Patricia Annino Quoted in Dow Jones’ Talk Back -Post-Election Tax Cloud has Many Stumped

By Arden Dale

Before the election, the future for taxes was clear as mud. After, it didn’t really change much. But tax lawyer Patricia M. Annino sees at least one difference.

Despite the uncertainty, clients earlier in the year were willing to take some action to protect their wealth.

They “understood the uncertainty and forged ahead anyway,” says Annino, a partner and chair of the estate-planning group at law firm Prince Lobel Glovsky & Tye LLP in Boston, Mass.

Now, she says, they’re paralyzed. “They want to see what the law will really be.”

Even though the Bush tax cuts are scheduled to expire in just over a month, sweeping away lower rates on income taxes, dividends, capital gains and estates, two central questions persist. Will tax rates really go up, and if so, when?

Uncertainty makes it inevitable that some taxpayers who want to make an estate plan or rejigger a portfolio will end up doing nothing for now, but being ready to act is important.

“You need to have a plan A, plan B and plan C,” says Charles Shirley, director in PricewaterhouseCoopers’ Private Company Services practice.

Taxes on income, capital gains and estates are set to rise in 2011 under the two laws that put the Bush tax cuts into place earlier in the decade. Long-term capital gains rates will go to 20%, and dividends will be taxable at personal tax rates. The top two personal income tax rates will rise: the 33% rate will go to 36%, and the 35% rate to 39.6%. In all, twelve key tax rates and provisions will change if lawmakers do nothing.

There are those who insist Congress will act to keep some cuts in place before the end of the year, but they have many tax advisers raising their eyebrows. When lawmakers let stand the one-year estate tax repeal in 2010, it came as a real shock to the tax community. Many are now loathe to say that anything is impossible.

Annino says she had six appointments this week with clients who don’t want to act because they think the future will get clearer soon. She has been reviewing estate plans to see the results if clients died this year with no estate tax versus next year when the exemption may be $1 million. She points out any adjustments that need to be made.

The estate tax is a focus for many advisers like Annino. The Bush cuts steadily pared the rates and increased the exemption, which is the dollar amount at which an estate qualifies to be taxed. Last year, estates under $3.5 million were exempted. In 2010, the tax lapsed entirely. It resumes next year, when the top rates on estates of more than $1 million will be 55%.

The Republicans’ election gains, including a new majority in the House but not the Senate, have some people predicting renewed tax relief. Some even talk boldly of an estate tax exemption of between $5 million and $10 million. Others completely disagree.

The fate of the tax is now “completely up in the air,” according to Alfred Peguero, partner, personal financial services at PwC. It is possible that Congress won’t act in time to stop the $1 million exemption from taking effect in 2011. In that case, many, many more people will fall under the estate tax.

“That’s a house and a retirement plan for many people,” said Peguero.

For anyone with an estate between $1 million and $3.5 million, it is not a good idea to sit on the fence. These people, says Rowsell, Ga. estate planner John Scroggin, are in the danger zone and need to think about tax-saving measures. For example, he says, they should think about transferring a big life insurance policy out of the estate and into the hands of children or other relatives.

(Arden Dale is a Getting Personal columnist who writes about personal finance; she covers topics including tax and estate planning, retirement, investment strategies, and financial needs of small businesses. She can be reached at 212-416-2234 or by email at

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(END) Dow Jones Newswires

Patricia Annino is a nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  For more visit:


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