Estate Planning in the Age of Uncertainty

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Ever since the Bush tax cuts went into effect in 2001, it was always assumed that, by the end of 2009, Congress would enact a legislative compromise that would prevent what happened on January 1st of this year: the unexpected elimination of the federal estate tax for 2010.  And, if Congress does not act soon, the federal estate tax will come back with a vengeance on January 1, 2011, as individual estates of over a $1,000,000 will be subject to the tax at rates of up to 55%.  In the meantime, some heirs have saved a lot of money due to the timing of their loved one passing in 2010.  For example, George Steinbrenner, owner of one of the most valuable sports teams in the world, the New York Yankees, passed away on July 13, 2010. His estate is estimated to save more than $500 million in estate taxes, a debt that may have forced the family to sell the team. Energy mogul Dan Duncan died on March 28 with an estimated worth of more than $8 billion. His death in 2010 saved his heirs an estimated $4 billion.



For the rest of us, what should we do in the interim?  It is important to be sure that your estate plan takes into consideration a possible change in the estate tax and how it could impact the ability to carry out your intentions.  As estate planning attorneys, we always advise our clients to review their wills every few years in case laws and/or circumstances have changed.  In this “Age of Uncertainty”, it is critical to make sure that you and your family are protected by having your will reviewed, and, if necessary, make the adjustments to ensure that your goals are achieved, particularly from a tax standpoint.



While we cannot be certain until Congress acts, there are a few other things that you can be thinking about as we approach January 1, 2011.  Recommended reading is a recent “Wealth Matters” article from the Personal Business section of the New York Times that addresses three critical areas: Estate Tax, Income Tax, and Capital Gains Tax.  "Wealth Matters" article 



Circular 230 Disclosure

The following disclosure is provided in accordance with the Internal Revenue Service's Circular 230. Any tax advice contained in this alert is intended to be preliminary, for discussion purposes only, and not final. Any tax advice is not intended to be used for marketing, promoting or recommending any transaction or for the use of any person in connection with the preparation of any tax return.  THE TAX INFORMATION IN THIS ARTICLE MAY IS NOT INTENDED TO BE USED, AND MAY NOT BE USED, BY ANY TAXPAYER, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER BY THE INTERNAL REVENUE SERVICE.  FOR INFORMATION ABOUT THIS STATEMENT CONTACT REAGER & ADLER, PC.  (The foregoing legend has been attached pursuant to U.S. Treasury Regulations governing tax practice.)

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Harrisburg Magazine Readers' Choice 2011