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Client Notice

January, 2010

To all Schanker and Schanker Clients:

You have probably heard that the Federal Estate Tax has been repealed for 2010 and replaced with a complicated system that imposes capital gains taxes upon your heirs when inherited assets are sold.  You may, understandably, be concerned how this will impact the estate plan that you have in place and whether changes should be made.

We have every expectation that the Federal Estate Tax will be reinstated by Congress with the same $3,500,000 exemption that was in effect in 2009.  In fact, the House of Representatives had already passed a bill to retain the $3,500,000 exemption permanently.  It was only as a result of the preoccupation by the Senate with the health care debate that the bill was never enacted.  Senate leaders have expressed an intention to pass the legislation this year and they appear to have the votes to do so.  President Obama has indicated a willingness to retain the Federal Estate Tax with a $3,500,000 exemption, so we can assume that he will sign it into law.

The federal gift tax exemption remains at $1,000,000 per person and New York and New Jersey estate taxes remain in effect at their pre-2010 levels with exemptions of $1,000,000 and $675,000 respectively.

We do not believe that most clients need to make any major changes to their basic estate planning documents at this time.  However, we cannot be assured with absolute certainty that our expectations of what Congress will likely do will, in fact, happen.

We do believe that there are estate planning opportunities that can be taken advantage of now, that may be curtailed along with the reenactment of the estate tax.  There have been proposals to eliminate valuation discounts for lifetime gifts and substantially reduce the advantages of trusts that have been commonly used in estate planning.  We expect that, if these proposals are enacted, they will be prospective rather than retroactive.

If you have any additional questions regarding the estate tax, or would like to discuss the planning opportunities that remain available to you, please do not hesitate to contact us for a consultation.  We will keep our website (www.schankerandsch.wpengine.com) up to date with any legislative changes.

Please feel free to contact to contact any of us at 631 424-5400 for more information.

Steven M. Schanker, Esq.
R. Mark Hochberg, Esq.
Andrea B. Schanker, Esq.