As previously reported (in an article last month) the estate and generation skipping transfer taxes have been repealed. The estate tax is a tax on the transfer of wealth (at death) to individuals, trusts, etc. other than the decedent’s spouse. Transfers to a citizen spouse are entitled to an unlimited marital deduction. Transfers to non-citizen spouses are entitled to an exclusion of $134,000.00.

The generation skipping transfer tax is an additional tax imposed (most often) when the decedent leaves his or her estate to his or her grandchildren (bypassing the children).

The gift tax remains effective, but the maximum gift tax rate has been lowered to 35%. The annual gift tax exclusion remains the same as last year -- $13,000.00 per person per calendar year.

The step-up in tax basis has been repealed and replaced with a modified carryover basis. Basis increases are permitted of $1,300,000 per decedent and $3,000,000 for assets transferred to a surviving spouse.

If you have any questions about gift tax, estate tax, generation skipping transfer tax, or your estate planning please contact Futterman & Lanza at 631-979-4300.

© 2010 FUTTERMAN & LANZA, LLP

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Futterman & Lanza, Attorneys at Law | Smithtown, New York | 631-979-4300