More on the estate tax

This Sunday New York Times article talks about the new estate tax law. It hits the typical highligthts - $5 million estate tax exemption, portability for (opposite sex) married couples. One topic of interest is gifting. The new tax law increases the lifetime gift tax exemption to $5 million, matching the estate tax exemption. The problem is one of timing, though. This law is set to expire at the end of 2012, with the 2001 law coming back into effect if Congress doesn't act. This means - and stop me if you've heard this before - the estate tax gift tax exemptions will go back to $1 million.

If you are one of those who are able and inclined to give away $5 million in the next two years, you could concievably be in a bind if the gift tax exemption goes back to $1 million. In this case, you may have to pay gift tax on $4million. Several things have to happen for this nightmare scenario to play out, though. First, you have to give away $5 million dollars by December 31, 2012. Second, Congress must let the law lapse and the gift tax exemption return to $1 million. Third, you have to die after 2012 while the the exemption is less than $5 million. Fourth, do you really need me to go to fourth?

As you might have thought by now, and as I've posted before, the universe of people this applies to is exceedingly small. Most people don't have $5 million to give away. Most people who do have $5 million don't want to give it away. Most people who do have $5 and want to give it away probably won't do it in the next two years.

Making sure you don't inadvertently expose your estate planning client to unnecessary taxes is important, but it is not the only thing we do as estate planners. Keeping a perspective on all this, and planning for your client in the real world, is just as important.

Speaking engagemetns in 2011

Time to mark your calendars. I am working on two engagements in 2011:

September 19, 2011, Oakland, California. I will be speaking on trusts. The topics include revocable trusts, irrevocable life insurance trusts, using trusts to reduce tax exposure, grantor trusts, ethics, and special needs trusts. The seminar runs all day, and is sponsored by National Business Institute. More details will be posted to their website www.nebi-sems.com .

I am also working on a talk about estate planning and divorce with Merrill Lynch in Castro Valley in May. I will post more details as they become available.

Hope to see you there!