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SinclairProsser Law, LLC
Estate Planning & Elder Law Attorneys
(410) 573-4818 or (301) 970-8080 •
Upcoming Estate Planning Seminars are February 9th, 12th, 13th and 14th!
Tell your clients, family and friends. Go to for locations, dates, time and to register your seat(s)!

2008: The Calm Before the Storm

The amount that one can give at death free from estate tax (known as the applicable exclusion amount) will remain at $2 million for 2008, as will the estate and gift tax rate of 45%. After 2008, the whole picture changes. In 2009, the applicable exclusion amount increases to $3.5 million – meaning that with proper planning a married couple could pass as much as $7 million free of estate tax. Then in 2010, the estate tax is repealed (temporarily) – but a new tax replaces it.

Under current law, most assets receive a “step-up in basis” at death, which means that a beneficiary can sell most inherited assets for what they were worth at the time of death without having to pay any income or capital gain taxes upon sale. When the estate tax is repealed in 2010, the “step-up in basis” also will be repealed and a “carry-over basis” regime will be installed. As a result of this, except for some designated exceptions, beneficiaries will be faced with increased income taxes in the form of capital gain taxes to replace the estate tax that will be eliminated. Some commentators have estimated that the tax revenues raised for the government under this regime, if left in place for the long-term, would eventually outstrip the revenues projected under the estate tax regime.

Like a phoenix rising from the ashes, under current law the estate tax is scheduled to re-appear in 2011. In that year, the tax law reverts to the law as it existed in 2001, meaning the applicable exclusion amount will be lowered to $1 million and the estate and gift tax rates will once again become progressive, capping out at a maximum marginal rate of 55%. If 2011 arrives without a change to this law, many clients who thought they had no estate tax worries based on what they were told throughout the period from 2001 to 2010 will be facing some serious estate tax consequences.

This roller-coaster tax law makes estate planning for individuals with net worth in excess of $1 million unpredictable and requires careful estate planning by a knowledgeable estate planning attorney. Drafting of plans with the forethought of dealing with the scheduled changes and the flexibility to deal with anticipated further changes in the law is critical.

The American Academy of Estate Planning Attorneys (“AAEPA”), of which our law firm is a member, has some of the top minds in the industry working on these planning strategies. The AAEPA has introduced the concept of Legacy Wealth Planning, a paradigm shift from the way most estate planning attorneys have traditionally approached planning for clients. The Academy also is pursuing a Private Letter Ruling that, if approved by the Internal Revenue Service, will change the manner in which most estate plans will be drafted in the future.

To learn more about how we can assist you and your clients with their estate planning needs, call Tamiko Neal or Jacqueline Short at 410-573-4818 or 301-970-8080 to schedule a telephone conference with one of our attorneys who focuses on estate planning. Also, visit our website at to learn more about Legacy Wealth Planning and to see a schedule of upcoming consumer seminars as well as CE seminars for financial professionals.

SinclairProsser Law, LLC a charter member of the American Academy of Estate Planning Attorneys, focuses on estate planning and administration, including revocable living trusts and charitable remainder trusts. Call Tamiko or Jacqueline at 410-573-4818 or 301-970-8080 to schedule a complimentary 15 minute telephone appointment to discuss your client’s situation with one of our firm’s attorneys. We have offices in Annapolis, Bowie and Millersville.
We welcome any feedback you may have about our educational alerts. You can email or call at (800) 366-4615.
Member of the American Academy of Estate Planning Attorneys