Wealth Transfer Rules Expiring December 31st

Clients and advisors alike are wondering what will happen to the favorable tax rates that are set to expire at the end of this year. One consideration within this broader discussion involves the expected changes to wealth transfer rules. If Congress doesn’t act in the next few months, transfer tax rates will revert back to 55% and the lifetime exclusion for an individual will move from $5.12M down to $1M for individuals and $10.24 down to $2M for couples. That poses a big potential estate planning blunder just down the road, one which can be avoided with some basic planning.


The most obvious play here would be to move a majority of the funds which you don’t anticipate needing in your lifetime into a trust, avoiding the potential risk of say, dying with $7M in your estate after the lifetime exclusion drops back down to $1M. That would potentially result in your heirs paying a 55% tax rate on $6M in assets.

The other potential benefit comes from taking advantage of “grantor” trust rules. By making the gift into a grantor trust, you can also pay the income taxes on the trust’s investment income, even though the trust remains outside your estate for gift and estate tax purposes. So you’re essentially giving a gift to your heirs without it being considered a gift for federal tax purposes.

If you have an estate worth more than $5M and haven’t done any planning for it, these next few months may be crucial to saving money for your children and future generations of your family.
As always, feel free to call or e-mail me with any questions.
Russell Bailyn

Wealth Manager
Premier Financial Advisors, Inc
14 E 60th Street, #402
New York, NY 10022
P: 212-752-4343 *231
F: 212-752-7673
rbailyn@premieradvisors.net

Securities and certain investment advisory services offered through: First Allied Securities, Inc., a registered Broker/Dealer. Member: FINRA/SIPC. Premier Financial Advisors, Inc. is a Registered Investment Advisor. First Allied Securities & Premier Financial Advisors are not affiliated entities.
This information should not be considered legal, accounting or tax advice. The effective application of estate planning strategies requires the services of a competent attorney and/or CPA.

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