Planning Without Estate Tax Concerns

A client of Matthew C. Mullhofer Attorney called him regarding the Estate Tax laws for the 2011-2012 years. Mr. Mullhofer explained that the 2010 Tax Relief Act contained new tax arrangements for 2011 and 2012. These arrangements include a higher amount that can be transferred and a tax rate that is lowered which could take off the burden from many estates.

Matthew C. Mullhofer Attorney brought up to his client that in 2013 the estate tax is scheduled to become more aggressive which means that it could affect many families who are not considered wealthy.

Mr. Mullhofer went on to explain that for estates left behind in 2011 and 2012, assets exceeding a $5 million will be taxed at 35%(this has been the lowest tax rate in 70 years!). Married couples may be able to pool their exemptions to shield up to $10 million from federal estate taxes with the proper planning. This means that 99% of the country may not be obligated to pay estate tax. Planning is a key component when it comes to protecting assets and shifting income to heirs. In today’s depreciated real estate market, $5 or $10 million is a lot of money.

In order to transfer $5 or $10 million to their children, trustees have to establish the typical family trust that provides for the first 3.5 or 5 million to be transferred into their children’s trust, explained Mr. Mullhofer. He recommended that the trust give the surviving spouse the ability to dictate how the distributions to their children will be if there is a change in circumstances after the death of the first spouse. Unfortunately, this type of planning is not provided for in some family trust documents that Mr. Mullhofer has reviewed.

Mr. Mullhofer’s client also wanted to know how to preserve and protect assets. Matthew C. Mullhofer Attorney explained that using a limited partnership or limited liability company would be one way to do that, especially wherever real estate is a major asset. There are also different types of trusts to consider and choose from.

Call Matthew C. Mullhofer Attorney today to discuss your Estate Tax concerns at (714) 827-9955.