Larry Chane Quoted in Money Magazine: Avoiding the 45% Estate Tax
Lawrence Chane was quoted by Money magazine on a 2001 law that increases the federal tax exemption—the amount of an estate not subject to a 45% federal tax—every year until, in 2010, it is completely eliminated, only to be reinstated in 2011.
Congress will probably intervene to avoid a year without estate taxes, says Mr. Chane, a Blank Rome estate-planning attorney. Lawmakers, he adds, are expected to keep the current exemption.
"Of course, anything can happen," says Mr. Chane, "but for now, plan around the higher limit." That's $3.5 million—but, with the right strategy, a married couple can shelter double that.
If the trust grows beyond $3.5 million, Mr. Chane suggests that a disclaimer bypass trust is a good option; it allows you to put some of the estate into a bypass trust at the time of your spouse's death. A couple might consider this, says Mr. Chane. If their estate stays under the exemption limits, the survivor isn't committed to a bypass trust. "Since they don't know how much they'll have or what tax law will be, a disclaimer can give them flexibility," he says.
“Keeping Wealth in the Family” by Walecia Konrad appeared on CNNMoney.com on December 31, 2008. For more information, please visit money.cnn.com.