Monday, January 10, 2011

$10 Million 2011 Estate Tax Exemption Applicable To Widows and Widowers Without Need For a By-pass Trust

I recently posted some information about the 2011 estate tax exemptions, raising the individual exemption value to $5 million, and lowering the tax rate on the taxable estate to 35% from the 2009 rate of 45%.  There's a lot more to the new tax law, of course, but here's another added positive - a bonus, if you will:

Under the 2011 tax rules, signed into law on December 17, 2010, widows and widowers may add any unused estate tax exemption value from the pre-deceased spouse to their own.  In effect, this makes the expanded $5 million per individual exemption, a full $10 million per couple exemption, without the need for an A-B Bypass Trust.  This provision allows for some to pass up to $10 Million to heirs tax- free without the more advanced trust provisions previously required to preserve the full individual exemption for each in a married couple.

While the provision does not apply retroactively to those whose spouse has passed prior to the effective date for the new law, for those with estate assets in excess of $5 million, this means less worry about taxation on the excess.

This good news certainly doesn't mean that proper planning is no longer needed - there are always myriad dimensions beyond the simple numbers, and, of course, keep in mind that this law may not last.  The new tax laws expire December 31, 2012, at which time Congress will have to either renew, revise, or ....

Davidson Law Office, LLP is a Fox Valley, Wisconsin law firm with a focus on business, asset protection and estate planning. Serving clients throughout Wisconsin from the heart of the Fox River Valley, with offshore asset protection services, international business corporations, domestic business structures, irrevocable trusts, family living trusts, life estates, powers of attorney, and complete estate and family security planning packages.

*Note that this information is provided as general information only and does not constitute legal advice with regard to any particular set of circumstances. As with any legal issue, consult with an experienced attorney if you have questions regarding matters related to the topics discussed in the blog or video. Davidson Law Office and Attorney Kevin Davidson do not provide legal advice outside of an attorney/client relationship memorialized by a written and signed contract for legal services.

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