A “perfect storm” for estate planning

Politics, the weak economy and low interest rates have combined to create one of the best environments for estate planning in a generation, according to experts. “If individuals are trying to transition assets to the next generation, we currently have a perfect storm — in a good sense — to do it,” said David Scott, vice president of advanced sales for Penn Mutual Life Insurance Co.  The elements of that perfect storm begin with a $5 million exemption from estate taxes ($10 million for married couples), which was part of the Middle Class Tax Relief Act of 2010 enacted in December. The value of real estate assets and securities are at low levels, making it more attractive to give such assets to other individuals. And with interest rates near zero, wealthy clients also can make loans to their children and to trusts at a very low cost.

The Republicans, fresh off their midterm-election victories last year, agreed to reinstate the estate tax for 2011-12, after it had lapsed in 2010, but raised the exemption to $5 million per person and $10 million for married couples. The unused portion of the exemption is portable between spouses as long as an estate tax return is filed within nine months of a person’s death. The tax rate on amounts over that threshold is 35%.

Source/more:  Investment News (requires registration)