By Jordan Dechtman, Wealth Management

10/15/2010 As the year of no estate tax nears to a close with no action from Congress, we face the possibility that the Bush tax plan will be allowed to play out and the estate tax will return with a vengeance in 2011 with a 55 percent rate and $1 million exemption. That has some Americans thinking about giving larger gifts before year end.
The gift tax has historically kept in step with the estate tax. In 2010, however, the gift tax is 35 percent, the same as the top marginal rate on ordinary income. Americans can gift $13,000 this year per person up to the lifetime maximum of $1 million in total gifts. The question then becomes, especially for the wealthy elderly, whether to gift amounts over $13,000 this year and pay the 35 percent gift tax or make those gifts after death and pay 55 percent estate tax. Those who opt for the gift tax will likely wait until late December – if they die before year end, they would have been subject to no estate tax, and the gift tax would have been paid unnecessarily.
With mid-term elections coming in November, Congress has postponed discussion on the Bush era tax cuts until after elections and before newly elected lawmakers are seated. The White House has proposed restoring 2009 rules of 45 percent and a $3.5 million exemption. Another proposal in the Senate would set the rate at 35 percent and a $10 million exemption. Although many Republicans still back extending the repeal, according to Investment News, the government has already missed out on tax proceeds from the estates of five billionaires who have died so far this year, including New York Yankees owner George Steinbrenner.
With concerns about outliving retirement savings, depleting the nest egg by making large gifts now to avoid estate taxes later may not be comfortable or feasible. Such decisions depend on your individual situation and should be made with advice from your tax professional and estate planning attorney. Our office can help you determine how gifts made today might impact your retirement plan. Contact your personal financial planner, Jordan, at 303-741-9772, email him at Jordan@JordanDechtman.com or visit www.JordanDechtman.com today to schedule a joint meeting with your other professional advisors.
About Jordan Dechtman Wealth Management. Jordan Dechtman Wealth Management is an independent Colorado financial services firm, serving clients since 1984. Jordan Dechtman Wealth Management helps you plan, predict, protect, your future one day at a time.
To learn more about the Jordan Dechtman Wealth Management difference, please contact Jordan Dechtman Wealth Management at 303.741.9772 or www.JordanDechtman.com.
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Phone: 303.741.9772
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Centennial, CO 80111
PR Contact: Jordan Dechtman
Jordan@JordanDechtman.com
www.JordanDechtman.com