My wife received a mailer in the mail recently that caught my eye. The return address was Flemings Steakhouse and Wine Bar. The outside of
Income Tax Reduction is the New Estate Tax
If you created your estate plan more than five years ago (and especially if more than 10 years ago), it might be time to peak at the documents, especially if you created a bypass trust otherwise known as a credit shelter trust, according to Phil Levin, a Radnor based estate planning attorney. If you recall, there used to be a $600,000 federal estate tax exemption available per person. To use the second exemption one would need to create the bypass trust which saved over $250,000 of federal estate tax for a married couple.
Today the federal estate tax exemption is $5.43 million per person, is indexed, and you don’t need to do anything to get the second one if you are married. So, now it may likely be more important to not shield from estate tax but rather income taxes especially on the highly appreciated assets. Why? Because now those assets (stocks, real estate etc) might qualify for a stepped-up basis which makes the gains income tax free to your heirs!
In summary, it might be time to have an expert like Phil Levin examine your estate plan and documents. There has been a paradigm shift and you want to make sure you are positioned for you and your heirs to capitalize on the new laws. Let us know if you need a referral to a qualified estate professional.