Latest Changes in Estate Planning Laws in Hackensack and Bergen County
The biggest change in estate planning laws stems from the 2010 nationwide repeal of the estate tax. Previously, this tax was levied on the assets left behind by those who passed away. Under the Obama administration, the estate tax has been completely repealed for the year 2010. This resulted in the following changes:
- The repeal of the generation-skipping tax (based on assets passed on to grandchildren) for 2010.
- A gift tax still remains in place for those who give away over $1 million over the course of their lifetime. However, the tax rate has been lowered 10 points, from 45 percent to 35 percent.
- Heirs must now calculate total assets by using the original price paid for them and not the value at the time of the owner’s death. This could cause considerable confusion and difficulty. For example, it could be very hard to determine the price of a stock bought years ago and to adjust for stock splits. Also, selling shares could require paying capital gains tax on their appreciated value. This is known as a carryover basis rule, and exemptions are made up to $1.3 million for heirs. Additionally, a $3 million exemption is allowed for assets inherited from a spouse.
An uncertain future
The real issue is the uncertainty surrounding 2011. Most expect taxes to be restored retroactively by Congress to 2009 levels. That is: an exemption of $3.5 million for the estate tax and generation-skipping tax and the application of a 45 percent rate for these taxes in addition to the gift tax. However, this remains unsettled.
Precedent suggests that enacting retroactive tax rates is legal. But some may argue that retroactive taxes are not constitutional and use this as grounds for legal action. For those with enough at stake, Bergen County estate litigation may be a possibility.
Until legislation is passed concerning 2011 estate tax laws, there will be more questions than answers. In the meantime, you might want to consider having your records in place for assets you may end up inheriting or passing on to others. Gather your own transaction documents and talk to your parents about any shares they hold.
Contact the Hackensack Estate Planning Attorneys at The Paton Law Firm
Estate law is complex. The attorneys at The Paton Law Firm are experts in the field and can guide you through the legal changes that affect estate planning law in Hackensack. They will also fight hard to prepare and protect those considering Hackensack estate litigation in response to the proposed changes for 2011. Contact us via this form or by calling 201-546-5298 today.