Make Time For Proper Estate Planning

Changes in federal law to impact tax liabilities in 2009.

Qualified, seasoned and prepared, trust the estate, tax and probate division of Novit & Scarminach to effectively structure your estate, minimize your tax burdens and prepare for the unexpected. Based on the changes enacted in 2001, the federal estate tax exemption will increase to $3.5 million for taxpayers dying in 2009. (The exemption in 2007 and 2008 was $2 million.)

As a result, $3.5 million of assets or more can “escape” federal estate tax in a properly planned estate. Remember, the federal estate tax is slated to “sunset” in 2010; as a result, estates of taxpayers dying in 2010 will not be subjected to federal estate tax. However, based on current law, the federal estate tax is resurrected in 2011 with   an estate tax exemption amount of only $1 million per taxpayer. The lifetime gift tax exemption remains at $1 million for 2009 but the annual gift tax exclusion increases from $12,000 per donee to $13,000 per donee for 2009. With the increase, a husband and wife could each gift $26,000 to each of their children (or grandchildren) in 2009 and pay no federal gift tax.

There continues to be no South Carolina estate or gift tax.

Just before Christmas, the Senate and House approved by unanimous consent a measure to suspend required minimum distributions from qualified defined contribution plans and IRAs for calendar year 2009 only, as well as other relief for retirement plan and IRA beneficiaries. As of the press date, the measure was awaiting the president’s signature.