1. 1 Federal Wealth Transfer Taxation

2. 2 FWT Components n Estate Tax – Ch. 11 n Gift Tax – Ch. 12 n Generation Skipping Transfer Tax – Ch. 13 n Economic Growth and Tax Relief Reconciliation Act of 2001 n Sunset provision

3. 3 Generation Skipping Transfer Tax Assets Grandparent Income for life Children Discretion Ascertainable standard 5 & 5 power Limited power Corpus Grandchildren Great Grandchildren

4. 4 FWT Components (cont.) n Not in a vacuum u 1014/1015 Stock A 5,000 10,000 AB FMV Stock B 9,500 10,000 Stock C 10,000 8,000

5. 5 FWT Components (cont.) u 1014 Repealed for decedents dying after Dec. 31, 2009 u No “fresh start” basis rules u Carryover basis lesser of AB or FMV dod

6. 6 FWT Components (cont.) u Executor election to increase: F general basis increase $1,300,000 F qualified spousal property increase $3,000,000 F combined F Inflation adjustment after 2010 u 121 exclusion of $250,000 available to estate or beneficiary

7. 7 FWT Components (cont.) n Not in a vacuum (cont.) u Distributions from estates and trusts u IRC 691 / IRD u Gains, losses, recapture, etc.

8. 8 Tax Returns n Estate Tax u 9 months plus extensions u Executor (personal representative) u Transferee

9. 9 Tax Returns (cont.) n Gift Tax u April 15 u Donor u Donee n GSTT u (later)

10. 10 Integration of Estate and Gift Tax n Rate Structure u 2502 (a) u 2001 (c) u EGTRRA 2001

11. 11 Integration of Estate and Gift Tax (cont.) n Unified Credit/Exclusion Amount u 2505 u 2010 u EGTRRA 2001

12. 12 Integration of Estate and Gift Tax (cont.) n Progressive Tax Base u 2502 (a) u 2001 (b) u Inclusive estate tax base u 2033, 2035 - 2044

13. 13 Tax Rates n Maximum Unified Transfer Tax Rate Calendar Year 2002 2003 2004 2005 2006 2007 2008 Tax Rate 50% 49% 48% 47% 46% 45%

14. 14 Tax Rates (cont.) n Maximum Unified Transfer Tax Rate Calendar Year 2009 2010 and later Tax Rate 45% Estate tax repealed. Highest individual rate (35%) applies to gift tax. The 5% surcharge has also been repealed starting in 2002. Effective date: Decedents dying after Dec. 31, 2001.

15. 15 Exclusion Amount n Unified Transfer Tax and GST Transfer Exemptions Calendar Year 2002 2003 2004 2005 2006 2007 GT Exemption $1,000,000 GST & Est. Tax Exemption $1,000,000 $1,500,000 $2,000,000

16. 16 Exclusion Amount (cont.) n Unified Transfer Tax and GST Transfer Exemptions Calendar Year 2008 2009 GT Exemption $1,000,000 GST & Est. Tax Exemption $2,000,000 $3,500,000 Effective date: Decedents dying after Dec. 31, 2001.