Legacy Newsletter offered by Oklahoma Baptist University
(that means odds and ends or miscellany)
Estate Tax Exemptions Change on January 1, 2011
While this will only apply to a few of us, for those few this is very important information: In 2009 the Federal Estate Tax Exemption was $3,500,000. This amount increased during 2010 so that a person’s entire estate has been exempt (no estate tax). Here’s the important part: unless Congress acts, beginning with 2011 the exemption reverts back past the $3.5 million to only $1 million. This means that many of you should do some serious estate planning, since in a family context there are ways to divide property so that estate tax problems are lessened or eliminated and, as shown in the next section, there can be other ways to preserve the estate.
Just at press time we learned about the death of the owner of the New York Yankees. He was ranked in the Forbes list of the 400 richest people. He was supposedly worth more than one billion dollars. Even though he possessed an incredible amount of wealth none of it will be taxed as estate taxes by the federal
government because he died before December 31, 2010. If he had died on January 1, 2011, if he had done no estate planning at all, the federal estate tax could have been as much or more than $550,000,000 – more than half of the estate. It could have been enough for his sons to lose the baseball team and it could be enough for your children to lose your farm or business (even if it is not worth as much as the Yankees baseball franchise, your farm or business might well be worth more than a million dollars). Don’t be surprised by this change! Plan for it!
Low Interest Rates Offer Tax Savings for Generational Transfers of Larger Estates
Because of the current low Applicable Federal Rate, OBU could help you transfer an estate of many millions of dollars in value to your grandchildren, and do this estate- and gift-tax-free (or with very low taxes). At the same time, you would be helping OBU.
How can this be done? There is an IRS-approved technique called
a Charitable Lead Trust. You put property in the trust for a term of years. During this time OBU receives the income from the property but then at the end of the term the property is delivered to the persons you directed in the trust either tax- free or at substantially reduced estate taxes.
The tax reduction depends on the amount of time the property is in the trust and the AFR rate at the time the trust is implemented. This idea works especially well with appreciating assets such as shopping centers or apartment complexes, but it can work with just about any kind Continued on Page 11
Having Ears To Hear 4
Leaving A Lasting Impression 6
Making An Eternal Impact 8
A New Kind of Fun 1
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