CORRECTION: The date for the Business Legacy Mentoring Series is Wednesday, September 18, 2013 from 7:30-9:00 A.M.

SPECIAL ANNOUNCEMENT: Please tune in to It’s Your Money not Theirs at 7:00 P.M. on Saturday August 10, 2013, on KFMB Radio 760 AM where I will be a guest discussing today’s topic, exciting new changes and the idea of collaboration. You Can Listen Live Online Here.

Welcome to Straight Talk. We at Legacy Legal and Family Legacy Trainings appreciate your enjoyment of our weekly insights on Building a Legendary Life and Creating Lasting Wealth and Legacy.

There has been much talk over the last few years about repealing the estate tax. You know, the punishment for dying. The estate tax was designed to make land more productive. The reason was that in the English feudal system property could pass from generation to generation without taxation making it less likely to be used in a variety of ways by a variety of people hence less productive. By taxing property owned at death there was a greater chance that land would have to be sold to pay the taxes and selling land meant more people using the land in different ways, thus making it more productive.

The American Taxpayer Relief Act passed in 2013 made rules relating to what is known as portability permanent. This means like a suitcase you can take it with you. The rule of portability basically says that as between two spouses (and with the most recent court pronouncements on same sex couples it appears they will qualify under this rule as well), whatever is the amount of the unused exclusion from estate tax of the deceased spouse, that amount may be added to the exclusion amount of the surviving spouse to protect property from estate tax.

For example. If a spouse dies and uses 2 million of their 5.25 million dollar exemption. The surviving spouse has available 3.25 of the deceased spouse’s exemption amount plus his or her own 5.25 million, thus allowing the surviving spouse a total of 8.5 million to shelter property from estate tax.

For those of you thinking, great I don’t have to worry about estate planning, think again. Within this very simple rule are now significant tax planning and asset planning opportunities. For example, using the old style planning and a bypass trust at the death of the first spouse will shelter all future growth in assets from estate taxes and also provide protection from creditors. This will not occur if the surviving spouse utilizes portability. As such, a thorough understanding of the nature of assets that exist in an estate is important. Also, given the nature of blended families, children unprepared for wealth and many other intangible factors having nothing to do with estate tax, the use of a variety of trusts for reasons solely having to do with human emotional and psychological dynamics can be essential.

The new law maintained valuable rules for multiple marriages with prior deaths. If a surviving spouse is a widow or widower, they can use the first decedent spouses exclusion, remarry and also get benefits from a second spouse as well. What I love about tax law is that what always seems so simple has a number of planning possibilities that requires proper discussion and thought, the value of an experienced professional.
Our vision is for business and families to be financially and legally secure to create lasting wealth. Our mission is to build, protect and preserve wealth and legacy for generations. To do these things we need to have business prosperity, good financial foundations, a tax fortress and personal power.

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