Model Client Letter Summarizing 2010 Tax Act

The Wealth Strategies Journal has posted a Model Client Letter/Memo Re 2010 Tax Act summarizing the Tax Act’s estate and gift tax provisions. Professionals may send the letter to their clients and allied professionals. The summary of the letter is below:

To summarize, the Act makes significant estate and gift tax changes. The key points discussed above include the following:

• The estate tax exclusion amount increases to $5 million per person for 2010 through 2012. 
• The maximum estate and gift tax rate is reduced from the 55 percent maximum rate under prior law to a maximum estate and gift tax rate of 35 percent for 2011 and 2012.
• A “portability” provision is included, which allows surviving spouses to use any applicable exclusion amount that is not used by the first spouse to pass away.
• The GST exemption amount is increased to $5 million for 2010 through 2012.
• The Act sunsets at the end of 2012, thus making the foregoing changes temporary in nature.

As always, we recommend that clients review their estate plans periodically and/or whenever a significant life event occurs (e.g., birth of a child, death of a spouse, purchase of new home, etc.).

For clients with substantial amounts of wealth and with closely held businesses, we highly recommend that such clients consider using lifetime gifts to take advantage of the current $5 million lifetime gift tax applicable exclusion amount, which will expire absent further Congressional action at the end of 2012.

Please do not hesitate to contact us with any questions that you might have or if you would like to discuss your estate plan in light of the Act.

Special thanks to Lewis J. Saret (Wealth Strategies Journal) for bringing this to my attention.