San Diego Financial Advisor Discusses Legislation Regarding Estate Planning

 By: John Dubots
With over 20 years as a Temecula Valley and San Diego financial advisor, I have seen tremendous fortunes eaten by inheritance taxes. Recent legislation introduced a temporary estate planning option called "portability" which allows a surviving spouse the ability to utilize a previously unused portion of estate tax exemption from their deceased spouse. This new proposal could minimize the amount of estate taxes paid by married couples.

Here's how "Portability" works

The federal government imposes a tax on the value of property and assets transferred to your heirs upon your death. While a surviving spouse is allowed to inherit the full value tax free, the amount that is passed directly to a nonspouse is currently tax deductible up to $5 million (as of 2011). This means an exemption on inheritance tax is is allowed for nonspousal beneficiaries on any amount less than $5 million and federal estate tax (currently 35%) must be paid on amounts exceeding $5 million.

Prior to the new tax law, if one spouse died and passed 100% of the assets on to the surviving spouse, the estate tax exemption was not needed and in essence, wasted. Then, when the surviving spouse passed on, the heirs could be responsible for estate tax liability if the total assets exceeded the $5 million mark.

Consider this example:

Married couple Jim and Betty have joint assets of $8 million. When Jim dies, 100% of the assets are transferred to Betty, meaning that no estate tax is due (since everything went to the surviving spouse) and none of Jim's potential $5 million exemption is used. Under old tax law, if Betty's estate is still worth $8 million when she passes away, her heirs would benefit from her estate tax exemption of $5 million, but would be forced to pay a 35% federal estate tax on the remaining $3 million- a whopping $1,050,000 tax liability.

Now, under the new legislation, Betty is allowed to use not only her $5 million exemption, but also the exemption that was not used by Jim. This means a full $10 million exemption and no tax liability on the $8 million passed on to her heirs. Typically, a family trust (credit shelter trust) was used to accomplish a similar result, but the portability law now protects families without a trust in place.

With this in mind, there are still a number of instances where a family trust may still be beneficial such as protecting assets against creditors, giving the first spouse to die control of final distribution of assets when the surviving spouse dies, and other aspects which make family trusts a wise option. The portability provision expires at the end of 2012. The bottom line is choosing a path that allows you to build and protect your wealth properly. Doing this correctly requires the advice of a professional who understands tax laws and is up to date with current policy at both the state and federal level. The right advisor will fully explain your options and be quick to notify you when conditions change- as so often they do.
Artice Source:

Related Articles in Estate Planning

People interested in the above article are also interested in the related articles listed below:

Self directed IRA investment options go beyond the traditional stocks and bonds into real estate, limited liability companies and partnerships; tax liens, mortgage receivables, precious metals, notes and so on. To establish a real estate IRA investment account, the first step is to set up a self directed IRA. A self directed IRA account allows the account holder to control and make the final decisions in the type of IRA investments they consider to be the most profitable.
The real estate sector is a field that grown rapidly and also considers that it will be get mount in new future. If you are willing for properties in India, there are several real estate firm help you to finding best properties. Here you can get information about properties in India, home loans, home loans companies, etc.
Sickness and death are tragic realities that every family will need to deal with at some point. Too often, this planning goes neglected because the subject is difficult to deal with for many, or simply too confusing. Many consider "estate planning" to be only for the wealthy with sprawling country homes filled with valuable antiques and tapestries. However, this could not be farther from the truth. While most wealthy do have estate plans in place, they are also critical for those who are not wealthy, to ensure that their needs and desires are met in both sickness and health.

More in Estate Planning

Excellent, Larry. Thank you for taking the new article directory technology and making it work to the max. I encourage everyone to keep contributing and contributing regularly. I can attest to the fact that this site is already a strong directory in a field of many. Kudos to Larry!

Matthew C. Keegan
The Article Writer


I find it a delight to use both as an author and a publisher. It is full of nice little surprises that make the whole process of writing, reading and publishing articles a complete delight. This is one that comes out tops and beats the rest hands down.

Eric Garner
Managing Director


I did a Google search and came across your site. It was exactly what I was looking for and was elated to find such a broad range of articles. As I am launching a free magazine in a small town in Florida, I wanted to be as resourceful as possible while still being able to provide some content that is interesting and well written. Your site has all the variables in the mix. Excellent Site hitting all the notes in the scale sort of speak.

Mo Montana
Florida, USA

Article Topics

Copyright © 2005 - by Larry Lim, Singapore - Article Search Engine Directory at™
All Rights Reserved Worldwide. All Trademarks and Servicemarks are the property of the respective owners.
ArabicBulgarianCatalanChinese (Simplified)Chinese (Traditional)CzechDanishDutchEnglishEstonianFinnishFrenchGermanGreekHaitian CreoleHebrewHindiHungarianIndonesianItalianJapaneseKoreanLatvianLithuanianNorwegianPersianPolishPortugueseRomanianRussianSlovakSlovenianSpanishSwedishThaiTurkishUkranianVietnamese