When you hear the phrase "estate planning" the first thought that comes to mind may be taxes. But estate planning is about more than just reducing taxes. It's about ensuring your assets are distributed according to your wishes. That's why, even with the estate tax reduction under the Economics Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), estate planning is still critical. In addition, estate taxes still pose a threat with respect to wealth available to transfer to the next generation. Remember, the "sunset" provision means that in 2011 the state tax will return to where it stood before EGTRRA, unless Confress takes further action to change the law.
In addition, the act includes other provisions that increase the complexity of estate planning, such as gradual repeal of the generation-skipping transfer (GST) tax; reduction in the top gift tax rate but no repeal of the gift tax; increase in gift, GST and estate tax exemptions; and repeal of the step-up in basis at death.
As a result, estate planning is more important than ever - without proper planning, you could still lose to estate taxes a large share of what you've spent a lifetime buliding.
This booket will help you start preparing a plan to reduce estate taxes taking into account EGTRRA. And if you already have a plan in place, it will show you how to make the adjustments necessary to take advantage of these changes and suggest strategies you currently may not be employing. We begin in this first section by offering you an overview of basic estate planning principles. Then on page 10 we start discussing estate tax saving strategies.
Certainly this booklet is no replacement for professional financial, tax and legal advice. Because of the complexities and new issues EGTRRA creates, Congress is likely to make further estate tax law changes that could affect the issues discussed here - or your estate plan. Be sure to get professional advice before implementing any estate planning strategies.
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