"As calendar 2010 winds to a close, people are beginning to think about January 1, 2011. On that date, the 2001 version of the Federal Estate Tax returns. What does that mean? A 55% estate tax and a $1,000,000 exclusion. That is a big change both from 2010’s 0% estate tax rate and unlimited exclusion and from 2009’s 45% estate tax rate and $3,500,000 exclusion. Many jokes have been made about the “luck” of the families of billionaires who died in 2010: Mary Cargill, died in February, worth $1.6 billion, made her money the old-fashioned way (she married it); Dan Duncan, died in April, the Texas pipeline tycoon worth $9,000,000,000, the 74th wealthiest person in the world; Walter Shorenstein, died in June, San Francisco’s largest landlord; and George Steinbrenner, died in July, owned the N.Y. Yankees.
There are ways to attain a zero estate tax without dying before January 1, 2011. The approach long favored by many was to have a Will that reads “Being of sound mind, I spent it all.” A client last week said he wants to know that when he is “placed in the box, the check to the mortician bounces.” This client was worth $250,000,000 before significant estate tax planning resulted in moving $100,000,000 to irrevocable trusts for his children. His situation illustrates the problem with the “I spent it all” approach. How do you program your spending so that the last dollar disappears with your last breath?"
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