I just read a really good article on some items in President Obama’s budget that may affect estate planning. Better yet is the emphasis the article places on some incredible opportunities in your estate planning that you can take advantage of now. It’s at Yahoo! Finance and you can read it here: http://bit.ly/daQI3d. When Steve Leimberg speaks on the topic, you know to listen. He is an estate planning “institution” in this country.
Here is my “short version” of the article (for those who enjoy “cliff notes”):
- Requirement that the basis of property in the hands of the person who receives it can be no greater than the value of the property as determined for estate or gift tax purposes. The article gives a good explanation of basis, so I won’t rehash it here. And you can look forward to more paperwork for you to do or for you to pay a CPA or Attorney to do, in an effort to ensure that the new rules are followed.
- A category of “disregarded restrictions” designed to curb the use of certain valuation discounts in planning. Watch this one closely because it could be a game changer for some very popular planning techniques, depending on how it is enacted.
- Grantor Retained Annuity Trusts (GRATs) would have to last a minimum of 10 years. Ouch! Depending on the age of the person using this popular planning technique, the mortality risk may take this option off the table.
As pointed out by Mr. Leimberg, these are just proposed changes and they are a long way from being law. Keep in mind, however, that with the current economic and budget situation, changes such as these that we didn’t think we would see may just have a chance of becoming reality.