Estate Tax Legislative Update – courtesy of Estate Attorney and MyCity4Her Affiliate Jane Frankel Sims, of the Law Offices of Jane Frankel Sims, LLC
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “Act”) was signed into law on December 17, 2010 and makes the following changes to the federal estate tax laws:
Prior to passage of the Act, estate and generation-skipping transfer taxes were fully repealed for 2010, and the gift tax rate was lowered to 35 percent, with a lifetime exemption of $1 million. The Act provides a top tax rate for estate, gift and generation-skipping transfer taxes of 35 percent, with a $5 million exclusion amount per person ($10 million per couple). The new rate and exemption amount apply to decedents dying, gifts made, and generation skipping transfers through December 31, 2012, thereby reunifying estate and gift tax, and creating a single graduated rate schedule for both. Also, the $5 million exemption amount will be indexed for inflation beginning in 2012.
The Act is effective January 1, 2010. This means that decedents dying after December 31, 2009 and before January 1, 2011, are also subject to the 35 percent top rate and $5 million exclusion. However, these estates may elect to have the prior law apply. If such an election is made, the estate would not be subject to estate tax, but the basis of assets acquired from the decedent would be determined under the modified carryover basis rules, not the basis step-up rules provided for in the Act. Once such an election is made, it would be revocable only with the consent of the IRS. For estates of decedents dying after December 31, 2010, the Act allows any applicable exclusion amount that remains unused to be available for use by the surviving spouse, in addition to the surviving spouse’s own exclusion amount.
Maryland’s estate tax laws remain unchanged.
Not sure what this means for you? Feel free to contact the Law Offices of Jane Frankel Sims, LLC with any questions or concerns. They can be reached by phone at: 410-828-7775 or by web at: www.janesimslaw.com
Jane Frankel Sims represents clients in matters involving estate planning, trust and estate administration and taxation. Before starting her own firm, Ms. Sims practiced in the areas of estate planning and tax law at Miles & Stockbridge and DLA Piper in Baltimore, and at Davis Polk & Wardwell in New York.
Her areas of practice include: Estate Planning, Estate & Gift Taxation, Estate and Trust Administration & Charitable Giving.
To learn more about Ms. Sims click here.