Estate and Family Planning
Abram Serotta, CPA
What a difference a year makes…
In 2010, there was no inheritance tax, a limited step up in the basis of assets upon death, and the federal capital gain and dividends tax rates were 15%. In 2011, there will be a $1 million exclusion for assets when one dies, a full step up in basis, 20% capital gains tax, and 39.6% tax on dividends in the maximum tax bracket. With all of these changes, you may wonder what you as a taxpayer can do. First, it is important to review your current estate plan as there are several tax planning steps one can take to reduce inheritance tax. Start by gathering your documents, such as wills, trusts, and health care directions. Next, list your assets at fair market value owned by each spouse or joint. List your life insurance. Confirm your beneficiaries of your retirement plan. Finally, set up a meeting with an estate planner at SME to review your plan and make recommendations.
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2010
No inheritance taxes
Limited step up in basis of assets
Federal capital gain and dividends tax rates at 15%
2011
$1 million exclusion for assets when one dies
Full step up in basis
20% capital gain
39.6% tax on dividends in maximum tax bracket
What can I as a taxpayer do?
Review your estate plan. There are major tax planning ideas to reduce inheritance tax.
How do I start?
- Gather your documents (i.e. wills, trusts, health care directions)
- List your assets at fair market value owned by each spouse or joint list your life insurance.
- Confirm your beneficiaries of retirement plan.
- Then, set up a meeting with an estate planner at SME to review your plan and make recommendations.