"New Perfect Storm"
In the world of advanced estate planning there existed a "Perfect Storm" from 2008-2010. A perfect storm in the sense that conditions were ideal for transferring ones estate to the next generation at an incredibly low estate and gift tax rate due to historically low federal interest rates and extraordinary low asset values. At that time, the mid-term AFR (applicable federal rate) dropped below 3%, real estate values were spiraling downward, interest rates and bond values were extraordinary low.
Every month the government establishes what is known as the Applicable Federal Rate (AFR) for the charging of interest rates in related party transactions or intra-family loans. The IRS uses the AFR to determine that the interest you are charging on an intra-family loan is sufficient. Using an interest rate less that the AFR would re-classify the loan as a gift. The AFR is divided into short term rates; for loans less than 3 years, mid-term rates; for loans from 3 to 9 years and long-term rates; for loans over 9 years. This rate is recalculated every month.
This unique mix of economic conditions along with advanced estate planning techniques such as IDGT's (sales to an intentionally defective grantor trust's), GRAT's (grantor retained annuity trust's), CLT's (charitable leads trust's) and Intra Family Loans (as discussed earlier), make it possible to take advantage of enormous tax savings opportunities. IRS Section 7520 is used for calculating the gift and estate taxes for these techniques. Roughly speaking the 7520 rate is equal to 120% of the mid-term AFR rate.
Today, or more specifically during 2011-2012, we have a "New Perfect Storm" and this new perfect storm is even more favorable than the first "Perfect Storm". Conditions that existed before are even better today from an estate planning point of view. Real estate values are still depressed, bond values are still low and the mid-term AFR (applicable federal rate) is now at or below 1%. Unlike 2008-2010, the federal gift tax exemption for 2011-2012, for an individual is $5,000,000, and for a couple is $10,000,000. In 2012 these figures are adjusted for inflation to be $5,120,000 for an individual and $10,240,000 for a couple.
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"I highly recommend them!"Ed Wollman and his team are very knowledgeable attorneys who handle their clients with great care. The office manager, Jo-Ann Hendrickx is a true asset to the firm as she is dedicated, hard working and always looking out for everyone's best interests.- Kim R.
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"They went above and beyond"The most professional and understanding organization, especially during these troubling times. They went above and beyond to to hurdle through many roadblocks to resolve my family’s affairs.- Tom R.
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"Ed Wollman and his team did a wonderful job with our estate planning. He took the time to make my family and I feel comfortable throughout the process. We are very grateful."Ed Wollman and his team did a wonderful job with our estate planning. He took the time to make my family and I feel comfortable throughout the process. We are very grateful.- Goldie James
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"We highly recommend their expertise."The office is very professional and easy to work with. Every aspect of our planning was explained in layman's terms with some humor. Our revised trust plus all documents written by them.- Douglass P.
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"The office of Wollman Gehrke & Associates does an excellent job in a professional manner. Jo-Ann Hendrickx is an asset to the firm with her friendly manner and depth of knowledge."The office of Wollman Gehrke & Associates does an excellent job in a professional manner. Jo-Ann Hendrickx is an asset to the firm with her friendly manner and depth of knowledge.- Amy Havig
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"Ruthanne (my wife) and I worked with Ed Wollman on our estate plans - he was wonderful! Ed explained everything in a manner we could understand and followed through until we signed the documents. He's been available to answer any questions we had."Ruthanne (my wife) and I worked with Ed Wollman on our estate plans - he was wonderful! Ed explained everything in a manner we could understand and followed through until we signed the documents. He's been available to answer any questions we had. I certainly recommend Wollman, Gehrke & Associates!- Ken Ginsberg
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"Thank you, Ed Wollman and Team."Ed Wollman had been my father's attorney for years and reviewed his documents with him faithfully every five years. Before my dad went into Hospice, Ed and his team were a great source of information and comfort during a difficult time. After his passing it was made easier navigating closing the estate with his team and words of encouragement. The value of knowing that everything was handled in the courts was a huge relief. Thank you, Ed Wollman and Team.- Lilla P.
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"Jo-Ann Hendrickx is a delight!"Such an asset to the firm! Her caring way and hard working values are unmatched! Thank you!- Maria S.