This is the 10th in a series of 23 tax tips thatAdvisorOne is publishing on each business day in March as part of our Tax Planning Special Report (see our Special Report calendar for a more complete list of topics to be covered and experts who will deliver their insights).
The tax tip today comes from Gavin Morrissey, director of advanced planning at Commonwealth Financial Network in San Diego. Morrissey consults with the independent broker-dealer's reps on issues involving insurance, tax, executive benefits, business, and estate and charitable planning. He also consults with advisors on concentrated stock and stock option planning and writes a tax planning blog for AdvisorOne.
The Tip: Using Bypass Trusts for State Estate Taxes
Morrissey (left) says the increased estate tax exemption to $5 million was not the only surprise in The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010; it also provided portability, meaning that a spouse can inherit a deceased’s $5 million exemption—if it’s unused—increasing his or her exemption to $10 million. “People in an estate below $10 million—the majority of the country—don’t need to do much planning to shelter $10 million assets from estate taxes.” Indeed, Morrissey’s advisor clients are asking whether bypass trusts are any longer necessary. Do their wealthy clients need one now?