I attended the Bucks County Estate Planning Council's meeting last night. The speaker's topic was on the Federal Estate Tax legislation or should I say the lack thereof. Since 2001 when the new law was implemented with a 2010 sunset, we have anticipated that Congress would be addressing the pending sunset. Well, we are half way through 2010 and nothing.
One third of the audience felt that Congress would act by year end, 1/3 felt they would act in 2011 and the other 1/3 felt they would not act at all. In other words, it is anyone's guess on the status of, among other things, the Federal Estate Tax which if Congress does nothing will take us back in time.
So what does an attorney advise a client? Flexible planning is the key with Disclaimer Trusts and QTIP trust being high on the list. Want to know more, contact us at www.ythlaw.com
Showing posts with label Disclaimer Trust. Show all posts
Showing posts with label Disclaimer Trust. Show all posts
Wednesday, September 22, 2010
Thursday, May 14, 2009
How do I plan in uncertain times?
Question:
Can you effectively plan your estate in the midst of uncertainty with Federal Estate Tax law? I am aware that Congress is considering bills that would change the Federal Estate tax. How can you effectively plan your estate when the tax laws are constantly changing?
Answer:
Flexibility is the key when planning ones estate during change and uncertainty. We do not have a crystal ball to see the future. Therefore, we need the next best thing.In my opinion, that would be control over the timing of implementation of designated estate planning tools. For example, funding the Credit Shelter Trust (used to preserve the exclusion amount of the first spouse to die) may create a burden for the surviving spouse if the estate is not large enough to justify the use of the Credit Shelter Trust. However, if the instrument is not drafted to provide some flexibility then funding of the Credit Shelter Trust may be mandatory. An alternative would be the use of a Disclaimer Trust. When the first spouse dies, an assessment can be made at that time whether to disclaim all or part of the inheritance. Only that amount, if any, would be placed in the Disclaimer Trust. The terms of the trust would provide for the surviving spouse during their lifetime. Afterwards, the funds would be distributed to the children or the remainder beneficiaries.
Ask your question by commenting or submitting a question to http://www.ythlaw.com/
Can you effectively plan your estate in the midst of uncertainty with Federal Estate Tax law? I am aware that Congress is considering bills that would change the Federal Estate tax. How can you effectively plan your estate when the tax laws are constantly changing?
Answer:
Flexibility is the key when planning ones estate during change and uncertainty. We do not have a crystal ball to see the future. Therefore, we need the next best thing.In my opinion, that would be control over the timing of implementation of designated estate planning tools. For example, funding the Credit Shelter Trust (used to preserve the exclusion amount of the first spouse to die) may create a burden for the surviving spouse if the estate is not large enough to justify the use of the Credit Shelter Trust. However, if the instrument is not drafted to provide some flexibility then funding of the Credit Shelter Trust may be mandatory. An alternative would be the use of a Disclaimer Trust. When the first spouse dies, an assessment can be made at that time whether to disclaim all or part of the inheritance. Only that amount, if any, would be placed in the Disclaimer Trust. The terms of the trust would provide for the surviving spouse during their lifetime. Afterwards, the funds would be distributed to the children or the remainder beneficiaries.
Ask your question by commenting or submitting a question to http://www.ythlaw.com/
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