In a December 17th segment on CNN’s The Situation Room, Wolf Blitzer and colleague Allan Chernoff began discussing the upcoming changes changes in the federal estate tax landscape. They point out that in just a few short days the calendar will turn and the reign of EGTRRA (the Bush tax cuts) over the estate tax comes to a close. No estate taxes will be owed on deaths occurring in the year 2010, but in 2011 the tax comes back at an even lower threshold, resetting to it’s pre-Bush rate of 41%-50% on assets over $1 Million. While all of this is perfectly accurate and well worth knowing, much of the commentary surrounding it was murky at best, if not just plain wrong. After the jump, some of the points that could use some tweaking:
“EYELIDS? I DON’T SEE WHAT EYELIDS HAVE TO DO WITH IT.”
These exact words were directed at me a few years ago by my Trusts professor in law school. The professor is a very well-known scholar in the wills/trusts/probate field, but as someone who doesn’t practice he failed to recognize that I was saying “ILIT,” common parlance in the field for an Irrevocable Life Insurance Trust.
My professor’s problem illustrates a potential one for Estate Planning clients. Most attorneys realize that they are dealing with complex and often obtuse concepts that can make an uninitiated client dizzy, and do their best to explain things carefully and at a reasonable pace. However, it may still be a challenge to take in, particularly with terms that sound confusing (like ILIT) or are used interchangeably with other terms, so after the jump, a glossary of common terms likely to cause confusion: