Retro-acted Estate Taxes for 2010-There are Estate Taxes in 2010

The “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” better known as the 2010 Tax Cut Extensions were signed into law on December 17, 2010.

The implications of this law were very far-reaching and retro-acted estate taxes for those passing in 2010. Until this law was passed, with no estate tax in place, there was in effect, no credit shelter trust available for estate planning.

Here are the retro-acted 2010 Estate Tax levels:

  1. Exclusion of $5 million per spouse if they have a credit shelter trust, for a total of $10 million for married couples
  2. Tax rate of 35% for estates over $5 million/$10 million (married couples with the use of a credit shelter trust)
  3. A second alternative option of using a step up in basis 15% tax on the estate, rather than using the exclusion amount of $5 million/$10 million (2010 date limits apply to this election.)

The bad news:

These laws were signed into effect with a two-year need for a vote to extend or amend. It is highly possible in two years we will be in limbo again under greater political pressures since the presidential election will occur at this time.

Have a Good Day!


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