Marc H. Wander is a partner of the Bloomfield Hills law firm of Witzke, Berry, Carter &Wander, PLLC. Marc has been licensed to practice law in Michigan since 1992. Marc’s practice is devoted to estate planning and business succession planning.  Marc is a member of the Probate and Estate Planning Section of the State Bar of Michigan and is a prior Chairperson of the Oakland County Bar Association Tax Committee. He is a frequent continuing education speaker to insurance agents, financial advisors, CPA’s and financial industry organizations. He has also been heard on WJR Radio. Follow Marc on Twitter @MarcWander

Among the plethora of Bush era tax cut and sequester debates, Congress must also address the expiration of the current estate tax law before the year’s end. As it stands, the federal estate tax exemption is set at $5.12 million and estates valued over this amount will be taxed at 35 percent. If no action is taken by Congress, the exemption will revert to $1 million and the estate tax rate will be 55 percent in 2013. It is estimated that 52,500 estates will be affected in the event Congress fails to act.

Business and farm lobbyists are fighting to rein in the estate tax, with many hoping to have the tax eliminated. In a full-force effort, they are trying to persuade Congress that resources needed for investment are being drained due to the constant changes in the estate tax rate, in recent years.

The GOP agrees, on the basis that decreasing the exemption and raising taxes on job creators in this economy rivals common sense. On the flipside, many Democrats repeatedly assert that in order to cut the deficit, the estate tax should return to the 2009 levels of a 45 percent rate for estates with a $3.5 million exemption.

Long-term and estate planning is subject to dramatic fluctuation if the estate tax plan expires without action. Currently, the federal unused spousal exclusion is portable, meaning, if one spouse dies and does not use all of the exclusion, the surviving spouse can combine the remaining amount with his or her exclusion. Also at risk of expiration, is the portability of the federal spousal exclusion in the event that the estate tax sunsets.

Witzke, Berry, Carter & Wander PLLC is keeping a close eye on the ongoing debates and how any estate tax decisions may affect you and your clients.

Mr. Witzke practices in the areas of estate and gift tax planning, financial planning, retirement planning, charitable giving, elder law, and small business planning. He focuses on helping clients grow, protect, and transfer wealth efficiently. Mr. Witzke is a past president and board member of the Financial Planning Association of Michigan, a member of the board of directors for Leadership Oakland, and a member of the planned giving advisory committees of Wayne State University and the Community House in Birmingham. Follow Mr. Witzke on Twitter @gr8estatelawyer.

Estate planning with revocable living trusts answer at least three main questions which includes: Who gets what?  How do you minimize settlement costs, such as probate and estate taxes? And, who is in control after the trustmaker passes away?

Barron’s has a great article entitled “The Five Biggest Ways to Bungle a Trust” that describes many of the mistakes that do-it-yourselfers face when they go at trust administration alone.  As Michigan trust administration and Oakland county probate lawyers, we are often brought in to clean up theses messes.

The first way people screw up trust administration involves keeping faulty records.  Generally trustees in Michigan must provide at least annual accountings to the beneficiaries.  Often, these accountings are slapped together at the last minute by an overwhelmed trustee.  As Michigan trust administration and estate administration lawyers, we professionally manage this process for our clients.  Whether we handle it in-house or outsource it to highly qualified CPA’s, our client’s understand that it’s professionally done and the beneficiaries of the trust appreciate the clarity.

Another way that trustees botch the trust administration process is by failing to diversify the trust assets.  It may be tempting to sit on a big chunk of a single stock, but often times, as prudent investors, it’s important for the trustee to diversify the portfolio so as to minimize risk for the beneficiaries.

Yet another trustee issue we see is that of biased distributions.  Trustees owe a fiduciary duty to the current beneficiaries and the remaindermen.  Therefore, a trustee cannot favor one beneficiary over another or allow any personal bias into the decision making.

The fourth area we, as Oakland county trust administration lawyers, see trustees making poor judgements is in the concept of the trustee expecting a payday.   Trustees, when acting without the aid of an trust administration attorney, often expect at the end of the day they will get a windfall for the efforts, when in reality, more often than not, they are only entitled to reasonable expenses and fees.  Quite often this is a source of probate or trust litigation.

Lastly, as a trustee acting alone, often times we’ll see that they have a false sense of safety.  A trustee acting without experienced Michigan trust administration counsel can feel that there is an entitlement and honor in serving the role of trustee at the other beneficiaries will defer to any judgements or decisions you make.  This generally cannot be further from the truth.  Quite often beneficiaries are looking for any little mistake a trustee makes, even in the best of families.

With all this Federal Estate Tax discussion the past few weeks, there was an interesting article in the NY Times asking if the Federal Estate Taxes even mattered?  You can read the article at Do Estate Taxes Matter?

With the new estate tax rules that have ben recently passed the estate planning world is waving goodbye to one acronym and welcoming in a few more.  Good by to EGTRRA, which was the Economic Growth Tax Relief Reconciliation Act that was signed into law by George W. Bush in 2001.

Now we have TRUIRJCA, TRA, and DSUEA.

TRUIRJCA stands for the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act.  This is the official name of the temporary Federal Estate Tax law that for two years extends and modifies the Bush era tax cuts.

The next key acronym is TRA, which some are using as an abbreviation for TRUIRJCA.  TRA stands for Tax Relief Act.  Julie Garber who wrote a blog post TRUIRJCA, TRA, and DSUEA-New Estate Planning Acronyms You Need to Know Now, much prefers TRA over TRUIRJCA.

The last key acronym is DSUEA, which stands for Deceased Spouse’s Unused Exemption Amount.  This acronym refers to the new portability concept included in the new rules.

Image: jscreationzs / FreeDigitalPhotos.net

With 2011 on our doorstep, its time to revisit your estate planning documents.  With much of the uncertainty over the estate tax wrapped up, for two years at least, many people had postponed getting their estate planning done and now that barrier to estate planning is removed.

So, as the boston.com article, Time to revisit your estate planning documents, mentions, why is now the right time?  One of the provisions signed by Obama is setting the estate tax exemption amount for the next two years as well as an increase in the lifetime gift tax exemption, both to $5 million.

So while, this higher exemption amount is good news, and now is a great time to update your estate planning documents, keep in mind that this provision is only for a  period of two years.  The new rules are set to change again in 2013.