanted to give his granddaughter a gift above the exemption, he would have paid an effective tax of 74 percent on that amount. This year, the grandparent would pay only the 35 percent gift tax.

No one wants to be a test case and this uncertainty can be used as a reminder for all of us to take a look at our estate plan and wills and pay attention to the anticipated legal changes.

Posted by Henry Moravec, III. Henry (Hank) Moravec is a partner at Moravecs, A Professional Law Corporation in San Marino, California, a suburb of Los Angeles. He focuses his practice on Estate Planning, Trust and Probate Administration, Beneficiary and Trustee Representation, Tax Law, and Nonprofit Law.

Should you have any questions regarding your own situation, you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is