May 1, 2011 12:00 PM

Fiduciary advisors should consider family dynamics when exploring the opportunities available under the 2010 Tax Relief Act

By Pascal Levensohn

The passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the 2010 Tax Relief Act) has opened an unexpected window of opportunity for the tax-exempt transfer of significantly more wealth to the next generation than was possible under prior regulations. The unification of the gift and estate tax exemptions at $5 million, allowing individuals to give up to $5 million tax-free during their life or at death, combined with lowering the tax rate on taxable gifts and estates to 35 percent, is very significant. It's possible that Congress will extend these raised exemption limits and reduced tax rates beyond their current scheduled expiration date of Dec. 31, 2012. But it's more likely that the urgent need to materially reduce America's structural public sector budget deficits will be met through a combination of higher taxes and spending cuts and that these tax increases won't spare estates.

This probability hasn't been lost on trusts and estates specialists who have flooded clients with the latest and greatest structures to accomplish these transfers. But, just because you can do something doesn't mean you should. Accelerating the transfer of wealth over the next two years may negatively affect family dynamics. For example, it may redistribute power in privately held companies among unprepared shareholders or place additional responsibilities on children who aren't ready to accept them. Clients may not have fully discussed or thought about these negative effects.

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

Poll

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

Click here to download the 2011 Trust Glossary

50 Years Ago This Month

Click here to read the issue.

50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

Click here to view the most up to date guide (September 2011)

Press Releases