Kraft, Walser,
Hettig Honsey & Kleiman
A Professional Limited Liability Partnership
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Fall/Winter 2001
Previous Newsletter
In The News
Office Anniversaries
Nancy Metag
18 years, July 11, 1983
Tami Stovern
3 years, August 3, 1998
Sue Fleegel
24 years, August 15, 1977
Wendy Sonnek
9 years, August 31, 1992
Hutchinson Office
12 years, October 2, 1989
Don Walser
29 years, October 20, 1972
John Kraft
35 years, October 21, 1966
Julie Wertish
21 years, December 17, 1980
New Arrivals
Shelby Lynn Stovern
May 1, 2001
Daughter of Tami and Derek Stovern
Trent Stephen Soukup
June 21, 2001
Grandson of Lena and Tim Soukup
Tune in to our Legal Update radio program Saturday mornings at 7:35 on KDUZ AM 1260
Olivia Office
107 North 9th Street
P.O. Box 148
Olivia, MN 56277
(320) 523-1322
Email
Hutchinson Office
131 South Main Street
P.O. Box 129
Hutchinson, MN 55350
(320) 587-8150
Email
This newsletter is intended as general information to our clients and friends on legal issues of interest. It is not intended to render legal advice or opions; such opinions can only be given when related to actual situations. If you have any questions, please contact us.
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Estate Tax Changes
Create Uncertainties
By Steven E. Hettig
O
n June 7, 2001, President Bush signed into law the "Economic Growth and Tax Relief Reconciliation Act of 2001". This new tax law contains a number of tax provisions, including many regarding federal estate taxes. This article will discuss the changes and the uncertain future of estate tax law.
The purpose of federal estate tax is to tax the transfer of wealth following the death of the owner. Part of the estate planning we do for clients relates to minimizing these estate taxes.
The new tax law repeals the estate tax effective in 2010. Does this mean that taxpayers will no longer have to worry about federal tax beginning in 2010? As is often the case with tax law, the answer to that question is certainly not an easy yes or no.
The new law contains a "sunset provision" on the repeal of this tax. This means that if Congress does not take steps to change the tax law, the repeal of the estate tax is reversed in 2011 and we revert back to "old" law as it was before June 7, 2001. This obviously makes planning for the future very difficult.
There are a number of other provisions in the new tax law, effective now through 2010, which increase the amount that can be transferred at death free from estate taxes.
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Currently, the first $675,000 of asses is protected from estate tax. This amount will increase to $1 million in 2002, $1.5 million in 2004, $2 million in 2006, and $3.5 million in 2009. The new tax law also reduces the top estate tax rates from a current minimum rate of 55% to 45% in 2007.
While the new Tax Act does contemplate a repeal of the estate tax in 2010, it does not repeal the gift tax. This means that gifts in excess of certain amounts will remain taxable. However, there will be a $1 million lifetime exemption for gifts, effective in 2002. This exemption allows a person to make gifts over their lifetime of up to $1 million without having to pay any gift taxes.
As often happens with tax law changes, some things become much more complicated. Under the current estate tax law, your basis for income tax purposes (the cost of your assets for computing gain or loss) is the value of the asset as of the date of death of the person from whom you inherit property. Under the new law, beginning in 2010, your basis will be the same as it was for the decedent, with several exceptions and modifications.
One thing is very clear. Because of the new law and the uncertainties that it creates, it is more important than ever to periodically review your estate plan. We want to make sure that your estate planning goals are still being accomplished using the most up-to-date tax laws.
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In this edition of our newsletter, we profile Dan Honsey, a partner with Kraft Walser Hettig & Honsey. Dan has been with the firm since 1994 and works in the Hutchinson and Olivia offices.
Dan, a 1992 graduate of the University of Minnesota Law School, is originally from Stewartville, Minnesota and received his undergraduate degree with distinction from the University of Minnesota-Morris. He joined Kraft Walser Hettig & Honsey after working as a law clerk for district court judges in International Falls. He is a member of the Labor and Employment Law Sections of the American and Minnesota Bar Associations. Dan's primary areas of practice are Employment Law, Business Litigation, Criminal Law, and Family Law.
Dan is a former college wrestler and volunteers his time and talents to the Hutchinson Wrestling Club. He currently serves as president of the Hutchinson Rotary Club and the Crow River Arts, and is a member of the Hutchinson Downtown Association Board of Directors. In 2000, Dan received the Outstanding Youth Leader award from the Hutchinson Chamber of Commerce. He also volunteers his time by taking cases through the Volunteer Attorney Program and by serving on the 8th District Ethics Committee of the State Bar Association. Dan has twice been named a "Rising Star" in the legal profession by Minnesota Law & Politics.
Dan and his wife, Theresa, a health care consultant with Deloitte Consulting, live in rural Hutchinson where they enjoy spending time with their three dogs.
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The Partners and Staff of
Kraft, Walser, Hettig & Honsey, PLLP Congratulate
2001 Super Lawyers
Donald H. Walser and John H. Kraft have been selected as two of the 5% of the lawyers in Minnesota designated "Super Lawyers" in a survey by Law and Politics magazine, Twin Cities Business Monthly and MPLS. St. Paul magazine!
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