Quinn DeAngelis, P.C.
Kierland Business Center
15849 N. 71st Street, Suite 100
Scottsdale, Arizona 85254
ESTATE PLANNING UPDATE
1. 2011 Annual Gift Tax Exemption: $13,000 per donor, per donee.
2. Temporary 2011 & 2012 Gift and Estate Tax Exemptions: $5,000,000 per donor; thereafter the Exemptions are currently set to return to $1,000,000 per donor.
3. Marital Deduction for Transfers to U.S. Spouse: Unlimited.
4. Temporary 2011 & 2012 Generation Skipping Tax Exemption: $5,000,000 per donor; thereafter the Exemptions are currently set to return to $1,000,000, indexed for inflation.
5. Top rate for Federal Estate, Gift and Generation Skipping Taxes: 35% through 2012, 55% thereafter.
6. Federal Legislation: Congress passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 which temporarily extends certain estate, gift and generation skipping tax provisions discussed above. In addition, the Act made the exemptions “portable” so that a spouse could use their deceased spouse’s unused exemption. These benefits all expire at the end of 2012, so their fate rests with the outcome of the 2012 election and the state of our economy. I see three likely scenarios for Congress: (a) do nothing and let the exemptions return to their 2002 amounts; (b) extend the 2012 and 2013 temporary exemptions and rates; and (c) repeal the estate tax entirely. At this time I anticipate that we will see an extension of the temporary exemption amounts.
7. State Legislation: The Arizona Trust Code became effective January 1, 2009. The new state law provides detailed notice and reporting requirements, easier modification and termination rules, and broader creditor protection provisions. Revocable trusts prepared prior to 2005 should be reviewed. If you would like me to review your trust in light of the new code, please contact me, otherwise we will discuss how the new rules apply to your trust at our next meeting.
8. Planning Opportunities: The temporary exemption amounts, low valuations and the low IRS rate tables for September affecting the minimum amount of interest (mid-term rate is 1.63%) and discount rate used to value of annuities (7520 rate is 2%) make grantor retained annuity trusts, charitable lead trusts and sales with deferred payments extremely attractive. If you are planning a transfer of wealth at any time in the next ten years, now is the time to at least review your alternatives, especially for individuals with current estate of more than $5,000,000 or couples with estates of more than $10,000,000. Depending upon a person’s desires and portfolio, there are several techniques available to reduce or defer estate tax obligations and if you are interested in exploring these options at this time, please contact me.
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