Overview of 2011 and 2012 Estate Tax Laws

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act was signed into law by President Obama on December 17, 2010. This new law provides sweeping changes to the rules governing federal estate taxes, gift taxes and generation-skipping transfer taxes for the 2010, 2011 and 2012 tax years.  Here is a summary of what the new law provides for the estates of decedents who die in 2011 or 2012:

1. Sets new and unified estate tax, gift tax and generation-skipping transfer tax exemptions and rates. For 2011 and 2012, the federal estate tax exemption will be $5 million and the estate tax rate for estates valued over this amount will be 35%. The estate tax has also become unified with federal gift and generation-skipping transfer taxes such that the gift tax exemption and generation-skipping transfer tax exemption will be $5 million each and the tax rate for both of these taxes will also be 35%.

ASSET PROTECTION – PROTECT YOUR ASSETS

America has become the most litigous society in the world!  Just read the paper or turn on the television, the our country is living through a litigation explosion with expanding theories of liabilities and outragious jury awards.  What can an business persons and professionals do to help minimize one's vulnerability to law suits and judgments.  The answer is Asset Protection.

ASSET PROTECTION IS NOT THE FOLLOWING:

1. Secretly hiding assets;
2. Fraudulently conveying assets to other relatives and friends for the purpose of avoiding paying credtiors;
3. Giving assets away after losing a case;
4. Evading taxes; and
5. Other criminal methods of hiding assets.

ASSET PROTECTION PROVIDES

1. Security:  by organizing and arranging assets in a legal manner that assist in preserving much of the value of an individual or families' assets if attacked by creditors, judgment liens, and frivolous lawsuits.  Asset Protection does not guarantee that a creditor will not be able to attach one's assets. 
2. Privacy:  reduce the number of assets that can be seen in public records.

To achieve this goal, an attorney will combine business, estate, family planning, along with asset protection methods.  However, asset protection does not deal with the secrecy of hiding assets, fraudulently transferring property or other fraudulant methods to avoid creditors.  These methods, in most cases, can protect assets before liability is incurred, or these methods can make it very expensive for plaintiffs to file a lawsuit.  These methods may not work for everyone.  Please consult a lawyer if you can benefit from asset protection, and if so, which methods are best for your specific needs.