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Dutchess OfficeBypass Trusts Double Estate Tax Exemption
In 2009, any assets below the amount of $3.5 million can be bequeathed to heirs with no federal estate tax penalty. However, assets left to one’s heirs over this estate tax exemption amount will be taxed. Barring any changes by Congress, in 2010 the estate tax will be repealed entirely. However, in 2011, it will be reinstated with an exemption of $1 million and a maximum unified rate of 50%.
Since it is nearly impossible to predict what year one might die, estate tax planning is crucial for all families who have accumulated assets in excess of $1 million. One tool that may be employed to address this issue is a bypass trust. Bypass trusts allow parents to double the amount of money that can be passed on to children tax-free.
When the first parent dies, instead of leaving all their assets to the surviving spouse, assets up to the exemption amount can be left to a trust for the benefit of the children. Therefore, when the second parent dies, he or she may also leave assets up to the exemption amount to the surviving heirs. In this way, parents are able to collectively double the amount they would otherwise be able to leave to children tax-free.
To learn more about New York elder law, New York Estate Planning, NY Elder, and New York Special Needs Planning, visit LittmanKrooks.com.
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25 Responses to “Bypass Trusts Double Estate Tax Exemption”You must be logged in to post a comment.
January 25th, 2010 at 7:12 am
This read was really worthwhile, the information was absolutely great! Keep up the good work.
February 14th, 2010 at 5:14 pm
excellent article,however i experience some difficulty in understanding the final paragraph, can you please explain a little bit further?
February 15th, 2010 at 12:31 pm
This is a good approach to what, for some, may be a controversial topic. Very well though out post.
February 16th, 2010 at 9:41 pm
As a Newbie, I am always searching online for articles that can help me. Thank you
February 16th, 2010 at 9:56 pm
For starters, this post does not apply for 2010 since the tax laws have changed and there is no estate tax for 2010. It is scheduled to re-appear in 2011. In 2009, it was possible to double the $3.5 million dollar exemption if you were married and set up a bypass trust. It is possible that this technique will become viable again if the estate tax comes alive again. If it does, I will do another post and explain things more clearly.
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