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ESTATE PLANNING SMARTS
The 2013 Supreme Court decision in United States v. Windsor will change estate planning for same-sex married couples. They can now take advantage of the unlimited marital deduction, portability, gift-splitting and IRA inheri- tance strategies. So it may be possible for them to simplify their documents. State estate or inheritances taxes, in states that have them, remain a separate concern, in states where same-sex marriage is not legal. The U.S. Supreme Court may resolve the problem in a case that was pending as this book went to press. (For a more detailed discussion, see Chapter 4.)
To stay current about laws that may affect your estate plan, visit the Web site for this book, www.estateplanningsmarts.com. You can also reg- ister at the site to receive occasional e-mail notifications of recent articles, book updates, products and services, and follow the author on Twitter at http://twitter.com/djworking.
Impending good fortune. Whether you have made a promising investment
or own a business and are expecting a huge success (such as a sale or initial public offering, or the introduction of a revolutionary product), think about shifting some of the upside potential to family. Once the appreciation occurs, making transfers will consume more of your $5.43 million lifetime gift-tax ex- emption or require you to pay gift tax on a larger amount. If you can afford to transfer some holdings before they increase in value, that appreciation will be sheltered from both gift tax and estate tax. Various methods for making these transfers while minimizing or eliminating gift tax were discussed in Chapter 15.
Economic decline. The financial maelstrom that began in 2008, and has continued to have an effect, created extraordinary estate planning opportuni- ties. A combination of low asset values and the decline in interest rates used in structuring various wealth transfer tools drastically reduced the tax cost of making lifetime transfers, whether through gifts or intrafamily transactions.
Unfortunately, the same economic forces also made people extremely anxious about their own financial security and less inclined to reduce their net worth through lifetime transfers – even of beaten-down assets. Still, the potential to turn lemons into lemonade is something to remember. Strate- gies such as the grantor retained annuity trust, or GRAT, and installment sales to family members or to trusts for their benefit (covered in Chapter 15) create an income stream for the person making the transfer. This may be an attractive feature if you worry that reducing your net worth in order to save estate taxes later will leave you short of money.
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