Breaking News - The Federal Estate Tax

Last week, a number of tax issues were addressed. For the next 2 years, 2011 and 2012 Congress has provided:

• The new estate tax rate will be levied on estates over $5 million ($10 million for couples), with a tax rate of 35% for 2011 and 2012

• The top two tax brackets will remain at 33% and 35%.

• No change for capital gains and dividends taxes. It will remain at 15% for everyone

Now that we know what to expect for the next 2 years, it’s a good idea to go back to the drawing board and re-evaluate your estate plan as well as you year-end tax strategies before December 31st.


Contact us at www.ythlaw.com for up to date estate planning information.

2. Saves Money - Continued

We continue today to discuss saving money through effective estate planning. We met Max and Margaret yesterday whose estate is worth well in excess of 5 million dollars. How can estate planning help them?

Well, Max and Margaret can reduce or eliminate their federal estate tax. Throughout your lifetime you, like Max and Margaret, have accumulated wealth in one form or another. Under the current federal estate tax law, individuals have an available tax credit against the ultimate estate tax due.

This tax credit is a direct dollar-for-dollar reduction of Max's or Margaret's tax liability, compared with tax deduction, which reduces Max's or Margaret's tax liability only in proportion to his or her tax bracket. Therefore, for Max and Margaret, each has a tax credit against the ultimate estate tax.

However, the estate tax is not due, for Max or Margaret, until the last one dies. This is because property left to a spouse is tax free. If Max is the first to die, he would transfer his estate to the Margaret free of an estate tax. It is not until the death of Margaret that the entire estate is subject to estate tax.

At that time, the tax credit of Margaret would be available to offset the amount of estate tax due. With advance planning, the tax credit available to the Max can be preserved and would then be available at the death of Margaret to further reduce the estate tax due.

We will continue to explain this significant benefit tomorrow. Stay tuned. Contact us at http://www.ythlaw.com/ with your questions or leave your comments here.