Trusts are very valuable for estate planning attorneys because these allow them to cut down on estate taxes and probate costs for anyone in California or the United States.
Last 2008, the only individuals who would be affected by the estate tax are those who die owning an estate worth more than two million dollars. For this current year, that amount will escalate to 3.5 million dollars but by the year 2010, the estate tax shall be revoked. However, if the repeal of estate tax will not be extended up to 2011, the amount of estate tax will kick in once more. Even worse possibility is that in 2011, if the repeal of estate tax will not be extended, the amount will kick in again at a staggering one million dollars. That is almost 47%.
Estate tax can be problematic for married couples if it so happens that the second spouse dies. For example, if one of the couple dies, all property owned will be handed over to the surviving spouse. However, if the second spouse dies, that would not be the case.
The question of what happens to the basis of any property inherited from a person who died is probably one of the most significant changes in estate planning. Right now, when you inherit some property, the market value of the said property during the death of the former owner would be the tax basis when you decide to sell that property. Hence, the basis is increased from the property’s value when the previous owner purchased it to the property’s market value when the previous owner died.
This law will, however, be repealed as well by year 2010. From then on, if you sell some inherited property, you would only be allowed to implement the increased basis for the first 1.3 million dollars worth of the said property. Whichever is less between the basis used by the former owner and the property’s market value on the former owner’s death will be the basis for the amount in excess. Having said so, estate planning on which assets to implement the stepped-up value is necessary
As the words imply, estate planning means cutting down on your estate taxes by planning which of your estate assets to sell. However, it is vital that you are aware of the laws being observed and any changes in those laws. This is usually difficult to do and understand, which is where an estate planning lawyer comes in.