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Playing The Changing Tax Picture
CNBC.com | May 24, 2010 | 12:18 PM EDT

What goes down, must come up.

That's the physics of taxes right now.

A decade of tax cuts is coming to an end in 2010 and though details on tax hikes are few at this point, the writing is certainly on the wall.

Here's some investment strategies that will help ease the pain.

Estate Tax

First the good news—and a one-year wonder. There is currently no estate tax.

Now the bad news. If Congress does nothing, we will return to the pre 2002 law—a $1 million estate tax exemption and a graduated maximum rate of 50 percent on additional income. How bad is that? Well, by comparison, in 2009, each individual could shelter $3.5 million worth of assets and the top tax rate was 45 percent.

Though only those on their death bed will be able to fully exploit this unprecedented tax hole, the healthy have some options.

“If you currently have assets that have decreased in value, but you anticipate that they will come back, those assets might be ripe for gifting to get them out of your estate,” says Brian Raftery, partner in the Trusts & Estates group at Herrick Feinstein in New York.

It is also a good time to gift assets to your children or to trusts for your children.

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