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You have until the end of this year to save millions

Until December 31, 2012, you can save millions of dollars in federal estate taxes, but only if you plan today.Obama passed the “Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010” on Dec. 17, 2010 which dramatically alters the dynamics of wealth transfer and life insurance planning for the next ten months.

This allows an estate planning bonanza currently, $5.12 million per person, $10.24 million per couple exempt from estate taxes and this exemption applies to generation skipping and gift taxes too. The great thing is this Act reunifies the gift tax and federal estate tax exemptions of $5 million and the federal Generation Skipping Tax (GST) tax exemption to the maximum federal estate tax exemption. This Act’s transfer tax provisions will sunset after Dec. 31, 2012 and from that time forward the Internal Revenue will treat the tax reduction technique as expired.

What does all this mean to you? It is an unprecedented opportunity to transfer your wealth to future generations with drastic reductions in or the possible entire elimination of federal estate taxes. In fact, the government’s insistence on using section 7520 rates — as of today, short term rates are 0.19 percent, midterm 1.12 percent and long term rates 2.58 percent — make using many estate planning structures extremely valuable. GRATS (Grantor Retained Annuity Trusts), estate freezes and split dollar loans for attractive Irrevocable Life Insurance Trust (ILIT) funding make it possible for a family to transfer up to $100 million to their heirs, estate tax-free, gift tax-free, and generation skipping tax-free.

To ensure your family gets the enjoyment of these benefits, you need to act now. First, spend some time exploring your values and your desires for your family’s future. Remember, a comprehensive planning process has many steps and takes many months from initiation to completion.