FAIRFAX, Va., March 17 /PRNewswire-USNewswire/ -- March Madness is brackets, teams on the bubble and last second shots. Right? Yes, but how about the madness facing individuals who are currently planning their estates in the face of Congress' inaction on the estate tax law? According to Odin, Feldman & Pittleman Trust, Estate & Tax Planning Attorney John Dedon, "Those who have followed this debacle know there currently is no federal estate tax; that Congress could reintroduce the estate tax this year, perhaps retroactively; and if Congress fails to act in 2010, in 2011 the amount individuals can protect from a maximum 55% death tax rate will be only $1 million."
"This is also March Madness. Tax attorneys and financial planners are struggling to advise clients how to plan with this death tax uncertainty," said Dedon. "While the alley-oop dunk makes the Sports Center highlights, it's the team making its free throws and the extra pass that wins the game." Dedon continued, "In other words, the need to address fundamental planning should not be obscured by the impossibility of predicting the future of the death tax."
According to John Dedon, "Some fundamental objectives individuals need to address, whether or not there will be estate tax to pay are as follows:"
- Guardians for minor children: "If you have children under age 18, who will care for them if neither parent is living? Absent you naming a Guardian, family members may be in front of a judge arguing over who has custody of the children."
- Spouses from second (or third) marriages: "Individuals in second marriages and who also have biological children often want to take care of the surviving spouse but want any remaining assets at the second death to revert to the biological children. If appropriate trusts and trustees are not utilized, the assets could end up with the second spouse's new husband or wife or the second spouse's children."
- Assets passing to children: "Parents often express a concern that their children's inheritance could end up with a former son or daughter in-law in the event of a child's divorce. Another common concern is that the inheritance could be frivolously wasted or that the inheritance could sap the child's motivation to lead a productive life. Parents can provide a Trust that protects the interests of the children and grandchildren, yet allows them to receive the benefits under terms."
- Probate avoidance: "We all can avoid probate, i.e., the process whereby the local jurisdiction will supervise the collection and ultimate distribution of the estate assets. Weaving through probate will take months (and sometimes years) and can be expensive, among other disadvantages. By utilizing Trusts and properly titling the assets and coordinating the beneficiary designations, probate is avoided."
- Asset Titling and Beneficiary Designations: "Often times individuals prepare thorough planning documents but do not coordinate the documents with the titling of their assets and beneficiary designations. Typically, the titling and beneficiary designations will supersede the dispositive provisions in the documents. The result of not tying the assets with the documents can be a failed estate plan."
Congress' inaction on the estate tax issue has been far from a legislative "One Shining Moment." John Dedon concluded, "Hopefully Congress will focus on estate tax issues this year and provide some permanence prior to 2011 and a $1 million exemption amount. But with or without Congress, individuals should ensure their fundamental estate planning objectives are met."
John Dedon is a principal in Odin, Feldman & Pittleman's Trust, Estate & Tax Planning practice group. His practice focuses on preserving wealth for high net worth individuals from estate and income tax, potential creditors, and probate costs.
For more information visit: www.dedononestateplanning.typepad.com
About Odin, Feldman & Pittleman
Odin, Feldman & Pittleman is a Northern Virginia based law firm with attorneys practicing in trusts, estates and tax planning; family law and domestic relations; litigation; government contract law; bankruptcy and creditors' rights; corporate, securities, tax and finance; labor and employment; technology and intellectual property; arbitration and mediation; banking and finance; real estate and construction law.
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SOURCE Odin, Feldman & Pittleman
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