Trust & Estates Law Alert - April 2011


On January 1, 2011, new legislation went into effect that: (i) significantly changed the Federal estate, gift and generation-skipping transfer (“GST”) tax rates, (ii) unified exemption amounts, and (iii) introduced the concept of “portability” to help avoid wasting unused exemptions. This new law sunsets on December 31, 2012 and as we experienced with the Federal estate tax repeal in 2010, there is no telling whether Congress will extend these tax provisions into 2013 and beyond. Accordingly, estate planning should be addressed now to take advantage of the opportunities brought about by new tax law changes, as well as to consider non-tax issues that remain of critical importance.

In 2011, the maximum estate, gift and GST tax rates decrease from 45% to 35% and the “step-up” basis rules for inherited property remains intact. This lower rate will apply for 2011 and 2012, as well as for 2010 through the retroactive reinstatement of the Federal estate tax. Fiduciaries for decedents dying in 2010 can elect to “opt out” of the estate tax, but the tradeoff is that the estate’s assets will be subject to the modified carry-over basis rules.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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