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Estate Planning and Compliance

Estate taxes represent a tax on accumulated wealth that was originally implemented by the federal government for the purpose of controlling the amount of wealth that could be transferred between generations. Legislation enacted in 2001 has substantially reduced the impact of estate taxes for individuals. The applicable credit amount that used to exempt $675,000 . It is scheduled to increase to $3.5 million in 2009; however, for gift tax purposes, the applicable exclusion remains at $1 million. Although the estate tax is scheduled for repeal in 2010, because of budgetary constraints it is scheduled to be reestablished in 2011 under 2001 rules unless Congress takes action. The current outlook for permanent repeal is certainly unclear.

The new legislation that we are very concerned with is a change to stepped-up basis rules that are currently in effect. Under the stepped up basis rules, the income tax basis of property acquired from a descendent at death is generally increased (or reduced) to equal its value as of the descendent's date of death. This treatment, which has provided significant income tax benefit to beneficiaries, will be repealed in 2010 and replaced with modified carryover basis at death rules. This new treatment, which was a trade-off for estate tax reduction, could ultimately result in substantially increased income taxes.

We will provide strategies for reducing estate taxes and probate costs particular to California residents. Such planning strategies include:

tpbs, LLP has considerable experience in preparing federal estate tax returns. We are knowledgeable in estate tax law and in the reporting alternatives available to reduce estate taxes to their lowest level. We are also able to advise you as to certain post-mortem planning techniques available to you.