Estate Taxes Repealed---what does it mean?

We all got hit in 2008. 401k's became 201ks, lifes were ruined. What happened, and what occurred after the collapse is still being worked out. I hope, if people were aware of what was about to happen, there would have been a mass exodus into bonds. Taking preventative action is not comfortable for many people. However, we all want to keep what is ours--no matter what.

The government tryed to save the Bear Stearns, and AIG. These economic hardships lead to democratic control of the senate (filibuster proof 60 strong) and our first African American president.

There are a number of issues in 2010 that will affect american citizens. Wikipedia defines estate tax is a tax imposed on the transfer of the "taxable estate" of a deceased person, whether such property is transferred via a will or according to the state laws of intestacy. The federal estate tax, at this date, has been repealed. Currently, there is a $1 million gift tax exemption, a gift tax rate of 35%, and carryover basis subject to some exemptions. There is much speculation about what actiions an individual should take to take advantage of the current status. Nobody should believe the government isn't going to get their piece of the pie. However, it is standard practice to make sure they get it as far down the road as possible.

The best plan is to proceed with caution. Clients don't want their legacy to be taxed. Many have placed their assets into trusts, or set up ways in an attempt to minimize their obligations.

People have customary placed life insurance into a trust. The trustee of the insurance trust should be the original applicant and owner of the insurance. If the insured transfers an existing policy to the insurance trust, the transfer will be recognized by the Internal Revenue Service if the insured survives the date of the transfer by not less than three years. If the insured dies within this three year period, the transfer will be ignored and the proceeds will be included in the insured's taxable estate. It's important to establish a life insurance trust sooner rather than later. Changes in beneficiary's can be easily hanlded.

Setting up a life insurance trust is fairly easy, and helps more money go to your loved ones, or charity of your choice. A growing number of people are setting up enhanced charitable trusts, which supports their legacy, provides life insurance for their family, and provides a tax write off. We'll look at this vehicle in the future.