California Estate Planning Attorney Explains Why Federal Estate Tax Law Changes Should Be Monitored

California Estate Planning Attorney Explains Why Federal Estate Tax Law Changes Should Be Monitored

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President Obama has proposed changes to estate tax law that will affect many California estate plans in 2010 and beyond. The estate tax is scheduled to drop to zero percent in 2010 and return to 55 percent in 2011. President Obama's 2010 budget proposal calls for keeping the estate tax at 45 percent on estates valued at $3.5 million or higher.

Estate planning attorneys have been struggling with how to create estate plans that took advantage of the Bush-era estate tax cuts that reduced the effective estate tax rate by raising the exemption from $1 million to $3.5 million while simultaneously reducing the tax rate from 55 percent to 45 percent.

The changes began in 2001 and were part of a ten-year plan that expires in 2010.

If the Obama proposal is adopted, estate planning attorneys will have a known playing field in which to craft estate plans. The uncertainty of what would happen in 2011 and beyond caused many estate planning attorneys to create estate plans that had vehicles in them that were tied to the changes in the rates.

Even though the rates do not affect those with smaller estates, estate planning attorneys and their clients should keep a close eye on Washington. Given the present fiscal situation in Washington and the proposed expenditures in the future, Washington will be looking for additional revenue sources, and estate plans are an inviting target. Some alternative proposals include indexing estate tax to inflation, which would effectively reduce government revenue. It is unclear which proposals, if any, will be enacted into law.

Some certified estate planning specialists have been including language in their estate plans to guard against changes in the estate tax law. It seems unwise to revise these plans until the dust settles, because Congress could elect to do nothing and let the 2011 estate tax hike take effect. Estate plans that are relying on the "carryover basis" in the current law will need to be revisited by an estate planning attorney, since the current law does not allow for a stepped-up basis on assets within estate plans.

Estate planning attorneys and clients, wealthy and not-so-wealthy need to keep their eyes on Congress, because the actions of the next 12 months will have lasting impact on estate plans for years to come.

If you would like more information about why federal estate tax law changes should be monitored, check online for comprehensive resources for personal wealth management solutions for personal wealth management solutions through estate planning, wills, and revocable trusts.

Whether your estate planning goals are immediate or long-term, a qualified California estate planning attorney will be able to counsel you on the best options available to you to meet your individual needs.


About the Author:
Kevin Von Tungeln is the Managing Partner of EstatePlanningSpecialists.com and Thompson Von Tungeln, P.C. Kevin practices exclusively in the areas of estate planning, probate, wills, conservatorships and trust administration.Visit www.EstatePlanningSpecialists.com or www.linkedin.com/in/kevinvontungeln to learn more.



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