The Tax Relief, Unemployment Insurance Authorization and Job Creation Act of 2010 was signed into law on December 17, 2010. Here are some of the highlights:
- For calendar years 2011 and 2012, the federal estate tax exemption for property passing to non-spouse beneficiaries is $5,000,000.00; the Connecticut estate tax exemption remains at $3,500,000.00.
- A federal estate tax exemption of $5,000,000.00 and a state estate tax exemption of $3,500,000.00 will allow for the simplification of many previously more complex estate plans.
- If a family member died in 2010 and a step up in the cost basis of property owned by the decedent is important, a special federal tax return describing the property must be filed no later than September 17, 2011.
- In most instances where a family member died in 2010, filing this special federal tax return before September 17, 2011 will be important. Here is an example. Dad’s house cost $50,000.00 when purchased, but was worth $400,000.00 when dad died in 2010. Tom, son, plans to sell the house. If Tom does not file the return, he will need to report a capital gain of $350,000.00 when he sells the house ($400,000.00-$50,000.00). If Tom does file the return, there is no capital gain because the cost basis will have been stepped up to $400,000.00.
We encourage you to call us to discuss how these changes in federal law affect your estate planning needs. We have experience preparing sensible and cost effective estate plans for individuals and couples.