Читать книгу 2012 Estate Planning - Martin Inc. Shenkman - Страница 10

With the potential for significant income tax increases in 2013 and considering the interconnectedness of estate and income tax planning, income tax issues cannot be ignored. Assets included in a taxpayer’s estate at death will generally receive a step up in income tax basis to their fair market value as determined for estate tax purposes and without income tax recognition. Assets given away before death will not step up (i.e., in general, the recipient of a lifetime gift assumes the donor’s tax basis in the gifted asset). Depending on the capital gain and ordinary income tax rates applicable to the taxpayer and his or her heirs on future sales, as compared to the federal (and state, if applicable), estate tax rates that may apply to assets held at death, gifting versus holding assets until death can have widely different results. Hence planning is essential.

With the possibility of income tax rate increases, should you convert your IRA to a Roth IRA before the year’s end? If the IRA is converted in 2012, the resulting income tax might prove to be much lower than in a future year. Also, the income tax paid upon conversion will remove those assets from the taxpayer’s estate and could generate a 55 percent marginal estate tax savings if 2013 brings a $1 million exemption and a 55 percent rate. On the other hand, if the estate tax exemption remains at the $5 million inflation-adjusted level and rates remain at 35 percent, a very different result may follow. Just to complicate matters, it is also appropriate to consider that annual distributions from an IRA (or pension plan) may be taxed at a lower rate than the entire amount of the IRA would be subject to upon conversion to a Roth IRA. Remember that income and estate tax planning decisions are interconnected, often in complicated or unobvious ways.

This book discusses a number of income tax considerations and how they may affect 2012 planning. Your income tax situation will be unique. Because of a myriad of factors (including exposure to state and local income taxes and the ability to avoid them) that ultimately affect how much income tax may be due, it is appropriate to do a thorough study of your income tax matters when doing estate tax planning.