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Past Articles: Important Message about IRA Conversion Opportunities Can You Afford Long-term Care Insurance?
About SC&H Financial Advisors, Inc. Personal Financial Planning is not a one-time event—it is a critical, ongoing process that, if managed well, leads to financial freedom. At SC&H, we develop complete and flexible plans that are designed to meet your ongoing needs. They are complete, because you need a fully integrated and comprehensive financial strategy that incorporates all of the most important wealth care issues. They are flexible, because milestones in your life such as a marriage, a career change, the birth of a child, a divorce, or a death in the family will require adjustments to your overall financial plan. To learn more about these services, visit www.scandh.com/fa. |
In This Issue:
As always, feel free to give any of us a call with questions. We are happy to help.
Regards, Greg Horning
In 2001, Congress enacted the Economic Growth and Tax Relief Reconciliation Act ("EGTRRA"). This Act provided for incremental increases in the exemption amount for estates subject to Federal Estate and Generation Skipping Transfer ("GST") taxes from $1,000,000 in 2001 to $3,500,000 in 2009. If Congress failed to enact any changes before December 31, 2009, there would be no estate tax for one year (2010) and the exemption amount would revert back to $1,000,000, with a maximum tax rate of 55% (plus a 5% surcharge on assets above $10,000,000) in 2011. As of the time of this writing, Congress has failed to enact any changes. As a result, there is currently no federal estate tax for individuals who die in 2010. However, estate planning industry professionals speculate that Congress may act to reinstate these taxes and make them retroactive to January 1, 2010. If not, new income tax basis rules would apply to assets inherited from an individual who dies in 2010. Prior to 2010, the recipient of inherited assets received a basis adjustment (step- up) to the value at the date of death. With no estate tax in 2010, new income tax basis rules would apply. The income tax basis of inherited assets will be the lower of the decedent's cost basis (carry over) or the date of death value (step down). There are two exceptions to the new basis rules. The first exception allows the personal representative to step up the basis of $1,300,000 of assets to the date of death value. The second exception allows the personal representative to step up the basis of an additional $3,000,000 of assets passing to the surviving spouse. Because these exceptions may not apply to all assets received from an individual dying in 2010, some recipients could receive assets with inherited capital gains. The longer Congress waits to address this matter, the more unlikely it will be that any changes will become retroactive to January 1, 2010. For those clients who are Maryland residents, the $1,000,000 exemption still applies at this time. However, we will follow this issue closely and let you know about any new developments.
Securities offered through Triad Advisors, Inc. Member FINRA/SIPC. Advisory Services offered through SC&H Financial Advisors, Inc. SC&H Financial Advisors, Inc. and Triad Advisors Inc. are unaffiliated entities. |
