Gould Cooksey Fennell, P.A.

2010 Estate Tax Repeal Creates Uncertainty for Existing Plans

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Eugene O’Neill chairs Gould Cooksey Fennell’s Commercial Litigation and Construction Disputes Practice Group, with an emphasis on construction law, business, real estate and probate litigation. He is triple board-certified in Civil Trial, Business Litigation, and Construction Law Mr. O’Neill is also listed among Florida’s “Super Lawyers”, a service which identifies the top 5% of attorneys in the state, as chosen by their peers and through the independent research of Law & Politics Magazine. For additional information regarding Mr. O’Neill or other GCF attorneys visit www.gouldcooksey.com

To the great surprise of nearly everyone, Congress was unable to accomplish expected revisions to the Federal Estate Tax in 2009. Consequently, the previously scheduled one-year repeal for 2010 that was not expected to survive did, in fact, occur as of January 1, 2010. While this repeal is, in many ways, welcome news, its unexpected arrival and uncertain future create an extremely difficult tax planning environment. Many in Congress have indicated intent to reverse this repeal and to apply such reversal retroactively. Therefore, although temporary repeal is the current law of the land, the true circumstance that will apply for 2010 remains very uncertain. Likewise, for the years beyond 2010, we have tremendous uncertainty as well. The laws in place currently call for the estate tax to return with a vengeance on January 1, 2011, back to an exemption level of only $1,000,000 (down from the 2009 level of $3,500,000). There is considerable hope and belief that Congress will act to increase those exemption levels considerably, but again, those details cannot be known and expectations vary substantially. The generationskipping tax laws and the generation-skipping tax exemption levels are also similarly affected by the current, temporary repeal and by the uncertain future of these laws, both within 2010 and beyond. Another significant change under the current 2010 law is the elimination of the basis “step-up” on inherited assets for capital gain and loss purposes. Under the law that applied up until January 1, 2010, the income tax basis of an asset was automatically changed to its current value as of its owner’s death. This year, however, that automatic change

would not occur, and the deceased owner’s income tax basis in assets will “carry over” to the heirs who inherit those assets. However, under some fairly complicated new rules, the decedent’s executor is given the ability to increase the basis of various assets, subject to certain total amount limitations. These profound changes in the tax laws, and the tremendous uncertainty surrounding them for this year and beyond, create two very significant risks for existing estate plans. One is the risk that language in existing documents tied to tax laws or exemption levels which have now changed may trigger unintended, adverse consequences as to the division and/or distribution of assets. The other is that existing documents could fail to take advantage of significant new tax planning opportunities created by these changes in the laws.

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RESTORING ESTATE ASSETS LOST THROUGH UNDUE INFLUENCE

Even the most well thought-out estate plan can be disrupted by undue influence, fraud or duress. Fortunately, the law provides a way to recover assets lost when someone is inappropriately pressured to make changes to a will, trust or other legal document. With five attorneys holding an LLM in Estate Planning or Taxation and four litigation attorneys, GCF has experience handling cases involving claims of undue influence. While undue influence can take on many forms the most common include: • Changes to an estate plan promoted by a new friend or acquaintance who became close to the decedent in the last months of life. • Changes to a long established estate plan through influence by a relative, trusted advisor, or caregiver, writing a child or children out of the will. • Health care workers or live-in aides who utilize the express or implied threat of withholding care to manipulate a decedent into changing his or her will. • Transfer of assets or changes to a will following a decline in mental capacity, isolation from family and friends and a growing dependence on the person prompting the changes.

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FUNDING BUSINESSES THROUGH PRIVATE OFFERINGS
The demographics of our community make it a popular place for businesses to raise capital through limited private offerings. If properly established, private offerings allow businesses to offer securities which are exempt from certain Federal & State securities laws. GCF’s Business & Corporate Group attorneys are experienced in providing business clients advice on the formation and implementation of limited private offerings and assistance with the documentation of business plans, preparation of necessary disclosure agreements and provide business tax planning advice. In the last few months, GCF attorneys completed several such projects for clients seeking to raise in excess of 10 million dollars in capital for new business ventures.

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DAVID M. CARTER ■ BRIAN J. CONNELLY ■ BYRON T. COOKSEY ■ TODD W. FENNELL ANThONY P. GuETTLER ■ TROY B. hAFNER ■ WILLIAM N. KIRK ■ ChRISTOPhER h. MARINE JASON L. ODOM ■ EuGENE J. O’NEILL ■ ChRISTOPhER K. PEGG ■ SANDRA G. RENNICK