As Alpharetta, Georgia, probate attorneys at the Tieger Law Center rightly report this week, estate taxes can be devastating to non-US citizens. 

The reason is that most U.S. citizens' estates currently pay no taxes on the first $5 million of the inheritance. Not so for non-citizens, where every dime after $60,000 is presently taxed at a 35% rate.

The “logic” behind this policy works in the case of foreign nationals who earned money abroad all their lives, brought it into the U.S., and then died. Less so for the more typical case of a foreigner who lived and worked in the U.S. for decades, paid taxes during his lifetime just like an American, and then leaves a modest estate worth more than $60,000.

The author of Tieger Law Center’s blog post recommends gifting using offshore family corporations. Other approaches to the problem abound, but key to all of them is beginning to plan early.

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Tanner Pittman, LLC is an estate planning and probate law firm that assists clients in the LaGrange, Newnan, Columbus, and Metro Atlanta areas. 

Presently, when an IRA owner dies, the named beneficiary of the IRA may take distributions of that account over his or her actuarial lifetime. The benefit of this is that the principal of the IRA continues to grow tax-deferred, resulting in very significant lifetime gain. 

Estate planning attorney Ronald Morton fears this benefit may be marked for death by Congress. He cites to a recent Forbes article addressing the same concerns. 

Tanner Pittman, LLC is a West Georgia and Atlanta-area law firm specializing in estate planning and complex planning to avoid estate and gift taxation for affluent individuals and families.   

The very fact that we're in a historically unprecedented time of Congressional generosity may be lulling the wealthy in to a false sense of security, reports Investment News.

Faced with a $5 million exemption and other priorities in life, individuals of all but the most tremendous wealth are putting off complicated tax planning in particular, and estate planning in general, according to a survey of 1,085 estate planning professionals. 

But we live in uncertain times. The estate tax exemption is set to go down to $1 million for each individual beginning in 2013, provided Congress does nothing. Why not wait until then? The very fact of this uncertainty, argue planners (this one included) means the time is nigh to make a contingency plan. After all, life happens, and given the large number of wealthy in their later years, many individuals run the risk of an event that will cause their incapacity before they can react to an adverse move by Congress.

Tanner Pittman, LLC is a West Georgia and Atlanta-area law firm specializing in estate planning and complex planning to avoid estate and gift taxation for affluent individuals and families. 

From legalnews.com, we have the story that perhaps only two tenths of one percent of the population is subject to estate taxes. This, compared to "eight to ten percent of the population" in the 1970's. 

The reason is that the standard exemption from estate taxation rose to $5 million when President Obama signed a compromise budget bill into law in the last days of 2010. The compromise is, however, set to expire beginning in 2013, resetting the exemption level to $1 million if Congress fails to act. 

No tears should be shed, though, for estate and probate practitioners, we are later told in the same article. As the baby boom generation retires and (alas) begins to pass away, probate litigation is increasing at a brisk pace. 

Finally, opines the author of the article, "the recession has created more probate litigation since family members are disappointed with their inheritance."

The down-economy is a boon to estate planners for the affluent, reports the Wall Stree Journal.

The reason: low interest rates and depreciated assets.

For this post, consider low-valued assets in estate planning. The U.S. federal estate tax is actually a two-tiered system, resting on both estate and gift taxes.  At least at present, the unified amount that one may give away in lifetime gifts or after-death bequests without facing taxation is $5 million.

When assets - such as stock or real estate - are depreciated, gifting is an exciting way to estate plan, especially if one supposes the assets may rebound in value in the future. The reason is that one can fit more assets under the $5 million threshold than one could in the past. 

Suppose a simple cas where an individual is 70 years old and had $12 million in assets four years ago that are now worth $7 million. $5 million of those assets may be gifted to heirs now. In another five years, the equity and real estate markets may have digested the toxicity they're presently ailing from, and the $5 million may be worth $8 million. The individual has effetively gifted away with no tax hit far more than s/he could in better economic times.

Consider too that the estate and gift tax exclusion of $5 million is presently set to endure only until the end of 2012. After that time, it's anybody's guess where Congress will reset the threshold. But the smart bet is that, even if it's reset to $2 million, Congress will not retroactively declare that gifts during the 2011-2012 window taxable.

Low asset valuations, therefore, may have come at the ideal time for gifting to family. In two years, we may see high valuations and a low gift tax exclusion, effectivly closing the door on such aggressive gift planning for an indefinite amount of time.

Tanner Pittman, LLC is a West Georgia and Atlanta-area law firm specializing in estate planning and complex planning to avoid estate and gift taxation for affluent individuals and families.

Perish the thought for attorneys who make their livings helping clients avoid estate taxation.

That said, the safe money is on continuation of an estate tax, especially as government debt load continues to climb and successive congresses seem powerless to stop it.

At the vanguard of abolishing the estate tax, however, is Dick Patten of the American Family Business Institute. Reuters recently ran a story reporting that 131 members of Congress have signed his pledge to vote to repeal the so-called "death tax," and a bill currently before the House to do the same has 168 co-sponsors.

Tanner Pittman, LLC assists clients in estate tax planning as well as general estate and will planning. We draft estate plans that seek a maximum of tax advantage for clients, regardless of where the political winds will take us.