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Let the Tax Games Begin!
The heading above was the title of a recent article published by Financial-Planning.com. We’d like to share the article’s insights and emphasize the importance of the many changes expected in estate tax laws by year end. To read the full article, click here.
As Martin M. Shenkman, a New York based estate planning attorney explains in his article, the estate tax is throwing us for a loop this year. While it is ending in 2010, it is expected to return next year and planners and advisors such as yourselves will have to help your clients navigate and understand what the changes mean for them.
The repeal of the federal estate and generation skipping transfer (GST) taxes in 2010 creates planning opportunities for certain clients. The consensus of opinion is that these taxes will be re-instated in 2011. Whether or not these taxes will be re-instated in 2010, and if so, whether the re-instatement will be retroactive to January 1, 2010, is far more uncertain. During the period of repeal it will be important to prepare your clients for the planning opportunities that do exist. These opportunities are tempered by the potential retroactive re-instatement of the estate and GST tax in 2010. Notwithstanding the unsettled state of affairs, there are two things about which every individual should be considering:
1. A thorough review of their existing estate plans, especially those that contain “formula allocation clauses”, which most do, to be certain that the surviving spouse is protected in the event of death during the repeal period. This approach can be simple (i.e. a one page letter) or more sophisticated planning (such as distribution to grandchildren from a non-exempt trust) may be considered.
2. Making loans (not gifts) to your Irrevocable Life Insurance Trust (especially if you have, or intend to, allocate any GST exemption to the trust). The loan may later be forgiven (a) this current year or (b) in the future, depending upon when the GST tax (and/or the GST exemption) is re-instated.
At Sapers & Wallack we pride ourselves in working with other advisors to offer clients appropriate advice based on their individual circumstances. We’re happy to discuss this further with you as well as meet with any of your clients who may be in need of estate or financial planning advice in regards to the estate tax repeal.
Please feel free to call us at 617-225-2600 or email us to set up a time to talk. We look forward to hearing from you.
Sincerely,
Aviva Sapers, CEO
Bill Sapers, Chairman
Ed Wallack, President
Sapers & Wallack, Inc.
Tel: 617.225.2600