{"id":435,"date":"2009-01-01T19:58:44","date_gmt":"2009-01-01T19:58:44","guid":{"rendered":"http:\/\/old.sommers-taxapedia.com\/archives\/?p=435"},"modified":"2012-10-26T20:04:14","modified_gmt":"2012-10-26T20:04:14","slug":"the-2009-estate-tax-roller-coaster","status":"publish","type":"post","link":"https:\/\/sommers-taxapedia.com\/archives\/the-2009-estate-tax-roller-coaster\/","title":{"rendered":"The 2009 Estate Tax Roller Coaster"},"content":{"rendered":"

Introduction<\/strong><\/p>\n

The risk-adverse world of estate planning has been flipped on its head. For the next two years, married couples with sizable estates should brace for a wild ride. Starting in 2009, the estate tax exemption equivalent (exemption) is now $3.5 million per person ($7.0 million for a married couple).<\/p>\n

In 2008, the exemption was $2.0 million per person. In 2010, estate taxes disappear only to resurface in 2011 with the exemption diving to $1.0 million per person, unless Congress intervenes.<\/p>\n

What is going on here?<\/p>\n

Traditional Analysis<\/strong><\/p>\n

Traditionally, estate planners grappled with exemptions that sheltered only a fraction of the estate tax liability. Maximizing the exemptions for husband and wife was the key objective.<\/p>\n

Generally, couples were concerned with the following: (i) minimizing estate taxes; (ii) leaving the maximum amount to the surviving spouse; and (iii) providing for the children or grandchildren after the death of the surviving spouse.<\/p>\n

2009 Change<\/strong><\/p>\n

With a combined $7.0 million exemption, the focus shifts from minimizing estates taxes to maximizing the amount left to the surviving spouse estate-tax free ($3.5 million in 2009).<\/p>\n

Note: Those with estates over $7.0 the traditional approach – maximizing each individual’s exemption – continues as the primary concern.<\/p>\n

Examples<\/strong><\/p>\n

Assume husband and wife’s estate is $4.0 million, owned equally, and they have their full exemptions. If husband dies in 2008, his share of the assets ($2.0 million) is covered by his $2.0 million exemption. The same is true for wife; thus, there is no estate tax liability.<\/p>\n

Now assume that husband dies in 2009. His $3.5 million exemption is $1.5 million greater than his $2.0 million share. If husband does not transfer additional assets to wife, her exemption will be underfunded by $1.5 million.<\/p>\n

Under the new exemption amount, husband may transfer an additional $1.5 million to wife without adverse estate tax consequences.<\/p>\n

Note: Under both examples, if in the future wife’s estate increases above her exemption, her estate may owe taxes on the difference.<\/p>\n

New Approach<\/strong><\/p>\n

Given this new reality, the combined exemptions may greatly exceed the estate’s value. Allocations based on the estate’s size and the surviving spouse’s exemption are now the primary focus.<\/p>\n

Maximum funding of the deceased spouse’s exemption may result is less than optimum planning and, potentially, an angry surviving spouse who was deprived of a larger share of the couple’s estate.<\/p>\n

Conclusion<\/strong><\/p>\n

With the increase in exemptions, estate planning is undergoing radical change. Although there is no estate tax in 2010, the betting crowd wagers that Congress will settle on a future exemption between $2.5 and $3.5 million.<\/p>\n","protected":false},"excerpt":{"rendered":"

Introduction The risk-adverse world of estate planning has been flipped on its head. For the next two years, married couples with sizable estates should brace for a wild ride. Starting in 2009, the estate tax exemption equivalent (exemption) is now $3.5 million per person ($7.0 million for a married couple). In 2008, the exemption was …Continue reading<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,6],"tags":[54,80],"class_list":["post-435","post","type-post","status-publish","format-standard","hentry","category-general-tax-information","category-wealth-preservation","tag-estate-tax","tag-exemptions"],"_links":{"self":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts\/435","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/comments?post=435"}],"version-history":[{"count":1,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts\/435\/revisions"}],"predecessor-version":[{"id":436,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts\/435\/revisions\/436"}],"wp:attachment":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/media?parent=435"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/categories?post=435"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/tags?post=435"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}